How Settlement Credits Work: Arizona

July 2019Article

Settlement credits are generally unnecessary in Arizona because the State has abolished joint and several liability for actions for personal injury, property damage, or wrongful death. A.R.S. § 12-2506. Now, “[e]ach defendant is liable only for the amount of damages allocated to that defendant in direct proportion to that defendant’s percentage of fault, and a separate judgment shall be entered against the defendant for that amount. To determine the amount of judgment to be entered against each defendant, the trier of fact shall multiply the total amount of damages recoverable by the plaintiff by the percentage of each defendant’s fault, and that amount is the maximum recoverable against the defendant.” Id. at subsection A.

Further, “[i]n assessing percentages of fault the trier of fact shall consider the fault of all persons who contributed to the alleged injury, death or damage to property, regardless of whether the person was, or could have been, named as a party to the suit. Negligence or fault of a nonparty may be considered if the plaintiff entered into a settlement agreement with the nonparty or if the defending party gives notice before trial, in accordance with requirements established by court rule, that a nonparty was wholly or partially at fault. Assessments of percentages of fault for nonparties are used only as a vehicle for accurately determining the fault of the named parties. Assessment of fault against nonparties does not subject any nonparty to liability in this or any other action, and it may not be introduced as evidence of liability in any action.” Id. at subsection B.

Exceptions to the rule of several liability only exist where the defendant and another person were acting in concert, where the other person was acting as an agent or servant of the defendant, and where the defendant’s liability for the fault of another person arises out of a duty created by the Federal Employers’ Liability Act. Id. at subsection D. In such cases, the defendant has a right of contribution from the other person. Id. at subsection E. Further, in a case where a defendant is jointly liable under subsection D, a release or covenant not to sue “reduces the claim against the [defendant] to the extent of any amount stipulated by the release or the covenant or in the amount of the consideration paid for it, whichever is the greater.” A.R.S. § 12-2504.

How Settlement Credits Work: