Preventing Collusion Between a Plaintiff and a Settling Co-Defendant: Look at Diamond v. Reshko

We have all heard the saying “Keep your friends close, but your enemies closer.” What should you do when plaintiff does just that, by settling with your co-defendant and teaming up against you?

In a case recently issued by the First Appellate District, Division Four, Diamond v. Reshko, the court reinforced prior case law holding that evidence of a pretrial settlement between the plaintiff and one or more defendants who participate fully in the ultimate trial is relevant and ordinarily should be disclosed to the jury.

Facts
In Diamond v. Reshko, the plaintiff was injured when a taxi cab she was riding in made an illegal U-turn and was struck by a speeding vehicle. Plaintiff and her husband sued the taxi cab driver,
the taxi cab owner, Yellow Cab (collectively the “Yellow Cab defendants”), and the driver of the speeding vehicle, Serge Reshko.

Settlement between Plaintiff and Yellow Cab Defendants
The Yellow Cab defendants settled with plaintiffs prior to trial. As part of the settlement, the Yellow Cab defendants agreed to participate as party defendants in the trial.

Reshko’s First Request for Admissibility of Settlement as Evidence
Defendant Reshko did not oppose the C.C.P. section 877.6 motion for good faith settlement as long as there was a recognition at trial that there had been a settlement. The trial court found settlement entered into in good faith, but deferred to trial judge on admissibility of settlement as evidence.

Reshko’s Second Request for Admissibility of Settlement as Evidence
Defendant Reshko filed a pre-trial motion in limine to request the jury be informed about the settlement between plaintiffs and the Yellow Cab defendants. Reshko argued settlement was admissible to show bias or prejudice arising out of the fact that the Yellow Cab defendants and plaintiffs were allied against him.

Defendant Reshko rightfully pointed out the settlement freed the Yellow Cab defendants from having to dispute causation and damages, and would allow them to force Reshko into a “bad guy” role while the Yellow Cab defendants “curried favor” with the jury. The trial court reserved ruling on the motion to see how things played out at trial.

Yellow Cab’s Collusive Actions at Trial
During the trial, the taxi cab driver conveniently changed his testimony from what he had testified at deposition. At deposition, the driver testified he could not remember whether plaintiff was wearing her seatbelt. However, at trial, the driver testified he clearly remembered looking in his rear view mirror and seeing plaintiff wearing her seatbelt.

In addition, Yellow Cab’s accident reconstruction expert testified the use of a seatbelt would not have affected the nature and severity of plaintiff’s injuries, which was contrary to the testimony of Reshko’s accident reconstruction expert.

At the close of evidence, defendant Reshko requested a ruling that Yellow Cab could not discuss plaintiff’s damages in closing argument. The trial court denied the request.

In closing argument, Yellow Cab’s attorney essentially became an advocate for plaintiffs on damages. He urged the jury to award plaintiffs all of their claimed past economic damages of approximately $294,000, admitted that, “unfortunately,” plaintiff had a different spine as a result of the accident, and the jury should award $150,000 in future economic damages, recommended $150,000 for past general damages, an additional $150,000 for future general damages, and $50,000.00 to $75,000.00 for loss of consortium, for a total jury award of approximately $800,000.

For damages, Reshko’s attorney argued for a total jury award of approximately $300,000.

The jury awarded total damages of $745,778 and apportioned 40% fault to Mansouri and 60% to Reshko.

Motion for New Trial Denied
Defendant Reshko filed a motion for a new trial, arguing Yellow Cab’s participation as a party defendant deprived him of a fair trial. The trial court issued a tentative ruling to deny the motion pursuant to previous rulings made during the trial.

Appeal
On appeal, plaintiffs and Yellow Cab relied on Evidence Code section 1152, which codifies the rule that evidence of a settlement agreement between a plaintiff and one or more joint tortfeasors is not admissible to prove the liability of the settling tortfeasor.

The Court of Appeal did not find this section persuasive as Reshko was not seeking to offer evidence of the settlement agreement as proof of Yellow Cab’s liability. Rather, it was being offered to prove witness bias and prevent collusion.

The Court found it was well-established case law that a settling defendant’s position should be revealed to the court and jury to avoid committing a fraud on the court, and to permit the trier of fact to properly weigh the settling defendant’s testimony. Pellett v. Sonotone Corp. (1945) 26 Cal.2d 705; Everman v. Superior Court (1992) 8 Cal.App.4th 466.

In reversing the judgment, the Court outlined three relevant principles:

(1) The good faith settlement did not limit the trial court’s authority to admit evidence of the settlement at trial.

(2) A good faith determination of a settlement agreement which contains a term requiring continued participation by a settling defendant is premised on a presumption that the jury will be made aware of the settlement in some way.

(3) The evidence of the settlement is independently relevant because disclosing the realignment of the interests of all parties who appear at trial prevents collusion and assists the jury in making reasoned determinations regarding liability and damages by facilitating informed evaluations of trial tactics, the credibility of the parties and their respective counsel, and ultimately, the substantive trial evidence.

Practical Application
This case is a good reminder to the defense to be wary of any pre-trial settlements between plaintiff and a co-defendant. Be sure to review the terms of the settlement agreement to see if there is any requirement for the co-defendant to remain a participant at trial. In such a circumstance, the non-settling defendant should raise the issue of the settlement as admissible evidence at trial as early as the opposition to the motion for determination of good faith settlement. The issue should be raised again in a pre-trial motion in limine to ensure preservation of the issue for appeal.

ABOUT THE AUTHOR
Kristi Blackwell is a Partner at Tyson & Mendes. She specializes in general liability, professional liability and business litigation. Contact Kristi at 858.459.4400 or kblackwell@tysonmendes.com

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