House Bill No. 571

Introduced By beaudry, mills, clark, hibbard, bitney, kottel, denny, bergman, orr, mood, sliter, mcgee, grimes, anderson, tash, smith, keating, grosfield, estrada, mcnutt, holden, bishop, crippen

A Bill for an Act entitled: "An Act providing for the effect of a release or covenant not to sue; revising the principles governing liability and the determination of liability when multiple persons are at fault; amending sections 27-1-702 and 27-1-703, MCA; and providing an immediate effective date and an applicability date."

WHEREAS, the Montana Supreme Court, in Plumb v. District Court, 927 P.2d 1011, 53 St. Rep. 1187 (1996), recently declared unconstitutional portions of Montana's comparative negligence statute because it failed to provide an opportunity for a nonparty to defend oneself, and it required the plaintiff to act in a dual capacity by requiring that the plaintiff represent nonparties; and

WHEREAS, the Montana Supreme Court also recognized in Plumb that parties who settle represent the single exception for fair apportionment of liability under third-party practice rules; and

WHEREAS, the Montana Supreme Court has recognized that the Legislature may alter tort causes of action to promote legitimate state interests; and

WHEREAS, the Legislature believes that the policy of the state is that claimants, defendants, and other potentially liable persons should be held responsible to the extent of individual fault; and

WHEREAS, the Legislature has retained joint and several liability, but modified it because of that policy; and

WHEREAS, the current system of modified joint and several liability must permit a consideration of the fault attributable to parties who settle or are released for the modified system to be operative; and

WHEREAS, the Legislature believes that a claimant who enters into a settlement or covenant not to sue does so because the claimant has made a considered judgment that the agreement is in the claimant's best interests; and

WHEREAS, the Legislature intends that the liability of persons who settle or are released and who may share in the responsibility for a tort cause of action be considered by the trier of fact and apportioned a percentage of damages according to their negligence; and

WHEREAS, the Legislature believes that the percent credit rule, rather than the dollar credit rule, more accurately reflects the basis for comparative negligence, which apportions liability according to the percentage of individual negligence.

THEREFORE, the Legislature finds it appropriate to pass legislation addressing the concerns raised by the Montana Supreme Court and to accomplish the Legislature's objectives of allocating liability on the basis of individual negligence, encouraging fair settlements that accurately reflect potential liability, and permitting the allocation of a percentage of liability to persons who settle or are released and are found to be partially or wholly responsible.

Be it enacted by the Legislature of the State of Montana:

NEW SECTION. Section 1.  Release -- covenant not to sue. A release or covenant not to sue given to one of two or more persons liable in tort for the same injury, death, damage, or loss:

(1) does not discharge any other tortfeasor from liability for that tortfeasor's several pro rata share of liability for the injury, death, damage, or loss unless the release or covenant not to sue provides otherwise;

(2) reduces the aggregate claim against the other tortfeasors to the extent of any percentage of fault attributed by the trier of fact under 27-1-703(6) to the tortfeasor to whom the release or covenant is given;

(3) discharges the tortfeasor to whom it is given from all liability for contribution.

Section 2.  Section 27-1-702, MCA, is amended to read:

"27-1-702.   Comparative negligence -- extent to which contributory negligence bars recovery in action for damages. Contributory negligence shall does not bar recovery in an action by any a person or his the person's legal representative to recover damages for negligence resulting in death or injury to the person or property if such the contributory negligence was not greater than the negligence of the person or the combined negligence of all persons against whom recovery is sought, but any damages allowed shall must be diminished in the proportion to the amount percentage of negligence attributable to the person recovering."

Section 3.  Section 27-1-703, MCA, is amended to read:

"27-1-703.   Multiple defendants -- determination of liability. (1) Except as provided in subsections (2) and (3), whenever if the negligence of a party in any to an action is an issue, each party against whom recovery may be allowed is jointly and severally liable for the amount that may be awarded to the claimant but has the right of contribution from any other person whose negligence may have contributed as a proximate cause to the injury complained of.

(2)  A party whose negligence is determined to be 50% or less of the combined negligence of all persons described in subsection (4) is severally liable only and is responsible only for the amount percentage of negligence attributable to that party, except as provided in subsection (3). The remaining parties are jointly and severally liable for the total less the amount percentage attributable to the claimant and to any person with whom the claimant has settled or who the plaintiff has released from liability.

(3)  A party may be jointly liable for all damages caused by the negligence of another if both acted in concert in contributing to the claimant's damages or if one party acted as an agent of the other.

