Powell Trachtman Logan Carrle & Lombardo

Design Professional's Practice Bulletin

Volume 6, Number 2 — December 2002
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This Bulletin addresses recent developments affecting Design Professionals as well as business concerns as important as the specific professional and technical issues they face.

Editors: Neil P. Clain and Richard J. Davies

Only Your “Fair Share”

By Richard J. Davies, Esquire

Introduction

Your firm and another party have been sued for negligence. A jury believes that your co-defendant is mostly responsible and assigns to it 99 percent of the liability; but it also believes that your firm is not entirely blameless, so it assigns to it 1 percent of the fault. The jury awards the injured plaintiff $100,000, but your co-defendant does not have any money to pay its part of the judgment. How much does your firm have to pay--its assigned 1 percent or the entire $100,000?

Until a recent change in the law, the frustrating answer in Pennsylvania was that the plaintiff could receive the entire $100,000 from your firm, even though it was found liable for only a small fraction of the plaintiff’s damages. That is because a statute, the Pennsylvania Comparative Negligence Act, unqualifiedly adopted the principle of joint and several liability, meaning that your firm is liable not only for its own allocated share of damages (i.e., several liability), but is also liable for the shares of other defendants that do not or cannot pay their allocated shares (i.e., joint liability).

The statute reflected a choice between competing unfairnesses –-it is unfair to have an injured plaintiff recover less than the full amount of its loss, but it is also unfair for a party causing the loss to pay more than its fair share to the plaintiff to make it whole.

The statute placed the entire burden of unfairness on the partially responsible defendant that has the resources to pay the plaintiff the full value of its loss. In fact, some plaintiff’s counsel referred to this result under the old Comparative Negligence Act as the “1 Percent Rule.” Plaintiff’s counsel would use that rule as leverage in settlement negotiations with those defendants with adequate insurance or financial resources, who were surrounded by defendants without such resources:

“You know, all I have to get is just 1 percent against you, and you will pay the entire verdict.”

However, this year the Pennsylvania legislature, and Governor Schweiker’s signature, modified this rule of joint and several liability to make it more fair to defendants with marginal responsibility for the plaintiff’s loss.

The Fair Share Act

On June 19, 2002,Governor Schweiker signed the “Fair Share Act,” which amends the Pennsylvania Comparative Negligence Act to dramatically and fundamentally change the rule of joint and several liability. The Fair Share Act amendments modify joint liability in tort actions (such as negligence suits), but they do not abolish it. The Fair Share Act amendments apply only to actions in which the right to sue arises after the August 19, 2002, effective date of the amendments. They do not apply to suits already filed before the effective date, or even to future suits that are based upon injuries suffered before the effective date of the amendments.

For actions based upon injuries occurring after the amendment’s effective date, the general rule in negligence cases will be that defendants have several liability only; that is, a culpable defendant will be liable only for its allocated share of the damages caused to plaintiff. Its liability to the plaintiff for damages will be apportioned according to how liability is apportioned among the various culpable defendants. In the example cited above, the 1 percent liable defendant would pay only $1,000--1 percent of the $100,000 verdict-– even if the 99 percent liable defendant could not pay anything. This means that the injured plaintiff, found to have suffered a $100,000 loss, will actually receive only $1,000. A defendant will no longer be obligated to fill the gaps created by the inadequate resources of its co-defendants, unless one of the statutory exceptions to the new rule applies.

These exceptions accommodate, under some circumstances, the interests of the innocent plaintiff who would otherwise suffer a harm without complete reimbursement.

There are five such exceptions to the new general rule of several liability. A defendant to whom one of these exceptions applies may be called upon to pay the entire verdict even if it is found liable for only a portion of it. The three exceptions most likely to arise in cases involving your services as a design professional are:

(1) the defendant is liable on a theory of intentional misrepresentation;

(2) the defendant is liable for an intentional tort (i.e., a harm intentionally caused by that defendant); and

(3) the defendant’s allocated share of liability is 60 percent or more (i.e., the defendant is mostly responsible for plaintiff’s harm).

The first two exceptions provide an incentive for plaintiffs to add claims of intentional conduct against parties not likely to be found at least 60 percent responsible. When someone or something has been harmed by an element of a design described in drawings or specifications, we often encounter claims that the design documents constitute misrepresentations of the appropriateness of a design element that has caused a plaintiff harm. Often the claim made is that the misrepresentation was not only negligent, but knowingly and intentionally made to produce a certain result (i.e., it is a claim of intentional misrepresentation, which is an intentional tort not subject to the new general role). While such claims are often difficult to prove, if a plaintiff can prove it in a particular case, the defendant design professional will be jointly liable, as well as severally liable, with any other defendants found liable to the harmed plaintiff.

The third exception requires no elaborate explanation. If your firm is found to have been mostly responsible for the plaintiff’s harm (i.e. a 60 percent or more allocated share of liability), it will be jointly liable for all of the remaining shares of liability.

Unless one of these exceptions applies, design professionals will no longer be subject to the “1 Percent Rule” and the leveraging effect its application can have upon the settlement process to raise the settlement contributions of marginally liable defendants.

That is, you will not have to pay more than your fair share.

As you might expect, this change in the law has been criticized by the plaintiff’s bar, which opposed it vigorously during the legislative process leading to its enactment. Fortunately, the Fair Share Act is now the law, and it strikes a much better balance between the competing interests of the injured plaintiff and of the conscientious design professional who bears only marginal responsibility for a plaintiff’s loss.

This bulletin is intended for general information purposes only and does not constitute legal advice. The reader should consult with legal counsel to determine how laws, suggestions and illustrations apply to specific situations.