Anyone who has handled tort claims in Rhode Island, including personal injury and negligence matters, knows that the resolution of these claims is complicated by the presence of multiple defendants. These complications come by way of parties arguing for differing levels of responsibility—if any, conflicting theories of defense, and the classic “deep pocket” defendant who is often asked to carry the weight of the “judgment-proof” one. Handling these claims was not made any simpler or less confusing by reviewing Rhode Island’s previous version of its enactment of the Uniform Contribution Among Tortfeasors Act, G.L. 1956 § 10-6-1 et seq.; however, recent amendments have made Rhode Island’s law more consistent with liability practices in other states. This should make handling tort claims in Rhode Island more familiar to construction companies, insurance carriers, and their legal counsel.
The law recently changed with the passage of two bills through both houses of Rhode Island’s General Assembly, which became effective July 14, 2021. In short, after these changes, a defendant, the “tortfeasor,” who settles with a claimant is protected from liability for contribution to other defendants without need for consideration of his or her degree of fault and the remaining defendants get a credit fixed to the amount the settling defendant paid for its release. See § 10-6-7 (with amendments effective July 14, 2021).
Previously, Rhode Island’s law contained provisions that set the credit given to non-settling defendants as either the amount paid by the settling defendant OR “any amount or proportion by which the release provides that the total claim shall be reduced, if greater than the consideration paid.” See § 10-6-7 (quoted language repealed by 2021 amendments). In practice, to ensure the settling defendant was immune from contribution suits from other defendants, the settling party and the claimant would agree to include in the release that the claimant will reduce his or her damages by the greater of the consideration paid or the pro-rata share of fault of the settling defendant. See pre-July 14, 2021 § 10-6-8 (repealed in its entirety by 2021 amendments). This could lead to fraught results, particularly for claimants, if a jury were to place a large percentage of fault for an injury on a defendant who had already settled for a relatively nominal amount, the remaining defendants could gain a windfall and elect to take the higher credit equal to the settling defendant’s pro rata share.
For example, a worker injured on a construction project sues the general contractor and a subcontractor the injured party contends was negligent. Prior to trial, the subcontractor settles for $25,000, and the claimant intends to continue to pursue the general contractor, which he believes is mainly at fault for the injury. A jury rendering a verdict for the injured worker would be asked to both award damages and assign fault between the general contractor and the subcontractor, even though the subcontractor is not a party to the trial. If a jury awards $1 Million in damages and finds the parties equally at fault, a 50/50% share of liability, the general contractor could have elected to take the credit of 50% of the verdict, or $500,000, leaving it only owing $500,000 to the injured party. The injured party took a risk by settling with the subcontractor for only $25,000, and will recover only $525,000 despite a jury’s finding his damages were $1 Million. This scenario has put the claimant in the position of being undercompensated for proved damages due to decisions made to settle with one or more tortfeasors prior to trial.
Using the above example, under the new law the general contractor would only be entitled to a credit equal to what the subcontractor settled for, or $25,000. The claimant would be able to seek $975,000 from the general contractor to satisfy the judgement arising out of the jury’s verdict. While not all scenarios would be this extreme, it is clear that the benefit of certainty runs to both parties. The remaining tortfeasor knows for certain the reduction in its exposure and the claimant is protected from the possibility a jury may views fault quite differently.
While the changes to the law appear to skew towards a benefit to the claimant, there are instances where defendants will benefit and can use the changes to resolve their involvement in a claim. For instance, settlement with defendants who have only a small role in the claim will be more attractive to claimants because the claimant will know for certain his damages are reduced only in the amount of the small settlement. A defendant whose fault is comparatively small can use this new attractiveness to its advantage and avoid further costs of litigation by reaching a reasonable settlement with the claimant. Overall, in an industry where uncertainty is best to be avoided the clarification of Rhode Island’s joint tortfeasor laws will benefit claims handlers and their counsel in resolving some tricky issues.
An acknowledgment to State Representative and attorney Brian C. Newberry for his article in the September/October 2021 issue of the Rhode Island Bar Journal that provided an inside-the-legislature look on these recent changes to the law.