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A Non-Settling Defendant has the Discretion to File a Cross-Claim or a Contribution Action Against a Settled Defendant Post-Trial
Spence v. Julian
This case arose out of a medical malpractice action in which Emerson R. Julian, Jr., M.D. (“Dr. Julian”) was allegedly negligent in the delivery of Caleb Spence. Dr. Julian’s alleged negligence was claimed to have caused Caleb Spence to have suffered a brain injury, which ultimately led to his death within one (1) year of his birth. His 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 confirmed that Mercy was not a “joint tort-feasor” for settlement purposes. The release also stated that Dr. Julian was only entitled to contribution from Mercy if a jury found that Mercy was a “joint tort-feasor.”
At trial, the jury found that Dr. Julian was negligent and awarded the Spences over $8,000,000, which was reduced to approximately $2,000,000 based. Dr. Julian did not file a Cross-Claim against Mercy pre-verdict, and the question whether Mercy was a “joint tort-feasor” was not presented to the jury.
Post-verdict, 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 tort-feasor.” In the declaratory judgment action, the trial judge held that Dr. Julian was entitled to file a post-verdict contribution claim against Mercy. The judge presiding in the companion contribution action held, however, 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 whether a non-settling defendant has the right to bring a contribution claim against a settling defendant, if 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. Section 3-1405 states that a release does not relieve the settling defendant from contribution unless the release: (1) is executed before the right of the other tort-feasor to file a contribution claim; and (2) the release provides an automatic reduction of the plaintiff’s damages.
There was no question that the Spences and Mercy entered into the settlement agreement before Dr. Julian had a right to file a contribution claim, because there had not yet been an adverse judgment against Dr. Julian. The issue was whether the release provided an automatic reduction in the Spence’s damages. The Spences and Mercy argued that the release provided for such a reduction, because the release provided for a reduction in damages if the jury found that Dr. Julian and Mercy were “joint tort-feasors.” The court, however, held that such a finding was conditioned on Dr. Julian filing a Cross-Claim pre-verdict. Since, 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.
On appeal from the Court of Special Appeals, the Court of Appeals affirmed the judgments of the Court of Special Appeals, and held that without a determination of Mercy’s joint tort-feasor status during trial, by either the hospital’s admission or the trial court’s adjudication of liability, the release did not satisfy the requirements § 3-1405. Accordingly, Mercy’s potential was not extinguished by the release. Likewise, the Court of Appeals also held that a release of one defendant that does not satisfy § 3-1405, does not bar a separate, subsequent action for contribution against it. As such, a claim does not accrue until there is an adverse verdict against the non-settled defendant.
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