| Beth A. Raffle, Esq.
Susan S. Brewer, Esq.
Ancil G. Ramey, Esq.
Steptoe & Johnson, PLLC
Morgantown, West Virginia
Attorneys for Defendants Monongalia
Health Systems, Inc., and Monogalia
County General Hospital Company, Inc.
Wesley W. Metheney, Esq.
| Curtis G. Power III, Esq.
Robert W. Dinsmore, Esq.
Bowles Rice McDavid Graff &
Attorneys for Plaintiffs
appellate standard of review of questions of law answered and certified by
a circuit court is de novo. Syl. pt. 1, Gallapoo v. Wal-Mart
Stores, Inc., 197 W. Va. 172, 475 S.E.2d 172 (1996).
release ordinarily covers only such matters as may fairly be said to have
been within the contemplation of the parties at the time of its execution.
Syl. pt. 2, Conley v. Hill, 115 W. Va. 175, 174 S.E. 883
(1934), overruled on other grounds, Thornton v. Charleston Area
Med. Ctr., 158 W. Va. 504, 213 S.E.2d 102 (1975).
3. A plaintiff's voluntary settlement with and release of a defendant who is primarily liable for the plaintiff's injury does not operate to release parties defendant whose liability is vicarious or derivative based solely upon their relationship with the settling defendant.
McGraw, Chief Justice:
This case comes to the Court
on certified question from the Circuit Court of Monongalia County, and requires
that we resolve the question of whether a plaintiff's release of a primarily
liable tortfeasor necessarily releases other parties defendant that may be
derivatively or vicariously liable based upon their relationship with the
tortfeasor. Specifically, the circuit court has posed the following question
Does the settlement with and release of a physician, who is an alleged ostensible agent of a hospital, necessarily release the hospital from further liability for the alleged malpractice of the physician where: (1) the physician is not an employee of the hospital; (2) the only negligence alleged is that of the physician; and (3) there is no allegation of negligence against the hospital?
The circuit court answered this question in the negative. We agree with this conclusion, and determine that a plaintiff's release of a primarily liable defendant should not be permitted to have the potentially unintended effect of releasing other liable parties.
In April 1999, Timothy Woodrum,
together with his wife, instituted an action in the Circuit Court of Monongalia
County, alleging that Dr. Jerome Johnson
(See footnote 1) was negligent in failing
to properly diagnose and treat an infection-related empyema of his left chest cavity.
Monongalia General Hospital
(See footnote 2) was also named as a party
defendant, based upon an allegation that Dr. Johnson was an ostensible agent
of the Hospital, thus exposing the hospital to vicarious liability under Torrence
v. Kusminsky, 185 W. Va. 734, 408 S.E.2d 684 (1991) (holding that
a hospital is estopped from denying the agency status of physicians practicing
in its emergency room).
(See footnote 3)
Plaintiffs settled with Dr. Johnson and his practice group on June 13, 2000, after extensive discovery had already been completed by the parties. The Release and Settlement Agreement executed by the settling parties contained the following reservation of rights: (See footnote 4)
It is understood by the parties
to this Release and Settlement Agreement that [plaintiffs] specifically reserve
their right to prosecute their claims or causes of action against the remaining
defendants in Civil Action No. 99-C-157, including without limitation, the cause
of action alleging that Dr. Johnson was an agent and/or employee of the remaining
defendants, Monongalia Health Systems, Inc., Monogalia County General Hospital,
d/b/a Monongalia General Hospital, at the times that Dr. Johnson provided health
care services to Timothy T. Woodrum.
The settlement amount remains undisclosed under the terms of the settlement agreement, although it is undisputed that plaintiffs accepted an amount less than the maximum amount payable under the defendant physician's malpractice insurance policy.
Upon being informed of the
settlement between plaintiffs and the defendant physician, the Hospital moved
for summary judgment, arguing that the release executed by plaintiffs inured
to their benefit by operation of law. Citing the common-law rule applicable
in several other jurisdictions, the Hospital argued that the release of an
agent should also release the principal, where the plaintiff's claim against
the principal is based solely upon ostensible agency. Upon determining that
courts in other jurisdictions are split on this issue, and finding no West
Virginia authority on point, the circuit court denied the Hospital's summary
judgment motion, and certified the question to this Court pursuant to W. Va.
