MORENO v. KRESS CO

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Court of Appeal, Third District, California.

Nicholas A. MORENO, a Minor, etc., et al., Plaintiffs and Respondents, v. S.H. KRESS & CO., Defendant and Appellant.

No. C012622.

Decided: April 29, 1997

The Fien Law Group, Robert B. Fien, Sacramento, and Law Office of Sheppard & Haven, for Plaintiffs and Respondents. Law Offices of Gordon & Rees, Catherine M. Leon, Thomas C. Crosby, San Francisco, for Defendant and Appellant.

In 1986 California voters passed a statewide ballot initiative to limit the liability of tortfeasors whose tortious conduct, although a small proportionate cause of the plaintiff's damage, had been forced to pay huge damage awards because of their financial wherewithal, colloquially referred to as their “deep pockets.”  (Civ.Code § § 1431 et seq., “Proposition 51”;  all further references are to the Civil Code unless otherwise indicated.)   The courts consistently have held that by enacting the “Fair Responsibility Act of 1986” the voters did not intend to eviscerate vicarious liability, a distinct basis of liability predicated upon a preexisting relationship between the tortfeasor and another and unrelated to the evils sought to be curbed by abolishing deep pocket joint liability for noneconomic damages.   The question posed in the published portion of this opinion is whether section 1431.2 limits the liability of a retailer, which by virtue of its participation in the chain of production or distribution of a defective product, is held strictly liable for a consumer's damages.

Three-year-old Nicholas Moreno was severely burned when loose caps for a toy cap gun, purchased by his father at an S.H. Kress store on February 23, 1987, exploded in his pocket.   The trial court found the caps defective due to inadequate warnings and packaging.   Both the inadequacy of the warnings and the packaging proximately caused the injuries.   Plaintiffs suffered economic and noneconomic damages.   The court ruled that section 1431.2 did not limit Kress's liability for the noneconomic damages but, because it was not at fault, it was entitled to complete equitable indemnity.   The foreign manufacturer is unknown and the distributor defendant, Bland Brothers, Inc., is bankrupt.

Kress argues section 1431.2 applies to strict products liability actions and is designed to shift the risk of insolvent or unavailable tortfeasors to an injured plaintiff.   We agree with the trial court that by restricting the joint liability of deep pocket tortfeasors for noneconomic damages, the voters did not intend to emasculate products liability actions in this state by shifting the risk of dangerous products to consumers.   We hold that the limitation of damages embodied in section 1431.2 does not apply to a retailer of a defective product because the retailer's liability is not predicated upon either comparative fault or deep pocket principles, but is analogous to vicarious liability, and therefore, outside the scope of section 1431.2.   In the unpublished portion of the opinion we conclude there is ample evidence of causation to support the judgment against Kress.   The judgment is affirmed.

I.

We need not recount the evolution of liability based on comparative fault;  a chore completed more than once by the Supreme Court.  (See e.g., DaFonte v. Up-Right, Inc. (1992) 2 Cal.4th 593, 597-599, 7 Cal.Rptr.2d 238, 828 P.2d 140;  Evangelatos v. Superior Court (1988) 44 Cal.3d 1188, 1196-1200, 246 Cal.Rptr. 629, 753 P.2d 585.)   Suffice it to say, prior to the passage of Proposition 51, concurrent or successive tortfeasors were liable for all the damages caused by their combined tortious conduct under the common law doctrine of joint and several liability.   In some instances, joint and several liability required defendants who bore only a small, even fractional, share of fault for an accident to pay all or a large share of the plaintiff's damages.   (DaFonte v. Up-Right, Inc., supra, 2 Cal.4th at p. 599, 7 Cal.Rptr.2d 238, 828 P.2d 140;  Evangelatos, supra, 44 Cal.3d at p. 1198, 246 Cal.Rptr. 629, 753 P.2d 585.)

