Case Name: In the Matter of New York City Asbestos Litigation. Anne M. South, Respondent, v. Chevron Corporation, Appellant, et al., Defendant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 2017-08-29
Citations: 153 A.D.3d 461
Docket Number: 
Parties: In the Matter of New York City Asbestos Litigation. Anne M. South, Respondent, v Chevron Corporation, Appellant, et al., Defendant.
Judges: Concur — Manzanet-Daniels, Maz-zarelli and Webber, JJ.
Reporter: Appellate Division Reports
Volume: 153
Pages: 461–474

Head Matter:
In the Matter of New York City Asbestos Litigation. Anne M. South, Respondent, v Chevron Corporation, Appellant, et al., Defendant.
[62 NYS3d 309]

Opinion:
Order, Supreme Court, New York County (Peter H. Moulton, J.), entered on or about January 5, 2016, which, to the extent appealed from, denied defendant Chevron Corporation's alleged predecessor in interest's (Texaco) motion for summary judgment dismissing the complaint as against it, affirmed.
Plaintiff's decedent, Mason South, and plaintiff, South's wife, commenced this action alleging that South's mesothelioma resulted from his exposure to asbestos during his 37-year career in the Merchant Marine. They claimed that defendant Texaco manufactured, produced, sold, supplied, merchandised and/or distributed asbestos-containing products that were located on the ships South worked on. The claims were brought under the Jones Act (46 USC § 30104 et seq.). South's wife asserted derivative claims and was substituted as plaintiff after South died of mesothelioma.
Texaco moved for summary judgment dismissing the complaint as against it. The basis for the motion was a release that South had given to it in connection with an earlier lawsuit, also in connection with his exposure to asbestos on merchant ships. In that Jones Act action, filed in 1997 in the United States District Court for the Northern District of Ohio, South alleged that "[a]s a direct and proximate result of said exposure to asbestos aboard the said vessels as well as secondary or passive smoke that hung still in the atmosphere free from dissipation for lack of adequate ventilation, Plaintiff suffers cancerpho-bia, traumatic stressful fear of affliction and worsening of pneumoconiosis as well as exacerbation of existing diseases; and suffers anatomical disorder, structural changes, pulmonary diseases inclusive of asbestosis/mesothelioma/lung cancer/ pneumoconiosis/chronic obstructive pulmonary disease/colon cancer/stomach cancer/rectal cancer/kidney cancer/pancreas cancer/pharynx cancer/brain cancer/other anatomical cancer, et cetera, either singularly or in combination thereof; and, moreover, Plaintiff suffers harm in the form of necessity to be monitored for other asbestotic diseases including lung cancer." The release that South executed in connection with the settlement of the 1997 action stated that South, "for himself, his heirs, administrators, beneficiaries, executors and assigns," released Texaco "forever" from any and all "actions, suits, [and] claims" which he "has now, has ever had, or which may accrue in the future." The release included any "bodily and/or personal injuries, sickness or death" which allegedly occurred as a result of South's asbestos exposure. The release acknowledged that the "long term effects of exposure" to asbestos might result in "obtaining a new and different diagnosis from the diagnosis as of the date of this Release." South stated in the release that despite this, he knew that he would be giving up the right to bring an action in the future for "any new or different diagnosis that may be made" as a result of his exposure to any asbestos or other product. This provision also pertained to South's executors, administrators, and heirs. South acknowledged that he had read the full release, discussed it with his attorney, and was signing it with full knowledge of its contents, and that he would be legally bound by it. In return for furnishing the release, South was paid $1,750.
In opposition to the motion, plaintiffs argued that the release did not preclude the claim for mesothelioma, based on section 5 of the Federal Employers' Liability Act (FELA) (45 USC § 55), which requires strict scrutiny of releases and prohibits agreements that exempt common carriers from liability. Under that standard, plaintiffs asserted that at the time South signed the release, he did not have mesothelioma and was not aware of the risk of mesothelioma as a potential injury from his asbestos exposure.
