What's happening
This bill repeals and replaces section 15-108 of the general obligations law, revising how settlements in tort actions affect liability, contribution, and indemnification among multiple parties.
Why it matters
Expands and clarifies options for non-settling defendants. The bill allows remaining defendants in tort cases to choose how their liability is reduced after another party settles (by the settlement amount, actual consideration paid, or the settling party’s equitable share of damages), potentially impacting their strategic decisions and the ultimate amount they owe.
Alters contribution and indemnification rights. The law generally shields settling parties from later claims for contribution or indemnification, but creates exceptions—such as when the settling party obtains a release for others, or when there are pre-existing contractual indemnification agreements—thereby changing the risk calculus for all parties involved.
Sets out detailed procedures and timing. The bill requires explicit, timely elections by non-settling defendants regarding their preferred method of liability reduction, demanding more awareness and responsiveness during litigation and possibly affecting case strategy and settlement negotiations.
Clarifies what counts as a settlement and how structured settlements are valued. The law defines the scope of what constitutes a “settlement” for these purposes and how to value future/structured payments, which is important for both plaintiffs and defendants in evaluating and negotiating settlements, especially in complex or high-value cases.
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Who cares
Headline styles
Change How Settlements Reduce Liability
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Vetoed memo.282
- Delivered to governor
- Returned to senate
- Passed assembly
- Ordered to third reading cal.487
- Substituted for A2372
- Referred to judiciary
- Delivered to assembly
- Passed senateVote 43–19
- Ordered to third reading cal.1785
- Committee discharged and committed to rules
- Referred to judiciary
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Clarify Tort Settlement Reductions
Assembly Floor Calendar · Sponsor Jeffrey Dinowitz
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
6081
2019-2020 Regular Sessions
IN SENATE
May 16, 2019
Introduced by Sen. HOYLMAN -- read twice and ordered printed, and when printed to be committed to the Committee on Judiciary
AN ACT to amend the general obligations law, in relation to settlements in tort actions; and to repeal section 15-108 of such law relating to release or covenant not to sue
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 15-108 of the general obligations law is REPEALED and a new section 15-108 is added to read as follows:
§ 15-108. Settlements in tort actions. (a) Effect of settlement. (1) A settlement reached with one of two or more persons who are liable or claimed to be liable in tort for the same injury or wrongful death does not discharge any other tortfeasor from liability unless its terms expressly so provide, except that each of the remaining tortfeasors may choose to reduce his or her liability to the plaintiff or claimant by the stated settlement amount, the consideration actually paid, or the settling tortfeasor's equitable share of the damages as determined under article fourteen of the civil practice law and rules.
(2) When more than one person settles with a plaintiff or claimant, each of the remaining tortfeasors may choose to reduce his or her liability to the plaintiff or claimant by the total of all stated settlement amounts, the total consideration actually paid for all of the settlements, or the total of the settling tortfeasors' equitable shares of the damages as determined under article fourteen of the civil practice law and rules.
(3) The choice authorized by this subdivision shall be made in open court or in a writing subscribed on behalf of the party seeking to limit liability, and shall be made prior to the first opening statement of the trial unless the party making the election only later becomes aware that a settlement has occurred. In the latter event, the election shall be made as soon as reasonably practicable after the party making the
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD01264-01-9
S. 6081 2
election is apprised of the settlement or settlements in issue, and, if feasible, prior to the return of a verdict. In the absence of specific and timely election otherwise, a party limiting liability will be deemed to have elected reduction in the total amount of the equitable share or shares of all settling tortfeasors.
(4) For purposes of calculating the reduction of liability under this subdivision in a case where a remaining tortfeasor is subject to a periodic payment judgment pursuant to article fifty-A or article fifty-B of the civil practice law and rules, the manner in which such reduction is effected shall depend on the type of credit chosen by the remaining tortfeasors.
(A) In those instances in which the remaining tortfeasor has elected pursuant to paragraph one of this subdivision to receive a credit equivalent to the amount or amounts which the plaintiff or claimant received in settlement, the credit provided by this subdivision shall be ratably apportioned between the past damages of the plaintiff and the future damages. This shall be done by determining the ratio between the plaintiff's past damages and the plaintiff's total damages, and then apportioning that same percentage of the settlement towards payment of the plaintiff's past damages. The remainder of the settlement credit would be credited towards, and would thus reduce, the plaintiff's future damages.
For purposes of the apportionment of the settlement credit between past and future damages, the ratio between past damages and total damages will be premised upon the amounts of damages awarded by the trier of fact after adjustment has already been made for all other setoffs, credits and reductions otherwise dictated by subdivision (a) of section five thousand thirty-one, or subdivision (a) of section five thousand forty-one of the civil practice law and rules, and before consideration of any of the calculations dictated by subdivision (b), (c), (d) or (e) of such sections.
(B) In those instances in which the remaining tortfeasor has elected pursuant to paragraph one of this subdivision to receive an equitable share credit, each of the plaintiff's awards for past damages and for future damages as remain after all other set-offs, credits and reductions otherwise dictated by subdivision (a) of section five thousand thirty-one or subdivision (a) of section five thousand forty-one of the civil practice law and rules shall be reduced by the settlor's equitable share of the total culpability.
