Free Memorandum - District Court of Arizona - Arizona

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Christopher R. Kaup (#014820) TIFFANY & BOSCO, P.A. Camelback Esplanade II, Third Floor 2525 E. Camelback Road Phoenix, AZ 85016-4237 Counsel for Plaintiff THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA BILTMORE ASSOCIATES, as Trustee for the Visitalk Creditors' Trust, Plaintiff, vs. PETER THIMMESCH, et al., CASE NO. CV 02 2405 PHX HRH

PLAINTIFF'S TRIAL MEMORANDUM ON CONTRIBUTION AMONG TORTFEASORS

12 13 14 15 16 17 18 19 20 21 22 23 percentage of fault times the total value of the injury. 24 25 26 1 "If a release or a covenant not to sue or not to enforce judgment execute is given ... to one of two or more persons liable in tort for the same injury ... it reduces the claim against the others to the extent of any amount stipulated by the release ...." A.R.S. § 122504.
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Defendants. I. OVERVIEW Because the underlying claims against the former officers and directors of Visitalk.com, Inc. ("Ds&Os") who have settled with the Plaintiff and Snell & Wilmer ("S&W") are for negligence, several only liability applies. A.R.S. § 12-2506(A). In other words, each defendant is liable for the injury in proportion to its fault, not for the entire injury. Hence, the S&W is not liable in tort for the same injury for which the Ds&Os admitted liability and settled. The amount of the stipulated Damron judgments against the Ds&Os, therefore, is not credited (or applied as a set-off) against the claims against the S&W (as would be the situation under A.R.S. § 12-2504 had the Ds&Os and the S&W been jointly liable for the same injury).1 Rather, S&W remains liable for their

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III.

LEGAL ARGUMENT A. ARIZONA DOES NOT APPLY A SET-OFF FOR A SETTLEMENT OR STIPULATED JUDGMENT BY ONE OF MULTIPLE DEFENDANTS LIABLE IN TORT FOR NEGLIGENCE.

The Arizona Court of Appeals addressed a situation similar to that at issue here where after a plaintiff settled with two defendants in a medical malpractice case it obtained a judgment based on allocation of fault against a third defendant. The court explained why the settlement did not reduce the liability of the third defendant, as follows: We conclude, however, that § 12-2504 does not apply because it was enacted as part of a statute permitting contribution between defendants liable for the entire amount of damages caused by the concurrent negligence of each of them. It was not designed for this case which was tried under A.R.S. § 12-2506, a more recently enacted statute. Section 122506 abolished joint and several liability, limiting recovery against any defendant to that percentage of a plaintiff's total injuries representing that defendant's degree of fault. Because recovery is so limited, contribution can never occur. Section 12-2504, passed as part of a statute regulating contribution, therefore, is not, obviously, applicable to a situation where there is no right to contribution. Roland v. Bernstein, 171 Ariz. 96, 97-98, 828 P.2d 1237, 1238-39 (App. 1991). The Court of Appeals later addressed claims against two drivers who shared negligence liability for injuries caused in a motor vehicle accident. Again, the court explained why an arbitration judgment against one defendant did not offset the second defendant's liability: [W]ith a few exceptions not at issue here, joint and several liability was abolished by the 1987 amendments to the UCATA. Consequently, after the 1987 amendments, the contribution statutes rarely apply. Wareing v. Falk, 182 Ariz. 495, 501, 897 P.2d 1381, 1387 (App. 1995) (citing A.R.S. § 12- 2506(A), (D)). The Court of Appeals in each of the above cited cases applied Arizona's statutory scheme of apportioning liability based on fault, regardless that, in theory, there can be

