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Settling Defendant Not Entitled to Pursue Cross-Claim for Contribution

By on April 10, 2014 in Blog with 0 Comments

A company responsible for maintaining cargo lifts found out in Cherilus v. Federal Express, 2014 N.J. Super. LEXIS 47 (App. Div. 2013) that after it settled with plaintiff, it would not be able to pursue the co-defendant manufacturer for contribution. In Cherilus, the plaintiff, Joseph Cherilus, was injured on a cargo lift at a Federal Express facility where he worked. He sued Linc Facilities Services (LFS) who, in turn, sued American Lifts, the manufacturer of the lift, in a third party claim.

American Lifts was granted summary judgment, based upon the 10 year statute of repose applicable to construction defects. (It was covered as a designer of an improvement to real property.) Subsequently, LFS settled with plaintiff on his personal injury claims. Thereafter, LFS appealed the summary judgment dismissal as to American Lifts so that it could pursue its claim for contribution for the settlement amount it paid to plaintiff. However, the Appellate Division found that it had no viable claim of contribution for its voluntary payment of settlement to plaintiff and affirmed the dismissal.

Based upon the 10 year statute of repose , the trial court had granted summary judgment to American Lifts as to both the plaintiff’s direct claim, as well as the third party contribution claim of LFS. Following this dismissal, LFS settled with plaintiff and filed a stipulation of dismissal as to plaintiff’s claim. Subsequently, the plaintiff executed an assignment of his claim against American Lifts for purpose of permitting LFS to pursue its appeal.

Initially, the court found that this assignment had no effect on the appeal. Plaintiff did not have a judgment against American Lifts. The court noted that a tort claim is not subject to assignment prior to judgment.

Next, the court focused on the Joint Tortfeasors Contribution Act. This Act permits contribution when a person suffering injury recovers a money judgment against one or more joint tortfeasors and a joint tortfeasor pays such judgment in excess of his pro rata share.

In a prior case, the New Jersey Supreme Court held that a settling defendant could make a claim for contribution if (1) the suit for contribution based upon the settlement had been elevated to the status of a judgment by a formal court proceeding and (2) the settlement discharged the injured party’s claim against a non-settling joint tortfeasor.

The Appellate Division found in Cherilus that the contribution statute does not apply to a contribution where the payment is a voluntary settlement of a claim for damages attributed to a joint tortfeasor. While a consent judgment would satisfy the “judgment” requirement of the statute, a stipulation of dismissal would not be sufficient.

The court explained that a defendant is not required to pay another tortfeasor’s share of the damages. It could proceed to trial on the plaintiff’s claims and receive a credit under the Comparative Negligence Act for any proportion of responsibility for the injuries that the jury attributes to another tortfeasor, even if the tortfeasor was earlier dismissed out based upon the statute of repose. Thus, the court noted that the amount a defendant pays to settle need not cover the liability of a co-defendant who has been dismissed out of the case.

The court further stated that “if a defendant nevertheless settles and pays more than its fair share for the injuries, it can preserve its claim for contribution from a potentially liable joint tortfeasor through appropriate judicial proceedings and a judgment order.” Thus, the import of this case is a settling defendant must preserve through a consent judgment any contribution claim it has against a joint tortfeasor or, by entering into a stipulation of dismissal, it will be precluded from pursuing a contribution claim. 

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Betsy G. Ramos

About the Author

About the Author:

Ms. Ramos is an Executive Committee Member and Co-Chair of the Litigation Department at Capehart Scatchard, P.A. located in Mount Laurel, New Jersey. She is an experienced litigator with over 25 years experience handling diverse matters. Practice areas include tort defense, business litigation, estate litigation, tort claims and civil rights defense, construction litigation, insurance coverage, employment litigation, shareholder disputes, and general litigation.

For the years 2020 and 2021, Ms. Ramos was selected for inclusion in The Best Lawyers in America© in the practice area of Litigation - Insurance. The attorneys on this list are selected based upon the consensus opinion of leading lawyers about the professional abilities of their colleagues within the same geographical area and legal practice area. A complete description of The Best Lawyers in America© methodology can be viewed via their website at: https://www.bestlawyers.com/methodology.

In 2021, Capehart Scatchard and Ms. Ramos received the “Best Law Firm” ranking in the area of Litigation – Insurance (Metro, Tier 3) published by U.S. News & World Report and Best Lawyers®. Law firms included on the list are recognized for professional excellence with consistently impressive ratings from clients and peers. To be eligible for a ranking, a firm must have at least one attorney who has been included in the current edition of Best Lawyers in America, which recognizes the top five percent of practicing lawyers in the United States. Betsy Ramos (Litigation – Insurance) was recognized for this prestigious award in the 2021 edition. For a description of the “Best Law Firm” selection methodology please visit: https://bestlawfirms.usnews.com/methodology.aspx.

“Best Law Firms” is published by Best Lawyers in partnership with U.S. News & World Report. For a description of the selection methodology please visit: https://bestlawfirms.usnews.com/methodology.aspx.

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