Slusher v. Ospital by Ospital, 19660

• Citation: 777 P.2d 437
• Decision Date: 23 June 1989
• Docket Number: No. 19660,19660
• Parties: Robert G. SLUSHER, Jr. Plaintiff and Appellee, v. Todd Paul OSPITAL, by his personal representative John OSPITAL, and Kenneth W. Brooks, Defendants, Cross-Claimants and Appellees, and Curtis Campbell, Defendant and Appellant.
• Court: Supreme Court of Utah

Page 437

777 P.2d 437

Robert G. SLUSHER, Jr. Plaintiff and Appellee, v. Todd Paul OSPITAL, by his personal representative John

OSPITAL, and Kenneth W. Brooks, Defendants,

Cross-Claimants and Appellees,

and

Curtis Campbell, Defendant and Appellant.

No. 19660.

Supreme Court of Utah.

June 23, 1989.

Wendell E. Bennett, Salt Lake City, for defendant and appellant.

W. Scott Barrett, Logan, for plaintiff and appellee.

L. Rich Humpherys, Salt Lake City, for Ospital.

ORME, Court of Appeals Judge:

Curtis Campbell appeals from adverse judgments entered against him in this multiparty case arising from a tragic highway accident. The appeal is focused exclusively on the trial court's handling of a settlement entered into, shortly before trial, between plaintiff and one defendant. We conclude that the court erred in not disclosing the settlement to the jury. However, as we are not persuaded that this error was prejudicial, we affirm.

FACTS

Plaintiff Robert G. Slusher, Jr., was traveling in a six-van caravan on a two-lane highway through the Dry Lake area of Sardine Canyon in Cache County, Utah. Slusher was the driver of the last van. Campbell, who had been following the caravan Slusher was seriously injured in the collision and sued defendants for damages. ¹ Ospital was killed in the collision, and his estate cross-claimed against Campbell on a negligence theory. Campbell cross-claimed against Ospital for contribution.

attempted to pass--or had just passed--all six vans. Todd Ospital, the driver of a small car coming the opposite direction, swerved onto the shoulder of the road, allegedly in an attempt to avoid Campbell. Ospital lost control of his vehicle and collided head-on with Slusher. Campbell's vehicle was unscathed. The cause of the collision was hotly disputed, with contradictory testimony concerning the speed of the Ospital and Campbell vehicles, whether Campbell had completely passed the caravan at the time Ospital lost control, and even whether another car which had passed the caravan might have precipitated Ospital's maneuvering.

Prior to trial, Slusher's claim against Ospital's estate was settled for $65,000. The agreement did not affect Slusher's claim against Campbell, nor did it affect Ospital's cross-claim against Campbell. ² Two days before trial, Campbell discovered that the settlement had been reached, although he had apparently been aware for several months that Ospital's estate was attempting to settle with Slusher. At the trial's outset, Campbell moved the court to do at least one of the following: (1) invalidate the settlement on public policy grounds, (2) bifurcate the proceeding so there would be separate trials on Slusher's complaint and Ospital's cross-claim, or (3) admit the settlement agreement into evidence. Campbell argued that Slusher and Ospital now had every incentive to show that Campbell was totally at fault, posing the risk of collusion at Campbell's expense. Accordingly, Campbell argued, the jury should be advised that Ospital and Slusher were no longer actually adversaries.

The trial court denied Campbell's requests. The court stated that advising the jury of the settlement would "place the jury in a position of looking at the agreement as an admission by Ospital of negligence and liability." Since the settlement was not an admission of negligence but merely an attempt to reduce the possible risk of a larger award, the court concluded that Ospital would be unduly prejudiced if evidence of the settlement were admitted.

The jury, kept ignorant of the settlement, returned a verdict against Campbell, finding him 100 percent responsible on both Slusher's claim and Ospital's cross-claim. Pursuant to the jury's verdicts, the court entered judgment in favor of Slusher for $200,000 and in favor of Ospital's estate for $50,849. Slusher's judgment was reduced by $65,000, the amount he received from Ospital in settlement. See note 2, supra.

On appeal, Campbell assails the settlement as a Mary Carter agreement and contends that the trial court erred in not granting him one of the three remedies he requested. We first consider the contention that the settlement agreement is properly classified as a Mary Carter agreement.

