Lowe v. Norfolk and Western Ry. Co.
| Decision Date | 17 May 1988 |
| Docket Number | No. 69761,69761 |
| Citation | 753 S.W.2d 891 |
| Parties | Richard G. LOWE, et al., Plaintiffs, v. NORFOLK AND WESTERN RAILWAY COMPANY, Defendant and Third-Party Plaintiff-Appellant, v. GATX CORPORATION, Dresser Industries, Inc., and Monsanto Company, Third-Party Defendants-Respondents. |
| Court | Missouri Supreme Court |
Stephen Schoenbeck, St. Louis, for appellant.
Kenneth R. Heineman, Bruce D. Ryder, Timothy Noelker, Ted L. Perryman, W. Munro Roberts, Jr., Laura B. Allen, William W. Evans, St. Louis, for respondents.
We now answer a previously unanswered question precipitated by this Court's epochal decision in Missouri Pacific Railway Co. v. Whitehead & Kales, 566 S.W.2d 466 (Mo. banc 1978), in which we abolished the long-established rule that a joint tort-feasor had no right to contribution from another joint tort-feasor, except when a joint judgment has been rendered. Prior to that decision a plaintiff had the unqualified right to sue one, some, or all persons who may have contributed to an injury. Those who were sued had no basis for complaint that others equally or more at fault were not sued. The case held that a defendant could institute third-party proceedings against possible joint tort-feasors whom the plaintiff had not chosen to sue. Later, in Safeway Stores, Inc. v. City of Raytown, 633 S.W.2d 727 (Mo. banc 1982), we held that the action for contribution or indemnity could be prosecuted as a separate action and did not have to be brought by way of third-party proceedings in the initial action.
Left unanswered was the question whether a remaining defendant could proceed against a defendant or potential defendant who had settled with the plaintiff. The question was laid to rest for the future by amendment to Section 537.060, RSMo 1986, effective September 28, 1983, which permits alleged tort-feasors to buy their peace by good faith settlement with the claimant. 1 The railroad argues that its right to contribution or indemnity accrued when the other parties settled in March of 1982 and that the amended statute cannot properly be given retroactive application so as to cut off this right. The settling defendants contend that the railroad's right to indemnification accrued, if at all, only after it settled with the plaintiffs, citing State ex rel. General Electric v. Gaertner, 666 S.W.2d 764 (Mo. banc 1984), and Rowland v. Skaggs Drug Co., 666 S.W.2d 770 (Mo. banc 1984), which hold that the statute of limitations does not run against a party seeking indemnification until that party pays or becomes obligated to pay the claimant. It follows, they say, that the amended statute was in place at the time the railroad's asserted rights accrued, and that there is no attempt to apply it retroactively to bar previously vested rights. They also cite Aherron v. St. John's Mercy Medical Center, 713 S.W.2d 498 (Mo. banc 1986), holding that the amendment applies to a release executed after the effective date even though the injury occurred before that date. We do not need to resolve this dispute, because we conclude that the same result would obtain whether or not the amendment is applied.
This claim arose because of the derailment of and spillage from a single tank car in Sturgeon, Missouri, on January 10, 1979. The car was manufactured by third-party defendant GATX Corporation. It was brand new and on its initial run. The derailment was caused by the failure of a coupler yoke supplied by third-party defendant Dresser Industries, Inc. The car carried chemicals produced by third-party defendant Monsanto Company, allegedly containing a small quantity of an extremely dangerous substance commonly known as dioxin. The appellant Norfolk and Western Railway Company, the operator of the train, directed a group of its employees to assist an independent contractor in cleaning up the spill. These employees claimed damages caused by contact with the dangerous substances during the cleanup.
Suit was brought by 47 plaintiffs against Norfolk and Western, GATX, Dresser, and Monsanto in the Circuit Court of Madison County, Illinois, under the Federal Employers Liability Act, 45 U.S.C. 51 et seq. The plaintiffs charged that the railroad failed to warn plaintiffs of the danger, failed to provide them with a safe place to work and the necessary protective clothing, and failed to provide decontamination facilities. All defendants except the railroad settled the case on the courthouse steps on March 15, 1982, Monsanto for $3,500,000, Dresser for $2,175,000, and GATX for $1,325,000. The trial proceeded against the railroad with the jury returning verdicts in favor of the plaintiffs totalling $57,965,000. The railroad appealed the verdicts, and also appealed the trial court's order dismissing its cross-claims for contribution or indemnity from the other defendants.
