Appeal of that part of a judgment entered in the United States District Court for the Eastern District of New York, Wexler, J., that denied defendant-appellant City of New York's cross-claim against defendant-appellee United States for contribution in the amount of its equitable share of plaintiffs' basic economic loss. The district court determined that the City was barred from recovering such contribution under New York's Comprehensive Motor Vehicle Insurance Reparations Act, N.Y. Ins. Law § 5101 et seq. (McKinney 1985). Reversed and remanded.
This appeal presents a single question: whether New York's Comprehensive Motor Vehicle Insurance Reparations Act (no-fault law or Act), N.Y. Ins. Law § 5101 et seq. (McKinney 1985), precludes recovery on a cross-claim brought by a defendant whom the Act deems to be a noncovered person against a co-defendant whom the Act deems to be a covered person seeking contribution for basic economic loss damages. In light of New York's strong policy favoring apportionment of damages among tortfeasors on the basis of relative culpability and given the legislature's failure to address the contribution issue in the Act, we conclude that the no-fault law did not extinguish the right of noncovered persons to seek contribution from covered joint tortfeasors. Accordingly, we reverse that part of the judgment entered in the United States District Court for the Eastern District of New York, Wexler, J., denying the cross-claim brought by the City of New York (City) against the United States for the latter's equitable share of plaintiffs' basic economic loss. We remand to the district court for entry of judgment in favor of the City on its cross-claim.
This litigation arose from an automobile accident that occurred on a municipally owned highway in Brooklyn, New York in December 1977. The facts are undisputed. An automobile owned by the United States and driven by a federal employee crossed the median divider of the Belt Highway and collided with plaintiffs Goodkins' vehicle. Plaintiffs sued, among others, the United States and the City. Federal jurisdiction was premised on the Federal Tort Claims Act, 28 U.S.C. § -1346 & 2671 et seq. (1982); the claim against the City was pendent to the federal claim. All of the claims were governed by state law. See Mandelbaum v. United States, 251 F.2d 748, 750 (2d Cir. 1958); 28 U.S.C. §§ 1346(b) & 2674.
At the trial on liability, the jury found only the City and the United States liable. The jury apportioned seventy percent of the liability to the City for its negligence in maintaining the highway and thirty percent to the United States. The jury's verdict, which was only advisory as to the United States, see 28 U.S.C. § 2402 (1982), was adopted in toto by the district court. At the subsequent trial on damages, the jury determined plaintiffs' total damages to be $500,000. The district court adopted the jury's award as to the United States. By special findings, the court determined that $49,067 and $15,473 of the general award were attributable, respectively, to plaintiff Berill Goodkin's and plaintiff Phyllis Goodkin's basic economic loss as defined by the no-fault law, N.Y. Ins. Law § 5102. The district court correctly acknowledged that the no-fault law precluded covered persons, such as plaintiffs, from recovering basic economic loss from other covered persons, such as the United States. It therefore concluded that the City, a noncovered person, should likewise be unable to recover in an action for contribution against the United States for amounts attributable to plaintiffs' basic economic loss.
A. New York's No-Fault Scheme
No-fault laws were created to remedy a long recognized and serious problem - the inability of the tort system to rapidly, adequately and fairly compensate victims of automobile accidents. 12A Couch on Insurance 2d § 45:661 (rev. ed. 1981). In Montgomery v. Daniels, 38 N.Y.2d 41, 378 N.Y.S.2d 1, 340 N.E.2d 444 (1975), upholding the constitutionality of New York's no-fault law, the New York Court of Appeals enumerated three particular problems that the legislature intended the Act to address: (1) the excessive and needless expense of the tort system; (2) the unfair and inequitable distribution of compensation among accident victims, including long delays in payment, and (3) the strain placed on the state judicial system by tort litigation. Id. at 50-51, 378 N.Y.S.2d at 8-9. The Act sought to remedy these problems by, inter alia, removing minor claims from the courts, eliminating fault as a required predicate for recovering certain losses from a predicate determination of liability based on fault, requiring payments to be made immediately on accrual of loss and requiring all owners of motor vehicles to carry no-fault insurance. The preeminent purpose of the no-fault law, according to the Court of Appeals, was "to assure the prompt and full reimbursement of the 'economic' losses those injured in automobile accidents may suffer." Perkins v. Merchants Mutual Insurance Co., 41 N.Y.2d 394, 396, 393 N.Y.S.2d 347, 348, 361 N.E.2d 997 (1977).
New York's no-fault legislation provides a plan for compensating victims of automobile accidents without regard to fault. In essence, it is a two-pronged, partial modification of the pre- existing system of reparation for personal injuries suffered in automobile accidents under which system liability was grounded in negligence under classic principles of tort law. One prong deals with compensation; the other with limitation of tort actions.
Montgomery, 38 N.Y.2d at 46, 378 N.Y.S.2d at 4. The Act partially but not completely eliminated the rights of automobile accident victims to recover in tort for their injuries. It replaced what it excised with a relatively simple and straightforward compensation system designed to quickly reimburse injured parties, up to certain limits, for the common, out-of-pocket expenses generated by their injuries.
A general overview of the statutory particulars provides a useful foundation for our evaluation of the question presented. Under the Act, every owner of a motor vehicle is responsible, regardless of fault, to a specified class of persons for any and all basic economic loss resulting from injuries occasioned by the use or operation of that vehicle. The class of persons includes the owner himself, operators and occupants of his vehicle and pedestrians. By definition, basic economic loss is limited to an aggregate maximum of $50,000 per person and includes the cost of professional health services ascertainable within one year, lost earnings and the cost of substitute services up to $1,000 per month for more than three years and other expenses up to $25 per day for not more than one year. N.Y. Ins. Law § 5102(a). Reimbursement for basic economic loss minus certain specified deductions constitutes first party benefits, id. § 5102(b), which are due and payable when the loss is incurred.
The Act imposes two limitations on recovery for personal injuries. By their terms, these limitations apply only to actions between covered person: "notwithstanding any other law," a covered person cannot recover against another covered person for basic economic loss, and a covered person who has not sustained serious injury as defined in section 5102(d)*fn1 cannot recover against another covered person for non-economic loss. Id. § 5104. Non-economic loss is "pain and suffering and similar nonmonetary detriment." Id. § 5102(c).
A covered person as defined by the Act is "any pedestrian injured through the use or operation of, or any owner, operator or occupant of, a motor vehicle which has in effect the financial security required . . . or which [is among the exceptions in N.Y. Veh. & Traf. Law § 321 (McKinney Supp. 1984), which includes vehicles owned by the United States] or any other person entitled to first party benefits." N.Y. Ins. Law § 5102(j). With certain exceptions, the motor vehicle owner's liability carrier must pay first party benefits to any person, "other than occupants of another motor vehicle or a motorcycle," whose injury arises out of the use or operation of the owner's vehicle. Id. at § 5103(a)(1). It must also pay first party benefits to "the named insured and members of his household, other than occupants of a motorcycle," for injuries arising from the use or operation of any insured vehicle outside of New York but in the United States or Canada or any uninsured vehicle in the United States or Canada. Id. § 5103(a)(2). Finally, it must pay first party benefits to any ...