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Courts Continue to Condone Double Recovery in Asbestos Cases

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On February 21, 2014, a California appellate court affirmed a trial court's ruling allowing plaintiffs double recovery. The Court held that not only were plaintiffs entitled to recover damages from the defendant, but that their recovery against the defendant would not be set-off by any future bankruptcy trust settlements.

In Paulus v. Crane Co., ("Paulus") Plaintiffs' decedent, William Paulus, died from mesothelioma caused by exposures to asbestos-containing products while employed as a plumber. After a jury trial, defendant Crane Co. ("Crane") was found 10% responsible for plaintiffs' damages. Crane appealed on the grounds that plaintiffs failed to introduce expert testimony that Crane's asbestos alone constituted a substantial factor in the development of decedent's mesothelioma and that the trial court erred in not reducing the damages awarded against it to account for settlements plaintiffs could obtain from other potentially liable parties' bankruptcy trusts.

As to the first ground for appeal, Crane argued that plaintiffs' expert did not testify that decedent's exposures to Crane's asbestos-containing gaskets alone constituted a substantial factor, but included non-Crane asbestos-containing products in the exposures which cumulatively constituted a substantial factor in bringing about the decedent's injury. The Court, however, held that the expert's testimony regarding Crane's asbestos-containing products, in conjunction with other evidence, was sufficient to allow the jury to infer that the decedent's exposures to Crane's asbestos-containing products alone were a substantial factor in bringing about the decedent's injury.

As to the second ground for appeal, Crane asserted three main arguments. First, Crane argued that, pursuant to Code of Civil Procedure section 877, it was entitled to a setoff for any additional settlements plaintiffs may seek in the future from asbestos bankruptcy trusts. Second, Crane further argued that denying the setoff for potential future settlements would allow plaintiffs double recovery. Third, Crane argued that the plaintiffs had a duty to mitigate damages and that their failure to obtain all available settlements from asbestos bankruptcy trusts constituted a failure to mitigate damages.

The Court disagreed with all three of Crane's arguments. In regards to Crane's first argument, the court concluded that it could not modify a judgment according to a theoretical future settlement. In regards to Crane's second argument, the Court held that a later settlement would not make the instant judgment improper, as a judgment against Crane could not be double recovery because all existing settlements were taken into account. In regards to Crane's third argument, the Court held that the duty to mitigate is an issue to be resolved by the trier of fact, not one to be raised on new evidence after judgment.

Paulus is concerning for the way in which the Court tacitly condones double recovery. Plaintiffs can simply seek settlement from asbestos bankruptcy trusts after receiving a final judgment in trial thereby receiving two separate recoveries. While this may not violate the strict letter of the law by allowing double recovery, it certainly violates the spirit. In practical terms, plaintiffs receive two separate damage awards for one injury. Paulus should serve as a reminder that defendants must engage in diligent discovery, before and during trial, to ensure that all affirmative defenses are raised, and to reduce the likelihood that such loopholes are exploited.

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