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Waldorf v. Shuta

April 15, 1998

MARK WALDORF APPELLANT IN NO. 97-5195
v.
EDWARD J. SHUTA; CAROLYN WOOD; KENNETH C. SPENCE, JR.; MARY KAY SPENCE; BOROUGH OF KENILWORTH; JOSEPH REGO; HENRY J. MOLL; VICTOR SMITH; LAWRENCE STICKLE; CHARLES DAVID; JOSEPH VENTRE; THOMAS NEVILLE; WILLIAM J. AHERN; WILLIAM E. CONRAD; LIVIO MANCINO; GARY ROWINSKY; MARIO DIBELLA; VINCENT SCORESE; HARRY GRAPENTHIN; MARY KELLY; RICHARD MCCORMACK; WILLIAM HOLT; A. ZELENIAK; RICHARD LOMAX; C. WILLIAM GUTEKUNST; FREDERICK BAILEY; MICHAEL PADULA; CHARLES SCHEUERMANN; FRED SUES; JOSEPH WALYUF; THOMAS MCHALE; PHILIP ERNST; FRANK J. MASCARO; WALTER E. BORIGHT, JR.; ALBERT SIMMENROTH; JAMES E. O'BRIEN; FRANK J. JOHDOF; RAYMOND BLYDENBURGH; EDWARD KASBARIAN; JOHN J. O'LOCK; EDMAC ENTERPRISES; EDWARD MCDERMOTT MARK WALDORF
v.
EDWARD J. SHUTA; CAROLYN WOOD; KENNETH C. SPENCE, JR.; MARY KAY SPENCE; BOROUGH OF KENILWORTH; JOSEPH REGO; HENRY J. MOLL; VICTOR SMITH; LAWRENCE STICKLE; CHARLES DAVID; JOSEPH VENTRE; THOMAS NEVILLE; WILLIAM J. AHERN; WILLIAM E. CONRAD; LIVIO MANCINO; GARY ROWINSKY; MARIO DIBELLA; VINCENT SCORESE; HARRY GRAPENTHIN; MARY KELLY; RICHARD MCCORMACK; WILLIAM HOLT; A. ZELENIAK; RICHARD LOMAX; C. WILLIAM GUTEKUNST; FREDERICK BAILEY; MICHAEL PADULA; CHARLES SCHEUERMANN; FRED SUES; JOSEPH WALYUF; THOMAS MCHALE; PHILIP ERNST; FRANK J. MASCARO; WALTER E. BORIGHT, JR.; ALBERT SIMMENROTH; JAMES E. O'BRIEN; FRANK J. JOHDOF; RAYMOND BLYDENBURGH; EDWARD KASBARIAN; JOHN J. O'LOCK; EDMAC ENTERPRISES; EDWARD MCDERMOTT BOROUGH OF KENILWORTH APPELLANT IN NO. 97-5222



On Appeal from the United States District Court for the District of New Jersey (D.C. Civ. No. 84-3885) Argued March 11, 1998

Before: Greenberg, Scirica, and Aldisert, Circuit Judges.

The opinion of the court was delivered by: Greenberg, Circuit Judge.

OPINION OF THE COURT

I. FACTUAL AND PROCEDURAL HISTORY

This case involves an appeal and a cross appeal from a judgment of $3,005,941 entered on a jury's verdict in favor of the plaintiff, Mark Waldorf, after a deduction for a collateral source recovery, in this personal injury action. Waldorf suffered injuries rendering him a quadriplegic in a motor vehicle accident in 1982 when he was 24 years old. First, Waldorf appeals from the denial of his motion for a new trial on damages and the refusal of the district court to grant him an additur as he contends that the verdict was inadequate and against the weight of the evidence. Second, Waldorf argues that he should receive a new trial based on the district court's improper qualification of a witness as an expert and based on the allegedly improper conduct of defense counsel during the trial. Defendant, Borough of Kenilworth, New Jersey ("the Borough"), contends, however, that we do not have jurisdiction over Waldorf 's appeal, because the district court has not entered a final judgment. In a cross appeal, the Borough also argues that the district court improperly bound it to a stipulation of liability to Waldorf that it made prior to an earlier trial, and that the court also erred in limiting a collateral source set-off against the jury's award. We hold that we have jurisdiction over this appeal and cross appeal and will affirm the district court's orders.