Code § 58-5-2 (1998).
The Hospital urges this
Court to recognize the well-settled maxim of common law that when a
plaintiff's only claim against a principal is under the theory of . . .
agency, a release of the agent from the suit also releases the principal.
We note at the outset that although this common-law rule has been in force
for some time in other states, it has never before been expressly adopted
in this jurisdiction.
(See footnote 5)
The issue was recently recognized,
but not resolved, in Dunn v. Kanawha County Bd. of Educ., 194 W. Va.
40, 459 S.E.2d 151 (1995), where we said in the context of a product liability
it is arguable that basic fairness and sound public policy dictate that a settlement by a plaintiff with the manufacturing defendant solely responsible for the defective product covers all damages caused by that product and extinguishes any right of the plaintiff to pursue others in the chain of distribution who did not make the product, contribute in any way to the defect, or commit any independent acts of negligence or fault. However, this issue was not raised by this certified question, and we leave its resolution for a later time.
Id. at 47, 459 S.E.2d at 158.
The only other reference to
this issue in our past cases came in State ex rel. Bumgarner v. Sims,
139 W. Va. 92, 79 S.E.2d 277 (1953), where the Court went so far as to
indicate that W. Va. Code § 55-7-12 (1931) abrogates the common-law
rule that the release of an agent necessarily released the agent's principal:
In this jurisdiction the common-law rule . . . that 'Where both master and servant are liable to a third party for a tort of the servant, a valid release of either master or servant from liability for the tort operates to release the other,' has been abrogated, in part, by [W. Va.] Code, 55-7-12. Section 12 reads: 'A release to, or an accord and satisfaction with, one or more joint trespassers, or tort-feasors, shall not [inure] to the benefit of another such trespasser, or tort-feasor, and shall be no bar to an action or suit against such other joint trespasser, or tort-feasor, for the same cause of action to which the release or accord and satisfaction relates.'
139 W. Va. at 112-13, 79 S.E.2d at 290 (citation omitted). This construction apparently stemmed from the Court's observation that [t]he relation of master and servant in those cases, in which the doctrine of respondent superior applies, is joint, and the parties should be regarded as though they were joint tort-feasors. Id. at 111, 79 S.E.2d at 289 (citing Wills v. Montfair Gas Coal Co., 97 W. Va. 476, 125 S.E. 367 (1924)). (See footnote 6)
In Bumgarner, the plaintiff had been accidentally shot by Coiner, a prison guard, while the latter was searching for an escaped convict. The plaintiff later brought a successful negligence action against Coiner, which resulted in a $3,000 judgment. A later attempt to collect on the judgment through execution proved unsuccessful, however, and Coiner's liability was later discharged in bankruptcy. The plaintiff subsequently sought relief from the Court of Claims, which awarded the plaintiff $2,000. Yet the Auditor refused to honor the resulting legislative appropriation, asserting that it was unconstitutional insofar as the State was not morally obligated to compensate the plaintiff.
In determining whether the
plaintiff in Bumgarner was entitled to payment of the award made by
the Court of Claims, the Court addressed the question whether the unsatisfied
judgment in [plaintiff's] favor and against Coiner alone, entered by the Circuit
Court of Roane County in the action at law instituted by the [plaintiff] against
Coiner, and whether Coiner's bankruptcy and his discharge in the bankruptcy
proceeding, without any satisfaction of [plaintiff's] claim, either in whole
or in part, would serve to release Coiner's employer, if such employer were
a private person and not the State of West Virginia. Bumgarner,
139 W. Va. at 111, 79 S.E.2d at 289. In answering this question,
the Court held that [a]s the [plaintiff's] judgment against Coiner . . . was not satisfied,
either in whole or in part, under the executions issued on the judgment or
in the bankruptcy proceeding, the judgment, in our opinion, would not serve
to bar [plaintiff's] claim against the State of West Virginia based on a moral
obligation; and we so hold under the provisions of [W. Va.] Code, 55-7-12,
and under the authority of Griffie v. McClung, [5 W. Va. 131 (1872)].
