Clayton v. Volkswagenwerk, A. G.

• Decision Date: 14 August 1980
• Docket Number: No. 17532,17532
• Citation: 606 S.W.2d 15
• Parties: Mary Lou CLAYTON, Appellant, v. VOLKSWAGENWERK, A. G., aka Volkswagenwerk Aktiengesellschaft, et al.,Appellees. (1st Dist.)
• Court: Texas Court of Appeals

Page 15

606 S.W.2d 15

Mary Lou CLAYTON, Appellant, v. VOLKSWAGENWERK, A. G., aka Volkswagenwerk Aktiengesellschaft, et al.,Appellees.

No. 17532.

Court of Civil Appeals of Texas, Houston (1st Dist.).

Aug. 14, 1980.

Rehearing Denied Oct. 2, 1980.

Kronzer, Abraham & Watkins, W. James Kronzer, Houston, for appellant.

Bean & Manning, Frank M. Bean, Houston, for appellees.

Before PEDEN, EVANS and WARREN, JJ.

PEDEN, Justice.

Mrs. Mary Lou Clayton appeals from a take nothing judgment in a personal injury suit premised on manufacturer's strict liability. She alleges that the trial court erred in: 1) refusing to strike or sever a cross-action, filed by Volkswagen against Lee's Exxon for indemnity or contribution, 2) permitting counsel for Volkswagen to tell the jury that the appellant and Lee's Exxon had settled their differences, 3) admitting into evidence a settlement agreement executed by Mrs. Clayton and Lee's Exxon, the cross-defendant, 4) refusing to admit into evidence certain portions of the deposition of Joe Harris, an expert witness who had died some three months before trial, 5) refusing to instruct the jury to disregard an objection made by counsel for Volkswagen, and 6) and 7) refusing to include in the charge two instructions she had offered.

We sustain the third point and we reverse and remand.

On June 2, 1973, Mrs. Clayton was driving her 1967 Volkswagen convertible north on Interstate Highway 45 at 60 to 65 miles per hour when it suddenly veered left onto the shoulder of the esplanade. She tried to regain control and get back onto the roadway, but before she was able to do so the car cut sharply to the right, skidding and spinning across the northbound section of the highway and onto a grassy embankment, where it rolled completely over and came to rest on its side. She suffered severe injuries in the accident, and we have just learned that while this case was on appeal, she died.

Mrs. Clayton filed suit against Jackson Lee, individually and doing business as Lee's Exxon, and against Volkswagenwerk Atkiengesellschaft and Volkswagen of America. She alleged that the Volkswagen automobile she was driving was so defectively designed and manufactured as to render it unreasonably dangerous, complaining specifically of the car's high (and to the rear) center of gravity, steering, and suspension system, and asserting that Volkswagen had failed to warn her of the car's dangerous propensities. She also alleged that Jackson Lee or his employees had negligently mounted the two rear tires which she had purchased at Lee's Exxon some three months before the accident and that the sudden deflation of the left rear tire which resulted from the improper mounting was a producing cause of the accident.

The case was reached for trial on February 5, 1979. During the preceding week, Mrs. Clayton and Lee concluded settlement negotiations and informed counsel for Volkswagen that Lee would be non-suited. Volkswagen on February 2 filed a cross-action against Lee for contribution or indemnity. Lee was non-suited by Mrs. Clayton on February 5, and the settlement agreement was executed on February 13.

The case was tried before a jury, which failed or refused to find from a preponderance of the evidence that the car was defectively designed, that Volkswagen failed to warn Mrs. Clayton of the risks involved in its operation, or that Lee negligently mounted the left rear tire. The trial court entered judgment on the verdict exonerating the appellees and Lee.

The appellant's first point of error is:

The trial court erred in failing to strike or sever Appellees' "Cross- Action" over and against Lee's Exxon filed on the eve of the trial, which was filed for the obvious purpose of demonstrating to the jury that Appellant had settled her differences with Lee's Exxon and that the latter party had an economic interest in the outcome of Mrs. Clayton's case against Appellees.

In deciding whether the trial court erred in failing to strike or sever the cross-action, we note that the question was called to the court's attention in a motion in limine. In it Mrs. Clayton asked the trial judge to instruct counsel for Volkswagen to obtain the court's permission, outside of the presence of the jury, before trying to develop or state, among other things: "V. That the Plaintiff and the Lee Defendants have settled their differences." Under this item she asserted that she had dismissed her claims against the Lee group and that Volkswagen's belated attempts to implead the Lee group for contribution and indemnity, "which should be stricken under normal and ordinary circumstances because of late filing," were without force as an effective pleading because of said dismissal. She argued that it was improper for Volkswagen to implead at this late hour for the sole reason of injecting the settlement before the jury.

This fifth item in the motion in limine was developed fully by oral argument, and a bill of exception was made when the trial judge denied it. The plaintiff did not present what amounted to a motion to strike the cross-action or a motion to sever it.

We overrule this point. The cross-action was filed while Lee and his company were still parties defendant. The trial judge was advised that Lee had agreed to answer the cross-action, and Lee did not claim surprise under Rule 63, Tex.R.Civ.Proc. As to severances, Rule 41 gives the trial judge broad discretion. McGuire v. Commercial Union Insurance Co. of N.Y., 431 S.W.2d 347 (Tex.1968). Under the facts called to the attention of the trial judge in our case, we think he might well have severed the cross-action on his own motion, but we cannot say he erred in not severing it. Lee's attorney told the trial judge that he was ready and willing to forego participation in the Clayton-Volkswagen trial if permitted to do so. Had this been accomplished, by severance of the cross-action, the admissibility question would not have arisen.

The appellant's second point of error is:

The court erred in permitting counsel for Appellees to state to the jury panel and to the jury selected in the case that Appellant and Lee's Exxon had settled and compromised their differences.

The traditional rule in Texas is that settlement agreements between the plaintiff and a co-defendant should be excluded from the jury. McGuire v. Commercial Union Insurance Co. of N.Y., supra; 1A Ray, Texas Law of Evidence § 1142 (3rd Ed. 1980). A recognized exception to this rule exists when a "Mary Carter" agreement has been reached, whereby the plaintiff typically releases his cause of action against one joint tortfeasor and promises to pay (or credit) the settling tortfeasor (who remains a party at the trial) a portion of the recovery obtained against the nonsettling defendant. Our Supreme Court held in General Motors Corporation v. Simmons, 558 S.W.2d 855 (1977) that such agreements are admissible in evidence to impeach the testimony of the nonsettling defendant by showing his financial interest in the outcome of the suit. See also City of Houston v. Sam P. Wallace and Co., 585 S.W.2d 669 (Tex.1979); Bristol-Myers Company v. Gonzales, 561 S.W.2d 801 (Tex.1978).

We agree with the...