Allgood v. Mueller, 146

• Decision Date: 01 September 1985
• Docket Number: No. 146,146
• Citation: 307 Md. 350,513 A.2d 915
• Parties: , 34 Ed. Law Rep. 511 Barbara ALLGOOD et al. v. Kenneth MUELLER et al. ,
• Court: Maryland Court of Appeals

Page 350

307 Md. 350

513 A.2d 915, 34 Ed. Law Rep. 511

Barbara ALLGOOD et al. v. Kenneth MUELLER et al.

No. 146, Sept. Term, 1985.

Court of Appeals of Maryland.

Aug. 27, 1986.

David M. Williams, Chestertown, for appellants.

Patrick James Attridge (Bernard J. Harig, on brief), Rockville, for appellees.

Edward S. Digges, Jr., Jack L. Harvey and Digges, Wharton & Levin, on brief, Annapolis, and Thomas H. Fitzpatrick and Anthony Hume, of counsel, Dallas, Tex., on brief, for Dresser Industries, Inc.

Argued before MURPHY, C.J., and SMITH, ^* ELDRIDGE, COLE, RODOWSKY, COUCH and McAULIFFE, JJ.

RODOWSKY, Judge.

This case illustrates a form of release under the Maryland Uniform Contribution Among Joint Tort-Feasors Act (the Act) which, in combination with the way in which the facts ultimately developed here, permits the releasor to retain the amount paid by the settling defendants together with the amount of the judgment against the nonsettling defendant. ¹

In May 1980, Gary Lyon, a student at a middle school in St. Mary's County, was injured during a physical education class while moving a piece of volleyball equipment. The instant suit for money damages based on that occurrence was brought by Barbara Allgood, individually, and as mother and next friend of Gary Lyon (collectively, Plaintiffs). Joined as defendants were Kenneth Mueller (Mueller), the physical education class teacher, George A. Kirby (Kirby), the principal of the middle school, the Board of Education of St. Mary's County (the Board), and Jayfro Corporation (Jayfro), the manufacturer of the equipment. During the trial the Plaintiffs settled with Mueller, Kirby, and the Board for $75,000 and gave a joint tortfeasors release. The trial continued without the jury being told about the settlement. The court submitted the case on special issues under which the jury awarded the Plaintiffs $20,000 damages only against Jayfro. Judgment in that amount was entered against Jayfro on February 25, 1985. On March 7, 1985, Jayfro moved for an order crediting against the judgment the amount paid by the settling defendants for their release by the Plaintiffs. The court, on July 25, 1985, ordered the clerk to enter as satisfied the Plaintiffs' $20,000 judgment against Jayfro. Plaintiffs appealed from that order and we issued the writ of certiorari on our own motion prior to consideration of the case by the Court of Special Appeals.

The release, captioned, "JOINT TORT-FEASOR'S RELEASE AND INDEMNIFICATION AGREEMENT," provides in pertinent part:

(2) This joint tort-feasor's release, since it involves a minor, will only be effective when approved by a Maryland Circuit Court Judge.

....

(6) Payment of the consideration for this release shall not be construed as an admission of liability of the settling defendants. The settling defendants expressly deny liability for the accident.... This release is intended and executed for the purpose of [compromising], discharging and releasing all existing claims by Plaintiff against the settling defendants.

(7) It is expressly understood that Plaintiff is not releasing the claim which Plaintiff has asserted against Jayfro Corporation, except as spelled out herein.

(8) It is expressly agreed that this release is being given pursuant to the terms and definitions set forth in the [Act] (Md. Code (1957, 1979 Repl.Vol.) Art. 50, Sections 16-24).

(9) It is the intention of the Plaintiff to relieve the settling tort-feasors from any liability to make contribution to Jayfro Corporation or its successors or assigns in the event that Jayfro Corporation is held liable to Plaintiff or Plaintiff's successors or assigns.

(10) Plaintiff agrees that her right (individually and as mother and next friend of Gary Lyon) to recover damages from Jayfro Corporation is hereby reduced to the extent of the pro-rata share of the settling defendants of the damages of the Plaintiff recoverable against Jayfro Corporation should any of the settling defendants be found jointly liable to Plaintiff with Jayfro Corporation.

(11) It is further agreed that Plaintiff will hold harmless and indemnify the settling defendants from any further liability or damages or financial responsibility to Jayfro Corporation which arises out of the claim by Jayfro Corporation against the settling defendants in Law No. 8382. [Emphasis added.]

