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Release Secured by Chevron Doesn't Block New Asbestos Claims, NY Court of Appeals Rules

Chevron's Corporate Offices in Houston. Photo: Jonathan McIntosh/Flickr

A settlement agreement from the 1990s does not shield Chevron Corp. from a new lawsuit alleging the company's asbestos contributed to mesothelioma diagnosed in a former seaman, the New York Court of Appeals said in a decision Thursday.

The court said in a split decision that a lawsuit brought against Chevron by a former merchant marine cannot be thrown out based on a settlement he agreed to in 1997 that was intended to exempt the oil and energy company from all future claims from the employee.

“We conclude that Chevron has not met its burden to demonstrate the absence of any material question of fact,” Associate Judge Rowan Wilson wrote. “The 1997 release does not unambiguously extinguish a future claim for mesothelioma.”

The lawsuit was brought against Chevron in in 2014 by Mason South after he developed mesothelioma, which he alleged was caused by his exposure to asbestos while he served as a seaman in the Merchant Marine for nearly four decades. South died of the disease in 2015, but his wife took over as the plaintiff in the case thereafter.

She was represented before the Court of Appeals by Louis Bograd, a member at Motley Rice in Washington, D.C. Bograd said they were pleased with the decision and look forward to resuming the case at the trial court, where it will return after the Court of Appeals rejected Chevron’s arguments Thursday.

Chevron had moved to resolve the case based on a release South signed in 1997 when he was involved in another lawsuit against the company. The agreement was part of a settlement between South and Texaco, which later merged with Chevron. South claimed he was exposed to asbestos fibers when he worked aboard Texaco ships during his career.

He was one of more than 100 defendants who sued Texaco in federal court at the time after he developed a nonmalignant pulmonary disease, which he attributed to the exposure. His mesothelioma diagnosis didn’t come until years after the settlement.

The release said South, at the time, was “giving up the right to bring an action against Texaco in the future for any new or different diagnosis that may be made about his condition as a result of exposure to any product,” according to the decision.

Chevron argued in court last month that the settlement was intended to absolve the company of any future lawsuits brought by South over his exposure to asbestos, or anything else, while on board Texaco’s ships. The company was represented by Meir Feder, a partner at Jones Day in Manhattan, who did not immediately return a request for comment.

“The decision below should be reversed because the release here was a straightforward settlement of Mr. South’s asbestos claims that he’d asserted in a lawsuit,” Feder argued last month

Feder was referring to the decision in the case by the Appellate Division, First Department last year that came to the same conclusion as Wilson, who was joined on the majority opinion by Associate Judges Jenny Rivera, Eugene Fahey, and Paul Feinman.

Wilson wrote that the decision was based, partly, on the 1942 U.S. Supreme Court ruling in Garrett v. Moore-McCormack, which placed the burden on the defendant to show when a release should be deemed invalid. South, in this case, could not have possibly known he would be diagnosed with mesothelioma in the future, which invalidated the power of the release over the current litigation, he wrote.

“The release itself does not mention mesothelioma,” Wilson wrote.“The release recites that Mr. South understood he was relinquishing his rights, but the record does not presently establish his ‘full understanding’ of what he was extinguishing.”

Associate Judge Michael Garcia disagreed with Wilson’s interpretation of the law in a dissenting opinion, on which Chief Judge Janet DiFiore and Associate Judge Leslie Stein concurred. Garcia argued that the court’s opinion weakens the power of settlement agreements in similar cases.

“By denying summary judgment, the majority seemingly renders all releases executed by seamen—no matter how comprehensive—unenforceable in New York courts,” Garcia wrote. “That result harms both defendants seeking certainty in settlement and plaintiffs hoping to avoid the risk and expense of litigation.”

He argued that South knew when he signed the 1997 settlement release that he was at risk of developing mesothelioma from the same asbestos exposure he was suing Texaco over at the time. His initial complaint against the company even mentioned the possibility of mesothelioma, Garcia said.

“Plaintiff’s current contention that he was unaware of the risk of mesothelioma is therefore belied by his own prior statements,” Garcia wrote.

The decision could open courts in New York to more litigation that seeks to invalidate past settlements by seaman over exposure to asbestos, or similar releases, Garcia wrote, which he argued goes against the initial intent of those agreements to exempt companies from future liability.

“Purportedly applying federal law, the majority turns New York into a destination venue for seaman plaintiffs who no longer wish to abide by the terms of their valid settlements,” Garcia wrote. “That result is wrong on the law, and undermines the many important policy goals furthered by settlement agreements.”

The lawsuit is now on its way to State Supreme Court in Manhattan for further litigation.

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