Why Defendants Left Out of a Settlement May Remain on the Hook
When a lawsuit is between a plaintiff and multiple defendants, litigation can get especially complicated, meaning parties are incentivized to settle before trial. One or more defendants settling early can make the proceedings simpler for the remaining parties. But the defendants left to continue the lawsuit may face increased exposure.
A popular tool for settlements is called a “Pierringer Agreement.” Hallmarks of a Pierringer Agreement include:
- A party settles with the plaintiffs and exits;
- They pay only their share of the damages;
- The lawsuit continues against the non-settling defendants.[1]
A non-settling defendant may feel like a Pierringer Agreement is unfair, because that defendant may be ordered to pay a higher portion of damages awarded at trial. In the 2025 Cadieux v Cadieux decision [Cadieux], the Court of Appeal decided the Agreement’s promotion of the public interest outweighed the risks posed to non-settling parties.[2]
Why Cadieux v Cadieux was Upheld on Appeal
Cadieux involved a vehicle collision between Patrick Cadieux (“Mr. Cadieux”) and Scott Ray (“Mr. Ray”) that severely injured the plaintiffs, Mr. Cadieux’s two minor children. Mr. Cadieux and Mr. Ray were defendants, as was the City of Ottawa (“City”) for its negligent design of the intersection. Eleven years after the lawsuit started, the plaintiffs settled with the City.[3]
Mr. Ray objected to the settlement, arguing that without the City as a co-defendant, he could have to pay more damages in the event of the plaintiffs’ victory. If Mr. Cadieux was unable to fully pay his own share, Mr. Ray would have to provide the rest of the amount. He argued this was unfair because the City would pay instead of him had it remained a defendant.
However, both the motion judge and the Court of Appeal found that leaving non-settling parties with higher risk is an acceptable tradeoff in partial settlements, as it forwards the main objectives of Pierringer Agreements, to:
- compensate the plaintiff; and
- encourage settlement in multi-party litigation.[4]
The Court of Appeal also noted that the risk of any one defendant paying higher damages than another is consistent with the Negligence Act. Each party is responsible for contributing to the legal award and costs to the degree “in which they are respectively found to be at fault.”[5] One or more defendants bearing extra costs is allowed for the purpose of compensating the plaintiffs.
Pierringer Agreements Shield the Setting Defendant from Liability
A Pierringer Agreement benefits the settling defendant, who will only need to pay damages proportionate to their degree of fault.[6] Doing so also benefits the non-settling defendants, since the lawsuit against them remains limited to what they were responsible for. However, they can no longer demand that the settling defendant contribute to pay judgment, which in Cadieux meant Mr. Ray was left on the hook for covering Mr. Cadieux’s costs.
Mr. Ray argued that imposing this additional risk was unfair, as the damages payment should be proportionately shared. However, the Court affirmed that the plaintiffs being fully compensated was the main priority, and Mr. Ray’s fear was not prejudicial enough.[7]
When a Non-Settling Defendant Can Get out of the Lawsuit
Despite the increased financial risks Mr. Ray faced in Cadieux, his actual defence was not materially affected. By contrast, in Crestwood Preparatory College Inc. v. Smith, a non-settling defendant successfully moved to halt the lawsuit against him, as the plaintiff had settled with two other defendants without disclosing the agreement.[8] The failure to disclose the settlement was unfair enough to warrant stopping the case.
Disclosing major shifts in the parties’ relationships is vital to maintaining procedural fairness.[9] While subjecting non-settling defendants to higher risk is not itself unfair enough to deny a settlement agreement, a lawsuit can be halted if the agreement was not swiftly disclosed.
As one of multiple defendants, you may remain responsible when others settle, and it is not unfair to impose that additional risk on you. However, you can raise an issue where a settlement was done without proper transparency. If you have concerns about your rights and duties in multi-party litigation, Walker Law’s experienced litigation team is here to help. Please feel free to reach out for a consultation.
Tags: Appeals, Civil Litigation Law, and Negligence Liability & Regulation.
[1] Sable Offshore Energy Inc. v. Ameron International Corp. 2013 SCC 37.
[2] Cadieux v Cadieux, 2025 ONCA 405 [Cadieux].
[3] Cadieux at para 6.
[4] Cadieux at para 27.
[5] Negligence Act, R.S.O. 1990, c. N.1, at s.1.
[6] Cadieux at para 13.
[7] Cadieux at para 22.
[8] Crestwood Preparatory College Inc. v. Smith, 2021 ONSC 8036 [Crestwood].
[9] Crestwood at paras 79-81.