The purpose of the Fair Responsibility Act of 1986 is articulated in section 1431.1 as follows:  “The People of the State of California find and declare as follows:  [¶] (a) The legal doctrine of joint and several liability, also known as the “deep pocket rule,” has resulted in a system of inequity and injustice that has threatened financial bankruptcy of local governments, other public agencies, private individuals and businesses and has resulted in higher prices for goods and services to the public and in higher taxes to the taxpayers.  [¶] (b) Some governmental and private defendants are perceived to have substantial financial resources or insurance coverage and have thus been included in lawsuits even though there was little or no basis for finding them at fault.   Under joint and several liability, if they are found to share even a fraction of the fault, they often are held financially liable for all the damage.   The People-taxpayers and consumers alike-ultimately pay for these lawsuits in the form of higher taxes, higher prices and higher insurance premiums.  [¶] (c) Local governments have been forced to curtail some essential police, fire and other protections because of the soaring costs of lawsuits and insurance premiums.  [¶] Therefore, the People of the State of California declare that to remedy these inequities, defendants in tort actions shall be held financially liable in closer proportion to their degree of fault.   To treat them differently is unfair and inequitable.  [¶] The People of the State of California further declare that reforms in the liability laws in tort actions are necessary and proper to avoid catastrophic economic consequences for state and local governmental bodies as well as private individuals and businesses.”  (Emphasis added.)

The Fair Responsibility Act effectuates a compromise, providing victims with the ability to obtain full compensation from joint tortfeasors for economic damages and yet equitably apportioning noneconomic damages between tortfeasors according to their proportionate fault.   The heart of the Act is found in section 1431.2.   The section clearly restricts the scope of section 1431.2 to actions based upon principles of comparative fault.   The provision states:  “(a) In any action for personal injury, property damage, or wrongful death, based upon principles of comparative fault, the liability of each defendant for non-economic damages shall be several only and shall not be joint.   Each defendant shall be liable only for the amount of non-economic damages allocated to that defendant in direct proportion to that defendant's percentage of fault, and a separate judgment shall be rendered against that defendant for that amount.”  (Emphasis added.)

 Vicarious liability and comparative fault derive from two very different public policy objectives.  “Vicarious liability means that the act or omission of one person ․ is imputed by operation of law to another and becomes the basis for holding both liable for the plaintiff's injuries.”   (Far West Financial Corp. v. D & S Co. (1988) 46 Cal.3d 796, 819, 251 Cal.Rptr. 202, 760 P.2d 399, dis. opn. of Kaufman, J.)   A vicariously liable defendant is not a tortfeasor, but an involuntary surety or guarantor.   (Ibid.)  By contrast, comparative fault is an evolving legal mechanism which attempts to apportion damages among multiple tortfeasors in proportion to fault.   In indemnity vernacular, vicarious liability involves loss shifting whereas comparative fault involves loss sharing.  (Ibid.)

An emerging line of cases uniformly rejects the notion that section 1431.2 curtails a victim's opportunity to recover noneconomic damages from one who is vicariously liable for the tortious conduct of another.   Since vicarious liability does not implicate the loss-sharing policy intrinsic to comparative fault, section 1431.2 does not apply.   The rationale employed in several of the vicarious liability cases is instructive.

In Miller v. Stouffer (1992) 9 Cal.App.4th 70, 11 Cal.Rptr.2d 454, a live-in housekeeper, practicing her driving within the course and scope of her employment, struck and severely injured a pedestrian.   Her employer, an elderly woman with limited assets, argued that since she was not at fault for the accident she could not be held liable for noneconomic damages pursuant to section 1431.2.   The court of appeal disagreed.

“Proposition 51 requires an apportionment of noneconomic damages based on each tortfeasor's comparative fault.  [Citation.]   By its terms, Proposition 51 is unavailing to [the employer] because it is directed at the doctrine of joint and several liability, while [the employer's] liability arises as a consequence of her status as [the housekeeper's] employer pursuant to the doctrine of respondeat superior.   Nothing in Proposition 51 altered the vicarious liability of an employer under that long-standing doctrine.”  (Id. at p. 83, 11 Cal.Rptr.2d 454.)

There are many “examples where, for deliberate reasons of public policy, a defendant who is without fault is subject to vicarious liability for the negligence of another, pursuant to statute or case law.   If, as [the employer] argues, Proposition 51 shields every defendant from liability for noneconomic damages beyond that attributable to that defendant's own fault, it largely would abrogate the vicarious tort liability of persons for the acts of others.   Nothing in the language or intent of Proposition 51 conveyed to the voter in June 1986 dictates such a drastic change in California tort law.”   (Id. at p. 85, 11 Cal.Rptr.2d 454.)

