Wells v. Tallahassee Memorial Regional Medical Center, Inc.

• Decision Date: 15 June 1995
• Docket Number: No. 83207,83207
• Citation: 659 So.2d 249
• Parties: 20 Fla. L. Weekly S278 Joyce WELLS, Petitioner, v. TALLAHASSEE MEMORIAL REGIONAL MEDICAL CENTER, INC., Respondent.
• Court: Florida Supreme Court

Page 249

659 So.2d 249

20 Fla. L. Weekly S278

Joyce WELLS, Petitioner, v. TALLAHASSEE MEMORIAL REGIONAL MEDICAL CENTER, INC., Respondent.

No. 83207.

Supreme Court of Florida.

June 15, 1995.

Rehearing Denied Aug. 24, 1995.

Jon D. Caminez and Barry Gulker of Caminez, Walker & Brown, Tallahassee, for petitioner.

Jesse F. Suber and J. Steven Carter, Tallahassee, for respondent.

Jonathan C. Hollingshead and Jennifer Herndon McRae of Fisher, Rushmer, Werrenrath, Keiner, Wack & Dickson, P.A., Orlando, amicus curiae, for Fla. Defense Lawyers Ass'n.

Raymond V. Miller and Jeffrey Dickstein of Kaufman, Miller, Dickstein & Grunspan, P.A., Miami, and Barbara Green of Barbara Green, P.A., Coral Gables, amicus curiae, for Academy of Fla. Trial Lawyers.

GRIMES, Chief Justice.

We review Tallahassee Memorial Regional Medical Center, Inc. v. Wells, 634 So.2d 655 (Fla. 1st DCA 1994), in which the district court of appeal certified the following questions to be of great public importance:

(A) IS A NON-SETTLING DEFENDANT IN A CASE TRIED UNDER SECTION 768.81(3) ENTITLED TO SETOFF OR REDUCTION OF HIS APPORTIONED SHARE OF THE DAMAGES, AS ASSESSED BY THE JURY, UNDER THE PROVISIONS OF SECTIONS 768.041(2), 46.015(2) OR 768.31(5)(a), BASED UPON SUMS PAID BY SETTLING DEFENDANTS IN EXCESS OF THEIR APPORTIONED LIABILITY AS DETERMINED BY THE JURY?

(B) DOES THE RULE AS TO SETOFF APPLY EQUALLY TO BOTH ECONOMIC AND NON-ECONOMIC DAMAGES?

Id. at 659-60. We have jurisdiction under article V, section 3(b)(4) of the Florida Constitution.

In 1991, Joyce Wells filed suit against Tallahassee Memorial Regional Medical Center, Inc. ("TMRMC"), Dr. Donald Alford, M.D., and Anesthesiology Associates and its employees Raymond Johns and Dr. Brence Sell, M.D., for the wrongful death of her husband. Prior to trial, Wells settled with Dr. Alford for $250,000, $50,000 of which was allocated to economic and $200,000 to noneconomic damages. Wells also settled with Anesthesiology Associates and its employees for $50,000, without apportionment.

TMRMC was the sole defendant at trial. However, the jury was instructed to apportion fault, if any, among all the defendants. ¹ The jury returned a verdict in favor of Wells, finding TMRMC 90% at fault, Dr. Alford 5% at fault, and Anesthesiology Associates 5% at fault. The jury assessed damages at $573,853--$202,853 in economic damages and $371,000 in noneconomic damages. Wells was awarded 90% of $573,853, plus $9,000 in costs, less $17,000 for social security benefits--for a total of $509,267.70. ²

TMRMC moved for a reduction in judgment, arguing that the judgment should be reduced by $300,000, representing the total amount paid by the settling defendants. The trial court denied the requested setoff.

On appeal, TMRMC contended that the trial court erred in denying the requested setoff. The district court of appeal held that sections 46.015(2), 768.041(2), and 768.31(5) Florida Statutes (1991) (the setoff statutes), required that "the $300,000 paid in settlement by other defendants must be applied in reduction of the total damage award returned by the jury." Tallahassee Memorial Regional Medical Ctr., Inc., 634 So.2d at 658. In reversing the judgment, the district court of appeal found that footnote 3 of this Court's opinion in Fabre v. Marin, 623 So.2d 1182 (Fla.1993), was controlling. Id. at 658-59. Recognizing some merit in Wells' arguments, however, the court chose to certify the foregoing questions.

