Appeal from the Circuit Court of Madison County. Nos. 91-L-144 & 91-L-145 (Consolidated). Honorable George S. Moran, Jr., Judge, presiding.
The Honorable Justice Welch delivered the opinion of the court: Chapman and Lewis, JJ., concur.
The opinion of the court was delivered by: Welch
JUSTICE WELCH delivered the opinion of the court:
In the early morning of December 29, 1990, plaintiffs Brian Banovz and Joseph Seketa were involved in a multi-vehicle accident on Interstate 270 in Madison County. They were passengers in a car driven by defendant-appellant, Raymond Rantanen, whose vehicle collided with a tractor-trailer which had jackknifed and was blocking all three lanes of traffic. Both plaintiffs sustained serious injuries, and they filed suit against Rantanen and against the driver of the tractor-trailer, David Lynn Wittaker, and the owner of the tractor-trailer and Wittaker's employer, the Mickow Corporation, alleging negligence. Both codefendants filed counterclaims against each other seeking contribution. The case proceeded to trial on plaintiffs' complaints and the counterclaims, and the jury returned verdicts in favor of Banovz in the amount of $1,005,120, and in favor of Seketa in the amount of $817,769. The jury also found defendant Rantanen 40% at fault and defendants Mickow Corporation and Wittaker (hereinafter "Mickow") 60% at fault. The circuit court of Madison County entered judgment on the verdicts on October 1, 1993.
Rantanen appeals the judgment in favor of Seketa only, having settled with Banovz. Rantanen raises numerous issues on appeal, which may be generally characterized as follows: (1) whether the settlement agreement entered into between Seketa and Mickow prior to trial, in which Mickow guaranteed a minimum recovery to Seketa, regardless of the verdict, in return for a maximum cap on its liability, was a "Mary Carter agreement," which Rantanen should have been allowed to disclose to the jury; (2) whether the trial court erred in failing to dismiss the counterclaims for contribution in light of the good faith settlement agreement between Seketa and Mickow; (3) whether the trial court erred in allowing evidence of Rantanen's alleged consumption of alcohol where that evidence related only to the counterclaims for contribution, violated Rantanen's physician-patient privilege, and was, in any event, insufficient to establish intoxication; and (4) whether the verdict in favor of Seketa and against Rantanen was against the manifest weight of the evidence, entitling Rantanen to a new trial on all issues.
We will turn first to the settlement agreement between Seketa and Mickow. On the first day of trial, September 7, 1993, Seketa and Mickow entered into a "Settlement Agreement" which provided that the minimum amount to be recovered by Joseph Seketa in the lawsuit would, in no event, be less than $150,000.00, even if the jury's verdict was less than that amount, and that, regardless of the size of the verdict against Mickow, the maximum amount that Mickow would be liable to Seketa for is $415,000.00, even should the jury verdict exceed that amount. The agreement further provided that Seketa could recover any additional amounts of a jury verdict, as he desired, against Rantanen. The agreement includes no other provisions, such as a requirement that Mickow stay in the lawsuit or that Mickow may recover any amount it pays out of any recovery Seketa receives from Rantanen. Banovz entered into an identical agreement with Mickow.
The trial court and Rantanen were advised of the settlement agreements prior to trial by Mickow, who Pointed out that the maximum amount recoverable under the agreements with both Seketa and Banovz was just $50,000 less than the insurance policy limit in the case. Rantanen advised that it would be seeking to admit the agreements into evidence for the jury's consideration. Mickow and plaintiff then moved in limine to exclude any mention of the agreements before the jury, and the motion was allowed subject to reconsideration upon the submission of case law.
On September 10, 1993, Rantanen filed a motion asking the court to reconsider its ruling on the motion in limine and to allow Rantanen to use the agreement in cross-examination of defendant Wittaker to show bias. This motion was denied.
Rantanen argues on appeal that, because the settlement agreement was a form of Mary Carter agreement, the trial court abused its discretion in granting the motion in limine and refusing to allow the agreement to be disclosed to the jury and used in cross-examination. The first question presented to us, then, is whether the settlement agreement is, in fact, a "Mary Carter" agreement.