The same rationale was adopted by the court in Rashtian v. BRAC-BH, Inc. (1992) 9 Cal.App.4th 1847, 12 Cal.Rptr.2d 411 wherein the court held that section 1431.2's limitation on noneconomic damages did not apply to the owner of an automobile under a permissive user statute.   Budget Rent-a-Car, like the employer in Miller, argued it was without fault, and therefore, was not liable for noneconomic damages sustained by a victim injured by a driver in a Budget rental car.

Applying the language of section 1431.2, the court wrote:  “[I]n our view the application of this [section] necessarily requires independently acting tortfeasors who have some fault to compare.   It can not, as a matter of logic or common sense, be applied to those who are without fault and only have vicarious liability by virtue of some statutory fiat.”  (Rashtian, supra, 9 Cal.App.4th at p. 1851, 12 Cal.Rptr.2d 411.)

The court acknowledged the theoretical distinction between respondeat superior and the liability imposed by statute on the owner of a motor vehicle.   Yet, the court concluded, “We see no reason for a different result here.   However, the critical factor in our analysis is not the presence of imputed negligence under the respondeat superior doctrine, but rather the imposition of vicarious liability, whatever the basis.   In Miller, that liability rested upon imputed negligence.   In this case, it rests upon statutory fiat.   In either case, liability for the negligent acts of another is imposed not because of independent culpability which can be measured and evaluated but because of status or relationship.”  (Rashtian v. BRAC-BH, Inc., supra, 9 Cal.App.4th at p. 1854, 12 Cal.Rptr.2d 411, emphasis in original.)

The court found the shield of Proposition 51 did not extend to a vicariously liable defendant whose liability was imposed by statute as a matter of public policy.  “The liability of the operator and the owner are, to the extent of the financial limitations of the statute, coextensive.   In other words, for the purposes of Proposition 51, they are a single tortfeasor.   Whatever noneconomic damages are properly charged to the operator are likewise the burden of the owner.   Certainly, nothing in Proposition 51 was intended or can reasonably be construed to abrogate that fundamental principle.”  (Id. at p. 1854, 12 Cal.Rptr.2d 411.)

Limiting the scope of section 1431.2 to liability based on comparative fault, and not vicarious liability, was reiterated again in Srithong v. Total Investment Co. (1994) 23 Cal.App.4th 721, 28 Cal.Rptr.2d 672.   The issue presented in Srithong was whether section 1431 et seq. applied where a defendant's liability was based on a nondelegable duty.   The defendant lessor hired an independent roofer to repair the commercial building leased in part to the plaintiff.   The roofer negligently injured the plaintiff.   Defendant sought to minimize his exposure by invoking section 1431.2's limitation on liability for noneconomic damages.  (Id. at pp. 724-725, 28 Cal.Rptr.2d 672.)

Under the nondelegable duty doctrine, the lessor landowner “cannot escape liability for failure to maintain property in a safe condition by delegating such duty to an independent contractor․   Simply stated, ‘ “[t]he duty which a possessor of land owes to others to put and maintain it in reasonably safe condition is nondelegable.   If an independent contractor, no matter how carefully selected, is employed to perform it, the possessor is answerable for harm caused by the negligent failure of his contractor to put or maintain the buildings and structures in reasonably safe condition[.]” ’ ”  (Srithong v. Total Investment Co., supra, 23 Cal.App.4th at p. 726, 28 Cal.Rptr.2d 672 quoting Brown v. George Pepperdine Foundation (1943) 23 Cal.2d 256, 260, 143 P.2d 929.)

The court put the nondelegable duty doctrine in the vicarious liability context.  “[T]he nondelegable duty rule is a form of vicarious liability because it is not based on the personal fault of the landowner who hired the independent contractor.   Rather, the party charged with a nondelegable duty is ‘held liable for the negligence of his agent, whether his agent was an employee or an independent contractor.’  ․  [¶] The rationale of the nondelegable duty rule is ‘to assure that when a negligently caused harm occurs, the injured party will be compensated by the person whose activity caused the harm[.]’  [Citation.]   The ‘recognition of nondelegable duties tends to insure that there will be a financially responsible defendant available to compensate for the negligent harms caused by that defendant's activity [.]’  [Citation.]   Thus, the nondelegable duty rule advances the same purposes as other forms of vicarious liability.”  (Srithong v. Total Investment Co., supra, 23 Cal.App.4th at p. 727, 28 Cal.Rptr.2d 672.)

