Boyle v. Texasgulf Aviation, Inc., 82 Civ. 4997
| Decision Date | 06 October 1988 |
| Docket Number | No. 82 Civ. 4997,82 Civ. 0816,83 Civ. 3640,82 Civ. 3913 and 82 Civ. 3912.,82 Civ. 4997 |
| Citation | 696 F. Supp. 951 |
| Parties | Constance A. BOYLE, Individually and as Administratrix of the Estate of Robert J. Boyle, Deceased, Plaintiffs, v. TEXASGULF AVIATION, INC., Defendants. TEXASGULF AVIATION, INC., Third-Party Plaintiff, v. COLT ELECTRONICS, CO., INC., Phoenix Aerospace, Inc., The Garrett Corporation, Lockheed Corporation, and The United States of America, Third-Party Defendants. The GARRETT CORPORATION, Fourth-Party Plaintiff, v. TEXASGULF, INC., Fourth-Party Defendant. MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Executor Under the Will of Charles F. Fogarty, Deceased, Plaintiff, v. TEXASGULF AVIATION, INC., Defendants. MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Executor Under the Will of Charles F. Fogarty, Deceased, Plaintiff, v. The GARRETT CORPORATION, Colt Electronics, Co., Inc., Phoenix Aerospace, Inc., and Lockheed Corp., Defendants. Mary L. McKEE, As Executrix Under the Will of Gordon N. McKee, Deceased, Plaintiff, v. COLT ELECTRONICS, CO., INC., Phoenix Aerospace, Inc., The Garrett Corporation and Lockheed Corporation, Defendants. The GARRETT CORPORATION and Lockheed Corporation, Third-Party Plaintiff, v. TEXASGULF, INC. and Texasgulf Aviation, Inc. Third-Party Defendants. Mary V. DREW, As Executrix Under the Will of Clarence E. Drew, Deceased, Plaintiff, v. COLT ELECTRONICS, CO., INC., Phoenix Aerospace, Inc., The Garrett Corporation and Lockheed Corporation, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Speiser & Krause, P.C., New York City (Frank H. Granito, Jr., of counsel), for plaintiff Boyle.
Kreindler & Kreindler, New York City (Milton G. Sincoff, of counsel), for plaintiff Morgan Guar.
Whitman & Ransom, New York City (John M. Newell, of counsel), for plaintiffs Drew and McKee.
Siff, Rosen & Parker, New York City (Ignatius John Melito, of counsel), for Texasgulf, Inc. and Zurich Ins. Co.
These related cases (the "Texasgulf cases") are beginning to run like a bad Jaws sequel: "Just when you thought it was safe to close the Texasgulf files ..." With this decision, however, we may finally be able to put an end to the litigation spurred by the tragic 1981 crash of a corporate aircraft at Westchester County Airport.
On February 11, 1981, a corporate airplane owned and operated by Texasgulf Aviation, Inc. ("TGA"), a wholly-owned subsidiary of Texasgulf, Inc. ("Texasgulf"), crashed near Westchester County Airport, killing its two man crew and six passengers. The six passengers were all employees of Texasgulf.
The estates of the crash victims instituted actions under New York's wrongful death statute, N.Y. Est. Powers & Trust Law 5-4.3 (McKinney 1981). The cases were consolidated and were tried in this court. The factual and procedural histories of these cases are fully delineated in Woodling v. Garrett Corp., 813 F.2d 543 (2d Cir.1987); Morgan Guaranty Trust Co. v. Texasgulf Aviation, Inc., 604 F.Supp. 699 (S.D.N.Y.1985); Texasgulf, Inc. v. Colt Electronics Co., 615 F.Supp. 648 (S.D.N.Y. 1984); Gregory v. Garrett Corp., 589 F.Supp. 296 (S.D.N.Y.1984), aff'd in part and vacated in part, 813 F.2d 543 (2d Cir.1987).
These cases were tried in two separate jury trials; the first relating to affirmative defenses, including a workers' compensation defense, and the second concerning basic liability. The jury found that TGA was not a division of Texasgulf, and, accordingly, it could not assert a workers' compensation defense against the passengers who were employed by Texasgulf. The liability of the various defendants found responsible was apportioned as follows: Texasgulf Aviation 70%; Garrett Corp. 20%; Phoenix Aerospace 5%; and Colt Electronics 5%. Thereafter, some of the cases were tried separately as to damages and some were settled.
