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Minnesota Supreme Court Reverses Staab: Only Jointly and Severally Liable Parties are Exposed to Reallocation

September 11, 2014

Minnesota Supreme Court Reverses Staab: Only Jointly and Severally Liable Parties are Exposed to Reallocation 

by Paul J. Rocheford & Beth A. Jenson Prouty 

Staab v. Diocese of St. Cloud (Staab II) 
No. A12-1575, A12-1972, __ N.W.2d __ (Minn. Sept. 10, 2014). 

The Minnesota Supreme Court has handed down its long-awaited decision in Staab II, reversing the court of appeals and concluding that reallocation of uncollectible amounts under Minn. Stat. § 604.02, subd. 2, can only be applied to defendants who are jointly and severally liable under § 604.02, subd. 1.  Thus, unless a 50% or less at fault defendant meets one of the other joint and several liability provisions under subdivision 1, that defendant is not going to be liable for more than its share of fault. 
   
Application of Staab II:    
The holding of Staab II  has broad implications for case handling, evaluating who to name as a party, settlement negotiations, and trial tactics.  Under the Court’s decision in Staab II, a defendant can be assured that – as long as it is only severally liable – its liability is limited to its own fault.  In contrast, if the Court had concluded that uncollectible amounts could be reallocated to parties who were only severally liable, the only way a defendant could hope to avoid the reallocation of other parties’ uncollectible exposure would be for the jury to hold the defendant less at fault than the plaintiff.   

Applying Staab II, a severally liable defendant can assess its potential exposure based only on its own fault and does not have to be concerned that uncollectible exposure of other parties or non-parties will be reallocated to it.  Also, defendants will have an incentive to name third-party defendants in a case – or at least place them on the verdict form – even if a judgment against them would be uncollectible.  A jury’s allocation of fault to such individuals and entities will likely reduce the fault attributed to other defendants and that uncollectible exposure will not be reallocated back to a severally liable defendant.    

Minnesota Statutes on Joint and Several Liability:       
Before 2003, joint and several liability was the norm.  Any defendant could be held liable for 100% of all damages not apportioned to the plaintiff unless the defendant fell within an exception.  In 2003, the Minnesota legislature amended Minn. Stat. § 604.02 to make several liability the rule.  Now, a defendant must be found greater than 50% at fault (or fall within one of the other three narrow exceptions) in order for that defendant to be jointly and severally liable so as to owe 100% of all damages not apportioned to the plaintiff. 

The 2003 statutory amendments to Minn. Stat. § 604.02 read as follows:   

Subdivision 1. Joint liability.  When two or more persons are severally liable, contributions to awards shall be in proportion to the percentage of fault attributable to each, except that each is the following persons are jointly and severally liable for the whole award: 

(1) a person whose fault is greater than 50 percent; 
(2) two or more persons who act in a common scheme or plan that results in injury; 
(3) a person who commits an intentional tort; or 
(4) a person whose liability arises under chapters 18B - pesticide control . . . .  

Except in cases where: […] A person whose fault is 15 percent or less is liable for a percentage of the whole award no greater than four times the percentage of fault, including any amount reallocated to that person under subdivision 2. 

Subdivision 2 remained unchanged, providing: 

Subd. 2. Reallocation of uncollectible amounts generally.  Upon motion made not later than one year after judgment is entered, the court shall determine whether all or part of a party’s equitable share of the obligation is uncollectible from that party and shall reallocate any uncollectible amount among the other parties, including a claimant at fault, according to their respective percentages of fault. A party whose liability is reallocated is nonetheless subject to contribution and to any continuing liability to the claimant on the judgment. 

Staab I  and Staab II:     
The Plaintiff in Staab I and Staab II was injured at Holy Cross Parish School when her husband pushed her wheelchair over an unmarked five-inch drop-off.  At trial, the Diocese of St. Cloud was found to be 50% at fault and Staab’s husband – who was not named as a defendant – was also found to be 50% at fault.   

The case twice made its way to the Minnesota Supreme Court.  The 2012 Staab I  opinion applies Minn. Stat. § 604.02, subd. 1, to explain how joint and several liability is to be determined.  The newly released Staab II  opinion applies Minn. Stat. § 604.02, subds. 1-2, to explain when and to whom uncollectible amounts can be reallocated. 

In Staab I, the Court – applying the amended Minn. Stat. § 604.02, subd. 1, for the first time – concluded the subdivision applied even though there was only one named defendant and fault was apportioned between the sole defendant and a nonparty tortfeasor.  This meant the Diocese was not liable for the fault attributed to Staab’s husband.  Rather, the Diocese was only liable for its 50% fault.  The Staab I Court did not consider what impact, if any, Minn. Stat. § 604.02, subd. 2, would have on the Diocese’s liability.  The dissent suggested that under subdivision 2, the liability attributed to Staab’s husband would be reallocated to the Diocese because that amount was uncollectible.   

Staab II holds that an uncollectible amount is not automatically reallocated to other parties under subdivision 2.  Rather, reallocation only applies to other parties that are jointly and severally liable under subdivision 1.  This means an uncollectible amount is only reallocated to a party found 51% or more at fault or who falls within one of the other three narrow exceptions as contained in subdivision 1. 

Click here to read the Minnesota Supreme Court decision.