Opinion
21573
November 13, 2001.
David A. Zelman, New York City, for plaintiffs.
DECISION AND JUDGMENT
I. BACKGROUND
Plaintiffs have sued defendants for pain and suffering caused by defendants' ownership and negligent operation of their motor vehicles March 30, 1999, leading to a collision with plaintiffs' vehicle in which plaintiff Kinga Sniadach was a passenger. N.Y. Ins. Law § 5102(d). On June 5, 2001, during the trial against defendant Gonzales before a jury, plaintiffs settled their action against Gonzales for $10,00O. Defendants Peralta and Hassan never answered the complaint and hence defaulted.
After settlement of the trial against Gonzales, and after notice to the defaulting defendants, the court held an inquest on plaintiffs' claims against these defendants, at which they further failed to appear. At the inquest, the court found that, as a consequence of the collision, plaintiff Kinga Sniadach suffered past pain and restrictions on her normal activities in the amount of $10,000. None of the medical evidence established ongoing injury. Plaintiff Waldemar Sniadach established no compensable loss of services proximately caused by the collision.
II. THE DEFAULTING DEFENDANTS' SHARE OF THE AWARD
While this situation may be common, an unresolved issue is whether plaintiffs' settlement with defendant Gonzales, on the record in open court, terminating the action against him, entitles the defaulting defendants to a setoff against the compensation awarded. Pollicina v. Misericordia Hosp Med. Ctr., 82 N.Y.2d 332, 336 (1993); Williams v. Niske, 81 N.Y.2d 437, 439 (1993). In a personal injury action involving multiple defendants, where one settles and the action proceeds to a judgment against others, the non-settling defendants are entitled to a reduction that is the greater of (1) the settling defendant's equitable share of the damages awarded, (2) the stipulated amount of the settlement, or (3) the amount actually paid by the settling defendant. N.Y. Gen. Oblig. Law § 15-108(a); Whalen v. Kawasaki Motors Corp., 92 N.Y.2d 288, 292 (1998); Didner v. Keene Corp., 82 N.Y.2d 342, 351 (1993); Kilfoil v. Ullrich, 275 A.D.2d 53, 58-59 (2d Dep't 2000) . This rule encourages settlement, yet assures that plaintiffs are fairly compensated by the non-settling defendants and, where their share of plaintiffs' loss is less than 100%, that the non-settling defendants bear no more than their share, and plaintiffs are not compensated for more than their loss. Whalen v. Kawasaki Motors Corp., 92 N.Y.2d at 292, 295;Didner v. Keene Corp., 82 N.Y.2d at 352-53.
Where the settling defendant bears a share of the total damages assessed by the trier of fact, but the settlement is below that equitable share, the non-settling defendants pay only their equitable share. If the settlement is above the settling defendant's share, the non-settling defendants pay only the difference between the settlement and the total damages assessed. Williams v. Niske, 81 N.Y.2d at 440, 443. Thus if the settlement equals or exceeds the total damages, the non-settling defendants pay nothing.
Here, the default judgment against defendants Peralta and Hassan foreclosed any determination that their equitable share of fault was less than 100% and thus foreclosed that prong of N.Y. Gen. Oblig. Law § 15-108(a). Whalen v. Kawasaki Motors Corp., 92 N.Y.2d at 292. Defendants against whom liability has been conclusively established may not present evidence of their degree of fault or claim less than full liability.Rokina Opt. Co. v. Camera King, 63 N.Y.2d 728, 731 (1984). Nor may they maintain an action for contribution against Gonzales, even if they were to obtain a vacatur of the default judgment. N.Y. Gen. Oblig. Law. § 15-108(b); Williams v. Niske, 81 N.Y.2d at 443; Gonzales v. Armac Indus., 81 N.Y.2d 1, 5 (1993); Becarie v. Union Bank of Switzerland, 272 A.D.2d 162 (1st Dep't 2000).
The question is whether, even if Gonzales may be 0% liable, one of the other setoffs, the stipulated amount of the settlement or Gonzales's actual payment, still applies. Pollicina v. Misericordia Hosp Med. Ctr., 82 N.Y.2d at 340-41. Although Peralta and Hassan are 100% responsible by default, the settlement between plaintiffs and Gonzales may be considered an approximate, intuitive assessment by the parties of Gonzales's share of fault and damages. Whalen v. Kawasaki Motors Corp., 92 N.Y.2d at 296. The default judgment precludes the factfinder's comparison of culpability between Gonzales and the owner and operator of the second vehicle, but the settlement between Gonzales and plaintiffs does provide an arm's length estimate of his fair share of damages.
