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A little-known strategy recently helped us obtain a $7.5 million settlement for a paralyzed client despite the fact that the primarily liable defendant "only" had $1.5 million in liability coverage. A defendant who is less than fifty percent at fault may still be held responsible for all of the plaintiffs' damages even though the Legislature expressly repealed joint and several liability for such defendants more than a decade ago.
Our case arose from an automobile accident in which a middle aged man suffered catastrophic injuries, leaving him permanently paralyzed from the ears down. The accident occurred when a large truck involved in a highway construction project made an illegal u-turn on a divided highway. The plaintiff, who was driving on the highway, ran into the back of the slow-moving truck after it had completed the u-turn and entered the high speed lane of the highway.
The truck involved in the accident was owned by a small New Hampshire corporation, which employed the driver. This company was a subcontractor on a highway project. The general contractor for the project was a large New Hampshire corporation. The accident occurred approximately a mile outside of the highway project limits. Following the accident, the driver of the truck was cited for making an illegal u-turn. He pled no contest and was found guilty.
While making the u-turn, the driver of the truck was following another truck driven by his boss, the owner of the small company. Afterward, the owner of the company said that he was shown this u-turn by a supervisor from the general contractor when the general contractor was showing him the work that needed to be done on this project. As a result, he said that he understood this u-turn to be an authorized maneuver for vehicles working on the project, even though it was outside of the actual project limits. He also said that he witnessed several of the general contractor's employees making this same maneuver during the three weeks that he had been working on this job, which reinforced his belief that it was allowed.
The collision occurred after the two trucks belonging to the subcontractor had entered the high speed lane from a median crossover. Our client was driving in the right hand lane of the highway behind a truck towing a boat, he pulled out to pass that vehicle, and ran into the back of the rear truck. The sun was shining brightly in the eyes of our client at that particular time of the day.
The liability insurance available from the subcontractor totaled $1.5 million. The general contractor, on the other hand, had virtually unlimited liability coverage. We sued both. The subcontractor did not contest liability, but alleged comparative fault on the part of the plaintiff. The general contractor contested the allegation that its employee had made the illegal u-turn while showing the subcontractor the job site, it argued that there was no causal relationship between its other employees' illegal u-turns and the illegal u-turn by the subcontractor, and it claimed that the subcontractor's illegal act was the sole proximate cause of the accident. It also alleged comparative fault.
The case settled at a second mediation session. By that time, approximately twenty fact witnesses and a few of the plaintiffs' experts had been deposed Structured settlements were put in place and cash was set aside so the plaintiffs could design and build a house that could accommodate the plaintiff. The total value of the settlement was $7.5 million, of which the general contractor's insurance companies paid $6 million.
Because the subcontractor's combination of liability insurance and assets was plainly insufficient to fully compensate the plaintiff in this case, we searched carefully for ways to hold the general contractor vicariously liable for the harm caused by its subcontractor. The trial court, however, dismissed our claims against the general contractor alleging an agency relationship, inherently dangerous activity, non-delegable duty, and negligent hiring. Under the circumstances, we questioned what would happen if the jury returned a verdict attributing the majority of fault to the subcontractor while apportioning a small amount of fault to the general contractor. We concluded that, despite the fact that joint and several liability would not apply, the general contractor would be required to pay the entire portion of the judgment that was uncollectible from the subcontractor.
Under R.S.A. 507:7-e, III, the trial judge is required to reapportion any uncollectible part of a judgment among the other solvent defendants. As a result, assume for the sake of argument that the jury in our case had returned a verdict in the amount of $5 million, holding the subcontractor 99% liable and the general contractor 1% liable. Under R.S.A. 507:7-e, the following would happen:
|A.||The court would enter judgment against the subcontractor for $4.95 million and against the general contractor for $50,000;|
|B.||The plaintiffs would attempt to collect the judgment of $4.95 million from the subcontractor and would be unsuccessful, having collected $1.5 million from insurance proceeds and approximately $100,000 in assets;|
|C.||The general contractor would pay its $50,000 judgment.|
|A.||The Court would then be required to "reallocate any uncollectible amount among the other defendants according to their proportionate shares."2;|
|B.||The Court would reallocate the entire uncollectible portion of the subcontractor's judgment to the general contractor. The general contractor would be required to pay the plaintiffs the entire $3.35 million;|
|C.||The general contractor would retain the right to seek contribution from the subcontractor.3|
When we presented this to the general contractor, its response was that a 1989 amendment to R.S.A. 507:7-e, I(b), repealing joint and several liability for those less than 50% at fault, rendered the reallocation provision in section III meaningless. We disagreed.
