Metro Aviation, Inc. v. United States

Metro Aviation, Inc. v. United States, 2013 MT 193 (July 16, 2013) (7-0) (Cotter, J.)

Issue: The Court answers three certified questions from the U.S. District Court for the District of Utah:
(1) May a person who has settled a claim with a victim bring an action for contribution against a joint tortfeasor under § 27-1-703. MCA, if the victim never filed a court action?
(2) When a defendant in a pending action settled with the plaintiff ahead of trial, does § 27-1-703, MCA, allow the settling defendant to bring a subsequent contribution action against a person who was not a party to the tort action?
(3) Does Montana recognize a common-law right of indemnity where the negligence of the party seeking indemnification was remote, passive, or secondary, compared to that of the party from whom indemnity is sought?

Short Answer: (1) No, (2) no, and (3) no.

Certified questions answered
Facts: In February 2007, a small p lane owned by Metro Aviation, Inc. crashed near Bozeman. The pilot, a Metro employee, and both passengers, Paul Erickson and Darcy Dengel, died in the crash. All three were Montana residents.

Erickson’s estate filed a claim with Metro’s insurers.Metro settled the claim without litigation Dengel’s estate filed suit against Metro, and Metro settled before trial. The United States was not a party to the Dengel action and was not involved in the settlement of either claim.

Metro then filed suit under the Federal Tort Claims Act against the United States in Montana federal court, alleging negligence by the FAA air traffic controllers in Salt Lake City. Metro asserted alternative claims of indemnity and contribution and sought to recover the settlement amounts paid to the Erickson and Dengel estates. The U.S. moved to transfer venue to Utah, and its motion was granted.

Procedural Posture & Holding: The U.S. moved for partial summary judgment on Metro’s indemnity and contribution claim asserting that the claims were  barred under both Utah and Montana law. Metro agreed they were barred by Utah law, but asserted that Montana law applies and allows the claims. The Utah federal court agreed that Montana law applies, but decided Montana law in this area is unsettled It certified three questions to the Montana Supreme Court, which held oral argument and now answers the questions.

Reasoning: Contribution distributes loss among joint tortfeasors by requiring each tortfeasor to pay its proportion of the negligence that proximately caused plaintiff’s injuries. Indemnity shifts the entire loss from one tortfeasor to another. Contribution is statutory, while indemnity arises out of equity.

(1) Contribution is allowed by statute: “If the negligence of a party to an action is at issue, each party against whom recovery is allowed . . . has the right of contribution from any other person whose negligence may have contributed . . .  to the injury complained of.” § 27-1-703, MCA (emphasis added). The Court looks at the plain language and determines that an “action” is not an insurance settlement, and Metro is not a “party.” Metro may not seek contribution from the US for the Erickson settlement.

(2) The Dengel estate filed suit against Metro, making Metro a “party.” But Metro settled before joining the U.S. as a party, and then sought contribution from the U.S. Section 27-1-703 clearly contemplates a single action; a stand-alone action for contribution is not permitted.

(3) Metro also seeks indemnity from the U.S., claiming its own negligence, if any, was remote, passive, or secondary, while the negligence of the FAA was active. Thus, it argues that fundamental fairness dictates that the U.S. should bear responsibility for the entire amount of the settlements paid to Engel and Erickson. The Court has previously held that fixing responsibility in indemnity based on active versus passive conduct is neither sensible nor practical. It has also rejected an indemnity claim where the party seeking indemnity was negligent in part, as it had unclean hands. Indemnity is neither fair nor appropriate when both parties are allegedly negligent, as it shifts the entire loss to one party.

Metro acknowledged the pilot may have experienced an illusion just before the accident, and alluded at oral argument to the possibility of an electrical failure. Because Metro allowed that it could have some degree of negligence, its claim for indemnity must fail.