Legal Memorandum: Right of Contribution and Settlement Agreements

Issue: May a person’s right of contribution only be established by court judgment and may a settlement agreement, made confidential by agreement of the parties, can be obtained in discovery by a party in an action for contribution who was not a party to the settlement agreement.

To support a right of contribution, the plaintiff must show that he and the defendant share common liability for damages and that the plaintiff has paid more than his share of damages under which there is a common obligation.  “‘Whether the common obligation be imposed by contract or grows out of a tort, the thing that gives rise to the right of contribution is that one of the common obligors has discharged more than his fair equitable share of the common liability.'”  Employers Mut. Cas. Co. v. Chicago, St. Paul, Mpls. & Omaha Rwy. Co., 50 N.W.2d 689 (Minn. 1951) (quoting Wait v. Pierce, 210 N.W. 822 (Wis.)).  Further, “[t]he party seeking contribution need not make payment pursuant to a judgment, but may settle by a fair and provident payment and then seek contribution from other joint [obligors] for their fair share of the settlement price.”  Id.

Many Minnesota cases serve as examples that the right of contribution need not arise out of a court judgment, including:

Farmers Ins. Exch. v. Village of Hewitt, 143 N.W.2d 230 (Minn. 1966).

Jones v. Fisher, 309 N.W.2d 726 (Minn. 1981).

Milbank Mut. Ins. Co. v. Village of Rose Creek, 225 N.W.2d 6 (Minn. 1974).

Roemhildt v. Gresser Cos., 729 N.W.2d 289 (Minn. 2007).

When multiple parties settle separately with a defendant to whom the parties share common liability, the confidential settlements are ordinarily discoverable by opposing parties.  […]