Stoughton v. State Farm Mut. Auto. Ins. Co., 1

• Decision Date: 24 September 1976
• Docket Number: No. 1,1
• Citation: 387 N.Y.S.2d 323,54 A.D.2d 602
• Parties: Donald M. STOUGHTON, Respondent, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant, and East Hampton Dewitt Corp., Defendant. Appeal
• Court: New York Supreme Court — Appellate Division

Page 323

387 N.Y.S.2d 323

54 A.D.2d 602

Donald M. STOUGHTON, Respondent, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant and East Hampton Dewitt Corp., Defendant.

Appeal No. 1.

Supreme Court, Appellate Division, Fourth Department.

Sept. 24, 1976.

Oot, Setright & Ciabotti, John Setright, Syracuse, for State Farm.

M. June Lockwood, Baldwinsville, for respondent Stoughton.

Before MARSH, P.J., and MAHONEY, DILLON, GOLDMAN and WITMER, JJ.

MEMORANDUM:

Plaintiff commenced this negligence action as the result of a fire in the Romax Office Building in Syracuse, where he and the defendant State Farm Mutual Automobile Insurance Company (State Farm) were tenants, and which was owned by the defendant East Hampton Dewitt Corp. (East Hampton). Each defendant interposed a cross-claim against the other and State Farm filed a third-party complaint against Maurice L. Rosen, M. L. Rosen Management Co. and Rosen-Klein Construction Co., Inc., all involved in the construction of the building.

Plaintiff subsequently moved for summary judgment against both defendants on the ground that the issue of liability had been litigated and resolved in a federal court action in which the defendants were parties, and which arose from the same fire. Plaintiff contended that the defendants were collaterally estopped from litigating the issue anew. Although Special Term denied plaintiff's motion insofar as it related to East Hampton, summary judgment was granted against State Farm, and it is from that order which State Farm appeals. East Hampton is not a party to the appeal inasmuch as plaintiff has taken no cross-appeal from the denial of this motion against it.

In the federal litigation, East Hampton and Warner National, Inc. (Warner), another tenant of the Romax Building, commenced separate actions against State Farm, alleging negligence in starting the fire and negligence in failing to make a timely call to the fire department which would have permitted the fire damage to be restricted to State Farm's offices. State Farm claimed, inter alia, that the spread of the fire was caused by the faulty construction of the building (East Hampton Dewitt Corp. v. State Farm Mut. Auto. Ins. Co., 2 Cir., 490 F.2d 1234, 1237). The two actions were tried together in a bifurcated trial. The first stage was limited to 'State Farm's negligence and the causal relationship, * * * standing alone, to the 'spread of the fire.' For that reason the (Federal trial court) over State Farm's objection, refused to allow the introduction of evidence of faulty construction at that time' (id.). The jury found that State Farm was not negligent in causing the start of the fire but was neglient in failing to report the fire promptly, and that such failure was a proximate cause of the spread of the fire.

The second stage of the trial was concerned with the determination of damages. Evidence of the building's faulty construction was admitted 'on the theory that the jury could properly take this into account by way of 'mitigation' of damages' (id.). The jury returned a verdict for Warner in the sum of $25,000, very nearly the amount demanded, but awarded East Hampton only $120,000, despite the fact that its claim for $820,000 was not seriously disputed. East Hampton appealed to the United States Court of Appeals, Second Circuit, contending that it was entitled to $820,000. The Second Circuit found that the verdicts represented 'substantial justice' and affirmed the judgment of the...