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July 31, 1996

LISA J. ANDERSON, as Executrix and Personal Representative of the Estate of J. Martin Anderson, deceased, Plaintiff, DEBORAH HOUSWORTH, as Guardian ad Litem of Bradley Anderson, the only child of J. Martin Anderson, Intervenor-Plaintiff,
SAM AIRLINES, fka, Sociedad Aeronautica De Medellin Consolidada S.A., AVIANCA AIRLINES, fka, Aerovias Nacionales De Colombia, S.A., AVIANCA, INC., Defendants.

The opinion of the court was delivered by: KORMAN


 This is a wrongful death action arising out of the crash of a SAM Airlines plane in Columbia, South America, that killed J. Martin Anderson. The decedent is survived by his wife Lisa Anderson and his thirteen-year-old son by a previous marriage, Bradley Anderson. Prior to the accident, the decedent lived in North Carolina with Mrs. Anderson and her son from a previous marriage. Bradley Anderson, who suffers from autism, resides with his mother, Deborah Housworth, in Georgia.

 This action was brought pursuant to the Warsaw Convention by Mrs. Anderson as a representative of the decedent's estate. After agreeing to a $ 2 million settlement with the defendants, Mrs. Anderson filed a motion asking for an order applying federal common law, rather than North Carolina law, to the allocation of the settlement proceeds. Under a North Carolina statute, N.C. Gen. Stat. § 28A-18-2 (1995), recoveries in wrongful death actions are allocated according to the provisions of the intestacy statute, which in turn accord equal shares to a widow and an only child.

 The motion papers are not clear about the degree to which the settlement was contingent on the outcome of the motion. Counsel for Mrs. Anderson initially stated that the settlement was reached "on condition this Court determines the amount to be paid to each beneficiary based on the applicable law." Pl. Lisa Anderson's Mem. of Law at 1. Counsel further indicated that "determination of the choice of law issue raised by this motion will resolve the present impasse." Id. Defendants, however, characterized the agreement as "subject to an apportionment of the settlement monies by this Court among the claiming beneficiaries." Defs.' Mem. of Law at 3. Indeed, this description was later accepted by counsel for Mrs. Anderson. See Pl. Lisa Anderson's Reply Mem. of Law at 4. The difference between these accounts, if any, leaves unclear whether the parties had agreed that I should apportion the settlement, or were asking me to decide a choice of law question in order to facilitate settlement.

 Rather than press for a ruling on the choice of law motion, the parties attempted to agree upon a distribution of the settlement. By the time a compromise order was submitted for my approval in the spring of 1995, the defendants had increased their offer to $ 2.15 million, of which Mrs. Anderson would receive $ 1,850,000 and Bradley would receive $ 300,000. In other words, Mrs. Anderson had agreed to allocate $ 150,000 of the original $ 2 million settlement--equal to 7.5%--to Bradley and defendants had agreed to contribute $ 150,000 in additional funds. Even when viewed in the context of the total $ 2.15 million settlement, Mrs. Anderson's projected share of the recovery would exceed 86%.

 According to counsel for Mrs. Anderson, the justification offered for this uneven distribution, with which I informally agreed, could be found in federal common law. Indeed, the compromise order submitted in April of 1996, included a request that I "order" that "the settlement, including distribution, is under federal common law and not the law of North Carolina." The legal basis for this conclusion, according to counsel for Mrs. Anderson, was squarely established in In re Air Disaster at Lockerbie, Scotland, 928 F.2d 1267 (2d Cir.) ("Lockerbie I"), cert. denied, 502 U.S. 920 (1991). According to Mrs. Anderson's earlier papers for the choice of law motion, Lockerbie I stood for the proposition that "federal law exclusively governs and preempts state law in international aviation disasters such as the one at bar" and provides only for "actual damages." Pl. Lisa Anderson's Mem. of Law at 1. The bulk of such damages would be calculated based on the loss of economic support, although other bases of recovery would also be available. Because the decedent was legally obligated to support Mrs. Anderson for life but obligated to provide for his son only until he reached age eighteen, counsel for Mrs. Anderson argued, "in this case, the widow would receive substantially more than the child." Pl. Lisa Anderson's Mem. of Law at 1.

 Even accepting this proffered basis for distributing the settlement, I was concerned that Bradley's $ 300,000 share of the settlement was unacceptably low. Particularly significant was its failure to take sufficiently into account the fact that Bradley's autism would render him incapable of financial independence as an adult. Indeed, Bradley's share was precisely equal to the $ 300,000 that Mrs. Anderson was prepared to set aside for her son by a prior marriage, for whom the decedent provided financial support and who would achieve emancipation at the usual age. After Mrs. Housworth indicated that she would agree to a settlement that would increase Bradley's share to $ 355,000, and after conferring with her, I indicated that I would approve such a settlement. The defendants agreed to contribute half of the additional $ 55,000, but Mrs. Anderson declined to do so. *fn1"

 Mrs. Anderson's refusal to reduce her $ 1.85 million share by $ 27,500 necessitated another status conference, which was held on Wednesday, July 24, 1996. At the conference, I observed that there were two disputes here: one between the plaintiffs and the defendants as to the amount of the damages and a second between the plaintiffs inter se as to how that amount should be divided. From the representations contained in the application to approve the settlement, it appeared that a total recovery of $ 2,177,500 was reasonable and was acceptable to Mrs. Anderson. While it was substantially less than the economic and other damages suffered by Mrs. Anderson and Bradley Anderson, it reflected the extraordinary difficulty of proving the gross negligence necessary to overcome the $ 75,000 limitation of liability imposed by the Warsaw Convention. See Co-Plaintiff Anderson's App. For Settlement P 5 ("I have been advised that during the 60 year history of this Treaty, in only eight cases have plaintiffs been successful in evading the damage limitation by proving wilful misconduct.").