This appeal is the third occasion that this case has been before us during the over 13 years that it has been litigated in the federal courts. See Waldorf v. Shuta, 3 F.3d 705 (3d Cir. 1993); Waldorf v. Shuta, 896 F.2d 723 (3d Cir. 1990). Although our prior opinions relate the circumstances surrounding this case, we set forth the facts again because of their relevance to the present appeal.

On November 17, 1982, at approximately 11:45 p.m., Waldorf was involved in a two-car accident at the four-way intersection of Monroe Avenue and North 14th Street in the Borough. He was a passenger in a van driven by Kenneth C. Spence, Jr., and was riding on a seat that was not bolted down, but instead was secured only by elastic straps. Waldorf was not wearing a seat belt at the time of the accident.

The intersection of Monroe Avenue and North 14th Street had only one traffic light facing in each direction. On the night of the accident, the red light facing west at the intersection failed. Corporal Victor Smith of the Kenilworth Police Department discovered at approximately 11:00 p.m. that the red light was not working. He attempted tofix the light; but he could not repair it, nor could he switch it into the blinking mode. Smith radioed police headquarters and discussed the situation with his supervisor, Lieutenant Joseph Rego. However, instead of ordering an officer to direct traffic at the intersection, Rego assigned Smith and the other officer on duty to what he regarded as more pressing matters.

At approximately 11:45 p.m. that night, Spence was traveling south on 14th Street. Edward J. Shuta, driving a Datsun Sedan, was traveling at approximately 60 miles per hour heading east on Monroe Avenue at the same time. The green light was facing Spence, and he proceeded into the intersection at approximately 20-25 miles per hour. Shuta testified that he saw a green light when he was crossing railroad tracks 237 feet from the intersection. However, he did not see the light turn yellow, nor did he notice that the red light was not working. Thus, he entered the intersection at the same time as Spence, and the vehicles collided. The force of the collision threw Waldorf from his seat, and the bench upon which he had been sitting struck his head.

Waldorf was taken to Memorial Hospital in Union, New Jersey, where neurosurgeon Dr. Howard Lieberman diagnosed that he had a fracture and dislocation at the C6-C7 level of the spine with a transection of the spinal cord and a total lack of function below that level resulting in quadriplegia. See app. at 129-31. While Waldorf was at the hospital, Dr. Lieberman initially treated him with cervical traction to reduce the fracture in the cervical spine, and Dr. Lieberman later fitted him with a halo brace, which was screwed into his skull to help his neck fractures heal. Waldorf remained in the hospital for three weeks and then transferred to the Kessler Institute for Rehabilitation in West Orange, New Jersey, where he began a rehabilitation program, physical therapy, and occupational therapy.

In March 1983, Waldorf transferred to the Rusk Institute for Rehabilitation at New York University Medical Center. At Rusk, Waldorf came under the care of Dr. Kristjan Ragnarsson, a board certified physician who specializes in physical medicine and rehabilitation. Waldorf received physical therapy, occupational therapy, counseling by social workers and psychologists, vocational counseling, and therapeutic recreation. See id. at 142-50. Ultimately, Waldorf was discharged on December 23, 1983. In all, Waldorf spent 404 days at Memorial Hospital, Kessler Institute, and Rusk Institute. Upon discharge, Waldorf continued under Dr. Ragnarsson's care as an outpatient. For a time, Waldorf was under the care of Dr. Asa Ruskin, a physical medicine specialist at Kinsgbrook Jewish Medical Center, but he returned to Dr. Ragnarsson's care in April 1991, after Dr. Ruskin's death.

