Morgan Guar. Trust Co. of NY v. Garrett Corp.

• Decision Date: 06 January 1986
• Docket Number: 82 Civ. 3640(GLG).,No. 82 Civ. 0816(GLG),82 Civ. 0816(GLG)
• Citation: Morgan Guar. Trust Co. of NY v. Garrett Corp., 625 F. Supp. 752 (S.D. N.Y. 1986)
• Parties: 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. MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Executor Under the Will of Charles F. Fogarty, Deceased, Plaintiff, v. TEXASGULF AVIATION, INC., Defendant.
• Court: U.S. District Court — Southern District of New York

625 F. Supp. 752

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.

MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Executor Under the Will of Charles F. Fogarty, Deceased, Plaintiff, v. TEXASGULF AVIATION, INC., Defendant.

Nos. 82 Civ. 0816(GLG), 82 Civ. 3640(GLG).

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

January 6, 1986.

Kreindler & Kreindler, New York City, for plaintiff; Milton G. Sincoff, Steven R. Pounian, of counsel.

Townley & Updike, New York City, for Texasgulf Inc. and Texasgulf Aviation, Inc.; Frederick D. Berkon, of counsel.

Perkins, Coie, Stone, Olsen & Williams, Seattle, Wash., for defendant Garrett Corp.; Sherilyn Peterson, Keith Gerrard, of counsel.

Haight, Gardner, Poor & Havens, New York City, for defendants Garrett, Colt, and Phoenix; Randal R. Craft, Jr., of counsel.

OPINION

GOETTEL, District Judge:

The plaintiff moves for reargument or reconsideration of this Court's May 8, 1985, decision regarding the admissibility of certain evidence. The plaintiff also moves for the application of Connecticut law to the issue of damages. For the reasons stated below, we deny the motion to reargue or reconsider and decline to apply Connecticut law to the issue of damages.

I. BACKGROUND

These two actions, and numerous others, arise from the tragic crash of a private aircraft near the Westchester County Airport in February 1981. All six passengers and two crew members died in the accident.¹ The plaintiff, Morgan Guaranty Trust Company of New York ("Morgan"), is the executor of the estate of Charles F. Fogarty ("Fogarty"), one of the six passengers. Fogarty and his fellow passengers were employees of Texasgulf Inc. ("Texasgulf"), a Texas corporation with its principal place of business in Connecticut. The two crew members were employed by Texasgulf Aviation, Inc. ("TGA"), a Delaware corporation with its principal place of business in New York. TGA, which owned and operated the aircraft, is a wholly-owned subsidiary of Texasgulf.²

Texasgulf and TGA filed the initial action in this district, seeking damages for loss of the aircraft, against the corporations that designed, manufactured, sold, installed, maintained, or inspected the critical components whose failure partially caused the crash. These defendants (hereinafter referred to collectively as the "product defendants") were (1) Lockheed Corporation ("Lockheed"), which designed and manufactured the airplane that crashed; (2) Phoenix Aerospace, Inc. ("Phoenix"), an Arizona corporation that designed and manufactured certain equipment whose malfunction was partially responsible for the plane crash; (3) Colt Electronics Co. ("Colt"), a Kansas corporation that adapted the Phoenix equipment for use in the aircraft that crashed; and (4) The Garrett Corporation ("Garrett"), a California corporation, whose division, AiReasearch Aviation Company, located in Islip, New York, installed the equipment on the aircraft.

Shortly thereafter, the estates of the six passengers filed wrongful death actions in the Southern District of New York against the product defendants and TGA. The crew members' estates brought similar actions against Texasgulf and the products defendants.³ The product defendants impleaded Texasgulf and TGA, asserting claims for contribution, in suits in which one or the other had not been sued directly. All the suits were consolidated for purposes of determining liability but not damages.

Texasgulf and TGA moved for summary judgment on two grounds. First, they contended that, as employers, they were immune from both direct and indirect claims under pertinent workers' compensation laws. Second, they asserted that six plaintiffs had signed releases, relieving Texasgulf and TGA of any tort liability or liability for contribution.

