Before Schwelb, Ruiz and Reid, Associate Judges.
The opinion of the court was delivered by: Ruiz, Associate Judge
Appeals from the Superior Court of the District of Columbia (Hon. Frederick H. Weisberg, Trial Judge)
(Argued October 15, 1998 Decided August 24, 2000)
Opinion for the court by Associate Judge Ruiz.
Concurring opinion by Associate Judge Ruiz at p. .
Concurring opinion by Associate Judge Reid at p. .
Dissenting opinion by Associate Judge Schwelb at p. .
In these consolidated appeals, we consider again the proper application of pro tanto and pro rata credits. Appellants Elena M. Paul and The George Washington University (GWU) ask us to review two post-trial orders made after a jury verdict awarding medical malpractice damages to Paul in a suit against Dr. Charles J. Bier, her private physician. According to Paul, the trial court erred in concluding that Dr. Bier was entitled to a pro tanto rather than a pro rata credit against the verdict as a result of Paul's settlement with GWU during trial. GWU asserts that the trial court abused its discretion in denying its post-verdict motion to assert a cross-claim for contribution against Dr. Bier. Because joint liability was not established between the alleged joint tortfeasors, Dr. Bier and GWU, we agree with the trial court's decision to apply a pro tanto credit to the jury's verdict. As Paul had already been compensated by the settlement with GWU in the full amount of the jury verdict, Dr. Bier had no outstanding obligation to pay Paul. We also hold that the trial court did not abuse its discretion in denying GWU's motion to file a cross-claim for contribution against Dr. Bier on the ground that the untimeliness of the motion was prejudicial to Dr. Bier, the non-settling party.
In 1994, Elena Paul sued Dr. Charles Bier and GWU, the employer of a second physician, Dr. Druy, to recover damages for medical malpractice. During trial, GWU settled with Paul in the amount of $2,000,000 and Paul's case against GWU was dismissed with prejudice *fn1 on July 18, 1996. *fn2 GWU denied liability in the settlement agreement. *fn3 In the event GWU was sued for contribution by Dr. Bier, however, the agreement required Paul to stipulate that GWU and its employees were "active tortfeasors . . . for the purpose of determining the rights of the remaining non-settling defendant [Dr. Bier] to a complete or partial set-off." The settlement agreement also required Paul to indemnify GWU for any amount it may be liable in contribution to Dr. Bier.
The trial continued against Dr. Bier and, on July 29, 1996, the jury returned a $2,000,000 verdict in favor of Paul. Dr. Bier did not file a cross-claim against either GWU or Dr. Druy for contribution or indemnification, but, instead, immediately after the jury's verdict, made a motion for the application of a pro tanto credit against the verdict of $2,000,000, the amount that Paul had received in settlement from GWU. Paul opposed the motion arguing for application of a pro rata credit in the amount of $1,000,000, to reflect what Paul claimed was GWU's one-half share, as joint tortfeasor with Dr. Bier, of the jury verdict. On September 16, 1996 the trial court ruled in favor of Dr. Bier, and applied a pro tanto credit against the verdict. As a result, appellant Paul's recovery was limited to the $2,000,000 settlement amount already paid by GWU, and Dr. Bier did not have to pay anything. On October 24, 1996, settling defendant GWU sought leave of the court to file a cross-claim for contribution against Dr. Bier, which the trial court denied as untimely. Paul appeals from the order applying a pro tanto credit. *fn4 GWU appeals from the trial court's refusal to allow the cross-claim for contribution.
A. Paul's Appeal (96-CV-1495): Pro Tanto v. Pro Rata Credit.
A pro tanto credit is based on the actual settlement amount, "dollar-for-dollar,"while a pro rata credit is based on proportionate shares of liability among joint tortfeasors. See Berg v. Footer, 673 A.2d 1244, 1248-49 (D.C. 1996). Appellant Paul opposes the application of a pro tanto credit of the settlement amount against the verdict on the ground that it results in the unjust enrichment of a non-settling defendant, such as Dr. Bier, when, as here, the amount of the verdict equals the amount of the settlement the plaintiff reached with another defendant. In addition, Paul asserts that a pro rata credit is appropriate in this case because only one of her two liability claims was submitted to the jury, and therefore the jury verdict represented only one-half of the damages arising from these claims. The question of "[h]ow to credit the judgment entered upon a jury verdict against a non-settling defendant with the proceeds a settling defendant paid to the plaintiff" is purely a question of law, which this court reviews de novo. Berg, 673 A.2d at 1247 (citing Bertram v. Freeport McMoran, Inc., 35 F.3d 1008, 1019 (5th Cir. 1994)). We stated in Berg that a non-settling defendant is entitled to a pro tanto credit for the amount paid by settling defendants who are not joint tortfeasors, see 673 A.2d at 1245, and to a pro rata credit based on the non-settling defendant's right of contribution against a settling joint tortfeasor, see id. at 1248.
