3P practice, contribution, and indemnification Flashcards
3P Practice (Impleader)
a) Impleader: procedural device used by D to join another party as a D alleged to be liable for damages D may have to pay P—claim is usually for indemnity or contribution (full or partial reimbursement arising out of same transaction or occurrence as P’s cause of action).
1) D becomes Third Party P in relation to the Third Party D.
2) rather than forcing D to wait until after she has paid a judgment to P, impleader enables D to join other party as TPD
b) Mechanics: D may implead (without court order) at any time after D answers, by doing the following.
1) D FILES with court a summons and third-party complaint
2) Within 120 days of filing, D SERVES summons and complaint on TPD and plaintiff.
(a) Need Proper Basis Jdx
(b) Need Proper Service of Process
3) TPD must ANSWER (serve on all parties)—w/in 20 days (personal delivery in NY) or 30 days (other methods)
4) After Answers, P may amend complaint to assert a claim directly against TPD within 20 days (making TPD a direct D to P)—if more than 20 days, need to motion ct for permission for such amendment
5) Relation Back of SOL: P’s added claim against TPD will be deemed interposed on date D filed impleader papers with court (and therefore timely) IF:
(a) P’s claim is based on same transaction/occurrence (facts) as impleader claim, AND
(b) P’s claim would have been timely on date of impleader.
indemnity
6 year SOL
indemnity flows from either a contractual or other relationship between actual wrongdoer and another, completely shifts loss
claim for full, 100% liability, by reimbursement, either:
1) By Contract—shift responsibility or
2) Implied-in-Law:
(a) Products Liability—manufacturer indemnifies retailer
(i) Leasing Defective Product (in the absence of negligence by lessee.
(b) Vicarious Liability—driver indemnifies owner of car who pays victim for driver’s negligence.
contribution
“two or more persons who are subject to liability for damages for same personal injury…may claim contribution among them whether or not an action has been brought or a judgment has been rendered against the person from whom contribution is sought”…BUT for an action for contribution to be maintained, it is necessary that each tortfeasor have breached a duty (SO right of contribution arises among several tortfeasors who share culpability for an injury)
6 year SOL from date of D’s full payment: when TPD breached tort duty which contributed to or aggravated damages for which D may be held liable to P → D may seek contribution from TPD, even if injured P has no direct right of recovery against TPD
—affects reimbursement rights among multiple tortfeasors, all of whom actually participated in tort, to mitigate harshness of joint/several liability (where each tortfeasor can be held liable to P for full amt of damages without regard to that individual tortfeasor’s % of fault).
1) Example: If P agrees that B is only liable for gross negligence, and B negligently causes damage which A is also jointly and severally liable for, even though B doesn’t have direct liability to P, A can still sue B for contribution because B “contributed to or aggravated damages.”
Note: MBE-intentional tortfeasors not entitled to contribution; NY-are entitled in all tort cases
2) Formula for Contribution
(a) Comparative Degrees of Fault (Majority/NY): D-payor can’t compel other D to pay more than own respective equitable shares of fault.
- so amt of contribution to which a tortfeasor is entitled is excess actually paid by him over and above his % of judgment
(b) Equal Shares Formula (Minority): Contribution shares always equal in amount, regardless of fault
(i) TIP: only apply if MBE asks for this explicitly
3) Special Contribution Cases
(a) Worker’s Compensation Cases (NY Exception):
(i) MBE: TPD NEVER has right to contribution from employer for any injury
(ii) NYS: TPD can’t seek contribution/indemnity from employer UNLESS GRAVE INJURY!
(1) Grave Injury (Strictly Applied): death; total loss of limb (arm, leg, hand, foot, nose, ear) or index finger, or multiple fingers/toes; paraplegia or quadriplegia, severe facial disfigurement, total blindness/deafness; total disability brain damage.
(2) Not Grave Injury: loss of thumb, finger tips—tip is not a finger—loss of one eye, broken bones, puncture wounds.
(b) Successive Tortfeasors: If 3rd-party aggravates damages (foreseeable) → 3rd-party can be liable to D for contribution.
(i) Example: If Dr commits medical malpractice after P hurts D, P only has 2.5 years to sue Dr. for patient-doctor malpractice, BUT D has 6 years to sue Dr. in contribution action from date of full payment
how to assert contribution/indemnity
1) If Co-Defendants—cross-claim
2) If Non-Party—either
(a) D impleads TPD.
(i) TIP: Will never be a SOL problem on impleading for contribution, because SOL starts on full payment of damages, but at this stage no damages have been paid.
(b) D sues TPD in separate action (contribution/indemnity from date of full payment of judgment).
(i) But, findings of fact and % fault won’t be binding on other tortfeasors → so need to prove whole case all over again—expensive and time consuming, and risky.
(1) Rationale: you can’t assert collateral estoppel against party who didn’t get day in court.
joint and several liability
Each tortfeasor liable for full amount of P’s damages regardless of individual tortfeasor’s percentage fault; payor seek reimbursement from others.
1) MBE: EXCEPT: Intentional Torts—only contribution for negligence claim
(a) NYS: contribution allowed all cases (intentional and negligence).
2) NYS: EXCEPT: CPLR Article 16: NY modifies Joint and Several Tort Liability (tort reform) in personal injury cases (not for wrongful death or property damage) by limiting non-economic damages for a joint tortfeasor who is 50% or less at fault to no more than own equitable share (no contribution needed)
(a) Non-Economic Damages—pain/suffering, loss of consortium, mental anguish (NOT economic, which includes out-of-pocket monetary losses, including lost income and medical expenses)
(b) EXCEPT: No Article 16 For:
(i) Intentional or Reckless Disregard Tortfeasors
(ii) Environmental Polluter—release hazardous substance
(iii) Some Car Drivers/Owners: Article 16 depends on status of party:
(1) Ordinary Driver/Owner: Ineligible
(2) Auto Manufacturer: Eligible
(3) Passenger Tortfeasor: Eligible
(4) Driver/Owner of Police/Fire Vehicle: Eligible
settlement in cases involving multiple tortfeasors
if P settles with one D, no discharge of liability for non-settling tortfeasors:
1) Effect on P: P can still sue others for unpaid balance BUT judgments against non-settling tortfeasors reduced to reflect what was already paid.
(a) The Reduction Formula: Judgment against non-settling tortfeasors reduced by LARGER of:
(i) Settlement amount OR
(ii) Settling tortfeasor’s equitable share of fault.
(iii) Example: D1 settles for 30K; court enters 100 judgment against D2, finding D2 60%, D1 40% liable; judgment reduced by 40 to 60; P gets 90 → If P loses money if he settles and settler % fault found to be higher (risk of settlement).
2) Effect on D (Settler):
(a) Contribution—does cut off contribution claims by/against settler; settler is out of the picture
(b) Indemnity—does NOT cut off indemnity claims; vicarious liable party can settle and then seek full reimbursement from active tortfeasor.
