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STAMBAUGH v. PACIFIC GAS AND ELECTRIC COMPANY

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Court of Appeal, First District, Division 1, California.

Howard E. STAMBAUGH, Petitioner, v. The SUPERIOR COURT OF SONOMA COUNTY, Respondent; PACIFIC GAS AND ELECTRIC COMPANY, Real Party in Interest.

Civ. 38688.

Decided: July 30, 1976

Geary, Geary, Shea, Pawson & O'Donnell, Michael F. O'Donnell, Santa Rosa, for petitioner. Charles T. Van Deusen, Noel Kelly, San Francisco, for real party in interest.

This original proceeding in mandate concerns the effect of Li v. Yellow Cab Co. (1975) 13 Cal.3d 804, 119 Cal.Rptr. 858, 532 P.2d 122l (hereafter ‘Li’), and Code of Civil Procedure section 877, upon a tortfeasor who has settled a damage claim for a tort alleged to have been jointly committed by him and other tortfeasors.

Li abolished California's ‘contributory negligence’ defense and replaced it with a ‘comparative negligence’ rule.

Section 877 (enacted 1957) deals with the effect of a release given in ‘good faith’ before verdict or judgment to one joint tortfeasor, upon the rights and obligations of others.

Certain uncontroverted facts of the case follow.

Howard E. Stambaugh, the petitioner of this proceeding, was involved in a motor vehicle accident which resulted in the death of one Carter (hereafter ‘decedent’). Prior to any action thereon, he settled a wrongful death claim with decedent's heirs by payment of $25,000, the full amount of his insurance coverage. Stambaugh received from the heirs a release from further liability. The release applied to him alone; it did not purport to release any other joint tortfeasor. Decedent's heirs thereafter commenced an action against Pacific Gas and Electric Company (hereafter ‘P G and E’) and other claimed joint tortfeasors, for decedent's wrongful death in relation to the same motor vehicle accident. P G and E cross-complained, bringing Stambaugh into the action as an alleged joint tortfeasor.

The relief sought by P G and E was that the ‘court determine the extent to which [Stambaugh's] negligence proximately contributed to the death of the decedent Charles C. Carter, and that judgment against said cross-defendant be entered accordingly.’

Stambaugh moved for summary judgment, or judgment on the pleadings, in respect of the cross-complaint. On the motion the facts of Stambaugh's settlement with the deceased's heirs and their release to him were established as a matter of law.

The superior court denied Stambaugh's motion. Thereafter, on his petition, we issued an alternative writ of mandate in order to test the validity of the superior court's order.

We first consider the holding of Li.

The high court, having considered many ‘variants' of the comparative negligence rule, settled upon ‘the so-called ‘pure’ form of comparative negligence [which] apportions liability in direct proportion to fault in all cases' (13 Cal.3d, p. 827, 119 Cal.Rptr. p. 874, 532 P.2d p. 1242; emphasis ours). It then stated: ‘[I]n all actions for negligence resulting in injury to person or property, the contributory negligence of the person injured in person or property shall not bar recovery, but the damages awarded shall be diminished in proportion to the amount of negligence attributable to the person recovering’ (P. 829, 119 Cal.Rptr. p. 875, 532 P.2d p. 1243).

American Jurisprudence, Second Edition, has elaborated upon the ‘pure’ form of comparative negligence adopted by Li. That work states: ‘As far as the right of the injured person to recover judgment against all, if there are more than one, of the tortfeasors who have caused his injury is concerned, no problem arises under a comparative negligence statute of the ‘pure’ type which permits an injured person to recover some part of his damages whether or not the degree or proportion of his negligence equals or exceeds that of the persons who injured him, and under such statutes it is immaterial that the injury was caused by the negligent conduct of two or more tortfeasors. . . . [E]ven though recovery against one joint tortfeasor who is liable for the injuries suffered by the claimant is impossible or improbable because he is uninsured and judgment proof, the other tortfeasor or tortfeasors are liable for the full amount recoverable, even though the causal negligence attributable to them is relatively minor. . . . [T]he apportionment of negligence among multiple defendants on whom liability may be imposed under a comparative negligence statute does not alter the common-law rule that all of those liable are liable to the injured person for the entire amount of damages recoverable by him, . . .' (57 Am.Jur.2d, Negligence, §§ 433, 435, 436, pp. 854–855, 860, 861; and see authority there collected.)

One of the authorities principally relied upon by the Li court was a treatise of Professor Victor E. Schwartz of the College of Law of the University of Cincinnati. He states: ‘The concept of joint and several liability of tortfeasors has been retained under comparative negligence, unless the statute specifically abolishes it, in all states that have been called upon to decide the question.’ (Schwartz, Comparative Negligence (1974) § 16.4, p. 253.)

