It is best practice to join the other co-defendant before settlement, in addition to reserving your right to contribution.
So, you discover a co-defendant after your very efficient defense attorney has obtained a favorable MMI report, wrangled a slightly better than reasonable settlement demand from Applicant’s attorney and set a Trial date. What should you do now?
You may be tempted to move ahead with the settlement and later join your co-defendant. After all, you’ve been made aware of the issue and plan to file your petition timely, within the statute of limitations. You decide, therefore, to settle the claim, and include language reserving your right to contribution from any party defendants during the cumulative trauma period, including but not limited to your co-defendant.
What does it mean, then, that you’ve included this language? What if co-defendant later hires counsel who argues that they would have negotiated a better deal, and that there’s no reason they should have to contribute to your Compromise and Release settlement?
The holding in Ventura v. Dana Point Cleaners provides us with a reminder that this default setting may be unfavorable to defendants. In Ventura v. Dana Point Cleaners, 2019 Cal. Wrk. Comp. P.D. LEXIS 114, party-defendant, Wasco, included language that it reserved its “right to contribution from any and all agents/ assignees/ TPAs, Insurance Co. during CT period, including but not limited to Zenith. But the WCAB held that Zenith was not yet joined, nor did the C&R Agreement resolve any claims against Zenith. The C&R Agreement therefore, had impact on Applicant’s rights against Zenith.
Even when you include language in the C&R Agreement, reserving a right to contribution, the Board in Ventura v. Dana Point Cleaners found that this is not a sufficient expression of intent – if you want the Agreement to resolve all possible defendants’ interests, then it is best practice to join the other co-defendant before settlement, in addition to reserving your right to contribution.
By: Crystl Chang, Esq. – Gilson Daub, LLP’s West LA Office