Martinez v. Lopez

RODOWSKY, Judge. This case involves the Maryland version of the Uniform Contribution Among Tort-Feasors Act, Md.Code (1957, 1979 Repl.Vol.), Art. 50, §§ 16-24 (the Md. Act). There are ⁹⁴ two tort-feasors. One settled before trial under a pro rata release by paying more than double a jointly liable defendant’s pro rata share of the total claim as ultimately determined by the jury’s verdict.

The issue is whether the amount paid by the settling defendant in excess of a pro rata share generally operates to reduce the total claim and, in this case where such a reduction produces a negative number, whether the excess paid operates to satisfy any judgment to be entered for the injured party against the nonsettling tortfeasor. For reasons hereinafter stated we shall hold that the total claim is satisfied. In so holding, we reverse the Court of Special Appeals which had affirmed the Circuit Court for Montgomery County’s judgment for a pro rata share. Martinez v. Lopez, 54 Md.App. 414 , 458 A.2d 1250 (1983).

Sandra Clara Lopez, a minor, and her parents, Nancy and Augustin Lopez (collectively the Plaintiffs), sought damages as compensation for personal injuries and loss allegedly resulting from medical malpractice. Plaintiffs sued Fernando J. Martinez, M.D. (Martinez) and Suburban Hospital (Suburban). On the morning trial commenced Suburban, with court approval, settled with the Plaintiffs for $725,000.

These parties agreed in their release that “all claims recoverable by” the Plaintiffs against Martinez “are hereby reduced to the extent of the statutory pro rata share of said Suburban Hospital,” under the Md. Act “of all such damages recoverable by [Plaintiffs] on account of said incident ____” The instrument further provided that “for the purposes of the aforegoing Release” Suburban and Martinez “are to be considered as joint tortfeasors within the meaning of the [Md. Act].” Trial proceeded as to Martinez against whom the jury returned a $600,000 verdict. 1 In light of the instructions to the jury, the parties recognize that this verdict represents the full value of the Plaintiffs’ claims, without adjustment for the payment by Suburban. ⁹⁵ Martinez moved for an order crediting Suburban’s payment against the verdict, the effect of which would be to satisfy any judgment against Martinez. In the view of the trial court Martinez remained liable for a pro rata share of the total claim so that judgment for $300,000 was entered against him. 2 On Martinez’s appeal, the Court of Special Appeals affirmed. We issued certiorari in response to a petition by Martinez. The issue revolves around §§ 19 and 20 of the Md. Act which read: § 19.

Effect of release on injured person’s claim. 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. § 20. Effect of release on right of contribution. A release by the injured person of one joint tort-feasor does not relieve him from liability to make contribution to another joint tort-feasor unless the release is given before the right of the other tort-feasor to secure a money judgment for contribution has accrued, and provides for a reduction, to the extent of the pro rata share of the released tort-feasor, of the injured person’s damages recoverable against all other tort-feasors.

Martinez rests his argument on the plain language of the “but” clause of § 19. Plaintiffs, adopting an analysis advanced by the intermediate appellate court, principally contend that §§ 19 and 20 are mutually exclusive because they deal with different types of releases. Section 19 is said to address the release of a joint tortfeasor under which the ⁹⁶ settling defendant remains liable to make contribution to another joint tortfeasor (non-pro rata release). Section 20 is said to state the rules applicable where the liability of the settling defendant for contribution is extinguished because the releasing plaintiff promised the settling defendant to credit a pro rata share against the total claim (pro rata release).

Logic dictates that we initially address the plain language argument. The issue is the effect which the release given by the Plaintiffs to Suburban has on any judgment to be entered against Martinez. On that issue § 19 is dispositive. It tells us that the Plaintiffs’ release of Suburban “reduces the claim against” Martinez.

The reduction is (1) in the amount of the consideration paid for the release, or (2) if the release provides that the total claim shall be reduced by an amount or proportion, and if that amount or proportion is greater than the consideration paid, then in the amount or proportion provided. Here the consideration paid is $725,000. The release does not specify an amount by which the total claim shall be reduced, (e.g., $1 million reduction for payment of $725,000). It does state the proportion by which the total claim of the Plaintiffs shall be reduced, ie., by a pro rata share.

Under the verdict a pro rata share is $300,000. The consideration paid, $725,000, is greater than the pro rata share, $300,000. Accordingly the Plaintiffs’ total claim is reduced by $725,-000. This exceeds the total claim as valued by the jury.

Application of the § 19 reduction in this case produces a negative number. Consequently, the trial court should have granted Martinez’s motion for the entry of a credit satisfying judgment against him. This result follows from the explanation of § 19’s operation which we gave in Swigert v. Welk, 213 Md. 613 , 133 A.2d 428 (1957). For purposes of discussion in that opinion we assumed that the two parties to the appeal were joint tortfeasors.

Welk had settled with the plaintiff for $3,500 ⁹⁷ under a pro rata release. The plaintiff sued Swigert who then impleaded Welk. With respect to the effect of the Md. Act on a hypothetical judgment in favor of the plaintiff against the nonsettling tortfeasor we said {id. at 619, 133 A.2d at 431 ): In our present case, the provisions of the Uniform Act may vitally affect the amount of any judgment that the plaintiff may recover against Swigert. For instance, if the plaintiffs damages be assessed at $4,000 and if the provision of [present § 19] requiring a reduction in the amount of the consideration paid for the release be applied [i.e., $3,500], the judgment to be entered against Swigert will be $500.

