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A Non-Settling Defendant has the Discretion to File a Cross-Claim or a Contribution Action Against a Settled Party

Spence v. Julian
No. 1511 (Md. Ct. Spec. App. October 26, 2011)

by Gregory L. Arbogast, Associate
Semmes, Bowen & Semmes (www.semmes.com)

In Spence v. Julian, the Court of Special Appeals held that a non-settling defendant has the discretion to pursue contribution from a settling defendant by way of Cross-Claim in the same action or in a subsequent contribution action. The Court held that a Swigert release does not require the non-settling defendant to bring all claims against the settling defendant in the original action. Instead, the non-settling defendant has the option to file a contribution action against the settling defendant after a judgment has been imposed on the non-settling defendant.

Spence arose out of a medical malpractice action in which Emerson R. Julian, Jr., M.D. was allegedly negligent in the delivery of Minor Child Caleb Spence, which allegedly caused Minor Child to have a brain injury. Minor Child died within one (1) year of his birth. Minor Child’s parents, the Spences, filed a wrongful death, negligence, and informed consent claim against Dr. Julian and Mercy Medical Center (“Mercy”).

The Spences settled their claims against Mercy before trial in a Swigert release. Specifically, the release stated that Mercy is not considered a “joint tortfeasor” for purposes of the settlement. Additionally, the release stated that Dr. Julian is only entitled to contribution from Mercy if a jury finds that Mercy is a “joint tortfeasor.”

At trial, the jury found that Dr. Julian was negligent and awarded the Spences over eight (8) million dollars, which the judge reduced to just over two (2) million dollars. Dr. Julian did not file any Cross-Claims against Mercy, and the question of whether Mercy was a “joint tortfeasor” was not presented to the jury.

Post trial, Dr. Julian filed a contribution claim against Mercy. The Spences then filed a declaratory judgment claim against Dr. Julian, in which the Spences argued that the release extinguished Dr. Julian’s claim against Mercy because the jury did not find that Mercy was a “joint tortfeasor.” In the declaratory judgment action, the judge found that Dr. Julian was entitled to file a post trial contribution claim against Mercy. The judge in Dr. Julian’s contribution claim, however, held that the release extinguished Dr. Julian’s claims against Mercy. The parties cross appealed these conflicting judgments.

The Court of Special Appeals addressed the question of whether a non-settling defendant has the right to bring a contribution claim against a settling defendant where the settling defendant entered into a Swigert release. The Court of Special Appeals looked to MD. CODE ANN., CTS. & JUD. PROC. § 3-1405 to determine whether the release extinguished Dr. Julian’s claims against Mercy. That statute states that a release does not relieve the settling defendant from contribution unless the release: (1) is executed before the right of the other tortfeasor to file a contribution claim; and (2) the release provides a reduction of the plaintiff’s damages. There is no question that the Spences and Mercy entered into their settlement agreement before Dr. Julian had a right to file a contribution claim because there had not yet been a judgment against Dr. Julian. The issue was whether the release provided a reduction in the Spence’s damages. The Spences and Mercy argued that the release did provide for such a reduction because the release provided for a reduction in damages if the jury found that Dr. Julian and Mercy were “joint tortfeasors.” The Court, however, held that such a finding was conditioned on Dr. Julian filing a Cross-Claim. Instead, Dr. Julian had the option of filing a Cross-Claim or pursuing a separate contribution claim post-trial. The Court held that the Swigert release did not extinguish Dr. Julian’s right to pursue a contribution claim. Therefore, the Court of Special Appeals reversed the Order dismissing Dr. Julian’s contribution claim.


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