(b) Liability of settling tortfeasor. Except as otherwise provided in subdivision (f) of this section, a settlement between the plaintiff or claimant and a tortfeasor relieves such tortfeasor from liability to any other person for contribution or indemnification.
(c) Waiver of contribution and indemnification. Except as otherwise provided in subdivisions (d) and (f) of this section, a tortfeasor who has settled with the plaintiff or claimant shall not be entitled to contribution or indemnification from any other person.
(d) Settling tortfeasor's limited right to contribution or indemnification. Notwithstanding the provisions of subdivision (c) of this section, a tortfeasor who has entered into a settlement with a plaintiff or claimant may seek contribution or indemnification from any other tortfeasor if, in consideration for such settlement, the plaintiff or claimant has released from liability the person or persons from whom contribution or indemnification is sought. Contribution or indemnification shall be available pursuant to this subdivision except to the extent that it is established by the party or parties from whom contrib-
S. 6081 3
ution or indemnification is sought that the amount paid in settlement was not reasonable.
(e) Relationship with article sixteen of the civil practice law and rules. If a person seeks to limit liability pursuant to both subdivision (a) of this section and article sixteen of the civil practice law and rules, the limitation shall be made by determining the percentage that the plaintiff's or claimant's non-economic loss bears to such person's total loss, and then applying the same percentage of the settlement credit to the plaintiff's or claimant's non-economic loss. A person whose liability is reduced under this section shall be entitled to an additional reduction of liability pursuant to article sixteen of the civil practice law and rules, but only to the extent that such person's remaining liability for non-economic loss exceeds the limitation of liability, if any, established by such article.
(f) Exemptions. Nothing contained in this section shall be construed to affect or impair:
(1) any claim for indemnification if, prior to the accident or occurrence on which the claim is based, the party seeking indemnification and the party from whom indemnification is sought had entered into a written contract in which the latter had expressly agreed to indemnify the former for the type of loss suffered; or
(2) a claim for indemnification by a public employee, including indemnification pursuant to section fifty-k of the general municipal law or section seventeen or section eighteen of the public officers law.
(g) Settlements within the scope of this section. An agreement between a plaintiff or claimant and a person who is liable or claimed to be liable in tort shall be deemed a settlement for the purposes of this section only if:
(1) the agreement completely or substantially terminates the dispute between those parties;
(2) the plaintiff or claimant receives, as part of the agreement, monetary consideration greater than one dollar; and
(3) such settlement occurs prior to entry of a judgment.
(h) Valuation of structured settlements. Where the monetary consideration for a settlement includes one or more payments which are to be made more than one year after the date of the settlement, the value of such future payments shall, for purposes of subdivision (a) of this section, be deemed to be the settling tortfeasor's cost in providing such payments.
§ 2. This act shall take effect on the thirty-first of January next succeeding the date on which it shall have become a law, and shall be applicable to any action commenced on or after such effective date.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the general obligations law, in relation to settlements in tort actions; and to repeal section 15-108 of such law relating to release or covenant not to sue
Justification
Section 15-108 of the General Obligations Law sets forth what happens when a personal injury or wrongful death plaintiff releases from liabil- ity one or more, but fewer than all, of the alleged tortfeasors. Although the statute was enacted to encourage settlements, most commen- tators have concluded that it generally rewards nonsettlors at the expense of seniors and that, by doing so, it actually discourages settlement.
The key feature of the statute, and the feature most criticized by the statute's detractors, is that it rewards defendants who do not settle and can penalize plaintiffs and defendants who do. It does this by allowing the non-settlor to reduce its liability to the plaintiff by the greatest of: (I) the amount that plaintiff received in settlement, (2) the amount that plaintiff was stipulated to receive in settlement, and (3) the settling tortfeasor's "equitable share" of the damages. The first two alternatives are almost always equivalent, usually leaving the non-settlor with the choice of an "amount paid" reduction or an "equita- ble share" reduction.
Read the full memo (1,287 words)
This benefits the non-settlor in two ways. First, in those instances in which the settling tortfeasor's payment turns out to exceed what the trier of fact later determines to be the settlor's equitable share of the damages, the non-settlor benefits by the difference between those two sums. The second benefit accorded to the non-settlor is that the risk of settlor's solvency, formerly borne by the non-settlor, is now eliminated. The non-settlor is able to deduct settlor's equitable share whether or not settlor actually could have paid such sum. By virtue of these features, the non-settlor often obtains windfall reductions of liability, usually albeit not always at the plaintiffs expense.
In 1986, the Law Revision Commission proposed that the non-settling tortfeasor obtain a reduction of only the "amount" paid by a settling tortfeasor, unless the settlement was itself made in "bad faith." Such plan was modeled upon section 4 of the 1955 Uniform Contribution amongst Tortfeasors Act. This proposal goes too far in the other direction and treats non-settlors unfairly. The non-settlor's liability would be effectively increased by virtue of a settlement to which the non-settlor did not accede and which the non-settlor was powerless to prevent. More- over, this proposal would inevitably spawn litigation over whether particular settlements were made in good faith.