Paul's complaint alleged that separate acts of negligence by Dr. Druy, a GWU employee, and Dr. Bier, her private physician, combined to proximately cause injury, namely post-phlebitic syndrome, as a result of vascular damage to her left leg. After presenting her case to the jury against all the defendants, Paul settled her negligence claim against GWU, and its employee, Dr. Druy, for $2,000,000, and they were dismissed as defendants in the case. The jury then found in favor of Paul against Dr. Bier after finding that Dr. Bier's actions were a proximate cause of Paul's injuries, and awarded her $2,000,000 as compensation for her injuries. Paul's claim that the jury verdict compensated for damages solely attributable to Dr. Bier, i.e., that it was not intended as full compensation for her injuries, is not borne out by the record. *fn5 The jury valued all of Paul's injuries at $2,000,000 and assessed those damages as attributable to Dr. Bier's negligence. Paul received $2,000,000 as a result of the settlement agreement with GWU. Thus, Paul was satisfied by the settlement to the full extent of the damages found by the jury.
Notwithstanding that she has received compensation to the full extent of the jury's $2,000,000 verdict, Paul contends that she is entitled to the benefit of a pro rata credit under our Berg opinion. We recognize that Paul would have benefitted if the trial court had applied a pro rata rather than a pro tanto credit, in that Dr. Bier would have been required to pay Paul an additional $1,000,000, *fn6 reflecting his proportionate share of liability. In Berg, this court applied a pro rata credit, which in the circumstances of that case resulted in total compensation to the plaintiff in excess of the jury's verdict, *fn7 noting that "the law contains no rigid rule against overcompensation." Id. at 1256 & n.19 (quoting McDermott, Inc. v. AmClyde and River Don Castings Ltd., 511 U.S. 202, 219 (1994)). This holding, however, was not based on the rationale that the plaintiff was entitled to compensation in excess of the jury's verdict, but rather that, in spite of that consequence, "consistency with established precedent applicable to settlements with joint tortfeasors weighs in favor of" applying a pro rata credit to the jury verdict "even though the non-settling defendant's pro rata contribution to the amount of the jury verdict, when added to the amounts recovered in settlement, will result in a plaintiff's recovery that exceeds the verdict." Berg, 673 A.2d at 1257. The court expressly declined to make application of a pro rata credit depend on the relative settlement and verdict amounts in an individual case, noting that "[m]aking particular credit rules contingent upon the relative amounts of the settlement and the jury's verdict . . . would only increase uncertainty and make it even more difficult for litigants to negotiate settlements." Id. But see Rose v. Associated Anesthesiologists, 163 U.S. App. D.C. 246, 250, 501 F.2d 806, 810 (1974) (limiting the amount of pro tanto credit "so as to assure that the defendant held liable in the litigation does not pay less than his equitable [pro rata] share"). *fn8
In short, the injured patient in Berg was no more than an incidental beneficiary of this court's decision to adhere to the rule that when a settling defendant is a joint tortfeasor, the non-settling defendant is entitled to a pro rata credit against the jury's verdict. See Berg, 673 A.2d at 1257 (citing Martello v. Hawley, 112 U.S. App. D.C. 129, 132, 300 F.2d 721, 724 (1962)). Although application of a pro tanto credit means that the plaintiff will not receive a windfall benefit, the court's decision to apply a pro tanto credit in no way reduces that to which the plaintiff is entitled, compensation in the amount awarded by the jury. Whether Paul will receive that windfall depends exclusively on whether a pro rata credit should have been applied in order to vindicate the right of contribution between the settling and non-settling defendants as joint tortfeasors. We now turn to that issue. *fn9
