direct action against a liability insurer

In January 1970 respondent A. Ernest Fitzgerald lost his job as a management analyst with the Department of the Air Force when his position was eliminated during a departmental reorganization and reduction in force. One year earlier, on November 13, 1968, Fitzgerald had testified before the Subcommittee on Economy in Government of the Joint Economic Committee that cost overruns on the C-5A transport plane could approximate $2 billion. Concerned that the dismissal might constitute retaliation for the congressional testimony, the subcommittee held public hearings. At a December 8, 1969 news conference President Richard Nixon promised to look into the matter and directed White House Chief of Staff H. R. Haldeman to arrange for Fitzgerald's reassignment to another administration position. An internal White House memorandum from aide Alexander Butterfield recommended that Fitzgerald "bleed, for a while at least" because of perceived disloyalty, and no further White House efforts to reemploy him occurred. Fitzgerald complained to the Civil Service Commission alleging unlawful retaliation. The Examiner held that Fitzgerald's dismissal had offended applicable civil service regulations based on a finding that the departmental reorganization was motivated by reasons purely personal to respondent. The Examiner recommended Fitzgerald's reappointment to his old position or to a job of comparable authority. The Commission explicitly found that the evidence did not support Fitzgerald's allegation of retaliation for his 1968 testimony. At a January 31, 1973 news conference President Nixon stated that he had approved Fitzgerald's dismissal. A day later the White House press office issued a retraction of the President's statement. In 1978 Fitzgerald filed a second amended complaint in the United States District Court for the District of Columbia naming Nixon as a defendant and alleging violations of the First Amendment and two federal statutes. The District Court denied Nixon's motion for summary judgment on absolute immunity grounds. The Court of Appeals for the District of Columbia Circuit dismissed the collateral appeal. Shortly after Nixon petitioned for certiorari the parties agreed that Nixon would pay Fitzgerald $142,000 immediately and an additional $28,000 if the Supreme Court ruled he was not entitled to absolute immunity.

Plaintiffs Richard E. and Margaret Schultz were domiciled in Emerson, New Jersey, with their sons Richard, age 13, and Christopher, age 11. In 1978 the boys attended Assumption School, an institution owned and operated by the Roman Catholic Archdiocese of Newark. By agreement with the Archdiocese, defendant Brothers of the Poor of St. Francis, Inc., an Ohio corporation, supplied teachers for the school, including Brother Edmund Coakeley. Coakeley also served as scoutmaster of Boy Scout Troop 337, a locally chartered troop sponsored and approved by defendant Boy Scouts of America, Inc., a federally chartered corporation then maintaining its national headquarters in New Brunswick, New Jersey. In July 1978 Coakeley took Christopher to Pine Creek Reservation, a Boy Scout camp located in upstate New York near Foresport in Oneida County, where the complaint alleges he sexually abused the boy. The complaint further alleges that Coakeley continued the abuse after Christopher returned to Assumption School in New Jersey that fall. He made similar threats during a scout trip to the same New York camp on Memorial Day weekend in 1978 when he abused Richard. As a result of these acts both boys allegedly suffered severe psychological, emotional and mental pain. Christopher committed suicide by ingesting drugs on May 29, 1979. The complaint sets forth four causes of action. Richard E. Schultz, as administrator of Christopher's estate, seeks damages for wrongful death and for pre-death injuries. As father and natural guardian he seeks damages for Richard's personal injuries. The parents also seek damages for their own injuries, including destruction of family life, medical expenditures, mental anguish and psychological harm. They charge both corporate defendants with negligence in assigning Coakeley to positions of trust and in failing to dismiss him despite actual or constructive notice of prior similar misconduct at another Boy Scout camp. Plaintiffs had previously sued the Roman Catholic Archdiocese of Newark in New Jersey; that action was dismissed. In the present New York action against Boy Scouts of America and the Franciscan Brothers, defendants moved for summary judgment asserting New Jersey charitable immunity and collateral estoppel from the prior judgment. Special Term granted the motions, severed the causes of action and dismissed the complaint. A divided Appellate Division affirmed.