Thank you for sharing!

Your article was successfully shared with the contacts you provided.
A federal appeals court has weighed in on a question of apportionment of liability among several tort defendants that has not been addressed by New York’s appellate courts. In Schipani v. McLeod, 06-5377, a unanimous panel of the U.S. Court of Appeals for the Second Circuit held on July 29 that negligence defendants lose their right to offset a proportionate share of settling a defendant’s liability if they do not raise the defense in response to a motion for summary judgment. In an automobile accident involving two defendants, one of whom settled for $35,000, the net result of the panel’s ruling was that the non-settling defendant’s share of the entire $170,000 award was increased by $118,000. The issue arose in the context of a three-vehicle accident on the New Jersey Turnpike in December 1998. Two passengers in a car that was rear-ended in a mishap involving two tractor-trailers pursued claims against the companies that owned the two trucks. A police report described the accident as having been caused by a chain reaction when one truck rear-ended the other, sending the truck ahead of it into the car in which the plaintiffs were riding. R. Byrd Trucking, the company that owned the truck that rear-ended the other truck, settled with the plaintiffs, Frank and Olga Schipani, for $35,000. In March 2004, Eastern District Judge Sterling Johnson Jr. issued a summary judgment finding D.P. Gallimore & Sons, the company that owned the truck that hit the car, liable for the accident. Judge Johnson referred assessment of damages to a magistrate judge. Ultimately, Eastern District Magistrate Judge Steven M. Gold awarded the Schipanis $170,000 in damages. Magistrate Judge Gold also apportioned damages between the two defendants. He held Byrd Trucking 90 percent responsible with the remaining 10 percent assessed against Gallimore. Ordinarily, both defendants would be liable for the total amount of the $170,000 judgment. But New York’s General Obligation Law §15-108 allows a non-settling defendant an offset reflecting a settling defendant’s share of the award even if that amount is greater than the amount the defendant settled for. Though Byrd Trucking had settled the Schipanis claims for $35,000, with 90 percent of the responsibility assessed against it, Byrd’s “equitable share” of the award, as defined by the General Obligation Law, was 90 percent of the entire $170,000 award, or $153,000. That would have left Gallimore responsible for only paying the remaining $17,000. Magistrate Judge Gold rejected the Schipanis’ argument that Gallimore had waived its right to an offset in the full amount of Byrd’s equitable share by not raising the offset provided in §15-108 and insisting upon an apportionment of damages at the time the Schipanis moved for summary judgment. On appeal, the circuit panel disagreed and concluded that Gallimore’s failure to raise the offset before summary judgment was entered against it left the company liable for the full amount of the award less the $35,000 the Byrd company had agreed to pay, or $135,000. The net result is an increase of $118,000 in the amount Gallimore must pay to satisfy the judgment. The Schipanis had brought the negligence lawsuit in the Eastern District of New York as diversity action. Panel Finds Waiver Writing for the panel, Judge Richard C. Wesley concluded that Magistrate Judge Gold had erred in concluding that there had been no waiver under New York law. Although New York’s appellate courts have not yet addressed the issue, Judge Wesley wrote that the Second Circuit panel had “little difficulty” in concluding that New York courts would not have found a waiver in a situation where a party fails to raise its right to an offset of the full value of a settling defendant’s share of an award at the summary judgment stage. Judge Wesley sat on the New York Court of Appeals for six years before his appointment to the Second Circuit in 2003. At the outset, Judge Wesley noted that Eastern District Judge Carol Bagley Amon had reached that conclusion in 2006 in Chubb & Son Inc. v. Kelleher, 2006 WL 2711543. New York appellate court rulings support the notion that apportionment of fault should be determined as part of the determination of liability, not damages, Judge Wesley wrote. The New York Court of Appeals in its 2006 decision Bryant v. State, 7 NY3d 732, stated “apportionment of fault is a component of the liability determination,” Judge Wesley noted. Similarly, he wrote, the Appellate Division, Second Department, has held that when trials are bifurcated into separate liability and damage phases, apportionment should be decided during the liability phase. “What we take from these cases,” he wrote, “is that when liability and damages are determined separately, either through bifurcation or summary judgment, liability must be apportioned at the time it is determined.” Judges Peter W. Hall and John G. Koeltl, sitting by designation from the Southern District, joined the ruling. To allow Gallimore to defer raising its apportionment defense when the Schipanis moved for summary judgment was both unfair and unwieldy, Judge Wesley reasoned. Allowing Magistrate Judge Gold to determine apportionment issues without notice was unfair to the Schipanis, Judge Wesley said, because they might have chosen “an entirely different litigation strategy.” For instance, they might have opposed the referral of damages to a magistrate judge or asked for a jury trial to apportion damages. Moreover, Judge Wesley added, judicial economy is sacrificed when there is an initial determination that a defendant bears “some” portion of responsibility for an accident, but separate proceedings are required to determine precisely how much liability and to set the amount of damages. Judge Wesley also found that Magistrate Judge Gold had erred in not awarding the Schipanis either pre- or post-judgment interest. Lester B. Herzog, who represented the Schipanis, said his clients are owed approximately $40,000 in interest on the award. The panel also remanded the case for a determination of whether the award included a component for the Schipanis’ loss of services for each other as marital partners. In his opinion, Magistrate Judge Gold had labeled the $115,000 he had awarded to Mr. Schipani and the $55,000 to Ms. Schipani as being for “past and future pain and suffering.” Eric P. Tosca, of the Law Office of John P. Humphreys, who represented Gallimore, declined to comment.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.