Bumgarner, 139 W. Va. at 116, 79 S.E.2d at 292.
(See footnote 7)
The holding in Bumgarner was predicated at least in part upon the Court's conclusion regarding the abrogation of the common-law rule concerning the effect that the release of a primarily liable agent or employee has on the continued liability of a vicariously responsible principal or employer. As it was already accepted law that a judgment against one tortfeasor did not bar suit against another who was jointly liable, see Griffie v. McClung, supra, such rule furnished the only logical resistance to the ultimate holding in Bumgarner. Thus, on stare decisis grounds, (See footnote 8) we would be hard-pressed to disregard the relevant statement in Bumgarner as dictum. See Miller v. Huntington & Ohio Bridge Co., 123 W. Va. 320, 329, 15 S.E.2d 687, 692 (1941) (the fact that a point of law does not appear in the syllabus of an opinion does not relegate it to the status of mere dictum). When an opinion issues for the Court, it is not only the result but also those portions of the opinion necessary to that result by which we are bound. Seminole Tribe of Florida v. Florida, 517 U.S. 44, 67, 116 S. Ct. 1114, 1129, 134 L. Ed. 2d 252 (1996); see also County of Allegheny v. American Civil Liberties Union, Greater Pittsburgh Chapter, 492 U.S. 573, 668, 109 S. Ct. 3086, 3141, 106 L. Ed. 2d 472 (1989) (As a general rule, the principle of stare decisis directs us to adhere not only to the holdings of our prior cases, but also to their explication of the governing rules of law.) (Kennedy, J., concurring and dissenting). (See footnote 9)
Nor are we convinced that there is any compelling reason to abandon the stance taken in Bumgarner. There is broad and diverse disagreement among courts as to whether the release of a primarily liable defendant necessarily inures to the benefit of parties whose liability is purely derivative. (See footnote 10)
The Hospital, embracing one side of this debate, emphatically argues that
the issue before this Court is one of the law of vicarious liability,
not of joint tortfeasors, and directs us to Theophelis v. Lansing
General Hosp., 430 Mich. 473, 424 N.W.2d 478 (1988), where a plurality
of a heavily divided Michigan Supreme Court stated that
common-law rules which once governed contribution rights among joint and concurrent tortfeasors should not be confused with the deeply rooted common-law doctrine that release of an agent discharges the principal for vicarious liability. The rationale for the latter rule is entirely different and is grounded on the very nature of the principal's derivative liability.
Id. at 483, 424 N.W.2d at 482 (plurality opinion). Some courts have, in accord with this reasoning, stressed the fundamental distinction between the full recovery permitted under the doctrine of joint and several liability, and the limitations inherent in a claim that rests on the doctrine of vicarious liability. Biddle v. Sartori Mem. Hosp., 518 N.W.2d 795, 798 (Iowa 1994). These courts take the position that because vicarious liability derives solely from the principal's legal relation to the wrongdoer, settlement with the tortfeasor removes the basis for any additional recovery from the principal upon the same acts of negligence. Id.; see also Estate of Williams v. Vandeberg, 620 N.W.2d 187, 190 (S.D. 2000); Theophelis, 430 Mich. at 490-91, 424 N.W.2d at 486 (plurality opinion). As the North Dakota Supreme Court had earlier explained:
percentage of negligence attributable to the conduct of the servant
constitutes the entire single share of liability attributable jointly
to the master and servant. . . . Because this percentage of negligence
represents the single share of liability covered by the common liability
of the master and servant, the master is necessarily released from vicarious
liability for the released servant's misconduct.
Horejsi v. Anderson, 353 N.W.2d 316, 318 (N.D. 1984).
If there were practical
significance to this single share theory, however, it would necessarily
prohibit an injured plaintiff from maintaining an action solely against a
derivatively liable defendant. See Theophelis, 430 Mich. at 516-17,
424 N.W.2d at 497 (Levin, J., concurring in judgment). But this Court
has consistently repudiated such an approach, taking the position that a plaintiff
is permitted to sue the principal either alone or together with the agent.