From the foregoing, Li will be seen to have introduced but two changes in this state's law of negligence. First, the concept of denial of any recovery for contributory negligence is abolished, and secondly, the tort claimant will have deducted from the total damages suffered by him, such amount as is directly proportionate to the extent that his own negligence contributed to the total negligence which proximately caused his total damages.

No purpose is seen in Li to abrogate the well-known rule of joint and several liability of joint tortfeasors, expressed by Mr. Witkin in this manner:

‘Contributory wrongdoers, whether joint tortfeasors or concurrent or successive tortfeasors, are ordinarily jointly and severally liable for the entire damage. . . . [¶] Hence, when they are joined in an action it is improper to apportion compensatory damages among them; judgment for the full amount should be rendered against each.’ (4 Witkin, Summary of Cal.Law (8th ed. 1974) Torts, § 35, p. 2333, and see authority there collected.)

Nor, in our opinion, does Li disturb another long-standing principle of tort law, that as to joint and several tortfeasors: ‘[T]hey are all jointly and severally liable, as the injured party may elect. The injured party may sue all or any of them jointly, or each separately, or, having secured a joint judgment against all, enforce such judgment by execution against one only, the only limitation being that he can have but one satisfaction for the injury that he has received.’ (Fowden v. Pacific Cast Steamship Co., 149 Cal. 151, 157, 86 P. 178, 180; see also General Electric Co. v. State of Cal. ex rel. Dept. Pub. Wks., 32 Cal.App.3d 918, 926, 108 Cal.Rptr. 543; Balding v. D. B. Stutsman, Inc., 246 Cal.App.2d 559, 562, 54 Cal.Rptr. 717; Thornton v. Luce, 209 Cal.App.2d 542, 551–552, 26 Cal.Rptr. 393; Frazzini v. Cable, 114 Cal.App. 444, 453, 300 P. 121; Rest., Torts, § 882.)

I. P G and E contends that Li must be construed as holding that each of several contributing joint tortfeasors, whether or not joined as a defendant, is liable to the plaintiff in damages, but only in the proportion that his negligence bears to the total negligence (i. e., that of all contributing joint tortfeasors and plaintiff) which proximately caused plaintiff's damages. This necessary apportioning of fault and assignment of liability to each of the joint tortfeasors can only be accomplished, it is urged, by bringing all of them before the court, since they have by virtue of Li become ‘indispensable parties' to the action according to Code of Civil Procedure section 389. Applying this rationale to the case at bench, P G and E insists that since Stambaugh was not joined as a defendant by the plaintiff heirs, he was properly brought in as a party by its cross-complaint.1

As pointed out, we see nothing in Li suggesting the conclusion sought by P G and E. And such a conclusion necessarily implies abandonment of the above-mentioned rule of joint and several liability of joint tortfeasors, and that permitting an injured party to select one or more of several joint tortfeasors as the objects of his claim.

We find it notable that, called upon to construe and implement Li, the highly respected Committee on Standard Jury Instructions of the Superior Court of Los Angeles County has developed and recommended jury instructions. These instructions give continued effect to the principle of joint and several liability of joint tortfeasors. (See Cal.Jury Instns., Civ. (cumulative pocket part for 5th rev. ed. 1975) Nos. 14.93–14.96.)

We have considered P G and E's argument that its interpretation of Li is mandated by the language of that case, which states that the fundamental purpose of the new comparative negligence rule ‘shall be to assign responsibility and liability for damage in direct proportion to the amount of negligence of each of the parties' (13 Cal.3d, p. 829, 119 Cal.Rptr., p. 875, 532 P.2d, p. 1243).

The excerpt does appear to lend some weight to P G and E's contention. But it will be noted that Li was concerned with a two-party case, with a plaintiff and a defendant.2 That the reference to ‘each of the parties' was to the more frequent ‘plaintiff and defendant’ relationship seems clear from Li's holding that: ‘[I]n all actions for negligence resulting in injury to person or property, the contributory negligence of the person injured in person or property shall not bar recovery, but the damages awarded shall be diminished in proportion to the amount of negligence attributable to the person recovering.’ (13 Cal.3d, p. 829, 119 Cal.Rptr., p. 875, 532 P.2d, p. 1243.) The complete holding is at least equally consistent with an intent that a plaintiff's award be diminished according to his own negligent contribution to his injuries, but that nevertheless the diminished award shall remain the joint and several liability of all of the joint tortfeasors sued and adjudged liable therefor. This meaning, we opine, was intended by the Li court.

