Philip Morris USA Inc. v. Skolnick

• Decision Date: 15 July 2015
• Docket Number: No. 4D13–4696.,4D13–4696.
• Citation: 171 So.3d 747
• Parties: PHILIP MORRIS USA INC., and R.J. Reynolds Tobacco Company, Appellants, v. Beatrice SKOLNICK, as personal representative of the Estate of Leo Skolnick, deceased, Appellee.
• Court: Florida District Court of Appeals

171 So.3d 747

PHILIP MORRIS USA INC., and R.J. Reynolds Tobacco Company, Appellants

v.Beatrice SKOLNICK, as personal representative of the Estate of Leo Skolnick, deceased, Appellee.

No. 4D13–4696.

District Court of Appeal of Florida, Fourth District.

July 15, 2015.

Rehearing Denied Sept. 2, 2015.

Amir C. Tayrani of Gibson, Dunn & Crutcher, LLP, Washington, D.C., Joseph H. Lang, Jr. of Carlton Fields Jorden Burt, P.A., Tampa, and Peter M. Henk of Shook Hardy & Bacon, L.L.P., Houston, Texas, for appellant, Philip Morris USA, Inc.

Gregory G. Katsas of Jones Day, Washington, D.C., for appellant, R.J. Reynolds Tobacco Company.

David J. Sales of David J. Sales, P.A., Jupiter, John S. Mills of The Mills Firm, P.A., Tallahassee, and Jonathan R. Gdanski of Schlessinger Law Offices, P.A., Fort Lauderdale, for appellee.

Opinion

GROSS, J.

In this Engle¹ progeny case, plaintiff Beatrice Skolnick recovered compensatory damages from two tobacco companies—Philip Morris USA Inc. and R.J. Reynolds Tobacco Company. The jury found for the defendants on claims of fraudulent concealment and conspiracy to commit fraudulent concealment.

We confront a novel issue in an Engle case. In 2004, as a plaintiff in a New York class action, Beatrice executed a settlement agreement, containing a release and covenant not to sue concurrent tortfeasors, where the injury at issue was her husband's lung cancer

. We hold that this settlement agreement applies to bar the strict liability and negligence causes of action in this case. However, under New York law, the release and covenant not to sue do not bar the intentional tort claims of fraudulent concealment and conspiracy to commit fraudulent concealment.

Beatrice cross-appealed from the defense verdict on the intentional tort counts. As to those counts, the trial court applied our decision in Philip Morris USA, Inc. v. Hess, 95 So.3d 254 (Fla. 4th DCA 2012). The Florida Supreme Court quashed this decision in April 2015. See Hess v. Philip Morris USA, Inc., ––– So.3d ––––, 2015 WL 1472319, 40 Fla. L. Weekly S188 (Fla. Apr. 2, 2015).

We reverse the judgment for the plaintiff on the strict liability and negligence counts and remand to the circuit court for the entry of a judgment for the defendants. On the cross-appeal, we reverse the judgment for the defendants on the fraudulent concealment and conspiracy counts and remand for a new trial.

The Release in the New York Action

In 2002, Beatrice joined hundreds of plaintiffs in a New York class action lawsuit against Verizon Communications Inc. and other defendants responsible for the operation of the Sylvania Plant (“the Hicksville Action”), which was located just 500 meters from Beatrice and Leo Skolnick's Westbury home. The complaint alleged the “facility emitted toxins into the surrounding environment located in Hicksville, New York,” which “contaminated the air, soil, surface water and ground water in the surrounding communities.” As it concerned Leo Skolnick, the complaint set forth the following:

Beatrice Skolnick, individually, and as Administratrix of the Estate of Leo Skolnick (“decedent”), ... brings an action for both conscious pain and suffering and wrongful death on behalf of the decedent. From the time period beginning in July of 1959 and ending in September of 1984, decedent resided [in] Westbury, New York, within close proximity of the Sylvania facility sites. As a result of Defendants' repeated releases of toxic, hazardous and/or radioactive substances into the area surrounding their operations on or near the Sylvania facility, decedent developed colon and lung cancer

. While prior to the development of his disease, decedent had been a healthy and active person, the onset of the cancers had a debilitating effect on his life, causing him severe physical injury, pain and suffering, and mental and emotional damage, as well as causing him to incur extensive medical and related expenses and lost income. This same disease ultimately lead to his death in 1993.

(Emphasis added).