In Bumgarner, the Court stated that
the relation between the master and servant, the latter acting within the scope of his employment, is joint and several in the sense that both master and servant are liable for injuries caused by the negligent wrongdoing of the servant, acting within the scope of his employment, and liability for such injuries may be asserted in an action at law against the master and servant jointly or against each of them in a separate action at law.
Syl. pt. 8, in part, Bumgarner, supra; see also Musgrove v. Hickory Inn, Inc., 168 W. Va. 65, 68, 281 S.E.2d 499, 501 (1981); Muldoon v. Kepner, 141 W. Va. 577, 583-84, 91 S.E.2d 727, 731 (1956).
In O'Dell v. Universal
Credit Co., 118 W. Va. 678, 191 S.E. 568 (1937), the plaintiff's
decedent had been killed when he was struck by an automobile driven by Hager,
the purported agent of the Universal Credit Company. Plaintiff subsequently brought an
action against both Hager and Universal, but later voluntarily dismissed Hager
prior to trial. On appeal, Universal argued that Hager's dismissal necessarily
prohibited further proceedings against it, since its liability [was]
dependent upon Hager's. Id. at 680, 191 S.E. at 570.
The Court rejected this argument, stating that [t]he effect of dismissing
Hager was to relinquish the instant action against him only.
Id. (emphasis in original). We went on to hold in syllabus point one
In a joint action of tort against master and servant, the plaintiff may dismiss the servant for a reason not going to the merits, without impairing his right to proceed against the master, although the latter is liable only under the doctrine of respondeat superior.
O'Dell therefore permits a plaintiff to voluntarily dismiss a negligent agent while still maintaining an action against the vicariously liable principal. It would be peculiar indeed if we were to allow a plaintiff to gratuitously dismiss a primarily liable tortfeasor without consequence to the right to proceed against a vicariously responsible defendant, but impose the harsh sanction of total preclusion simply because the plaintiff was successful in obtaining some measure of recompense for his or her injuries.
What is instructive about
our prior cases is that while the Court has clearly acknowledged the fact
that there is a technical difference between joint tortfeasors and those whose
liability is derivative or vicarious, see, e.g., Wills v. Montfair
Gas Coal Co., 97 W. Va. at 478, 125 S.E. at 368 (explaining
that actors may be considered joint tortfeasors [i]f the tortious act
be jointly done, or severally done for a similar purpose and at the same time,
without concert of action) (citation omitted), we have never used this
difference to make a practical distinction between the two. Hence our statement
in Bumgarner that vicariously liable parties should be regarded
as though they were joint tort-feasors. 139 W. Va. at 111,
79 S.E.2d at 289 (citation omitted); see also Harless,
169 W. Va. at 684, 289 S.E.2d at 699 (noting that in Bumgarner
the Court characterized the relationship of master and servant as similar
to joint tortfeasors).
The Supreme Court of New
Jersey took a similar approach in Cartel Capital Corp. v. Fireco of New
Jersey, 81 N.J. 548, 410 A.2d 674 (1980), where it held that the release
of a negligent manufacturer did not have the effect of releasing a retailer
who was sued on the basis of strict liability:
The general rule in this jurisdiction is that a release of one tortfeasor will not release others who may also be liable to plaintiff for his harm unless the release is so intended or the plaintiff receives as a result thereof either full satisfaction or satisfaction intended as such. . . . While that departure from the common law was formulated in the context of multiple acts of negligence committed by concurrent tortfeasors, each of whom was himself actually rather than merely vicariously liable, we see no reason why the rule should not apply as well to the single act of negligence for which both the actual wrongdoer and his master or principal are each independently liable. The rationale of the rule is equally apposite whether the liability is actual or vicarious namely, that plaintiff is entitled to pursue all those who are independently liable to him for his harm until one full satisfaction is obtained.
Id. at 560, 410 A.2d at 680 (quoting McFadden v. Turner, 159 N.J. Super. 360, 366-67, 388 A.2d 244, 246-47 (App. Div. 1978)) (internal citations omitted). The Court agrees with this statement, finding that it cogently explains the approach we have taken in the past.
