Bostick v. Flex Equip. Co., Inc. (2007) · DecisionDepot

Bostick v. Flex Equip. Co., Inc.

Name: California Superior Court Tentative Rulings
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California Court of Appeal Jan 29, 2007 No. B171567, B173455Published

Before: Aldrich

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Holding. The court held that Proposition 51 does not apply to strict products liability actions involving a single defective product where all defendants are in the same chain of distribution, meaning such defendants remain jointly and severally liable for noneconomic damages. Additionally, the court held that a jury's finding of zero fault for 'other entities' in a primary action does not collaterally estop a defendant from litigating fault in a subsequent cross-action for equitable indemnity.

Issues

Does Proposition 51 apply to limit a defendant's liability for noneconomic damages in a strict products liability action?
Is a jury's finding of zero fault for 'other entities' in a primary action binding on a defendant in a subsequent cross-action for equitable indemnity via collateral estoppel?

Disposition. Affirmed in part, reversed in part.

Quotations verified verbatim against the opinion

“the jury's finding in the trial on the complaint, namely that the percentage of fault attributable to "other entities" was zero, is not collateral estoppel so as to bind Flex.”

54 Cal.Rptr.3d 28 (2007) 147 Cal.App.4th 80 Harold L. BOSTICK, Plaintiff and Appellant,

FLEX EQUIPMENT COMPANY, INC., Defendant and Appellant.

Gold's Gym, Inc., Cross-complainant and Respondent,

Flex Equipment Company, Inc., Cross-defendant and Appellant.

Nos. B171567, B173455. Court of Appeal of California, Second District, Division Three.

January 29, 2007. [31] Smith, Chapman & Campbell, Steven C. Smith, William D. Chapman and Robert J. Hadlock, Santa Ana, for Plaintiff and Appellant.

Horvitz & Levy, David S. Ettinger, S. Thomas Todd, Encino; Callahan, McCune & Willis and John J. Tasker, West Los Angeles, for Defendant, Cross-defendant and Appellant.

No appearance for Cross-complainant and Respondent.

Certified for Partial Publication.[*]

[30] ALDRICH, J.

INTRODUCTION

Harold L. Bostick suffered severe, disabling injuries while working out at Gold's Gym, Inc. (Gold's Gym) on weight-lifting equipment manufactured by Flex Equipment Company, Inc. (Flex). Bostick sued both Flex and Gold's Gym. Gold's Gym cross-complained against Flex for equitable indemnity. The cross-complaint was severed for separate trial. Prior to the conclusion of the trial on the complaint, Bostick entered into a settlement with Gold's Gym for $7.3 million. The jury returned a verdict awarding Bostick nearly $3.3 million in economic damages and $13 million in noneconomic damages, and later awarded $1 in punitive damages. The jury apportioned 90 percent of the fault to Flex, 10 percent to Bostick, and 0 percent fault to "other entities." The trial court reduced Bostick's award against Flex by the full amount of the $7.3 million settlement and entered a judgment in favor of Bostick. Thereafter, the trial court entered judgment in favor of Gold's Gym on its cross-complaint against Flex for equitable indemnity in the full amount of the $7.3 million settlement.