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cases where the plaintiff will recover more than its actual damages. It does so because to do otherwise would be a potential windfall for a tortfeasor who resists settlement. Holding a non-settling tortfeasor liable for his full proportionate share of a plaintiff's damages without reducing the amount paid in settlement by other tortfeasors advances this state's strong policy of encouraging settlement even if in some circumstances it results in a plaintiff's receipt of more than the amount of damages determined by the trier of fact. Neil v. Kavena, 176 Ariz. 93, 96-97, 859 P.2d 203, 206-207 (App. 1993). [O]ffsetting a plaintiff's damages by the amount of a non-party's settlement is unnecessary because the defendant pays only his share of the damages. A contrary rule would (1) give the benefit of an advantageous settlement to the non-settling tortfeasor, rather than to the plaintiff who negotiated the settlement, (2) discourage some defendants from settling in anticipation of acquiring the benefits of the settlements of their co-tortfeasors, and (3) neglect to recognize the fact that settlement dollars are not synonymous with damages but merely a contractual estimate of the settling tortfeasor's liability. Gemstar Ltd. v. Ernst & Young, 185 Ariz. 493, 508, 917 P.2d 222, 237 (Ariz. 1996) (citations and quotation and alteration marks omitted). The situation here is analogous to that addressed by the Arizona Court of Appeals in the cases just discussed. Defendant S&W is defending claims sounding in negligence. S&W is no more entitled to benefit from the Trustee's stipulated judgment with the Ds&Os than was the physician defendant in the Roland case or the driver defendant in the Wareing case. Rather, for the reasons well set out by the courts in Neil and Gemstar, this Court should not apply any set-off whatsoever to the judgment against these Defendants based on the settlement of the claim against the Ds&Os. B. THE ARIZONA EXCEPTION FOR INTENTIONAL TORTS DOES NOT APPLY.

Arizona makes an exception to several only liability and applies joint liability in those unusual cases where the injury was caused exclusively by intentional tortious conduct. Tortfeasors are jointly liable where they intentionally acted in concert to cause an indivisible harm. A.R.S. § 12- 2506(D)(1), (F)(1). According to subsection (F): Acting in concert does not apply to any person whose conduct was negligent in any of its degrees rather than intentional. A person's conduct
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that provides substantial assistance to one committing an intentional tort does not constitute acting in concert if the person has not consciously agreed with the other to commit the intentional tort. A.R.S. § 12-2506(F)(2) (emphasis added). Where this is the case, A.R.S. § 12-2504 applies. In such situations, a judgment against one of two tortfeasors is applied as a setoff for the benefit of the second tortfeasor. Only in such situations. S&W has not agreed or even assert and the Trustee has not alleged that Defendants were part of an intentional scheme to injure Visitalk, that Defendants were acting in concert with the Ds&Os with the overt intention to harm Visitalk. Section 122504, therefore, does not apply and there is no set-off for the Damron judgment entered against the Ds&Os. Rather, the general rule of several only liability discussed in the preceding section applies. III. CONCLUSION
For the reasons explained above, the Trustee respectfully asks the Court to reject any suggestion by Defendants that they are entitled to benefit from a set-off based on the Damrontype settlement of Visitalk's claims against the Ds&Os and deny S&W's speaking motion on this

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issue.

16 Dated this 3d day of March, 2008. 17 TIFFANY & BOSCO, P.A. 18 19 20 21 22 23 24 25 26 4 By: /s/ State Bar No. 14820 Christopher R. Kaup Camelback Esplanade II, Third Floor 2525 E. Camelback Road Phoenix, AZ 85016-4237 Counsel for Plaintiff

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CERTIFICATE OF SERVICE I hereby certify that on March 3, 2008, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Gary L. Birnbaum Charles S. Price Timothy J. Thomason Scot L. Claus MARISCAL WEEKS MCINTYRE & FRIEDLANDER PA 2901 North Central Avenue, Suite 200 Phoenix, AZ 85012-2705 Attorneys for Defendant Snell & Wilmer, LLP I hereby certify that on March 3, 2008, I caused the attached document to be served by first class mail on the following, who are not registered participants of the CM/ECF System: Peter Thimmesch 11329 Stonehouse Place Potomac Falls, Virginia 20165-5123 Defendant Pro Se

By

/s/ Lauri Andrisani

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