Anderson v. SAM AIRLINES

• Decision Date: 31 July 1996
• Docket Number: No. 94 CV 1935.,94 CV 1935.
• Citation: 939 F. Supp. 167
• Parties: Lisa J. ANDERSON, as Executrix and Personal Representative of the Estate of J. Martin Anderson, deceased, Plaintiff, Deborah Housworth, as Guardian ad Litem of Bradley Anderson, the only child of J. Martin Anderson, Intervenor-Plaintiff, v. SAM AIRLINES, fka, Sociedad Aeronautica De Medellin Consolidada S.A., Avianca Airlines, fka, Aerovias Nacionales De Colombia, S.A. Avianca, Inc., Defendants.
• Court: U.S. District Court — Eastern District of New York

939 F. Supp. 167

Lisa J. ANDERSON, as Executrix and Personal Representative of the Estate of J. Martin Anderson, deceased, Plaintiff Deborah Housworth, as Guardian ad Litem of Bradley Anderson, the only child of J. Martin Anderson, Intervenor-Plaintiff, v. SAM AIRLINES, fka, Sociedad Aeronautica De Medellin Consolidada S.A., Avianca Airlines, fka, Aerovias Nacionales De Colombia, S.A. Avianca, Inc., Defendants.

No. 94 CV 1935.

United States District Court, E.D. New York.

July 31, 1996.

Milton G. Sincoff, Kreindler & Kreindler, N.Y., N.Y., for Lisa J. Anderson.

Barry Staples, Marietta, GA, for Deborah Housworth.

Michael J. Holland, Condon & Forsyth, New York City, for defendants.

CORRECTED MEMORANDUM & ORDER

KORMAN, District Judge.

This is a wrongful death action arising out of the crash of a SAM Airlines plane in Colombia, South America, that killed J. Martin Anderson. The decedent is survived by his wife Lisa Anderson and his thirteen-year-old son by a previous marriage, Bradley Anderson. Prior to the accident, the decedent lived in North Carolina with Mrs. Anderson and her son from a previous marriage. Bradley Anderson, who suffers from autism, resides with his mother, Deborah Housworth, in Georgia.

This action was brought pursuant to the Warsaw Convention by Mrs. Anderson as a representative of the decedent's estate. After agreeing to a $2 million settlement with the defendants, Mrs. Anderson filed a motion asking for an order applying federal common law, rather than North Carolina law, to the allocation of the settlement proceeds. Under a North Carolina statute, N.C.Gen.Stat. § 28A-18-2 (1995), recoveries in wrongful death actions are allocated according to the provisions of the intestacy statute, which in turn accord equal shares to a widow and an only child.

The motion papers are not clear about the degree to which the settlement was contingent on the outcome of the motion. Counsel for Mrs. Anderson initially stated that the settlement was reached "on condition this Court determines the amount to be paid to each beneficiary based on the applicable law." Pl. Lisa Anderson's Mem. of Law at 1. Counsel further indicated that "determination of the choice of law issue raised by this motion will resolve the present impasse." Id. Defendants, however, characterized the agreement as "subject to an apportionment of the settlement monies by this Court among the claiming beneficiaries." Defs.' Mem. of Law at 3. Indeed, this description was later accepted by counsel for Mrs. Anderson. See Pl. Lisa Anderson's Reply Mem. of Law at 4. The difference between these accounts, if any, leaves unclear whether the parties had agreed that I should apportion the settlement, or were asking me to decide a choice of law question in order to facilitate settlement.

While I tentatively concluded that federal common law would apply, nevertheless, it also became clear that the resolution of the choice of law issue would not result in a settlement of the case. Accordingly, I granted Mrs. Anderson's application to try the issue of damages first. The parties then proceeded to take discovery, which consisted mainly of deposing the family of Bradley Anderson, and then agreed upon a distribution of the proceeds of the settlement. By the time a compromise order was submitted for my approval in the spring of 1995, the defendants had increased their offer to $2.15 million, of which Mrs. Anderson would receive $1,850,000 and Bradley would receive $300,000. In other words, Mrs. Anderson had agreed to allocate $150,000 of the original $2 million settlement — equal to 7.5% — to Bradley and defendants had agreed to contribute $150,000 in additional funds. Even when viewed in the context of the total $2.15 million settlement, Mrs. Anderson's projected share of the recovery would exceed 86%.

According to counsel for Mrs. Anderson, the justification offered for this uneven distribution, with which I informally agreed, could be found in federal common law. Indeed, the compromise order submitted in April of 1996, included a request that I "order" that "the settlement, including distribution, is under federal common law and not the law of North Carolina." The legal basis for this conclusion, according to counsel for Mrs. Anderson, was squarely established in In re Air Disaster at Lockerbie, Scotland, 928 F.2d 1267 (2d Cir.) ("Lockerbie I"), cert. denied, 502 U.S. 920, 112 S.Ct. 331, 116 L.Ed.2d 272 (1991). According to Mrs. Anderson's earlier papers for the choice of law motion, Lockerbie I stood for the proposition that "federal law exclusively governs and preempts state law in international aviation disasters such as the one at bar" and provides only for "actual damages." Pl. Lisa Anderson's Mem. of Law at 1. The bulk of such damages would be calculated based on the loss of economic support, although other bases of recovery would also be available. Because the decedent was legally obligated to support Mrs. Anderson for life but obligated to provide for his son only until he reached age eighteen, counsel for Mrs. Anderson argued, "in this case, the widow would receive substantially more than the child." Pl. Lisa Anderson's Mem. of Law at 1.

