Civil Practice – Judgments – Setoff – Pre- & Post-Trial Settlements – Construction Defects

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In this construction-defect case, the defendant-general contractor settled with plaintiffs after the jury returned a verdict against defendants but before judgment was entered. Since the issues presented to the jury included HVAC access and fire separation penetrations, the post-trial settlement amount allocated to the issues of HVAC access and fire separation penetration should have been allowed as a setoff for the defendant-roofing company.
We affirm in part and reverse in part the trial court’s ruling on the roofing company’s motion for setoff.
The plaintiff-property owners’ association and an individual property owner sued multiple contractors for defects in the construction of plaintiffs’ condominiums. Plaintiffs settled with several contractors pre-trial and then went to trial against the general contractor, the defendant-roofing company and two roofing sub-subcontractors. The jury awarded plaintiffs $6.5 million in actual damages plus punitive damages of $500,000 each against the general contractor and the roofing company. Plaintiffs settled post-trial with the general contractor.
At issue is how much of the settlement amounts should go to set off the jury’s verdict against the roofing company.
Plaintiffs received $1 million in insurance proceeds pretrial pursuant to a mediated partial payment/covenant not to execute. This payment was allocated to HVAC, electrical, drainage and fireplaces. By eliminating repair costs for HVAC, electrical, drainage and fireplaces from their damages estimate at trial, plaintiffs effectively gave the roofing company a setoff. The trial court did not err in declining to give a second reduction by setting off this amount from the verdict.
Plaintiffs’ post-trial settlement with the general contractor allocated $637,500 to issues put before the jury, i.e., lack of access to the HVAC units due to framing mistakes and fire separation penetrations. While the general contractor settled prior to the entry of judgment and so was not technically subject to the judgment, that is not what is required for the roofing company to be entitled to setoff. Setoff is premised on a settlement corresponding to the same injury.
The roofing company and the general contractor were found jointly and severally liable for all the injuries put before the jury including damages related to framing for HVAC access and fire separation penetrations not related to sprinkler installation. The injuries addressed by the jury’s verdict cannot now be parsed out and separated simply because plaintiffs settled their claim against the general contractor prior to the entry of judgment.
Plaintiffs would receive a double recovery if both (1) the roofing company were to pay for these injuries and (2) the general contractor’s settlement compensated them for the same injuries. Accordingly, the trial court erred in denying a setoff to the roofing company for the remaining $500,000 of the general contractor’s settlement allocated to framing for HVAC access and fire separation penetrations not related to sprinkler installation.
The form of the jury’s verdict indicates that it found the roofing company and the general contractor each individually liable for a punitive damages award. Since the punitive damages award against the general contractor and the roofing company constitute two separate injuries, the trial court properly denied the roofing company a setoff with respect to the punitive damages portion of the general contractor’s settlement with plaintiffs.
The record supports the trial court’s refusal to allow setoff for the roofing company with respect to the remaining pretrial settlements.
Affirmed in part; reversed in part.
Palmetto Pointe at Peas Island Condominium Property Owners Association, Inc. v. Island Pointe, LLC (Lawyers Weekly No. 011-042-23, 20 pp.) (Aphrodite Konduros, J.) Christian Stegmaier and James Lloyd Williams for appellant; Stephanie Drawdy, Joshua Fletcher Evans, Edward Buckley, Anna Scarborough McCann and Justin O’Toole Lucey for respondents. South Carolina Court of Appeals