1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE DISTRICT OF PUERTO RICO 3 4 TANIS MILICEVIC, 5 6 Plaintiff, 7 v. CIVIL NO. 22-1202 (HRV) 8 UNIVERSAL INSURANCE COMPANY, 9 Defendant. 10 11 12 MEMORANDUM AND ORDER 13 Pending before the Court is Universal Insurance Company’s (“Universal”) 14 “Motion for Disclosure of Settlement Agreement.” (Docket No. 119). Plaintiff, Tanis 15 Milicevic, former Defendant and Third-Party Defendant Liberty Mutual Insurance 16 17 Company (“Liberty”), District Hotel Partners, LLC (“DHP”)(previously Bayamón Hotel 18 Company or “BHC”), and Bluhost, LLC (previously known as IHE, LLC)(hereinafter the 19 “settling parties”), oppose Universal’s motion. (Docket Nos. 120, 124). 20 For the reasons set forth below, the motion is DENIED. 21 I. Brief Factual Background and Procedural History 22 23 On May 4, 2022, Plaintiff Tanis Milicevic commenced the instant diversity 24 jurisdiction action against BHC (subsequently substituted for defendant DHP) alleging 25 in sum and substance that due to BHC’s negligence, she suffered damages. (Docket No. 26 1). The original complaint specifically alleged that on June 12, 2021, Ms. Milicevic was 27 28 1 1 staying in a room at the Hyatt Place San Juan City Center, a hotel owned by BHC. (Id. at 2 2, ¶ 8). When she woke up that morning, she stepped onto the tile leading to the 3 bathroom and violently slipped resulting in severe physical injuries, including a 4 displaced femur fracture. (Id., ¶¶ 9,10). 5 BHC answered the complaint on July 6, 2022, generally denying liability and 6 7 asserting several affirmative defenses. (Docket No. 9). Following a failed attempt at 8 settlement (Docket No. 33), BHC filed third-party complaints against its insurance 9 companies Liberty and Universal pursuant to the direct-action provisions of the Puerto 10 Rico Insurance Code, 26 P.R. Laws. Ann. §§ 2001 and 2003. (Docket Nos. 38 and 47). 11 Subsequently, Liberty filed a crossclaim against Universal. (Docket No. 73). 12 13 On February 2, 2024, I denied a motion to dismiss filed by Liberty on statute of 14 limitations grounds. (Docket Nos. 46, 62). Universal also moved to dismiss the third- 15 party complaint against it for failure to state a claim. (Docket No. 69). Meanwhile, after 16 being granted leave to do so, Plaintiff filed an amended complaint on March 25, 2024. 17 (Docket No. 86). Among other things, the amended complaint added Liberty and 18 19 Universal as defendants under the direct-action statute. (Id.). 20 On May 23, 2024, the settling parties filed a joint “Stipulation of Dismissal with 21 Prejudice” in which they informed me that they had reached an agreement to partially 22 settle the case. (Docket Nos. 111). I noted the stipulation and entered partial judgment 23 accordingly. (Docket Nos. 112, 113). Pursuant to the partial judgment, the amended 24 complaint was dismissed as to the settling defendants. Also, under the partial judgment, 25 26 the third-party complaints against Liberty and Universal were dismissed as well as the 27 crossclaim by Liberty against Universal. (Docket No. 113). The dismissal of the third- 28 2 1 party complaint against it, mooted Universal’s motion to dismiss at Docket No. 69. (See 2 Docket No. 114). Universal currently stands as the only defendant remaining in the case. 3 Universal filed its motion for disclosure of settlement agreement on May 30, 2024. 4 (Docket No. 119). The settling parties jointly opposed said motion for disclosure on June 5 7, 2024. (Docket No. 120). In said opposition, they only agreed to include a selected 6 7 portion of the settlement agreement that outlines releases and waivers of liability. (Id.) 8 I ordered Universal to reply to the settling parties’ opposition addressing whether 9 the request had become moot in light of the information included in the filing at Docket 10 No. 120. (Docket No. 121). In compliance, Universal filed its reply on June 17, 2024, 11 arguing that its request to disclose the settlement agreement had not become moot and 12 13 reiterating its position that it is entitled to be provided an unredacted version of the 14 settlement agreement at issue. (Docket No. 123). Plaintiff responded to the motion in 15 compliance on June 23, 2024, and Universal filed a brief reply on June 25, 2024. (Docket 16 Nos. 124, 125). 17 II. Discussion 18 19 Universal argues that it is entitled to the disclosure of the complete settlement 20 agreement to determine the effects of said agreement on it, the only non-settling party, 21 as well as its own exposure. According to Universal, the partial disclosure made by the 22 settling parties failed to place it in a position to adequately assess the availability of 23 affirmative defenses and to determine whether the claims against it are precluded, if, for 24 instance, the settlement agreement completely extinguished the responsibility of its 25 26 insured DHP. Because Universal is not a tortfeasor but the insurer of a tortfeasor, it 27 contends that its liability is dependent on the liability of DHP, a party that it suspects has 28 3 1 been fully released from liability pursuant to the settlement agreement. Accordingly, 2 Universal maintains that it needs to review the “totality of the wording in the settlement 3 agreement, and the specific terms and scope of the release and waivers of liability 4 between plaintiff and the released defendants” (Docket No. 123 at 3) before it is required 5 to answer or otherwise move the Court. 