Dunn v. Kanawha County Bd. of Educ.

• Decision Date: 19 May 1995
• Docket Number: No. 22550,22550
• Citation: 459 S.E.2d 151,194 W.Va. 40
• Parties: , 101 Ed. Law Rep. 1207 Jessica DUNN and Jason Dunn, et al., Plaintiffs, v. KANAWHA COUNTY BOARD OF EDUCATION, et al., Defendants.
• Court: West Virginia Supreme Court

Page 151

459 S.E.2d 151

194 W.Va. 40, 101 Ed. Law Rep. 1207

Jessica DUNN and Jason Dunn, et al., Plaintiffs, v. KANAWHA COUNTY BOARD OF EDUCATION, et al., Defendants.

No. 22550.

Supreme Court of Appeals of West Virginia.

Submitted Feb. 28, 1995.

Decided May 19, 1995.

Syllabus by the Court

1. " 'The general principal of implied indemnity arises from equitable considerations. At the heart of the doctrine is the premise that the person seeking to assert implied indemnity--the indemnitee--has been required to pay damages caused by a third party--the indemnitor. In the typical case, the indemnitee is made liable to the injured party because of some positive duty created by statute or the common law, but the actual cause of the injury was the act of the indemnitor.' Syllabus Point 2, Hill v. Joseph T. Ryerson & Son, Inc., 165 W.Va. 22, 268 S.E.2d 296 (1980)." Syllabus point 1, Sydenstricker v. Unipunch Products, Inc., 169 W.Va. 440, 288 S.E.2d 511 (1982).

2. "The doctrine of contribution has its roots in equitable principles. The right to contribution arises when persons having a common obligation, either in contract or tort, are sued on that obligation and one party is forced to pay more than his pro tanto share of the obligation. One of the essential differences between indemnity and contribution is that contribution does not permit a full recovery of all damages paid by the party seeking contribution. Recovery can only be obtained for the excess that such party has paid over his own share." Syllabus point 4, Sydenstricker v. Unipunch Products, Inc., 169 W.Va. 440, 288 S.E.2d 511 (1982).

3. "A defendant in a civil action has a right in advance of judgment to join a joint tortfeasor based on a cause of action for contribution. This is termed an 'inchoate right to contribution' in order to distinguish it from the statutory right of contribution after a joint judgment conferred by W.Va.Code, 55-7-13 (1923)." Syllabus point 2, Board of Education of McDowell County v. Zando, Martin & Milstead, Inc., 182 W.Va. 597, 390 S.E.2d 796 (1990).

4. "A party in a civil action who has made a good faith settlement with the plaintiff prior to a judicial determination of liability is relieved from any liability for contribution." Syllabus point 6, Board of Education of McDowell County v. Zando, Martin & Milstead, Inc., 182 W.Va. 597, 390 S.E.2d 796 (1990).

5. "A seller who does not contribute to the defect in a product may have an implied indemnity remedy against the manufacturer of the product, when the seller is sued by the user." Syllabus point 1, Hill v. Joseph T. Ryerson & Son, Inc., 165 W.Va. 22, 268 S.E.2d 296 (1980).

6. In a multiparty product liability lawsuit, a good faith settlement between the plaintiff(s) and the manufacturing defendant who is responsible for the defective product will not extinguish the right of a non-settling defendant to seek implied indemnification when the liability of the non-settling defendant is predicated not on its own independent fault or negligence, but on a theory of strict liability.

Guy R. Bucci, Robert C. Chambers, Bucci, Chambers & Willis, L.C., Charleston, and James T. Cooper, Henry R. Glass, III, Lovett, Cooper & Glass, Charleston, and Carl S. Kravitz, David N. Webster, Caplin & Drysdale, Washington, DC, for plaintiffs.

David L. Shuman, Shuman, Annand & Poe, Charleston, and Avrum Levicoff, Brown, Levicoff & McDyer, Beckley, and Michael Fisher, Offutt, Eifert, Fisher, Duffield & Nord, Huntington, and William J. Cooper, Jacobson, Maynard, Tuschman & Kalur, Charleston, for amicus, WV General & Plastic Surgeons.

Arden J. Curry, II, Pauley, Curry, Sturgeon & Vanderford, Charleston, for amicus, The Builders Supply Ass'n of WV.

Jeffrey M. Wakefield, William L. Ballard, Christine Fox, Richard D. Jones, Tracy L. Webb, Flaherty, Sensabaugh & Bonasso, Charleston, for defendant, Kanawha County Bd. of Educ.

Paul M. Friedberg, David Johnson, Lewis, Friedberg, Glasser, Casey & Rollins, Charleston, and Donald W. Fowler, Joe G. Hollingsworth, Katharine R. Latimer, Bruce J. Berger, Spriggs & Hollingsworth, Washington, DC, for defendant, Velsicol.

Charles R. McElwee, Robinson & McElwee, Charleston, for amicus, The WV Hosp. Ass'n.