The court denied Texaco's motion. It focused its analysis on two federal cases, one from the Sixth Circuit adopting a bright-line test voiding releases that attempt to bar claims for injuries that have not been explicitly forsaken, and one from the Third Circuit enforcing such releases, provided that the plaintiff understood the actual specific risks being released. The motion court held that, under either circuit's standard, Texaco failed to establish that South understood he was releasing a future claim for mesothelioma. Under the more lenient Third Circuit test, the 1997 release was inadequate because although it referred to future claims arising out of asbestos exposure and contemplated a second injury, it did not mention cancer or mesothelioma explicitly. Moreover, the court characterized the settlement payment South received as consideration for the 1997 release as, "[biased on this court's experience . . . extremely low, given . . . South's alleged extensive asbestos exposure." The court alternatively described the amount as "meager."
Texaco argues on appeal that the release should be enforced because it represents a compromise of a known claim, not an exemption from liability for a future unknown claim. It contends that because the release resolved an action arising out of South's exposure to asbestos, it applies to additional injuries that might later manifest themselves as a result of the same exposure. Texaco notes that the 1997 complaint asserted a claim for possible diseases stemming from his exposure, and mentioned mesothelioma as one of those diseases. Thus, Texaco reasons, the release necessarily embraced mesothelioma as a condition South was aware of as a risk of asbestos exposure but was willing to compromise as a claim in exchange for monetary consideration. Texaco stresses the language in the release by which South acknowledged that his exposure to asbestos could cause new diseases that were not yet apparent on the date he executed the release, and his statement in the release that he had read it carefully and had had the assistance of counsel.
The Jones Act provides merchant mariners, such as South, with a right of action for injuries and death arising out of the performance of their duties. The statute incorporates FELA by reference (American Dredging Co. v Miller, 510 US 443, 456 [1994] ["the Jones Act adopts the entire judicially developed doctrine of liability under the Federal Employers' Liability Act" (internal quotation marks omitted)]). While section 5 of FELA voids any contract, such as a release, "the purpose or intent of which shall be to enable any common carrier to exempt itself from any liability created by this chapter" (45 USC § 55), the United States Supreme Court has differentiated between an agreement conferring a broad immunity from liability and one, such as a release, that compromises an actual claimed liability (see Callen v Pennsylvania R. Co., 332 US 625, 631 [1948]).
Nevertheless, not all releases can pass muster under section 5. As noted by the motion court, there is a split in the federal circuits as to the standard under which a release should be analyzed for FELA purposes, although both cases discussed by the court resulted in the release at issue being declared unenforceable. In Babbitt v Norfolk & W. Ry. Co. (104 F3d 89, 93 [6th Cir 1997]), the Sixth Circuit concluded that for a FELA release to be valid, it "must reflect a bargained-for settlement of a known claim for a specific injury, as contrasted with an attempt to extinguish potential future claims the employee might have arising from injuries known or unknown by him." The Third Circuit, in contrast, focused, in Wicker v Consolidated Rail Corp. (142 F3d 690, 701 [3d Cir 1998], cert denied 525 US 1012 [1998]), on the broader question of whether, as opposed to an actual injury, the plaintiff who signed the release was aware of "known risks even if there is no present manifestation of injury." The Wicker court cautioned, however, that a release should be carefully construed to ensure that the plaintiff was specifically aware of the known risks, and that the inclusion of boilerplate in the release would militate against such a conclusion. Thus, the Third Circuit declined to dismiss the complaint in Wicker, finding that the five releases at issue there either were pro forma and did not reflect any actual negotiation of the claims being waived or were blunderbuss efforts to preclude any and all possible claims. Texaco contends that neither case applies here. It points out that Babbitt did not deal with a release in connection with the settlement of a lawsuit, but rather in the context of the plaintiff's separation from the defendant as part of an early retirement program. With respect to Wicker, Texaco contrasts the releases in those cases, which it characterizes as going "well beyond the specific controversies that had been settled," with the release here.
