Posted September 10th, 2014 in Top Stories

Minnesota Supreme Court Clarifies Law on Allocation of Liability

The Minnesota Supreme Court today issued its long-awaited opinion in the case of Staab v. Diocese of St. Cloud. The Court’s decision resolves an important ambiguity in the interpretation of Minnesota Statute 604.02, the law which governs division of liability when multiple parties are found to have caused an injury. The majority opinion is an important step in preserving the principle that each party to a lawsuit should pay only that portion of the damages it caused.

In Staab, the plaintiff was injured when her husband pushed her wheelchair over an unmarked drop-off at a parish school. She sued the Diocese, which was the only defendant at trial. In its defense, the Diocese claimed that the plaintiff’s husband was negligent in pushing the wheelchair. The jury divided fault for the injury equally between the Diocese and the husband.

The dispute resolved in today’s opinion (the second time this case has reached the Minnesota Supreme Court) focused on an inconsistency between subdivisions 1 and 2 of Minnesota Statute 604.02. Subdivision 1 was amended in 2003 to establish “several” rather than “joint and several” liability. “Several” liability means that if a defendant in a lawsuit is found to have been only partially at fault for causing an injury (for example, 25% at fault), that defendant can be required to pay no more than its own proportional share of the damages (in that example, 25%). “Joint and several” liability means that the defendant is potentially responsible for the whole amount of the judgment if the plaintiff could not collect from others found to be at fault. (For instance, if the other 75% of fault was assigned to a bankrupt company, or someone the plaintiff did not or could not legally sue.) The 2003 amended statute declared that several liability, not joint and several liability, applies in Minnesota civil courts unless one of four specified exceptions came into force. (The most notable exception applies joint and several liability to defendants who are found to be more than 50% at fault.)

The plaintiff in Staab attempted to undermine several liability by applying subdivision 2 of 604.02, which was not amended in 2003. Subdivision 2 states that up to one year after a judgment, a court may determine whether portions of fault allocated to some of the parties are uncollectible. If so, then the court is to “reallocate” that amount proportionally among other parties found at fault.

The Court today decided that this “reallocation” procedure cannot be applied to make a severally-liable defendant responsible for more than its own share of the judgment. The Court held that the legislature intended to establish the principle of several liability except when the listed exceptions apply, and that reallocation to a severally-liable defendant would functionally and impermissibly impose joint and several liability. Justice Wilhelmina Wright wrote the majority opinion. Justice David Lillehaug dissented, joined by Justice Alan Page. To see the full opinion click here.

This is an important decision for civil defendants. Before Staab, a defendant found partially but not primarily at fault risked being forced into a functional equivalent of joint and several liability by operation of statutory reallocation. The Minnesota Supreme Court has ensured that such defendants can enjoy the protection of the 2003 statutory amendments.

Cort Sylvester (csylvester@nilanjohnson.com) of NJL would be happy to address any questions you may have regarding the Minnesota Supreme Court’s opinion and its impact on defendants in Minnesota.