The opinion of the court was delivered by: LASKER
Marine Midland Bank, N.A. ("Marine") moves pursuant to Rules 12(b)(6) and 56(b) of the Federal Rules of Civil Procedure to dismiss the third-party complaint filed by Oppenheim, Appel, Dixon & Co. ("OAD") against Marine. The motion is granted.
In an earlier, related litigation, Wichita Federal Savings and Loan Association v. Comark, No. 82 Civ. 4703(MEL) (S.D.N.Y.), five savings and loan associations and a municipality sued Comark, a dealer in government securities, and Marine, Comark's clearing bank, for losses of $17 million in government securities. The Wichita action was tried to a jury in the spring of 1985, with the jury returning a verdict for fraud and the court directing a verdict for conversion against Comark. The plaintiffs settled their claims against Marine in mid-trial.
In the present action five of the six Wichita plaintiffs or their successors-in-interest (hereafter "plaintiffs") are suing OAD, Comark's accountants, on a variety of legal theories for the losses they sustained. OAD, in turn, has impleaded Marine as a third-party defendant
for recovery from Marine by way of contribution
in the event that plaintiffs recover damages from OAD in this action.
By the present motion Marine seeks to dismiss the third-party complaint against it on the ground that as a released tortfeasor it is immune from contribution on the state law claims under N.Y. Gen. Oblig. L. § 15-108(b) (McKinney 1978) and on the federal securities law claims
because either (1) New York's contribution statute provides the appropriate rule of decision; (2) contribution is barred as a matter of federal common law; or (3) contribution on federal securities claims is available only as between joint tortfeasors, and Marine and OAD are not joint tortfeasors.
The settlement agreement between the plaintiffs and Marine provides for the dismissal with prejudice of plaintiffs' claims against Marine, the exchange of releases between the parties of all claims arising out of the Comark situation, the payment by Marine to plaintiffs of a "base settlement amount" of $3 million, and the payment of an "additional settlement amount" of up to $2 million which is contingent upon the amount of money subsequently recovered by plaintiffs from Comark, Comark's estate, Comark's partners, and OAD.
October 23, 1985 Settlement Agreement (Exhibit A to Affidavit of Philip L. Graham, Jr.).
New York's release statute, the focus of the parties' arguments on this motion, provides in pertinent part:
(a) Effect of release of or covenant not to sue tortfeasors. When a release or a covenant not to sue or not to enforce a judgment is given to one of two or more persons liable or claimed to be liable in tort for the same injury, or the same wrongful death, it does not discharge any of the other tortfeasors from liability for the injury or wrongful death unless its terms expressly so provide, but it reduces the claim of the releasor against the other tortfeasors to the extent of any amount stipulated by the release or the covenant, or in the amount of the consideration paid for it, or in the amount of the released tortfeasor's equitable share of the damages under article fourteen of the civil practice law and rules, whichever is the greatest.
(b) Release of tortfeasor. A release given in good faith by the injured person to one tortfeasor as provided in subdivision (a) relieves him from liability to any other person for contribution as provided in article fourteen of the civil practice law and rules.
N.Y. Gen. Oblig. L. § 15-108 (McKinney 1978).
Before analyzing the legal issues raised by Marine's motion to dismiss, it is helpful to identify the positions of the parties. Marine maintains that the third-party complaint against it should be dismissed on the ground that plaintiffs' release in Marine's favor bars all contribution claims against it. Marine takes no position on the question of what law governs the reduction of OAD's liability to the plaintiffs as the result of Marine's settlement or on the issue of the application of Section 15-108 to the settlement in this regard.
OAD concedes that the New York release statute bars contribution claims against Marine on the state law causes of action in the case (although OAD argues that Section 15-108 guarantees it a reduction in its potential liability of at least $5 million, based on the Marine settlement) but contends that contribution from Marine is not precluded on the federal securities law claims.
Plaintiffs, for their part, agree that contribution from Marine is barred on the state law claims but argue that the applicable rule of decision is provided not by New York's contribution statute but rather by the laws of other states -- all of which do not entitle a joint tortfeasor such as OAD to a setoff based upon a settling tortfeasor's relative fault. See N.Y. Gen. Oblig. L. § 15-108(a). Plaintiffs appear to support OAD's position that ...