Mcdermott, Inc. v. Amclyde & River Don Castings, Ltd.

511 U.S. 202 (1994)

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Nature of the Case

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Facts

P purchased a specially designed, 5,000-ton crane from D. P used the crane for the first time, and its main hook broke, causing massive damage to the deck and to the crane itself. The malfunction may have been caused by P's negligent operation of the crane, by D's faulty design or construction, by a defect in the hook supplied by River Don Castings, Ltd. (River Don), or by one or more of the three companies (the 'sling defendants') that supplied the supporting steel slings. Invoking admiralty jurisdiction under 28 U.S.C. 1333(1), P sued. On the eve of trial, P entered into a settlement with the sling defendants. In exchange for $1 million, petitioner agreed to dismiss with prejudice its claims against the sling defendants, to release them from all liability for either deck or crane damages, and to indemnify them against any contribution action. The trial judge later ruled that P's claim for crane damages was barred by East River Steamship Corp. v. Transamerica Delaval Inc., 476 U.S. 858 (1986). The jury found that the total damages to the deck amounted to $2.1 million and, in answer to special interrogatories, allocated responsibility among the respective parties: 32% to AmClyde, 38% to River Don, and 30% jointly to McDermott and the sling defendants. The Court denied a motion by respondents to reduce the judgment pro tanto by the $1 million settlement and entered judgment against AmClyde for $672,000 (32% of $2.1 million) and against River Don for $798,000 (38% of $2.1 million). Even though the sum of those judgments plus the settlement proceeds exceeded the total damages found by the jury, the District Court concluded that P had not received a double recovery because the settlement had covered both crane damages and deck damages. The Court of Appeals held that a contractual provision precluded any recovery against D and that the trial judge had improperly denied a pro tanto settlement credit. It reversed the judgment against D entirely and reduced the judgment against River Don to $470,000. It arrived at that figure by making two calculations. The court determined the 'full damage award is $1.47 million ($2.1 million jury verdict less 30% attributed to McDermott/sling defendants).' It deducted the '$1 million P received in settlement to reach $470,000.' Because it was less than River Don's liability as found by the jury (38% of $2.1 million or $798,000), it directed the entry of judgment against River Don in that amount. The Supreme Court granted certiorari to consider how a settlement with less than all of the defendants in an admiralty case should affect the liability of nonsettling defendants.