Our emphasis has consistently
been upon giving full effect to the terms of settlement agreements. As we
stated in syllabus point two of Conley v. Hill, 115 W. Va. 175,
174 S.E. 883 (1934), overruled on other grounds, Thornton v. Charleston Area
Med. Ctr., 158 W. Va. 504, 515, 213 S.E.2d 102, 108 (1975), [a]
release ordinarily covers only such matters as may fairly be said to have
been within the contemplation of the parties at the time of its execution.
See also Thornton, 158 W. Va. at 515, 213 S.E.2d at 108
(stating that we deem it patently illogical to conclusively presume,
in the absence of particular language indicative of such intention, that a
release of the original tort-feasor bars recovery from the subsequent tort-feasor).
Thus, like the Indiana Supreme Court, [w]e perceive no valid reason
to disregard the intent of parties to a release regardless of the theory under
which multiple potentially liable parties may be pursued. Pelo v.
Franklin College of Indiana, 715 N.E.2d 365, 366 (Ind. 1999).
If the single share
theory holds any currency in the distinctions it makes between primarily liable
tortfeasors and those parties whose liability is entirely derivative, it must
rest upon the ground of fundamental fairness. In this regard, however, we
simply do not see how the Hospital could in any way be prejudiced by a rule
which permits plaintiffs to proceed further against it in the present matter.
As we have seen, had they chosen, the plaintiffs could have appropriately
brought an action solely against the Hospital, or otherwise voluntarily dismissed
the defendant physician. Significantly, a vicariously liable defendant's right
to implied indemnity is not affected by settlement between a plaintiff and
other liable parties. See, e.g., syl. pt. 7, Hager v.
Marshall, 202 W. Va. 577, 505 S.E.2d 640 (1998) (In non-product
liability multi-party civil actions, a good faith settlement between a plaintiff
and a defendant will extinguish the right of a non-settling defendant to seek
implied indemnity unless such non-settling defendant is without fault.).
The substantive impact of the settlement agreement in this case is therefore not materially different from what would result if plaintiffs had chosen
to utilize procedures that have long been permitted under West Virginia law.
The Hospital raises the
point that, given its right to indemnity, any derivative action against it
at this juncture would be circuitous, in that an exercise of its right to
indemnity would result in any verdict in excess of [Dr. Johnson's] settlement
[being] the ultimate responsibility of such defendant physician. This
line of reasoning has been embraced by several courts. As the Court of Appeals
of South Carolina remarked:
Were we to find the covenant released [the agent] but not [the principal], it would necessarily follow that [the principal] could seek indemnification from [the agent] and recover the entire amount of any verdict against it from him. This would effectively strip the covenant not to sue of any real meaning and result in what the court in Nelson v. Gillette described as a corrosive circle of indemnity. 571 N.W.2d 332, 339 (N.D. 1997).
Andrade v. Johnson, 345 S.C. 216, 226, 546 S.E.2d 665, 670 (S.C. Ct. App. 2001); see also Williams v. Vandeberg, 620 N.W.2d 187, 191 (S.D. 2000) (holding that release of agent releases principal notwithstanding express reservation of rights, noting that such conclusion fosters the principal of finality while attempting to limit circuity of action and multiplicity of lawsuits); L.C. v. R.P., 563 N.W.2d 799, 801 (N.D.1997) (holding that rule is premised on avoiding a circle of indemnity that would have resulted if the release of the servant did not also release the master from vicarious liability).
Other courts, however, take the opposite view concerning the consequences of a principal's right to indemnity. The Supreme Court of Texas, in Knutson v. Morton Foods, Inc., 603 S.W.2d 805 (Tex. 1980), addressed a factual scenario little different than that posed by this case. The plaintiff Knutsons were injured as a result of an automobile collision allegedly caused by Chastain, who at the time of the accident was purportedly acting within the scope of her employment with defendant Morton Foods. 603 S.W.2d at 806. The Knutsons brought an action against both Chastain and her husband, as well as Morton Foods, but later settled with the Chastains for $10,000, executing a release that included an express reservation of their right to pursue a judgment against Morton Foods. Id.
