Double Recovery – Settlement and the Reduction Affirmative Defense

In an interesting opinion with lessons for both sides of the bar, the Missouri Southern District Court of Appeals essentially allowed a plaintiff to recover twice in a property damage case. International Division, Inc.  (“INDIV”) filed suit against a number of defendants for damage to its offices as a result of nearby construction. During the course of the litigation, INDIV settled with three of the four defendants, leaving only the general contractor, DeWitt and Associates, Inc. (“DeWitt”), as a defendant. The total amount of the settlement was $28,500. INDIV dismissed the three defendants with which it had settled before trial. DeWitt then amended its answer to request a reduction in the amount awarded at trial pursuant to section 537.060, RSMo, as a result of the settlement. In its affirmative defense, DeWitt specifically identified the settling defendants, but not the amount of the settlement. The case then went to trial and the jury returned a verdict for INDIV and awarded it $28,000. In a post-trial motion, DeWitt requested a reduction of the jury verdict in the amount by the amount of settlement, which would have reduced the verdict to zero. The trial court granted the motion and reduced the verdict to zero. INDVI appealed.

On appeal, the Southern District Court of Appeals reversed and remanded. It found that the affirmative defense requesting a reduction due to the codefendants’ settlement was not sufficiently pleaded. Because the specific amount of the settlement was not included in the affirmative defense, it was not properly pleaded under Missouri’s rule requiring parties plead the ultimate facts of their claims or defenses. Specifically, to obtain a reduction for a settlement, a defendant must plead the existence of the settlement as well as the amount of the settlement. Therefore, DeWitt was not entitled to a reduction in the verdict. As a result, in a case where INDIV suffered $28,000 in damages, it would be able to recover a total of $56,500 through both the settlement and the verdict.

If you’re a defense attorney, you may be thinking, plaintiff’s counsel could or should have filed a motion for more definite statement. The Southern District addressed this and noted that doing so may have resulted in INDIV’s waiver of any objection to the improperly pleaded affirmative defense. The court noted a motion for more definite statement “inherently concedes a cause of action and a motion to dismiss is a more appropriate vehicle in contesting the sufficiency of a petition.” Therefore, INDIV was not required to attack the affirmative defense through a motion for more definite statement.

There are a couple of take-aways from this opinion. First, if a defendant wants a reduction in any judgment due to a settlement, the fact and amount of the settlement must be pleaded. Failing to do so can waive the defense. This holding carries with it interesting implications for defendants who want a confidential settlement in a case where there are multiple defendants, some of whom continue with the litigation and want to plead the reduction affirmative defense. For plaintiff’s attorneys, no motion for more definite statement should be filed in response to a poorly pleading reduction defense. Instead, plaintiff’s counsel should consistently object to the admission of any evidence of the settlement as beyond the scope of the pleadings and untimely, if the evidence is offered in a post-trial motion.

The full opinion can be found at International Division, Inc. v. DeWitt and Associates, Inc., No. SD32496, Mo.App. S.D. 2014.