The opinion of the court was delivered by: CONNER
In this fraud action, plaintiffs charge that they were induced to settle a malpractice action against defendant Brookdale Hospital and others for $185,000, upon the representation that Brookdale had no excess liability coverage above a $200,000 policy. Defendant Paul Ratner, an officer of Citizens Casualty Insurance Company of New York, the primary insurer, and defendants John McGrath, Esq., and Christopher McGrath, Jr., Esq. ("the McGraths"), designated as trial counsel for Brookdale Hospital in the state action by the New York State Superintendent of Insurance, as liquidator of Citizens Casualty Company, move this Court for an order vacating the dismissal of plaintiff's action against Brookdale and two Brookdale executives, Morrell Goldberg and Bernard Fuss, and for leave to serve an amended answer asserting cross-claims against them; or, in the alternative, for leave to serve a third-party complaint. Additionally, defendants Ratner and George Berkowitz, Esq., Trustee of Brookdale and Vice-Chairman of its Legal Committee, move for leave to assert cross-claims against each other.
On December 28, 1971 Brookdale filed its answer to plaintiff's complaint. Ratner and the McGraths had previously filed answers on November 4, 1971, but had failed to assert cross-claims against Brookdale. On January 26, 1972, plaintiff dismissed his action against Brookdale with prejudice, pursuant to a stipulation approved by the Court pursuant to Rule 41(a)(2), F.R.Civ.P. Subsequently, Ratner and the McGraths retained new counsel, who now assert on behalf of their clients that the dismissal of plaintiff's action against Brookdale, without prior notice to other parties in the action, prejudiced their right to assert cross-claims against Brookdale.
According to the Court's docket sheet and file of this case, on January 17, 1972, defendant American Mutual Insurance Company of Boston filed its answer to plaintiff's complaint, and asserted a cross-claim against Brookdale. On January 28, 1972, defendants Arkwright-Boston Manufacturers Mutual Insurance Company, Allstate Insurance Company, Urbaine Fire Insurance Company, Grange League Insurance Company, and Employers Mutual Liability Insurance Company of Wisconsin filed answers and asserted cross-claims against Brookdale. Other defendants had also filed answers prior to the dismissal of plaintiff's action against Brookdale, but had not asserted cross-claims against Brookdale.
It is clear that dismissal of an action with prejudice pursuant to Rule 41(a)(2) is a final adjudication of the issues presented by the pleadings and normally bars further suit between the parties on the same cause of action. Glick v. Ballentine Produce, Inc., 397 F.2d 590 (8th Cir. 1968); Cleveland v. Higgins, 148 F.2d 722, (2d Cir.), cert. denied, 326 U.S. 722, 66 S. Ct. 27, 90 L. Ed. 428 (1945). However, the stipulation of dismissal with prejudice of plaintiff's action against Brookdale, endorsed "so ordered" by Judge MacMahon,
did not operate to dismiss the cross-claim asserted by American Mutual Insurance Company of Boston which was filed prior to entry of the order of dismissal. Barker v. Louisiana & Arkansas Ry. Co., 57 F.R.D. 489 (D.La.1972); Aetna Insurance Co. v. Newton, 398 F.2d 729, 734 (3d Cir. 1968); Frommeyer v. L. & R. Construction Co., 139 F. Supp. 579 (D.N.J. 1956), aff'd, 261 F.2d 879 (3rd Cir. 1958). Since this Court has retained jurisdiction over Brookdale by virtue of that cross-claim, Brookdale remains a codefendant in this action and the movants may assert cross-claims pursuant to Rule 13(g), F.R.Civ.P. by amending their answers if leave of the Court is granted pursuant to Rule 15, F.R.Civ.P. Therefore, it is apparent that the order of dismissal need not be vacated
in order to grant the movants the relief requested.
Since jurisdiction of this action is based on diversity, it is necessary to determine whether the moving defendants have a substantive claim under New York law for indemnity against Brookdale.
Brookdale opposes the motion on the ground that the movants have no substantive claim for contribution under N.Y.C.P.L.R. 1401 (McKinney 1963), because plaintiff has not obtained judgment against the movants, and neither Ratner nor either of the McGraths has paid more than his pro rata share of such a judgment. They further argue that, in any event, there is no right to contribution in fraud actions in New York.
While Brookdale correctly states the requirements for contribution pursuant to N.Y.C.P.L.R. 1401, it relies on cases which are no longer good law. Revolutionary changes in the substantive law of New York have resulted from the decision of the New York Court of Appeals in Dole v. Dow Chemical Co., 30 N.Y.2d 143, 331 N.Y.S.2d 382, 282 N.E.2d 288 (1972). In considering the impact of Dole and its progeny on the relief herein requested, this Court is presented with the apparently novel question whether a cross-claim for indemnity should be permitted where an intentional tort is involved.