(4)  On motion of any a party against whom a claim is asserted for negligence resulting in death or injury to person or property, any other person whose negligence may have contributed as a proximate cause to the injury complained of may be joined as an additional party to the action. For purposes of determining the percentage of liability attributable to each party whose action contributed to the injury complained of, the trier of fact shall consider the negligence of the claimant, injured person, defendants, and third-party defendants. The liability of nonparties, including persons released from liability by the claimant and persons immune from liability to and persons with whom the claimant, has settled must also be considered by the trier of fact, as provided in subsection (6). The trier of fact shall apportion the percentage of negligence of all persons listed in this subsection. Contribution must be proportional to the liability of the parties against whom recovery is allowed. Nothing contained in this section makes any party indispensable pursuant to Rule 19, Montana Rules of Civil Procedure.

(5)  If for any reason all or part of the contribution from a party liable for contribution cannot be obtained, each of the other parties shall contribute a proportional part of the unpaid portion of the noncontributing party's share and may obtain judgment in a pending or subsequent action for contribution from the noncontributing party. A party found to be 50% or less negligent for the injury complained of is liable for contribution under this section only up to the percentage of negligence attributed to that party.

(6)  (a) In an action based on negligence, a defendant may assert as a defense that the damages of the claimant were caused in full or in part by a nonparty, which may be referred to as a nonparty defense person with whom the claimant has settled or who the claimant has released from liability.

(b)  In determining the percentage of liability attributable to persons who are parties to the action, the trier of fact shall consider the negligence of nonparties, including persons released from liability by the claimant and persons immune from liability to the claimant, if a nonparty defense is properly asserted in accordance with this subsection (6) or with whom the claimant has settled. A finding of negligence of a nonparty person with whom the claimant has settled or who has been released from liability by the claimant is not a presumptive or conclusive finding as to that nonparty person for purposes of a prior or subsequent action involving that nonparty person.

(c) Except for persons who have settled with or have been released by the claimant, comparison of fault with any of the following persons is prohibited:

(i) a person who is immune from liability to the claimant;

(ii) a person who is not subject to the jurisdiction of the court; or

(iii) any other person who could have been, but was not, named as a third party.

(d) A release of settlement entered into by a claimant constitutes an assumption of the liability, if any, allocated to the settled or released person. The claim of the releasing or settling claimant against other persons is reduced by the percentage of the released or settled person's equitable share of the obligation, as determined under subsection (4).

(c)(e)  The burden of proof as to a nonparty's liability is on the defendant or defendants who affirmatively plead the nonparty defense, but this subsection (6) does not relieve the claimant of the burden of proving that negligence on the part of the defendant or defendants contributed as a proximate cause to the injury of the claimant or alter other proof requirements. A defendant who alleges that a person released by the claimant or with whom the claimant has settled is at fault in the matter has the burden of proving:

(i) the negligence of the person who the claimant has released or with whom the claimant has settled;

(ii) any standard of care applicable to the person who the claimant released or with whom the claimant settled; and

(iii) that the negligence of the person whom the claimant has released or with whom the claimant has settled was a contributing cause under the law applicable to the matter.

(d)(f)  A nonparty defense must be defendant alleging that a settled or released person is at fault in the matter shall affirmatively pleaded as a part of plead the settlement or release as a defense in the answer. A defendant who gains actual knowledge of a nonparty defense settled or released person after the filing of that defendant's answer may plead the defense of settlement or release with reasonable promptness, as determined by the trial court, in a manner that is consistent with:

(i)  giving the defendant a reasonable opportunity to discover the existence of a nonparty defense settled or released person;

(ii) giving the settled or released person an opportunity to intervene in the action to defend against claims affirmatively asserted, including the opportunity to be represented by an attorney, present a defense, participate in discovery, cross-examine witnesses, and appear as a witness of either party; and

(ii)(iii)  giving the claimant a reasonable opportunity to defend against a nonparty the defense; and

(iii) giving the claimant a reasonable opportunity, if appropriate, to add the nonparty as an additional defendant to the action before the expiration of the period of limitation applicable to the claim. However, this subsection (iii) does not extend the period of limitation or revive the action if the period of limitation has expired.

(e)(g)  If a defendant asserts a nonparty defense alleges that a settled or released person is at fault in the matter, the defendant shall notify each nonparty person who the defendant alleges caused the claimant's injuries, in whole or in part. Notification must be made by mailing the defendant's answer to each nonparty settled or released person at the nonparty's person's last-known address by certified mail, return receipt requested."

NEW SECTION. Section 4.  Applicability. [This act] applies to causes of action that arise on or after [the effective date of this act].

NEW SECTION. Section 5.  Nonseverability. It is the intent of the legislature that each part of [this act] is essentially dependent upon every other part, and if one part is held unconstitutional or invalid, all other parts are invalid.

NEW SECTION. Section 6.  Effective date. [This act] is effective on passage and approval.

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