On Wednesday legislation was introduced in the Rhode Island General Assembly that would resolve the the $75 million loan guarantee to 38 Studios and subsequent debt when the company defaulted on the loan and filed for bankruptcy in 2012. The proposal, which was submitted at the request of Governor Lincoln Chafee's administration, deals with Chapter 42-64-40 of the state's General Laws, which covers "court-approved settlements."
The bill states that "a person, corporation, or other entity who has resolved its liability to the Rhode Island Commerce Corporation in a judicially approved good faith settlement is not liable for claims for contribution or equitable indemnity regarding matters addressed in the settlement."
The proposal also contains language that applies exclusively to "The Rhode Island Economic Development Corporation Job Creation Guaranty Program Taxable Revenue Bond (38 Studios, LLC Project) Series 2010."
The bill defines a "good faith settlement" as one that "does not exhibit collusion, fraud, dishonesty, or other wrongful or tortious conduct intended to prejudice the non- settling tortfeasor(s), irrespective of the settling or non-settling tortfeasors' proportionate share of liability."
The bill's House and Senate sponsors say that similar proposals were used in the settlements of two other very significant cases in Rhode Island's history; litigation that arose after the state's banking crisis in the 1990s and the Station Nightclub fire in 2003.
"The legislation encourages settlement," Senate Judiciary Committee Chairman Michael McCaffrey, D-Warwick, said in a statement. "It provides that those defendants entering good faith, judicially-approved settlements would not be liable for claims from co-defendants for contribution or equitable indemnity regarding matters addressed in the settlements. The finality of the litigation without fear of a contribution claim from a co-defendant provides an inducement to settle."
"The bill is specific only to the 38 Studios lawsuit and is done to encourage a settlement," said House Judiciary Chairwoman Edith Ajello (D-Providence), in a separate statement. "The bill makes it clear that the credit to the non-settling defendants is limited to the amount of money paid by the settling defendants. It eliminates the uncertainty of determining what the percentage of fault is among all the defendants, which may not be determined for many years in the event of a jury trial."
Source: Providence Journal