Ryals v. Hall-Lane Moving and Storage Co., Inc.

• Decision Date: 02 April 1996
• Docket Number: HALL-LANE,No. COA94-748,COA94-748
• Court: North Carolina Court of Appeals
• Parties: Mary Lois Tart RYALS, Plaintiff, v.MOVING AND STORAGE COMPANY, INC., Raymond Jensen, Holly Lee Williams and Frank Mahoney, Defendants.

Page 69

468 S.E.2d 69

122 N.C.App. 134

Mary Lois Tart RYALS, Plaintiff, v. HALL-LANE MOVING AND STORAGE COMPANY, INC., Raymond Jensen, Holly Lee Williams and Frank Mahoney, Defendants.

No. COA94-748.

Court of Appeals of North Carolina.

April 2, 1996.

E. Gregory Stott, Raleigh, for plaintiff-appellant.

Smith & Holmes, P.C. by Robert P. Holmes, Raleigh, for defendant-appellants Holly Lee Williams and Frank Mahoney.

JOHN, Judge.

Plaintiff filed suit against defendants Raymond Jensen (Jensen), Hall-Lane Moving and Storage Company, Inc. (Hall-Lane), Holly Lee Williams (Williams) and Frank Mahoney (Mahoney) for personal injuries sustained when an automobile owned by Mahoney and operated by Williams collided with a vehicle in which plaintiff was a passenger. Williams and Mahoney appeal the judgment entered upon a jury verdict finding them liable for plaintiff's injuries. Williams and Mahoney assign error to the trial court's refusal to admit evidence of a pre-trial settlement agreement between plaintiff and defendants Jensen and Hall-Lane. Plaintiff also appeals, citing as error the trial court's reduction of her damages award by the amount she received in settlement from Jensen and Hall-Lane. We find no error by the trial court.

Facts pertinent to this appeal are as follows: On 20 April 1991, plaintiff was injured in a collision on Interstate 40 while a passenger in her daughter's Dodge which was struck by a Toyota driven by Williams. Plaintiff filed suit in December 1991 against Jensen, a truck driver who was operating his vehicle on the highway near Williams' Toyota at the time of the accident, and Hall-Lane, which owned the truck being driven by Jensen. Plaintiff alleged in her complaint that Jensen struck Williams' automobile as he attempted to change lanes, thereby causing Williams to careen across the highway and collide with the oncoming Dodge. Jensen and Hall-Lane filed answer denying the essential allegations of plaintiff's complaint.

Plaintiff filed an amended complaint in June 1992, adding Williams and Mahoney as defendants. In addition to her original allegations against Jensen, plaintiff set forth as an alternative theory that Williams lost control of her automobile and collided with the Dodge due to Williams' own negligence as she attempted to overtake a vehicle ahead of her at too great a speed.

Hall-Lane and Jensen thereafter filed cross-claims against Williams and Mahoney for indemnity and contribution in the event the former were held liable. Williams and Mahoney followed with similar cross-claims against Jensen and Hall-Lane for contribution and indemnity as well as claims for personal and property damage incurred when Jensen's truck allegedly hit the vehicle occupied by Williams and Mahoney.

Trial began 18 January 1994. At the close of plaintiff's evidence, Jensen and Hall-Lane moved for directed verdict on grounds that plaintiff had presented no evidence that Jensen had caused the collision. After allowing plaintiff the chance to re-open her case, which opportunity plaintiff declined, the trial court granted the motion.

At that point, Williams and Mahoney became aware that plaintiff had settled with Jensen and Hall-Lane in the amount of $10,000 prior to trial based upon the contingency that Jensen and Hall-Lane continue as defendants at trial. Williams and Mahoney then dismissed without prejudice their claims against Jensen and Hall-Lane. The jury subsequently rendered a verdict finding Williams and Mahoney liable for plaintiff's injuries in the amount of $25,000. In a judgment filed 28 January 1994 and "pursuant to N.C.G.S. Chapter 1B," the trial court reduced the award to plaintiff by the $10,000 she had received in settlement with Jensen and Hall-Lane. The parties to this appeal filed timely notice thereof 21 February 1994.

Williams and Mahoney argue that

the trial court committed reversible error by refusing to allow evidence of the pretrial settlement between plaintiff and defendants Jensen and Hall-Lane where the pretrial settlement was kept secret from the trial court and from the other defendants until after the plaintiff rested her case-in-chief.

We disagree.

