Collier v. Eagle-Picher Industries, Inc.

WILNER, Chief Judge. The appeals now before us arise from consolidated proceedings in the Circuit Court for Baltimore County in which several plaintiffs sued several defendants to recover for injuries resulting from the plaintiffs’ exposure to asbestos-containing products. Each of the defendants was alleged to have manufactured, sold, or supplied such a product to which the plaintiffs were exposed while employed at the ⁴² Bethlehem Steel Corporation plant in Sparrows Point, Maryland. 1 We are concerned, most immediately, with eight of the plaintiffs and three of the defendants, although the status of several other defendants is also relevant. One aspect of this proceeding — the appeal by the plaintiffs and a cross-appeal by the three defendants — concerns the Uniform Contribution Among Tort-Feasors Act (Md.Ann.Code art. 50, §§ 16-24) and the way in which the Circuit Court applied it.

A second aspect — a separate appeal by defendant Corhart Refractories Company (Corhart) — touches on an evidentiary issue and challenges whether the plaintiffs produced legally sufficient evidence that they were exposed to an asbestos-containing product supplied by Corhart. A third, preliminary, aspect is whether, by reason of petitions filed by the other two defendant-appellees/cross-appellants under Chapter 11 of the Federal Bankruptcy Act, we may even proceed to decide these appeals. The first and third aspects are especially related, and so we shall start with them. They involve five of the plaintiffs —Collier, Wilkins, Regula, Pilachowski, and Morosko — and the three defendant-appellees/cross-appellants — EaglePicher Industries, Inc. (Eagle-Picher), The Celotex Corporation (Celotex), and Corhart.

I. PROCEEDINGS CONCERNING THE UNIFORM ACT The appeals and cross-appeals challenging the manner in which the court dealt with the Uniform Act are presented to us through an agreed Statement of the Case and one exhibit, and so we do not have a record extract containing the pleadings and relevant motions or documenting all that occurred in the Circuit Court with respect to these matters. ⁴³ Each of the five plaintiffs had initially sued other defendants in addition to Eagle-Picher, Celotex, and Corhart, apparently on the theory that they too had manufactured, sold, or supplied asbestos-containing products to which the plaintiffs were injuriously exposed. The plaintiffs eventually settled with those defendants, however, entering some settlements prior to trial and some during trial. In addition to the more-or-less standard language effecting a release of liability, the form of release given to each of those defendants stated, in relevant part, that: “This Release does not and shall not bar any cause of action, right, lien, or claim arising from the said claim which the undersigned have or may have in the future against any other alleged tortfeasors or any other person or entity not specifically named herein and released hereby, but shall serve only to reduce any recovery which may be had against the said other alleged tortfeasors or other person or entity to the extent of the pro-rata share recoverable by law from Releasees, in accordance with the provisions of the Uniform Contribution among Joint Tortfeasors Act of Maryland, Art. 50, Section 16 et seq., Md.Ann.Code. The said reduction effected hereby shall not be construed to affect' the recovery in any suit, cause of action or claim to which the said Releasees shall not have been adjudged legally liable for contribution.

It is understood and agreed that this settlement is in compromise of a disputed claim, and that the payment made is not to be construed as an admission of liability on the part of the Releasees, and that said Releasees deny any liability and intend merely to avoid litigation.” (Emphasis added.) The parties had agreed that the defendants who settled before trial would not appear at trial and that those who settled during trial would thereafter cease to participate. Through a general pre-trial order, each of the defendants was deemed to have filed cross-claims against all other defendants, and it was further agreed that those cross- ⁴⁴ claims, which we assume were for contribution, would not be submitted to the jury but would instead be resolved by the court in a post-trial proceeding. The defendants, but not the plaintiffs, had also agreed that, at that proceeding, the evidence admitted at the jury trial bearing on the liability of the settling defendants could be considered in determining the cross-claims. After rendition of the jury’s verdicts in favor of the five plaintiffs, the court conducted a proceeding to resolve the cross-claims.

