Legislation designed to encourage settlements in the lawsuit against Curt Schilling over the collapse of 38 Studios passed the Rhode Island House Tuesday, but not before prompting another debate about whether the state should pay for its failed investment in the video game company.
The measure aims to shield any defendant that settles in the case from lawsuits from co-defendants over damages for which that co-defendant is found liable. Supporters said that legal protection would be a big incentive for parties interested in settling the case.
The Economic Development Corp. approved a $75 million loan guarantee for 38 Studios in 2010. The agency, now renamed the Rhode Island Commerce Corp., sued the former Red Sox pitcher and 13 others after the company went bankrupt last year, claiming the EDC board was misled into signing off on the transaction. Schilling and the other defendants deny the charges. The state is on the hook for some $90 million.
During hearings on the bill, the agency's lawyer told lawmakers that he's had preliminary settlement talks with unidentified parties in the lawsuit and that the measure would help maximize financial recovery in the litigation.
The House passed the bill 53-16. The Senate has already passed its version of the bill. Final votes will send the legislation to Gov. Lincoln Chafee.
Discussion over the bill quickly turned into another debate over honoring the state's debts from the failed investment. As they did last year, several lawmakers argued that taxpayers shouldn't have to pay for the state's investment blunder.
Last year, lawmakers grudgingly approved a $2.5 million debt payment. Later this year they'll be asked to set aside $12.5 million for the next debt payment.
Rep. Charlene Lima, D-Cranston, suggested that debt payments should be limited to whatever money the state can recoup from the litigation a move which would prevent any taxpayer dollars from being used.
"It was a fiasco," she said of the 38 Studios investment. "The taxpayers should not pay."
Lima's amendment failed, but the debate is almost certain to return when lawmakers review the next debt payment in the state budget.