Williams and Mahoney contend the settlement between plaintiff and Jensen and Hall-Lane constituted a "Mary Carter" agreement. This is a type of settlement which derives its designation from a Florida case, Booth v. Mary Carter Paint Company, 202 So.2d 8 (Fla.Dist.Ct.App.1967), overruled by Ward v. Ochoa, 284 So.2d 385 (Fla.1973), in which the plaintiff made a secret settlement arrangement with one defendant who then continued as a party at trial. This Court has defined a "Mary Carter" agreement as "one in which a co-defendant secretly settles a case and continues as an ostensible co-defendant." Wright v. Commercial Union Ins. Co., 63 N.C.App. 465, 470, 305 S.E.2d 190, 193, disc. review denied, 309 N.C. 634, 308 S.E.2d 719 (1983).

The legality of "Mary Carter" agreements has not been addressed by North Carolina courts. Other states considering the propriety of such agreements have reached differing results, including banning the use of this type of agreement or requiring the existence and terms of such a settlement to be disclosed to the jury. See Christopher Vaeth, Annotation, Validity and Effect of "Mary Carter" or Similar Agreement Setting Maximum Liability of One Cotortfeasor and Providing for Reduction or Extinguishment Thereof Relative to Recovery Against Nonagreeing Cotortfeasor, 22 A.L.R.5th 483 (1994).

"Mary Carter" agreements characteristically set the amount of the settling defendant's financial responsibility as contingent upon the judgment ultimately obtained against the non-settling defendant, i.e., as the judgment amount against the non-settling defendant increases, the settlement amount decreases, thereby giving the settling defendant an incentive to assist the plaintiff in obtaining as large an award as possible against the non-settling defendant. Vaeth, supra; but see Dosdourian v. Carsten, 624 So.2d 241, 247 (Fla.1993)("Mary Carter" agreement despite lack of evidence that settling defendant's liability could be reduced by participating in the trial).

By contrast, there is no contention in the case sub judice that the settlement between plaintiff and Jensen and Hall-Lane was not in the fixed, pre-determined amount of $10,000. The settling defendants, Jensen and Hall-Lane, thus had no direct incentive as a result of their settlement with plaintiff to assist her in obtaining any award against Williams and Mahoney, much less one as substantial as possible. However, Jensen and Hall-Lane did possess a motive to paint Williams and Mahoney as the sole tortfeasors due to the former's position as defendants in the cross-claim of Williams and Mahoney for personal and property damages. With or without a "secret" settlement with plaintiff, Jensen and Hall-Lane accordingly remained in an adversarial role against their co-defendants.

For the foregoing reasons, it is doubtful the settlement between plaintiff and Jensen and Hall-Lane may truly be characterized as a "Mary Carter" agreement. In any event, it is unnecessary to label the agreement definitively or reach the issue of the propriety of "Mary Carter" agreements in general in order to resolve the instant appeal against Williams and Mahoney. We conclude the latter were not prejudiced by ignorance until mid-trial of a settlement agreement between plaintiff and the co-defendants such that exclusion of evidence of that agreement constituted reversible error. See Lawing v. Lawing, 81 N.C.App. 159, 162, 344 S.E.2d 100, 104 (1986)("[P]arty asserting error must show from the record not only that the trial court committed error, but that the aggrieved party was prejudiced as a result."); see also N.C.R. Civ. P. 61 ("Harmless error").

Williams and Mahoney maintain they were victimized by an unfair trial, having based their trial strategy on the assumption plaintiff would attack all defendants with equal vehemence and that Jensen and Hall-Lane were equally likely to be found liable. For example, Williams and Mahoney claim to have selected a jury "sympathetic to all of the injured parties," so as to enhance the opportunity to recover on their personal injury cross-claims against Jensen and Hall-Lane. They further assert concessions advanced during jury selection and in opening statement that plaintiff was entitled to recover from some party. Finally, Williams and Mahoney cite their election at trial not to dispute plaintiff's damages and their consequent failure to cross-examine plaintiff or her chiropractor in this regard.

Of the foregoing, only the lack of cross-examination--but not counsel's explanation--may be verified from the record. See N.C.R.App. P. 9(a)(appellate "review is solely upon the record on appeal"). In any event, we find unpersuasive the contention of Williams and Mahoney that they were surprised and consequently prejudiced, when plaintiff failed to present evidence against Jensen and Hall-Lane. For example, plaintiff's attorney advised the court immediately preceding trial:

[O]ur evidence will be--we don't have any evidence that Hall-Lane was actually at fault other than what we were told by Mrs. Williams and Mr. Mahoney through their agents early on. That's why the lawsuit was originally filed against the trucking company. Our evidence will be that we saw the Mahoney-Williams' vehicle going out of control so our evidence will only be that they were negligent. So, I think then that would be their responsibility, or then it would be their burden to show someone else may or may not have caused the accident.

Shortly thereafter, counsel for Jensen and Hall-Lane commented:

This is sort of--this is not your typical case in terms of p...