In this illustration the amount paid in settlement exceeds the pro rata share of each joint tortfeasor. The amount by which the release consideration exceeds the pro rata share of the settling defendant is applied to reduce the pro rata share of the nonsettling defendant. The only difference between the illustration in Swigert and the case before us is that Suburban’s payment is more than twice a pro rata share. But nothing in § 19 or elsewhere in the Md. Act limits applying all of the settlement payment against the plaintiff’s claim where the payment is greater than the amount or proportion of reduction specified in the release.

The difference between the instant case and the illustration in Swigert is of degree but not of principle in the operation of § 19. The Md. Act was enacted by Ch. 344 of the Acts of 1941 and may be cited as the Uniform Contribution Among Tort-Feasors Act. See § 23. With the omission of certain sections not here relevant, the Md. Act is the statute promulgated by the Commissioners on Uniform State Laws in 1939 (the 1939 Model Act).

See 1939 Handbook of the National Conference of Commissioners on Uniform State Laws and Proceedings of the Forty-Ninth Annual Conference 240-252. Section 19 of the Md. Act is § 4 of the 1939 Model Act. Comments of the National Conference upon § 4 advise that its second clause ⁹⁸ is included simply to emphasize the fact that a release of one tortfeasor will benefit the others by reducing the claim against them in the amount of the consideration paid therefor, or in the amount or proportion by which the release provides that the total claim shall be reduced, whichever is larger. [Id. at 246.] Seven jurisdictions, in addition to Maryland, have adopted the 1939 Model Act in some form. These are Arkansas, Delaware, Hawaii, New Mexico, Pennsylvania, Rhode Island and South Dakota.

See 12 U.L.A. 57 (1975 & Supp.1984). “Most of these states have made important changes in the [1939 Model Act] which have defeated the whole idea of uniformity ....” Commissioners’ Prefatory Note (1955 Revision), id. at 59. However, cases like the present one have arisen in certain of the foregoing states. In each case § 4 of the 1939 Model Act had been adopted in the same form in which it exists as § 19 of the Md. Act. Where the consideration paid for a pro rata release exceeded the total of (1) the pro rata shares by which the release provided that the common liability was to be reduced and (2) the pro rata share of the nonsettling joint tortfeasor, the plaintiff’s claim was held to be paid in full.

See Raughley v. Delaware Coach Co., 47 Del. 343 , 91 A.2d 245 (Super.1952); Daugherty v. Hershberger, 386 Pa. 367 , 126 A.2d 730 (1956) (as to claims of certain plaintiffs); cf. Weinstein v. Stryker, 267 F.Supp. 34 (E.D.Pa.1967). Where the amount paid for a pro rata release by the settling defendant exceeded the party’s pro rata share, but did not exceed the total of the shares of all joint tortfeasors, the consideration in excess of the pro rata share also reduced the plaintiff’s claim and was in effect credited to the benefit of the nonsettling defendants. See Garrison v. Navajo Freight Lines, Inc., 74 N.M. 238 , 392 P.2d 580 (1964); Daugherty v. Hershberger, supra, 386 Pa. 367 , 126 A.2d 730 (as to certain claims); Augustine v. Langlais, 121 R.I. 802 , 402 A.2d 1187 (1979). 3 The ⁹⁹ holdings in these cases apply the principle illustrated in Swigert v. Welk, supra. For Suburban’s payment to satisfy both its and Martinez’s pro rata shares of the common liability comports with the analysis of the Md. Act made by the late Wendell D. Allen, Esq.

Mr. Allen’s study paper, Joint Tortfeasors; Contribution; Indemnity; Procedure, which was first read to the Barristers Club of Baltimore on Tuesday, March 30, 1948 and later printed in the Daily Record, June 7, 1948, at 3-5, substantially influenced the practical construction of the Md. Act by the bar and trial courts of this state. In a letter to unnamed attorneys of November 27, 1970, printed in the Daily Record, January 11, 1971, at 6, cols. 1-3, Mr. Allen opined on facts completely analogous to those in the present case that the plaintiff would take nothing against the nonsettling defendant. He did “not see any other rational way in which to apply the language of the [Md. Act].” In his view the doctrine of unjust enrichment governed and had implicitly been applied in the illustration given in Swigert . Plaintiffs are joined by an amicus, The Maryland Trial Lawyers’ Association, in defense of the construction of the Md. Act by the intermediate appellate court.

It is said that the Plaintiffs agreed in their release of Suburban to credit ¹⁰⁰ against the common liability only the pro rata share of Suburban. To credit twice a pro rata share defeats the intention of the parties to the release. This argument ignores that language in § 19 which applies the greater of the consideration paid or the amount or proportion agreed upon to reduce the total claim. The parties to the release cannot by their agreement restrict the benefit which the statute says flows from that release to the nonsettling defendant who is not a party to the agreement.

Ultimately Plaintiffs’ statutory construction argument rests on the theory adopted by the Court of Special Appeals in this case. In its Martinez the intermediate appellate court drove a wedge of mutual exclusivity between §§ 19 and 20. Section 19 was said to deal with releases which do not protect the releasee from possible contribution to another joint tortfeasor. Section 20 was said to apply where the releasee obtains the reduction of the damages by the pro rata share of the released tortfeasor and is thereby protected from a claim for contribution.

But one cannot get to that destination by following the road of the statute’s words. We agree with Martinez and other amici that the two