Waldorf 's injuries as a result of this accident are catastrophic. He has lost control of all motor, muscle, and sensory functions below the C6-C7 neurological level. Waldorf can move his facial, neck, and shoulder muscles and can raise and bend his elbow; but he cannot move his fingers. Although his chest muscles are paralyzed, he is able to breath without a respirator. Waldorf has lost a great deal of weight and muscle mass as a result of his condition. In order to combat this problem, Waldorf undergoes a 45-minute stretching and exercise program twice a day and engages in bicycle riding therapy for two hours a day. The muscles in his legs are spastic, resulting in involuntarily contractions and motions of his legs.

Waldorf has no control over his bowel functions, which have to be stimulated artificially on a daily basis. Since 1985, he has been under the care of Dr. Joshua Feibusch, a gastroenterologist, for this problem. Furthermore, Waldorf has no control over his urinary functions, so he has to wear an external urinary collection unit. This situation has led to several urinary tract infections, one of which required a nine-day hospital stay. Among other medical problems, Waldorf suffers from autonomic dysreflexia, sexual disfunction, and musculoskeletal problems. He has had and will require 24-hour attendant care for the rest of his life. Throughout his ordeal, Waldorf has suffered from a great amount of pain.

Waldorf filed this action in the district court on September 21, 1984, against the drivers of the vehicles involved in the accident, the Borough, and various present and former Borough officials. At the first trial, which was on both liability and damages, he received a jury verdict on August 12, 1988, against the Borough, Police Lt. Rego, and the drivers of the vehicles in the amount of $8,400,000. We subsequently reversed and remanded the case for a new trial. See Waldorf, 896 F.2d at 744-45.

On remand, the Borough proposed to stipulate its liability to Waldorf in exchange for certain procedural concessions. Counsel for the Borough made this proposal at a hearing before a magistrate Judge stating:

The borough has, after much consideration and soul-searching, has authorized me to advise the Court that they will not contest liability in this matter, provided two things, and these are absolute conditions for this admission by them: One is that the case be bifurcated and different juries hear liability and damages; and the second thing is that the damages trial proceed first before a liability trial. Therefore, a decision not to contest liability is predicated on those two prerequisites.

App. at 277. Waldorf 's counsel objected to this stipulation, but the magistrate Judge nevertheless incorporated the stipulation by reference into an order of August 4, 1992. See id. at 292. Pursuant to this order, the case was tried only on damages leading to the jury returning a verdict on September 25, 1992, for Waldorf in the amount of $16,135,716. The Borough sought and obtained a Rule 54(b) certification of the judgment and then filed an appeal. See Fed. R. Civ. P. 54(b). We again reversed and remanded the case for a new trial on damages. See Waldorf , 3 F.3d at 713.

After the second remand, the Borough retained new counsel who moved in the district court for relief from its stipulation of liability. The district court denied the motion and held that the stipulation bound the Borough. See Waldorf v. Borough of Kenilworth, 878 F. Supp. 686 (D.N.J. 1995). The Borough then unsuccessfully sought permission to appeal the decision.

The court then held a third trial, which like the second trial, was only on damages. On October 25, 1995, the jury returned a verdict in favor of Waldorf in the amount of $3,086,500 divided as follows: $2,500,000 for pain and suffering; $195,000 for past lost earnings; and $391,500 for future lost earnings. The district court entered judgment against the Borough on November 8, 1995, following which Waldorf moved for a new trial on damages, or in the alternative, for a substantial additur. The district court denied this motion on February 26, 1996. See Waldorf v. Shuta, 916 F. Supp. 423 (D.N.J. 1996).

Waldorf then moved for a Rule 54(b) certification for entry of a final judgment against the Borough, and the Borough filed a cross-motion for an order setting a date for the liability trial. See Fed. R. Civ. P. 54(b). The Borough also filed a motion seeking a collateral source set-off as provided by N.J. Stat. Ann. § 59:9-2(e) (West 1992). Pursuant to Rule 54(b), the district court certified the judgment so that it could be appealed and, by doing so, denied the Borough's motion to set a trial date on liability. The court, however, did not file a written opinion with its order explaining why it entered the final judgment. As part of this same order, the court granted in part the Borough's motion for a collateral source set-off and reduced the judgment to $3,005,941.