The class action settled for $10,400,000, with Beatrice receiving a $60,000 share. In a 38–page settlement agreement, which states that it is to be governed by New York law, the Hicksville parties settled “the claims described herein against” the listed defendants and the plaintiffs agreed to a release. The settlement agreement indicated that the “Hicksville Actions concern[ed] the operations of and alleged emissions and discharges from a facility that manufactured nuclear fuel elements from approximately 1952 until 1966.” Consistent with this description, the agreement defined “Released Claims” as including any and all actions “which ar[o]se out of or relate[d] to”:

(1) any claim asserted, or that could have been asserted, in the Hicksville Actions ... or (2)(a) the operation or conduct of the Hicksville Facility and/or the Hicksville Sites, and/or (b) any condition of the premises, the exterior or interior environment at the Hicksville Facility and/or the Hicksville Sites, and/or (c) any condition, result, effect or impact allegedly created, endured or caused by the business, manufacturing, waste removal or activities performed or taking place at the Hicksville Facility and/or the Hicksville Sites.

The persons to be “released” were defined to include a number of corporations and entities filling two-and-a-half pages.

Beginning on page 24, the settlement agreement sets the contours of the plaintiffs' release, stating initially that upon an identified “effective date” the releasers—i.e., the class plaintiffs—“shall be deemed to have, and by operation of th[e] Agreement shall have[ ] ... fully, finally, and forever released, relinquished and discharged the Released Persons from any and all of the Released Claims.” The agreement further stated that the agreement and release “may be pled as a full and complete defense to any Released Claims that may be instituted, prosecuted or attempted in breach of th[e] agreement.”

Paragraph 26 then expanded from the release into the plaintiffs' covenant not to sue “any other tortfeasors, whether joint or concurrent and whether now known or unknown,” stating:

26. Releasors covenant not to sue any other tortfeasors, whether joint or concurrent and whether now known or unknown, for losses or injuries alleged in the Hicksville Actions or at issue in the Released Claims. This covenant does not apply to future claims based on the aggravation of the losses or injuries alleged in the Hicksville Actions. Releasors may sue future tortfeasors if such tortfeasors aggravate and/or increase the severity of a loss or injury alleged in the Hicksville Actions.

(Emphasis added).

As required by the settlement agreement, in 2004 Beatrice executed a “Verified Declaration for Allocation of Settlement Proceeds” for her “Wrongful Death Claim.” In the declaration, Beatrice asserted that the “illness[ ] or injur [y] ... that caused the decedent's death” was “lung cancer

.” Beatrice further attested that the lung cancer “diagnosis was ultimately confirmed at [Leo's] death” as dictated in his death certificate.

Motion for Summary Judgment

Prior to trial, the defendants moved for summary judgment on their affirmative defense that Beatrice's tobacco claims were barred by Paragraph 26's covenant not to sue since Beatrice was suing “other tortfeasors” for the same “loss[ ] or injur[y] alleged in the Hicksville Actions”—i.e., that Leo died from lung cancer

. The defendants argued that because the settlement agreement was defined to include Beatrice's “claim for [Leo's] lung cancer and death,” the covenant not to sue “bar[red her] from suing ‘any other tortfeasors' for [Leo's] lung cancer, even if those tortfeasors were ‘unknown’ to her at the time she entered into the Settlement Agreement.” Beatrice responded with numerous counterarguments, one of which was that the defendants' interpretation of the release was unreasonable since the release and settlement agreement sought to resolve an entirely separate action and the “only losses or injuries alleged in the Hicksville Actions or at issue in the Released Claims were those caused by releases of contaminants from the New York defendants[ ].” “Had the New York defendants intended the [covenant not to sue] to achieve the extraordinary result that the tobacco defendants now claim for it,” Beatrice argued, their “sophisticated counsel certainly would have expressed that intent more clearly.”

At a hearing on the motion, the trial court questioned the merits of the defendants' motion because Beatrice's tobacco claims and Hicksville claims were “totally different, essentially different torts altogether.” Three days later, the trial court entered a written order denying the summary judgment motion, citing New York's General Obligations Law § 15–108 and two cases—Long Island Pipe Fabrication & Supply Corp. v. S & S Fire Suppression Sys., Inc., 226 A.D.2d 1136, 641 N.Y.S.2d 477 (N.Y.1966), and Wells v. Shearson Lehman/Am. Express, Inc., 72 N.Y.2d 11, 530 N.Y.S.2d 517, 526 N.E.2d 8 (1988).

The release and covenant not to sue in the Hicksville Action barred the negligence and strict liability causes of action, but not the intentional torts of fraudulent concealment or conspiracy to commit fraudulent concealment

The crucial issue in this case concerns whether these provisions of the settlement agreement for the Hicksville class action—in particular, Paragraph 26—bar Beatrice from bringing her tobacco suit, since both are predicated on the Leo's death from lung cancer

. The covenant not to sue covers “joint or concurrent” tortfeasors, “whether now known or unknown.” The tobacco companies here are concurrent tortfeasors with the Hicksville defendants, so they stand under the umbrella of the covenant not to sue.

Standard of Review

Because this issue arises from a summary judgment and the construction of an unambiguous contract, our review is de novo. See Dennis v. Kline, 120 So.3d 11, 20 (Fla. 4th DCA 2013) (orders on summary judgment motions are reviewed de novo);...