 Because Mrs. Anderson appears here as "a trustee in respect to the fund she may recover for the benefit of those entitled eventually to receive it," Estate of Below, 12 N.C. App. 657, 660, 184 S.E.2d 378, 381 (Ct. App. 1971), she was obligated to accept that amount rather than hold the estate hostage in order to obtain the agreement of the beneficiaries of the recovery to the division of the settlement that she desired in her personal capacity. If need be, a neutral person could be appointed as the representative of the estate to determine whether the case against the defendants should be settled for $ 2,177,500. See Gardner v. Parson, 874 F.2d 131, 138 (3d Cir. 1989); cf. Austin Wakeman Scott, Abridgement of the Law of Trusts § 187.1, at 369 (1960) ("Where the trustee commits or threatens to commit a breach of trust by an abuse of his discretion . . . the court may . . . direct the trustee to act where his failure to act is an abuse of discretion; or . . . remove him as trustee . . . .").

 If the dispute between the plaintiffs and the defendants was resolved, the dispute between the plaintiffs inter se as to the division of the amount could be resolved by the trier of fact. Alternatively, the $ 27,500 shortfall could be bridged by reducing the award of fees to Mrs. Anderson's counsel. The reduction would be justified in part because there was no basis for him to claim a contingency fee on the first $ 75,000 of the settlement, to which the estate would automatically have been entitled, and because, although he was retained to represent Mrs. Anderson in her fiduciary capacity as the representative of the estate of J. Martin Anderson, he actually represented the potentially conflicting personal interest of Mrs. Anderson. *fn2" See Murray v. Beard, 102 N.Y. 505, 509, 7 N.E. 553, 555 (1886) (holding that agent forfeits fee when he accepts duties that are "conflicting and incapable of faithful performance by the same person"); Musico v. Champion Credit Corp., 764 F.2d 102, 112-14 (2d Cir. 1985) (holding that agent forfeits fees for improperly performed tasks); Viventi v. Cap'n Rick Corp., 525 F. Supp. 31, 35 (S.D.N.Y. 1981) (reducing fee because "it was improper for [attorney] to represent each claimant with respect to the division of the settlement fund"), aff'd 685 F.2d 423 (2d Cir. 1982), and aff'd sub nom. Shapiro v. Fuchsberg & Fuchsberg, 685 F.2d 426 (2d Cir. 1982), and aff'd sub nom. Viventi v. Cap'n Rick Corp., 685 F.2d 428 (2d Cir. 1982).

 I gave counsel an opportunity to persuade me why these alternatives should not be pursued. Near the end of an extensive two-hour conference, Mrs. Anderson's counsel alluded to the holding of the Supreme Court in Zicherman v. Korean Air Lines Co., 133 L. Ed. 2d 596, 116 S. Ct. 629, 636 (1996). Reading the case while the parties were still before me, I learned for the first time that an essential premise of the holding of the Court of Appeals for the Second Circuit in Lockerbie I --the existence of a federal common law applicable to airplane crashes--may have been seriously undermined by Zicherman. When counsel for Mrs. Anderson asked what he should tell his client regarding the settlement, I told him that I needed time to consider the impact of Zicherman on a settlement that relied on Lockerbie I to justify according Mrs. Anderson approximately 85% of the recovery. If, as a first reading of Zicherman suggested, the distribution of the recovery would be governed by state law, there was a strong claim for North Carolina law, which provided a generous basis for calculating damages, while dividing the recovery equally between a spouse and an only child.

 On the day following the conference, counsel for Mrs. Anderson wrote a letter conceding that there was no longer an applicable federal common law. Instead, he agreed, consistent with Zicherman, that the applicable substantive law would be determined by the application of New York State's choice of law rule. New York, he argued, would apply the law of Columbia, not North Carolina, to the issue in dispute here. At the same time, however, Mrs. Anderson's counsel urged me not to decide which law applied so that the parties could pursue settlement discussions. On the next day he wrote to advise me that Mrs. Anderson was agreeable to decreasing her share of the recovery by $ 27,500, which would make possible the settlement to which Mrs. Housworth agreed and which I had indicated I would approve before reading Zicherman. This offer was conditioned upon its immediate acceptance. On Monday, the next business day, Mrs. Anderson's counsel forwarded a two-month-old unpublished opinion by my colleague Judge Seybert, in which, notwithstanding Zicherman, she decided that federal common law governed the damages recoverable in an action brought under the Warsaw Convention. See Bissett v. Pan Am. World Airways, No. 89 CV 1460 (E.D.N.Y. May 21, 1996). Based on that holding, counsel argued that North Carolina law was not applicable.

 Under these circumstances, I would have preferred more time to come to an informed conclusion as to what law applies here before being asked to approve the $ 355,000 settlement, which was predicated on a legal premise that may no longer be valid. Indeed, when confronted with Zicherman, Judge Seybert was sufficiently moved to vacate a judgment and fully reconsider the issue before reaching the conclusion she did. Nevertheless, because Mrs. Anderson's last settlement offer required an immediate ruling, I tentatively concluded that North ...

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