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Burlington Northern Railroad Co. v. Stone Container Corp.2/20/1997
ng the settlement amount and independently determining what it considered "the most" reasonable settlement amount for the landowner to pay solely for the 1989 claim or, instead, by allocating a percentage of the total settlement amount to that claim. To the extent the trial court ignored the settlement amount and independently determined "the most" reasonable settlement amount for the 1989 claim, we conclude that the court erred.
As noted, it would be unfair to an indemnitee settling a claim against it in good faith for a reasonable amount to face the risk of recovering a lesser amount from the indemnitor because a fact finder later independently determined that "the most" reasonable settlement of that claim was some lesser amount. Further, the fact finder would be faced with the daunting task of finding, not the actual value of the claim, but the most reasonable settlement amount for the indemnitee of the claim. This would require the fact finder to assume the position of the indemnitee at the time of settlement and evaluate, not only the value of the claim, but also the indemnitee's own unique needs and interests in seeking the settlement.
We therefore conclude that the proper approach is not to ignore the settlement amount and independently determine the most reasonable settlement amount for the 1989 claim. Rather, in order to give effect to the settlement, the fact finder must first determine whether the entire settlement was in good faith and reasonable. If so, the fact finder must then determine the percentage of the damages that should be allocated to the 1989 claim and multiply that percentage times the entire settlement amount to determine the damages for which the indemnitor is liable.
Under this approach, the fact finder avoids having to evaluate both the claim and the indemnitee's own unique needs and interests to determine "the most" reasonable amount the indemnitee should have paid to settle the 1989 claim. At the same time, it allows the indemnitee the full value of its settlement, but no more.
Here, we are unable to discern whether the trial court found the entire settlement was reasonable and, if so, whether it arrived at the $25,000 award by properly determining the percentage of the total damages that were incurred in the 1989 event and multiplying that times the actual total settlement or, instead, incorrectly ignoring the settlement amount and determining that $25,000 was "the most" reasonable settlement of that claim for the indemnitee. We must therefore remand for further findings regarding, and if necessary for reconsideration of, the damages to be awarded.
The judgment is affirmed as to the trial court's determination that the landowner is liable to the railroad for the entire amount of the settlement attributable to the 1989 claim, the award of damages is vacated, and the cause is remanded for further findings regarding, and if necessary reconsideration of, the damages award.
JUDGE HUME and JUDGE DAVIDSON concur.
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