The opinion of the court was delivered by: McLAUGHLIN, Circuit Judge[fn*]. [fn*] Setting as district judge designation.
The parties seek an entry of judgment. Fed.R.Civ.P. 58.
Accordingly, the Clerk is directed to enter judgment against
Owens-Illinois, Inc. in the amount of $0.00.
The total amount of plaintiff's verdict was $239,800.00;
$55,000.00 of that verdict was for plaintiff's wrongful death
claim. Because New York law entitles plaintiff to pre-verdict
interest on her wrongful death claim, the final tally for her
award under the jury verdict amounts to $279,400.00.
N YEst.Powers & Trust Law § 5-4.3 (McKinney Supp. 1990).
Under New York law, however, the judgment against a defendant
in a civil asbestos suit for damages "is to be reduced by the
amount of plaintiff's settlements with former co-defendants, or
by the amount of consideration stipulated in plaintiff's
release of them, or by the proportion of fault that the jury
attributes to them, whichever is greatest." In re Joint Eastern
and Southern Districts Asbestos Litigation, 124 F.R.D. 538, 544
(E.D.N.Y. 1989), aff'd, 899 F.2d 1281 (2d Cir.), cert. denied,
___ U.S. ___, 111 S.Ct. 297, 112 L.Ed.2d 250 (1990). In that
regard, plaintiff proceeded to trial (and to verdict) against
01 alone, after settling with the other five former
codefendants. One of the five settling codefendants, Johns
Manville Corporation ("JMC" or "Manville"), entered into an
agreement with plaintiff to settle for $100,000 (40% to be paid
within 90 days of the verdict; 60% to be paid within five years
of the initial payment date). The jury found JMC to be 3%
liable, which amounts to $8,382.00 of the overall verdict. To
date, JMC has not paid any of the settlement amount.
Additionally, the Manville trust has gone into bankruptcy,
casting doubt on the likelihood of any future payment to
plaintiff. In re Johns Manville Corp., et al., 82 B 11656
(BRL). In light of JMC's recent financial predicament,
plaintiff and OI disagree over the appropriate offset for JMC
under the jury verdict.
OI seeks an offset for the Manville settlement for the total
amount stipulated in the release ($100,000). Under OI's
approach, the total amount of its offset for all settling
defendants amounts to $294,700.00.*fn1 Because that offset
exceeds the jury verdict of $279,400.00, OI would pay nothing
under the verdict. Williams v. Niske, 147 Misc.2d 556, 557
N YS.2d 1006 (1989).
Plaintiff emphasizes that because of the Manville bankruptcy
(and the likelihood of little or no payment under the JMC
settlement), the actual settlement amount is zero. Plaintiff
concludes, therefore, that 01 should be entitled to a JMC set
off of only the 3% liability (amounting to $8,382.00) allocated
by the jury to JMC and upheld by this court. To prevent any
possible future windfall, plaintiff agrees to assign to 01 her
right to any future payment that JMC may make.
New York's General Obligations Law § 15-108(a) provides:
Plaintiff argues that JMC's bankruptcy, which occurred after
the $100,000 settlement was agreed upon, makes the settlement
worthless. Therefore, runs the argument, no offset for the
Manville settlement should be made. The court rejects this
argument. It is reasonable to infer that those dealing with the
Manville trust at the time of this litigation were well aware
of its financial problems. Indeed, it is likely that plaintiff
knew this simply by virtue of accepting a settlement with
staggered payments. Even without such insights, "[e]quity will
not relieve a party of its obligations under a contract merely
because subsequently, with the benefit of hindsight it appears
to have been a bad bargain." Raphael v. Booth Memorial
Hospital, 67 A.D.2d 702, 703, 412 N.Y.S.2d 409, 411 (2d Dep't
1979); see also Commentary to CPLR 15-108 (recognizing
plaintiff takes risks "when he elects to seize the bird in the
hand by settling with one of the tortfeasors.").
Plaintiff also contends that, even if Manville were not
bankrupt, 01 should be entitled to an offset (for the Manville
settlement) of only the present value of the settlement.
Presumably this would be calculated as of the date of the
$100,000 settlement agreement. The offset, therefore, would be
for the then-present value of the $40,000 to be paid in 90
days, plus the then-present value of the $60,000 that was to be
paid within five years of the initial payment date.
To support this talmudic interpretation of Section 15-108(a),
plaintiff relies upon Reinitz v. Arc Elec. Construction Co.,
104 A.D.2d 247, 483 N.Y.S.2d 821 (3rd Dep't 1984). Her reliance
is misplaced. In Reinitz, the plaintiff entered into a
structured settlement requiring one settling defendant to
purchase an annuity. To inflate the size of his offset, the
non-settling defendant sought to value the release at the
matured value of the annuity rather than the actual purchase
price specified in the release itself. Id. at 250, 483 N.Y.S.2d
at 823. The court found that the amount actually paid for the
annuity was the appropriate offset. Reinitz, however, is ...