Orsini v. Kugel

Decision Date19 November 1993
Docket NumberNo. 348,D,348
Citation9 F.3d 1042
PartiesLouis ORSINI and Mary Orsini, Plaintiffs, v. Nahum KUGEL and German C. Garcia, Defendants, Jean Paul Pierre and Moisture Hacking Corp., Defendants-Appellants, Chris Roos and George Roos, Defendants-Appellees. ocket 93-7181.
CourtU.S. Court of Appeals — Second Circuit

Edward A. McDonald, New York City (William J. McMorris, Reboul, MacMurray, Hewitt, Maynard & Kristol, of counsel), for defendants-appellants.

Milton M. Witchel, New York City (Stephen G. Ringel, of counsel), for defendants-appellees.

Before: VAN GRAAFEILAND, WALKER and JACOBS, Circuit Judges.

JACOBS, Circuit Judge:

In the aftermath of a personal injury diversity action, the United States District Court for the Southern District of New York (Mukasey, J.) entered judgment against one set of defendants on the cross-claim for contribution asserted by another set of defendants. Plaintiffs, who are not parties to this appeal, had obtained a jury verdict against defendants-appellants John Paul Pierre and Moisture Hacking Corporation (jointly, "Moisture Hacking") and defendants-appellees Chris Roos and George Roos (the "Rooses"). Plaintiffs thereafter agreed to settle the action for less than the verdict. Judgment was entered and the personal injury settlement was effectuated by a satisfaction of judgment. The Rooses then obtained judgment in the amount of $222,000 plus pre-judgment interest on their cross-claim against Moisture Hacking, from which Moisture Hacking brings this appeal.

Moisture Hacking argues that the cross-claim for contribution was barred for two reasons: (1) the parties had executed (although no one filed) a stipulation of discontinuance as part of the settlement of the action with plaintiffs; and (2) New York General Obligations Law Sec. 15-108 precludes a contribution claim by a settling tortfeasor. Moisture Hacking also argues that the Rooses were not entitled to pre-judgment interest. Neither the unfiled stipulation nor any cited principle of New York law bars the contribution claim, and we therefore affirm the award of $222,000. We reverse the award of pre-judgment interest, however, because the Rooses' claim sounds solely in contribution for which pre-judgment interest is not available under New York law.

BACKGROUND

A taxicab carrying plaintiffs Louis and Mary Orsini collided with two other cars near the corner of Fifth Avenue and 56th Street in New York City. The injured plaintiffs sued Moisture Hacking, the Rooses, German Garcia and Nahum Kugel, who were the owners and drivers of the taxicab and cars involved. All of the defendants interposed cross-claims for contribution. The case proceeded to trial. On April 2, 1992, a jury returned a verdict in plaintiffs' favor, finding Moisture Hacking 90 percent liable, the Rooses 10 percent liable, and Garcia and Kugel blameless. Total damages were assessed at $415,581.

After the verdict but before entry of judgment, plaintiffs agreed to compromise their claims. The record does not reveal what, if anything, Garcia and Kugel paid, but whatever the terms, the remaining defendants waived their right to set off as to them. As to Moisture Hacking and the Rooses, plaintiffs agreed to accept $280,000, a sum equal to the limits of these defendants' insurance policies. The settlement agreement also called for entry of judgment pursuant to the verdict. Hence, on April 27, 1992, judgment was filed against Moisture Hacking and the Rooses, jointly and severally in the amount of $415,581. Immediately thereafter, payment of the reduced amount was made as follows: Moisture Hacking had earlier deposited with the court the proceeds of its $30,000 liability policy, and in the settlement consented to the transfer of that money to plaintiffs' attorney. The Rooses paid plaintiffs the proceeds of their $250,000 insurance policy. Plaintiffs executed general releases in favor of Moisture Hacking and the Rooses, and a satisfaction of judgment which was filed on May 15, 1992.

The only other documentation of the settlement in the record is a single-paragraph "Stipulation Discontinuing Action With Prejudice," executed by plaintiffs, Moisture Hacking and the Rooses on April 27, 1992, the same day judgment was filed on plaintiffs' claims. The Rooses characterize the stipulation as a "belt-and-suspenders device" intended only to confirm the termination of plaintiffs' claims against all defendants. Moisture Hacking argues that the stipulation of discontinuance, which was executed after the parties consented to terminate plaintiffs' claims by entry of judgment, could have had no purpose other than to extinguish the cross-claims of the signatory defendants. On its face, the stipulation of discontinuance does not preserve any claim or reserve to the Rooses any right to seek contribution. The stipulation recites that it "may be filed without further notice with the Clerk of the Court." Although the stipulation could have been filed by any party, no one filed it; nor does it appear to have been presented to the district court other than as an exhibit to motion papers.