What actually occurred is not clearly reflected in the agreed Statement of the Case, but it appears that (1) the initial phase of the proceeding was to determine which of the settling defendants were joint tortfeasors, (2) the plaintiffs, over their objection, were excluded from participating in that phase on the ground that they had no interest, and therefore no standing, in the matter, and (3) no additional evidence was presented to the court as to who was, or was not, a joint tortfeasor. The defendants presented memoranda to the court explaining their respective positions, to which were attached excerpts from the evidence admitted at trial. After considering the memoranda, the court determined, in some form and manner not clearly reflected in the Statement of the Case, which of the settling defendants were joint tortfeasors with Eagle-Picher, Celotex, and Cor-hart. Following that determination, the court addressed what, if any, reductions should be made to the verdicts by reason of the various settlements and releases.

The plaintiffs were permitted to participate, and did participate, in that phase of the proceeding. A number of different views were presented to the court. Eagle-Picher, Celotex, and Corhart moved that the verdicts be reduced by all amounts or pro tanto shares paid by all of the settling defendants, whether or not they were joint tortfeasors. The court rejected that motion.

The issue then became the amount of credit that ought to flow from a joint release that each of the plaintiffs had separately entered into with three defendants — GAF, Inc. (GAF), Quig ⁴⁵ ley Company, Inc. (Quigley), and Keene Corporation (Keene) —who were part of a group known as the Center for Claims Resolution. A single, aggregate sum was paid to each of the plaintiffs on behalf of all three of those defendants in exchange for the joint release. The release did not indicate what, if any, contribution to that sum was made by the respective defendants. The dispute between the parties arose from the fact that, in the first phase of the post-trial proceeding, the court had determined that two of the three defendants so released— GAF and Quigley — were not joint tortfeasors in these cases; only Keene was found to be a joint tortfeasor.

The question, then, was whether, for purposes of the Uniform Act, the entire amount paid for the joint release or only the amount contributed by Keene was to be regarded as the “consideration paid for the release.” The relevance, and importance, of this determination is evident from one section of the Act — § 19 of art. 50 — and from the language of the release itself. Section 19 provides: “A release by the injured person of one joint tort-feasor, whether before or after judgment, does not discharge the other tort-feasors unless the release so provides; but reduces the claim against the other tort-feasors in the amount of the consideration paid for the release, or in any amount or proportion by which the release provides that the total claim shall be reduced, if greater than the consideration paid.” The release, as noted earlier, provides for a reduction of any recovery against the “other alleged tortfeasors or other person or entity to the extent of the pro-rata share recoverable by law from Releasees, in accordance with [the Uniform Act]” but made clear that the “reduction effected hereby shall not be construed to affect the recovery in any suit, cause of action or claim to which the said Releasees shall not have been adjudged legally liable for contribution.” ⁴⁶ The plaintiffs offered evidence that the parties to the releases intended to consider each of the three released defendants as having paid “equal proportional shares of the consideration” and thus urged the court to consider, as the “consideration paid for the release,” only the contribution by Keene — the sole joint tortfeasor among the three releases. That would have made Keene’s pro rata share greater than the actual dollar consideration in the Collier, Regula, and Morosko cases, thus causing the judgments to be reduced by the former rather than the latter. Eagle-Picher, Celotex, and Corhart, on the other hand, insisted that the full amounts paid to the plaintiffs be regarded as the consideration for the respective releases, in which event it would exceed Keene’s pro rata share and therefore become the credit to be applied against the judgments.

The results flowing from the divergent views as to this set of joint releases can be illustrated as follows: Plaintiff Collier Wilkins Regula Pilachow Morosko (1) Judgment $225,000 $50,000 $75,000 $50,000 $140,000 (2) #Jt. Tortf. 8 8 7 5 7 (3) Pro Rata Share 28,125 6,250 10,714 10,000 20,000 (4) Total Jt. Rel. Consid. 61.500 22,275 19,762 39,375 54.000 (5) Keene’s Share Of (4) 20.500 7,425 6,587 13,125 18.000 (6) Net if (3)(5) applied 56,250 11,575 21,428 16,875 60,000 (7) Net if (4) Applied 2 22,875 0 12,380 0 26,000 The court adopted the defendants’ views on this issue.

