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BARRETT v. UNITED STATES

December 10, 1986

ELIZABETH BARRETT, Individually and as Administratrix of the Estate of Harold Blauer, Deceased, Plaintiff,
v.
UNITED STATES OF AMERICA, JAMES CATTELL, AND NEWTON BIGELOW, Defendants



The opinion of the court was delivered by: MOTLEY

MOTLEY, J.

This lawsuit arises out of the tragic death of Harold Blauer which occurred on January 8, 1953 as a result of his injection with an experimental drug, EA-1298, a mescaline derivative, while he was a patient at the New York State Psychiatric Institute, a state mental facility. The drug had been supplied to the Psychiatric Institute pursuant to a contract between the Institute and the United States Army Chemical Corp, which was interested in possible chemical warfare applications of the substance. Not suspecting any such extraordinary backdrop to Harold Blauer's death, in 1953 his estate filed a lawsuit against New York State sounding in medical malpractice. This suit was eventually settled in 1955 for $18,000, with the United States secretly paying half the amount.

 Plaintiff Elizabeth Barrett, Blauer's daughter, did not learn of the United States' role in her father's death until 1975 when the Army notified her of the Chemical Corp's involvement in the Psychiatric Institute research project during which Harold Blauer died. Shortly thereafter, she filed this lawsuit in her individual capacity as well as in her capacity as administratrix of the estate of Harold Blauer.

 The facts and allegations out of which this current lawsuit arises have been extensively discussed in the numerous decisions already rendered in this case by both the district court and the Court of Appeals on a variety of issues. See, e.g., Barrett v. United States, 798 F.2d 565 (2d Cir. 1986); Barrett v. United States, 689 F.2d 324 (2d Cir. 1982), cert. denied 462 U.S. 1131, 77 L. Ed. 2d 1366, 103 S. Ct. 3111 (1983), Barrett v. United States, 622 F. Supp. 574 (S.D.N.Y. 1985). For purposes of the present opinion, it will suffice to say that in addition to suing the United States under the Federal Tort Claims Act, 28 U.S.C. Sections 1346(b), 2671 et seq. for its alleged negligence in creating and conducting the drug experiment project, plaintiffs have sued the numerous individuals allegedly involved in the death and the events surrounding it under 42 U.S.C. Section 1983 for violations of the constitutional rights of Harold Blauer, his estate, and its beneficiaries. Of these individual defendants, who at one time included both state and federal officials and employees, only two remain, Dr. James Cattell, the doctor at the Psychiatric Institute who actually administered the fatal injection to Harold Blauer, and Dr. Newton Bigelow, the New York State Commissioner of Mental Hygiene at the time Mr. Blauer died.

 Plaintiffs have asserted two distinct constitutional claims against these individuals under Section 1983. The first arises out of the individual defendants' alleged role in depriving Harold Blauer of his liberty and life without due process of law by causing him to participate in the Army experiments at the Psychiatric Institute. This first claim has frequently been referred to in this suit as plaintiffs' "pre-death claim." Plaintiffs' second claim arises out of the individual defendants' alleged role in an illegal cover-up by federal and state officials of the complete facts of Harold Blauer's death. This claim has frequently been referred to as plaintiffs' "post-death claim." The gravaman of this second claim is that by concealing and misrepresenting the true facts of Harold Blauer's death, namely those facts going to the Army's involvement and purpose in the experimentation, Harold Blauer's estate and its beneficiaries were unconstitutionally deprived of their property rights in a potential cause of action against the federal government, and in the incremental value, had the full circumstances of the death been known, of the lawsuit that they did file and settle in the 1950's. See Barrett v. United States, 689 F.2d 324, 331-33 (2d Cir. 1982).

 Defendants assert that plaintiffs' second cause of action, based on the alleged cover-up, for unconstitutional deprivation of property is barred by the election of remedies requirement imposed in this Circuit for actions arising out of allegedly fraudulent settlements. Subsequent to the close of plaintiffs' case at trial, and after extensive argument on this and related issues, the court has determined for the reasons that follow that plaintiffs' cause of action under Section 1983 for unconstitutional deprivation of property as a result of the alleged illegal cover-up of the true facts of Harold Blauer's death must be dismissed.

 Discussion

 It is well-established under New York State law that where a party seeks to recover damages upon learning that he has been fraudulently induced to settle a meritorious claim, he has two options. He may either ratify the settlement agreement and sue for fraud, or else rescind the settlement agreement and sue anew on the underlying wrong. Slotkin v. Citizens Casualty Co. of New York, 614 F.2d 301, 312 (2d Cir. 1979); cert. denied, 449 U.S. 981, 66 L. Ed. 2d 243, 101 S. Ct. 395, 101 S. Ct. 396 (1980): Byrnes v. National Union Insurance Co., 34 A.D.2d 872, 310 N.Y.S.2d 781 (1970).

