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Rutherford v. Gary Line Inc.

decided: January 28, 1980.


Appeal from an order of the United States District Court for the Southern District of New York, Mary Johnson Lowe, Judge, dismissing the complaint in a diversity case seeking damages for wrongful death and conscious pain and suffering for the benefit of the minor daughter of a Pennsylvania decedent who died in a New York two-truck accident. The court of appeals, applying Pennsylvania law, held that a release granted to one appellee after settlement of a Pennsylvania suit does not bar the present action. It also held that New York law governs the vicarious liability of certain appellees, alleged to have owned the trailer involved in the accident. Reversed and remanded.

Before Moore, Oakes and Newman, Circuit Judges.

Author: Oakes

This diversity wrongful-death case presents some interesting conflict-of-laws issues, including the applicability of a Pennsylvania release with a reservation of rights to a New York accident, as well as the issue of who is a joint tortfeasor under the Uniform Contribution Among Joint Tortfeasors Act (the Uniform Act).*fn1 The United States District Court for the Southern District of New York, Mary Johnson Lowe, Judge, held that Pennsylvania law applied and operated to make a release given by appellant running to appellee, The Gray Line, Inc.,*fn2 prevent recovery against other appellees Sorensen Transportation Co., Inc., Arthur W. Sorensen, Sr., Arthur W. Sorensen, Jr., and Robert C. Sorensen (hereinafter the "Sorensen appellees"), Steven H. Hnatvik, and Willie K. Thomas. We disagree in part and reverse.

Appellant's decedent, Darryl Mouat, was killed on October 29, 1973, while operating a truck on the New York State Thruway, when a tractor-trailer driven by appellee Hnatvik crossed the median strip and struck the Mouat truck. Appellee Thomas owned the Hnatvik tractor. The trailer was owned, at least previously, by Gray Line, and bore its ICC permit number. Gray Line had leased the trailer to Thomas, whose driver was making a delivery of newspapers for Gray Line at the time of the accident. The Sorensen appellees acquired certain Gray Line interests and ICC rights, and some of its vehicles and trailers, three weeks before the accident, and there was apparently a bill of sale covering the trailer in question.

A Pennsylvania executor brought suit in the United States District Court for the Eastern District of Pennsylvania under the Pennsylvania survival and wrongful death statutes,*fn3 but only against Gray Line. The decedent and the sole beneficiary of his estate, a minor daughter, were citizens of Pennsylvania. Suit was also brought in the United States District Court for the Southern District of New York, for wrongful death and conscious pain and suffering, against all appellees. The Pennsylvania suit was settled with the approval of the Pennsylvania court for $140,000, $130,000 being applied to the survival action and $10,000 to the wrongful death action. A release executed in Pennsylvania and running to Gray Line was expressly "without prejudice to plaintiff to proceed against Willie K. Thomas and Steven H. Hnatvik" in the pending federal court action, with no mention being made of the Sorensen appellees.

The district court dismissed the complaint by applying New York conflict-of-laws rules, as it was required to do, Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 496, 61 S. Ct. 1020, 85 L. Ed. 1477 (1941), and finding, under Babcock v. Jackson, 12 N.Y.2d 473, 240 N.Y.S.2d 743, 191 N.E.2d 279 (1963), Pennsylvania law applicable to what the judge conceived as the issues in the case: whether particular defendants were financially responsible for the accident, whether an employer is a joint tortfeasor with his employee, and whether the release to Gray Line operated to release all other defendants below. The judge found the Pennsylvania common-law rule of respondeat superior applicable, rather than the vicarious liability imposed upon all vehicle owners under N.Y.Veh. & Traf.Law § 388.*fn4 This finding implicitly exonerated the Sorensen appellees, whose only connection with the accident was their possible status as vendees of the trailer. The district judge also held that an employer is not a joint tortfeasor with his employee, relying on the case of Builders Supply Co. v. McCabe, 366 Pa. 322, 77 A.2d 368 (1951), although it preceded the adoption by Pennsylvania of the Uniform Act.*fn5 The court held that such an employer is merely secondarily liable to the primarily liable operator or employee. By virtue of this holding appellant could not benefit by the Uniform Act's provisions that a release of one joint tortfeasor does not release others unless the release so provides.*fn6 Then, returning to Pennsylvania's common law, the district court held that the release of one secondarily liable tortfeasor, Gray Line, even with a reservation of rights, constituted a release of all parties, citing Union of Russian Societies of St. Michael and St. George v. Koss, 348 Pa. 574, 577, 36 A.2d 433, 434 (1944), and distinguishing cases*fn7 that dealt with tortfeasors who allegedly committed independent and separate tortious acts. We do not see the case in quite the same way.

I. The Effect of the Release

We agree with the district court that under Babcock v. Jackson, supra, and related cases, see Rosenthal v. Warren, 475 F.2d 438 (2d Cir.), cert. denied, 414 U.S. 856, 94 S. Ct. 159, 38 L. Ed. 2d 106 (1973), with respect to the effect of a release New York would look to the law of the state with the "superior interest" in having its policy or law applied. Thus the effect of this Pennsylvania release, executed by a Pennsylvania plaintiff, in respect to a Pennsylvania estate's claim for relief, is a matter that would ordinarily be governed by Pennsylvania law. This is true despite intimations in Ehrenzweig, Releases of Concurrent Tort-Feasors in the Conflict of Laws: Law and Reason Versus the Restatement, 46 U.Va.L.Rev. 712 (1960), that the better rule of law is, as urged by Dean Prosser,*fn8 to permit recovery after the release of one joint tortfeasor (with or without a reservation of rights),*fn9 and that this better rule should always be applied by the forum state.*fn10 It is clear that the New York conflict-of-laws cases have not taken this "Better Rule of Law" approach. Rosenthal v. Warren, supra, 475 F.2d at 441 n.4.

