Gerling Konzern Allgemeine Versicherungs AG v. Lawson

• Decision Date: 08 March 2005
• Docket Number: Docket No. 122938. COA No. 1.
• Citation: Gerling Konzern Allgemeine Versicherungs AG v. Lawson, 472 Mich. 44, 693 N.W.2d 149 (Mich. 2005)
• Parties: GERLING KONZERN ALLGEMEINE VERSICHERUNGS AG, subrogee of Regents of the University of Michigan, Plaintiff-Appellant, v. Cecil R. LAWSON and American Beauty Turf Nurseries, Inc., jointly and severally, Defendants-Appellees.
• Court: Michigan Supreme Court

693 N.W.2d 149

472 Mich. 44

GERLING KONZERN ALLGEMEINE VERSICHERUNGS AG, subrogee of Regents of the University of Michigan, Plaintiff-Appellant, v.Cecil R. LAWSON and American Beauty Turf Nurseries, Inc., jointly and severally, Defendants-Appellees.

Docket No. 122938. COA No. 1.

Supreme Court of Michigan.

Argued October 5, 2004.

Decided March 8, 2005.

Lacey & Jones(by Michael T. Reinholm), [Birmingham,] for the plaintiff.

G.W. Caravas & Associates, P.C.(by Gary W. Caravas)[Clinton Twp.,], and Kopla, Landau & Pinkus(by Mark L. Dolin)[Farmington Hills,] for the defendants.

John P. Jacobs, P.C.(by John P. Jacobs), [Detroit,] for amicus curiae the Detroit Edison Company.

MARKMAN, J.

This case requires that we consider whether a plaintiff, who has settled an underlying tort claim with an injured party, may subsequently proceed on a contribution action against a defendant whom the plaintiff alleges was a joint tortfeasor whose negligence constituted a proximate cause of the underlying plaintiff's injuries.Defendants argue that tort reform legislation in 1995, specifically MCL 600.2956,MCL 600.2957, andMCL 600.6304, has abrogated plaintiff's contribution action because, had the underlying tort action proceeded to trial, the jury or judge would have been required to allocate fault among all tortfeasors and each tortfeasor, including plaintiff, would have been required to pay only for its percentage of fault.Further, defendants maintain that, if plaintiff paid more in the settlement than was warranted by its percentage of fault, it did so as a volunteer and therefore cannot seek contribution from joint tortfeasors.

These arguments are unavailing for the simple reason that the 1995 tort reform legislation preserved the right of a severally liable tortfeasor such as plaintiff to bring an action for contribution.Therefore, we reverse the judgment of the Court of Appeals and remand this case to the trial court for further proceedings consistent with this opinion.

I.FACTS AND PROCEDURAL HISTORY

This case arose from a three-vehicle accident that occurred in 1997.In one vehicle were Ricki Ash and James Nicastri, the injured parties in the underlying claim; in the second vehicle, owned by the Regents of the University of Michigan (Regents), was employee Barry Maus; and in the third vehicle, owned by American Beauty Turf Nurseries, Inc.(American Beauty), was employee Cecil Lawson.Ash and Nicastri filed suit in the Court of Claims against Maus and the Regents.Gerling Konzern Allgemeine Versicherungs AG(Gerling Konzern), the insurer and subrogee of the Regents, settled with Ash and Nicastri on behalf of Maus and the Regents, and the underlying tort action was accordingly dismissed with prejudice.

In November 1999, plaintiff in this action, Gerling Konzern, filed a contribution action against defendants Lawson and American Beauty pursuant to MCL 600.2925a-600.2925d. Defendants moved for summary disposition pursuant to MCR 2.116(C)(8), arguing that the tort reform acts of 1995, 1995 PA 161and1995 PA 249, by eliminating joint and several liability in certain tort actions, including the underlying action in this case, abrogated plaintiff's contribution cause of action.The trial court denied defendants' motion for summary disposition.On appeal, the Court of Appeals reversed the order of the trial court and remanded for entry of judgment in favor of defendants, holding that plaintiff's contribution action was barred as a result of the elimination of joint and several liability and the rule that, in tort actions in which liability is several only, each tortfeasor is required to pay only for his percentage of fault.254 Mich.App. 241, 657 N.W.2d 143(2002).We granted plaintiff's application for leave to appeal, 469 Mich. 954, 671 N.W.2d 54(2003), and subsequently ordered that the case be reargued and resubmitted.471 Mich. 855, 684 N.W.2d 358(2004).

II.STANDARD OF REVIEW

We review de novo the trial court's decision to grant or deny summary disposition under MCR 2.116(C)(8).Maiden v. Rozwood,461 Mich. 109, 118, 597 N.W.2d 817(1999).A motion under MCR 2.116(C)(8) tests the legal sufficiency of the complaint, and may be granted only where the claims alleged are "`so clearly unenforceable as a matter of law that no factual development could possibly justify recovery.'"Maiden, supra at 119, 597 N.W.2d 817(citation omitted).We also review questions of statutory interpretation de novo.Oade v. Jackson Nat'l Life Ins. Co.,465 Mich. 244, 250, 632 N.W.2d 126(2001).