In deciding the summary judgment motion on the immunity issue, the Court was initially faced with a choice of law question. New York had an interest in applying its law since, in addition to being the forum state, it was also the site of the crash and much of the conduct precipitating it. The states of Connecticut and North Carolina had an interest in applying their law since two of the decedents were North Carolina domiciliaries and the others, including Fogarty, were Connecticut domiciliaries. After full consideration of New York's choice of law rules, we applied New York law, concluding as follows:

A New York court, confronted with a tort claim based upon events and conduct occurring primarily in New York and knowing the striking stand taken in Dole v. Dow Chemical Co., 30 N.Y.2d 143, 282 N.E.2d 288, 331 N.Y.S.2d 382 (1972) on the issue of third party contribution, a position diametrically opposed to that of the majority of states, would have no hesitation in applying New York law here. Not to do so would be to undermine one of the primary purposes of New York's rule, that is to deter tortious conduct by attributing liability and damages among joint tortfeasors in proportion to their relative responsibility for injuries and losses, regardless of whether one of the tortfeasors happens to be an employer. This rule after all is one that implements the "tort policy goals of deterrence, equitable loss sharing by all wrongdoers, effective loss distribution over a large segment of society, and rapid compensation of the plaintiff...." Id. at 150, 282 N.E.2d at 295, 331 N.Y. S.2d at 389 (quoting Werner, Contribution and Indemnity, 57 Cal.L.Rev. 490, 516 (1969)). Because Dole itself was a workers' compensation case and because the rule it announced is in great part designed to deter tortious conduct, the Court does not see how in the instant case it can apply the opposite rule of Connecticut when New York has so many critical contacts with the parties and events in question.

Gregory v. Garrett Corp., 578 F.Supp. 871, 883 (S.D.N.Y.1983).

We denied the motion for summary judgment on both grounds, primarily because material issues of fact required a full evidentiary hearing. Id. at 886. See Gregory v. Garrett Corp., 578 F.Supp. 890, 893 (S.D.N.Y.1983) (denying summary judgment on the release issue). Thereafter, we granted a motion by Texasgulf and TGA for a trifurcated trial with the affirmative defenses of release and workers compensation immunity to be tried first, and the issues of liability and, if necessary, damages to be tried later. The affirmative defenses were tried to a jury for five weeks in spring 1984. In answering special interrogatories, that jury found, inter alia, that Texasgulf and TGA were separate entities, and that TGA, not Texasgulf, was the employer of the flight crew and operator of the aircraft that crashed. Since only TGA employed the crew members, their estates could maintain direct claims against Texasgulf. Since only Texasgulf employed the passengers, their estates could maintain direct claims against TGA. Under New York law, the product defendants could pursue third-party claims for contribution against Texasgulf or TGA when either was not sued directly.

Several months later in 1984, the issue of liability was tried before another jury for a period of about ten weeks. The jury returned a verdict in favor of the plaintiffs, finding certain defendants liable in the following proportions: Texasgulf⁴ 70%, Garrett 20%, Colt and Phoenix 5% each, and Lockheed not liable.

The final stage in these proceedings will be separate damage trials for each plaintiff. Prior to the damage trials, the parties have sought rulings on numerous in limine evidentiary matters. The instant motions seek reargument or reconsideration of one in limine ruling as well as application of Connecticut law to the issue of damages.

II. DISCUSSION

A. Motion to Reargue or Reconsider

The in limine motion at issue sought to exclude evidence of three separate payments made to the plaintiffs—a pension benefit, a survivorship benefit, and a bonus plan payment. Our ruling regarding each payment was guided by the "collateral source doctrine," which provides that a defendant cannot reduce its liability by showing that a plaintiff received benefits from another source. Morgan Guaranty Trust Co. v. Texasgulf Aviation, Inc., No. 82-3649, slip op. at 2 (S.D.N.Y. May 8, 1985). However, the collateral source doctrine does not bar evidence offered to show that the identical payment claimed as lost was in fact paid. This was the issue regarding the pension payment. We held that evidence of the pension plan payment was admissible to rebut a claim of lost support from allegedly lost pension benefits. Id. at 6-7. We found the survivorship benefit to be similar to a death benefit. The right to this payment arose from services rendered by the decedent. It vested on his first day of employment and was paid only because the employee died before retirement. We held that evidence of this payment was inadmissible under New York law since it was a benefit for previously extended consideration. Id. at 4. We reserved for the jury the factual question of whether the bonus payment was gratuitous or obligatory. Under New York law, evidence of a payment made gratuitously would be admissible.⁵ Id. at 3-4. See Cunningham v. Rederiet Vindeggen, 333 F.2d 308, 316 (2d Cir.1964).

The plaintiff moves for reargument or reconsideration of our May 8, 1985, decision on two grounds. First, it contends that permitting evidence of some of these payments to go to the jury was incorrect under New York law. Second, it proposes that a recent New York Court of Appeals decision, Schultz v. Boy Scouts of America, Inc., 65 N.Y.2d 189, 480 N.E.2d 679, 491 N.Y.S.2d 90 (1985), compels the application of Connecticut rather than New York law to that in limine evidentiary issue.

Local Rule 3(j) of the Rules of Civil Procedure for the Southern District of New York requires a party seeking reargument to set...