Waldorf then filed a timely notice of appeal, and the Borough filed a cross appeal. On December 5, 1996, we entered an order dismissing the appeals "for lack of appellate jurisdiction," citing Fed. R. Civ. P. 54(b). Waldorf filed a second motion with the district court for a certification of a final judgment pursuant to Rule 54(b). The district court subsequently issued a written opinion and order on March 24, 1997, again granting Waldorf 's certification motion. See Waldorf v. Borough of Kenilworth, 959 F. Supp. 675 (D.N.J. 1997).

On April 3, 1997, Waldorf again appealed. Kenneth C. Spence, Jr., Mary Kay Spence, Edward Shuta, and Carolyn Wood also filed notices of appeal, but they later withdrew their appeals. The Borough filed a cross appeal and, in addition, filed a motion to dismiss Waldorf 's appeal for want of jurisdiction.

II. JURISDICTION

The district court exercised jurisdiction pursuant to 28 U.S.C. § 1332(a), based on the diversity of citizenship among the parties. However, the Borough asserts that we do not have jurisdiction under 28 U.S.C. § 1291 because in its view the district court improperly certified the judgment as a final order pursuant to Rule 54(b). We will address this jurisdictional question first.

A district court's determination to grant a Rule 54(b) certification motion is "predicated on its affirmative answer to two questions, i.e., were the judgments final and were they ready for appeal." Gerardi v. Pelullo , 16 F.3d 1363, 1368 (3d Cir. 1994). In reviewing the district court's decision regarding whether a judgment is final, we exercise a plenary standard of review. See id. In this appeal, the question of finality involves the district court's interpretation of the stipulation of liability that the Borough made prior to the second trial. In reviewing the district court's interpretation of that stipulation we also exercise plenary review.*fn1 See Washington Hosp. v. White, 889 F.2d 1294, 1299 (3d Cir. 1989). With respect to the question of whether the issue was "ready for appeal . . . tak[ing] into account judicial administrative interests as well as the equities involved," we exercise an abuse of discretion standard of review. Gerardi, 16 F.3d at 1368 (internal quotation marks omitted). Thus, we will exercise a plenary standard of review to consider the district court's interpretation of the Borough's stipulation and the district court's determination of the finality of this judgment, but will use an abuse of discretion standard to review the district court's determination that this judgment was "ready for appeal" under Rule 54(b).

A. District Court Determination

In an opinion dated March 24, 1997, the district court certified the judgment as final under Rule 54(b) in order to permit an immediate appeal. See Waldorf, 959 F. Supp. at 682. The district court noted that following the third trial, it first had certified the judgment under Rule 54(b) without an opinion, but that we dismissed the appeal "for lack of appellate jurisdiction," citing Rule 54(b). See id. at 677-78. The district court recognized that the dismissal could imply that an appeal was not appropriate at that point in the litigation; however, the district court determined that we more likely dismissed the appeal because the court failed to state its reasons for its certification of the judgment as final. See id. at 678. Thus, having determined it would be appropriate to reconsider the certification motion in a written opinion, the court addressed its merits.

The court recognized that to certify an order pursuant to Rule 54(b), the judgment must be final and there must be no just reason for delay in entering the final judgment. With regard to the question of finality, the court held that the judgment was final, because "it is an `ultimate disposition' of Waldorf 's individual claim for damages against [the] Borough." Id. at 679. The Borough had conceded its liability; and on that basis, the jury determined that Waldorf was entitled to damages from the Borough. The court also held that while the Borough claimed that it could assert the affirmative defense of comparative negligence against Waldorf, this assertion would not preclude a finding of finality; instead, the court determined that if the Borough had such a defense, it was merely a factor for the court to consider in the delay analysis and thus did not affect finality. Therefore, the court held that the judgment was final under Rule 54(b).

Having made a finding of finality, the court considered whether there was any just reason for delay. Under this analysis, courts should consider the following factors:

(1) the presence or absence of a claim or counterc laim which could result in a set-off against the judgment sought to be made final; (2) the relationship be tween the adjudicated and unadjudicated claims; (3) the possibility that the need for review might or might not be mooted by future developments in the district court; (4) the possibility that the reviewing court might be obliged to consider the same issue a second time; and (5) miscellaneous factors such as delay, economic and solvency considerations, shortening the time of trial, frivolity of competing claims, expense, and the like.