This bill would allow the non-settlor the same alternatives as currently exist, but require that the choice be made before, rather than after, trial. The non-settlor still would get to choose whether it will reduce its liability to plaintiff by the amount of the settlor's payment to plaintiff or by the amount of the settlor's equitable share of the damages. The difference is that because the non-settlor would have to make the choice before the verdict was rendered, there would be an added incentive to a defendant to settle, rather than to sit back and choose the "best of both worlds." So as to avoid disputes, selection would be effective only if made in writing or on the record in open court. If the non-settlor failed timely to make an election and thus "defaulted", he or she thereby would be presumed to have elected an "equitable share" credit.
The statute is vague as to which agreements will trigger its operation. Currently, it requires a formal release to be exchanged. The courts, however, have ignored this requirement. Under this proposal, the statute would be triggered by the occurrence of a "settlement", thus codifying the case law.
The current statute also is ambiguous as to the manner in which the non-settlors' liability is calculated in those, instances in which the plaintiff reaches settlement with more than one tortfeasor. This proposal, consistent with recent Court, of Appeals decisions, adopts the "aggregate," rather than "pick and-choose," method of calculation.
Neither GOL § 15-108 nor CPLR Article 16 (the "limited liability" law, which partially abrogates the general rule of joint and several liabil- ity) specifies the interrelationship between those provisions. There are a number of logically tenable methods in which the statute could be applied to a given fact pattern; selection of one such method rather than another could conceivably make hundreds of thousands of dollars' difference to the parties. The instant measure precisely delineates the manner in which the two statutes would operate, essentially codifying the approach adopted in In Re Brooklyn Navy Yard Asbestos, 971 F.2d 831 (2nd Cir. 1992).
The statute has been construed by the courts to render the settling defendant immune from contribution claims but not from indemnity claims. Because, as a practical matter, it often is difficult to distinguish a contribution claim from a claim for common law indemnity, it is not uncommon for a defendant who thinks that he or she has "bought peace" to be rudely surprised with a successful indemnity claim. This serves as yet another disincentive to settle. This bill would apply the statute to common law indemnification, but not to contractual indemnification. Public employees could, however, seek common law indemnification: But, while rendering the settlor immune from common law indemnity claims, this measure would not otherwise displace the rule set forth in Riviello v. Wale/ron, 47 N.Y.2d 297 (1979). Riviello held that a non-settlor who stands vicariously liable for a settling defendant's wrong is entitled to an "amount paid" credit, but cannot claim an "equitable share" cred- it. An "equitable share" apportionment in such a case would result in a total elimination of the nonsettlor's liability, thereby defeating the purpose of vicarious liability.
This bill would allow a tortfeasor, upon settlement with the plaintiff, also to "buy" the plaintiffs claims against one or more other tortfea- sors. There are many cases in which this option would streamline the litigation and induce quicker settlements. The current statute is silent as to the manner in which a structured settlement should be valued for its purposes. This measure would require structured settlements to be valued in terms of their cost.
Finally, we note that the instant measure has been modified slightly from past versions. A new provision has been added (see, proposed I5-108(a)(4)), which would precisely specify the mariner in which settlement would be credited towards and reduce a non-settlor's liabil- ity in actions governed by Article 50-A or 50-B of the Civil Practice Law and Rules in which the future damages are paid periodically. This is a matter not currently addressed by any statute, and it has caused confusion. To resolve that confusion, this measure would require the settlement credit to be apportioned pro rata between past and future damages.
This measure, which would have no fiscal impact on the State, would take effect on the thirty-first of January next succeeding the date on which it shall have become a law and shall be applicable to any action commenced on or after such effective date.
Legislative history
2017-18 - A.9028 - Third Reading Calendar 2015-16: A.244/S.1605 A.Cal./S.Judi 2014; A.1085/S.887 - A.Cal./S.Judi 2013: A.1085/S.887 - A.Judi/S.Judi 2012; A.625/S.3766 - A. Judi/S. Judi 2011; A.625/S.3766 - A. Cal/S. Cal 2010; A.2579-A - A. Judi 2009; A.2579/S.2390 - A. Cal/S.Judi 2008; A.9157/S.7482 - A.Cal/SRules 2007; A.9157 - A. Judi 2003-04; A.7881/S.2829 - PA/S.Rules 2001-02; A.7346/S.3975 - PA/S.Judi 1999-00; A.7160/S.3395 - PA/S.Judi 1997-98; A.7037/S.2786-A - PA/S.Cal 1995-96; A.7742/S.4517 - A. Judi/S.Judi 1993-94; A.11834/S.8175-A - A. Judi/S.Rules
Fiscal implications for state and local governments
None.
Effective date
January 1st next succeeding the date on which it shall have become a law and apply only to actions and proceedings commenced on or after such date.
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