Upon consideration of Eaton Corporation's Petition for Rehearing of Order Denying Writ of Certiorari as Improvidently Granted, and the Joinder of Amicus Curiae, The Product Liability Advisory Council thereto filed in the above cause, and now being sufficiently advised in the premises,

IT IS THIS DAY ORDERED that said Petition shall be, and the same hereby is DENIED.

BY THE COURT, EN BANC, MARCH 9, 1995.

Opinion by CHIEF JUDGE STERNBERG

Defendant Eaton Corporation (manufacturer) appeals a judgment entered on a verdict finding it partially liable for the plaintiffs' injuries. Plaintiffs, James and Marilyn Simon (homeowners), cross-appeal. Defendant Rob Coppola, d/b/a Designer Spas and Hot Tubs, (Coppola) responds to both the appeal and cross-appeal. We affirm, but remand for allowance of costs.

In late 1987, the homeowners contracted with Tom and Bill Schnell, d/b/a Property Renovation Specialists, for the installation of a deck and a used hot tub. The Schnells in turn contracted with Coppola to inspect the tub's equipment pack and repair it as needed. The pack consisted of the heater, circulation equipment, and other controls. Greg Anderton, an employee of Coppola, installed new controls including a thermostat manufactured by Eaton.

Another Coppola employee, Jerry Wolf, installed the equipment pack in the tub at the home. Wolf set the thermostat at the half-way point. He told the Schnells and the homeowners that the tub would be warm enough to use that evening, but advised placing a solar blanket over it for the next few days to retain heat. He suggested cutting the blanket to fit the inside of the tub. The homeowners used the tub that evening and covered it with a solar blanket.

The next morning, Mrs. Simon went to the tub to cut the blanket. To do so, she rolled up her pants leg and started to step into the tub. As she did so, she realized the water was extremely hot and tried to pull back but lost her balance and fell into the tub immersing the lower half of her body in the water. She sustained second and third degree burns.

The homeowners filed suit against the manufacturer, Coppola, and two other defendants, alleging that the thermostat was defective. They brought claims founded in strict liability, breach of warranty, and breach of express and implied warranties of merchantability and fitness for a particular purpose. The homeowners alleged that Coppola was negligent in its installation of the thermostat and control pack in the tub.

When Coppola designated Tom and Bill Schnell, d/b/a Property Renovation Specialists, as nonparties at fault, the homeowners amended their complaint to add them as defendants. The homeowners subsequently settled with the Schnells before trial, but the Schnells remained designated nonparties at fault throughout the trial.

Coppola filed a petition in bankruptcy shortly after the suit was filed. An automatic stay was extended but later was lifted to the extent of his liability coverage. The homeowners again amended their complaint to include Anderton and Wolf as defendants.

The homeowners then entered into a covenant not to execute with Hawkeye Insurance Company on behalf of Coppola, Anderton, and Wolf. The homeowners accepted a $300,000 payment, dismissed their claims against Anderton and Wolf while retaining Coppola and Designer Spas as defendants, and agreed not to execute on any judgment against Coppola personally in excess of $300,000.

After a three-week trial, the jury returned a verdict in favor of the homeowners on all four counts against the manufacturer. The verdict allocated 75% fault to the manufacturer and 12.5% fault each to nonparties Tom and Bill Schnell. The verdict found both Coppola and Mrs. Simon negligent but not liable, finding no causal connection between the negligence of either and the homeowners' damages. The jury awarded $850,000 to Mrs. Simon for economic and non-economic damages and $25,000 to Mr. Simon for loss of consortium.

After a hearing, the court reduced the verdicts by the 25% apportioned to the nonparties and awarded $637,500 to Mrs. Simon and $18,750 to Mr. Simon.

The manufacturer contends the court erred in several evidentiary rulings and in its calculation of damages with regard to the effect of the various pre-trial settlements. The homeowners cross-appeal, contesting the court's award of expert witness fees to Coppola. Coppola joins in the homeowners' response to the manufacturer's appeal and responds to the homeowners' cross-appeal.