Had Peralta and Hassan not defaulted, the settlement amount of $10, OOO, representing the best available measure of Gonzales's share, would be subtracted from the $10,000 in damages assessed to arrive at a net award of $0 against the remaining defendants, provided they raised this setoff as a defense. N.Y. Gen. Oblig. Law § 15-108(a); Whalen v. Kawasaki Motors Corp., 92 N.Y.2d at 294-95. Even though it may produce a windfall to these defendants, that result protects against plaintiffs' double recovery. Whalen v. Kawasaki Motors Corp., 92 N.Y.2d at 292;Didner v. Keene Corp., 82 N.Y.2d at 352; Williams v. Niske, 81 N.Y.2d at 443.
Where the non-settling defendants have defaulted, however, the windfall rightfully belongs to plaintiffs. While the court at an inquest on damages may consider evidence regarding a setoff, the particular setoff under N.Y. Gen. Oblig. Law § 15-108(a) is unavailable to defaulting defendants. First, the setoffs that may be considered at an inquest as reductions of plaintiffs' damages are limited to credits or other circumstances intrinsic to plaintiffs' claim. Amusement Business Underwriters v. American Intl. Group, 66 N.Y.2d 878, 880 (1985); Rokina Opt. Co. v. Camera King, 63 N.Y.2d at 730-31; Hussein v. Ratcher, 272 A.D.2d at 447. The setoff under N.Y. Gen. Oblig. Law § 15-108(a) is an affirmative defense of payment that assumes the essential elements of plaintiffs' claim and depends instead on subsequent, distinct facts that qualify or defeat it. This defense therefore must be pleaded, even at the late date of another defendant's settlement, for tortfeasors to obtain the statute's protection. CPLR § 3018 (b); Whalen v. Kawasaki Motors Corp., 92 N.Y.2d at 293; Hill v. St. Clare's Hosp., 67 N.Y.2d 72, 83-84 (1986). In addition, the burden to present that evidence rests with nonsettling defendants. Id. at 83. Section 15-108 (a)'s benefits thus do not inure to defendants due solely to the settlement, even if it produces a recovery for plaintiffs exceeding their damages. Ward v. City of Schenectady, 204 A.D.2d 779, 780 (3d Dep't 1994).
Here, moreover, plaintiffs settled with Gonzales knowing that the other defendants had not answered and therefore could not plead application of N.Y. Gen. Oblig. Law § 15-108(a). If it now were applied, plaintiffs would suffer prejudice. See Whalen v. Kawasaki Motors Corp., 92 N.Y.2d at 293; Washington v. State, 188 Misc.2d 155, 156 (Ct.Cl. 2001). Gonzales, too, has relinquished his right to contribution from the other defendants. N.Y. Gen. Oblig. Law § 15-108(c); Gonzales v. Armac Indus., 81 N.Y.2d at 5, 7; Benjamin Dev. Co. v. Marlin Enters., 249 A.D.2d 183, 184 (1st Dep't 1998); Bradt v. Lustig, 280 A.D.2d 739, 740 (3d Dep't 2001). In the final analysis, if $10,000.00 represents the best available measure of Gonzales's share, yet Peralta and Hassan are 100% liable, or even if they were 50% liable, their fair share is at least $10,000.00 as well.
III. CONCLUSION
As a result of the non-settling defendants' default, plaintiffs' settlement with the non-defaulting defendant is not counted toward the award in favor of plaintiff Kinga Sniadach against defaulting defendants Peralta and Hassan. Plaintiffs may recover $10,000 twice.
Therefore the court severs the action against defendants Peralta and Hassan and awards a judgment in favor of plaintiff Kinga Sniadach against these defendants for $10,000 in past damages. CPLR § 3215(a); Holt v. Holt, 262 A.D.2d 530 (2d Dep't 1999). Peralta, the operator of Hassan's vehicle, and Hassan are jointly and severally liable. N.Y. Veh. Traf. Law § 388(1). Interest on the damages is calculated from May 10, 2000, when the court determined these defendants' liability by granting plaintiffs a default judgment against Peralta and Hassan. CPLR § 5002; Rohring v. City of Niagara Falls, 84 N.Y.2d 60, 68, 70 (1994); Love v. State of New York, 78 N.Y.2d 540, 543-45 (1991); Jenkins v. Meredith Ave. Assocs., 238 A.D.2d 477, 479 (2d Dep't 1997). The court awards nothing on plaintiff Waldemar Sniadach's derivative claim.
[Portions of opinion omitted for purposes of publication.]