 The essence of plaintiffs' second claim in this lawsuit, that is, their Section 1983 claim for unconstitutional deprivation of property, is that the estate of Harold Blauer and its beneficiaries were fraudulently induced to settle their claims against all parties arising out of Harold Blauer's death for an amount much less than the full value of these claims. Barrett v. United States, 689 F.2d at 331-32. Under Slotkin and the New York rule explicated therein, in order to sue for fraud in the inducement of this settlement, plaintiffs must ratify the settlement. Slotkin, 614 F.2d at 312 (New York rule allows "recission on the one hand or ratification and suit for damages On the other"), However, essential to plaintiffs' first and distinct claim in this lawsuit for the death of Harold Blauer, which has been brought against the United States under the Federal Tort Claims Act and against the individual defendants under Section 1983, is a repudiation of the 1955 settlement agreement. Barrett v. United States, 622 F. Supp. at 583-585 (S.D.N.Y. 1985). Thus, the present case involves a situation where plaintiffs are attempting both to rescind the settlement and sue anew on the underlying wrong, and also to ratify the settlement in order to sue in fraud for the incremental value of the claim or claims that they were allegedly deprived of as a result of the fraud.

 Even without the benefit of the Second Circuit's extensive discussion in Slotkin of a litigation presenting a similar configuration, it is evident that the two groups of claims which plaintiffs wish to pursue in the present lawsuit, both on Harold Blauer's death and on its cover-up, are mutually exclusive. Plaintiffs must either attempt to invalidate the 1955 settlement agreement and sue anew on all claims arising out of Harold Blauer's death, or instead ratify the settlement agreement and sue for fraud.

 No injustice is worked by requiring an election of remedies in such a situation because regardless of which cause of action is selected the measure of damages is virtually identical. Furthermore, any amount obtained on the post-death cause of action would be essentially duplicative of any recovery that might be obtained for the pre-death cause of action, and thus could not actually be collected. See Barrett v. United States, 689 F.2d at 332, n. 1 (2d Cir. 1982).

 Were plaintiffs to choose the claim for Harold Blauer's death itself, i.e, were they to pursue their argument that the 1955 settlement is invalid and sue anew for Harold Blauer's death under the Federal Tort Claims Act and under Section 1983, they would, if successful, be entitled to damages against both the United States and the individual defendants for Blauer's conscious pain and suffering, and for those items of damages allowable under New York State's wrongful death statute. See Parilis v. Feinstein, 49 N.Y.2d 984, 406 N.E.2d 1059, 429 N.Y.S.2d 165 (1980). In addition, under Section 1983 they might also be entitled to punitive damages against the individuals for their roles in Harold Blauer's death. On this pre-death claim, plaintiffs would furthermore be entitled to pre-judgment interest against the individual defendants. *fn1"

 Were plaintiffs instead to choose the second, cover-up cause of action, i.e., to ratify the settlement and sue the individual defendants for the injury caused to Harold Blauer's estate and its beneficiaries by the alleged fraudulent cover-up, the damages would be almost precisely the same. If successful on their fraud claim, plaintiffs would obtain against the individual defendants the value of the lost suit against the United States arising out of Harold Blauer's death, as well as the value of the lost constitutional suit against any individual defendants for Harold Blauer's deprivation of life and liberty. As explained above, the value of these suits consists of an award for Harold Blauer's conscious pain and suffering, the wrongful death damages available under New York State law, possible punitive damages against the individuals for their roles in the death, and interest on these amounts from 1953 to the present. In addition, plaintiffs might possibly be able to obtain additional punitive damages for the individuals' wrongful conduct in connection with the alleged cover-up operation. *fn2" Thus, with the exception of a possible second set of punitive damages were plaintiffs to chose the cover-up claim, the damages recoverable under the pre-death claim and the damages recoverable under the post-death claim are identical.

 Plaintiffs have already indicated to the court on the record that if required under Slotkin to make an election between their pre-death causes of action for Harold Blauer's death under both negligence and constitutional theories, and their post-death cause of action for unconstitutional property deprivation, they would elect the former. This is not surprising. Were plaintiffs to choose their post-death cover-up claim for fraudulent misrepresentation and concealment instead of the pre-death claim for Harold Blauer's death itself, they would lose the United States of America as a defendant since fraud is not actionable under the Federal Tort Claims Act. 28 U.S.C. Section 2680(h); Barrett v. United States, 622 F. Supp. 574, 582 (S.D.N.Y. 1985). Because, as explained above, the allowable damages under the ...


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