New York City Asbestos Litigation, In re

• Decision Date: 09 February 1993
• Parties: In re NEW YORK CITY ASBESTOS LITIGATION; Brooklyn Naval Shipyard Cases. Edward Ancewicz and Angela Ancewicz, .
• Court: New York Supreme Court — Appellate Division

Page 43

593 N.Y.S.2d 43

188 A.D.2d 214

In re NEW YORK CITY ASBESTOS LITIGATION; Brooklyn Naval

Shipyard Cases.

Edward Ancewicz and Angela Ancewicz, [and 24 other actions].

Supreme Court, Appellate Division,

First Department.

Feb. 9, 1993.

Steven J. Phillips, New York City, of counsel (Diane Paolicelli, Robert I Komitor, Alani Golanski, Moshe Maimon and Jerry Kristal, with him on the brief) Levy Phillips & Konigsberg and Greitzer & Locks, for plaintiffs-appellants.

Robert H. Riley, New York City, of counsel (Schiff Hardin & Waite, attorneys) for defendant-appellant-cross-appellant-respondent Owens-Illinois, Inc.

Andrew T. Berry, Newark, NJ, of counsel (Richard P. O'Leary, Kevin J. Connell, and E. Johanna Gibbon, with him on the brief, McCarter & English, attorneys) for defendant-appellant-cross-appellant-respondent Keene Corp.

Gordon & Silber, New York City, for defendant-appellant-cross-appellant-respondent Manville Corp. Asbestos Disease Compensation Fund.

Before SULLIVAN, J.P., and MILONAS, KUPFERMAN and RUBIN, JJ.

RUBIN, Justice.

This action involves approximately 600 cases arising out of exposure to asbestos at the Brooklyn Navy Yard. The asbestos was contained in products manufactured and distributed by some 40 named defendants. Trial was conducted utilizing the reverse bifurcation format and proceeded first on the question of damages, resulting in a jury verdict in excess of $73,000,000. A determination was then made as to which products contributed to injuries sustained by the individual plaintiffs and liability apportioned accordingly among the responsible defendants.

The main issue raised by this appeal is the credit to be given to the non-settling defendants for settlement agreements reached by other tortfeasors pursuant to General Obligations Law § 15-108. The statute provides: "(a) Effect of release of or covenant not to sue tortfeasors. When a release or a covenant not to sue or not to enforce a judgment is given to one of two or more persons liable or claimed to be liable in tort for the same injury, or the same wrongful death, it does not discharge any of the other tortfeasors from liability for the injury or wrongful death unless its terms expressly so provide, but it reduces the claim of the releasor against the other tortfeasors to the extent of any amount stipulated by the release or the covenant, or in the amount of the consideration paid for it, or in the amount of the released tortfeasor's equitable share of the damages under article fourteen of the civil practice law and rules, whichever is the greatest."

Defendants argue that "the statute speaks in the singular", requiring that the setoff for settlements be calculated individually, that is, on a defendant-by-defendant basis, allocating to each the greater of the dollar amount of the settlement or "the amount of the released tortfeasor's equitable share of the damages" pursuant to CPLR Article 14. Thus, defendants argue that the "aggregation method" of calculating offsets, advanced by plaintiffs, is inappropriate and that Supreme Court was entirely correct in refusing to apply it.

General Obligations Law § 15-108 is elegant in its conciseness of expression, reducing a potentially complex mathematical calculation to a few words. The shortcoming in the statute is that it expressly addresses the situation where a release "is given to one of two or more persons" (emphasis added) who are potentially liable to the plaintiff. It does not address the situation where the plaintiff settles with two or more tortfeasors (Williams v. Niske, 181 A.D.2d 307, 312, 586 N.Y.S.2d 942 lv. granted 186 A.D.2d 1099, 593 N.Y.S.2d 391). In view of the statutory omission, the courts are left to fashion an interpretation which is consistent with the object of the statute (McKinney's Consolidated Laws of N.Y., Book 1, Statutes § 96), while avoiding an absurd result (McKinney's Statutes § 145). The particular outcome which the cases have attempted to avoid is the reduction of a nonsettling defendant's liability to an amount which represents far less than his proportionate share of fault as determined by the trier of fact, in some cases "virtually exonerating the nonsettling defendant" (Williams v. Niske, supra, 181 A.D.2d at 309, 586 N.Y.S.2d 942).

