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In re New York City Asbestos Litigation10/31/2002
This opinion is uncorrected and subject to revision before publication in the Miscellaneous Reports.
(*1)
(*2) These motions and cross-motion seeking declaratory relief in four asbestos-related personal injury and wrongful death lawsuits raise a critical issue about judgment molding that affects not only these four actions, but the tens of thousands of cases now pending before me in the New York City Asbestos Litigation ("NYCAL"). The question is whether, under Article 16 of the CPLR, a solvent tortfeasor in a personal-injury or wrongful death lawsuit whose percentage of fault is less than fifty percent must absorb the liability for non-economic losses of a tortfeasor that has filed for bankruptcy .
(*3) Statutory Framework
Article 16, enacted in 1986, partially abrogates New York's common-law, under which any joint tortfeasor, whatever its share of fault, could be held jointly and severally liable for the entire judgment. Rangolan v. Co. of Nassau, 96 N.Y.2d 42, 46 (2001). The statute, CPLR 1601(1), limits a joint tortfeasor's liability for the plaintiff's non-economic losses to its proportionate share, provided that the tortfeasor is found 50% or less at fault. If a defendant is found more than 50% culpable, however, it cannot benefit from the statute and remains liable as a joint and several tortfeasor.
The first proviso in CPLR 1601(1) states that, if a plaintiff in an action can prove that it could not with due diligence obtain jurisdiction over a tortfeasor and join it as a defendant, then that non-party tortfeasor's share of fault will not be considered when calculating the party-defendants' percentages of fault under Article 16.
(*4) Issue and Contentions
The issue here is whether, under the CPLR 1601(1) proviso, a plaintiff is "unable to obtain jurisdiction" over a tortfeasor simply because it has filed for bankruptcy , triggering the automatic stay of prosecution under 11 USC ยง 362(a). Defendants contend that, as a matter of law, a bankruptcy filing by a tortfeasor does not divest a plaintiff of jurisdiction that it might otherwise obtain over the bankrupt, and accordingly the bankrupt's share of fault should be included when calculating the defendants' exposure under Article 16. Plaintiffs argue that, because the automatic stay afforded by a bankruptcy filing precludes a plaintiff from obtaining "effective jurisdiction" over the bankrupt tortfeasor, the bankrupt tortfeasor's shares should be excluded from the calculation, which will cause the culpable defendants' shares of liability to increase. If the adjustment causes a defendant's liability to rise to above fifty percent, the severally liable defendant would become jointly liable for the plaintiff's entire non-economic loss.
Effect on Asbestos Litigation
This issue is relevant to any personal injury action with more than one tortfeasor, (*5)in which a bankrupt entity has been assigned liability. But its impact on asbestos litigation is especially pronounced, because of the large number of potentially culpable parties that have filed for bankruptcy . Most of these companies claim to have been driven into bankruptcy by the "elephantine mass of asbestos cases" in state and federal courts throughout the country.
Since 1982, at least sixty-two companies that mined asbestos, or manufactured or used asbestos-containing products, have filed for bankruptcy. The bankruptcy rate is accelerating: The first three companies filed in 1982, followed by thirteen more in the (*6)rest of the 1980's. In the 1990's, there were eighteen filings. And since January 1, 2000, in a period of less than three years, twenty-six companies
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