Defendant Is Entitled To A Credit Against
Arbitration Award For Amounts
Paid To The Plaintiff By Settling Tortfeasors
Tiberghein v. B.R. Jones Roofing Company, No. 2006-657 (August 28, 2007)

Facts: The plaintiff was injured in a slip and fall accident at the Durham Market Place. 

The fall was caused by a puddle of water which resulted from a leak in the roof. 

The defendant, BR Jones Roofing Co., had previously repaired and restored the roof, and had provided the Durham Marketplace with a ten-year roofing guarantee.  Despite having received notice of the leaks, BR Jones failed to satisfy the guarantee.

The plaintiffs filed suit against BR Jones, the Durham Market, Hannaford Brothers (the sublessor), and Colonial Durham Associates (owner of the shopping plaza).  The plaintiffs settled their claims with Durham Market and Colonial Durham for $65,000 ($32,500 each). 

Hannaford filed a cross-suit for indemnification against the plaintiffs and Durham Market alleging that it had been wrongfully named as a defendant.  The plaintiffs paid $8,000 to settle that claim. 

The only remaining parties, the plaintiffs and BR Jones, submitted the case to binding arbitration, which resulted in a $250,000 award.  Prior to arbitration, plaintiffs’ counsel had written a letter to defense counsel acknowledging that the defendant would be entitled to a credit relative to the settlements already received.  BR Jones issued a check to the plaintiffs in the amount of $192,152.33, which included interest from the date of the award, less a credit in the amount of $65,000 for the settlements with Durham Market and Colonial Durham. 

Although the arbitrator informed the parties that the $250,000 award was intended to represent the entire amount of damages to which the plaintiffs were entitled, and not just the amount attributable to the defendant’s conduct, the plaintiffs filed motions with the superior court arguing that the $250,000 award should not have been reduced by the $65,000 settlement.  The trial court denied the plaintiffs’ motion, ruling that the amount paid by BR Jones fully satisfied the arbitrator’s award. 

The plaintiffs appealed, arguing that the defendant was not entitled to a pro tanto, dollar-for-dollar credit for the $65,000 settlement under RSA 507:7-h because RSA 507:7-e and 507:7-I do not apply to arbitration awards. 

Held:   Affirmed. 

The Court held that BR Jones properly reduced the amount due by deducting the $65,000 settlement, ruling that the statutes entitling defendants to a credit for settlements payments made by other tortfeasors are applicable to both court and arbitration proceedings. 

            RSA 507:7-h provides:

A release or covenant not to sue given in good faith to one of 2 or more persons liable in tort for the same injury discharges that person in accordance with its terms and from all liability for contribution, but it does not discharge any other person liable upon the same claim unless its terms expressly so provide. However, it reduces the claim of the releasing person against other persons by the amount of the consideration for the release.

            RSA 507:7-i provides:

[U]pon return of a verdict for the plaintiff by the jury in any such trial, the court shall inquire of counsel the amount of consideration paid for any such settlement, release, or covenant not to sue, and shall reduce the plaintiff’s verdict by that amount.

RSA 507:7-e directs the court to “[i]nstruct the jury to determine, or if there is no jury shall find, the amount of damages to be awarded …in accordance with the proportionate fault of each of the parties.

The Court concluded that the statutes are not limited to court proceedings, and entitle the non-settling tortfeasor to a dollar-for-dollar credit against an arbitration award for settlement payments by other tortfeasors. 

The Court also rejected the plaintiffs’ claim that the $8,000 payment they made to Hannaford should reduce the defendant’s credit to $57,000, ruling that the defendant should not be required to bear the cost of the plaintiff’s settlement of Hannaford’s independent claim against the plaintiff.

The Court also found unpersuasive the plaintiffs’ argument that the defendant was not entitled to the $65,000 credit because the arbitrator did not apportion fault among the tortfeasors under Nilsson and DeBenedetto.  The Court held that unless there is a finding of minimal fault (less than 50% under RSA 507:7-e, I(b)), a defendant is jointly and severally liable and, therefore, entitled to a credit for settlements received by the plaintiff.  Here, the plaintiffs alleged a common theory of liability against the defendants, and BR Jones was jointly and severally liable.

Regards,

Mike Wallenius

603-634-4300
mwallenius@gss-lawyers.com