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Smith v. Zufelt9/12/1994
In this case we are called upon to decide the appropriate amount of settlement proceeds, if any, that should be offset from a jury award when a plaintiff has both settled with a nonparty and successfully litigated claims for the same injury against nonsettling defendants. After a jury verdict for plaintiff, the trial court reduced the jury award by deducting an amount based on the fault attributed to the settling nonparty, which amount was less than the total settlement paid by the nonparty. The court of appeals reversed, holding that because settlement proceeds are payments from a collateral source, the total settlement amount, less that portion representing attorney fees, should be offset from the amount nonsettling defendants are to pay as damages in accordance with the jury verdict. Smith v. Zufelt, 856 P.2d 8 (Colo. App. 1992).
Both parties petitioned for certiorari, and we granted defendants' petition to address the exclusion of attorney fees from the calculus and plaintiffs' cross-petition to decide the settlement proceeds setoff issue. For the reasons set forth below, we hold that an offset is appropriate but that the amount of offset should be limited by the percentage of liability attributed to the settling nonparties. Because the amount paid in settlement, less attorney fees, exceeds the liability attributed to the nonparty, it is unnecessary for us to reach, and we decline to address, the issue of whether the amounts paid as attorney fees were properly excluded from any offset. We therefore reverse in part, and remand to the court of appeals with directions that the judgment of the trial court be reinstated.
I
In January of 1988, Kory Zufelt ("Kory"), age eight, was accidentally shot in the stomach by Michael Smith, age twelve. The two boys and Kory's brother, Troy Zufelt, were hunting on land owned by Michael Smith's grandparents, Maude and Ellis Smith. Kory, his brother Troy, and his parents, Katherine and Ronald Zufelt, (collectively "the Zufelts") brought a negligence action against Michael Smith, Michael's parents, Charles and Hazel Smith, and Michael's grandparents, Maude and Ellis Smith.
Prior to trial, Maude Smith and Ellis Smith settled with the Zufelts for $88,629.24. The settlement was apportioned $50,000 to Kory; $7,000 to Troy Zufelt; $2,500 to the Zufelt family; and $29,129.24 for attorneys' fees and costs. For purposes of trial, Maude and Ellis Smith were then designated as "statutory nonparties having fault" pursuant to section 13-21-111.5, 6A C.R.S. (1987 & 1993 Supp.).
The Zufelts tried their case against the remaining defendants, Michael Smith and his parents, Charles and Hazel Smith. The jury found in favor of the Zufelts and returned verdicts in the amount of $105,000 for Kory and $25,000 for Kory's parents. Fault was apportioned as follows: 84% to Charles Smith; 0% to Hazel Smith; 15% to Maude Smith; 0% to Ellis Smith; and 1% to Michael Smith. The trial court then reduced the verdict by an amount equivalent to the 15% fault charged to the settling nonparties, Maude and Ellis Smith. The court therefore entered a judgment ordering the defendants to pay $89,250 to Kory and $21,250 to Kory's parents, Ronald and Katherine. Kory received total compensation of $139,250 -- $50,000 from the settlement with Maude and Ellis Smith and $89,250 from the judgment at trial.
In Smith v. Zufelt, 856 P.2d 8 (Colo. App. 1992), the court of appeals held that the settlement proceeds received by Kory were collateral to the amount to which he was entitled to be made whole and should therefore be offset from the amount which Kory was entitled to receive as determi
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