The circuit court's order recited that the "Seventy-Five Thousand ($75,000.00) Dollar settlement is more than the $20,000.00 award which is the jury's assessment of the full value of plaintiffs' claim[.]" We infer that the circuit court applied, either directly or indirectly, § 19 of the Act under which "[a] release by the injured person of one joint tortfeasor ... reduces the claim against the other tort-feasors in the amount of the consideration paid for the release," where that amount exceeds any amount or proportion provided in the release.

Plaintiffs' position is that the Act does not apply to the facts here and that, under the terms of the release, the Plaintiffs have neither waived their rights against Jayfro nor agreed to reduce any judgment if none of the settling defendants is found jointly liable with Jayfro to the Plaintiffs. Jayfro's position is that the release treats it as a joint tortfeasor with the settling defendants so that it gets a reduction of the judgment under, or to the extent provided by, § 19 of the Act. Jayfro says that the principle recognized in Jones v. Hurst, 54 Md.App. 607, 459 A.2d 219 (1983) applies here.

Section 19 provides how a "release by the injured person of one joint tort-feasor ... reduces the claim against the other tort-feasors[.]" For the nonsettling defendant to get the benefit of the reduction solely by operation of statutory law, the settling defendant and the nonsettling defendant must be "persons jointly or severally liable in tort for the same injury to person or property, whether or not judgment has been recovered against all or some of them." Act, § 16(a). See also Brooks v. Daley, 242 Md. 185, 193, 218 A.2d 184, 188-89 (1966); Swigert v. Welk, 213 Md. 613, 619, 133 A.2d 428, 431 (1957); Jones v. Hurst, supra, 54 Md.App. at 608, 459 A.2d at 220. Swigert v. Welk, supra, pointed out that "[t]he [Act] does not specify the test of liability[,]" and observed that "[c]learly, something short of an actual judgment will suffice; we think it equally clear that a denial of liability will not." 213 Md. at 619, 133 A.2d at 431. Over the years the considerable expanse between the two guideposts staked out in Swigert has been an object of attention in the drafting of joint tortfeasors releases.

Jones v. Hurst, supra, recognized that the reduction described in § 19 could be obtained by a release drafted to achieve that effect. There a motor vehicle operated by the plaintiff had been struck in the rear by a vehicle manufactured by General Motors Corporation and operated by the nonsettling defendant. The plaintiff sued the nonsettling defendant who raised sudden brake failure as a defense. Plaintiff then sued General Motors in a separate action which was later dismissed after the plaintiff and General Motors settled pursuant to a joint tortfeasors release. Thereafter the plaintiff obtained a judgment against the nonsettling defendant in the original action in which General Motors was not a party. The nonsettling defendant claimed, and Jones held, that the plaintiff's judgment was to be reduced by a pro rata share based on the provisions of the release to General Motors. Although General Motors expressly denied liability to the plaintiff in that release, the instrument continued:

I [plaintiff] further understand and agree that in any action or suit in which General Motors Corporation may be of [sic ] has been joined as a defendant, any and all judgments recovered [sic ] by me against any person, firm or corporation for any and all claims as aforesaid shall be reduced in the amount of the consideration paid for this release or to the extent of the pro rata share of the said General Motors Corporation if said pro rata share is greater than the consideration paid for this release [recited to be $10]; or in accordance with the Uniform Contribution Among Tort-Feasors Act, Article 50, Sections 16-24 of the Maryland Code. I further agree that for the purpose of determining the amount of any judgments that may be recovered by me against any person, firm or corporation, except General Motors Corporation in the aforesaid action ... that the said General Motors Corporation shall be considered as joint tortfeasors [sic] to the same extent and effect as if judgments had been rendered against them [sic] as joint tort-feasors [emphasis supplied]. [54 Md.App. at 609-10, 459 A.2d at 221 (emphasis in original).]

Jones reached the correct result as a matter of contract law. The release in Jones contained an unconditional promise by the releasor to determine the amount of any judgment recovered by the releasor against any one other than General Motors by considering General Motors to be a joint tortfeasor to the same extent as if judgment had been rendered against it as a joint tortfeasor. The nonsettling defendant was a third-party beneficiary of that unconditional promise. We need not express any opinion whether a release in the form utilized in...