Articles
Bench & Bar of Minnesota is the official publication of the Minnesota State Bar Association.

Construing Ambiguity: The Changing Shape of Joint and Several Liability

An eight-year-old wheelchair accident and a ten-year-old amendment to Minn. Stat. §604.02 have combined to engender disputes that are now on their fourth visit to Minnesota’s appellate courts. The future of several liability in the state appears to hang on the outcome of the case now before the Minnesota Supreme Court. 

Saturday, April 9, 2005 was a rough day for Alice and Richard Staab. By the end of the day, Alice had a broken leg and Richard, who was pushing Alice in her wheelchair when it toppled, undoubtedly felt horrible. Little did Alice and Richard know that their personal ordeal would turn into a landmark lawsuit for tort litigation in Minnesota that would stretch well into the next decade.

The Staab lawsuit provided the first opportunity for a Minnesota appellate court to construe the language in Minn. Stat. §604.02, as amended in 2003.1 Section 604.02 governs apportionment and reallocation of fault. Since the district court’s initial ruling, the case has made four trips to the Minnesota Judicial Center in St. Paul, most recently before the Minnesota Supreme Court for oral argument on November 4, 2013. The Staab case has and will continue to shape tort litigation in Minnesota.

The Key Statute

Section 604.02 was amended in 2003 with much fanfare.2 The relevant portion of the statute provides:

Subdivision 1. Joint liability.

When two or more persons are severally liable, contributions to awards shall be in proportion to the percentage of fault attributable to each, except that the following persons are jointly and severally liable for the whole award:

(1) a person whose fault is greater than 50 percent;

(2) two or more persons who act in a common scheme or plan that results in injury;

(3) a person who commits an intentional tort; or

(4) a person whose liability arises under [various enumerated statutes].

This section applies to claims arising from events that occur on or after August 1, 2003.

Subd. 2. Reallocation of uncollectible amounts generally.

Upon motion made not later than one year after judgment is entered, the court shall determine whether all or part of a party’s equitable share of the obligation is uncollectible from that party and shall reallocate any uncollectible amount among the other parties, including a claimant at fault, according to their respective percentages of fault. A party whose liability is reallocated is nonetheless subject to contribution and to any continuing liability to the claimant on the judgment.

Subdivision 1 establishes a general rule that where two or more “persons” who are “severally” (i.e., separately) liable for a single indivisible injury, each party must contribute to a damage award “in proportion to the percentage of fault attributable to each [person].”3 Consider, for example, a case where a jury assigned percentages of fault of 60 percent, 20 percent, and 20 percent, respectively, to a Packers fan and two Vikings fans who injured a tailgating bystander when they were brawling. Under a rule of several liability, the fans would be responsible for $60,000, $20,000, and $20,000 respectively, for a $100,000 jury award. This is a significant change from the 2002 version of section 604.02, which provided a general rule of joint and several liability.4 Joint and several liability means that a plaintiff has the option of holding any one of several defendants responsible an entire award.

The current version of section 604.02 provides several exceptions to the general rule of several liability and makes a person jointly and severally liable where: (1) a person is more than 50 percent at fault, (2) two persons “act in a common scheme or plan that results in injury,” (3) a person commits an intentional tort, or (4) the claim is based on certain statutory causes of action.5 Applying these rules to our example, the tailgating bystander could collect the entire award from the Packers fan who was more than 50 percent responsible, or from the Vikings fans, who acted as part of a common scheme when they cooperated in tossing the Packers fan into the crowd.

Standing alone, the new rule of several liability in subdivision 1 would limit exposure for tortfeasors (and their indemnitors) who have only a small portion of fault. But there is bad news for solvent defendants. Subdivision 2 of section 604.02 provides that if any “party’s” share of an obligation is deemed by the court to be “uncollectible” upon a motion brought within one year after judgment is entered, the court “shall reallocate any uncollectible amount among the other parties, including a claimant at fault, according to their respective percentages of fault.”6 Solvent parties may pursue a claim for contribution from parties whose liability was reallocated,7 but that is almost always a waste of time and treasure.

