Legal Blog

Pierringer Agreement

Gendron v. Thompson Fuels 2017 Ont SCJ

Owner, fuel company, and fuel tank manufacturer were litigating over the responsibility of an oil spill. Owner entered into a Pierringer Agreement with the manufacturer. As a result of this agreement, the manufacturer paid a settlement amount to the owner and was no longer a party to the action. Usually, under this type of agreement, there is a provision that should the manufacturer be held to be liable at trial for an amount that is more than it was to pay the plaintiff under the agreement, then the plaintiff would reduce the amount that it received so that the manufacturer would pay only the settlement amount. With this type of agreement, the plaintiff assures itself of a minimum amount and then looks for more from the non-settling defendant, in this case the fuel company. As a basic rule, after the liability proportions have been determined, the plaintiff cannot end up with more than its actual assessed damages. As an example, assume that the plaintiff settles with the settling defendant for $7, its damages are assessed at $10, and the non-settling defendant is held to be 80% liable for the damages. Under this scenario, the plaintiff could receive no more than $3 from the non-settling defendant. Conversely, if the non-settling defendant was held to be 20% liable for the damages, then the plaintiff would receive its $7 from the settling defendant and $2 from the non-settling defendant for a total of $9. The Gendron case dealt with a scenario in which the plaintiff was held to be 60% contributorily negligent for the damages. The non-settling defendant wanted to pay an amount that, when added to the amount that the settling defendant had paid, would equal 40% of the actual damages. Of course, if the settling defendant had paid more than 40% of the actual damages, the non-settling defendant would pay nothing. The judge held that the concept of a plaintiff not receiving more in aggregate then the total amount of its damages applied to its damages before deduction for contributory negligence.

Written by Jonathan Speigel Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.