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Wimberly held that Proposition 51 did not modify the common law rule that defendants in an action for strict products liability who are in the chain of distribution of the same defective product are jointly and severally liable for all of the plaintiffs economic and noneconomic damages. (Wimberly, supra, 56 Cal.App.4th at p. 633, 65 Cal.Rptr.2d 532.) In reaching its conclusion, Wimberly relied on three opinions by this court holding that Proposition 51 does not relieve defendants whose liability was solely vicarious of all liability for noneconomic damages. (Id. at pp. 629-630, 65 Cal.Rptr.2d 532.) We held in those cases that if a defendant's liability is based entirely on a rule of law that imposes liability without fault and is not based on the defendant's independent conduct, the defendant is liable to the plaintiff for noneconomic damages in the same amount as the person whose liability is imputed to the defendant. (Srithong v. Total Investment Co. (1994) 23 Cal.App.4th 721, 728, 28 Cal. Rptr.2d 672 [Proposition 51 does not apply where liability imposed vicariously by virtue of defendants' status as lessors under nondelegable duty doctrine]; Rashtian v. BRAC-BH, Inc. (1992) 9 Cal.App.4th 1847, [37] 1853-1854, 12 Cal.Rptr.2d 411 [Proposition 51 does not apply where liability imposed on defendant vicariously by permissive user statutes as matter of public policy]; Miller v. Stouffer (1992) 9 Cal.App.4th 70, 84,11 Cal.Rptr.2d 454 [Proposition 51 does not apply where liability imposed on defendant vicariously via doctrine of respondeat superior].) In reaching our conclusion, we noted that application of Proposition 51 "necessarily requires independently acting tortfeasors who have some fault to compare." (Rashtian, supra, at p. 1851, 12 Cal.Rptr.2d 411.) However, we reasoned, "vicarious liability is a departure from the general tort principle that liability is based on fault [citation]" (Srithong, supra, at p. 726, 28 Cal.Rptr.2d 672), where for "deliberate reasons of public policy, a defendant who is without fault is subject to vicarious liability for the negligence of another." (Miller, supra, at p. 85, 11 Cal.Rptr.2d 454.) We concluded that the voters intended Proposition 51 to require apportionment of liability among persons at fault, but did not intend the measure to eliminate vicarious liability for noneconomic damages. (Rashtian, supra, at p. 1854, 12 Cal.Rptr.2d 411; Miller, supra, at pp. 84-85, 11 Cal.Rptr.2d 454; see Srithong, supra, at p. 728, 28 Cal.Rptr.2d 672.)

Strict products liability is similar to vicarious liability, Wimberly determined, because under both theories, liability is imposed on the defendant to serve analogous public policies. (Wimberly, supra, 56 Cal. App.4th at p. 630, 65 Cal.Rptr.2d 532.) Wimberly quoted at length from our Supreme Court: "While strict product liability is not commonly referred to as `vicarious liability,' in Far West Financial Corp. v. D. & S. Co. (1988) 46 Cal.3d 796, 813, footnote 13, 251 Cal.Rptr. 202, 760 P.2d 399, the court noted the concepts' similarities: 'In many instancesfor example, strict product liabilitytort law places "direct" liability on an individual or entity which may have exercised due care in order to serve the public policies of a fair allocation of the costs of accidents or to encourage even greater safety efforts than are imposed by the due care standard. (See, e.g., Greenman v. Yuba Power Products, Inc., [supra,] 59 Cal.2d 57, 63, 27 Cal.Rptr. 697, 377 P.2d 897....) As a leading text on torts explains, the modern justification for vicarious liability closely parallels the justification for imposing liability on the nonnegligent manufacturer of a product: "What has emerged as the modern justification for vicarious liability is a rule of policy, a deliberate allocation of risk. The losses caused by the torts of employees, which as a practical matter are sure to occur in the conduct of the employer's enterprise, are placed upon that enterprise itself, as a required cost of doing business. They are placed upon the employer because, having engaged in an enterprise, which will on the basis of all past experience involve harm to others through the torts of employees, and sought to profit by it, it is just that he, rather than the innocent plaintiff, should bear them; and because he is better able to absorb them, and to distribute them, through prices, rates or liability insurance, to the public, and so to shift them to society, to the community at large." [Citation.]' " (Wimberly, supra, at p. 630, 65 Cal.Rptr.2d 532, italics added by Wimberly; compare Mary M. v. City of Los Angeles (1991) 54 Cal.3d 202, 209, 285 Cal.Rptr. 99, 814 P.2d 1341 [among policies behind respondeat superior doctrine is to "ensure that the victim's losses will be equitably borne by those who benefit from the enterprise that gave rise to the injury"]; see Barry v. Raskov (1991) 232 Cal.App.3d 447, 455, 283 Cal.Rptr. 463 ["The law has long recognized one party may owe a duty to another which, for public policy reasons, cannot be delegated."].) As with vicarious [38] liability, strict product liability is motivated by the deliberate public policy decisions to hold a defendant liable by virtue of the defendant's status, rather than its conduct. Because strict product liability is similar to vicarious liability in that, under either doctrine, a defendant can be held liable regardless of whether the defendant was negligent, Wimberly concluded that "the reasoning of Miller, Rashtian and Srithong applies equally here." (Wimberly, supra, at p. 630, 65 Cal.Rptr.2d 532.)