Anita R. Casey, Renatha S. Garner, Meyer, Darragh, Buckler, Bebenek & Eck, Charleston, for amicus, CSM Systems, Inc.

A.L. Emch, Anthony Majestro, William D. Esbenshade, Jackson & Kelly, Charleston, for amicus, WV Retailers Ass'n.

Cheryl A. Eifert, Blake Benton, Offutt, Eifert, Fisher, Duffield & Nord, Huntington for amicus, American Medical Ass'n and West Virginia State Medical Ass'n.

FOX, Judge: ¹

We accepted this certified question from the Circuit Court of Kanawha County, West Virginia, to consider whether a good faith settlement between a plaintiff and a defendant in a multiparty lawsuit extinguishes the rights of non-settling defendants to seek indemnification from the settling defendant.

The sixty-seven plaintiffs from three consolidated lawsuits are students, parents, teachers, and others who allege injuries resulting from exposure to toxic substances at Andrew Jackson Junior High School, in Cross Lanes, West Virginia. One of the toxic substances was a termiticide known as chlordane.

The plaintiffs initially asserted numerous theories of liability against various defendants, including negligence, willful, wanton, and reckless misconduct, breach of warranty, strict product liability, and deliberate intent to injure an employee. However, the focus of this certified question is the plaintiffs' product liability claim against Velsicol Chemical Corporation. Velsicol is the only United States manufacturer of technical chlordane, which is chlordane in its purest form and is used to make other chlordane-containing compounds. ² In addition to suing Velsicol, the plaintiffs are pursuing product liability claims against others in the chain of distribution, including distributors and applicators of chlordane. Defendants Kanawha County Board of Education and Robert Klatzkin, a former principal at Andrew Jackson Junior High School (hereinafter referred to collectively as the BOE), contend the defendant manufacturer Velsicol is ultimately responsible for damages caused by its defective product.

On 1 April 1994, the plaintiffs agreed to dismiss all claims against Velsicol in exchange for a substantial monetary settlement. Pursuant to court order, the amount of the settlement remained confidential, but non-settling defendants were informed and given the opportunity to challenge its reasonableness. Velsicol intends for this settlement, reached prior to a judicial determination of liability, to extinguish all potential claims arising from this lawsuit, including claims for implied indemnity. However, because Velsicol's settlement agreement did not include therein a release from liability, the non-settling defendants in the chain of distribution want to be able to seek indemnification from Velsicol if they are subsequently made to pay damages to the plaintiffs for injuries they contend Velsicol was solely responsible for as the manufacturer of the defective product.

On 22 April 1994, the plaintiffs and Velsicol jointly requested that the circuit court find their settlement was in good faith in order to extinguish any potential claims against Velsicol for both contribution and indemnification. The non-settling defendants potentially affected by this settlement objected on the grounds that (1) a factual determination of good faith was premature, and (2) a finding of a good faith settlement does not extinguish claims for implied indemnity. ³ Following a hearing, the circuit court tentatively found the settlement was in good faith but deferred its ruling on the settlement's effect on any cross-claims against Velsicol.

After a second hearing on 6 May 1994, the circuit court concluded the settlement was negotiated in good faith and it barred claims for contribution against Velsicol. However, the circuit court ruled that claims for implied indemnity would not be extinguished by the good faith settlement.

On 24 May 1994, the plaintiffs and Velsicol moved for reconsideration of the 6 May 1994 ruling on the implied indemnification issue. The circuit court denied the motion for reconsideration on 31 May 1994, and an order certifying the indemnification issue to this Court was entered on 8 July 1994.

On 12 October 1994, this Court granted the joint petition for review of the following certified question:

Whether a good faith settlement by a defendant extinguishes rights of non-settling defendants and others for implied indemnity against the settling defendant under West Virginia law?

The Circuit Court of Kanawha County, West Virginia, the Honorable Paul Zakaib, Jr., presiding, answered the question in the negative, finding there is a legal and factual distinction between claims of implied indemnification and claims for contribution.

Relying primarily on language found in Smith v. Monongahela Power Co., 189 W.Va. 237, 429 S.E.2d 643 (1993), the plaintiffs and Velsicol now contend the 6 May 1994 circuit court ruling was erroneous, and argue this Court's prior decisions establish that their good faith settlement extinguishes all contribution and indemnification claims the non-settling defendants might wish to assert against Velsicol.

However, the BOE argues the plaintiffs and Velsicol have confused the issues by treating contribution and indemnification as identical legal concepts, when, in fact, "the concept of indemnification plays a unique role and is clearly distinct from contribution in product liability cases." We agree.

Indemnification and contribution are separate and distinct legal concepts. "The idea of indemnity implies a primary or basic liability in one person, though a second person is also for some reason liable with the first, or even without the first, to a third person. Discharge of the obligation by the second person leaves him with a right...