McDermott Inc. v AmClyde case brief

McDermott Inc. v AmClyde case brief summary

Supreme Court, 1994

This is a property damage case, not a personal injury case, but it has been applied to injury cases where there are multiple defendants.

Facts

• McDermott purchased a crane from AmClyde.
• In the first attempt to use it, a prong of the crane’s broke.
• McDermott brought suit against AmClyde, River Don (hook supplier) and the three sling defendants (steel sling suppliers).
• McDermott agreed to dismiss claims against the sling defendants since it got a $1 mill settlement.
• The jury allocated the following responsibility: 32% to AmClyde, 38% to River Don and 30% jointly to McDermott and the sling defendants.
• The court denied a motion to reduce the damages by 1 million of settlement. So the judgments plus the settlement exceeded the total damages found by the jury. However, the district court concluded that McDermott had not received a double recovery because the settlement had covered the crane damages and the deck damages.

Rationale

• It is generally agreed that when a plaintiff settles with one of several joint tortfeasors, the non-settling defendants are entitled to a credit for that settlement.
• However, there is a divergence among respected scholars and judges aobut how that credit should be determined.
• The “one satisfaction rule” has been repudiated.
• The law contains no rigid rule against overcompensation.
• Paying for the damage caused can be more important than preventing overcompensation.
• A plaintiff’s good fortune in striking a favorable bargain with one defendant gives other defendants no claim to pay less than their proportionate share of the total loss.
• One of the virtues of the “proportionate share rule” is that, unlike the pro tanto rule, it does not make a litigation defendant’s liability dependant on the amount of a settlement negotiated by others without regard to its interests.
• There is no reason to allocate any shortfall to the other defendants, who were not parties to the settlement.

Note on the McDermott case

• McDermott is also applied to personal injury and death cases.
• We see it a lot in asbestos litigation in seafarers.
• The issue is when some defendants have settled and some not.
• So, is there any credit given to those who settle.
• Pro tanto rule
• Proportionate share rule:
  • What the jury has to do is decide what parties caused the injury and assign a proportion of fault to those parties.
  • The jury has also to decide what the total damages are.
  • There is no credit for the amounts recovered by settlement.
  • In some cases the plaintiff has recovered more than the amount awarded by the jury when you sum the jury award and the settlement.
  • It was argued in SC that this was “inequitable”, but the counter argument is that if the plaintiff had settle for less, the damages would be less than the damages awarded by the jury.
  • The whole concept is to take the risk of settling out of the equation and let the jury focused only on the fault and damages.

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