Pierringer-type Agreements

Pierringer-type agreements are exotic sounding. But are they really useful or worthwhile using in everyday insurance-type cases?

It seems to me that in the proper circumstances they can, in fact, be quite useful. And they are not really as complicated or exotic as they might at first seem.

They are useful where one defendant is willing to settle with the plaintiff while the other defendant is not.

The agreement simply permits the plaintiff to settle with the "settling defendant" but proceed with the action against the "non-settling defendant".

Such an agreement was approved by the Ontario Court of Appeal in JM and WB, 2004 O.J. No 2312, 71 O.R. (3d) 171 (C.A.).

The agreement should provide:

1. That the settlement and payment contemplated are not to be taken as an admission of liability on the part of the settling defendant;

2. That the action will be dismissed as against the settling defendant, on consent and without costs;

3. That the plaintiffs will use their best efforts to cause any crossclaims against the settling defendant to be similarly dismissed, without costs, in order to fully and finally conclude all litigation arising from the matters pleaded in the action against the settling defendant;

4. A full and final release by the plaintiffs in favour of the settling defendant;

5. That the plaintiffs will indemnify and hold harmless the settling defendant from any crossclaim or third party claim, and any other proceeding or claim arising from the issues and allegations in the within action; and

6. For the disclosure of the agreement, including the settlement amount provided thereunder, to the trial court, on certain conditions.

The indemnity provision should state that the plaintiffs restrict their claim to whatever the non‑settling defendants may be directly liability for and, as such, non-settling defendants cannot be jointly liable with the settling defendant.

This means that non-settling defendants have no basis to seek contribution, indemnity, relief over by way of equitable subrogation, declaratory relief or otherwise against the settling defendant.

An order should then be obtained dismissing the plaintiffs’ claim against the settling defendant, after which the plaintiffs amend their statement of claim, on consent, to reflect its compromises in its claim detailed in the Pierringer agreement, stating as follows:

The plaintiff has agreed with the settling defendant that it shall limit its claims against the non-settling defendants to claims for damages, costs and interest attributable only to the non-settling defendants share of liability to the plaintiff (and joint liability to one another, if any, and if there is more than one non-settling defendant) such that the plaintiff’s recovery shall be limited to recovering the damages, costs and interest attributable to the non-settling defendants’ several share of liability (or joint share of liability if more than one non-settling defendant) as proven against it or them at trial.

For greater certainty, the plaintiff shall have no claim directly or indirectly against the settling defendant and the plaintiff shall limit its claim against the non-settling defendant so as to exclude any crossclaim or third party claim made against or which could be made against the settling defendant arising from the issues in this action.

The plaintiff admits that the Court at any trial of this matter has and shall have full authority to adjudicate upon the apportionment of liability, if any, between all defendants named in the Statement of Claim, including the settling defendants, whether or not the settling defendants remain as parties by crossclaim or third party claim in this action.

The terms of the agreement listed above, plus amendments to the Statement of Claim, were approved by the Court of Appeal for Ontario in the above-noted decision.

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