6 7 Plaintiff responded that the settlement agreement, by its clear terms, did not 8 release Universal from liability under the direct-action statute. (Docket No. 124). Her 9 position is that she will still have to prove her case of liability and damages against the 10 Hotel but can only recover damages from Universal as the non-settling insurer of DHP 11 up to the limits of the insurance policy. Plaintiff does not dispute that Universal will be 12 13 able to raise all defenses the Hotel has against liability and the amount of damages. 14 Plaintiff also engages in the exercise of characterizing the case law cited by Universal as 15 either not applicable or distinguishable. 16 In reply, and even though she has unambiguously opposed the same (Docket No. 17 120), Universal claims that its request for disclosure of the settlement agreement “must” 18 19 be deemed unopposed by Plaintiff. (Docket No. 125). In any event, Universal reiterates 20 its request for full disclosure of the settlement agreement. 21 After careful consideration of the arguments presented, and the applicable law, I 22 find that Universal is not entitled to disclosure of the full confidential settlement 23 agreement. First, I note that as a matter of public policy, the confidentiality of settlement 24 agreements should be preserved to the extent possible. See Close v. Account Resolution 25 26 Servs., 557 F. Supp. 3d 247, 250 (D. Mass. 2021)(quoting Thomasian v. Wells Fargo 27 Bank, N.A., No. 03:12-cv-01435-HU, 2013 U.S. Dist. LEXIS 119554, 2013 WL 4498667, 28 4 1 at *2 (D. Or. Aug. 22, 2013)(“A ‘strong public policy favoring settlement of disputed 2 claims dictates that confidentiality agreements regarding such settlements not be lightly 3 abrogated.’”); see also Berkan v. Mead Johnson Nutrition Puerto Rico,Inc., 204 D.P.R. 4 183, 207 (2020)(noting Puerto Rico’s public policy in favor of settlements.). 5 Second, none of the cases cited by Universal hold that a non-settling co-defendant 6 7 is entitled, or has a right, to disclosure of a confidential settlement agreement to be able 8 to argue affirmative defenses and the extent of its liability. The cases cited by Universal 9 simply stand for the proposition that the intent of the parties to the settlement agreement 10 and the stipulated terms with respect to releases and waivers of liability, must be 11 considered by the Court (not the non-settling party) for their effect on the liability of a 12 13 non-settling co-defendant or tortfeasor. See Sagardia v. Hospital Auxilio Mutuo, 177 14 D.P.R. 484 (2009). 15 Further, Universal’s reliance on Rodriguez-Ramos v. Hospital Dr. Susoni, Inc., 16 186 D.P.R. 889 (2012) is misplaced. According to Universal, the Puerto Rico Supreme 17 Court “held that in light of partial settlement, the remaining defendants can and should 18 19 be granted an opportunity to review the terms of a confidential settlement agreement to 20 determine its effects in the judgment or their own exposure . . . .” (Docket No. 119 at 21 2)(emphasis ours). The case is also cited for the proposition that Universal has a “right 22 to review the terms of a confidential settlement agreement to determine its effects in the 23 judgment, defenses and own exposure” because the Supreme Court of Puerto Rico 24 supposedly concluded “that the co-defendant should have requested access to the 25 26 settlement agreements to determine their effect.” (Docket No. 123 at 8). That is not what 27 the case holds. 28 5 1 Relevantly, Ramos-Rodriguez v. Hospital Dr. Susoni, Inc., supra, addressed a 2 claim made by a co-defendant doctor in a medical malpractice action that the lower 3 courts erred in not requesting copies of the confidential settlement agreements reached 4 by two of the co-defendants. Id. at 902. The argument was that the amounts received by 5 the plaintiffs through those settlement agreements should be reduced from the damages 6 7 assessed against him. Id. In response, the plaintiffs opposed the disclosure of the 8 agreements and proffered that the agreements where of the kind endorsed by the Court 9 in Szendrey v. Hospicare, Inc., 158 D.P.R. 648 (2003), and that there was a release of 10 liability in both the internal and external relationship between the settling parties. 11 Rodriguez-Ramos v. Hospital Dr. Susoni, Inc., 186 D.P.R. at 902. 12 13 After a discussion of the relevant law regarding settlement agreements and their 14 potential effects on a non-settling co-defendant, the Court disposed of the controversy 15 by way of a procedural finding that the request for disclosure of the settlement 16 agreements (again, to the Court, not the co-defendant) was not properly before it since 17 the partial judgments at issue had become final and were not appealed. See id. at 902- 18 19 907. The Court specifically noted that to agree to the petition of requesting the signed 20 agreements to determine the effects that said agreements could have had over the 21 internal and external relation of the other defendants in solidarity would have the 22 simultaneous effect of reviewing a partial judgment that became final more than three 23 years prior. Id. at 906-07. And the trial Court had already adjudicated, through a final 24 judgment, that the portion received by the plaintiffs through the settlement agreements 25 26 did not have any effect over the damages to be imposed on the no-settling co-defendant. 