May 2011 #2. Hawaii's Act 300 Good Faith Settlement Law Poses Many Unresolved Questions.

Authorby Wayne Parsons, Vladimir Devens, and John C. McLaren

Hawaii Bar Journal

2011.

May 2011 #2.

Hawaii's Act 300 Good Faith Settlement Law Poses Many Unresolved Questions

Hawaii State Bar JournalMay 2011 Hawaii's Act 300Good Faith Settlement Law Poses Many Unresolved Questionsby Wayne Parsons, Vladimir Devens, and John C. McLarenIn enacting the 'Act 300" the good faith settlement law' in 2001, which has been codified as Hawaii Revised Statutes ("HRS"), section 663-15.5, the Hawaii legislature established the policy of encouraging settlements by doing away with the defense commonly known as "blaming the empty chair"

If the trial judge grants a petition to approve a settlement with less than all of the defendants under the provisions of Act 300, the settling defendant is completely removed from the case, is no longer a party, and is dismissed from all cross claims or third party claims. At trial, the non-settling defendants generally may not introduce evidence or make arguments that place blame upon the settling defendant, i.e. the "empty chair." The non-settling defendants do have the benefit in an Act 300 settlement of receiving a credit in the amount of the settlement paid by the settled defendant against any judgment that is rendered against them at trial. For example, if the settlement is for $50,000 and the judgment at trial against the non-settling defendants is $500,000, the amount that the non-settling defendants must pay is reduced by $50,000.

Act 300 modifies the long-standing system of joint and several liability, under which the judge or jury at trial considers evidence of the degree of fault of the absent settling defendant, and the settling defendant is named on the special verdict form. Under that system, the peicentage of fault assessed against the settling defendant proportionately reduces the amount the remaining defendants have to pay. For example, if the settling defendant was found by the jury or judge to be 30% at fault at trial, the $500,000 verdict is reduced by the 30% of fault assessed and not by the amount paid in the settlement. The nonsettling defendants get the benefit of a $150,000 reduction in the amount they have to pay the plaintiff The plaintiff recovers only $350,000 and suffers because the settlement amount of $50,000 was less than the fault apportioned to the settling defendant by the jury or judge.

Fearing that the uncertain result of the defense blaming the "empty chair," plaintiffs we re reluctant to settle with less than all of the defendants. Act 300 ended that uncertainty in order to encourage settlements. Many issues arise during trial after an Act 300 settlement. Several of those issues will be discussed later in this article.

The House Standing Committee on the Judiciary and Hawaiian Affairs stated that the purpose of Senate Bill No. 659, which became Act 300, was to simplify the proceduies and reduce the costs associated with claims involving joint tortfeasors by:

(1) Estaliishing a new joint tortfeasor release statute that includes the right of contribution; (2) Repealing the existing joint tortfeasor release statute and right of contribution statute; and (3) Estaliishing a good faith settlement procedure for joint tortfeasors and co-obligors.(fn2)

The legislature evaluated and considered a similar law that had been in place in California for over ten years.

The Senate Standing Committee on the Judiciary opined that the bill would "ach i eve its stated purpose while still adequately protecting the rights of all parties involved."(fn3)

Act 300 adopted the joint-tort fea-sor contribution methodology of section 4 of the 1955 version of the Uniform Contribution Among Tortfeasors Act ("UCATA") ,(fn4) and it replaced a method from the 1939 version of U C ATA that had long been the law in Hawaii.(fn5)

Haw. Rev. S tat. (HRS) § 663-15.5 (Act 300, 2001 Session Laws of Hawaii) modified previous practice of joint and several liability and repealed HRS § 663-14 and HRS § 663-15 of the 1939 UC ATA. The new section HRS §663-15.5(a) provides that when a joint t ortfeasor or coobligor is released in a "good faith" settlement, the releases hall: (1) not discharge any other tortfeasor "unless its terms so provide; " (2) reduce the claims against the non-settling defendants "in the amount stipulated by the release, ... , or in the amount of the consideration paid for it, which ever is greater; " and (3) discharge the settling defendant "from all liability for any contribution to any other joint to rtfeasor or co-obligor."

A settlement given pursuant to HRS § 663-15.5(a)(3) now discharges the settling tortfeasor from all liability for contribution to any other party and makes the non-settling defendants responsible for the full award of dam- ages less only "the amount stipulated " in the settlement or "the amount of the consideration paid for it, whichever is greater," provided that the settlement is "...

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