A threshold obstacle to Paul's claim that a pro rata credit should have been applied to the verdict rendered against Dr. Bier is the absence of either a judicial determination or a stipulation, see Berg, 673 A.2d at 1251 & n.13; Lamphier v. Washington Hosp. Ctr., 524 A.2d 729, 733 & n.5 (D.C. 1987), that GWU is a joint tortfeasor with Dr. Bier. Because GWU settled mid-trial and was dismissed from the case, and it did not raise the issue of contribution until after the jury's verdict, see infra, there was no court adjudication that GWU and Dr. Bier were joint tortfeasors. GWU's post-trial unilateral acknowledgment of liability in its cross-claim for contribution, is not supported by any stipulation *fn10 and is contradicted by its blanket denial of liability in the settlement agreement. See supra note 3. As we have explained, for a non-settling defendant to receive a pro rata credit, the liability of the settling defendants must be established either by adjudication or by stipulation between the plaintiff and the settling party. See Shannon, supra note 9, 696 A.2d at 1367 (citing Berg, 673 A.2d at 1251 & n.13); Washington Hosp. Ctr., supra note 5, 722 A.2d at 336 (noting the "essential prerequisite for entitlement to contribution is that the parties be joint tortfeasors in the sense that their negligence concurred in causing the harm to the injured party") (citations omitted); Washington, supra note 9, 579 A.2d at 187 (explaining that the right to contribution is contingent upon a finding of joint liability); Lamphier, 524 A.2d at 733 & n.5 (noting that the liability of the settling tortfeasor must be judicially established as a predicate to asserting the right to contribution) (citing Otis Elevator Co. v. Henderson, 514 A.2d 784, 786 (D.C. 1986) (per curiam)). As Paul's argument for a pro rata credit derives from the right to contribution of the joint tortfeasors, the same requirement applies if the plaintiff, rather than the non-settling defendant, requests a pro rata credit. In the absence of either an adjudication or stipulation that GWU and Dr. Bier were joint tortfeasors, the trial court did not err in granting Dr. Bier's request to apply a pro tanto credit. *fn11 Cf. Berg, 673 A.2d at 1250-51 (stipulation sufficient where the settling tortfeasor admitted to liability in pretrial statement stipulation of facts to the court and "[a]ll parties, including [non-settling tortfeasor] agree that [settling tortfeasor's] stipulation of liability is enough to make it a joint tortfeasor").
A. GWU's Appeal (97-CV-50): The Settling Defendant's Cross-Claim for Contribution.
GWU asserts that the trial court abused its discretion in denying its motion to file a cross-claim for contribution against Dr. Bier following the jury verdict. It maintains that there is no equitable reason why it should be required to pay the full amount of the jury verdict while Dr. Bier receives a "free pass," and that such an inequitable result conflicts with this court's longstanding policy of encouraging out-of-court settlements. As we noted earlier in connection with Paul's appeal, a question at issue in this case is whether, even assuming the timeliness of GWU's motion, GWU could claim a right to contribution as a joint tortfeasor given that its liability to the plaintiff was neither judicially determined nor the product of a stipulation by the parties. See supra notes 10 and 11. *fn12 Assuming that GWU, as a settling defendant, had a right of contribution against the non-settling Dr. Bier, we recognize that the settling defendant must have available a procedural mechanism to establish the predicate joint tortfeasor liability, even though as a result of settlement, it is no longer party to the lawsuit. This court, however, has yet to decide the issue whether a settling defendant has a right to contribution. See, e.g., Washington Hosp. Ctr., 722 A.2d at 342-43 & nn.13-15. We do not reach either question, however, because we hold that, even if GWU is a joint tortfeasor with a right to contribution, the trial court did not abuse its discretion in disallowing the cross-claim on the ground that GWU's failure to timely assert its right to contribution was prejudicial to Dr. Bier, the non-settling defendant. *fn13
The decision whether to grant or deny a motion to file a cross-claim under Super. Ct. Civ. R. 13 (a) or to amend a pleading under Rule 15 is within the sound discretion of the trial court, and we review the decision for abuse of discretion. We are mindful, however, of the liberal construction we place on pleading rules to achieve substantial justice over formalism. See Goldkind v. Snider Bros., Inc., 467 A.2d 468, 474 (D.C. 1983); Eskridge v. Jackson, 401 A.2d 986, 988 (D.C. 1979) (per curiam); Eagle Wine & Liquor Co. v. Silverberg Elec. Co., 402 A.2d 31, 34 (D.C. 1979). Although a trial court may not deny a motion to amend the pleadings simply because of undue delay, "the lateness of a motion may well provide the predicate for a proper determination that prejudice to the opposing party would result if an amendment were allowed." Eagle Wine & Liquor Co., 402 A.2d. at 35; see also Gordon v. Raven Sys. & Research, Inc., 462 A.2d 10, 13 (D.C. 1983) (no abuse of discretion in denying leave to amend complaint requested eighteen months after filing and after close of discovery, noting that movant gave no reason for delay and opposing party would be prejudiced by having to begin anew the pretrial and trial proceedings).