Just as the Hospital has
done in this case, Morton Foods argued in Knutson that the plaintiffs
should be prohibited from proceeding against it because it would result in
a confusing circuity of action. The Knutson Court, while recognizing
the fact that the Chastains could potentially be subject to an indemnity suit
by Morton Foods, rejected this argument, stating that
[t]here are reasons . . . which favor a recognition of partial settlements . . . to this case and situation. We have long recognized that encouraging settlement and compromise is in the public interest. . . . The instant decision will aid in the achievement of that goal. A plaintiff will be able to settle with a tortfeasor who acts for another without being fearful of losing his cause of action against the party that may be liable under respondeat superior. At the same time, the party who is liable under respondeat superior will retain complete access to the courts for a full adjudication of his liabilities and his rights of indemnification.
The Knutsons and Chastains knew about these possibilities, and they were exposed to these obligations to indemnify when they executed the release. They contracted with these possibilities in mind. . . . . Only the Knutsons and the Chastains will be affected by the fact that this agreement may fail to protect the Chastains from all future liability . . . . Ironically, the only party that is troubled by the incompleteness, or wisdom, of this release is Morton Foods. Morton Foods, however, neither participated in the negotiation of this instrument, nor paid any consideration for its release from liability.
Morton Foods, who was not a party to the settlement agreement, is the only one who does not want to give it the force expressed in the document, but it is no more prejudiced by the settlement than if none had been made. Morton Foods has actually been benefitted since the partial settlement made by the Chastains to the plaintiffs reduces Morton Foods' liability. We see no reason why we should be concerned with the potential problems that the Knutsons and Chastains may encounter as a result of this settlement than they were at the time they executed the release.
603 S.W.2d at 807-08 (citation omitted). The Texas court went on to hold that [t]he fact that an employee has been released in a settlement has no bearing on the continued liability of the employer unless the settlement is in full satisfaction of the plaintiff's claims against both the employer and the employee. Id. at 807. This Court is persuaded that Knutson states the better reasoned approach to this issue.
This raises the very real
possibility, however, that the primarily liable agent will remain liable for
the full amount of damages notwithstanding the fact that he or she has settled
with the plaintiff. But, [a]s to any subsequent action by the [principal]
against the [agent], '[a] primary wrongdoer enters [settlement] agreements
at the peril of being later held to respond again in an indemnification action
brought against him by the vicarious wrongdoer.' Van Cleave v. Gamboni
Constr. Co., 101 Nev. 524, 529, 706 P.2d 845, 848 (1985) (citation omitted).
This potentially undesirable consequence can, of course, be avoided by providing
in the settlement agreement that the plaintiff will indemnify the settling
defendant for any amount that such party may be called upon to pay in excess
of the settlement amount.
(See footnote 11) In such case the plaintiff would have little, if any, incentive to continue pursing a judgment against
the derivatively responsible principal, thus effectively bringing the action
to a conclusion.
Even where there is no agreement
by the plaintiff to indemnify the settling agent, there undoubtedly will be
the master may elect not to seek indemnification. This is especially true in cases . . . where the servant's settlement was for the entire amount of his insurance coverage. Given that the master may choose not to seek indemnity from his servant, who in many cases may be judgment proof, the servant's settlement with the injured party fulfills the underlying policy of [promoting settlement].
Yates v. New South Pizza, Ltd., 330 N.C. 790, 795, 412 S.E.2d 666, 670 (1992). See also Saranillio v. Silva, 78 Haw. 1, 14, 889 P.2d 685, 698 (1995) (observing in context of statutory provision permitting settlement between plaintiff and employee to the exclusion of vicariously liable defendant, that the employee might be spared from indemnifying his/her employer if the employer chooses not to seek reimbursement).
Indeed, given the existence
of West Virginia Rule of Civil Procedure 14(a), the only way that a settlement
between a plaintiff and a primarily liable agent could have any practical
consequence in the prosecution of an action would be if the derivatively responsible
principal chose not to pursue indemnity by way of a third-party claim. The purpose of Rule 14(a), . . .
permitting impleader of a third party defendant by the original defendant,
is to eliminate circuity of actions when the rights of all three parties center
upon a common factual situation. Syl. pt. 1, Bluefield Sash
& Door Co., Inc. v. Corte Constr. Co., 158 W. Va. 802, 216 S.E.2d
216 (1975), overruled on other grounds, Haynes v. City of Nitro,
161 W. Va. 230, 240 S.E.2d 544 (1977). Had it choosen to, the Hospital
could have filed a third party complaint against the defendant physician on
the basis of implied indemnity, in which case the action would proceed, at
least from the Hospital's prospective, almost as if there had been no settlement.