Some have observed that liability for noneconomic damages can be apportioned because strict products liability is not liability without fault. (See, Daly v. General Motors Corp., supra, 20 Cal.3d at p. 739, 144 Cal.Rptr. 380, 575 P.2d 1162; Wilson v. John Crane, Inc. (2000) 81 Cal.App.4th 847, 853, 97 Cal.Rptr.2d 240.) Yet, as Wimberly explained, the only "fault" relevant in strict products liability cases, if any, is the defendant's participation in the chain of distribution of a defective product. (Wimberly, supra, 56 Cal.App.4th at p. 632, 65 Cal.Rptr.2d 532; see also, Barrett v. Superior Court, supra, 222 Cal.App.3d at p. 1189, 272 Cal.Rptr. 304.) That is, liability under the strict products liability doctrinejust as with vicarious liability is imposed on a defendant irrespective of negligence, as a matter of social policy, not because of independent and culpable conduct. It is imposed on defendants because of their status as a member of the chain of distribution. (Wimberly, supra, at pp. 630, 632-633, 65 Cal.Rptr.2d 532, quoting from Greenman, supra, 59 Cal.2d at p. 63, 27 Cal.Rptr. 697, 377 P.2d 897; accord Malone, Contrasting Images of Torts, supra, 13 Stan. L.Rev., at p. 804; Pierce v. Pacific Gas & Electric Co., supra, 166 Cal.App.3d at p. 83, 212 Cal.Rptr. 283.) Defendants in strict products liability cases are not joint tortfeasors in the traditional sense. Their liability attaches regardless of the extent of their participation in the conduct that caused the plaintiffs injuries. These defendants are not independent tortfeasors, but are held responsible by reason of liability imposed by a rule of law born of public policy. (See, e.g., Rashtian v. BRAC-BH, Inc., supra, 9 Cal. App.4th at p. 1852, 12 Cal.Rptr.2d 411.) Thus, the defendants within the chain of distribution of a defective product are viewed "`as a single entity.'" (Kesmodel v. Rand (2004) 119 Cal.App.4th 1128, 1142-1143, 15 Cal.Rptr.3d 118.) By its terms, Proposition 51 is not triggered in a case of strict products liability where there is one defective product and all of the defendants are in the same chain of distribution. The reason is that in strict products liability cases, there is no fault to compare. All defendants are liable for the same conduct. (Ibid)