Mary Carter agreements, which derive their name from the Florida case, Booth v. Mary Carter Paint Co. (Fla. Dist. Ct. App. 1967), 202 So. 2d 8, occur in multi-party litigation when fewer than all defendants settle with the plaintiff. ( Carter v. Tom's Truck Repair, Inc. (Mo. 1993), 857 S.W.2d 172, 175.) A Mary Carter agreement has the following features: (1) the liability of the settling defendant is limited and the plaintiff is guaranteed a minimum recovery; (2) the settling defendant remains a party to the pending action without disclosing the full agreement to the nonsettling defendants and/or the judge and jury; and (3) if judgment against the nonsettling defendant is for more than the amount of settlement, any money collected will first offset the settlement so that the settling defendant may ultimately pay nothing. ( Carter, 857 S.W.2d at 175.). It is this third feature which poses the real problem, for it gives the settling defendant a direct financial interest in the amount recovered against any nonsettling defendant. ( Carter, 857 S.W.2d at 175.) When this financial interest is kept secret from the jury, it distorts the adversarial process and potentially undermines the right to a fair trial. Carter, 857 S.W.2d at 175-76.
For example, in Carter, the plaintiff, Carter, was rear-ended by a Consolidated Freightways truck driven by Johnny Bauer. The truck's brakes, which had allegedly failed, had recently been repaired by Tom's Truck Repair. Carter sued Consolidated, Bauer, and Tom's. Consolidated and Tom's cross-claimed against each other for apportionment. Before trial, Carter and Consolidated entered into a settlement agreement in which Consolidated agreed to pay Carter $250,000 regardless of the jury verdict, Consolidated would remain in the case as a defendant, and any judgment against Tom's, or settlement paid in favor of Carter, would reduce dollar for dollar Consolidated's settlement obligation. Thus, Consolidated's maximum total liability was $250,000, and if judgment against Tom's exceeded $250,000, Consolidated would pay nothing.
A Mary Carter agreement such as the one in Carter effectively realigns the parties and, because it is kept secret from the jury, distorts the adversarial process. "By painting a gruesome testimonial picture of the other defendant's misconduct or, in some cases, by admissions against himself and the other defendants, [a settling defendant] could diminish or eliminate his own liability by use of the secret 'Mary Carter Agreement.'" ( Ward v. Ochoa (Fla. 1973), 284 So. 2d 385, 387.) In Carter, the interests of plaintiff Carter and defendant Consolidated at trial were identical. Both parties sought a jury verdict that would exceed $250,000 and that would maximize Tom's liability or percentage of fault. In the event of such a verdict, Carter would collect more than the $250,000 guaranteed by Consolidated, yet Consolidated would pay nothing. Thus, Consolidated's status as a party-defendant was illusory, and Consolidated was effectively and practically realigned with plaintiff.
It is true, as pointed out in Carter, that codefendants in any lawsuit who have filed cross-claims against each other to apportion fault are usually mutually antagonistic, regardless of whether one is a party to a settlement agreement with plaintiff. However, both parties maintain an interest in minimizing the amount of damages and in a finding of no liability for all defendants. Furthermore, this antagonism is apparent to and explained to the jury. A Mary Carter agreement, which realigns the interests of the codefendants vis-a-vis each other, is kept secret from the jury. The jury, if apprised of the agreement, would likely weigh differently the testimony and conduct of the settling defendant as related to the nonsettling defendant. Ochoa, 284 So. 2d at 387.
There are variations of the Mary Carter agreement, but they all give the settling defendant some interest in increasing the liability of the nonsettling defendant and a financial incentive to bolster the plaintiff's case. The agreements effect a change in the relationship of the codefendants and create a tremendous incentive for the settling defendant to ensure that the plaintiff succeeds in obtaining a sizable recovery, thus motivating the defendant to assist greatly in the plaintiff's presentation of the case. ( Elbaor v. Smith (Tex. 1992), 845 S.W.2d 240, 247.) Accordingly, some courts have found the agreements to be void as against public policy ( Elbaor, 845 S.W.2d at 250; Lum v. Stinnett (1971), 87 Nev. 402, 488 P.2d 347, 351; Trampe v. Wisconsin Telephone Co. (1934), 214 Wis. ...