Justia U.S. 2nd Circuit Court of Appeals Opinion Summaries

Plaintiff, as a subrogee of a regional affiliate of the American Automobile Association Mid-Atlantic, Inc. ("AAAMA"), sued the liability insurers of the American Automobile Association ("AAA") seeking indemnification for payments made by plaintiff in settlement of a personal injury action. At issue was whether the district court erred in finding that AAAMA was an additional insured. The court held that the district court erred in finding that AAAMA was an additional insured where AAAMA's liability did not arise out of AAA national's operations.

Intervenors appealed an order granting plaintiffs' and defendants' joint motion for orders approving their Settlement Agreement and Mutual Release of Claims related to property damage claims that arose from the terrorist attacks of September 11th, 2001. At issue was whether the district court's application of New York state settlement rules was contrary to, and thus preempted by, the Air Transportation Safety and System Stabilization Act of 2001 ("ATSSSA"). Also at issue was whether the district court failed to make a proper evaluation of the fairness of the settlement agreement, and that the court erred in crediting the proposed settlement payments to the contributing defendants' respective liability limits under ATSSSA. The court held that the ATSSSA did not preempt New York state's "first-come first served" settlement rule and that the proposed settlement payments pursuant to the settlement agreement properly reduced the contributing defendants' remaining liability under the ATSSSA's liability limits. The court also held that the district court did not abuse its discretion in finding that plaintiffs and defendants entered into their settlement in good faith.