I.

Contrary to the manufacturer's first contention, the trial court did not err in allowing a thermostat to be received in evidence for impeachment purposes.

The homeowners' theory against the manufacturer was that the thermostat installed in the tub had been defectively manufactured. The particular component of the thermostat claimed to be defective was known as an actuator. The homeowners contended that the defect in the actuator allowed the water to heat beyond the marked maximum of 115 degrees F. Specifically, they alleged that the actuator, a metal bulb, had been defectively crimped during manufacture and that this defect altered the temperature sensing mechanism such that it allowed the water in the tub to heat to 180 degrees F. The manufacturer maintained that any damage to the thermostat occurred after it left the factory.

The actuator involved was manufactured in 1985. The homeowners sought to introduce another thermostat manufactured in 1989 to impeach testimony of the manufacturer's expert who testified that it would be "bordering on [the] impossible" for the actuator bulb at issue to leave the factory in the condition alleged.

The manufacturer contends that the court erred in admitting the second thermostat, arguing that the differences between the two resulted in it not being substantially similar to the actuator at issue.

This second thermostat had been discovered by the homeowners shortly before trial was scheduled to begin. It had gone through quality control inspections at the factory, but it too overheated. An expert witness for the homeowners examined it and submitted an affidavit concluding that the actuator component of the thermostat was substantially similar to that in the homeowners' tub, even though the entire thermostat unit differed in several other ways.

The manufacturer moved in limine to exclude the second thermostat, arguing that it was not substantially similar and that, pursuant to CRE 403, any probative value was outweighed by the potential for unfair prejudice in its influence on the jury. The court denied the motion, ruling that the evidence was admissible as impeachment of the manufacturer's expert witness. It found that the CRE 403 argument went to factual issues, including the difference in the dates of manufacture and the differences in manufacture and materials. The court noted that the homeowners would still have to show at trial the substantial similarity between the actuators.

Evidence of other similar post-accident product failures is admissible upon a showing that the other accidents occurred under circumstances and conditions the same or substantially similar to the one involved in the present case. Such evidence is particularly relevant when the defendant contends that the alleged incident could not possibly have caused the complained-of injury. And, the court has discretion to determine the similarity and to weigh CRE 403 concerns implicated by such evidence. Koehn v. R.D. Werner Co., 809 P.2d 1045 (Colo.App. 1990).

Any differences in the circumstances between the two occurrences goes to the weight to be given such evidence. Ponder v. Warren Tool Co., 834 F.2d 1553 (10th Cir. 1987).

The court did not rule immediately on the motion in limine, preferring to wait until trial. Evidence concerning the second thermostat was introduced during testimony of the manufacturer's expert after he stated his opinion concerning the near impossibility for a thermostat to go through the manufacturer's testing procedures and still allow water to heat to 180 degrees F and, his belief that the actuator at issue had not left the factory in the condition it was in at the time of the incident.

The record reflects that the court allowed substantial voir dire before permitting the introduction of the second thermostat, during which the manufacturer was afforded the opportunity to establish the differences between the two thermostats. We perceive no abuse of discretion in the court's decision. See Koehn v. R.D. Werner Co., supra. See also Wheeler v. John Deere Co., 862 F.2d 1404 (10th Cir. 1988) (evidence of other incidents admissible to impeach if proponent first shows similarity to product at issue).

II.

We also disagree with the manufacturer's contention that the court erred in not directing a verdict on homeowners' claims of strict liability and breach of implied warranty of fitness for a particular purpose.

A motion for a directed verdict should be granted only if the evidence, considered in a light most favorable to the non-moving party, compels the conclusion that reasonable persons could not disagree, and when no evidence has been presented that could sustain a jury's verdict against the moving party. United Bank v. One Center Joint Venture, 773 P.2d 637 (Colo.App. 1989).