Id. at 679 (citing Allis-Chalmers Corp. v. Philadelphia Elec. Co., 521 F.2d 360, 364 (3d Cir. 1975) (footnotes omitted)). With regard to the first factor, the court recognized that the existence of an affirmative defense would weigh heavily against the grant of a certification. As part of the liability trial, the Borough argued that it intended to raise an affirmative defense of comparative negligence against Waldorf. However, Waldorf claimed that the Borough waived this defense when it stipulated to liability prior to the second trial. The district court examined the circumstances surrounding the liability stipulation, and found that the Borough made no explanation at that time regarding the specific scope of the waiver nor did it express any intent to preserve any affirmative defense. See id. at 679-80. Thus, these circumstances weighed in favor of finding a waiver of the comparative negligence defense.

The court also rejected the Borough's argument that its opening remarks at the second trial evidenced its intent not to waive its affirmative defense. In these remarks, counsel for the Borough stated that "[t]he Borough, in fact, has said it is at least in part responsible for this tragic event." Id. at 680. According to the Borough, this statement demonstrated that it believed that it had maintained its affirmative defense of comparative negligence against Waldorf. The court rejected this argument, noting that the statement "is consistent with the understanding that the liability phase of the trial was to treat the cross-claims asserted by the Borough against the other defendants." Id. Thus, the court held that the statement did not imply that the Borough had preserved its affirmative defense against Waldorf.

As further support for its decision, the court noted that following the second trial, the Borough was in the same procedural position in which Waldorf found himself after the third trial -- appealing under a Rule 54(b) certification on damages prior to a liability trial. Yet when the Borough appealed, it did not mention its affirmative defense and instead proceeded with its appeal. Based on all of this evidence, the court determined that the Borough's stipulation of liability precluded its assertion of an affirmative defense of comparative negligence against Waldorf.

Additionally, the court held that permitting the Borough to litigate the issue of Waldorf 's comparative negligence would "run afoul of the principles underlying New Jersey's `ultimate outcome' rule." Id. (citing Roman v. Mitchell, 413 A.2d 322 (N.J. 1980)). In Roman, the New Jersey Supreme Court held that " `a jury in a comparative negligence situation should be given an ultimate outcome charge so that its deliberations on percentages of negligence will not be had in a vacuum, or possibly based on a mistaken notion of how the [comparative negligence] statute works.' " Id. at 681 (quoting Roman, 413 A.2d at 327). Thus, in order to make an appropriate determination, a jury is entitled to know that any award to a plaintiff will be reduced by the plaintiff 's negligence and, indeed, that a plaintiff 's negligence, if exceeding that of the defendant, will bar his claim entirely. The court noted that if the Borough was permitted to argue comparative negligence, "one jury will have decided the amount of Waldorf 's total damages and a second jury may quantify, by percentage, his fault." Id. The court held that the damages jury, therefore, would have operated in the vacuum that Roman sought to avoid. Based on all of these arguments, the court held that the Borough waived its affirmative defense of comparative negligence. Therefore, the first factor in determining whether there was just reason for delay, i.e., the possibility of a set-off by reason of a counterclaim, weighed in favor of certification as there was no such possibility.

In considering the second factor relating to whether there was just reason for delay in entering a final judgment, the district court found that all of the unadjudicated claims in this case addressed the issue of liability among the defendants. The Borough had conceded its liability to Waldorf, so all that remained was a determination of whether to allocate responsibility for the damages judgment among the remaining defendants. Because a certification of this judgment would not impair the Borough's right to seek contribution from the other defendants, the court held that this factor did not weigh against certification. See id. at 681.

Considering the possibility of mootness and of multiple reviews factors, the district court held that "[i]t is highly unlikely that the litigation of the Borough's cross-claims on the basis of liability would serve to moot the issue of the propriety of the jury verdict" with regard to damages. Id. Furthermore, the court recognized that another jury would not redetermine the quantum of damages so that we would address the damage issue only on this occasion. Therefore, the district court determined that these factors did not weigh against certification. See id. at 681-82.

