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Ford Motor Credit Co. v. Meehan

March 31, 2008


The opinion of the court was delivered by: Hurley, Senior District Judge



Five people were injured while passengers in a vehicle leased by defendant John J. Meehan ("Meehan") and driven by his son, defendant Matthew J. Meehan (collectively, "Defendants"). The vehicle was leased from Plaintiffs Ford Motor Credit Company and Ford Credit Titling Trust (collectively, "Plaintiffs" or "Ford"). After the passengers sued both Ford and Defendants in state court, and after Ford settled all claims with the passengers, Ford filed the present action seeking indemnification from Defendants based, inter alia, on an indemnity provision in the lease agreement. Ford now moves for summary judgment pursuant to Federal Rule of Civil Procedure ("Rule") 56.1 on its contractual indemnification claim against defendant John Meehan only. For the reasons that follow, Ford's motion is granted in part and denied in part.


The material facts, drawn from the Complaint and the parties' Local 56.1 Statements, are undisputed unless otherwise noted.

On or about December 23, 1999, Meehan entered into a lease agreement (the "Lease") with Hempstead L/M Motors Corp. d/b/a Garden City Saab (the "Lessor") to lease a 2000 Lincoln Navigator (the "Vehicle") for the term of 36 months. The Lease was assigned by the Lessor to Ford Credit Titling Trust. The Lease provides that upon assignment to Ford Credit Titling Trust, Ford Motor Credit Company was granted the "power to act on [Ford Credit Titling Trust's] behalf to administer, enforce and defend" the Lease. (Aff. of Mary J. Reno-Brevoort, dated June 22, 2007, ("Reno-Brevoort Aff.") Ex. GG ¶ 29.)

Under the terms of the Lease, Meehan agreed to maintain liability insurance covering the Vehicle and protecting Plaintiffs as additional insureds. (Id. ¶ 21.) Meehan maintained such insurance with Allstate in the combined sum of $1,300,000.00. The Lease further provided in the section captioned "INDEMNITY" that Meehan "will indemnify and hold harmless [Plaintiffs] and their assigns from any loss or damage to the Vehicle and its contents and from all claims, losses, injuries, expenses and costs related to the use, maintenance, or condition of the Vehicle." (Id. ¶ 33.)

On November 23, 2000, Matthew Meehan was driving the Vehicle when the Vehicle flipped onto its side and struck a tree. There were six passengers in the Vehicle at the time of the accident: (1) Justin Bakst ("Bakst"); (2) Patrick McCloskey ("McCloskey"); (3) Lawrence Zaccherio; (4) Frank Zaccherio; (5) Michael Maher; and (6) Danny Maher. As a result of the accident, McCloskey, then an eighteen year old freshman at Loyola College on a full athletic scholarship, sustained serious trauma to his right leg. On November 28, 2000, McCloskey underwent an above-the-knee amputation of that leg. Bakst, who was eighteen years old at the time, was killed. Three of the other passengers sustained various levels of injuries.

Thereafter, five of the passengers brought four separate actions against Ford and Defendants in state court. Ford Credit Titling Trust's alleged liability was premised upon its status as statutory owner of the Vehicle under section 388 of New York Vehicle and Traffic Law.*fn1 By Order entered on December 20, 2002, the New York Supreme Court, Nassau County, consolidated each of the passenger cases under one action. On the eve of trial, the suit settled. The settlement called for payments to the passengers totaling $5,825,000.00 (the "Settlement Agreement"), which amount was to be paid as follows:

McCloskey $5,075,000.00

Michael Maher $350,000.00 Frank Zaccherio $100,000.00 Lawrence Zaccherio $25,000.00 Estate of Bakst $275,000.00 Meehan's insurer, Allstate, tendered the full limits of Meehan's policy ($1,300,000.00) in partial satisfaction of the settlement amount. The Allstate funds were used to satisfy in full the claims of all of the passenger plaintiffs except McCloskey, who was paid $550,000.00 out of the Allstate funds. Ford Credit Titling Trust paid the remainder ($4,525,000) to McCloskey.

In a release executed by McCloskey on January 7, 2005, McCloskey released both Ford and Defendants from any further claims related to the car accident. The release provides that it does not "extinguish, release, impair, alter or modify" the claims of Ford against the Meehans. (Declaration of David L. Tillem, dated Apr. 30, 2007 ("Tillem Decl."), Ex. BB.)

On October 12, 2005, Ford filed the instant action, seeking contractual and implied indemnification from Defendants. Ford seeks the $4,525,000.00 paid to McCloskey, less the sum of $25,000, representing the mandatory minimum primary insurance Ford must credit to Defendants under section 370(a) of New York Vehicle and Traffic Law. By instant motion, Ford now seeks summary judgment on its contractual indemnity claim against defendant John J. Meehan only. In opposition, Meehan claims that he never agreed to the settlement and that Ford settled the action unilaterally. He also notes that Defendants never agreed to, nor signed, the release executed by McCloskey. For the reasons set forth below, Ford's motion is granted in part and denied in part.


I. Applicable Law and Legal Standards

Summary judgment pursuant to Federal Rule of Civil Procedure 56 is only appropriate where admissible evidence in the form of affidavits, deposition transcripts, or other documentation demonstrates the absence of a genuine issue of material fact, and one party's entitlement to judgment as a matter of law. See Viola v. Philips Med. Sys. of N. Am., 42 F.3d 712, 716 (2d Cir. 1994). The relevant governing law in each case determines which facts are material; "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). No genuinely triable factual issue exists when the moving party demonstrates, on the basis of the pleadings and submitted evidence, and after drawing all inferences and ...

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