As this Court has consistently
made clear in the past, '[t]he law favors and encourages the resolution
of controversies by contracts of compromise and settlement rather than by
litigation[.]' Syl. pt. 6, in part, DeVane v. Kennedy, 205
W. Va. 519, 519 S.E.2d 622 (1999) (quoting syl. pt. 1, Sanders
v. Roselawn Mem'l Gardens, Inc., 152 W. Va. 91, 159 S.E.2d 784 (1968));
see also Board of Educ. of McDowell County v. Zando, Martin &
Milstead, Inc., 182 W. Va. 597, 604, 390 S.E.2d 796, 803 (1990);
State ex rel. Vapor Corp. v. Narick, 173 W. Va. 770, 320 S.E.2d
345 (1984); Floyd v. Watson, 163 W. Va. 65, 254 S.E.2d 687 (1979);
Janney v. Virginian Ry. Co., 119 W. Va. 249, 193 S.E. 187 (1937).
In our estimation, permitting plaintiffs to enter into partial settlements
with primarily liable parties without requiring them to necessarily forsake
their right to pursue further action against parties whose liability is vicarious
or derivative, encourages settlement in those instances where countervailing
claims for indemnity are unlikely, thus permitting a negligent agent or employee
who is without substantial financial resources to buy his or her peace. In
virtually every other conceivable circumstance, the converse rule would be
just as likely to obstruct settlement as it would be to promote it. This is particularly true because at least some injured
parties 'would be reluctant to settle with the servant or agent, and thereby
extinguish his [or her] cause of action against the master or principal, unless
he [or she] could settle with the servant or agent for' for full satisfaction
(in which case the effect of the common law rule would be irrelevant).
Saranillo v. Silva, 78 Haw. at 13, 889 P.2d at 697 (quoting
Van Cleave, 101 Nev. at 530, 706 P.2d at 849) (alterations
in Saranillo); see also Pelo v. Franklin College of Indiana,
715 N.E.2d at 366 (stating that under common-law rule a knowledgeable
plaintiff simply cannot afford to settle piecemeal even if . . .
one potential defendant is willing to contribute the full amount of his or
her available resources_typically policy limits).
Such a preclusive rule would
also result in the creation of a perilous danger to the unwary plaintiff,
a circumstance that most citizens would find both mystifying and untenable.
Cf. Thornton, 158 W. Va. at 514, 213 S.E.2d at 108
(abrogating rule that release of original tortfeasor necessarily releases
successive tortfeasors, observing that such rule may, in fact, prove
to be a trap for the unwary layman who is ignorant of the law). We agree
with the Indiana Supreme Court that the rule advocated by the Hospital in
this case, which would ignore the express intention of the parties to the
sets a trap for those litigants who are unaware of the exception for cases based on derivative liability, notwithstanding the general rule . . . that a release will operate as the parties intended. The law is not a game where the litigant with the lawyer who happens to know all the traps wins. To the extent possible rules of law should produce results consistent with the expectations of ordinary citizens. Surely most people, like the [plaintiffs], would be surprised to discover that the [plaintiffs'] release did not mean what it said when it purported to preserve their claim against [the derivatively liable defendant]. Accordingly, when parties sign an agreement releasing one defendant with the clearly expressed expectation that they will be able to proceed against others, that expectation should be given effect by the courts
Pelo, 715 N.E.2d at 366.
From a practical standpoint,
moreover, it may not always be possible for a settling plaintiff to determine
at the time of partial settlement whether his or her claims against other
non-settling defendants rest upon actionable conduct on the part of such defendants,
or vicarious liability. It is easily conceivable that a plaintiff could release
a primarily liable defendant at an early stage of the litigation without obtaining
full satisfaction for the underlying claim, on the assumption that the remaining
defendants are directly liable, only to find out at a later point that the
viability of his or her action against the non-settling defendants rests entirely
upon theories of vicarious liability. The rule advocated by the Hospital would
deny relief to the plaintiff under such easily foreseeable circumstances.