We have also, as requested, noticed the holding of Pierringer v. Hoger, 21 Wis.2d 182, 124 N.W.2d 106, 112: ‘Upon the trial the release should be given immediate effect, as it is for contribution purposes, and the judgment, if any, against the nonsettling defendant should only be for that percentage of negligence allocated to him by the findings or the verdict. The claim for the balance has been satisfied by the plaintiff and there is no point in going through the circuity of ordering a judgment for a larger amount and requiring the plaintiff to satisfy it.’ (P G and E's emphasis.) But this Wisconsin holding appears to be under one of the many ‘variant’ forms of comparative negligence considered by Li, and rejected in favor of the ‘pure’ form (see 13 Cal.3d, p. 827, 119 Cal.Rptr. 858, 532 P.2d 1226) which we have previously discussed.

The instant contention of P G and E is accordingly found invalid.

II. P G and E next contends that, regardless of Li, Stambaugh was properly brought into the action because the ‘good faith’ of his settlement with the plaintiff heirs and his release, was one of the issues therein. The contention is founded upon Code of Civil Procedure section 877 (hereafter ‘section 877’), and a holding of River Garden Farms, Inc. v. Superior Court, 26 Cal.App.3d 986, 103 Cal.Rptr. 498.

Section 877 provides:

‘Where a release, dismissal with or without prejudice, or a covenant not to sue or not to enforce judgment is given in good faith before verdict or judgment to one or more of a number of tortfeasors claimed to be liable for the same tort—(a) It shall not discharge any other such tortfeasor from liability unless its terms so provide, but it shall reduce the claims against the others in the amount stipulated by the release, the dismissal or the covenant, or in the amount of the consideration paid for it whichever is the greater; and (b) It shall discharge the tortfeasor to whom it is given from all liability for any contribution to any other tortfeasors.’ (Emphasis added.)

In River Garden Farms, Inc. v. Superior Court, supra, 26 Cal.App.3d 986, 103 Cal.Rptr. 798, two children made claims against several alleged joint tortfeasors for damages for their own personal injuries, and for the wrongful death of their parents. Three of the defendants settled the claims for a total of $1,290,000. By agreement, which was approved by the trial court without the knowledge of the remaining group of defendants, the settlements were apportioned $490,000 toward the personal injury damages and $800,000 toward the wrongful death claims. Learning of this apportionment the remaining defendants sought, and were granted, an alternative writ of mandate by the Court of Appeal. They contended (p. 992, 103 Cal.Rptr. p. 502) that the ‘allocation of a disproportionately large share of the settlements to the wrongful death claims ha[d] isolated petitioner [River Garden Farms, Inc. et al.] as the sole target for potentially large personal injury judgments which it will bear alone, without contribution and with credit only for the relatively minor share of the settlements allocated to the personal injury claims.’ It was argued that the settlements were invalid because of the ‘good faith’ requirement of section 877.

Because the petitioners (the remaining defendants) had sought no relief in the superior court, the Court of Appeal denied mandate. But in its opinion the court nevertheless discussed the broad issues involved. It concluded that in a proper case a ‘nonsettling tortfeasor has a civil claim for damages against the claimant who exercised bad faith,’ and that such an ‘issue may be litigated within the framework of the claimant's tort suit’ (26 Cal.App.3d, pp. 1001, 1002, 103 Cal.Rptr. p. 509). It made no decision whether the allocation in question ‘violated the claimants' duty of good faith [since good] or bad faith is a question of fact in each case’ (p. 998, 103 Cal.Rptr. p. 507). And since the petitioners did not ‘charge the settling defendants with lack of good faith [the court did] not inquire whether [they might be brought] into the lawsuit as new parties defendant’ (p. 1002, 103 Cal.Rptr. p. 509).

A more recent case on the subject, not cited by the parties in their briefs, is Lareau v. Southern Pac. Transportation Co. (1975) 44 Cal.App.3d 783, 118 Cal.Rptr. 837; its factual context and legal issues are strikingly similar to those of River Garden Farms, Inc. v. Superior Court, supra. The court there concluded ‘from the record before us that bad faith cannot be ruled out as a matter of law and that Southern Pacific [the complaining joint tortfeasor] should be permitted to file a separate action against plaintiffs and settling defendants to determine the issue of good faith and the amount of damages in the event of a finding in favor of [against?] Southern Pacific on the issue of liability.’ (P. 799, 118 Cal.Rptr. p. 847.)

From these cases it will be seen that in a proper case an aggrieved joint tortfeasor may have relief against a claimant and another joint tortfeasor who have settled in bad faith.

In the case at bench the record establishes only that Stambaugh, one of several alleged joint tortfeasors, settled the tort claim against him for $25,000 the full amount of his insurance coverage. It contains no direct evidence of Stambaugh's bad faith or even a charge of such bad faith. A remaining question, however, might be whether a lack of good faith, according to section 877, may be inferred from the circumstances or implied by law.

Relevant to this question is one of the strongest policies of our law.