To establish a prima facie case of strict liability based on a defective product, the plaintiff must show that the product: (1) was defective and because of the defect was unreasonably dangerous; (2) the defect existed at the time the product was sold or left the defendant's control; (3) the product was expected to and did reach the plaintiff, an expected user, without substantial change in its condition; (4) the plaintiff was injured; and (5) the defect was a cause of the injury. CJI-Civ.3d 14:18 (1989).

Taken in the light most favorable to the homeowners, there was sufficient evidence in the record for a reasonable jury to conclude that the crimp in the actuator existed when it left the manufacturer's factory and that it rendered the thermostat defective and unreasonably dangerous by allowing the water to heat past the marked maximum temperature, that it reached the homeowners without substantial change, and that it was a cause of the homeowners' injuries.

Shaw v. General Motors Corp., 727 P.2d 387 (Colo.App. 1986) and other cases cited by the manufacturer are distinguishable. The products involved in those cases were not defective when they left the manufacturer, but either became components of allegedly defective finished products or were subject to misuse. Here, on the other hand, the actuator involved was alleged to be defective when it left the manufacturer's factory.

To establish a prima facie case for breach of implied warranty for fitness for a particular purpose, the plaintiff must show that: (1) the defendant sold and impliedly warranted the product to be fit for a particular purpose; (2) the plaintiff was reasonably expected to use the product; (3) the product was not suitable for the purpose warranted; and (4) the breach was a cause of the plaintiff's injuries. See CJI-Civ.3d 14:8 (1989).

Again, taken in the light most favorable to the homeowners, there was sufficient evidence in the record for a reasonable jury to conclude that the actuator was impliedly warranted by the manufacturer for use in hot tubs, that the homeowners could have been reasonably expected to use the thermostat and that, due to the defect, the product was not fit for such use and was a cause of the homeowners' injuries.

Accordingly, we perceive no error in the denial of the manufacturer's motion for directed verdict on these two claims.

III.

The manufacturer argues that the court erred in admitting two exhibits into evidence. We perceive no abuse of discretion.

Rulings on relevancy of evidence are within the sound discretion of the trial court and are not to be disturbed unless the record demonstrates an abuse of that discretion. K.N. Energy, Inc. v. Great Western Sugar Co., 698 P.2d 769 (Colo. 1985). There was no such abuse here.

The first questioned exhibit was a thermostat manufactured in 1987 and purchased by the homeowners' expert during a pre-trial investigation. Although the actuator was not crimped as was the one at issue, it carried the same model number and functioned and operated the same way. It was admitted after the manufacturer's expert conceded in voir dire that the only significant difference was the absence of crimping which, he testified, would not affect the high end of the temperature range.

The second exhibit was a log of the results of final inspections of thermostats of the same model as the one at issue which were manufactured at the factory from 1984 to 1988. It showed that, in 1986, a lot of 200 thermostats had been rejected because the "crimp in actuator was too big."

The court concluded that the log "cut both ways" because it showed not only that the manufacturer's quality control program had discovered the problem but also the potential for error in the manufacturing process. The court also stated that the log would help the jury better understand the manufacturing process.

Under these circumstances, we conclude that the court did not abuse its discretion in admitting either exhibit. K.N. Energy, Inc. v. Great Western Sugar Co., supra.

IV.

The manufacturer next contends that the court erred when it permitted Mrs. Simon's physician to offer certain medical opinions.

The physician was accepted as an expert in plastic and reconstructive surgery and the care of burn patients. He testified that he had discontinued a steroid treatment after Mrs. Simon reported certain gynecological symptoms.

The manufacturer objected, claiming that matters concerning the area of gynecological and obstetrical medicine were outside the doctor's area of expertise. The court overruled the objection and allowed the testimony. The doctor then explained his reasons for discontinuing the treatment.

The homeowners contend that the doctor did not seek to offer an expert opinion in gynecological and obstetrical medicine by testifying as to the causes of Mrs. Simon's symptoms, but rather gave his reasons for his course of treatment which were based on Mrs. Simon's physical responses to that treatment.

