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Non-settling Co-defendants Be Warned: Set-offs May Be Dead in Georgia

Posted on: March 1st, 2010

By Sun Choy and Jacob E. Daly

In personal injury cases, plaintiffs often sue multiple defendants with “deep pockets” in order to maximize the potential for recovery. If the defendants are determined to be joint tortfeasors, then all defendants are jointly and severally liable for the full amount of the plaintiff’s damages. Consequently, a joint tortfeasor is entitled to a set-off for any payment made to a plaintiff by another joint tortfeasor to prevent a windfall to the plaintiff. However, what happens if a settling co-defendant is not a joint tortfeasor? Until recently, no Georgia case directly addressed this issue.

In Broda v. Dziwura, the Supreme Court of Georgia finally addressed this issue in what started off as a typical automobile accident case. Plaintiff Mindy Broda suffered a serious injury to her wrist when defendant Joan Dziwura rear-ended her vehicle. Broda also sued Dziwura’s purported employer, Winmark Homes, based on a theory of respondeat superior or vicarious liability. Winmark Homes denied being Dziwura’s employer and presented evidence at trial that Dziwura was an independent contractor. While the jury was deliberating, Broda and Winmark Homes entered into a high-low agreement that guaranteed Broda a minimum of $250,000. The jury returned a verdict against Dziwura and awarded damages in excess of $1 million. Even though the jury did not find Winmark Homes to be liable, Winmark Homes paid Broda $250,000 pursuant to the terms of the high-low agreement.

The trial court denied Dziwura’s request for a set-off because the jury did not find Winmark Homes to be a joint tortfeasor. The Court of Appeals reversed because it determined that Broda was not entitled to a recovery greater than the amount awarded by the jury. Given the absence of Georgia law on the point, the Court of Appeals reasoned that Winmark Homes had made the payment at a time when Broda was claiming that it also was liable and for the purpose of limiting Winmark Homes’ potential exposure.

In reversing, the Supreme Court focused on the jury’s determination that Dziwura was 100 percent at fault. Relying on cases from other states, the Court reasoned that “[t]he applicability of a set-off is predicated on the settling party being liable, at least in some part, for the plaintiff’s injury.” The Court further noted, “[i]f a windfall must be had, it will inure to the benefit of the injured party rather than relieve the wrongdoer of full responsibility for his wrongdoing.”

Although fact specific, the ultimate impact of Broda may be far reaching and signal the death of set-offs in Georgia, especially given that most, if not all, settling co-defendants deny liability as a term of the settlement. Based on the denial of liability, a set-off would not be available under Broda unless the non-settling defendant obtains a judicial or jury determination that the settling defendant is liable. Even with such a determination, a complete set-off may no longer be available due to apportionment of fault. To be sure, the impact of Broda must now be considered every time a co-defendant settles with the plaintiff.

For more information regarding this article, please contact Mr. Choy at 770.818.1412 or by email at [email protected], and Mr. Daly at 770.818.1431 or by email at [email protected].

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