In short, while we are cognizant of the fact that there are differing viewpoints on this subject, we think that a rule permitting a plaintiff to settle with and release a primarily liable defendant without prejudice to the plaintiff's right to further pursue a judgment against defendants who are vicariously responsible is more consistent with our past precedent and holds greater promise for promoting fair and expeditious settlement among litigants. Consequently, we hold that a plaintiff's voluntary settlement with and release of a defendant who is primarily liable for the plaintiff's injury does not operate to release parties defendant whose liability is vicarious or derivative based solely upon their relationship with the settling defendant.
For the reasons stated,
we answer the question of law certified by the Circuit Court of Monongalia
County in the negative.
Certified question answered.
covenant not to sue is to be distinguished from a release in that it is not
a present abandonment or relinquishment of the right or claim but is merely
an agreement not to sue on an existing claim. It does not extinguish the cause of action. As between the parties to the agreement,
the final result is the same in both cases. The difference is primarily in
the effect as to third parties, and is based mainly on the fact that in the
case of a release there is an immediate release or discharge, whereas in the
other case there is merely an agreement not to prosecute a suit. A covenant
not to sue is nothing but a contract, and should be so construed.
66 Am. Jur. 2d Release § 2, at 679 (1973) (footnotes omitted). See also Goldstein v. Gilbert, 125 W. Va. 250, 253, 23 S.E.2d 606, 608 (1942). We are not inclined to draw any significant distinctions on this basis. As the Restatement (Second) of Torts observes, this would amount to an artificial distinction, which in the past has frequently resulted in the unintended and unpaid-for discharge of one of the tortfeasors. This earlier rule is not consistent with the modern American point of view. Restatement (Second) of Torts § 885 cmt. b, at 334 (1979).
[t]here is no reason perceived
why the Coal Company and its superintendent who employed and permitted the
infant to work in the mine cannot be joined as joint tort-feasors. See Barger v. Hood, 87 W. Va. 78, 104 S.E. 280 [(1920)]. If the tortious
act be jointly done, or severally done though for a similar purpose and at
the same time, without concert of action, the actors are joint tort-feasors.
Ordinarily both parties guilty of concurrent negligent acts may be joined
in the action, even though they had no common purpose, and there was no concert
of action. Johnson v. Chapman, 43 W. Va. 639, 28 S. E. 744 [(1897)]. There is no
misjoinder of parties in this count. While the decisions are not harmonious,
the weight of authority backed by reason sustains the right of an injured
person to join in the same action master and servant where the right of action
springs from the wrongful act of the servant for which the master is responsible.
Wills, 97 W. Va. at 478, 125 S.E. at 366-67; see also Harless v. First Nat. Bank in Fairmont, 169 W. Va. 673, 684, 289 S.E.2d 692, 699 (1982).
the common law, as it existed in this State prior to the enactment of Section
7, Chapter 136, West Virginia Code of 1868, now Code, 55-7-12, and under the
present statute contained in Code, 55-7-12, a judgment obtained by a person
injured through the negligence of the employee of another, while the employee
was acting within the scope of his employment, which has not been satisfied
in whole or in part under execution or executions issued thereon, or in a
proceeding in bankruptcy, in which the employee is the bankrupt, will not
bar a recovery against the employer for the same injury in a separate action
at law; and by the same token will not bar a claim against the State by the
injured person to recover compensation for injuries inflicted, based upon
the moral obligation of the State to pay.
Syl. pt. 9, Bumgarner.
is not a rule of law but is a matter of judicial policy. . . .
It is a policy which promotes certainty, stability and uniformity in the law.
It should be deviated from only when urgent reason requires deviation. . . .
In the rare case when it clearly is apparent that an error has been made or
that the application of an outmoded rule, due to changing conditions, results
in injustice, deviation from that policy is warranted.
Id. at 1029, 207 S.E.2d at 173 (quoting Adkins v. St. Francis Hosp. of Charleston, 149 W. Va. 705, 718, 143 S.E.2d 154, 162 (1965)).