It refused to accept the plaintiffs’ proffer as to the actual contribution by Keene and regarded the full amounts paid for the joint releases as the “consideration paid for the release.” Judgments were therefore entered as indicated in Item (7), rather than Item (6), above. In their appeal, the plaintiffs complain that the court erred (1) in not allowing them to participate in the proceed ⁴⁷ ing to adjudicate which of the settling defendants were joint tortfeasors, and (2) in applying as a credit against their respective judgments the full amount of consideration paid for the joint releases of GAF, Quigley, and Keene. In a cross-appeal, Eagle-Picher, Celotex, and Corhart urged that the court erred in not reducing the judgments “by the pro tanto amounts of all settlement monies received [by the respective plaintiffs].” Those issues comprise the first aspect of the composite appeals. The third aspect, noted earlier, arises from the fact that on October 12, 1990 — after these appeals had been noted— Celotex filed for protection under Chapter 11 of the U.S. Bankruptcy Code.

This Court then entered an order staying all proceedings in the appeals as to Celotex but allowing the appeals to proceed as to all other parties. Subsequently, Eagle-Picher and Corhart moved that the appeals be stayed as to them as well until Celotex could once again participate in the proceedings. On the day before oral argument, we were informed that Eagle-Picher had also filed a petition under Chapter 11. We therefore stayed the appeals as to it, leaving the question whether the appeals can proceed against Corhart, the one remaining appellee.

Because that is a threshold issue, we shall address it first.

II

STAY OF THE APPEAL Preliminarily, we note that the bankruptcies of Celotex and Eagle-Picher in no way affect the separate cross-appeal by Corhart, which deals, as we have indicated, with whether the plaintiffs sufficiently proved liability on its part. The only aspects of these appeals that could even arguably be affected by the bankruptcies are those relating to the reductions ordered in the verdicts by reason of the settlements. Title 11 U.S.C. § 362 (a) provides, in relevant part and with certain exceptions not applicable here, that the filing of a petition under Chapter 11 of the Bankruptcy Act operates as a stay of judicial proceedings pending against the debtor ⁴⁸ when the petition was filed. We have, as noted, complied with that provision by staying this proceeding as to Celotex and Eagle-Picher — the debtors in bankruptcy. “It is universally acknowledged,” however, “that an automatic stay of proceeding accorded by § 362 may not be invoked by entities such as sureties, guarantors, co-obligors, or others with a similar legal or factual nexus to the Chapter 11 debtor.” Lynch v. Johns-Manville Sales Corp., 710 F.2d 1194, 1196 (6th Cir.1983) and cases cited therein; see also Williford v. Armstrong World Industries, Inc., 715 F.2d 124 (4th Cir.1983); Matter of Johns-Manville Corp., Bkrtcy., 26 B.R. 405 (S.D.N.Y.1983); Credit Alliance Corp. v. Williams, 851 F.2d 119 (4th Cir.1988).

In conformance with this principle, it is well established that an automatic stay under § 362 does not usually affect a State court’s ability to proceed with either a trial or an appeal involving a debtor’s co-defendants, so long as the proceeding is stayed as to the debtor. See Wright v. Eagle-Picher, 80 Md.App. 606 , 608 n. 1, 565 A.2d 377 (1989); Ace Tile Co., Inc. v. Casson Const. Co., Inc., 715 P.2d 344, 346 (Col.App. 1986); Gen. Motors Accept.

