Pierringer Settlement Agreements
Proceeding with Eyes Wide Open
Keywords:Contract Law, Tort Law, Insurance Law, Civil Litigation, Damages, Costs, Settlements, Pierringer Agreements, Mary Carter Agreements, Double Recovery, Compensation Principle, Fairness Principle
Pierringer Agreements are a form of proportionate share settlement agreements. Under Pierringer Agreements plaintiffs settle with some defendants and continue the litigation against the non-settling defendants. The agreement severs joint liability between settling and non-settling defendants. Non-settling defendants are only liable for their proportionate share of the plaintiffs’ loss. Under- or over-settlements may be inevitable. Under the current Canadian approach, plaintiffs bear the risk of under-settlement but the benefit of over-settlement accrues to non-settling defendants. This is unfair because non-settling defendants bear no risk for under-settlement. The potential under-compensation that is a detriment to plaintiffs justifies retaining excess settlements similar to the private insurance exception to the compensation principle. This avoids incentivizing non-settling defendants and furthers the public interest in promoting settlements.