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TOKIO MARINE & FIRE INS. CO. v. MCDONNELL DOUGLAS

July 19, 1978

The TOKIO MARINE & FIRE INSURANCE COMPANY, LIMITED, et al., Plaintiffs
v.
McDONNELL DOUGLAS CORPORATION, Defendant. McDONNELL DOUGLAS CORPORATION, Third-Party Plaintiff, v. JAPAN AIR LINES CO., LTD., Third-Party Defendant



The opinion of the court was delivered by: MOTLEY

MEMORANDUM OPINION

On November 28, 1972 a DC-8-62 commercial airliner manufactured by the McDonnell Douglas Corporation (MDC) and owned and operated by Japan Air Lines Co., Ltd., (JAL) crashed shortly after takeoff from Sheremetievo Airport located in Moscow, U.S.S.R. As a result of the crash fifty two passengers were killed and others were injured, and the aircraft was totally destroyed. In broad outline the passengers' representatives sued both MDC and JAL for wrongful death; JAL's subrogees sued MDC for the cost of the aircraft; and MDC sued JAL for indemnity and contribution in the event that MDC was held liable to the passenger plaintiffs.

 MDC has settled the passenger suits thus terminating that aspect of the litigation. On November 2, 1977 this court granted summary judgment in favor of MDC and dismissed JAL's subrogees' action against MDC for the cost of the aircraft. The only remaining aspect of this complex litigation and the subject of this opinion is MDC's claim that JAL is liable to it for contribution and indemnity in order to compensate MDC for its passenger settlements. JAL has moved for summary judgment and for dismissal of these remaining claims of MDC. Rules 56 and 12(b), Fed.R.Civ.P. The motions are denied.

 Jurisdiction of this action is based on diversity of citizenship. 28 U.S.C. § 1332(a)(2). MDC is a Maryland corporation with its principal place of business in California. JAL is a Japanese corporation.

 The complex nature of this motion must be made clear at the outset so that the discussion of the facts may be read in a framework which will make them more comprehensible. Five separate lawsuits are involved including four passenger actions and the suit for the cost of the aircraft. In the context of these four suits MDC has asked for contribution and indemnity in the context of cross-claims, a counterclaim and a third-party action. JAL contends that the laws of two jurisdictions are relevant to its motion, New York and Illinois. MDC counters that either the law of California or, in the alternative, federal common law governs this motion for summary judgment. Regardless of the jurisdiction, the law of contribution and indemnity requires that the precise nature of the passengers' claims be examined when considering whether cause of action in contribution and indemnity is available to the party (MDC) which enters into a settlement agreement with these passengers.

 The Facts

 The discussion of each of the five separate actions involved in this motion will include the following elements: nature of the action and plaintiffs' specific causes of action as to MDC; the litigation history of the case; the nature of the settlement agreement between MDC and the passengers; and MDC's claims for indemnity and contribution which are at issue.

 Sackheim v. Japan Air Lines Co., Ltd., No. 72 L16885

 Gerbick v. Japan Airlines Co., Ltd., No. 73 L 1767

 These two actions were commenced in the Circuit Court of Cook County, Illinois by representatives and next-of-kin of two American passengers aboard the aircraft. The two counts against MDC alleged eight specific instances of negligence in the design and construction of the aircraft and the instructions relating to its operation. Plaintiffs also allege that MDC breached its implied warranties in that the aircraft was delivered to JAL in an unreasonably dangerous condition which was one of the proximate causes of the crash and death of plaintiffs.

 MDC has settled these actions for $ 875,000 in Sackheim and $ 575,000 in Gerbick and has obtained general releases in return. MDC's claims for indemnity and contribution with respect to these two actions are contained in MDC's counterclaim in 75 Civ. 5915 (CBM) discussed Infra.

 Brettler v. Japan Air Lines Co., Ltd., 73 Civ. 1531 (CBM)

 This action was filed in this court by the representative of a New York citizen who died in the Moscow crash. The first count of the complaint alleges that MDC negligently designed, manufactured, assembled and sold the aircraft and failed to properly warn and instruct JAL as to the use of the aircraft. The third count would hold MDC liable to plaintiff under a breach of warranty (express or implied) theory. The final claim against MDC sounds in strict product liability.

