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Civil Litigation - Pierringer Orders

. Maio v. Kapp Contracting Inc.

In Maio v. Kapp Contracting Inc. (Ont CA, 2022) the Court of Appeal considered a Pierringer agreement:

[8] While the motion judge did not specifically refer to any case law dealing with this issue, nor was he required to, his decision is consistent with this court’s decision in Endean v. St. Joseph's General Hospital, 2019 ONCA 181, where the court dealt with a similar Pierringer Agreement. In Endean, the court explained the general rule that plaintiffs are entitled to recover one hundred percent of their damages from any tortfeasor who is found liable for damages, even if other tortfeasors are also responsible for the same damages. A tortfeasor can then avoid paying all damages by making crossclaims or third-party claims. The court explained that the effect of a Pierringer Agreement must be understood in the context of these principles. As the court held, at para. 52, “the purpose of a Pierringer Order is to facilitate a settlement between a plaintiff and a defendant who wishes to settle (a settling defendant), while maintaining a level playing field for the remaining (non-settling) defendant against whom the plaintiff wishes to proceed to trial”.

[9] Accordingly, a Pierringer Agreement that limits a plaintiff’s ability to recover for the several liability of remaining defendants does not limit a plaintiff’s recovery to only those damages directly attributable to the remaining defendants. Rather, unless the agreement is specifically worded otherwise, the effect of such an agreement is to ensure that the plaintiff does not recover any damages attributable to the defendant released in the Pierringer Agreement.

[10] In this case, at the time the respondents and the City entered into the Pierringer Agreement, everyone was aware that there were third- and fourth-party claims. As is typical when parties enter into Pierringer Agreements, and as discussed in Endean, the concern was to ensure that the plaintiff could not recover damages attributable to the City from other parties. Otherwise, the settlement would be prejudicial to the remaining defendants – and, by extension, to the third and fourth parties – because they would be unable to recover any damages attributable to the City from the City through crossclaims. However, there is no basis for finding that the parties to the Pierringer Agreement intended to reduce the respondents’ damages to those that could only specifically be attributed to the remaining defendants, which by now is only Mer. The appellant was not a party to the agreement and there is no basis for finding that the Pierringer Agreement and the Order were meant to benefit the appellant, nor any other third or fourth parties, in this way.

[11] The appellant argues that the motion judge erred in failing to follow this court’s decision in Taylor v. Canada (Health), 2009 ONCA 487. It is worth noting that Taylor did not involve a Pierringer Agreement. As the court explained in Endean, at para. 66, Taylor involved a unique situation where the plaintiff intended to avoid any third-party claims by only seeking damages attributable to the defendant. This is not the case here. By entering into the Pierringer Agreement, the respondents sought to settle their claim against the City and to pursue their claims against the remaining defendants. There is no evidence that, by doing so, they intended to recover only those damages specifically attributable to the remaining defendants, thereby releasing all third and fourth parties from any potential liability.

[12] The appellant further argues that the motion judge’s reasons are insufficient. We disagree. The motion judge was asked to address a discrete issue, namely the effect of the Pierringer Agreement and the Order on the third- and fourth-party claims. The motion judge rejected the appellant’s argument in clear and succinct reasons. The basis for his decision is readily understandable. He was not required to address every argument made by the appellant.

. Endean v. St. Joseph's General Hospital

In Endean v. St. Joseph's General Hospital (Ont CA, 2019) the Court of Appeal considers Pierringer orders:

[52] This brings us to the Pierringer Order in the Hearsey Action. Named after Pierringer v. Hoger, 124 N.W. 2d 106, 21 Wis. 2d 182 (U.S. Wis. S.C. 1963), the purpose of a Pierringer Order is to facilitate a settlement between a plaintiff and a defendant who wishes to settle (a settling defendant), while maintaining a level playing field for the remaining (non-settling) defendant against whom the plaintiff wishes to proceed to trial: see Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37, [2013] 2 S.C.R. 623, at paras. 6, 23-26. It does this by certain essential provisions:

(1) The settling defendant settles with the plaintiff;

(2) The plaintiff discontinues its claim [against] the settling defendant;

(3) The plaintiff continues its action against the non-settling [defendant] but limits its claim to the non-settling defendant's several liability (a 'bar order');

(4) The settling defendant agrees to co-operate with the plaintiff by making documents and witnesses available for the action against the non-settling defendant;

(5) The settling defendant agrees not to seek contribution and indemnity from the non-settling defendant; and

(6) The plaintiff agrees to indemnify the settling defendant against any claims over by the non-settling defendants.

Handley Estate v. DTE Industries Limited, 2018 ONCA 324, 421 D.L.R. (4th) 636, at para. 39, citing Paul M. Perell & John W. Morden, The Law of Civil Procedure in Ontario, 3d ed. (Toronto: LexisNexis Canada, 2017), at p. 762.

[53] These essential provisions of a Pierringer Order are informed by the discussion of liability above. The non-settling defendant will have cross-claimed against a settling defendant because it wants to recover the settling defendant’s share of fault from it as indemnity, should the non-settling defendant have to pay more than its proportionate share of the plaintiff’s damages. The non-settling defendant’s need to do so disappears under a Pierringer Order, because it requires the plaintiff to effectively put the non-settling defendant in the same economic position as if it paid the plaintiff in full and recovered any indemnity from the settling defendant. It does this by requiring the plaintiff to reduce its recovery from the non-settling defendant by the percentage of fault to be attributed to the settling defendant, and thus by the amount the non-settling defendant would have been able to recover from the settling defendant as indemnity: see M.(J.) v. Bradley (2004), 2004 CanLII 8541 (ON CA), 71 O.R. (3d) 171, 187 O.A.C. 201 (C.A.), at paras. 30-31.

[54] To use an example, suppose defendants A and B were each creditworthy and cross-claimed against each other for indemnity. Suppose each is found liable at trial and fault was apportioned 50% to each. The plaintiff makes A pay 100% of the damages. But A recovers from B, on a cross-claim, for B’s 50% proportionate liability as indemnity. At the end of the day, A’s net payment is only 50%, commensurate with A’s liability. [55] Now suppose the plaintiff settled with B before trial. In the Pierringer Order situation, the plaintiff reduces their recovery from A (who did not settle) by the amount it is determined that B is at fault. At trial, A and B are each found to be 50% at fault. The plaintiff reduces their claim against A by the amount of fault attributed to B. A’s net payment is the same 50%.