Pierringer Agreements: What You Need to Know

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Written By: Dale Orlando and Brock Turville, Student-at-Law

personal injury cases

personal injury cases

In an action with multiple defendants, some may be prepared to settle the plaintiff’s claims and some may not. Pierringer agreements allow settling defendants to be removed from the action, while non-settling defendants proceed to trial.

The following occurs in a typical Pierringer agreement case:

  • The plaintiff agrees to discontinue the action against the settling defendant and, as a result, the plaintiff’s claims against that defendant are “extinguished”
  • Pleadings are formally amended to remove the settling defendant from the action
  • After the agreement is signed, the plaintiff receives payment from the settling defendant in full and final satisfaction of the claims against it
  • The plaintiff continues the action against the non-settling defendant, who is only responsible for the several share of damages (i.e. losses the non-settling defendant alone caused the plaintiff to suffer)
  • The non-financial aspects of the Pierringer agreement may be disclosed to the non-settling defendant, but the settlement amount will not be disclosed because of settlement privilege
  • At the conclusion of the trial, the settlement amount will be disclosed to the judge to ensure the plaintiff does not over-recover for his or her actual losses
  • If the settlement amount and the award against the non-settling defendant at trial exceeds the plaintiff’s proven losses, the judge can reduce the award against the non-setting defendant

Settlement Privilege

In Sable Offshore Energy Inc. v. Ameron International Corp.,[1] the Supreme Court of Canada addressed the issue of whether the non-settling defendants were entitled to know the settlement amount. The Court held the non-settling defendants were not entitled to disclosure of the amount because of settlement privilege.

The Court highlighted that additional protections were afforded to the non-settling defendant, including receiving non-financial terms of the Pierringer Agreement, receiving relevant documents and evidence in the settling defendant’s possession, and having access to the settling defendant’s experts at trial. Further, the settlement amount would be disclosed to the Court once the trial concluded. Here, the non-settling defendants could take solace in the fact that if the plaintiff was overcompensated, damages would be adjusted downward if they exceeded its several share.

Burden of Proof

In MacNeil v Kajetanowicz,[2] the plaintiff, through his litigation guardian, commenced an action against two hospitals and a neonatologist. The plaintiff settled with both hospitals in a Pierringer agreement before trial, and the neonatologist became the only defendant at trial.

The onus clearly remained with the plaintiff to prove the negligence of the neonatologist. The main issue in this case was whether the plaintiff had the burden to prove negligence of both hospitals. Even though the plaintiff settled with both hospitals, the trial judge charged the jury that “the burden remains upon the plaintiff to prove that each of these settling hospitals is negligent.” After this charge, the jury found the neonatologist was not negligent and the trial judge dismissed the claim. The plaintiff appealed.

The Nova Scotia Court of Appeal held that the burden of proving negligence of the hospitals was on the non-settling defendant, the neonatologist, not the plaintiff. As a result, the appeal was allowed and a new trial was ordered.

Analysis

The trial judge held the view that the plaintiff had the onus to prove negligence of both hospitals. Typically, this onus rests with the plaintiff in accordance with the principle in Snell v Farrel, which states that the onus is on the party that asserts a proposition (i.e. another party was negligent).

Pierringer agreements interact with the principle in Snell in an interesting way because the settlement extinguishes the plaintiff’s claims against the settling defendant. This alters the burden of proof because the plaintiff’s theory of liability no longer relies on the assertion that the settling defendant was negligent. The plaintiff’s interest shifted to attributing as much fault to the non-setting defendant(s) as possible. The plaintiff filed an amended statement of claim and notice of action, deleting his claims against the settling defendants, to reflect this new position. As a result, the plaintiff’s only surviving claim was against the neonatologist.

On the other hand, the neonatologist’s theory of defence rested “squarely” on alleging the negligence of both hospitals. The neonatologist became the party that asserted a proposition (i.e. that the hospitals were negligent in their treatment of the plaintiff), so the burden of proving the negligence of both hospitals transferred to him.

Conclusion

Pierringer agreements are useful tools in personal injury cases because they allow plaintiffs to partially settle their claims and reduce the risk and cost of proceeding to trial. A word of caution around Pierringer agreements should also be kept in mind. Plaintiffs and their lawyers must ensure that they have properly assessed the value of the case and settle for an appropriate amount. If a plaintiff misjudges his or her case and settles for less than the settling defendant would have been liable for at trial, they cannot recover this amount at trial as the non-settling defendant will only be responsible for their proportionate share of damages.

For more information on Pierringer agreements, please visit the link below: https://www.mcleishorlando.com/blog/scc-upholds-settlement-privilege-in-pierringer-agreements/

 

[1] 2013 SCC 37

[2] 2019 CarswellNS 312

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