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Is There Still A Right To Setoff Settlement Amounts Paid By A Co-Defendant In A Negligence Case Involving Multiple Defendants

Florida Statute § 768.81, titled “Comparative Fault”, provides a statutory scheme for determining damages in a “negligence action” and apportioning these damages if there are multiple parties involved.  The statute expressly defines a “negligence action” as including, without limitation, “a[ny] civil action for damages based upon a theory of negligence, strict liability, products liability, professional malpractice whether couched in terms of contract or tort, or breach of warranty and like theories. The substance of an action, not conclusory terms used by a party, determines whether an action is a negligence action.” See Fla. Stat. § 768.81(1)(c).

The statute was amended by the Florida Legislature in April of 2006.  This most recent amendment effectively abolished the doctrine of joint & several liability in its entirety.

Prior to 2006, the previous version of Florida Statute § 768.81 still incorporated the concept of joint & several liability.  Specifically, in discussing how damages in a negligence action should be apportioned, the prior statute stated as follows:  “the court shall enter judgment against each party liable on the basis of such party’s percentage of fault and not on the basis of the doctrine of joint and several liability; provided that with respect to any party whose percentage of fault equals or exceeds that of a particular claimant, the court shall enter judgment with respect to economic damages against that party on the basis of the doctrine of joint and several liability…Notwithstanding the provisions of this section, the doctrine of joint and several liability applies to all actions in which the total amount of damages does not exceed $25,000”.

In short, the prior versions of Florida’s “comparative fault” statute had eliminated the doctrine of joint and several liability – but only for the recovery of non-economic damages in negligence cases.

The current version of the statute does not distinguish between economic and non-economic damages.  Instead, under revised Florida Statute § 768.81(3), in a negligence action the court “shall enter judgment against each party liable on the basis of such party’s percentage of fault and not on the basis of the doctrine of joint and several liability”.  Under the current statute, therefore, if a defendant in a negligence action intends to argue that its overall liability or exposure should be reduced because of the alleged fault of a non-party (including a co-defendant who has “settled out”) that defendant is now statutorily required to affirmatively plead the fault of the non-party and ensure that the non-party is included on the verdict form, and then prove by a preponderance of the evidence the fault of such non-party. See Fla. Stat. § 768.81(3)(a) & (b).

There has not been an abundance of case law since the 2006 amendments to Florida Statute § 768.81 which specifically address the issue of “judgment setoffs” in cases involving settling and non-settling defendants.  However, the few cases that have broached this subject have clearly indicated that not only does a non-settling defendant no longer have a right to a “judgment setoff” regarding a prior settlement between the plaintiff and a settling co-defendant, but some of these courts have further held that information and documents relating to such a settlement are not discoverable by the non-settling defendant to the extent that they have no relevancy to any remaining issue in the litigation.

For example, in Schippers v. United States of America, 2011 U.S. Dist. LEXIS 141356 (M.D. Fla. 2011), the government was sued as a defendant in a tort action following a fatal airplane crash.  The government filed a motion to compel after the plaintiffs refused to produce a copy of a settlement agreement they reached with another party in the case.  Despite a number of novel arguments and multiple requests by the government to obtain this settlement information, the Schippers court held that the government was not entitled to discover the terms of the settlement between the plaintiff and another co-defendant and further stated that the non-settling defendant “has no right of setoff” now that the doctrine of joint and several liability has been abolished following the legislative amendment in 2006.

In Port Charlotte HMZ, LLC v. Suarez, 2016 Fla. App. LEXIS 15869 (Fla. 2nd DCA October 26, 2016), the Second District Court of Appeal recently reversed the trial court’s post-trial decision to setoff the from the jury verdict the amounts previously paid by a co-defendant who settled before trial.  The Suarez court held that, in light of the 2006 amendments to Florida Statute § 768.81 and the abolition of the doctrine of joint and several liability, “the trial court erred in applying a setoff” based on the amount paid by a settling co-defendant.  See also Sterbenz v. Anderson, 2013 U.S. Dist. LEXIS 44568 (M.D. Fla. March 28, 2013)

The recurring argument that is typically raised by a non-settling defendant is that, without a setoff, a plaintiff might possibly obtain a double-recovery or “windfall” – i.e. the plaintiff enters into a lofty settlement with one co-defendant, and then subsequently convinces the jury that the remaining non-settling defendant is principally at fault for its damages.  However, there are several opinions issued by the Supreme Court of Florida (interpreting the prior version of Florida Statute § 768.81) in which the Court explained that “[s]ettlement dollars are not synonymous with damages but merely a contractual estimate of the settling tortfeasor’s liability; they include not only damages but also the value of avoiding the risk and expense at trial” and “[g]iven these components of a settlement, there is no conceptual inconsistency in allowing a plaintiff to recover more from a settlement or partial settlement than he could receive as damages. There can be a multitude of reasons that underlie a settling co-defendant’s calculated business determination regarding the amount that it is willing to pay to voluntarily settle a claim, as well as a plaintiff’s decision to accept such an amount.”  (Plus, as a counter to the “windfall” argument, a plaintiff can similarly argue that it would be equally unfair to it if it accepts a nominal settlement from one co-defendant (with the belief that the lion’s share of liability rests with a non-settling defendant), and the jury ultimately returns a verdict which apportions most of the liability on the settling defendant.  In such a scenario, the plaintiff has no further recourse against the settling defendant and is now stuck with an “anti-windfall”).

Bottom line, under the current version of Florida Statute § 768.81, if a trial court were to recognize and apply a “setoff” defense asserted by a non-settling defendant, and offset a future verdict against that non-settling defendant based on an amount previously paid to the plaintiff by a settling co-defendant, the trial court would be clearly ignoring the plain language of the current statute which states that “the court shall enter judgment against each party liable on the basis of such party’s percentage of fault and not on the basis of the doctrine of joint and several liability”.