The current law regarding set-offs in multi-defendant cases is often viewed as difficult and confusing. As is almost always the case, in most product liability cases the plaintiff will name several defendants in the complaint. As is also common, throughout the typical products litigation process one or more of the defendants will settle their case. This month’s article will discuss when non-settling defendants are entitled to a set-off of the monies paid by the other settling defendants.

History of Florida Case Regarding Set-Off

There are a few primary statutes that apply to set-offs in multi-defendant cases. First, Florida Statutes, §46.015(2), Release of Parties, and §768.041(2), Release or Covenant not to Sue, provide that at trial, if the court is shown proof that another defendant or party has settled or paid monies in exchange for a release or covenant not to sue, then the court shall set off that amount from any judgment rendered. Second, under Florida Statutes §768.31(5), Contribution among Tortfeasors, states that a release to one tortfeasor does not discharge other tortfeasors, but will reduce the claims against those parties. The Supreme Court of Florida held that each of these statutes assumes that the applicable cases involve more than one defendant, who are jointly and severally liable for the same damages.

In Wells v. Tallahassee Memorial Regional Medical Center, Inc, 659 So.2d 249 (Fla. 1995), the Supreme Court held that Florida’s set-off statutes apply to economic damages only because liability is several, not common. Non-settling defendants could no longer rely upon the above cited statutes to lessen their liability. The Court found that non-economic damages are not set-off by settlement monies. Each defendant was to be exclusively accountable for its share of non-economic damages.

The Wells court set forth a formula to calculate the percentage by which the jury award of economic damages would be set off by prior settlements. The formula starts by determining the percentage of economic damages bydividing the jury’s award of economic damages by the total jury award. This percentage is multiplied by the total amount of settlement prior to the verdict. This number is then subtracted from the jury’s total economic damage award. Any social security benefits are also subtracted and the resulting number is the total economic damages for which the non-settling defendant is liable. To reach the total jury award apportioned to a single defendant,the non-economic damages are multiplied by the jury’s determination of the percentage of fault attributable to that non-settling defendant. This number is added to the amount of economic damages determined above and equals the non-settling defendant’s liability.

In Nash v. Wells Fargo Guard Services, Inc., 678 So.2d 1262 (Fla. 1996), the Supreme Court of Florida held that a non-settling defendant must plead the negligence of a nonparty as an affirmative defense and identify that party prior to trial. In order to set-off non-economic damages under §768.81 for the negligence of nonparties, the defendant has the burden of proving that the nonparty’s negligence contributed to the accident before the nonparty’s name can be added to the verdict form. Only then was a nonsettling defendant entitled to set-off for non-economic damages.

Later in Gouty v. Schnepel, 795 So.2d 959 (Fla. 2001), the Florida Supreme Court held that if a non-settling defendant is found to be completely at fault for the damages alleged and the jury finds that a Fabre party has no liability, then no set-off is applicable. In Gouty, the plaintiff sued the owner of a gun and the manufacturer of the gun after being injured by the bullet. The manufacturer settled their claim prior to trial. The owner of the gun named the manufacturer as a Fabre party and listed them on the verdict form at trial. The jury found no liability on the part of the manufacturer and found that the owner of the gun was 100 percent liable for the damages alleged. The lower tribunal denied the owner’s motion to reduce the damages awarded by the settlement amount with the manufacturer. The question was certified by the First District to the Court. The Court held that Florida’s setoff statutes applied only when liability was joint and several. Therefore, when the settling defendant is found to be without fault by the jury, that party cannot be considered a joint tortfeasor. The Court followed their previous opinions that “the applicability of the set-off statutes is predicated on the existence of other tortfeasors who are liable for the same injury as the settling party.”

Therefore, the Gouty Court held that neither economic damages for a prior settlement, nor non-economic damages for a Fabre party, can be set-off when the non-settling defendant is found to bear 100 percent of the liability.

The Impact of the D’Angelo v. Fitzmaurice

The Gouty opinion was substantially limited by the Court when it issued its opinion in D’Angelo v. Fitzmaurice, 863 So.2d 311 (Fla. 2003). In D’Angelo, a malpractice action was brought against the hospital, the physician and the physician’s professional association. The hospital settled before trial. The jury returned a verdict in favor of the plaintiff, and the physician moved to set off the entire settlement value from the verdict. The circuit court allowed a set off of the economic damages, but not the non-economic damages. The district court of appeal reversed the underlying court’s decision, following the opinion of the Gouty, and held that the physician was not entitled to any set-off because the hospital was not included on the verdict form so that the jury could determine whether liability existed for that entity.