MARY CARTER AGREEMENTS

As indicated, the terms of the settlement agreement included a provision requiring Ospital's estate to pay Slusher $65,000. However, Ospital's estate remained in the case so it could pursue its cross-claim against Campbell. Campbell contends that such an agreement changed the adversarial position of the agreeing parties and provided an incentive for them to collude against him. Campbell claims that this type of an agreement is a Mary Carter agreement and that while such agreements should perhaps There is a legitimate basis for Campbell's concern. Initially, Slusher was motivated to show himself to be free of negligence, but he had no particular stake in the allocation of liability between defendants. However, after the settlement with Ospital's estate, Slusher had every incentive to characterize Campbell as solely responsible and exclusively liable. Ospital's estate, of course, wanted to focus responsibility on Campbell all along, but with the settlement, the estate had a motivated ally in Slusher. Although there is no evidence of fabricated testimony in the record before us, the potential for prejudice clearly existed, and Campbell argues that had the settlement agreement been disclosed to the jury, it may well have rendered a different verdict concerning the allocation of liability between Campbell and Ospital.

be invalidated as against public policy, at a minimum, evidence of such agreements should be admitted for consideration by the jury. In this way, the jury can better assess the nature of the testimony offered by the agreeing parties, knowing that there now exists an incentive on their part to shift as much blame as possible onto their common adversary.

It is against this background that Campbell condemns the settlement as a Mary Carter agreement. The term derives from a 1967 Florida case, Booth v. Mary Carter Paint Co., 202 So.2d 8 (Fla.Ct.App.1967), overruled in part by Ward v. Ochoa, 284 So.2d 385, 388 (Fla.1973), ³ upholding the validity and nondisclosure of a secret agreement that limited the maximum liability of two out of three defendants. A classic Mary Carter agreement ⁴ is a settlement accord with these features: (1) it limits the liability of the agreeing defendant, who remains a party to a pending action; (2) it is withheld from the nonsettling parties and/or judge and jury; and (3) it guarantees to the plaintiff a minimum recovery, notwithstanding the fact that the plaintiff may not recover a judgment against the agreeing defendant or that the verdict may be less than that specified in the agreement. General Motors Corp. v. Lahocki, 286 Md. 714, 720-23, 410 A.2d 1039, 1042-43 (Ct.App.1980).

The notoriety surrounding Mary Carter agreements has increased in the last twenty years with the growing use of such agreements as a settlement device. ⁵ Entman, Mary Carter Agreements: An Assessment of Attempted Solutions, 38 U.Fla.L.Rev. 521, 522 (1986). The perceived evils engendered by a Mary Carter agreement include undue prejudice against the nonsettling defendant, and therefore denial of a fair trial, and collusion among the settling defendants and the plaintiff. The most egregious characteristic of the Mary Carter agreement is secrecy:

Secrecy is the essence of [a Mary Carter agreement], because the court or jury as trier of the facts, if apprised of this, would likely weigh differently the testimony and conduct of the signing defendant as related to the non-signing defendants. By painting a gruesome testimonial picture of the other defendant's misconduct or, in some cases, by admissions against himself and the other defendants, he could diminish or eliminate his own liability by use of the secret "Mary Carter Agreement."

Ward, 284 So.2d at 387. Such factors obviously tend to undermine the adversarial nature of a trial proceeding.

Ospital and Slusher argue that the settlement agreement between them was not a Mary Carter agreement and that it did not have any of the prejudicial effects of such agreements. They argue that the element of secrecy was not present, as Campbell had been informed by Ospital of the likelihood of settlement and in fact learned of the settlement before the trial. The settlement was then disclosed to the trial court. Moreover, this particular settlement was for a fixed sum and fully compromised Slusher's claim against Ospital. Accordingly, it is not a Mary Carter agreement in a technical sense. ⁶ We think this is largely irrelevant, however, to the present case. The fact that the agreement might influence testimony but was kept secret from the jury is enough to trigger legitimate concern about whether Campbell received a fair trial.

VALIDITY OF AGREEMENT AND BIFURCATION

As noted, Campbell made three alternative requests to the trial court in response to his discovery of the settlement agreement shortly before trial: (1) to bifurcate the proceeding; (2) to void the agreement as contrary to public policy; or (3) to admit the settlement agreement into evidence so that the jury could more fairly weigh the testimony of the witnesses. We agree with the trial court's refusal to void the agreement or to bifurcate the proceeding.

Of course, trial courts enjoy considerable discretion in deciding bifurcation and consolidation requests under rule 42 of the Utah Rules of Civil Procedure. See, e.g., Coleman v. Dillman, 624 P.2d 713, 716 (Utah 1981) (bifurcation under rule 42 may be accomplished for the convenience and at the discretion of the trial court); Raggenbuck v. Suhrmann, 7 Utah 2d 327, 329, 325 P.2d 258, 259 (1958) (absent prejudice to a litigant, the trial court has discretion to consolidate matters for trial); see also 9 C. Wright & A. Miller, Federal Practice and Procedure § 2392 (1971) (...