Mary Carter Agreement in United States

The Florida Supreme Court defined a Mary Carter agreement as ‘a contract by which one co-defendant secretly agrees with the plaintiff that, if such defendant will proceed to defend himself in court, his own maximum liability will be diminished proportionately by increasing the liability of the other co-defendants.’ Id. at 387.

When the Florida Supreme Court finally addressed Mary Carter agreements, it noted their potential to skew the trial process and thus established supervisory guidelines to limit their ill effects. See Ward v. Ochoa, 284 So. 2d 385 (Fla. 1973). Under such an agreement, the liability of the settling defendant is limited and the plaintiff is guaranteed a minimum recovery; the settling defendant remains a party to the pending action without disclosing the full agreement to the nonsettling defendant and/or the judge and jury; and if judgment against the non-settling defendant is for more than the amount of settlement, any money collected will first offset the settlement so that the settling defendant may ultimately pay nothing. Banovz v. Rantanen, 271 Ill.App.3d 910, 913-14, 649 N.E.2d 977 (5th Dist.1995).

Mary Carter agreements give the settling defendant a financial stake in the outcome, which distorts the adversarial process when the settlement is kept from the jury. Most courts do not allow them. Some courts allow such agreements if the court concludes that it was in good faith and the jury is informed of the agreement. In People v. Trin Trung Ngo, 1996 WL 609562 (Cal. Sup. Ct. Oct. 24, 1996) the court held that settling defendants under ‘Mary Carter’ agreements may appear as litigants at trial The San Diego division of the Fourth Appellate District Court of Appeal has ruled that the trial court may allow settling defendants to participate in the trial. The settling defendants stood to gain from the plaintiffs’ success at trial. California Code of Civil Procedure section 877.5 recognizes sliding scale settlements, but requires disclosure to the court and to the non-settling parties. If a settling defendant testifies at trial, the court may tell the jury enough about the agreement to reveal possible bias.

Source: Deans law dictionary