In evaluating the timeliness of GWU's motion to file a cross-claim and its potential prejudice to Dr. Bier, we start with the familiar principle we have already discussed in connection with Paul's appeal that a right of contribution does not arise "without a finding that the party seeking contribution is a joint tortfeasor along with the party from whom contribution is sought." Hall, supra note 13, 621 A.2d at 850. GWU argues that it did not have a right of contribution against Dr. Bier until he was found to be a tortfeasor, and thus, that GWU could not have filed its cross-claim before the jury's verdict. Here, GWU sought leave to file its cross-claim not only three months after the jury's verdict but also five weeks after the trial court had ruled on Dr. Bier's motion for a pro tanto credit. Thus, GWU also argues that its contribution claim was not untimely because it did not accrue until after the trial court awarded a pro tanto credit to Dr. Bier and it became clear that GWU had paid a disproportionate share of the liability. According to our case law, "a right of contribution accrues when two or more parties are joint tortfeasors." Hall, supra note 13, 621 A.2d at 850 (citations omitted), but is "enforceable only after the one seeking it has been forced to pay." Bair v. Bryant, 96 A.2d 508, 510 (D.C. 1953). Although we do not decide whether GWU was a joint tortfeasor, we note that if GWU was not a joint tortfeasor then it had no right to contribution, and if, as GWU subsequently postulated, it was a joint tortfeasor, its right of contribution (assuming that settling defendants have such a right) would have become enforceable at the time, while the litigation against Dr. Bier was still in progress, when it agreed to pay Paul $2,000,000. Moreover, it would not be the trial court's application of the pro tanto credit in mid-September 1996, but the verdict at the end of July 1996, that would have alerted GWU to the disproportionality of its settlement with Paul. *fn14 We therefore are not persuaded that GWU had a reason, based in law, to delay asserting its claim of contribution.
In Washington, this court held that a non-settling defendant is barred from filing a cross-claim for contribution post-trial in the parallel situation to the one in this appeal, where the non-settling defendant's share of liability after application of a pro tanto credit was more than its pro rata share. 579 A.2d at 186-88 & n.11. Even though the right to contribution does not accrue until the non-settling defendant's status as joint tortfeasor is established, a cross-claim for contribution against a settling defendant must be asserted before the verdict is rendered as the claimant is expected to "safeguard any legitimate claim it might have to lessen the burden of a plaintiff's verdict" by asserting it during trial. Id. at 188 (citation omitted). Likewise, in Hall v. General Motors Corp., 207 U.S. App. D.C. 350, 647 F.2d 175 (1980), the court indicated that where a non-settling defendant has a clear opportunity to clarify the issue of a settling defendant's liability by filing a cross-claim during trial and does not do so, the non-settling defendant is not entitled to a pro rata reduction of judgment based on joint liability. See Id. at 358-59, 183-84; see also Berg, 673 A.2d at 1250 n.10 (noting non-settling defendant's responsibility to file cross-claim against settling defendant in principal action to ensure right to a pro rata contribution); Otis Elevator Co., 514 A.2d at 786 (concluding that where a non-settling defendant does not cross-claim against a settling defendant for contribution, and neither the judge nor the jury ever considered liability of settling defendant, non-settling defendant is only entitled to pro tanto contribution). In formulating this rule, we have focused on the prejudice caused by the non-settling defendant's late assertion of a claim for contribution on the settling defendant, see Berg, 673 A.2d at 1250 n.10, and on the plaintiff, see Washington, 579 A.2d at 188 (because "[pro rata] credit's consequences are visited upon the plaintiff . . . . injured party in settling with one tortfeasor effectively bears the burden that otherwise would fall upon the settling tortfeasor to make contribution").