We agree with the homeowners and perceive no abuse of discretion in the court's evidentiary ruling. See Publix Cab Co. v. Colorado National Bank, 139 Colo. 205, 338 P.2d 702 (1959). See also K.N. Energy, Inc. v. Great Western Sugar Co., supra.

V.

The manufacturer also asserts that the court erred in not allowing the jury to consider the potential liability of Anderton and Wolf and also in its decision not to inform the jury of the terms of the homeowners' settlement with them. We disagree with both contentions.

The manufacturer argues that the jury was permitted, either through inference or implication, to conclude that neither Anderton nor Wolf was liable. To the contrary, the record reflects that the jury instructions stated that both Anderton and Wolf were employees of Coppola acting within the scope and course of their employment at all relevant times. Consequently, the jury could have assigned fault to either Anderton or Wolf or both and was instructed that, should it do so, any such liability should be attributed to Coppola.

Citing Greenmeir v. Spencer, 719 P.2d 710 (Colo. 1986), the manufacturer argues that the court was required to advise the jury of the fact of the settlement between the homeowners and Anderton and Wolf. We conclude that Greenmeir does not mandate such action here.

In the Greenmeir ruling, the supreme court held that, in order to avoid jury speculation as to the fate of an absent person when the defendant is obviously not the only potentially liable person: "[I]n the usual case a jury should be advised of the fact of settlement, but not the amount." The court, however, made clear that it was not establishing an absolute rule. It left the decision to inform the jury to the discretion of the trial court, requiring only that, if a trial court determines that such an instruction is not appropriate, it must make a sufficient record to allow appellate review.

Here, the trial court determined that it could "best reach justice in this case" by deviating from Greenmeir. Given that Anderton and Wolf were included in the settlement reached with Coppola and that Coppola remained in the trial as a defendant, we agree with the trial court that justice was best served by not informing the jury of the settlement, allowing the jury to determine liability, and then making appropriate adjustments to the jury verdict.

Based on the circumstances of this case and the record made by the court, the court's decision not to give a Greenmeir instruction was not an abuse of discretion.

VI.

We also disagree with the manufacturer's final assertion that the court erred in not crediting the amount of the homeowners' settlement with Coppola against the amount it owed as damages.

On a motion to amend judgment, the court considered whether it should reduce the judgment pursuant to either or both §§ 13-21-111.6 and 13-50.5-105, C.R.S. (1987 Repl. Vol. 6A). The court considered the relevant case law but ultimately determined that any reduction would produce a windfall for the manufacturer. It thus did not apply either statute and let the judgment stand without reduction by the amount of the settlement. The manufacturer argues that the court erred in this decision. We agree that the court should have applied § 13-50.5-105 but not § 13-21-111.6. We do not agree that such application would reduce the judgment.

A.

In our view, § 13-21-111.6 is inapplicable to this case. That section requires the court to reduce the damage award by amounts that the plaintiff is "compensated for his loss by any other person, corporation, insurance company, or fund." The language of this clause evinces a clear intent that damages be set off by any collateral source contributions not specifically excepted by the second clause of the statute. See Van Waters Rogers, Inc. v. Keelan, 840 P.2d 1070 (Colo. 1992). The second clause provides that the verdict is not to be reduced by amounts the plaintiff receives as a result of a contract entered into and paid for by or on behalf of the plaintiff.

Thus, since the settlement payment was made by another "person or corporation," the general requirement of the collateral source statute mandates that the verdict be reduced by the settlement amount, unless the payment qualifies for the statutory exception. We conclude that a settlement accompanied by a release or covenant not to execute falls within the scope of the "contract" exception.

We note initially that Colorado courts have recognized that a compromise and settlement is a contract to end judicial proceedings. H.W. Houston Construction Co. v. District Court, 632 P.2d 563 (Colo. 1981); Recreational Development Co. v. American Construction Co., 749 P.2d 1002 (Colo.App. 1987).