Most importantly, the ruling set forth in D’Angelo addressed a cause of action which accrued prior to the 1999 Tort Reform Act. In the 1999 Act, Section 768.81, Florida Statutes, Comparative Fault, eliminates joint and several liability for non-economic damages completely. The D’Angelo Court specifically found that Florida’s set-off statutes continue to apply to economic damages when parties are subject to joint and several liability. That being said, the Court took the opportunity to comment separately on both types of damages, economic and non-economic, and the applicability of set-off to each.

Non-Economic Damages

The Court held that to receive any set-off for non-economic damages, defendants must follow the procedure set forth in Nash v. Wells Fargo Guard Services, Inc., 678 So.2d 1262 (Fla. 1996). Specifically, the defendant(s) must raise Fabre as an affirmative defense and specifically name any Fabre party prior to trial. The non-settling defendant must prove their case against each Fabre defendant in order to include those parties on the verdict form. If the jury allocates some portion of liability to a particular Fabre party, then and only then is the defendant allowed a set-off for non-economic damages.

Economic Damages

The Court ruled that “a settling defendant does not have to be found liable before any economic damages setoff can be given.” They opted to limit the Gouty opinion to the factual scenario where a settling defendant is listed as a Fabre party on the verdict form and is expressly found to have no (zero percent) liability. Otherwise, if the nonsettling defendant does not opt to name a Fabre defendant and list that party on the verdict form, they will still be entitled to a set-off for economic damages of settlement monies received, in accordance with the formula set forth in Wells v. Tallahassee Memorial Regional Medical Center,Inc., 659 So.2d 249 (Fla. 1995). However, the 1999 Tort Reform Act changed Florida Statutes, §768.81, so that it now applies to negligence actions. Section 768.81(3) now sets out specific amounts of economic damages that are subject to joint and several liability based upon the jury’s finding of fault of each defendant and any comparative fault of the plaintiff. This makes it difficult to determine the amount of economic damages that will be subject to a set-off because this amount may differ from the total amount of economic damages in the jury’s verdict.¹ Therefore, rather than using the total amount of economic damages awarded by the jury in the Wells formula, the amount of economic damages must be calculated under §768.81(3).

Immediately following the Court’s decision in D’Angelo, the Fourth District Court of Appeal issued a ruling in Grobman v. Posey, 863 So.2d 1230 (Fla. 4th DCA 2003) that has further expanded the law of set-off. The Grobman court held that in the case where a settling defendant is vicariously liable for a non-settling defendant, then the entire amount of settlement monies paid by that defendant can be set-off, whether economic or non-economic. The appellate court held that in the situation where a settling defendant is vicariously liable for a non-settling defendant’s action, §768.81 does not apply. Therefore, failure to list the settling defendant on the verdict form as a Fabre party would not preclude a set-off for non-economic damages. The appellate court held that this factual scenario would hold true for either a vicarious claim or a derivative claim.²

Options for the Plaintiff’s Counsel

There is not much leeway today for practitioners faced with a motion for set-off. One possibility often discussed is for the settling parties to simply apportion the settlement between economic and non-economic damages in the release itself. However, the Wells Court specifically held that this could not be done because it may foster collusion between the settling parties. The Court instead set forth the formula to determine the amount of set-off to apply to economic damages.

There is, however, one option plaintiff’s counsel should consider when the non-settling defendant raises D’Angelo, arguing that they would be entitled to a large set-off after trial. Plaintiff’s counsel can reply by unilaterally moving that the settling defendants be named on the verdict form as Fabre parties themselves. This will force the defense attorney to prove their case against the settling defendants. This is also a good tactic for mediation purposes.³

If the plaintiff names the settling defendant as a Fabre party, they are arguably taking a chance of reducing any liability of the non-settling defendants at trial. However,either side has the ability to request that a party be listed on the verdict form as a Fabre party, as long as it’s done prior to the pretrial conference. Then, if the jury finds that the Fabre party is “specifically” without fault, the non-settling defendant is not permitted any set-off.

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1 See, Thomas D. Sawaya, Florida Personal Injury and Wrongful Death Actions, §5.10 (2003).

2 The non-settling defendant in Grobman was an HMO. The vicarious claim was for the conduct of its “agents” or the physicians it held out as its healthcare providers, while the derivative claim was for negligent credentialing of those same health care providers.

3 Eugene W. Harris, of Harris & Gonzalez in Lakeland,

Florida, suggested the idea of listing settling defendants on the verdict form by the plaintiff. This tactic was successfully utilized by our firm during a recent mediation after the defense attorney raised the D’Angelo case to threaten the plaintiff with a substantial set-off if the case was tried before a jury.