On January 13, 1987, a jury rendered a judgment in favor of the Boyle estate in the amount of $1,312,000. Appeals and cross-appeals were filed. While appeals were pending, the plaintiffs in Boyle reached a settlement with defendants Garrett, Phoenix and Colt whereby, in lieu of appeal, those defendants agreed to pay in full their apportioned share (30%) of the judgment, or $393,600. The settlement was so ordered by the Second Circuit and the case remanded to this court for "fixing of any workers' compensation lien." Boyle v. Texasgulf Aviation, Inc., Nos. 87-7136, 87-7170, 87-7172 (2d Cir. June 29, 1987).1 Thereafter, Boyle entered into settlements with the remaining defendants, leaving only questions of the workers' compensation liens unresolved.
The sole remaining issue in this tortured litigation, therefore, is finally before this court. We are presented herein with plaintiff Boyle's motion to extinguish, or in the alternative to reduce, the worker's compensation lien of the Zurich-American Insurance Companies in accordance with New York law. This motion is countered by Texasgulf's cross-motion to amend the pleadings to allow Texasgulf to join the action as a plaintiff and to apportion damages pursuant to Connecticut law, and corresponding motions directed towards plaintiffs Morgan Guaranty, Drew and McKee.
It is incumbent upon a federal court exercising diversity jurisdiction to apply the choice of law principles of the forum state. Klaxon v. Stentor Electric Mfg. Co., 313 U.S. 487, 496-97, 61 S.Ct. 1020, 1021-22, 85 L.Ed. 1477 (1941); O'Connor v. Lee-Hy Paving Corp., 579 F.2d 194, 205 (2d Cir.), cert. denied, 439 U.S. 1034, 99 S.Ct. 638, 58 L.Ed.2d 696 (1978). It is the law of this state that the rights of an employer and its insurance carrier to be reimbursed for workers' compensation benefits paid to an employee are governed by the law of the state in which the benefits were paid, here Connecticut. See Liberty Mutual Ins. Co. v. Borsari Tank Corp., 248 F.2d 277, 282 (2d Cir.1957). This is also the position of the Restatement (Second) of Conflict of Laws § 185 (1971) which states:
The local law of the state under whose workmen's compensation statute an employee has received an award for an injury determines what interest the person who paid the award has in any recovery for tort or wrongful death that the employee may obtain against a third person on account of the same injury.
This rule applies notwithstanding that the substantive issues of the employee's tort action are governed by the law of a state other than the state where the compensation benefits were paid. Boyer v. Travelers Indemnity Co., 280 F.2d 289, 291 (6th Cir.1960). This court has previously determined that the worker's compensation issues in this litigation — to the extent they involve the Connecticut residents who have joined in this motion — are governed by Connecticut law, Gregory v. Garrett Corp., 578 F.Supp. 871, 886 (S.D.N.Y.1983), and the parties conceded at oral argument that Connecticut law properly controls the issue before this court. We hold, therefore, that Connecticut's workers' compensation laws govern the compensation lien issues herein. Accordingly, plaintiffs' motion to set the lien in accordance with New York law is denied.
The next issue before the court is whether Texasgulf may properly amend the pleadings at this stage of the litigation to have the compensation lien set under Connecticut law. Texasgulf so moves because Connecticut law permits recovery by the employer without deducting the employer's proportionate share of litigation costs. Conn.Gen.Stat. § 31-293 (). Questions remain, however, as to whether Texasgulf may seek recovery under this statute at this late stage of the litigation.
The text of the statute, which is ambiguously worded, at best, provides in pertinent part:
When any injury for which compensation is payable under the provisions of this chapter has been sustained under circumstances creating in some other person than the employer a legal liability to pay damages in respect thereto, the ... injured employee may proceed at law against such person to recover damages for such injury; and any employer having paid, or having become obligated to pay, compensation under the provisions of this chapter may bring an action against such other person to recover any amount that he has paid or has become obligated to pay as compensation to such injured employee. If either such employee or such employer brings such action against such third person, he shall forth-with notify the other, in writing, by personal presentation or by registered or certified mail, of such fact and of the name of the court to which the writ is returnable, and such other may join as a party plaintiff in such action within thirty days after such notification, and, if such other fails to join as a party plaintiff, his right of action against such third person shall abate. In any case in which an employee brings an action against a third party in accordance with the provisions of this section, and the employer is a party defendant in such action, the employer may join as a party plaintiff in such action. The bringing of such action against an employer shall not constitute notice to such employer within the meaning of this section.
The Connecticut legislature has left much to be desired in the drafting of this statute. For an employer to seek reimbursement for workers' compensation payments made to the employee, it must either sue the tortfeasor or intervene as a plaintiff in the employee's suit against the same party. Intervention is permitted only within thirty days after formal notification of the action by...
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