Legal Definitions - settlement-first method

The settlement-first method is a legal approach used by courts to calculate the final amount of money a defendant must pay a plaintiff after a jury has determined a total award, especially when the plaintiff has already received payments from other parties involved in the same case through settlements.

Under this method, the court first reduces the jury's total monetary award by subtracting all settlement amounts the plaintiff has already received. Only after this initial reduction is the remaining amount further reduced by the percentage of the plaintiff's own responsibility for the harm, a concept known as "comparative fault." This sequence ensures that the benefit of any prior settlements is applied before considering the plaintiff's own contribution to the incident.

• Example 1: Multi-Vehicle Accident

  Imagine a plaintiff, Sarah, was injured in a car accident involving two other drivers, Mark and Lisa. Sarah settled with Mark for $20,000 before trial. She then went to trial against Lisa, and the jury awarded Sarah $100,000 for her injuries. The jury also found that Sarah was 10% responsible for the accident (comparative fault), and Lisa was 90% responsible.

  Using the settlement-first method, the court would first subtract Mark's settlement from the jury verdict: $100,000 - $20,000 = $80,000. Then, Sarah's 10% comparative fault would be applied to this reduced amount: $80,000 - (10% of $80,000) = $80,000 - $8,000 = $72,000. Therefore, Lisa would be ordered to pay Sarah $72,000.

• Example 2: Defective Product Claim

  Consider a plaintiff, David, who was injured by a defective power tool. He sued both the manufacturer, "ToolCo," and the retailer, "Hardware Haven." David settled with Hardware Haven for $50,000. He then proceeded to trial against ToolCo, where the jury awarded him $500,000. The jury also determined that David was 5% at fault for not reading the instruction manual properly (comparative fault), while ToolCo was 95% at fault for the defect.

  Applying the settlement-first method, the court would first deduct Hardware Haven's settlement from the jury's award: $500,000 - $50,000 = $450,000. Next, David's 5% comparative fault would be applied to this amount: $450,000 - (5% of $450,000) = $450,000 - $22,500 = $427,500. ToolCo would then be responsible for paying David $427,500.

• Example 3: Construction Site Injury

  A construction worker, Maria, was injured on a job site and sued the general contractor, "BuildRight," and a subcontractor, "SteelWorks." Maria settled with SteelWorks for $75,000. At trial against BuildRight, the jury awarded Maria $750,000. The jury also found Maria 15% at fault for not wearing all required safety gear (comparative fault), and BuildRight 85% at fault for unsafe conditions.

  Using the settlement-first method, the court would first subtract SteelWorks' settlement from the jury verdict: $750,000 - $75,000 = $675,000. Then, Maria's 15% comparative fault would be applied to this reduced sum: $675,000 - (15% of $675,000) = $675,000 - $101,250 = $573,750. BuildRight would therefore be ordered to pay Maria $573,750.