Opinion ID: 484641
Heading Depth: 2
Heading Rank: 1

Heading: The Trial of the Affirmative Defenses

Text: 8 The first trial, held in the spring of 1984, dealt with TGA's affirmative defenses. As set forth in greater detail in Part II.A. below, Woodling presented evidence to show that, although TG paid the salaries of all TGA personnel, TGA was governed and operated as an entity separate from TG. The evidence included proof that TGA's pilots and maintenance employees were supervised by TGA officials; that both TG and TGA repeatedly certified to various state and federal agencies that TGA both owned and operated the aircraft; and that TGA entered into contracts in its own name for the lease, modification, and storage of aircraft and for the training and temporary employment of pilots. There was documentary and testimonial evidence that the technical aviation decisions with respect to TGA operations were made by TGA alone, not by TG. 9 As discussed in Part II.B. below, Woodling testified that she had signed the Release in reliance on TG officials' representations, inter alia, that TGA was essentially a shell that had no employees, no power to hire and fire the pilots and ground personnel, and no business operations beyond holding title to the former TGI aircraft. Woodling testified that she had understood these representations to mean that TGA would have a workers' compensation defense to any wrongful death action she might bring. She also testified that she signed the Release because she was informed by TG and its insurer, United States Aircraft Insurance Group (USAIG), that a $250,000 insurance benefit payable to Albert Woodling's estate could not be received unless she signed such a release. Woodling testified that she was unaware that TG had another insurance policy with American Home Assurance Company (American Home) which did not require such a release and which on its face covered aircraft accidents if the aircraft was not owned or operated by the Policyholder, defined therein as Texasgulf, Inc. She stated that had the existence and terms of the American Home policy been revealed to her, she would not have signed the Release. 10 TGA introduced the Release, which stated in part as follows: 11 This Release reflects the entire agreement between Releasor and Releasee concerning the subject matter hereof. Releasor has carefully read and fully understands the provisions of this Release and knows the contents thereof, and signs the same as Releasor's own free act, and avers that Releasor has not been influenced to any extent whatsoever in making and signing same by any representations or inducements whatsoever by Releasee, other than as set forth herein. 12 In addition, TGA introduced proof that the American Home policy did not in fact cover the death of Albert Woodling because the language that appeared to cover that event was the inadvertent result of a mutual mistake between TG and the carrier. TGA moved for a directed verdict in its favor on the basis of either or both of its affirmative defenses. 13 The district court denied the motion and submitted special interrogatories to the jury with respect to each defense. The court instructed the jury that in fact Albert Woodling's death was not covered by the American Home policy and that the jury should decide whether the nondisclosure of the policy with its mistaken facial coverage was a fraudulent or material misrepresentation. 14 The jury found in favor of Woodling on both of TGA's defenses. Rejecting the workers' compensation immunity defense, the jury found that TG and TGA were separate entities and that TGA was the employer of the flight crew and maintenance personnel involved in the events leading to the crash. Rejecting the release defense, the jury found that TGA was the operator of the airplane involved in the crash, that TG or USAIG had made fraudulent or material misrepresentations both with regard to the status and operations of TGA and with regard to the existence and coverage of the American Home policy, and that Woodling had justifiably relied on each set of misrepresentations in signing the Release. See Gregory v. Garrett Corp., 589 F.Supp. 296, 298-99 (S.D.N.Y.1984). 15 TGA moved unsuccessfully for judgment n.o.v. and for a new trial. In addition, on the ground that Woodling should not be allowed to rescind the Release agreement without returning the consideration she received, TG and TGA moved for an order requiring Woodling to return to TG its $250,000. The court granted this motion, and in order not to compromise TGA's ability to pursue on appeal its challenge to the decision allowing rescission of the Release, the court allowed Woodling to place the money in an interest-bearing escrow account. The court denied the request that Woodling be required to pay TG interest on the $250,000 for the period during which she had retained possession of it. See id. at 301 n. 10.