There remains a question whether, in some revisitation of renvoi, the New York courts would look in their "interest analysis" approach to the whole law of Pennsylvania (including Pennsylvania's conflict-of-laws rules), see Restatement (Second) of Conflict of Laws § 8, or only to the local Pennsylvania law on releases. Even if the New York courts did look to the whole law, however, we believe a Pennsylvania court would follow its own substantive law to determine the effect of a release given by its citizen(s), even if the accident occurred out-of-state. Bittner v. Little, supra note 10, is, we believe, no longer likely to be followed, because the second Restatement generally determines the effect on one joint tortfeasor of a release given to another by reference to the local law of the state which has the "most significant relationship" to the occurrence and the parties. Restatement (Second) of Conflict of Laws §§ 170, 145, and 6. The second Restatement is so authoritative that the Pennsylvania courts would, we feel, still apply the analogy of § 170 even if the district judge were correct in suggesting that this is not strictly speaking a case of joint tortfeasors.

Thus we must look to Pennsylvania local law. Several factors become relevant here. The first is the status of Gray Line as a tortfeasor. Under Pennsylvania law, a release "given to one not shown to be liable does not release a tort feasor." Union of Russian Societies of St. Michael and St. George, supra, 348 Pa. at 578, 36 A.2d at 435. Here, the released party, Gray Line, has denied liability in the release agreed to by plaintiff. But this denial is not determinative because, if the law is such that the other appellees may gain thereby, they retain the right to keep Gray Line among the named defendants and ultimately show its tortfeasor status. Davis v. Miller, 385 Pa. 348, 123 A.2d 422 (1956).*fn11 Thus our remaining conclusions must be based on the assumption that Gray Line will ultimately be shown to be a tortfeasor.

We must turn then to the relationships between Gray Line and the other appellees. Does Pennsylvania law dictate that the acting, primarily liable employee is released by a release to his general employer? Does it also dictate that the secondarily liable specific employer (Thomas) or the vicariously liable vendees of the trailer (the Sorensens) are similarly released? The key issue is whether or not these other appellees are joint tortfeasors with Gray Line for purposes of the Uniform Act, 42 Pa.Cons.Stat.Ann. § 8326, which, as we have noted, provides that the release of one joint tortfeasor does not release others. We hold that all appellees were joint tortfeasors for these purposes,*fn12 and therefore we hold that none of the other appellees was released by the release to Gray Line.

Our general conclusion is supported by the language of the Act itself, which defines the term "joint tortfeasors" quite broadly. The term "means two or more persons jointly or severally liable in tort for the same injury to persons or property, whether or not judgment has been recovered against all or some of them." 42 Pa.Cons.Stat.Ann. § 8322; see, e. g., Smith v. Raparot, 101 R.I. 565, 225 A.2d 666 (1967).

Looking more specifically at the various appellees, we note that the possible liability of the Sorensen interests and of Thomas (driver Hnatvik's full-time employer) is, like the liability of Gray Line, secondary or vicarious. It has long been held that two parties who are each secondarily liable are considered joint tortfeasors as between each other. E. g., Gordon v. S. M. Byers Motor Car Co., 309 Pa. 453, 459, 164 A. 334, 336 (1932); see Grasberger v. Liebert & Obert, Inc., 134 Pa.Super. 78, 4 A.2d 186, rev'd on other grounds, 335 Pa. 491, 6 A.2d 925 (1939). More importantly, there is the case of Mazer v. Lipshutz, 360 F.2d 275 (3d Cir.), cert. denied, 385 U.S. 833, 87 S. Ct. 72, 17 L. Ed. 2d 68 (1966) (Mazer II ), where the Third Circuit held that a release given to a hospital for the negligence of a head technician in charge of a hospital blood bank, reserving rights, inter alia, against the operating room surgeon, did not release the surgeon even though the technician was also subordinate to him during the operation. The court relied on Pennsylvania law to the effect that a servant may have two masters at one time, McConnell v. Williams, 361 Pa. 355, 361, 65 A.2d 243, 245 (1949), a proposition which, if it is not universal, should be. Mazer holds then that the two masters are joint tortfeasors for purposes of the Uniform Act. See also Mazer v. Lipschutz, 327 F.2d 42, 54-55 (3d Cir. 1963) (Mazer I ). But cf. Sheppard v. Atlantic States Gas Co., 72 F. Supp. 185 (E.D.Pa.1947), rev'd on other grounds, 167 F.2d 841 (3d Cir. 1948). We find Mazer to be controlling.

As for the driver Hnatvik, whose liability is primary, rather than secondary, his status in relation to Gray Line is furthest from that of a "joint tortfeasor" in the traditional sense. And there is, in addition, at least one case, George v. Brehm, 246 F. Supp. 242 (W.D.Pa.1965), which reads the Act as not applying to a case involving one primarily and one secondarily liable defendant. The court there held applicable the common law rule that release of a primarily liable tortfeasor also releases one who is secondarily liable. Id. at 246. Nevertheless, regardless of the continued vitality of the specific rule stated in George, we feel certain that the courts of Pennsylvania would no longer apply the converse rule, releasing a primarily liable wrongdoer whenever there has been a release of a secondarily liable party. To do so would be anomalous, since such a release would then, based on our prior conclusions, not ...

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