 This action was settled by MDC on the eve of trial in early 1977 for the sum of $ 800,000 in return for releases from the plaintiffs. In its answer to the complaint, MDC cross-claims against its co-defendant JAL alleging first, that it is entitled to indemnity from JAL because any negligence of MDC was "passive" while that of JAL was "active". Second, it also seeks, in the alternative, contribution from JAL in proportion to JAL's relative culpability

 for the crash. The Tokio Marine and Fire Insurance Company Limited v. McDonnell Douglas Corporation, 75 Civ. 5915 (CBM)

 After the crash of the JAL aircraft, these plaintiff insurance companies sued, as subrogees of JAL, to recover the cost of the aircraft from MDC. On November 2, 1977 this court granted summary judgment in favor of defendant MDC and dismissed the main action on the ground that the exculpatory clause of the MDC-JAL contract for the purchase of the aircraft precluded this suit by JAL (or its subrogees which stand in the shoes of JAL). The grant of summary judgment also mooted MDC's cross-claim against the third-party defendant JAL (which had been impleaded by a co-defendant of MDC). That cross-claim alleges that if MDC is liable to the subrogees of JAL, then JAL is liable to MDC for contribution of indemnity by virtue of the fact that JAL was either partly or primarily responsible for the accident in Moscow. *fn1"

 MDC's counterclaim against the subrogees is still alive. In that counterclaim MDC seeks indemnity from the subrogees on the ground that, if MDC is required to pay passenger claims either in settlement or after judgment, it would only be due to JAL's negligence and not because of any negligence on the part of MDC. The parties to this action agree that this counterclaim covers All of MDC's claims for contribution and indemnity in all five actions. In short, it is an "omnibus" claim for contribution and indemnity which does duplicate the contribution and indemnity claims of MDC in the other four actions.

 Aiba v. McDonnell Douglas Corporation, 76 Civ. 5582 (CBM)

 This action was originally filed in the District Court for the Eastern District of Michigan. It was transferred to this court as a companion case to Brettler and Tokio Marine. The suit is by the representatives, heirs, and next-of-kin of twenty-six Japanese passengers who died in the Moscow crash. They have three causes of action against MDC; first, that MDC negligently designed, manufactured, assembled, inspected and sold the aircraft and failed to render proper warnings and instructions to JAL; second, that MDC is strictly liable to plaintiffs; and third, that MDC breached express or implied warranties which ran to plaintiffs.

 MDC has settled this entire action for an aggregate of $ 6,000,000 and has obtained releases from plaintiffs.

 MDC has filed a third-party action against JAL in this case praying for indemnity or contribution in the event that a judgment is rendered against MDC or MDC settles with plaintiffs out of court.

 The instant motion for summary judgment filed by JAL seeks dismissal of MDC's cross-claim in Brettler, MDC's counterclaim against the subrogee insurance companies in Tokio Marine, *fn2" and MDC's third-party complaint in Aiba Against JAL.

 In sum, JAL seeks dismissal of all MDC's claims for either contribution or indemnity with respect to the out-of-court settlements on the ground that these claims are precluded under the relevant state law.

 Discussion

 1. General Principles of Indemnity and Contribution

 Before focusing on the specific legal questions presented by this motion, a general discussion of the law of contribution and the law of indemnity will lay a solid framework within which the nuances of the various state laws can be discussed, Infra. *fn3"

 Contribution and indemnity *fn4" are similar concepts in that in each instance one party with an actual or potential tort judgment against him seeks to shift all or part of that judgment to another party. The difference between the two is that a party seeking contribution seeks less than 100% Of the judgment rendered against him and necessarily admits at least partial culpability for the underlying tort. The party seeking indemnity attempts to shift the entire burden of the judgment upon another party on the ground that that other party is actually or "primarily" responsible for the tort.

 At common law the strict rule was that there shall be no contribution among joint tortfeasors. Parties sued and against whom judgment was rendered were jointly and severally liable for the payment of the judgment. Parties not originally sued by plaintiff could not be held liable for any portion of the judgment in a third-party action or any other action instituted by the original defendants. As noted, Infra, this rule has been changed by statute in various jurisdictions.

 The courts have developed the concept of "implied indemnity" to cover cases where the "no contribution" rule would reach an unjust result. Though not strictly termed such, implied indemnity is an equitable concept and turns on the degrees of responsibility between the party against whom the original judgment has been rendered and the party against whom indemnity is sought. The right to indemnity is a jury question. The question is often asked whether the party seeking indemnity is guilty only of "passive" negligence while the party against whom indemnity is sought is guilty of "active" negligence. Alternatively phrased, the jury can grant indemnity if it finds that one party was "primarily" liable while the party seeking indemnity was only "secondarily" liable. Indemnity can be awarded if the party seeking it was liable to the plaintiff only because of a non-delegable legal obligation, for ...


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