Under prior New York law, a plaintiff could choose which tort-feasors he would sue, since each was jointly and severally liable. Where joint tort-feasors had caused an injury, a plaintiff could sue only one, who would not have the right to implead others who may have contributed to the injury. The tort-feasor sued would have to bear full responsibility for the acts of others. The only exception to this rule was where a tort-feasor could demonstrate that he was only "passively" negligent. In such case, a third party he claimed to be "actively" negligent could then be impleaded. The rationale for prohibiting one tort-feasor from sharing liability with another where both were "active" wrongdoers, which was applicable to both intentional and unintentional torts, was the deterrence of wrongdoing.
Dole created the substantive law doctrine that a tort-feasor who is sued individually may implead others who have contributed to the plaintiff's injury, rather than being forced to bear the responsibility alone.
The Dole doctrine is based on the principle that the damages should be fairly apportioned among those who participated in the wrong, regardless of whether or not they were "active" or "passive" tort-feasors. Thus, while the plaintiff may initiate his suit against any one or more of several tort-feasors, the defendants now have the right to implead any other tort-feasors who are or may be liable for all or part of the injury, or to assert cross-claims for indemnity against codefendants already joined. Kelly v. Long Island Lighting Co., 31 N.Y.2d 25, 334 N.Y.S.2d 851, 286 N.E.2d 241 (1972). Moreover, the New York courts have ruled that even where a plaintiff has settled or released his claim against one of several joint tort-feasors, a tort-feasor not a party to the release or settlement may still maintain a third-party claim against the defendants released. Michelucci v. Bennett, 71 Misc.2d 347, 335 N.Y.S.2d 967 (Sup.Ct.1972); Michelucci v. Bennett, 73 Misc.2d 621, 341 N.Y.S.2d 837 (Sup.Ct.1973); Hain v. Hewlett Arcade, Inc., 40 A.D.2d 991, 338 N.Y.S.2d 791 (2d Dept. 1972).
Although the ruling in Dole was made with reference to actions based on negligence, the doctrine has been extended to cases involving statutory liability, in which a plaintiff is entitled to recover whether or not the defendant was negligent and whether or not the plaintiff was contributorily negligent, Kelly v. Diesel Construction, 70 Misc.2d 686, 334 N.Y.S.2d 309 (Sup.Ct.1972), aff'd, 42 A.D.2d 891, 347 N.Y.S.2d 698 (1st Dept. 1973); to cases of implied breach of warranty involving negligence, Walsh v. Ford Motor Co., 70 Misc.2d 1031, 335 N.Y.S.2d 110 (Sup.Ct.1972); and to an action for an attorney's malpractice. Langner v. Eschwege, 39 A.D.2d 653, 332 N.Y.S.2d 16 (1st Dept. 1972).
Although the applicability of the Dole doctrine to intentional torts has not been considered by the New York courts, there is authority to support its extension to such cases. Professor Siegel, in his Commentary to N.Y.C.P.L.R. 3019 (3019:26, McKinney Supp. 1974) states that there is sound reason for including intentional torts within the ambit of Dole, especially at the pleading stage. And Murphy, "Dole v. Dow Chemical: Thoughts About the Future," Journal of Insurance, Negligence and Compensation Law Section, New York State Bar Association, Fall, 1972 at 17, 20-21, argues that even in the area of intentional torts parties may not be equally culpable, and that if juries are capable of determining degrees of culpability in negligence actions, there is no good reason to presume that they are incapable of so doing in actions involving intentional torts.
Like these authors, we can perceive no logical reason for differentiating between actions for negligence and actions for intentional wrongs, such as fraud, in applying the salutary rule of Dole. Such a distinction would seem particularly inappropriate in the factual situation portrayed by the proposed pleadings, which we must accept as true for the purpose of the present motions. Dombrovskis v. Murff, 24 F.R.D. 302 (S.D.N.Y.1959); Key Pharmaceuticals, Inc. v. Lowey, 54 F.R.D. 447 (S.D.N.Y.1972). The McGraths allege that they were merely the conduit for information furnished them by the Brookdale defendants, and, Ratner alleges that he did nothing more than stand mute while the information was passed on to plaintiffs and to the Court.
While these allegations, even if true, would not absolve the movants of responsibility, they would seem to bring the cross-claim more into the pattern of the cases in which "passive" tort-feasors originally named as defendants seek to implead their "active" confederates -- which, as we have observed, would have been allowed even before Dole.5
The Brookdale defendants do not assert any prejudice to them which might result from the proposed amendments, and we can perceive none. The cross-claim filed against Brookdale prior to the dismissal of plaintiff's action, and those filed two days thereafter, have not yet been answered, although they have been pending for more than two years; nor has discovery proceeded to an extent where significant delay in trial would result. Moreover, the Brookdale ...