January 27, 2025
One of the foundational lessons taught in law school is that evidence regarding settlements is generally inadmissible. Many lawyers go through their careers believing this is a rule without exceptions. Many lawyers carry this belief throughout their careers, assuming it to be an unyielding rule. However, New York law presents a significant exception to this principle. Under New York’s statutory framework, a witness can be cross-examined about a settlement to demonstrate bias. This potential for cross-examination should be carefully considered before deciding to settle with only one of multiple co-defendants.
The prohibition against admitting evidence of settlement negotiations in New York is codified in CPLR 4547. This statute bars the admission of evidence related to offering or accepting a settlement to establish liability or the appropriate amount of damages. Nevertheless, CPLR 4547 includes a crucial exception: “Furthermore, the exclusion established by this section shall not limit the admissibility of such evidence when it is offered for another purpose, such as proving bias or prejudice of a witness, negating a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution” (CPLR 4547 [emphasis added]). By its text, the statute permits the cross-examination of a settling defendant about the settlement to reveal bias or prejudice.
This happened in Hill v Arnold (226 AD2d 232 [1st Dept 1996]). In that case, the plaintiff settled her malpractice claim against the hospital but not against one of her treating physicians. At trial, the plaintiff called a nurse from the hospital to testify. The physician sought to cross-examine the nurse on the settlement and, by merely asking whether the hospital settled the claims against it, the trial court granted a mistrial and sanctioned the physician’s attorney. On appeal, the Appellate Division held that the question was permissible. More specifically, the First Department held “[s]ince nurse Walker clearly had a motive to exonerate herself and her employer from wrongdoing in their treatment of plaintiff, it was error to exclude counsel’s cross-examination question as to the hospital’s prior settlement” (Hill, 226 AD2d at 233).
The Second Department reached the same conclusion in Pretto v Leiwant (80 AD2d 579 [2d Dept 1981]). In that case, the trial court prevented a settling defendant from cross-examining a passenger in the plaintiff’s car who previously settled his case against the defendant. The court held “[i]t is permissible to establish on cross-examination that an adversary witness has settled a claim against the party calling him to testify to show bias” (Pretto, 80 AD2d at 579).
Another concern about settling a claim against only one defendant stems from General Obligations Law § 15-108. Under that statute, the non-settling defendant can elect the offset they receive due to the settlement. The non-settling defendant can take the higher offset of the dollar amount paid or reduce the verdict by the percentage of fault apportioned to the settling plaintiff. The admissibility of the settlement by the former defendant presents added risk to the 15-108 analysis. Cross-examination on this topic could allow the non-settling defendant to argue that the settling defendant is not credible, which could increase the percentage of fault the jury assigns to the settling defendant, further reducing the plaintiff’s recovery.
Settling with fewer than all defendants creates strategic issues that warrant consulting with appellate counsel to shape trial strategy, mitigate risks, and potentially achieve a global settlement without a full trial. The Law Offices of Seth M. Weinberg, PLLC has extensive experience with these complex issues and can serve as a valuable partner in ensuring the best outcome for your cases.