Persons & Parties

As every lawyer knows, serendipity and the rigors of the adversarial process will eventually expose the ambiguities in even the most straightforward statutes. The amended version of section 604.02 is no exception. Alice and Richard Staab visited the Holy Cross Parish School of the Diocese of St. Cloud on April 9, 2005. When leaving the building, Richard attempted to maneuver Alice’s wheelchair through a doorway that had a threshold 4-5 inches higher than the exterior walkway. Alice fell out of her wheelchair, suffering a broken leg and other injuries.

Alice sued the diocese, but neither she nor the diocese asserted claims against Richard. A jury found Richard and the diocese were each 50 percent culpable and awarded Alice $224,200.70 in damages. The district court ordered the diocese to pay the entire damage award, reasoning that the new rule of several liability in the amended version of section 604.02 did not apply because Richard was not a party to the litigation. In the first Minnesota appellate court decision (Staab I) construing the amended section 604.02, the court of appeals held that the term “persons,” as used in subdivision 1, “must be defined broadly to include not just a party to a lawsuit, but any tortfeasor whose fault has been submitted to the jury.”8 Thus, the court of appeals held the diocese was not responsible for Richard’s 50 percent share of fault—at least, not yet.

Timing & Intent

On review, a four-justice majority of the Minnesota Supreme Court affirmed the court of appeals’ decision on more expansive grounds (Staab II). The supreme court first examined “when,” for purposes of subdivision 1, two or more persons are severally liable—i.e., the point in time at which liability attaches. The court concluded that because liability attaches, under the common law, at the time of the tortious act causing the injury, a tortfeasor’s absence from a lawsuit does not exclude them from apportionment under subdivision 1.9 The court further noted that even if liability were determined at the time of a judgment, subdivision 1 still requires apportionment among nonparties because a different interpretation would make named defendants jointly and severally liable in violation of the clear intent of the legislature to limit joint and several liability to the enumerated exceptions.10

Neither the court of appeals in Staab I nor the supreme court in Staab II had occasion to apply the reallocation provision in subdivision 2, but the tort stars were aligned. On remand, Alice Staab moved to reallocate Richard’s 50 percent share of the liability to the diocese under subdivision 2. The district court granted that motion, finding that Richard’s share of the fault was uncollectible.

Obligation to Remedy

On a second trip to the court of appeals (Staab III), the diocese argued that reallocation under subdivision 2 applies only where there is joint and several liability. The court of appeals squarely rejected that argument under the plain language of subdivision 1 and the court of appeals’ recent decision in O’Brien v. Dombeck.11

The diocese also argued that the use of the term “party” in subdivision 2 should be read more restrictively to include only litigants, given that subdivision 1 uses the term “person,” which the Staab I and Staab II courts interpreted more broadly to include “parties to the transaction.” But the court of appeals rejected that argument under the Minnesota Supreme Court’s decision in Hosley v. Armstrong Cork Co. (Hosley I), in which the court construed the pre-2003 version of section 604.02.12 Finally, the court of appeals rejected an argument that a judgment against a tortfeasor is necessary for that tortfeasor’s fault to be reallocated, reasoning that the term “obligation” is broad enough to include “both the legal and the moral duty to remedy a plaintiff’s injuries.”13

Not surprisingly, the diocese and the defense bar refused to accept defeat. The Minnesota Supreme Court granted review of the court of appeals’ decision in June 2013, and both the Minnesota Defense Lawyers Association (MDLA) and the Minnesota Association for Justice have submitted amicus briefs.

Limiting Liability

The diocese and the MDLA raise legitimate jurisprudential and practical concerns about the court of appeals’ holding. First, the supreme court recognized in Staab II that “the 2003 amendments to [§604.02] clearly indicate the Legislature’s intent to limit joint and several liability to the four circumstances enumerated in the exception clause, and to apply the rule of several liability in all other circumstances.”14 The diocese emphasized in both its briefing and in oral argument that reallocating fault among severally liable parties under subdivision 2 eviscerates the legislative objective of the amendment to subdivision 1 by distributing responsibility according to collectability, rather than culpability.

