Section 3.9 Meaning of Good Faith

• Library: Settling Cases 2014

The 1983 amendment to § 537.060, RSMo 2000, applies to partial settlements made in “good faith.” Thus, a settlement made with one of several tortfeasors in bad faith would not extinguish the nonsettling parties’ rights to contribution.

“Good faith” does not lend itself to ready definition. Obviously, it excludes collusive settlements when, for example, an injured party releases a family member for nominal consideration to thwart a concurrent tortfeasor’s right to contribution. What about the situation in which a plaintiff settles at arm’s length for an amount of money that is less than the settling tortfeasor’s proportionate share of damages?

Given the fact that a number of states have adopted statutes similar to § 4 of the UCATA, it is not surprising that there is disagreement as to what factors a court may consider if the good faith of a partial settlement is challenged.

One line of analysis is represented by Tech‑Bilt, Inc. v. Woodward‑Clyde & Associates, 698 P.2d 159 (Cal. 1985). In that case, the supreme court of California held that the goals of the California settlement statute (which is similar to § 537.060) are “first, equitable sharing of costs among the parties at fault, and second, encouragement of settlements.” Tech-Bilt, 698 P.2d at 163. Given this priority, the California court held that a number of factors other than fraud or collusion could be considered in determining whether a settlement was in good faith. These included:

· a rough approximation of the injured party’s total recovery and the settlor’s proportionate liability;

· the amount paid in settlement;

· the allocation of settlement proceeds among multiple claimants;

· a recognition that a settlor should pay less in settlement than the settlor would pay if found liable after a trial; and

· the financial conditions and...