Even accepting this proffered basis for distributing the settlement, I was concerned that Bradley's $300,000 share of the settlement was unacceptably low. Particularly significant was its failure to take sufficiently into account the fact that Bradley's autism would render him incapable of financial independence as an adult. Indeed, Bradley's share was precisely equal to the $300,000 that Mrs. Anderson was prepared to set aside for her son by a prior marriage, for whom the decedent provided financial support and who would achieve emancipation at the usual age. After Mrs. Housworth indicated that she would agree to a settlement that would increase Bradley's share to $355,000, and after conferring with her, I indicated that I would approve such a settlement. The defendants agreed to contribute half of the additional $55,000, but Mrs. Anderson declined to do so.¹

Mrs. Anderson's refusal to reduce her $1.85 million share by $27,500 necessitated another status conference, which was held on Wednesday, July 24, 1996. At the conference, I observed that there were two disputes here: one between the plaintiffs and the defendants as to the amount of the damages and a second between the plaintiffs inter se as to how that amount should be divided. From the representations contained in the application to approve the settlement, it appeared that a total recovery of $2,177,500 was reasonable and was acceptable to Mrs. Anderson. While it was substantially less than the economic and other damages suffered by Mrs. Anderson and Bradley Anderson, it reflected the extraordinary difficulty of proving the gross negligence necessary to overcome the $75,000 limitation of liability imposed by the Warsaw Convention. See Co-Plaintiff Anderson's App. For Settlement ¶ 5 ("I have been advised that during the 60 year history of this Treaty, in only eight cases have plaintiffs been successful in evading the damage limitation by proving wilful misconduct.").

Because Mrs. Anderson appears here as "a trustee in respect to the fund she may recover for the benefit of those entitled eventually to receive it," Estate of Below, 12 N.C.App. 657, 660, 184 S.E.2d 378, 381 (Ct. App.1971), she was obligated to accept that amount rather than hold the estate hostage in order to obtain the agreement of the beneficiaries of the recovery to the division of the settlement that she desired in her personal capacity. If need be, a neutral person could be appointed as the representative of the estate to determine whether the case against the defendants should be settled for $2,177,500. See Gardner v. Parson, 874 F.2d 131, 138 (3d Cir.1989); cf. Austin Wakeman Scott, Abridgement of the Law of Trusts § 187.1, at 369 (1960) ("Where the trustee commits or threatens to commit a breach of trust by an abuse of his discretion ... the court may ... direct the trustee to act where his failure to act is an abuse of discretion; or ... remove him as trustee....").

If the dispute between the plaintiffs and the defendants was resolved, the dispute between the plaintiffs inter se as to the division of the amount could be resolved by the trier of fact. Alternatively, the $27,500 shortfall could be bridged by reducing the award of fees to Mrs. Anderson's counsel. The reduction would be justified in part because there was no basis for him to claim a contingency fee on the first $75,000 of the settlement, to which the estate would automatically have been entitled, and because, although he was retained to represent Mrs. Anderson in her fiduciary capacity as the representative of the estate of J. Martin Anderson, he actually represented the potentially conflicting personal interest of Mrs. Anderson.²See Murray v. Beard, 102 N.Y. 505, 509, 7 N.E. 553, 555 (1886) (holding that agent forfeits fee when he accepts duties that are "conflicting and incapable of faithful performance by the same person"); Musico v. Champion Credit Corp., 764 F.2d 102, 112-14 (2d Cir.1985) (holding that agent forfeits fees for improperly performed tasks); Viventi v. Cap'n Rick Corp., 525 F.Supp. 31, 35 (S.D.N.Y.1981) (reducing fee because "it was improper for attorney to represent each claimant with respect to the division of the settlement fund"), aff'd 685 F.2d 423 (2d Cir.1982), and aff'd sub nom. Shapiro v. Fuchsberg & Fuchsberg, 685 F.2d 426 (2d Cir.1982), and aff'd sub nom. Viventi v. Cap'n Rick Corp., 685 F.2d 428 (2d Cir.1982).

I gave counsel an opportunity to persuade me why these alternatives should not be pursued. Near the end of an extensive two-hour conference, Mrs. Anderson's counsel alluded to the holding of the Supreme Court in Zicherman v. Korean Air Lines Co., ___ U.S. ___, ___, 116 S.Ct. 629, 636, 133 L.Ed.2d 596 (1996). Reading the case while the parties were still before me, I...