Corp. v. Yates Motor Co., 159 Ga.App. 215 , 283 S.E.2d 74 (1981); Centrust Services, Inc. v. Guterman, 160 A.D.2d 416 , 554 N.Y.S.2d 113 , 114-15 (A.D. 1 Dept.1990); Commercial Finance v. American Resources, 737 P.2d 1120, 1131 (Haw. App. 1987); Greenberg v. Fincher & Son Real Estate, Inc., 753 S.W.2d 506 (Tex.Ct.App.1988). In Royal Truck & Trailer v. Armadora, Etc., 10 B.R. 488 (N.D.Ill.1981), and Matter of Johns-Manville Corp., supra, 26 B.R. 405 , the Court, though reciting the general rule that proceedings against non-debtor co-defendants are not automatically stayed under § 362(a), indicated that “there are instances where a bankruptcy court may properly stay proceedings against non-bankrupt co-defendants.” 26 B.R. at 410 (emphasis added). See also A.H. Robins Co., Inc. v. Piccinin, 788 F.2d 994 (4th Cir.), cert. denied, 479 U.S. 876 , 107 S.Ct. 251 , 93 L.Ed.2d 177 (1986); Credit Alliance Corp. v. Williams, supra, 851 F.2d 119 .

In the ⁴⁹ instant proceeding that has not happened, at least not to our knowledge. We know of no stay entered by either Bankruptcy Court precluding us from proceeding as to Corhart. Nor, significantly, has either Eagle-Picher or Celotex asked this Court to stay proceedings as to Corhart by reason of their respective bankruptcies. The request comes from Corhart, and we see no basis for such a stay.

In A.H. Robins Co., Inc., supra, the Fourth Circuit Court of Appeals held that there must be “unusual circumstances” to warrant a stay of proceedings against co-defendants. At 999, it noted: “This ‘unusual situation,’ it would seem, arises when there is such identity between the debtor and the third-party defendant that the debtor may be said to be the real party defendant and that a judgment against the third-party defendant will in effect be a judgment or finding against the debtor. An illustration of such a situation would be a suit against a third-party who is entitled to absolute indemnity by the debtor on account of any judgment that might result against them in the case. To refuse application of the statutory stay in that case would defeat the very purpose and intent of the statute.” See also 1008 where the Court concluded that actions against a debtor’s co-defendants may be enjoined where, if the actions were successful, they would “affect the property of the debtor to the detriment of the debtor’s creditors as a whole.” Corhart seems to argue that such would be the case here — that if we were to conclude that the trial court erred in applying the full consideration paid for the joint releases against the judgments, the effect would be to increase “the joint Judgment.” It contends that “[tjhere is no legal authority which would permit this Court or the Trial Court to increase the amount of the Judgment against one Joint Tortfeasor ... and not the other____” We disagree. ⁵⁰ Three of the judgments at issue here — those obtained by the Collier, Regula, and Pilachowski plaintiffs — were against only Eagle-Picher and Celotex.

Because we have stayed the appellate proceedings as to those two defendants, we shall not consider any challenge to those judgments. Subject to a decision in some future proceeding conducted when and if those stays are lifted, those three judgments will remain intact as entered. Corhart’s motion to stay goes only to the other two judgments — those won by the Wilkins and Morosko plaintiffs — which, we presume, were entered against Eagle-Picher, Celotex, and Corhart jointly and severally. 3 Because there is several, as well as joint, liability, the plaintiffs can, at their election, proceed against Corhart alone. Indeed, because of the § 362(a) stays, that is the only defendant against whom they can presently proceed.

Neither Eagle-Picher nor Celotex will, or can be, bound directly by any mandate we may issue with respect to those judgments. Nor would they be subject to the bar of res judicata or collateral estoppel. In short, despite Corhart’s suggestion to the contrary, nothing we may do in this appeal can or will increase the judgments entered against Eagle-Picher or Celotex or require them to pay anything more than they are now obligated to pay. It is possible, of course, should we find error in the reductions ordered by the court and cause the two judgments to be increased, that at some future time either the plaintiffs or Corhart might try to recover the additional amounts from Eagle-Picher or Celotex.

In that event, those defendants may have to contend with the possible stare decisis effect of this Opinion, as we propose to publish it, but they will be legally free to resist the attempt and ⁵¹ urge that our decision is (1) not binding on them, and (2) wrong. That, as a practical matter, Eagle-Picher or Celotex might find itself in a less advantageous position in such a circumstance than it would be if we declined to rule at all does not, in our view, constitute the kind of “unusual situation” envisioned by the Fourth Circuit Court of Appeals. Moreover, any indirect detriment to those defendants from not staying the appeal as to Corhart has to be weighed against the clear and immediate detriment to the two plaintiffs if we do stay it. After years of litigation, a jury found that they were injured by Corh art’s tortious conduct and awarded them damages.

