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Schulman v. Saloon Beverage, Inc.

United States District Court, D. Vermont

May 12, 2014

Norman H. Schulman, M.D., Susan Schulman, Plaintiffs,
Saloon Beverage, Inc. d/b/a Sirloin Saloon, DWH I, LLC, Susan Schulze-Claasen, Defendants.

OPINION AND ORDER (Docs. 62, 77)

JOHN M. CONROY, Magistrate Judge.

Plaintiffs Norman H. Schulman, M.D. and Susan Schulman (the Schulmans) have filed this action against the above-captioned Defendants under Vermont's Dram Shop Act (DSA), 7 V.S.A. ยง 501, alleging that Defendants' sale of beer to Mark R. Clarke (Clarke) caused the February 18, 2011 head-on collision between the vehicle that Clarke was operating and the Schulmans' vehicle. ( See Doc. 13.)[1] Currently pending is Defendants' Motion for Setoff (Doc. 62) and the Schulmans' Motion for Leave to File a Sur-Reply (Doc. 77). In their Motion, Defendants assert that the Schulmans have received a total of $731, 741.09 in settlements and that Defendants are entitled to an equitable setoff in that amount from any judgment that might be entered against them.

The Schulmans oppose the Motion, arguing that Vermont law does not permit contribution among joint tortfeasors; that the collateral-source rule prohibits setoff; and that payments made to USAA are exempt from setoff. (Doc. 66 at 2-5.) In their Reply, Defendants assert that: (1) the DSA provides a right of contribution; (2) the Schulmans are not permitted to recover twice for the same injury; and (3) Defendants are entitled to a credit against any tort liability for all payments made by and on behalf of Clarke. (Doc. 71 at 1.)

All parties have consented to direct assignment to the undersigned Magistrate Judge. (Docs. 2, 3, 7.) The Court held a hearing on Defendants' Motion on April 24, 2013. After the hearing, the Schulmans filed a Motion for Leave to File a Sur-Reply (Doc. 77), and Defendants filed an Opposition (Doc. 79). For the reasons that follow, the Schulmans' Motion for Leave to File a Sur-Reply (Doc. 79) is GRANTED and Defendants' Motion for Setoff (Doc. 62) is GRANTED.


Clarke and the Schulmans each carried insurance at the time of the collision. Clarke was insured by Progressive. The Schulmans were insured by USAA Insurance (USAA). According to the Schulmans, after the collision, they retained counsel and filed a claim with Progressive. They settled that claim for $731, 741.09. (Doc. 66 at 2.)[2] The settlement was memorialized in two releases, described in more detail below.

On February 14, 2012, the Schulmans signed a general release in favor of Clarke Outdoors, Mark Clarke, Jennifer Clarke (collectively, "the Clarkes"), and Progressive, acknowledging receipt of $649, 241.09 from the Clarkes and Progressive. (Doc. 62-1.) The release includes the following limiting provision:

THIS RELEASE is specifically NOT intended to release, whether presently known or unknown, all other tortfeasors liable or claimed to be liable for any Dram Shop Act or liquor liability claims, and SPECIFICALLY EXCLUDES from this RELEASE, DWH I LLC, DWH II, LLC, FLOYD ENTERPRISES, INC., SIRLOIN SALOON OF MANCHESTER, VT, FIRST MERCURY INSURANCE COMPANY, and their respective subsidiaries, sub-corporations, affiliated partnerships, agents, servants and employees.

( Id. ) Also, in exchange for $82, 500 received jointly from the Schulmans and from Progressive on behalf of the Clarkes, USAA executed a general release in favor of the Schulmans and Progressive on behalf of the Clarkes. (Doc. 62-2.) The release from USAA includes the same limiting provision that appears in the February 14, 2012 release in favor of Progressive. ( Id. )


I. Ruling on Setoff Prior to Determination of Liability

Defendants have brought their Motion for Setoff prior to any determination as to their liability. Indeed, as discussed at length in the Court's Order on the Schulmans' Motion for Sanctions (Doc. 75), the parties dispute whether Clarke was even at the Sirloin Saloon on the night in question. If Defendants are ultimately determined not to be liable, then of course the question of setoff would be moot: there would be no recovery against which to apply such a setoff.

At least with respect to motions for summary judgment, there are conflicting opinions about the propriety of ruling on a damages issue prior to a determination of liability. Compare Jewell-Rung Agency, Inc. v. Haddad Org., Ltd., 814 F.Supp. 337, 339 (S.D.N.Y. 1993) ("Courts have granted motions for summary judgment to limit damages while leaving issues of liability for trial.") with Lovely H. v. Eggleston, No. 05 Civ. 6920(KBF), 2012 WL 4459463, at *2 (S.D.N.Y. Sept. 19, 2012) (citing Amerada Hess Corp. v. Yuma Shipping Corp., No. 82 Civ. 2136 (JFK), 1985 WL 458, at *4 (S.D.N.Y. Mar. 27, 1985)) (concluding that partial summary judgment motion was premature because it sought an adjudication on damages prior to a determination of liability).

The relevant issue in Amerada Hess was whether-in order to facilitate settlement discussions-a bifurcated damages trial should precede the liability trial. 1985 WL 458, at *4. The court ruled that it should not, stating: "To ask the Court to hold a trial simply to facilitate settlement... is asking too much in view of the Court's crowded docket." Id. Here, Defendants are not seeking a full-blown trial on the setoff issue; they are seeking a ruling on that issue as a matter of law. In light of that distinction, this Court concludes that it is appropriate to rule on the damages issue presented in the Motion for Setoff notwithstanding the fact that there has been no determination of liability. Moreover, no party objects to the Court's ruling on the setoff issue, and doing so now is "in the interest of efficiency." Gowanus Indus. ...

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