Admission into Evidence of Testimony and Answers to Discovery of Settled Defendants Leads to New Trial Ordered on Issue of Apportionment

NEW JERSEY — Donna Rowe (plaintiff), individually and as executrix and executrix ad prosequendum of the estate of Ronald Rowe (Rowe), appealed an April 27, 2015 judgment of $304,152.70 plus prejudgment interest. The plaintiffs originally sued 27 defendants, alleging that exposure to asbestos from their products caused Rowe’s mesothelioma. Twelve defendants were granted summary judgment, four were dismissed, and two never appeared and the claims against them were abandoned. Additionally, eight parties settled their claims before trial, leaving only Hilco, Inc., the successor-in-interest to Universal Engineering Co., Inc. (Universal) at trial.

Universal cross-claimed for contribution against all co-defendants under the Joint Tortfeasors Contribution Law and the New Jersey Comparative Negligence Act. Prior to trial, Universal sent notices in lieu of subpoena to each of the eight settling the defendants, demanding the appearance of a corporate representative to provide testimony. The notices stated that they “shall remain in effect in the event your client settles or is dismissed from the case.” Universal certified that none of the settling the defendants would produce a witness at trial.

During trial, Universal read portions of testimony from corporate representatives from the six of the settling the defendants who are based outside of New Jersey; the other two were not allowed because they are based in New Jersey, and thus, available to appear. Universal further read selected interrogatory answers of all the eight settling the defendants because as the trial court ruled, it was allowed as long as they were certified answers. Some of the interrogatories were filed in the instant matter, others from different Middlesex County matters, and others from matters entirely outside of New Jersey.

At the close of Universal’s case, the plaintiffs moved to dismissed Universal’s claims against the settling the defendants, contending that no sufficient basis for allocation had been established. The court rejected the plaintiffs’ allocation argument, stating that “there were factual proofs that were presented, and it ultimately will be up to the jury to determine whether they are sufficient.”

The jury awarded $1.5 million in compensatory damages. The jury allocated the damages as follows: twenty percent to Universal and the remaining eighty percent, in varying increments, against the eight settled the defendants.

The plaintiff appealed, arguing that the trial court erred in allowing the non-settling the defendant, Universal, to introduce answers to interrogatories and testimony of the settling the defendants from prior proceedings because such evidence is hearsay that did not fall within any exception to the rule against hearsay.

The appeals court determined that the trial judge erred in admitting the settling defendants evidence and that it was not exempt from the general prohibition against hearsay. The trial judge further erred by deciding the settling the defendants were unavailable “merely because they declined to appear without having been released either by counsel or the court.” The appeals court stated that “allowing the admission of evidence by a defendant against the very party that crafted the evidence and can defend itself is qualitatively different than what Universal did here, which was to transform statements of settling the defendants into unrebuttable admissions to be used against a party that did not make those admissions.”  The trial court “allowing the admission of this evidence transformed the statements of the settling the defendants into irrefutable admissions to be used against the plaintiff, even though plaintiff did not make the statements.”

The appeals court also determined that “the trial court failed to require that Universal demonstrate due diligence in ascertaining the unavailability of the settling the defendants” and in doing so, erred in admitting the corporate representative testimony of the six out-of-state settling the defendants. The party seeking to admit prior testimony has the burden of demonstrating that the witness is unavailable, and Universal did not do so.

The case was reversed and remanded for a new trial on the issue of apportionment.