Daly, supra, 20 Cal.3d at page 730, 144 Cal.Rptr. 380, 575 P.2d 1162, held that the principles of comparative fault expressed in Li v. Yellow Cab Co. (1975) 13 Cal.3d 804, 119 Cal.Rptr. 858, 532 P.2d 1226 applied to an action for strict products liability. Li abrogated the contributory negligence doctrine, which barred recovery if the plaintiffs conduct contributed as a legal cause of injury in any degree, and adopted the comparative negligence doctrine, which reduces the plaintiffs recovery only in proportion to the plaintiffs comparative fault. (Id. at pp. 828-829, 119 Cal.Rptr. 858, 532 P.2d 1226.) Daly held specifically that In an action for strict products liability, the plaintiffs recovery should be reduced in proportion to the plaintiffs comparative fault. (Daly, supra, at pp. 736-737, 144 Cal.Rptr. 380, 575 P.2d 1162.) Daly stated that such an apportionment reflected more accurately an "`equitable apportionment or allocation of loss'" rather than a comparison of fault, but nonetheless adopted the term "comparative fault" in this context due to its common use. (Id. at pp. 736, 742, 144 Cal.Rptr. 380, 575 P.2d 1162.) Daly rejected the argument that jurors cannot measure or compare a plaintiffs negligence with a defendant's strict liability, stating, "We are unpersuaded by the argument and are convinced that jurors are able to undertake a fair apportionment of liability." (Id. at p. 738, 144 Cal.Rptr. 380, 575 P.2d 1162.) Daly also rejected the argument that jurors cannot fairly apportion loss to entities in the chain of distribution other than the manufacturer, stating: "Regardless of the identity of a particular defendant or of his position in the commercial chain the basis for his liability remains that he has marketed or distributed a defective product. If, as we believe, jurors are capable of assessing fully and fairly the legal responsibility of a manufacturer on a strict liability basis, no reason appears why they cannot do likewise with respect to subsequent distributors and vendors of the product." (Id. at p. 739, 144 Cal.Rptr. 380, 575 P.2d 1162.)

Safeway Stores, Inc. v. Nestr-Kart (1978) 21 Cal.3d 322, 328-332, 146 Cal.Rptr. 550, 579 P.2d 441 (Safeway) held that in a cross-action for equitable indemnity, comparative fault principles provided the basis for apportionment of liability between a defendant whose liability to the plaintiff was based on strict products liability and a defendant whose liability was based on both strict liability and negligence. The court stated, "even in cases in which one or more tortfeasors' liability rests on the principle of strict liability, fairness and other tort policies, such as deterrence of dangerous conduct or encouragement of accident-reducing behavior, frequently call for an apportionment of liability among multiple tortfeasors." (Id. at p. 330, 146 Cal.Rptr. 550, 579 P.2d 441.) The court stated further, "Nothing in the rationale of strict product liability conflicts with a rule which apportions liability between a strictly liable defendant and other responsible tortfeasors." (Ibid.) Safeway rejected the argument that there was no logical basis to apportion responsibility between strictly liable and negligent defendants, stating, "As our recent decision in Daly explains ..., the suggested difficulties are more theoretical than practical, and experience in other jurisdictions demonstrates that juries are fully competent to apply comparative fault principles between negligent and strictly liable defendants. [Citations.]" (Id. at p. 331, 146 Cal.Rptr. 550, 579 P.2d 441.) Safeway noted that the jury in the case then before the court had apportioned fault between the owner of the shopping cart, found by the jury to be both negligent and strictly liable, and the manufacturer, found by the jury to be only strictly liable, and stated, "We see no reason to assume that a similar common sense determination of proportional fault or proportional responsibility will be beyond the ken of other juries in similar cases." (Id. at p. 332, 146 Cal.Rptr. 550, 579 P.2d 441.) The California Supreme Court has stated more recently, "Past California cases have made it clear that the `comparative fault' doctrine is a flexible, commonsense concept, under which a jury properly may consider and evaluate the relative responsibility of various parties for an injury (whether their responsibility for the injury rests on negligence, strict liability, or other theories of responsibility), in order to arrive at an 'equitable apportionment or allocation of loss.' [Citations.]" (Knight v. Jewett (1992) 3 Cal.4th 296, 313-314, 11 Cal. Rptr.2d 2, 834 P.2d 696 (plur. opn. of George, J.).)