In Van Waters Rogers, supra, the supreme court rejected the narrow interpretation that the exception applied only to contracts for which the plaintiff paid money. It there held that the exception applied to benefits received by fire fighters from a statewide fund created by statute and to which neither the fire fighter nor his employer ever contributed. In so holding, it ruled that the exception is "broad enough to protect benefits that result from an employment contract for which a person gives consideration in the form of services." Van Waters, supra, at 1078.

The Van Waters court went on to construe the clause as "broad enough to cover contracts for which a plaintiff gives some form of consideration, whether it be in the form of money or employment services." Van Waters, supra, at 1079. And, it noted that its construction of the statute "serves the purpose of protecting benefits to which a person is entitled by virtue of that person's own efforts." Van Waters, supra, at 1079.

Here, the settlement and covenant not to execute were entered into and paid for by the homeowners. In exchange for the settlement payments, the homeowners surrendered their claims against the settling parties. As this case illustrates, that consideration was not insubstantial. By accepting $100,000 from the Schnells, for instance, the homeowners released the right to recover on the jury's verdict against the Schnells, which proved to be 25% of $875,000, or $218,750. Also, the settlements were negotiated for and resulted from the homeowners' own efforts in pursuing those claims. We conclude that payments received in connection with a covenant not to execute fall within the statutory exception to § 13-21-111.6 and, thus, do not reduce the amount of damages.

We recognize that application of U.S. Fidelity Guaranty Co. v. Salida Gas Service Co., 793 P.2d 602 (Colo.App. 1989); Gutierrez v. Bussey, 837 P.2d 272 (Colo.App. 1992); and Smith v. Zufelt, 856 P.2d 8 (Colo.App. 1992) (cert. granted July 26, 1993), could lead to a different result. However, none of these decisions address whether the "contract" exception applies to releases or covenants not to execute. Therefore, in light of the supreme court's broad interpretation of "contract" in Van Waters, supra, the continuing vitality of these cases is open to question, and we choose not to follow them here.

B.

Section 13-50.5-105, C.R.S. (1987 Repl. Vol. 6A) provides, in pertinent part, that, when a release or a covenant not to sue or not to enforce judgment is given in good faith to one of two or more persons liable in tort, it does not discharge any other tortfeasor from liability. However, it reduces the aggregate claim against the other "to the extent of any degree or percentage of fault or negligence attributable by the finder of fact to the tortfeasor to whom the release or covenant is given." There is no right on the part of a tortfeasor who has not settled to choose, instead, a reduction in the actual amount paid in settlement.

Here, the jury determined that Coppola was 0% at fault. Consequently, the aggregate claim against the manufacturer should not be reduced by the amount of the settlement between the homeowners and Coppola. This result, as the supreme court has noted, furthers the overriding policy of the Uniform Contribution Among Joint Tortfeasors Act, § 13-50-101, et seq., C.R.S. (1987 Repl. Vol. 6A), of which this statute is a part.

In light of these considerations, we believe that a refusal to reduce the judgment by the settlement amount is justified under the Act even if it results in overcompensation to the plaintiff, particularly since a contrary rule would defeat, in cases such as the present one, the Act's overriding goal of ensuring full compensation.

Kussman v. City County of Denver, 706 P.2d 776, 781 (fn.5) (Colo. 1985) (interpreting prior version of § 13-50.5-105).

The manufacturer, however, argues that § 13-50.5-105 expressly applies only to persons found "liable in tort." Because Coppola was found to be 0% at fault, the manufacturer contends he was not found liable in tort within the meaning of § 13-50.5-105 and the statute is thus inapplicable.

This argument, however, ignores the historical context of the statute. That background indicates that the statute's focus is on the effect of the settlement payment at the time it is made and the character of the payment as one made because the alleged tortfeasor faced exposure to being held "liable in tort" at trial.