507:7-e, I(b) sets forth a general rule: Defendants who are less than 50% at fault are not jointly liable and will pay only their proportionate share of damages. This means that, in the normal course, a plaintiff cannot choose to enforce his entire judgment against a particular defendant.
507:7-e, III, on the other hand, sets forth a specific rule: When one defendant in a multiple defendant case is insolvent, the uncollectible portion of the insolvent defendant's share of damages is reallocated to the remaining defendants. To the extent that these rules can be said to conflict, "[i]t is a well settled rule of statutory construction that in the case of conflicting statutory provisions, the specific statute controls over the general statute."4 Put another way:
The reallocation provision is just one of several exceptions to the general rule set forth in 507:7-e, I(b):
|GENERAL RULE:||No joint liability for defendant who is less than 50% at fault6|
|FIRST EXCEPTION:||Joint liability applies if there is a common plan or design7|
|SECOND EXCEPTION:||Damages are reallocated to severally liable defendants if one defendant is insolvent8|
|THIRD EXCEPTION:||Joint liability applies in environmental clean up cases9|
If section I(b) were intended to apply even when a portion of the judgment is uncollectible, section III would be entirely superfluous. This is true because reallocation is never necessary when the solvent defendant is already jointly liable (50% or more at fault), and reallocation would never be allowed when the solvent defendant is only severally liable (less than 50% at fault).
Since the earliest reported cases, the New Hampshire Supreme Court has emphasized that "significant words in a statute are not to be rejected or rendered ineffectual by construction, but the statute is to be so read as to give to every part its due weight."10 Because the only way section III can be given effect is by considering it a limited exception to the general rule set forth in section I(b), this construction must be adopted.
Even if the legislature intended to completely extinguish section III when it enacted the present section I(b), it failed to make that clear in the statute itself. In fact, the legislative history shows that the General Court considered changes to section III throughout this period, but declined to make them. Even if this failure was a mistake, it cannot be remedied by the courts:
Simply put, "[t]he courts have no function of redrafting legislation in order to make it conformable to an intention not fairly expressed in it."12 The bottom line is that the only interpretation of R.S.A. 507:7-e that complies with all of the rules of statutory construction is that section I(b) articulates a general rule that is subject to exceptions, including section III. Reallocation, therefore, is a limited exception to the general rule that a defendant who is less than 50% at fault is only required to pay his proportionate share.
Obviously, this issue was not litigated in our case since it would not come up unless there had been a jury verdict. However, the general contractor faced the very real threat that it would have unlimited liability even if it were only found to be 1% at fault. In light of the outcome, it must have taken the threat seriously.
If you are considering making this argument in a case, you have to resist the urge to settle with the primarily liable defendant, even if he offers his policy limits. You must keep the main defendant in the case to maintain the threat that there will be an uncollectible judgment against him.
Joint and several liability was the rule under the common law, and it survived for centuries for a very important reason: It ensured that the risk of a tortfeasor's insolvency would fall on one who was also responsible to some degree for the victim's injuries, and not upon the victim himself. With the partial repeal of joint and several liability in 1989, the Legislature decided that plaintiffs in this state should not be permitted to choose which of two or more defendants will pay their damages. However, in R.S.A. 507:7-e, III, the Legislature retained the important principal that one who is legally at fault should bear the burden of making the victim whole, even when someone else may have had a greater level of responsibility.