We see no reason why the same principle should not apply when it is the settling defendant claiming contribution. As the trial court aptly noted:
If equity bars a late-filed cross-claim for contribution by the non-settling defendant even where its share of liability after a pro tanto credit is more than its pro rata share, it is hard to see why equity should entertain an after-the-fact cross-claim by the settling defendant when the verdict goes the other way.
Like a non-settling defendant, a settling defendant sleeps on its rights when it fails to file a timely cross-claim to determine the respective liability of the defendants. Fairness dictates that all defendants, whether they choose to settle or litigate, file cross-claims for contribution before the verdict in order to give notice to other defendants that they will be required to pay their fair share of damages to a joint tortfeasor in the event that they are found liable. *fn15 We recognize that a non-settling defendant does not need the spur of a claim for contribution to defend itself against a plaintiff's claim of liability. The manner of defense and trial strategy may be different, however, in light of a claim for contribution by an alleged joint tortfeasor. In this case, as we noted earlier in consideration of Paul's appeal, there was no request to apportion the injury attributable to Dr. Bier from that attributable to GWU. See supra note 5. Although there can be no doubt that it was in Dr. Bier's interest even prior to GWU's settlement to separate its responsibility from that of GWU if it could have reduced his potential liability to Paul as a result, Dr. Bier may have considered that the most effective defense with the jury was one that denied all liability on his part and attempted to minimize the injury alleged by Paul. Had Dr. Bier been put on notice of GWU's intent to claim for contribution, he would have had an incentive to build a case during trial that separated his liability from that of GWU if he knew that joint tortfeasor liability would be a central feature of his responsibility to GWU. See Washington, supra note 9, 579 A.2d at 188 (noting ways in which plaintiff might have litigated differently in light of request for pro rata credit even if it meant shifting theories before jury).
In this case, were the court to grant GWU, a settling defendant, leave to file its belated cross-claim for contribution against Dr. Bier, in the words of the trial court, GWU would "have all of the benefits of a claim for contribution with none of the burdens that should, in equity, attend such a claim." Given that the $2,000,000 settlement amount equals the jury verdict, the pro tanto credit protects GWU against any contribution claim by Dr. Bier. Even if GWU's pro rata share of the verdict had exceeded the settlement amount, and Dr. Bier had claimed a right to contribution, the indemnification clause in the settlement agreement between Paul and GWU ensures that GWU will be shielded from any further contribution. See Rose, 163 U.S. App. D.C. at 250, 501 F.2d at 810 (noting that settling defendants "cannot equitably insist on a continuing involvement in the litigation for the purpose of invoking contribution to lessen their [settlement] payment when they have no exposure to an increase in payment if contribution should be sought from them"). Dr. Bier, on the other hand, would be precluded from filing a cross-claim for contribution against GWU after the verdict. See Washington, supra note 9, 579 A.2d at 187-88. Thus, as the trial court observed, GWU filed its cross-claim only after it was protected from any "downside risk of contribution to Dr. Bier."
A requirement that all defendants file cross-claims for contribution before verdict is in line with our longstanding policy of encouraging settlements. See, e.g., Moses-Ecco Co. v. Roscoe-Ajax Corp., 115 U.S. App. D.C. 366, 371 & n.4, 320 F.2d 685, 690 & n.4 (1963) (citing Martello, 112 U.S. App. D.C. at 130, 300 F.2d at 722, and McKenna v. Austin, 77 U.S. App. D.C. 228, 234, 134 F.2d 659, 665 (1943)). Had GWU filed a timely cross-claim for contribution, Dr. Bier would have been put on notice that, should the jury find him negligent, he would be required to pay his pro rata share of the damages award. While this information may not have induced Dr. Bier to settle, especially if he believed that he would be exonerated by the jury, at the very least a contribution cross-claim would have informed Dr. Bier's strategic choices and should, therefore, have been filed during the course of the litigation. Accordingly, the trial court did not abuse its discretion in denying as untimely GWU's motion to cross-claim for contribution, filed several months after GWU knew the jury verdict awarding $2,000,000 to Paul and the trial court's order granting Dr. Bier's motion for a pro tanto credit against the verdict. *fn16
For the foregoing reasons, we affirm the trial court's application of a pro tanto credit and denial of GWU's post-verdict motion to amend its pleadings to include a cross-claim for contribution.
Ruiz, Associate Judge, ...