The language "claimed to be liable for the same tort" (§ 877) is not expressly limited to joint and several liability. Regardless of whether the 1957 Legislature anticipated that the then-prevailing rule of joint and several liability for multiple tortfeasors responsible for the same indivisible injury (American Motorcycle, supra, 20 Cal.3d at pp. 586-587, 146 Cal.Rptr. 182, 578 P.2d 899) might be modified in the future, the broad language used by the Legislature plainly encompasses tortfeasors responsible for the same indivisible injury whether their liability is joint and several or only several. (See Greathouse v. Amcord Inc., supra, 35 Cal.App.4th at p. 840, 41 Cal.Rptr.2d 561 ["The setoff provided by Code of Civil Procedure section 877 applies whenever the acts of multiple defendants `have combined to cause "one indivisible injury."' [Citations.]"]; May v. Miller (1991) 228 Cal.App.3d 404, 409, 278 Cal.Rptr. 341 ["The only relevant question in applying section 877 is whether there was one indivisible injury caused by two or more parties."].) There is no indication in either the words of section 877 or in its legislative history that the Legislature intended the required setoff to apply to only a joint and several liability. Moreover, as I have already stated, the statutory purpose of avoiding a double recovery can be fully achieved only if the phrases "claimed to be liable for the same tort" (§ 877) and "the claims against the others" (§ 877, subd. (a)) are construed to include claims for both economic and noneconomic damages, in accordance with the plain meaning of those words, and reduce the plaintiffs claims for noneconomic damages against the nonsettling defendants to the extent necessary to avoid a double recovery. Construed in this manner, the setoff requirement, in my view, would also provide a greater incentive to settlement and help to ensure an equitable apportionment of liability among tortfeasors through the resulting right of equitable indemnity in favor of a settling defendant against a nonsettling defendant.

The rule suggested above, in contrast, would require a setoff for the noneconomic portion of a settlement to the extent necessary to avoid a double recovery by the plaintiff. If such a setoff were required, a settling defendant would be allowed to recover equitable indemnity from a nonsettling defendant for all or part of the noneconomic portion of a high settlement, depending on the circumstances. A defendant contemplating settlement in a multiple-defendant tort case would be more likely to pay a greater amount if there existed an opportunity to recover from one or more nonsettling defendants not only the excess economic portion of a high settlement (i.e., the amount by which the economic portion of the settlement exceeds the amount of economic damages later apportioned to the settling defendant by the trier of fact) but also the excess noneconomic portion of a high settlement (i.e., the amount by which the noneconomic portion of the settlement exceeds the amount of noneconomic damages later apportioned to the settling defendant by the trier of fact). Particularly in cases where noneconomic damages may be substantial, the ability to recovery indemnity for the noneconomic portion of a high settlement in this manner, rather than be required to bear the full cost of settlement as to noneconomic damages regardless of the apportionment [64] of fault by the trier of fact, provides a significantly greater incentive for defendants to agree to and pay greater amounts in settlement. Such a result would benefit plaintiffs as well and bring about more settlements. In my view, this would encourage settlements far more than a rule that precluded any indemnity against the nonsettling defendant for the noneconomic portion of a settlement. In addition, the settling defendant's opportunity for such an indemnity recovery would be a complete answer to the concern expressed in Hoch, supra, 24 Cal.App.4th 48, 29 Cal.Rptr.2d 615 that a nonsettling defendant would reap an inequitable windfall if a setoff were permitted as to noneconomic damages.