The Appellate Court of Illinois, Fifth District, to the surprise of many and the consternation of some, reversed the judgments in favor of the plaintiffs, finding that Madison County, Illinois, was an inconvenient forum for the maintenance of these claims. It specifically held that the settlements had been reached in good faith and that they barred claims for contribution, but not for products liability, under applicable Illinois statutes. The opinion was handed down on April 19, 1984, and is reported as Lowe v. Norfolk and Western Railway Company, 124 Ill.App.3d 80, 79 Ill.Dec. 238, 463 N.E.2d 792 (1984).
The plaintiffs then filed suit in the Circuit Court of the City of St. Louis against the defendant railroad, which filed third-party claims against the three settling defendants. The trial court dismissed the third-party claims after a hearing, concluding that the plaintiffs had entered into good faith settlements with the third-party defendants and that the settlements were effective to discharge these defendants from all liability. The railroad then reached a settlement with the plaintiffs for a total of $15,700,000, expressly reserving its rights against the settling defendants. It now appeals the dismissal of the third-party claims. The court of appeals affirmed the dismissal but transferred the case to us because it perceived special importance. We likewise affirm.
The third-party claims are set out in eight counts, as follows:
COUNT NO. AGAINST BASIS
I GATX Strict products liability
II GATX Negligence
III Dresser Strict products liability
IV Dresser Negligence
V Monsanto Negligence
VI Monsanto Strict products liability
VII Monsanto Strict liability for ultra-hazardous activity
VIII Monsanto Contractual indemnity based on bill of lading
The railroad argues that the trial court was in error in concluding that the settlements had been reached in good faith. The Illinois appellate court expressly rejected this contention. It could not be predicted, at the time the settlements were entered into, that the courts of the forum state would ultimately conclude that the case should have been brought someplace else. The settling defendants were confronted with a very substantial trial, and each of them paid a seven figure amount to dispose of the claim against it. The policy underlying the doctrine of collateral estoppel calls for its application here, as to an issue expressly presented to and decided by the Illinois courts.
But we do not have to rest our conclusion on collateral estoppel. The court below held a hearing at which the parties had the opportunity to present evidence, and concluded that the third-party defendants had settled in good faith. The railroad argued bad faith (1) because counsel for all defendants had previously agreed that there would be no settlement, (2) because pretrial discovery had focused on Monsanto, against whom there was a claim for punitive damages, and (3) because the settlement figures were small in proportion to the size of the Illinois verdict. Judge Gallagher rejected these assertions. Nothing in the record supports a contention that the plaintiffs or the settling defendants had any consideration other than their own economic interests in agreeing to settle. No similar case had been tried. The seven-digit settlement figures hardly bespeak collusion. The railroad concedes that it made no attempt to settle before the Illinois trial. The finding of good faith is adequately supported by the evidence.
The railroad cites cases from California indicating that a settlement may not be in good faith if the settling defendants do not contribute a substantial portion of the damages claimed, or ultimately awarded. 2 We are not persuaded by these cases, which seem to espouse a view contrary to ours about the nature and purpose of settlement, which is to substitute present assurance for future uncertainty.
We conclude that the Whitehead and Kales decision did not change the prior law allowing a defendant to buy peace by a good faith settlement with the plaintiff. Such a settlement protects the settling defendant against claims of the other defendants as well as those of the plaintiff. This is consistent with State ex rel. Maryland Heights Concrete Contractors, Inc. v. Ferriss, 588 S.W.2d 489 (Mo. banc 1979), in which we held that a defendant against whom a verdict had been rendered had no right to a reduction of the award, or to contribution, because a person insulated from liability by the workers compensation statutes might be guilty of negligence which contributed to the accident. Also in line is Kendall v. Sears, Roebuck and Co., 634 S.W.2d 176 (Mo. banc 1982), holding that a defendant sued by an unemancipated minor had no right to contribution from the plaintiff's father, who was immune to suit by his son, or to mitigation of the judgment against him. By the same token a settling defendant is no longer liable to the plaintiff, and therefore not subject to a claim for...
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