 The vicarious liability imposed by the judicially created doctrines of respondeat superior and nondelegable duty or the statutorily imposed liability for permissive users is premised on the same social policy.   As between an injured victim and an enterprise or individual who enjoyed the benefit of the activity that gave rise to the injury (Mary M. v. City of Los Angeles (1991) 54 Cal.3d 202, 209, 285 Cal.Rptr. 99, 814 P.2d 1341), the enterprise should bear the risk and burden arising from the activity.   Hence, the vicariously liable defendant is a guarantor or indemnitor of the independent tortfeasor as a matter of public policy and not based upon an equitable distribution of liability proportionate to fault.   Fault is irrelevant to vicarious liability.

Kress insists the vicarious liability cases are inapposite and “the application of Proposition 51 to a strict product liability action is undisputed law handed down by the California Supreme Court and consistently applied by all California courts.”   There is both irony and a glaring deficiency in Kress's argument:  the cases it cites are inapposite and it fails to cite, and we have been unable to find, a case applying section 1431.2 to limit the damages of a defendant whose liability arose solely from strict products liability.

Kress flaunts DaFonte v. Up-Right, Inc., supra, 2 Cal.4th 593, 7 Cal.Rptr.2d 238, 828 P.2d 140 as a Proposition 51/strict products liability case.  DaFonte does involve strict liability and it does consider important issues about Proposition 51.   But the Proposition 51 issue resolved by the court has absolutely nothing to do with strict products liability.   The Supreme Court held that “the plain language of section 1431.2 eliminates a third party defendant's joint and several liability to an injured employee for unpaid noneconomic damages attributable to the fault of the employer, who is statutorily immune from suit.”  (Id. at p. 596, 7 Cal.Rptr.2d 238, 828 P.2d 140.)   But the basis of defendant manufacturer's liability was irrelevant to whether an employer's comparative fault was included in the universe of fault allocated in a post-Proposition 51 case.   The manufacturer's liability could have been predicated on negligence, rather than strict liability, and the resolution of the Proposition 51 issue, that is the allocation of damages among multiple tortfeasors, would have been the same.

Nor is Hoch v. Allied-Signal, Inc. (1994) 24 Cal.App.4th 48, 29 Cal.Rptr.2d 615 any more helpful to Kress.   In Hoch, the jury attributed 35 percent of the fault to the manufacturer of a defective seat belt for its negligence.   Fundamentally, therefore, the case is inapposite because the manufacturer's liability was not predicated on its strict liability, but on negligence.   Clearly, to the extent its negligence contributed to the plaintiff's injuries, its liability for noneconomic damages was limited to its “comparative fault” as described in section 1431.2.   As in Kress's reliance upon DaFonte, Hoch does not raise the issue of whether section 1431.2 applies to a retailer, distributor, or other participant in the chain of production and distribution who is completely without fault.   Moreover, in an even stranger twist, section 1431.2 was raised in Hoch by the plaintiff, not a defendant, so as to preclude a setoff for the good faith settlement paid by a joint tortfeasor.  (Id. at p. 64, 29 Cal.Rptr.2d 615.)   Plaintiff prevailed.   We fail to see how Hoch assists Kress in any way.

Kress presents a second line of defense equally as vulnerable as the first.   Focusing on section 1431.2's express limitation to cases involving “comparative fault,” Kress asserts that liability can be apportioned when “the liability of one or more defendants derives from principles of strict liability.”  (Safeway Stores, Inc. v. Nest-Kart (1978) 21 Cal.3d 322, 328, 146 Cal.Rptr. 550, 579 P.2d 441.)

Safeway Stores is an equitable indemnity case.   Although a Safeway shopper was injured by a defective shopping cart, the jury concluded “the primary fault for the accident lay with Safeway because of its negligent failure properly to maintain the cart in safe working condition.”  (Id. at p. 330, 146 Cal.Rptr. 550, 579 P.2d 441.)   The trial court, therefore, found that Safeway should bear a proportionately greater share of liability than the manufacturer of the defective cart.   The Supreme Court wrote, “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.)

