Court Enforces $7.5 Million Settlement for Man Shot in Manhattan Building Stairwell

On March 23, 1987, at about 7:15 p.m., a man was approaching a staircase that led from the vestibule of a commercial building at 33rd Street and Sixth Avenue in Manhattan down to the subway. The building was the old Gimbel's store, then out of business and being demolished. Three men attacked him in an apparent attempted robbery and shot him in the head. He survived with severe brain damage and was found incompetent, so Eleanor Monaghan brought the case as his guardian ad litem.

The building's owner, SZS 33 Associates, L.P., had sealed off or guarded the entrances into the old store while leaving the PATH stairway open, and had arranged patrols of the premises. The Port Authority of New York and New Jersey and its subsidiary, PATH, owned the station and held an easement through the property that included the stairway. The lawsuit, filed in federal court in Manhattan in 1989, claimed SZS had failed to reasonably ensure the safety of its premises. Alan J. Konigsberg of Levy Phillips & Konigsberg was counsel for the plaintiffs, with Alani Golanski and Audrey M. Perlman on the appeal.

The case nearly ended early. In 1991 Judge Robert Sweet granted summary judgment to SZS, finding it owed no duty on the staircase. Then, in a companion suit against the security contractor and the construction manager, the plaintiff obtained security documents that SZS had not produced, including a memo assigning the contractor to guard the entrance vestibules. The court vacated the judgment and reinstated the case, later sanctioning SZS for gross negligence in discovery by barring it from arguing that it lacked notice of the danger or of criminal activity on the premises. In 1993 the court denied SZS a second summary judgment, holding that SZS owed a duty to secure the premises against exactly this kind of dangerous condition. SZS brought the Port Authority parties into the case, seeking indemnity under a 1935 agreement covering the stairway.

At an unrecorded settlement meeting before the court on Nov. 14, 1994, SZS offered $7.5 million to resolve the claims, on condition that the Port Authority side agree the amount was fair and reasonable and that SZS could pursue indemnity and contribution from it at trial. All parties later conceded the Port Authority side had agreed to both. When no written stipulation was signed, SZS argued there was no deal. The plaintiff moved to enforce it, and on Feb. 23, 1995, the court entered judgment against SZS for $7.5 million, finding the plaintiff had relied on the agreement in good faith.

The rest of the fight was between the defendants. In the third-party trial in January 1995, the jury put 80 percent of the fault on the Port Authority parties, 15 percent on SZS and 5 percent on the security contractor. SZS had already collected a settlement from the contractor and passed $375,000, that 5 percent share of the $7.5 million, to the plaintiff. A March 8, 1995 judgment required the Port Authority parties to indemnify SZS for their share, less a statutory set-off for the contractor's payment.

SZS appealed the enforcement of the settlement and the Port Authority parties cross-appealed the indemnity ruling. On Jan. 12, 1996, the Second Circuit affirmed both judgments, agreeing that the parties had settled on Nov. 14, 1994, and that the Port Authority's set-off defense did not undo that agreement.