Settlements In Multi-Party Litigation
Posted Apr 6, 2020
By Washington State Litigation Lawyer Andrew M. McKenzie
Frequently a plaintiff’s injuries are attributable to the combined effects of the actions of multiple defendants. In this context, the defendants may be jointly and severally liable to the plaintiff, which means that if one defendant is insolvent, the plaintiff may collect the full amount of the damages from the remaining defendant(s).
Under RCW 4.22.040, defendants who are jointly and severally liable can sue each other for their respective share of responsibility, even though such cross-claims have no effect on the plaintiff’s underlying right to recovery. The right of a jointly and severally liable defendant to sue co-defendants to make them pay is called a “right of contribution.” In multi-party litigation of this kind, defendants may have differing resources, tolerance for risk, and assessment of the case. One defendant may be willing to settle to avoid a trial while the co-defendants would rather try the case and take their chances.
Washington policy is to encourage settlements rather than continued disputes, and to that end the legislature has provided a mechanism to facilitate settlements with less than all of a pool of jointly liable defendants. A settling defendant may cut off the right of its co-defendants to seek contribution by demonstrating the reasonableness of the settlement in court under RCW 4.22.060. The court will consider multiple factors to determine the reasonableness of the settling defendant’s settlement with the plaintiff, including the plaintiff’s damages, plaintiff’s liability theory, the merits of the settling defendant’s asserted defense, the relative fault of the parties, the risks and expenses of continued litigation, the released defendant’s ability to pay, evidence of bad faith, collusion, or fraud, the extent of the plaintiff’s investigation and preparation of the case, and the interests of the defendants remaining in the case. The settling defendant bears the burden of proving reasonableness. When following this procedure, the settling defendant has piece of mind knowing that its co-defendants may not pursue the settling defendant for contribution in case the trial goes in the plaintiff’s favor. In multi-party litigation, a settling defendant should take care to make the settlement agreement contingent upon a finding of reasonableness by the Court in order to be assured that the settlement completely extricates the settling defendant from the case.
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