27 Id. at 907. If the non-settling co-defendant wanted the trial court to review the 28 6 1 confidential settlement agreement, it should have so requested prior to the entry of the 2 partial judgment or appeal from said partial judgment. Id. By not doing so, he conceded 3 that the settling co-defendants be release from the internal and external relationship, 4 making the request to review the settlement agreements unavailing. Id. 5 The foregoing shows that the cited case does not hold that non-settling defendants 6 7 should be granted an opportunity to review themselves a confidential settlement 8 agreement to determine its effects and exposure. At most, the decision leaves the door 9 open for judicial review and consideration of confidential settlement agreements to 10 determine their effects, but the issue was not properly before the Court on procedural 11 and jurisdictional grounds. Here, Universal is not requesting that I review the settlement 12 13 agreement to determine its effects. Universal is claiming a categorical and unconditional 14 right to review the confidential settlement agreement itself. But the case law it cites does 15 not support its position. 16 Lastly, I find that the information already disclosed by the settling parties 17 regarding the release clauses in the agreement provides sufficient information to 18 19 Universal to be able to answer the allegations in the amended complaint and/or raise 20 affirmative defenses. The settling co-defendants have shared the portions of the 21 agreement that notify Universal who the released parties are. The information shared 22 also sheds light regarding the specific intent of the settling parties as to the type of release 23 as follows: 24 It is the specific intent of the PLAINTIFF to release the LIBERTY 25 RELEASED PERSONS of any and all liability arising from the Casualty and 26 Lawsuit, and such release will apply to the LIBERTY RELEASED PERSONS not only in the external relationship between PLAINTIFF and the LIBERTY 27 RELEASED PERSONS, but also in the internal relationship between joint 28 7 1 tortfeasors. Therefore, PLAINTIFF will absorb whatever portion of liability that may be assessed against the LIBERTY RELEASED PERSONS in the 2 future, if any. This means that the LIBERTY RELEASED PERSONS will 3 never have to pay the PLAINTIFF or any non-released joint tortfeasors or their insurers, or cross-claimants or third-party plaintiffs any amounts over 4 the amounts paid by virtue of this Agreement. The PLAINTIFF waives any right to collect any further amounts or sums (other than the one being paid 5 herein) from the LIBERTY RELEASED PERSONS based upon liability in solido. In other words, it is the express intention of the parties to this 6 Agreement that the LIBERTY RELEASED PERSONS will not pay any 7 compensation to anyone other than the compensation for damages in section 2.1, above. 8 (Docket No. 120 at 2-3). The settling parties made it a point to clarify in the agreement 9 10 that the release should not be interpreted as a release in favor of Universal. (Id. at 3). 11 As Universal acknowledges, the effects of an agreement to settle a claim against 12 one of several co-defendants depend on the terms of the agreement. See U.S. Fire Ins. 13 Co. v. AEE, 174 D.P.R. 846, 855 (2008). A plaintiff can release a co-defendant of all 14 responsibility, that is, in their external relationship as well as in the internal relationship 15 16 between co-defendants. Id. When this happens, the plaintiff assumes the portion of the 17 responsibility attributable to the released co-defendant. Id. at 855-56 (citing Szendrey v. 18 Hospicare, Inc., 158 D.P.R. at 656-659). 19 From the information provided by the settling parties, Universal knows that its 20 insured DHP has been released from liability and that the release applies to both the 21 external relationship between Plaintiff and DHP as well as the internal relationship 22 23 between the released co-defendants. It is also clear that the settlement agreement does 24 not intend to release Universal. “The release or discharge from liability granted by a 25 plaintiff to a codefendant and joint codebtor does not release the other joint tortfeasors 26 from liability for the damage when the intention of the parties in the settlement and 27 28 8 1 release agreement has thus acknowledged this fact.” Id. at 655 [58 Official Translation at 2 5-6] (citing P.R. Fuels, Inc. v. Empire Gas Co., Inc., 149 D.P.R. 691 (1999) and Merle v. 3 West Bend Co., 97 D.P.R. 403 (1969)). Simply put, Universal has all it needs to decide 4 what defenses to allege and what arguments to advance regarding its own liability as a 5 non-settling defendant vis a vis its status as the insurer of a released tortfeasor sued 6 7 under the direct-action statute. 8 III. Conclusion 9 In view of the above, the motion for disclosure of settlement agreement is 10 DENIED. Universal must answer the amended complaint or otherwise move the Court 11 by August 7, 2024. I am disinclined to grant extensions of this deadline absent 12 13 extraordinary circumstances. 14 IT IS SO ORDERED 15 In San Juan, Puerto Rico this 17th day of July, 2024. 16 S/Héctor L. Ramos-Vega 17 HÉCTOR L. RAMOS-VEGA UNITED STATES MAGISTRATE JUDGE 18 19 20 21 22 23 24 25 26 27 28 9