While Safeway Stores addresses apportionment in strict liability cases, it has nothing to do with section 1431.2 or with vicarious liability.   Kress ignores the only portion of the opinion with a bearing on the question posed by this appeal.   The Supreme Court expressly emphasized that Safeway's liability was based on negligence, not strict products liability.   The court stated:  “In the instant case the jury found that Safeway was itself negligent in failing to safely maintain its carts, and thus Safeway's liability is in no sense solely derivative or vicarious.   Accordingly, we have no occasion to determine in this case whether the comparative indemnity doctrine should be applied in a situation in which a party's liability is entirely derivative or vicarious in nature.”  (Safeway Stores, Inc. v. Nest-Kart, supra, 21 Cal.3d at p. 332, fn. 5, 146 Cal.Rptr. 550, 579 P.2d 441.)

Equitable indemnity between multiple tortfeasors including successive and concurrent tortfeasors is a subject of some complexity and many collateral effects.   We note, but need not discuss, the collision between good faith settlements and comparative fault in indemnity cases.  (Far West Financial Corp. v. D & S Co., supra, 46 Cal.3d 796, 251 Cal.Rptr. 202, 760 P.2d 399;  Angelus Associates Corp. v. Neonex Leisure Products, Inc. (1985) 167 Cal.App.3d 532, 213 Cal.Rptr. 403;  City of Sacramento v. Gemsch Investment Co. (1981) 115 Cal.App.3d 869, 171 Cal.Rptr. 764.)   Some might argue the concept of comparative fault, when applied to vicarious liability, was bastardized to promote the overreaching policy favoring settlement embodied in section 877.6.  (Far West Financial Corp. v. D & S Co., supra, 46 Cal.3d at pp. 817-828, 251 Cal.Rptr. 202, 760 P.2d 399;  dis. opn. of Kaufman, J.) Fortunately since neither indemnity nor good faith settlements are at issue here, we are not drawn into this analytical thicket.   We simply conclude that the rule of apportionment announced in Safeway Stores does not resolve the pivotal issue of whether section 1431.2 applies to limit the damages of a defendant, who is without fault, but is held strictly liable in tort.

 The record is clear.   The trial court found Bland Brothers 100 percent responsible for the defective product.   Kress was not at fault and did not cause plaintiff's injuries.   Hence, unlike Safeway, Kress was liable, not for its own negligence, but based on the social policy that a retailer, as one of the many beneficiaries from the sale of products, is to be held strictly liable to the consumer for the damages suffered as a result of a defective product.

 Strict products liability evolves from the same public policy interests as respondeat superior, nondelegable duties and permissive user statutes.   In each case, liability is derivative.   As a matter of law and not as a matter of fault, one who benefits from the injury producing activity is held financially accountable to the victim.

Within products liability doctrine, liability is assigned to “a party who possesses the ability to distribute losses over an appropriate segment of society.”  (Safeway Stores, Inc. v. Nest-Kart, supra, 21 Cal.3d at p. 330, 146 Cal.Rptr. 550, 579 P.2d 441.)  “Black's Law Dictionary defines tortfeasor as ‘A wrong-doer;  one who commits or is guilty of a tort.’  [Citation.]   Retailers and others in the manufacturing and marketing chain of a defective product whose liability is imposed without fault hardly fit the definition;  however public policy demands they respond in damages to the injured consumer although they may be ‘factually innocent’ of any wrongdoing․   As to the person or entity ultimately responsible for the defective product, the retailer is neither a wrongdoer nor a tortfeasor.”   (Angelus Associates Corp. v. Neonex Leisure Products, Inc., supra, 167 Cal.App.3d at p. 541, 213 Cal.Rptr. 403.)

In sum, we conclude that Kress's liability, as a retailer in the stream of commerce, was not based on fault.   Strict products liability, like vicarious liability, is a creature of social policy designed to hold one financially accountable to a victim without regard to wrongdoing.   In both types of liability, compensation is divorced from fault.   As the courts explicitly held in Miller, Rashtian, and Srithong, there is nothing in either the language or purpose of section 1431 et seq. to suggest the voters intended to alter established principles of vicarious liability.   Similarly, we find nothing in the language of section 1431.2 to evidence an intent to constrain strict liability for defective products.   Section 1431.2's limitation on liability for noneconomic damages, therefore, does not apply to a retailer whose sole basis of liability rests on principles of strict products liability.

II.**

DISPOSITION

The judgment is affirmed.

FOOTNOTES

FOOTNOTE.   See footnote 1, ante.

RAYE, Associate Justice.

SIMS, Acting P.J., and SCOTLAND, J., concur.