Dear Colleagues,

 

A is damaged by the the wrongful conduct of B and C. B and C are concurrent wrongdoers. A sues only B. B sues C claiming contribution.

 

One of the many problems in contribution jurisprudence is the situation where the contribution claim is commenced by B against C after the expiration of the limitation period governing an action by A against C for the damages in respect of which A sues B and B claims contribution from C. That problem has been handled by statute in some jurisdictions so that, in at least some cases, C cannot defeat the contribution claim on the basis that C is no longer liable to A because of an expired limitation period. Some jurisdictions do not have a statutory answer.

 

If it is the case that contribution rights are based on unjust enrichment principles, then, in principle, C may have a valid defence to the contribution claim, since C derives no legal benefit from any payment made by B to A where the payment is made a B to A at a time when C is no longer potentially liable to A - could not be held liable if sued by A - for the damages for which B paid A.

 

Most common law jurisdictions where contribution remedies are required and exist, to my knowledge, recognize the underlying unfairness to B of the situation where the conduct of A, alone, in the "timing" of the initiation of A's action against B - the time of the commencement of the action or service of process - could cause B to lose an otherwise available contribution right against C.

 

A solution to the problem by statute, where the statute provides that in qualifying circumstances the expiration of the limitation period applicable to an action by A against C does not provide C a defence to B's contribution claim, is a policy-based answer which avoids the need to determine a first principles answer.

 

My view is that the better answer is that, in principle, C should not be able to defeat B's contribution claim merely on the basis that the limitation period for an action by A against C has expired so that C can no longer be sued successfully by A, where there is no conduct on B's part that is somehow a relevant part of the explanation for why A waited to initiate process against B until after A's limitation period for suing C expired.

 

My problem, assuming that the UE source of contribution is correct, and assuming that A's recovery is not to be reduced by the amount of contribution that B cannot recover from C solely as a result of the time that A commenced action against B (or served process on B), has been how to support my view of the better answer on a principled basis other the normative assertion one of fairness as between B and C.

 

I believe that a principled justification appears if we look first at the situation where A and C have settled for an amount that is less, in a relevant sense, that what C's "share" of A's damages would be if a court had to determine that issue for some purpose. In that hypothetical, the astute C, wanting to be assured that the payment made to A will practicably end C's exposure to additional legal expense - C's own legal fees as well as contribution payments to another concurrent tortfeasor - could try to make it a term of the settlement that A not initiate (not commence, or at least not serve) proceedings against B or any other concurrent wrongdoer until the limitation period governing any action by A against C has expired. That "wait until" provision is irrelevant to A in any jurisdiction where so waiting will not affect the amount of A's recovery from any other concurrent tortfeasor.

 

It seems to me that, in the situation where C made it a term of the settlement with A, that A "wait until", there is justification in treating A as, in a relevant sense, C's agent for the purpose of bringing about the circumstance where C could acquire the "lack of still existinng potential liability defence". If this analysis is correct, then the circumstances that have brought about the possible loss of B's contribution right are also due to the conduct of C. Again, if this analysis is correct, then in UE terms, we have the (1) the benefit to C; (2) the corresponding deprivation to B, if still existing potential liability is required; and (3) a juristic reason for not allowing C to keep the benefit.

 

I think that, in this hypothetical, the settlement with the "wait until" term provides the benefit to C that sufficiently satisfies a UE-based analysis, because C's conduct is part of the circumstances that later produce the situation that C does not actually receive a benefit from B's payment to A when the payment is made.

 

Now move to the situation where, for whatever reason, C does not make it a term of the settlement that A "wait until" but A still does. Does principle require a different answer if, again, A is not to be penalized? Another way to ask the question is whether C's ignorance of the law - C's failure to get from A the "wait until" term which is legally irrelevant to A - should make a difference. I do not see why it should. It seems to me that C's position should be treated the same. There is a benefit only to C by A waiting. It may be a legal fiction to treat this situation as if it is the same, for contribution purposes, as the situation where C required and A agreed to the "wait until" term but I believe that to be a justifiable fiction, so long as A's recovery is not to be reduced. If this is correct, we again have all of (1) benefit (2) corresponding deprivation and (3) juristic reason.

 

I am not aware of any published material in which this analysis and justification has been suggested. I don't recall it existing in Williams' text, though I might have forgotten. I am reasonably sure it's not hinted at in Charles Mitchell's text. (If I'm wrong about that, so much the better.) I am not, however, as current in this area as I once was, so perhaps there is something else that one of you are aware of. Comments would be appreciated.

 

Cheers,

 

David Cheifetz