If the court erred in reducing those awards, we should proceed as swiftly as possible to correct that error, at least to the extent we are able to do so. For all of these reasons, we deny the motion of Corhart to stay the appellate proceedings as to it.

III

REDUCTIONS IN VERDICTS A. Introduction The complaints made about the reductions ordered by the court present three separate, though interrelated, issues. The first basic premise adopted by the court was that only amounts paid in settlement by defendants deemed to be joint tortfeasors would be considered in calculating the reductions; amounts paid by non-joint tortfeasors would not be considered. That ruling is challenged by Corhart in its cross-appeal; as noted earlier, it believes that all amounts paid in settlement should be considered, whether or not the payor was a joint tortfeasor. The second issue stems directly from the first.

As we observed, the court determined who among the settling defendants were joint tortfeasors at a post-trial proceeding on the various defendants’ cross-claims for contribution, in which the plaintiffs were not permitted to participate. The plaintiffs complain that, because the determination of ⁵² whether a settling defendant was a joint tortfeasor had a direct effect on the amount of their ultimate judgments, they had a legally cognizable interest in that determination and should have been permitted to participate in the proceeding. The third issue focuses entirely on the joint releases given to GAF, Quigley, and Keene. As we indicated, the plaintiffs proffered evidence to show that Keene contributed one-third of the aggregate amount paid for those releases, urging that, because only Keene, among those defendants, was found to be a joint tortfeasor, only its contribution and not the aggregate sum should be considered as the consideration paid for the releases.

The court, as noted, rejected both the proffered evidence and the argument and found the aggregate amounts to be the consideration paid for the releases. We shall deal with these issues seriatim. B. Amounts Paid By Non-Joint Tortfeasors The argument, initially presented by Eagle-Picher, Celotex, and Corhart but considered now only as to Corhart, proceeds from the common law principle that a plaintiff is generally entitled to only one recovery for the wrong done to him and that the extent of that recovery is measured ultimately by the jury’s verdict. This principle, it claims, has not been altered by passage of the Uniform Act.

All that the Act did, it contends, was to abrogate the common law rule that a settlement with one alleged tortfeasor extinguished the plaintiff’s right to proceed against other tortfeasors, in favor of the rule permitting such actions to proceed but reducing any judgment entered against the non-settling defendant by whatever was recovered in settlement with the other alleged tortfeasors. In essence, Cor-hart interprets the Act as permitting, or at least not precluding, the deduction of any amount or pro tanto share paid by a person whom the plaintiff ever alleged was a joint tortfeasor, whether or not that person was ever found or declared to be a joint tortfeasor. Only in that way, it says, ⁵³ can the law effectively protect against a windfall recovery by the plaintiff. We reject that contention, at least in the form and breadth presented.

Citing some language used in two pre-Act case s—Gun ther v. Lee, 45 Md. 60 (1876) and Cox v. Md. Elec. Rwys Co., 126 Md. 300 , 95 A. 43 (1915) — Corhart asserts that, at common law, a release given to anyone in connection with an injury sufficed to preclude a plaintiff from proceeding against others in connection with the injury. It concedes that, by virtue of the Act, the rule precluding further proceedings has been abrogated. It claims, however, that the common law rule, as construed by it, survives in a transmogrified form as a complement, or supplement, to the statute.

The “one-injury-one-recovery” principle, it asserts, requires that the statutory scheme of dollar for dollar or pro tanto reductions be applied with respect to all settlements made by the plaintiffs, whether or not the releasee is a joint tortfeasor. We find no merit in that argument. In the first place, Corhart’s view of the common law is incorrect; the rule was never actually applied in Maryland as Corhart suggests. The language seized upon by Corhart originated in Gunther v. Lee, supra, where a homeowner sued her neighbor and contractors employed by the neighbor for damage done to her property by reason of work done on the neighbor’s home.

It seems clear from the Opinion that the three defendants were sued as classic common law