Covenant not to execute, like a release, defeats joint and several liability

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Maguire noted that the Tort Reform Act is in derogation of the common law and should be strictly construed. Since the statutory language providing that settlements eliminate joint and several liability refers only to “released” defendants, Maguire argued that the court should not infer that covenants not to execute have the same effect.

The Court of Appeals disagreed. The court noted that other Washington decisions have treated a settlement as synonymous with a release for purposes of joint and several liability.

Furthermore, "the settlement document in this case has the practical effect of releasing the defendants." It provides that the parties were settling for the purpose of avoiding the uncertainties and expense of litigation and that it was "intended to constitute a complete resolution of all claims by the plaintiffs against defendants Teuber and Hadsall." The covenant also stated that all contribution claims against the settling defendants would be extinguished.

The court also concluded that the statutory term “judgment” denotes an adverse ruling with actual, detrimental effects on the judgment debtor. A defendant who previously obtained a settlement with a covenant preventing execution of the judgment does not face those consequences, since the settlement constitutes a complete resolution of all claims.

The Maguire court reversed and directed the trial court to dismiss Teuber and Hadsall from the action.