A “Mary Carter” agreement is an agreement between a plaintiff and one or more, but not all, co-tortfeasor defendants which places a limit on the maximum liability of the settling defendant, and further provides that such sum will be reduced or extinguished (based on the amount recovered) in the event of a recovery against the non-agreeing co-tortfeasor. The plaintiff also agrees to not execute on any judgment against the settling defendant, seeking recourse against only the non-agreeing defendants, and the defendant agrees to continue as a party defendant in the trial of the action.
Mary Carter agreements are viewed differently in different jurisdictions. In Louisiana, for instance, Mary Carter agreements that are not made known to the trier of fact are said to violate public policy as they distort the litigation process. Other jurisdictions apply off-sets where such a settlement is reached.
Should you use a Mary Carter Agreement in Colorado?
Mary Carter agreements are not very practical in Colorado as such an agreement would likely be discoverable. Because the finder of fact (judge or jury) is to determine the degree of negligence of the agreeing defendant under the Pro-Rata Liability Act, the purpose of the secret agreement is eliminated and there is no reason to use one.
As always, it is very important to know what effect a settlement with one party may have on the outcome of your case against another defendant – especially if the agreement is kept secret from a non-settling party.
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