Second, the court of appeals’ holding in Staab III is contrary to yet silent about prior decisions of that court holding that joint and several liability is a predicate to reallocation.15 In the few pre-2003 decisions where multiple tortfeasors were not jointly and several liable, the courts consistently held that reallocation did not apply. In Eid v. Hodson, plaintiff homeowners obtained a favorable jury verdict against two parties, but the district court entered two separate judgments.16 The court of appeals concluded that reallocation did not apply: “Unless joint liability is established, however, Minn. Stat. §604.02, subd. 2 does not apply and there is no basis for reallocating any uncollectible amount of a judgment to another party.”17 In Hahn v. Tri-Line Farmers Co-op, a jury determined an employer was 95 percent at fault for an industrial accident and assigned 3 percent and 2 percent to an equipment manufacturer and the plaintiff employee, respectively.18 The employer and manufacturer were not jointly and severally liable because the employee was barred from recovering against the employer under the worker’s compensation scheme.19 The court of appeals concluded that reallocation was “inappropriate” because “[t]he requisite joint liability required for reallocation is absent in this case.”20

Third, as the court of appeals recently acknowledged in O’Brien, it would be absurd to interpret the statute to allow the liability of a named defendant to be reallocated to an unnamed defendant who did not participate in the litigation.21 The court of appeals in Staab III stopped short of explaining why the text of subdivision 2 allows reallocation from a nonparty to a party, but not from a party to a nonparty.22 For their part, Alice Staab and the Minnesota Association for Justice point out that the supreme court in Hosley I has already held that “‘party’ in subdivision 2 means all persons who are parties to the tort, regardless of whether they are named in the lawsuit.”23

Stubborn Ambiguity

Under different circumstances, the terminology in subdivisions 1 and 2 might have figured more prominently in the Staab IV briefing and arguments. Subdivision 1 refers to apportionment of fault among “persons” whereas subdivision 2 refers to reallocation of fault among “part[ies].” Many would instinctively assume that this distinction in word choice was deliberate and indicative of a legislative intent that the two subdivisions apply to different classes of people.

But the import of that textual distinction was defused long before Alice and Richard Staab visited the Holy Cross Parish School. In Hosley I, the Minnesota Supreme Court acknowledged the use of “persons” in subdivision  1 and “party” in subdivision 2 and commented, “[w]e have held that such distinctions in language are presumed intentional.”24 The court also acknowledged the comments to the reallocation provision in the Uniform Comparative Fault Act, on which subdivision 2 was patterned. Those comments state, “The limitation to parties to the action means ignoring other persons who may have been at fault with regard to the particular injury but who have not been joined as parties. This is a deliberate decision.”25 Despite all of this, the Hosley I court concluded that because Minnesota courts submit to the jury the fault of all “parties to the transaction,” there is no problem interpreting “persons” and “parties” to mean the same thing.26

The supreme court could not now ignore Hosley I even if it were so inclined. The Staab II court expressly acknowledged the interpretation of “persons” and “party” in Hosley I and gave no indication of any intent to overrule that interpretation.27

In private, the Staab litigants and constituents on both sides of this debate would probably agree with the court of appeals that section 604.02 is “not a model of clarity.”28 The ambiguity of the statute has been further complicated by the fact that courts are relying on case law that preceded the amendment in interpreting the amended version of section 604.02. The fundamentally different assumptions about liability among tortfeasors in the pre- and post-amended statute significantly affect how the other provisions in section 604.02 are construed.

Future of Several Liability

The Staab case was the first test of the 2003 amendments, and Staab II was undoubtedly a victory for defendants. Preserving the new rule of several liability gives defendants significant bargaining leverage to resolve claims, particularly in the case of defendants who are not the primary target.

But the gains made by defendants in 2003 and in the wake of Staab II appear to have been short-lived. If the supreme court affirms the core holding of Staab III, the rule of several liability will be significantly eroded, and plaintiffs will regain much of the leverage that they had before 2003. Affirmance of Staab III will likely invite substantial litigation over whether and when an obligation is “uncollectible” for purposes of subdivision 2.

Nearly a decade after their fateful trip to the Holy Cross Parish School in St. Cloud, Alice and Richard Staab’s ordeal continues. They do not wait alone because the bench and the bar alike continue to wait on Staab.

Peter Gregory is an attorney with the Minneapolis law firm of Bassford Remele, A Professional Association. He focuses his civil litigation practice on the areas of commercial litigation, trust and estates litigation, and professional liability.

 

Notes

Leave a Reply

Articles by Issue

Articles by Subject