We start with the observation that, since this is an admiralty case, Texaco bears the burden of establishing that the release is enforceable (see Garrett v Moore-McCormack Co., 317 US 239, 248 [1942]). That burden includes demonstrating that South fully understood his rights and received adequate consideration (id.). Turning to the two federal cases discussed by the parties, there is no question that Babbitt, assuming it applied to the release in this case, would bar the release's application. That is because the release does not explicitly mention that South was forbearing any claim against Texaco specifically for mesothelioma. Whether Wicker also bars the release necessitates, according to the Third Circuit, a "fact-intensive" examination to ascertain the parties' intent at the time the release was executed (142 F3d at 701), for which the Wicker court offered some guidelines. For example, "the validity of the release [should not] turn on the writing alone because of the ease in writing detailed boiler plate agreements" (id.). Further, written releases spelling out "the scope and duration of the known risks" would be "strong, but not conclusive, evidence of the parties' intent" (id.).
Here, subjecting it to the high level of scrutiny required by Wicker, we find that the release does not pass muster. To tease out the true intent South had when he signed the release, it is necessary to consider the context in which he did so. The 1997 complaint, while making generalized allegations that South had been exposed to asbestos, is exceedingly vague as to whether he had actually contracted an asbestos-related disease. To be sure, it mentions a "devastating pulmonary disease Plaintiff now suffers" and an exhaustive grab-bag of asbestos-related diseases, from asbestosis to mesothelioma to brain cancer. However, it is impossible to conclude from the complaint that South had actually received a diagnosis. Indeed, the "meager" consideration he received for resolving the claim suggests that he had not been diagnosed with an asbestos-related dis ease, much less one even approaching the severity of the mesothelioma that the complaint specifically alleges he had. The complaint leaves open that possibility, to the extent it seeks relief for fear of an asbestos-related disease and not for the disease itself. Accordingly, the risk of contracting an actual asbestos-related disease remained hypothetical to South, and we decline to read the release as if South understood the implications of such a disease but chose nonetheless to release Texaco from claims arising from it.
Further, if South had not received a definitive diagnosis at the time the 1997 complaint was filed, then the release, to the extent it warns him of the possibility of "a new and different diagnosis from the diagnosis as of the date of this Release," does not reflect the actual circumstances known to him, since the words "new" and "different" suggest that South had already been diagnosed with a disease when he executed the release. Rather, the lack of an actual diagnosis reveals the language in the release as mere boilerplate, and not the result of an agreement the parameters of which had been specifically negotiated and understood by South. Under even the stricter standard of Wicker, "the release [ ] do[es] not demonstrate [South] knew of the actual risks to which [he was] exposed and from which [Texaco] was being released" (142 F3d at 701).
The dissent acknowledges that Wicker cautions that a court, in interpreting a release such as the one at issue here, must probe beyond the release's words. However, it then disregards that requirement, stating that "the language of the release is clear and comprehensive" and that "the release's language establishes that the decedent understood that his exposure to asbestos could result in future injuries and diagnoses." Even when purporting to consider the context in which the release was executed, the dissent focuses only on the fact that the complaint mentions mesothelioma, concluding from that fact that South definitively intended to release a claim for it. Thus, the dissent directly contradicts Wicker's, determination that "the written release should not be conclusive" (142 F3d at 701).
Furthermore, the dissent points to no evidence that South appreciated the consequence of waiving a claim for mesothe-lioma. It cites Oliverio v Consolidated Rail Corp. (14 Misc 3d 219 [Sup Ct, Erie County 2006]) favorably; however, in that case, it appears that the plaintiff already had received a diagnosis of lung cancer when he signed the release. Accordingly, the court held, it could not be said that he should not reasonably have anticipated contracting a different sort of cancer at a later date, such as his bladder cancer, as a result of his initial exposure to asbestos. The court's concern in Oliverio was that "[i]f a new claim were permitted for each and every new manifestation of the asbestos exposure, regardless of the extent of the parties' awareness of such risks, there would be no incentive on the part of the . . . defendant to ever compromise such claims" (14 Misc 3d at 222). Here, again, there is no evidence that South had any manifestation of his asbestos exposure at the time he executed the release. Under those circumstances, it cannot be said that Texaco carried its burden of proving that the release is enforceable.
Concur — Manzanet-Daniels, Maz-zarelli and Webber, JJ.