Western Steamship, supra, 8 Cal.4th 100, 32 Cal.Rptr.2d 263, 876 P.2d 1062 involved an indemnity action by a cruise ship operator against a hospital after the cruise ship operator had settled a personal injury action in Florida by an injured employee. Western Steamship held that a statutory limitation on the hospital's liability to an injured party for noneconomic damages also limited the hospital's liability for equitable indemnity. Civil Code section 3333.2 limits the amount of noneconomic damages against a health care provider in an action for professional negligence to $250,000. The court concluded that the purposes of the limitation on liability would be served only if the limitation applied not only in an action for professional negligence, but also in an equitable indemnity action based on professional negligence. (Western Steamship, supra, at p. 112, 32 Cal.Rptr.2d 263, 876 P.2d 1062.) The court also relied on the principle that "`there can be no indemnity without liability'" (id., at p. 114, 32 Cal.Rptr.2d 263, 876 P.2d 1062, quoting Munoz v. Davis, supra, 141 Cal. App.3d at p. 425, 190 Cal.Rptr. 400) and concluded that any limitation on liability that would apply to the claim of the injured plaintiff also applied in an action for equitable indemnity. (Id. at pp. 114-115, 32 Cal.Rptr.2d 263, 876 P.2d 1062.) Western Steamship explained that the hospital would not have been responsible to pay the injured party noneconomic damages in excess of $250,000, so the cruise ship operator's payment of noneconomic damages in excess of that amount in settlement did not relieve the hospital of a liability that the hospital otherwise would have incurred. (Id. at pp. 116-117, 32 Cal.Rptr.2d 263, 876 P.2d 1062.) The court concluded that the hospital was not unjustly enriched by the payment of damages for which it could not be liable, that there was no basis for restitution for that payment, and that therefore there was no equitable basis for equitable indemnity for that payment. (Ibid.)

Western Steamship, supra, 8 Cal.4th at page 114, 32 Cal.Rptr.2d 263, 876 P.2d 1062 cited Munoz v. Davis, supra, 141 Cal.App.3d 420, 190 Cal.Rptr. 400 using language that I believe has been misconstrued:[18] "We find further support for our conclusions in the fundamental principle that `there can be no indemnity without liability.' (Munoz v. Davis, supra, 141 Cal.App.3d at p. 425, 190 Cal.Rptr. 400; GEM Developers v. Hallcraft Homes of San Diego, Inc. (1989) 213 Cal.App.3d 419, 430 [261 Cal.Rptr. 626]; Colich, supra, 198 Cal.App.3d at p. 1236, 244 Cal.Rptr. 714; Allis-Chalmers Corp. v. Superior Court (1985) 168 Cal.App.3d 1155, 1159 [214 Cal. Rptr. 615].) Indemnity does not invariably follow fault; it is premised on a joint legal obligation to another for damages. Accordingly, as against the indemnitee, the indemnitor can invoke any substantive defense to liability that would be available against the injured party." Although Munoz and the other opinions cited in the quoted passage all stated that the prospective [73] indemnitor and indemnitee must be "jointly and severally liable" or that there must be "joint and several liability" (Munoz, supra, 141 Cal.App.3d at p. 425, 190 Cal.Rptr. 400; GEM Developers, supra, 213 Cal.App.3d at p. 430, 261 Cal. Rptr. 626; Colich, supra, 198 Cal.App.3d at p. 1236, 244 Cal.Rptr. 714; Allis-Chalmers, supra, 168 Cal.App.3d at p. 1159, 214 Cal.Rptr. 615), Western Steamship referred to "a joint legal obligation" and described the statutory limitation as a limitation on the "joint liability" of the indemnitor and indemnitee.[19] (Western Steamship, supra, 8 Cal.4th at pp. 115, 116, 32 Cal.Rptr.2d 263, 876 P.2d 1062.) Despite those references to joint liability, Western Steamship did not deny indemnification for noneconomic damages in excess of $250,000 on the ground that there can be no indemnification for payment of a several liability. Western Steamship did not discuss the question whether a tortfeasor can recover equitable indemnity from another tortfeasor for the portion of a settlement attributable to noneconomic damages, but dispensed with the proposition that Proposition 51 might affect the right of equitable indemnity by stating: "We note that under Civil Code section 1431.2, liability for noneconomic damages `shall be several only and shall not be joint.' (Id., subd. (a).) That provision does not apply to the facts of this case; therefore, we have no occasion to consider any impact it might have on the rule we announce today." (Western Steamship, supra, at p. 117, fn. 14, 32 Cal.Rptr.2d 263, 876 P.2d 1062.)

Bostick v. Flex Equip. Co., Inc.

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INTRODUCTION

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FACTUAL AND PROCEDURAL BACKGROUND

DISCUSSION

CONCLUSION

DISPOSITION

CONCLUSION

NOTES

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