As this court recently noted in Williams v. Niske (supra, at 311, 586 N.Y.S.2d 942), the preeminent object of the statute is to encourage settlement. Therefore, a construction which places a nonsettling defendant in an advantageous position vis-a-vis settling tortfeasors is to be avoided. The purpose of allowing a nonsettling defendant credit for releases obtained by settling defendants is merely to ensure that a tortfeasor who proceeds to verdict is not held responsible for more than his equitable share of the plaintiff's damages (Williams v. Niske, supra, at 310, 586 N.Y.S.2d 942) subject, of course, to the doctrine of joint and several liability. At the same time, the credit to be given to a nonsettling defendant should not be derived by a method which tends to undercompensate the plaintiff. That is, the plaintiff should receive the amount of his verdict reduced only insofar as the plaintiff has agreed to accept less in settlement than the share of damages attributable to the settling tortfeasors. A nonsettling defendant, however, should generally be required to contribute the full amount of his proportionate share of the damages, reduced only insofar as is required to preclude recovery by a plaintiff of more than the amount of the verdict.

Before analyzing the statute in light of these principles, two observations are in order. First, I proceed from the presumption that General Obligations Law § 15-108 can and should be uniformly applied to avoid inconsistent results (McKinney's Consolidated Laws of NY, Book 1, Statutes § 98) and to "yield equitable results consonant with the statute's purpose of promoting settlement" (Williams v. Niske, supra, at 312, 586 N.Y.S.2d 942). To this end, the plaintiff must be free from the misapprehension that settlement will be disadvantageous, and the defendant must be free from any illusion that, by proceeding to trial, exposure to liability may be greatly reduced. Second, although the parties in Williams apparently presented the issue as whether to credit the nonsettling defendant with the statutory value of settlements individually (defendant by defendant) or in the aggregate (id.), the method proposed by the defendant in that case is entirely inconsistent with the statute, whichever formulation is advocated. The result obtained in Williams should be the same whether reached by aggregating the settlements or applying them individually to the credit of the nonsettling defendant.

Cases involving verdict reduction calculations pursuant to General Obligations Law § 15-108 can be divided into two general categories, those in which the jury has allocated fault among all tortfeasors and those, such as Williams, in which the jury has apportioned fault only among certain nonsettling defendants. The determination of what constitutes a settling defendant's "equitable share" of the verdict within the contemplation of the statute is somewhat more involved in the latter instance, and care must be taken to avoid the pitfall into which the plaintiff in Williams became entrapped by the nonsettling defendant at the trial level.

In Williams, four tortfeasors settled with the plaintiff prior to trial for a total of $900,000. While the jury was deliberating, two additional settlements were reached, one for $100,000 and the other on a high/low basis for $100,000 up to $400,000 to ensure a combined recovery of at least $500,000 against that defendant and the remaining (nonsettling) defendant, Billy the Kid, Inc. The jury returned a verdict of $2,600,000, apportioning fault only among the three defendants who proceeded to trial and finding the nonsettling defendant Billy the Kid, Inc. 35% liable and the other two defendants 65% liable. Billy the Kid, Inc., taking liberty with both mathematical and legal theory, contended that its statutory liability was a mere $10,000. It proposed that the total verdict ($2,600,000) should first be reduced by 65%, representing the "equitable share" attributable to the settling tortfeasors ($1,690,000), to yield a remaining liability of $910,000 to be borne by the three defendants who proceeded to trial. It then proposed that the remaining liability be reduced by the amount of the pre-trial settlements ($900,000) to arrive at its own asserted liability for damages of $10,000. The argument has a superficial plausibility, and Billy the Kid, Inc. was successful in limiting the judgment entered against it to this nominal amount.

The fault in this reasoning is that it seeks to offset against liability determined on the basis of the net verdict (the verdict less the amount of pre-trial settlements) a credit calculated on the basis of the gross verdict. It seeks to obtain credit for 65% of $2.6 million while liability is determined as 35% of only $1.7 million. This methodology is both illogical and mathematically indefensible. Inherent in the concept of percentage is the requirement that the total (100%) add up to a single figure of which the percentages each comprise a part. Obviously, 65% of $2,600,000 (the gross verdict) for which Billy the Kid, Inc. sought credit, when added to 35% of $1,700,000 (its equitable share of the verdict as ultimately determined by the jury) does not add up to either figure (the actual result is $2,285,000). To yield a valid result, the defendant's liability for damages and the credit received for that portion of damages contributed by settling tortfeasors must be calculated using the same principal sum.

Nor is the methodology advocated by Billy the Kid, Inc. consistent with the plain language of the statute. An amount given for a release "reduces the claim of the releasor against the other tortfeasors " (General...