“Satisfaction and release” rules ensure that a plaintiff does not recover multiple damages amounts for the same injury. Although a plaintiff is entitled to recover the total amount of damages awarded by a jury or judge, she may not recover that amount more than once.
Under joint liability, each defendant who is held liable for the plaintiff’s injury may be responsible for paying the entire damages award. For instance, suppose that in a products liability case, the plaintiff is injured when she sits in a defective lawn chair, which breaks. At trial, both the manufacturer of the lawn chair and the company that sold the chair to the plaintiff are held liable for the plaintiff’s injuries. The trial court awards the plaintiff a total of $100,000 in damages. A week later, the company that sold the chair goes out of business without paying anything toward the damages award. Joint liability rules dictate that the manufacturer is still responsible for paying the entire $100,000 to the plaintiff, even though the manufacturer may only have been 50% liable for the plaintiff’s injury.
Satisfaction and release rules work to curb joint liability by only allowing the plaintiff to collect once. In the example above, the plaintiff would be allowed to collect any amount from the manufacturer and/or the seller, as long as the total amount she collected was not higher than $100,000. The plaintiff may use joint liability to get her full $100,000 from either defendant, but she may not collect $100,000 from each defendant. Once her total reaches $100,000, both defendants are released from paying any more in damages to the plaintiff (although they may use contribution and indemnity rules with one another to ensure each has paid its fair share).
Similarly, the plaintiff may not sue each defendant separately for the same injury in order to collect extra damages. For instance, suppose that in the example above, the plaintiff only sued the seller of the chair for her injuries. At trial, she asks the jury for $50,000 in damages. The jury finds that the seller is liable, but only awards the plaintiff $50,000 in damages. The plaintiff may not then sue the manufacturer, blaming it for the same injury, in order to get the additional $50,000 in damages. The plaintiff’s receiving a jury verdict on the proper compensation for her injury releases any other defendants she might have sued for the same injury.
However, most states allow the plaintiff to release one defendant but keep her right to sue the others in the same case. A few states even allow a “Mary Carter agreement,” in which a defendant guarantees he’ll make a small payment to the plaintiff in exchange for the plaintiff releasing him from the lawsuit. However, if the plaintiff receives an excess judgment, that money may be used to pay the defendant’s guaranteed payment. Consequently, defendants in Mary Carter agreements have an incentive to help the plaintiff win the biggest possible damages amount against the other defendants, so that their excess payments, not the defendant’s own pocket, becomes the source of the guaranteed money.
Collateral Source Rule
Satisfaction and release is also affected by the collateral source rule. Under the collateral source rule, if the plaintiff receives a payment for her injuries, but that payment is not made on behalf of a defendant who owes her damages, the payment does not “count” toward the total damages amount.
For instance, suppose that the defendant, distracted by trying to read a map while driving, runs his car into the plaintiff’s garage, damaging it. The plaintiff sues the defendant for negligence. At trial, the jury finds the defendant liable and awards the plaintiff damages of $10,000, which is approximately the cost of fixing the garage. Meanwhile, the plaintiff submits a claim to her insurance company, which pays $10,000 to fix the garage. Even though the plaintiff now has $20,000, the collateral source rule allows her to keep the money because the insurance company did not pay the plaintiff on the defendant’s behalf. Rather, the insurance money came from a separate contract the plaintiff and the insurance company made, which had nothing to do with the defendant.