In Fabre, this Court interpreted section 768.81(3), Florida Statutes (Supp.1988), to mean that each defendant should pay for noneconomic damages only in proportion to the percentage of fault by which that defendant contributed to the accident. In order to do this, it is necessary to determine the percentage of fault of all entities who contributed to the accident regardless of whether they are joined as defendants. Footnote 3 of our opinion in Fabre states:

Thus, we reject the argument that our interpretation of section 768.81(3) when coupled with the right to setoff under section 768.31(5) will lead to a double reduction in the amount of damages. This possibility may be avoided by applying the setoff contemplated by section 768.31(5) against the total damages (reduced by any comparative negligence of the plaintiff) rather than against the apportioned damages caused by a particular defendant. For example, suppose defendant A is released from the suit for a settlement of $60,000 and the case goes to trial against defendant B. The jury returns a verdict finding the plaintiff's comparative negligence to be 40%, the negligence of A and B to be 30% each, and the damages to be $300,000. Because the $60,000 setoff would not reduce the plaintiff's $180,000 to below $90,000, B would still have to pay the full $90,000 for his share of the liability. Of course, if the damages were found to be $150,000, the $60,000 from the settlement with A would be set off against the plaintiff's $90,000 recovery which would mean that B's obligation would be reduced from $45,000 to $30,000.

Fabre, 623 So.2d at 1186 n. 3.

Before this Court, Wells argues that with respect to noneconomic damages, the notion that each party is only responsible for his or her share of the damages dictates that payment by one tortfeasor should only extinguish that tortfeasor's liability and have no effect on another tortfeasor's liability. She asserts that the setoff statutes are only applicable where there is common liability, as in the case of economic damages. Thus, where liability is determined by the jury as a percentage of fault, the comparative fault statute, section 768.81(3), would apply and there would be no setoff.

On the other hand, TMRMC argues that the purpose of the setoff provisions is to prevent duplicate or overlapping compensation for identical damages. The abolition of joint and several liability by section 768.81(3), TMRMC argues, did not alter this long-established prohibition against double recovery. TMRMC points out that a contrary holding would permit Wells to recover an amount in excess of her damages, as determined by the jury.

At first glance, it would appear that the rationale of footnote 3 would foreclose Wells' claim. In fairness, however, the arguments advanced in this appeal were not presented to, nor considered by, this Court in Fabre. The illustration in footnote 3 was intended to demonstrate that our interpretation of section 768.81(3) would not lead to a double reduction in damages. Therefore, despite the dicta contained in footnote 3, we have chosen to address the parties' arguments on the merits.

Several other states, which have abolished joint and several liability in certain respects and require the apportionment of damages between all entities responsible for the accident regardless of whether they are joined as defendants, have already addressed the questions before us. In Hoch v. Allied-Signal, Inc., 24 Cal.App.4th 48, 29 Cal.Rptr.2d 615 (1994), a California court held that setoff statutes much like those of Florida applied only in cases of joint and several liability. The court explained that to apply setoff provisions in situations of several liability would discourage rather than encourage settlement:

If the settlement was "low," the plaintiff will recover less than the noneconomic damages awarded by the jury. If the settlement was "high," the nonsettling defendant will reap the benefit, paying less than their fault-share of the noneconomic damages. This would be inequitable and would provide "little incentive for the injured person to settle with one or fewer than all of the tortfeasors."

Hoch, 29 Cal.Rptr.2d at 624 (footnote omitted) (quoting Wilson v. Galt, 100 N.M. 227, 232, 668 P.2d 1104, 1109 (Ct.App.1983)). Accord In re Piper Aircraft, 792 F.Supp. 1189 (N.D.Cal.1992); Espinoza v. Machonga, 9 Cal.App.4th 268, 11 Cal.Rptr.2d 498 (1992).

Arizona courts also refuse to require a setoff of settlement amounts where the liability of the defendants is several rather than joint and several. Neil v. Kavena, 176 Ariz. 93, 859 P.2d 203 (Ct.App.1993); see also Roland v. Bernstein, 171 Ariz. 96, 828 P.2d 1237 (Ct.App.1991). In rejecting the argument that the plaintiff will receive an impermissible double recovery if the total amount paid in settlement is not set off, the court in Neil pointed out:

The single-recovery rule, which historically permitted defendants a credit for amounts paid in settlement by other defendants to prevent a plaintiff's excess recovery, was adopted when courts could not allocate liability among defendants; a settling defendant could only offer to pay for a plaintiff's entire, indivisible injury. Now, the respective shares of the liability of multiple defendants can be determined. Each defendant may settle his portion and such settlement neither affects the amount of harm caused by the remaining defendants nor the liability. The settling defendant simply has paid an agreed amount to "buy his peace" and the non-settling defendant has no right to complain that the settling defendant paid too much.

176 Ariz. at 97, 859 P.2d at 207 (citations omitted). The court also rejected the suggestion that the plaintiff will receive a "windfall" if the total amount paid in settlement is not set off:

Settlement dollars are not synonymous with damages but merely a contractual estimate of the settling tortfeasor's liability; they include not only damages but also the value of avoiding the risk and expense of trial. Given these components of a settlement, "there is no conceptual inconsistency in allowing a plaintiff to recover more from a settlement or partial settlement than he could receive as damages."

Id. at 96, 859 P.2d at 206 (citations omitted) (quoting Duncan v. Cessna Aircraft Co., 665 S.W.2d 414, 431-32 (Tex.1984)).

Though not precisely on point, cases from New Mexico and Iowa as well as the United States Supreme Court employ a rationale similar to that of Arizona and California....