Finally, in considering the miscellaneous factors, the district court held that the consequences of a delay in the review of this verdict weighed in favor of immediate certification and review. The court recognized that Waldorf had been injured more than 14 years earlier, and had not received any compensation from this case. Without a certification, the unjustified delay would continue. The court also held that economic and solvency considerations were immaterial, determining that they played no role. See id. at 682.

Because it determined that the judgment was final and the factors weighed in favor of finding that there was no just reason for delay in the entry of a final judgment, the district court held that certification was proper under Rule 54(b).

B. Discussion

The court's authority to certify a judgment under Rule 54(b) as final creates a narrow exception to the historic policy of the federal appellate courts against piecemeal appeals. See, e.g., Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 438, 76 S.Ct. 895, 901 (1956); Braswell Shipyards, Inc. v. Beazer East, Inc., 2 F.3d 1331, 1335 (4th Cir. 1993). Rule 54(b) provides:

When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment. . . .

Thus, to certify entry of a final judgment under this rule in a multiple claim or multiple party action, the district court must determine expressly that the judgment is final and that there is no just reason for delay.

Initially on this point we state that the district court correctly understood that we based our dismissal of the earlier appeal and cross appeal on the district court's failure to state its reasons for certification on the record. We consistently have required district courts to provide a reasoned opinion as a prerequisite for appellate review of a judgment certified as final. See, e.g., Cemar, Inc. v. Nissan Motor Corp., 897 F.2d 120, 123 (3d Cir. 1990) (dismissing appeal on jurisdictional grounds because the district court did not state its reasons for certification on the record); Allis-Chalmers Corp. v. Philadelphia Elec. Co., 521 F.2d at 364 (adopting the policy of requiring a written statement of reasons by the district court in support of its determination to certify a judgment as final under Rule 54(b)). Because the district court did not provide a written outlining its reasons for its first certification of the judgment, we dismissed the appeal for want of jurisdiction. As part of the second certification, however, the district court provided a written explaining its reasons in great detail for granting the certification motion. Therefore, we can review the merits of the district court's certification decision.

This case involves multiple claims among multiple parties. In addition to his claim against the Borough, Waldorf has direct claims against other defendants, and the Borough has cross-claims for contribution against these same parties. See generally Owens v. Aetna Life & Cas. Co., 654 F.2d 218, 220 n.2 (3d Cir. 1981) (suggesting that contribution and indemnity claims are separate claims from the underlying complaint for purposes of a Rule 54(b) certification); Capital Transit Co. v. District of Columbia, 225 F.2d 38, 40 (D.C. Cir. 1955) ("Third party complaints seeking indemnity or contribution have in several instances been held to present a severable claim, capable of separate final adjudication under Rule 54(b) . . . ."). Thus, this case presents a situation in which a Rule 54(b) certification may be appropriate provided that in the unusual circumstances here the judgment is final and there is no just reason for delay.

1. Finality

A final judgment is "an ultimate Disposition of an individual claim entered in the course of a multiple claims action." Sears, Roebuck & Co., 351 U.S. at 436, 76 S.Ct. at 900; see also Gerardi, 16 F.3d at 1638 ("Finality is defined by the requirements of 28 U.S.C. § 1291, which are generally described as `ending the litigation on the merits and leav[ing] nothing for the court to do but execute the judgment.' " (citations omitted)). Although a district court has discretion in certifying a judgment for appeal under Rule 54(b) "[t]he district court cannot, in its exercise of its discretion, treat as `final' that which is not`final' within the meaning of [28 U.S.C. §] 1291." Sears, Roebuck & Co., 351 U.S. at 437, 76 S.Ct. at 900. Thus, if the Borough has retained its right to assert an affirmative defense of comparative negligence against Waldorf, the reservation would prevent a Rule 54(b) certification in this case because the judgment would not be final. See Bohl v. Stamatakis Indus., Inc. (In re Lull Corp.), 52 F.3d 787, 788-89 (8th Cir. 1995) (holding that the presence of an affirmative defense precluded a finding of finality for the purposes of a Rule 54(b) certification); see also Trustees of the Chicago Truck Drivers, Helpers & Warehouse Workers Union (Indep.) Pension Fund v. Central Transp., Inc. , 935 F.2d 114, 116 (7th Cir. 1991) (holding that Rule 54(b) does not permit an "appeal when damages have been partially but not completely determined, or when the district court will revisit the issues."); Allis-Chalmers Corp., 521 F.2d at 366 ("[I]n the absence of unusual or harsh circumstances, we believe that the presence of the counterclaim, which could result in a set-off against any amounts due and owing to the plaintiff, weighs heavily against the grant of 54(b) certification.").

