Settlements, Set-Offs, and Secrecy
A recent case from the South Carolina Court of Appeals, Huck v. Avtex Commercial, discusses many of the common issues that arise when there are multiple defendants at fault. William Huck filed suit against several defendants in Charleston, S.C., including Wild Wing Café, the owner of Wild Wing’s building (Avtex), Civil Site Environmental, and Chandler Construction after he slipped and fell walking into the establishment.
The lawsuit asked for damages including the cost of his medical expenses and surgery that was required after the fall. It also included a claim for loss of consortium on behalf of his wife which was later dismissed by the court.
Any time a lawsuit is settled, the defense attorneys will insist on secrecy as a condition. In most cases, the parties sign an agreement that the terms of the settlement will not be disclosed. From the defendant’s point of view, there are good reasons for secrecy – they do not want to be seen as an “easy target,” they do not want to encourage more lawsuits, and they do not want the next plaintiff to point to a prior settlement amount and say, “why aren’t you offering me that amount?”
In Huck, the plaintiffs settled their claims with Civil Site and Chandler before the trial. At trial, the jurors returned a verdict against Avtex for $97,640, and the court dismissed the loss of consortium claim that was filed for Huck’s wife.
Then the process of reducing the jurors’ verdict began…
South Carolina follows a “modified comparative negligence rule” where jurors can find that a plaintiff is up to 50% negligent and still award damages. If the plaintiff is found to be 51% negligent, they recover nothing. If they are found to be up to 50% negligent, the verdict is reduced by the percentage of negligence that is attributed to the plaintiff.
Following the trial, Huck’s recovery was reduced by 50%, leaving him with a verdict of $48,820.
Settlements Result in Set-Offs
You can settle claims against some defendants before trial and still proceed to trial against the remaining defendants. When you sign a release against one defendant, it does not apply to the rest of them. They are, however, entitled to a set-off in the amount of the settlement if the claims against each defendant are based on the same injury.
After the trial, Huck, Civil Site, and Chandler refused to disclose the terms of their secret settlement. Avtex insisted that they were entitled to a set-off, and the only way the court could determine the amount of that set-off was if Civil Site and Chandler revealed the amount of their settlement with Huck. The trial court held that Civil Site and Chandler did not have to disclose the terms of the settlement. The Court of Appeals disagreed, holding that the defendants could not keep the terms of the settlement secret in this situation, they must disclose the terms, and the court must then determine whether a set-off is necessary and what the amount will be.
On remand, Huck’s verdict, already reduced to $48,820, will be further reduced by the amount that Civil Site and Chandler paid in their settlement.
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