Civil practice – Global settlement – Contribution – Indemnification

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Where (1) concrete ceiling panels collapsed on the roadway of the Interstate 90 Highway Connector Tunnel in Boston, crushing a passing car and killing one of its occupants, (2) the commonwealth of Massachusetts, the Massachusetts Highway Department, and the Massachusetts Turnpike Authority then filed suit against 13 defendants involved in the design, construction and management of the I-90 Connector Tunnel ceiling, (3) the commonwealth and the United States later entered into a global settlement with five of the defendants, under which defendant Bechtel/Parsons Brinckerhoff agreed to pay a total of $450,230,500 to the commonwealth and the United States and (4) B/PB now moves, in light of that Global Settlement, to dismiss each of the cross-claims for contribution and indemnification that have been brought against it by the other defendants, the motion must be denied without prejudice, as the settling parties will be given an opportunity to set forth the amount allocated to the settlement of the instant civil claim that can be used to offset any judgment to be entered against the non-settling defendants.

Judge's reasoning

"This Court finds that B/PB is not entitled to the dismissal of cross-claims unless and until it satisfies both the letter and spirit of G.L.c. 231B, §4. … Stated bluntly, until the Global Settlement sets forth the amount allocated to the settlement of the instant civil claim that can be used to offset any judgment to be entered against the non-settling defendants, there is no settlement that entitles B/PB to the release of the cross-claims. If and when such an allocation is provided, the non-settling defendants will have an opportunity to meet their burden of challenging the good faith of the allocation. If they satisfy that burden, this Court will then permit discovery and conduct an evidentiary hearing limited to the same issue of good faith that applies to any settlement.

"There is no good reason why this Court should take on the formidable burden of determining an allocation when the settling parties can do so far more easily, with far better access to the information needed to make this allocation. While the settling parties' allocation, as part of the Global Settlement itself, shall be accepted by the Court if made in good faith, there is good reason to believe that the allocation reached by the parties, if made through arms length negotiation, will be fair and reasonable. B/PB will have an incentive to maximize the amount allocated to the instant civil claim so as to minimize the risk that the Court will find the allocation to have been made in bad faith. The Commonwealth will have an incentive to minimize the amount allocated to the instant civil claim to minimize the amount offset against any judgment it may obtain from the non-settling defendants, but it will be constrained by public statements that it made at the time of settlement regarding the adequacy of the amount it received to resolve the instant claim.

"If the parties cannot reach any agreement on allocation, then B/PB will continue to be a cross-claim defendant. This Court notes that the Global Settlement expressly considered this possibility – paragraph 41 provides that, if B/PB remains a defendant in this case and a judgment is obtained against it by any cross-claimant, the Commonwealth agrees to reduce its judgment against the cross-claimant by the amount of the cross-claim judgment against B/PB in order to obtain a release or settlement of that cross-claim against B/PB. …

"While this Court will not dismiss the cross-claims for contribution against B/PB until the parties to the Global Settlement agree upon the amount allocated to the settlement of the instant civil complaint that can be used to offset any judgments against the non-settling defendants, it makes sense to determine now what that allocation need include, lest we find ourselves with ambiguity following trial as to how to implement the offset. This Court recognizes that the complaint seeks damages for various defects in the I-90 Connector Tunnel, but the claims against certain defendants may be narrower than others because certain defendants may have worked on only portions of that Tunnel. Therefore, this Court directs the non-settling defendants, no later than June 6, 2008, to propose to the Court which claims need be included in the settlement allocation. The settling parties may respond no later than June 20, 2008. Unless there is agreement among all parties, this Court will conduct a hearing on June 24, 2008 at 2:00 p.m. to identify with precision the scope of the settlement allocation that is needed for B/PB to obtain dismissal of the cross-claims for contribution."

Commonwealth, et al. v. Bechtel Corp., et al. (Lawyers Weekly No.12-156-08) (12 pages) (Gants, J.) (Suffolk Superior Court) (Civil Action No. 06-4933-BLS1) (May 21, 2008).