On June 1, 1992, the Rooses filed a motion for judgment on their cross-claim seeking contribution from Moisture Hacking. Moisture Hacking contested the motion, arguing that the contribution claim was barred by the fully executed stipulation discontinuing the action, and by New York General Obligations Law Sec. 15-108 (McKinney's 1989) which bars contribution claims by settling tortfeasors. The district court granted the Rooses' motion in an opinion and order dated November 30 1992 which addresses only the application of section 15-108. The district court found dispositive Rock v. Reed-Prentice Div. of Package Machinery Co., 39 N.Y.2d 34, 41, 382 N.Y.S.2d 720, 723, 346 N.E.2d 520, 524 (1976), in which the New York Court of Appeals held that section 15-108 "has no application to a claim for contribution which has been litigated and reduced to judgment."

The district court awarded the Rooses $222,000, which is 90 percent of the total payments made by the two groups of defendants reduced by the amount actually paid by Moisture Hacking. In a judgment entered on February 2, 1993, the district court also awarded pre-judgment interest at a rate of nine percent per annum from April 27, 1992 through January 14, 1993. This second judgment finally disposed of all claims as to all parties. The Rooses' cross-claim was thus ultimately terminated by entry of judgment rather than by stipulation. This appeal ensued.

DISCUSSION
I. Stipulation of Discontinuance

The effect of a voluntary dismissal is governed by Fed.R.Civ.P. 41(a). Moisture Hacking argues that the unconditional stipulation of discontinuance, allegedly executed as part of a global settlement, extinguished the Rooses' cross-claim for contribution and divested the district court of jurisdiction to adjudicate it. The requirements of Rule 41(a)(1)(ii) render Moisture Hacking's argument untenable:

an action may be dismissed by the plaintiff without order of court ... (ii) by filing a stipulation of dismissal signed by all parties who have appeared in the action.

(Emphasis added.) The plain language of the rule requires that the stipulation be filed in order to effectuate a voluntary dismissal. We need not decide whether, if filed, the stipulation would have terminated whatever then remained of the action. But see Barr Laboratories, Inc. v. Abbott Laboratories, 867 F.2d 743, 748 (2d Cir.1989). The unfiled stipulation has no such effect. All claims have been resolved by entry of two judgments, and those judgments are not rendered infirm by the existence of the unfiled stipulation. See McCall-Bey v. Franzen, 777 F.2d 1178, 1185 (7th Cir.1985) (later-filed stipulation of dismissal with prejudice has no effect since judge had already ordered the case dismissed without prejudice). Moisture Hacking made no application in the district court to vacate either judgment, and we therefore do not consider whether the district court could have permitted the filing of the stipulation under that circumstance.

Moisture Hacking characterizes the failure to file as "ministerial error." A stipulation of discontinuance, however, is not self-executing. Since the stipulation need not be so-ordered by the judge, the court would ordinarily have no knowledge of an unfiled stipulation of discontinuance and would not know what cases were still live on its docket. It is therefore not incidental that Rule 41 gives effect to a stipulation of discontinuance only when it is filed. See McCall-Bey, 777 F.2d at 1185 ("The requirement that the stipulation be filed in court is not merely a technicality....").

We similarly reject the suggestion that inclusion of the stipulation as an exhibit to the parties' motion papers on the cross-claim constituted the requisite filing. See Fed.R.Civ.P. 5(e). Although an oral stipulation in open court can effect dismissal, see In re Furlong, 885 F.2d 815, 817-18 (11th Cir.1989); Carter v. Beverly Hills Sav. & Loan Ass'n, 884 F.2d 1186, 1191 (9th Cir.1989), cert. denied, 497 U.S. 1024, 110 S.Ct. 3270, 111 L.Ed.2d 780 (1990); Oswalt v. Scripto, Inc., 616 F.2d 191, 195 (5th Cir.1980); but see United States v. Transocean Air Lines, Inc., 356 F.2d 702, 705 (5th Cir.1966) (Rule 41(a)(1)(ii) dismissal can be effected only when stipulation is filed by all parties), that is not what happened in this case. Here, the parties did not orally stipulate in open court to discontinue the action; nor did any party seek to effectuate the signed stipulation by filing it with the clerk prior to entry of judgment on the Rooses' cross-claim for contribution. Although both parties attached the stipulation of discontinuance as an exhibit to their motion papers on the cross-claim, they did so in order to contest its meaning and effect. Therefore, the cross-claim was not extinguished by stipulation and the district court...

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