The concern is that if the certification is allowed a defendant will have to pay money to a plaintiff that ultimately the plaintiff could be required to return if the defendant is successful in his or her defense. In fact, the New Jersey Tort Claims Act, which is applicable to Waldorf 's claim against the Borough, provides that if a plaintiff 's negligence is greater than a defendants' negligence, the plaintiff is precluded from recovery. See N.J. Stat. Ann. § 59:9-4 (West 1992). Under this rule, depending on the outcome of the affirmative defense, an underlying judgment against the defendant could be invalidated. Thus, if the Borough can raise an affirmative defense of comparative negligence against Waldorf, the judgment from which Waldorf appeals is not final.

We hold, however, that this judgment is final because we agree with the district court's determination that the Borough waived its affirmative defense of comparative negligence as a result of its stipulation of liability prior to the second trial. In interpreting a stipulation, courts should consider its plain language and "the circumstances surrounding the formation of the [s]tipulation which may explain" its meaning. Washington Hosp., 889 F.2d at 1302 (internal quotation marks omitted). The Boroughfirst proposed stipulating liability at a hearing before a magistrate Judge in the context of considering a trial involving all of the defendants as to damages only. See app. at 276-77. Susan Sharko, the previous counsel for the Borough, explained to the magistrate Judge that a trial limited to damages could not be held by consent because at least one defendant, Police Lt. Rego, was unwilling to stipulate to liability. See id. After this explanation, Sharko, acting for the Borough, made a clear and unequivocal stipulation of liability as to Waldorf: "The borough . . . has authorized me to advise the Court that they will not contest liability in this matter . . . ." Id. at 277. The only condition to the stipulation was that the court hold the damages trial first, to be followed by a separate liability trial. See id.

The Borough argues that the provision for the separate liability trial demonstrates that it did not waive its affirmative defense of comparative negligence as to Waldorf. This argument is without merit. The plain language of the stipulation clearly does not reserve to the Borough any right to contest liability with respect to Waldorf. The assertion of an affirmative defense of comparative negligence is inconsistent with a stipulation of liability, because the thrust of the defense is the denial of liability to the same party in whose favor the stipulation of liability runs. Furthermore, given the New Jersey law which may deny recovery to a plaintiff depending upon his percentage of comparative negligence, the stipulation necessarily had to waive this affirmative defense if it was to be a stipulation of liability. Therefore, the Borough is attempting to recast the stipulation so that it was nothing more than a stipulation that it was negligent and that its negligence was a proximate cause of the accident. Such a limited stipulation would leave the liability question open as Waldorf 's comparative negligence could bar the action.

Other persons present at the hearing when the Borough made the stipulation understood it as waiving the Borough's affirmative defense of comparative negligence. In fact, while discussing the Borough's proposal, the magistrate Judge stated that as a result of the stipulation, "the only rights that would accrue after [the damage trial] would be the rights between the various defendants to contribution . . . ." App. at 280; see also id. at 281 ("But in any event, Plaintiff will have 100 percent liability against the Borough, and the future liability trial, if it occurs at all, will only be to establish whether or not any one need make contribution." (comments of Steven Backfish, attorney for Police Lt. Rego)). Thus, without any objection by the Borough, the individuals involved at the hearing explained that the purpose of the liability trial would be to determine issues of contribution and not to disturb the Borough's stipulation of liability to Waldorf. Considering the ...


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