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MONAGHAN v. SZS 33 ASSOCS.

February 3, 1995

ELEANOR MONAGHAN, Individually and as Guardian Ad Litem for WILLIAM MONAGHAN, an incompetent, Plaintiffs, against SZS 33 ASSOCIATES, L.P., a Delaware Limited Partnership, Defendant. SZS 33 ASSOCIATES, L.P., a Delaware Limited Partnership, Third-Party Plaintiff, - against - THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, and PORT AUTHORITY TRANS-HUDSON CORP., Third-Party Defendants. SZS 33 ASSOCIATES, L.P., a Delaware Limited Partnership, Second-Third-Party Plaintiff, - against - TISHMAN CONSTRUCTION CORPORATION OF NEW YORK, McLANE SECURITY, INC., Second-Third Party Defendants.

ROBERT W. SWEET, U.S.D.J.


The opinion of the court was delivered by: ROBERT W. SWEET

Sweet, D.J.

 Plaintiffs William and Eleanor Monaghan (the "Monaghans") have moved to enforce an oral agreement of settlement between them and defendant SZS 33 Associates, L.P. ("SZS"). Also, SZS sought to enforce a contractual indemnification provision under an easement agreement (the "1935 Easement Agreement") against Port Authority of New York and New Jersey ("Port Authority") and the Port Authority Trans-Hudson Corporation ("PATH") (together "Port Authority/PATH") in the course of a trial between SZS and Port Authority/PATH.

 For the reasons set forth below, the Monaghans' motion to enforce the settlement agreement is granted, and SZS is entitled to contractual indemnification under the 1935 Easement Agreement.

 The Parties

 The plaintiffs are natural persons who reside and are domiciled in the State of New Jersey who sought to recover damages for injuries sustained by William Monaghan ("Monaghan") in the course of an armed robbery attempt which took place on March 23, 1987, in a vestibule and stairway in the former Gimbels building at West 32nd Street and Avenue of the Americas in Manhattan, leading to Port Authority/PATH's 33rd Street subway station. Monaghan was shot in the head and is severely brain damaged.

 SZS, a Delaware limited partnership, owns property in the State of New York, specifically, the property located at 1275 Broadway in New York City, formerly known as the Gimbels Building.

 Port Authority and PATH are governmental entities duly organized and existing under and by virtue of the laws of the States of New York and New Jersey. PATH is a wholly owned subsidiary of Port Authority which operates a public railroad transportation system.

 Non-party defendant McLane Security, Inc. ("McLane") is a corporation duly organized and existing under the laws of the State of New York who provided security services at the Premises under contract to SZS.

 Prior Proceedings

 The prior proceedings in this diversity action are fully set forth in the prior opinions of this Court, familiarity with which is assumed. See Monaghan v. SZS 33 Assocs., 1995 WL 10843, No. 89 Civ. 4900 (S.D.N.Y. January 12, 1995); Monaghan v. SZS 33 Assocs., 1994 WL 714436, No. 89 Civ. 4900 (S.D.N.Y. Dec. 21, 1994); Monaghan v. SZS 33 Assocs., 1994 WL 6231285, No. 89 Civ. 4900 (S.D.N.Y. Nov. 9, 1994); Monaghan v. SZS 33 Assocs., 1994 WL 584699, No. 89 Civ. 4900 (S.D.N.Y. Oct. 24, 1994), Monaghan v. SZS 33 Assocs., 153 F.R.D. 60 (S.D.N.Y. 1994); Monaghan v. SZS 33 Assocs., 827 F. Supp. 233 (S.D.N.Y. 1993); Monaghan v. SZS 33 Assocs., L.P., No. 89 Civ. 4900, 1993 U.S. Dist. LEXIS 5939 (S.D.N.Y. May 5, 1993); Monaghan v. SZS 33 Assocs., L.P., No. 89 Civ. 4900, 1992 U.S. Dist. LEXIS 7864 (S.D.N.Y. June 1, 1992); Monaghan v. SZS 33 Assocs., L.P., No. 89 Civ. 4900, 1991 U.S. Dist. LEXIS 10943 (S.D.N.Y. Aug. 8, 1991); Monaghan v. SZS 33 Assocs., L.P., 760 F. Supp. 355 (S.D.N.Y.), aff'd, 953 F.2d 635 (2d Cir. 1991) (unpublished summ. order) (Nos. 91-7781, 91-7803, slip. op. (2d Cir. Dec. 5, 1991)).

 By order of October 25, the action was set for trial on November 15. Settlement negotiations in this case were conducted, with the participation of the Court, on October 12, 1994, October 24, 1994, November 9, 1994, November 10, 1994 and November 14, 1994. SZS settled its third-party claims against McLane on October 24, 1994, with an undertaking by McLane to contribute to the contemplated settlement with the Monaghans. These meetings were not on the record.

 Appearing at the November 14 settlement conference were Philip McManus and Deborah DelSordo, counsel for SZS; Keith Harris, counsel for Port Authority/PATH; and Alan J. Konigsberg and Audrey Perlman, counsel for the Monaghans. All parties agreed at the November 14 meeting to the conditions of payment of $ 7,500,000 to the Monaghans as an appropriate settlement of their claim. SZS and Port Authority/PATH, although in agreement on the reasonableness of the settlement amount to the Monaghans, were unable to reach agreement with respect to an issue, discussed below, relevant to the resolution of the third party claims of SZS against Port Authority/PATH.

 The third-party action was then severed and set for trial before a jury on January 11, 1995.

 The Monaghans' motion to enforce the settlement with SZS was filed on December 14, 1994 and oral argument was heard on December 21, 1994.

 On January 11, 1995 the trial of the third-party action commenced, concluding with a special verdict rendered on January 27, which determined the allocation of liability for the Monaghans' damages. SZS was found to be 15 percent liable, McLane 5 percent liable and Port Authority/PATH 70 percent liable.

 During the trial of the third-party claim it was agreed that the contractual indemnity claim would be tried to the Court and the following facts were established during the trial.

 Certain post-trial motions are yet to be heard.

 Facts

 1. Facts Concerning the Settlement Agreement

 William Monaghan is now 71 years of age. His medical condition is precarious and as set forth above, protracted litigation has delayed a resolution of his claim.

 At the November 14 settlement meeting, SZS offered to pay plaintiffs $ 7,500,000 in settlement of plaintiffs' claims against SZS, contingent upon Port Authority/PATH's agreement that (i) the plaintiffs were entitled to compensation and that this settlement amount was fair and reasonable, and (ii) Port Authority/PATH and SZS would proceed to trial of the SZS' third-party action for indemnification and contribution. Plaintiffs counsel accepted this offer on behalf of plaintiffs and the trial date was adjourned to November 21, 1994. SZS and Port Authority/PATH sought to reach a written agreement and during that process Port Authority/PATH sought to preserve, in the express language of the proposed writing, its right to assert the affirmative defense of setoff as offered by § 15-108 of the New York General Obligations Law. SZS took issue with the Port Authority/PATH's assertion of this setoff right, and no agreement was forthcoming. *fn1" Subsequent to the November 14 settlement meeting the trial of the third party action was adjourned to December 5, at which time, on the failure of any agreement between SZS and Port Authority/PATH, it was set for January 11, 1995.

 At the oral argument on this motion on December 14 all parties conceded that at the November 14 meeting Port Authority/PATH agreed that the Monaghans were entitled to a recovery and that $ 7,500,000 was a fair and reasonable settlement amount for their claim, and that a full trial would be ...


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