III.ANALYSIS

Until the enactment of tort reform legislation in 1995, concurrent tortfeasors in Michigan were "jointly and severally" liable.This meant that where multiple tortfeasors caused a single or indivisible injury, the injured party could either sue all tortfeasors jointly or he could sue any individual tortfeasor severally, and each individual tortfeasor was liable for the entire judgment, although the injured party was entitled to full compensation only once.SeeMarkley v. Oak Health Care Investors of Coldwater, Inc.,255 Mich.App. 245, 251, 660 N.W.2d 344(2003);Maddux v. Donaldson,362 Mich. 425, 433, 108 N.W.2d 33(1961)."At common law, contribution was not, as a general rule, recoverable among or between joint wrongdoers or tortfeasors."O'Dowd v. Gen. Motors Corp.,419 Mich. 597, 603, 358 N.W.2d 553(1984).The right of contribution, although now codified in a majority of states, evolved in equity.See4 Restatement Torts, 2d, § 886A, comment c.¹ Thus, even though, at law, a "joint and several" tortfeasor was liable for an entire judgment, equity came to allow that tortfeasor to seek contribution from other tortfeasors.A primary purpose underlying "contribution" was to mitigate the unfairness resulting to a jointly and severally liable tortfeasor who had been required to pay an entire judgment in cases in which other tortfeasors also contributed to an injury.

However, as part of the 1995 tort reform legislation, the Legislature enacted MCL 600.2956, which provides in part, "Except as provided in section 6304, in an action based on tort or another legal theory seeking damages for personal injury, property damage, or wrongful death, the liability of each defendant for damages is several only and is not joint."MCL 600.2957(1) further provides, "In an action based on tort or another legal theory seeking damages for personal injury, property damage, or wrongful death, the liability of each person shall be allocated under this section by the trier of fact and, subject to section 6304, in direct proportion to the person's percentage of fault."Finally, MCL 600.6304 provides:

(1) In an action based on tort ... seeking damages for personal injury, property damage, or wrongful death involving fault of more than 1 person, including third-party defendants and nonparties, the court ... shall instruct the jury to answer special interrogatories or, if there is no jury, shall make findings indicating both of the following:

* * *

(b) The percentage of the total fault of all persons that contributed to the death or injury....

* * *

(4) Liability in an action to which this section applies is several only and not joint.Except as otherwise provided in subsection (6), a person shall not be required to pay damages in an amount greater than his or her percentage of fault as found under subsection (1).

Thus, the 1995legislation eliminated joint and several liability in certain tort actions, requires that the fact-finder in such actions allocate fault among all responsible tortfeasors, and provides that each tortfeasor need not pay damages in an amount greater than his allocated percentage of fault.As such, in an action in which an injured party has sued only one of multiple tortfeasors and in which §§ 2956,2957, and6304 apply, the tortfeasor would have no need to seek contribution from other tortfeasors, either in that same action (by bringing in third-party defendants) or in a separate action, because no "person shall ... be required to pay damages in an amount greater than his or her percentage of [allocated] fault...."Section 6304(4).Thus, the dissent is correct in observing that the "1995 tort reform legislation has ... rendered unnecessary most claims for contribution in personal injury accidents."Post at 162.

Yet, although the 1995 tort reform legislation may have "rendered unnecessary" most contribution claims, this does not mean that it precludes every type of contribution claim, in particular that at issue in the instant case.Even before the 1995legislation, a tortfeasor had a statutory right to seek contribution in the event that he settled a claim, seeMCL 600.2925a(3), and this is the type of contribution at issue here.Contribution actions have not always solely been directed toward recovering monies that a "jointly and severally" liable tortfeasor was required to pay as the result of a verdict for which the tortfeasor was fully, although not solely, responsible.Rather, such actions have also been directed toward obtaining contribution from other responsible tortfeasors following a settlement.We find no basis in §§ 2956,2957, or 6304 to conclude that a right to seek contribution in these circumstances has been precluded in cases in which liability among multiple tortfeasors is now "several" only rather than "joint and several."

MCL 600.2925a provides, in part:

(1) Except as otherwise provided in this act, when 2 or more persons become jointly or severally liable in tort for the same injury to a person or property or for the same wrongful death, there is a right of contribution among them even though judgment has not been recovered against all or any of them.

(2) The right of contribution exists only in favor of a tort-feasor who has paid more than his pro rata share of the common liability and his total recovery is limited to the amount paid by him in excess of his pro rata share.A tort-feasor against

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