Section 13-50.5-105 was enacted as part of Colorado's adoption of the Uniform Contribution Among Joint Tortfeasors Act in 1977. See Stubbs v. Copper Mountain, Inc., 862 P.2d 978 (Colo.App. 1993).

Under the original version of § 13-50.5-105, which also contained the phrase on which the manufacturer relies, an alleged tortfeasor who settled with a plaintiff to avoid exposure to liability at trial typically received a release of any further claims. As a result, the fact finder did not make any finding as to the fault or negligence of those who settled prior to trial. The only exception was in the unusual circumstance that a tortfeasor received a covenant not to execute and remained a defendant at trial. It was not until after the General Assembly amended the statute and concurrently enacted § 13-21-111.5, C.R.S. (1987 Repl. Vol. 6A), in 1986, that a procedure was created for the fact finder at trial routinely to determine the liability of a tortfeasor who had settled before trial.

Because under the original statute there typically was no determination made at trial as to whether those who had settled were "liable in tort," the current statute should not be construed to require such a finding before a reduction in the amount of the settlement is permitted.

The more reasonable interpretation of the statute is that § 13-50.5-105, before and after its amendment, applies to those who pay compensation to an injury victim because they are facing exposure to being held "liable in tort" at trial, as distinct from those who provide payments from a collateral source, such as an insurance contract. See Wong v. Sharp, 734 F. Supp. 943 (D. Colo. 1990).

Such an interpretation is consistent with long recognized and well accepted tort principles:

Payments made by one who is not himself liable as a joint tortfeasor will go to diminish the claim of the injured person against others responsible for the same harm if they are made in compensation of that claim, as distinguished from payments from collateral sources such as insurance, sick benefits, donated medical or nursing services, voluntary continuance or wages by the employer, and the like. These payments are commonly made by one who fears that he may be held liable as a tortfeasor and who turns out not to be.

Restatement (Second) of Torts § 885 comment f (1979) (emphasis added); see also Restatement (Second) of Torts § 920A(1) (1979) ("A payment made by a tortfeasor or by a person acting for him to a person whom he has injured is credited against his tort liability, as are payments made by another who is, or believes he is, subject to the same tort liability.").

Application of Wesley v. United Services Automobile Ass'n, 694 P.2d 855 (Colo.App. 1984), could lead to a contrary result; however, in our view, the vitality of that case has been eroded by the supreme court's decision in Kussman v. City County of Denver, supra, decided the year after Wesley. Cf. Smith v. Zufelt, supra.

VII.

In their cross-appeal, the homeowners contend that the court erred in awarding and disallowing various fees related to a witness for Coppola. We disagree.

Because Coppola's bill of costs included expenses of taking discovery depositions, the homeowners argue that the court erred when it allowed the entire amount requested by Coppola as fees for his expert witness. Over homeowners' objection, the court allowed as costs expert witness fees of $15,385.33 for trial preparation and $5,197.55 for trial testimony.

A trial court has discretion in awarding costs for expert witnesses. Section 13-33-102(4), C.R.S. (1987 Repl. Vol. 6A); Burt v. Beautiful Savior Lutheran Church, 809 P.2d 1064 (Colo.App. 1990). Moreover, expenses incurred in taking discovery depositions are allowed where the taking of the deposition and its general content were reasonably necessary for the development of the case in light of facts known to counsel at the time it was taken. Cherry Creek School District #5 v. Voelker, 859 P.2d 805 (Colo. 1993). Given this standard, we perceive no abuse of discretion in the trial court's order even though the record indicates a charge for deposition preparation for Coppola's expert.

The homeowners also contend that the court erred when it disallowed certain portions of their expert witness fees and various costs associated with the taking of a video deposition of an out-of-state witness. Under our view of Cherry Creek School District # 5 v. Voelker, supra, we agree and therefore remand for an award of such fees and costs.

The judgment is affirmed, and the cause is remanded for an award of costs.

JUDGE BRIGGS specially concurs.

JUDGE METZGER concurs in part and dissents in part.