State Farm Mutual Automobile Insurance v. Grafman

968 F. Supp. 2d 480, 2013 WL 1910852, 2013 U.S. Dist. LEXIS 65960
District Court, E.D. New York·Decided May 8, 2013·No. No. 04-CV-2609 NG SMG·Published·Cited by 103 cases

Opinion

OPINION & ORDER

GERSHON, District Judge:

On January 3, 2013, 2013 WL 1911301, the Honorable Steven M. Gold, Chief Magistrate Judge, filed a comprehensive Report and Recommendation (the “Report”) regarding the amount of damages to be awarded to plaintiff State Farm Automobile Insurance Company from various defaulting defendants. Most of the defaulting defendants neither participated in the proceedings before Judge Gold, nor filed objections to the Report. Defendant Jacob Kagan and his corporation, defendant Mirka United, Inc. (“Mirka”), appeared through counsel at the hearing before Judge Gold, and defendant Igor Vetoukh filed a letter in opposition to plaintiffs request for damages. Of these three defendants, only Kagan and Mirka have filed timely objections to Judge Gold’s Report.

In reviewing the Report, the court “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1)(C). “To accept the report and recommendation of a magistrate, to which no timely objection has been made, a district court need only satisfy itself that there is no clear error on the face of the record.” Urena v. People of State of New York, 160 F.Supp.2d 606, 609-10 (S.D.N.Y.2001) (quoting Nelson v. Smith, 618 F.Supp. 1186, 1189 (S.D.N.Y.1985)); see also Pizarra v. Bartlett, 776 F.Supp. 815, 817 (S.D.N.Y.1991) (adoption permitted where the un-objected to sections are “not facially erroneous”).

Under 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, however, the review of portions of the Report to which timely objections [482] have been made, is de novo. See United States v. Male Juvenile, 121 F.3d 34, 38 (2d Cir.1997).

The recommended awards, here, are based upon claims of RICO violations and violations of the New York State common law of fraud. Plaintiff has sought only “single,” and not treble, damages and has represented that it will not seek attorneys’ fees under the RICO statute, notwithstanding its entitlement to them.1 In making his recommendation, Judge Gold has carefully analyzed the evidence of damages and applied the pertinent law with care.

Overall, I find that Judge Gold’s conclusions are fully supported by the facts and law. With one modification, I therefore adopt Judge Gold’s thoughtful and well-reasoned Report and Recommendation, and I reject the objections proffered.

The question of set-offs for Kagan and Mirka based on the settlements of the other, non-defaulting defendants forms the primary basis of Kagan and Mirka’s objection, and so I review Judge Gold’s analysis of this point de novo. While I agree with the conclusion that application of Judge Gold’s recommendation would ultimately compel, I would have reached it in a different manner. I therefore modify the Report to include the following.

In discussing whether or not to offset the damages award, Judge Gold concluded that, “as a general matter, any relevant settlement amounts should be taken into account when assessing damages.” (Report at 20.) Noting that only certain settlements should be considered, and that plaintiff waived its right to attorneys’ fees, Judge Gold directed plaintiff to submit a letter setting forth additional information relating to the relevant settlements, in-eluding their amounts, and an approximation of the amounts incurred by plaintiff in reasonable attorneys’ fees. (Id.) He then wrote, “If, but only if, the properly attributed amounts received from other defendants in settlements exceed the reasonable attorney’s fees incurred, should the amount of any final judgments against the defaulted defendants be reduced.” (Id. at 20-21.)

Plaintiffs subsequent submissions show that the sum of reasonable attorneys’ fees incurred greatly exceeds the amount of the settlements reached with the other defendants, and so, pursuant to Judge Gold’s recommendation, the set-off sought by Kagan and Mirka would not be applied. While I agree that this is the correct result, I disagree with respect to Kagan and Mirka’s entitlement to set-offs as an initial matter.

Federal common law controls on the question of whether a defendant in a federal action “is entitled to a credit against judgment for the settlement by another party to the dispute.” Singer v. Olympia Brewing Co., 878 F.2d 596, 600 (2d Cir.1989). The Supreme Court has held that, where a plaintiff has settled “with one of several joint tortfeasors, the nonsettling defendants are entitled to a credit for that settlement” and that the amount of such credit should be determined using what the Court refers to as the “proportionate share approach.” McDermott, Inc. v. AmClyde, 511 U.S. 202, 208-10, 114 S.Ct. 1461, 128 L.Ed.2d 148 (1994).2 The McDermott Court also found that “the law contains no rigid rule against overcompensation” and that “making tortfeasors pay for the damage they cause can be more important than preventing overcompensation.” Id. at 219, 114 S.Ct. 1461.

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State Farm Mutual Automobile Insurance v. Grafman, 968 F. Supp. 2d 480, 2013 WL 1910852, 2013 U.S. Dist. LEXIS 65960 (E.D.N.Y. 2013).

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