Tortfeasor Liability in Asbestos Cases
In a recent decision, Scapa Dryer Fabrics, Inc. v. Saville, 16 A.3d 159 (Md. 2011), the Maryland Court of Appeals addressed an issue of first impression relating to joint tortfeasor liability in asbestos cases. In that case, Mr. Saville was a “broke hustler” for a paper mill: his job was to keep the machines clean and gather the nonsaleable paper for recycling. The defendant, Scapa Dryer Fabrics, manufactured a dryer felt containing asbestos that was used in the paper machine. Mr. Saville, who was responsible for scraping and cleaning the felt with a metal blade on a daily basis, alleged that he contracted asbestosis, lung cancer, and mesothelioma as a result of exposure to asbestos dust from the dryer felt. He brought an action against Scapa and approximately thirty other defendants.
A number of Scapa’s co-defendants formed trusts pursuant to sec. 524(g) of the federal Bankruptcy Code. Under sec. 524(g), a bankrupt entity which has been named as a defendant in an asbestos case can create a trust for the purpose of compensating victims of asbestos-related injuries. Section 524(g) trusts cannot be sued for damages, but must use their assets to pay compensation to claimants in a fair and consistent manner. In this case, a number of sec. 524(g) trusts made compensation payments to Mr. Saville.
At trial, the jury found for the plaintiff, awarding damages of $1.7 million. Scapa argued that it should be entitled to an offset for all settlement payments made by co-defendants’ sec. 524(g) trusts. Scapa asserted that the settlement payments should offset the plaintiff’s recovery because, under sec. 524(g), Scapa could not bring a suit for contribution against these trusts.
The court held that under the Maryland Uniform Contribution Among Joint Tortfeasors Act, a defendant cannot offset its liability unless its co-defendants are found to be jointly and severally liable for the plaintiff’s injury. Therefore, payments made by the sec. 524 (g) trusts would not necessarily offset the plaintiff’s recovery from Scapa because these payments did not necessarily constitute an admission of liability. Rather, if the settlement agreement expressly stated that the sec. 524 (g) trust was liable, or should be treated as though a judgment had been rendered against it, then Scapa would be entitled to an offset. If, however, the settlement agreement did not acknowledge liability, the settlement payments would be treated as “volunteer payments” and would not offset the judgment against Scapa. In order to permit Scapa to properly makes its case on this score, the court held that Scapa was entitled to discovery of all sec. 524 (g) settlement agreements and payment amounts.