‘The law wisely favors settlements, . . .” (Potter v. Pacific Coast Lumber Co., 37 Cal.2d 592, 602, 234 P.2d 16; and see People ex rel. Dept. Pub. Wks. v. Douglas, 15 Cal.App.3d 814, 820, 93 Cal.Rptr. 644; Brown v. Guarantee Ins. Co., 155 Cal.App.2d 679, 696, 319 P.2d 69; Cilibrasi v. Reiter, 103 Cal.App.2d 397, 400, 299 P.2d 394; Lamb v. Herndon, 97 Cal.App. 193, 203, 275 P. 503.) ‘[I]t is the policy of the law to discourage litigation and to favor compromises of doubtful rights and controversies, made either in or out of court.’ (Hamilton v. Oakland School Dist., 219 Cal. 322, 329, 26 P.2d 296, 299; see also Central Basin etc. Wat. Dist. v. Fossette, 235 Cal.App.2d 689, 705, 45 Cal.Rptr. 651.) Settlement agreements “are highly favored as productive of peace and goodwill in the community, and reducing the expense and persistency of litigation.” (McClure v. McClure, 100 Cal. 339, 343, 34 P. 822, 824, see also Estate of Johanson, 62 Cal.App.2d 41, 56, 144 P.2d 72.) Indeed, it has been said that a major goal of section 877, the statute upon which P G and E here relies, is the ‘encouragement of settlements.’ (Insurance Co. of North America v. United States Fire Ins. Co., 34 Cal.App.3d 391, 396, 110 Cal.Rptr. 48; River Garden Farms, Inc. v. Superior Court, supra, 26 Cal.App.3d 986, 993, 103 Cal.Rptr. 498.)

Few things would be better calculated to frustrate this policy, and to discourage settlement of disputed tort claims, than knowledge that such a settlement lacked finality and would but lead to further litigation with one's joint tortfeasors, and perhaps further liability.

Except in rare cases of collusion or bad faith, such as were claimed in River Garden Farms, Inc. v. Superior Court, supra, 26 Cal.App.3d 986, 103 Cal.Rptr. 498, and Lareau v. Southern Pac. Transportation Co., supra, 44 Cal.App.3d 783, 118 Cal.Rptr. 837, a joint tortfeasor should be permitted to negotiate settlement of an adverse claim according to his own best interests, whether for his financial advantage, or for the purchase of peace and quiet, or otherwise. His good faith will not be determined by the proportion his settlement bears to the damages of the claimant. For the damages are often speculative, and the probability of legal liability therefor is often uncertain or remote. And even where the claimant's damages are obviously great, and the liability therefor certain, a disproportionately low settlement figure is often reasonable in the case of a relatively insolvent, and uninsured, or underinsured, joint tortfeasor.

We hesitate, as did the court in River Garden Farms, Inc. v. Superior Court, supra, to bound the area of ‘good faith.’ As said by that court: ‘When profit is involved, the ingenuity of man spawns limitless varieties of unfairness. Thus, formulation of a precise definition of good faith is neither possible nor practicable.’ (26 Cal.App.3d, p. 997, 103 Cal.Rptr. p. 506.) But we opine that it would be a rare case indeed, where, as here, a joint tortfeasor who was the immediate causative agent of a claimant's injuries, who settles for the full amount of his insurance coverage, may reasonably be charged with lack of good faith under section 877. And it must be noted that in such a case all joint tortfeasors against whom a judgment is finally entered will be the beneficiaries of such a settlement, for its amount will be deducted from the claimant's damages as found by the trier of fact. (See Winzler & Kelly v. Superior Court, 48 Cal.App.3d 385, 392, 122 Cal.Rptr. 259.)

Neither P G and E's cross-complaint, nor the record before the court on Stambaugh's motion for judgment, alleged or tended to establish any bad faith of Stambaugh in his settlement with the plaintiff heirs. It follows that, contrary to P G and E's contention, the good faith of Stambaugh's settlement was not at issue in the superior court proceedings.

III. From the discussions of parts I and II of this opinion it becomes patent that neither P G and E's cross-complaint, nor the proceedings on Stambaugh's motion for judgment in the superior court, tended to establish the existence of a cause of action against Stambaugh. Nor does Stambaugh appear to be an indispensable party according to the standards of Code of Civil Procedure section 389, subdivision (a), as is contended by P G and E.

IV. P G and E makes a further contention which was not raised in the superior court. It is urged that the cross-complaint properly brought Stambaugh into the action in order the P G and E might have ‘necessary discovery, including whether [Stambaugh's] settlement was negotiated in ‘good faith.”

But obviously one must have, or at least assert, a cause of action against another before he will be permitted to bring that party into an action by way of cross-complaint, or otherwise. The court's processes may not be used to bring a party into an action simply in order to determine, by discovery, whether a cause of action against him actually does exist.

The superior court accordingly erred in denying Stambaugh's motion for summary judgment or judgment on the pleadings.

The peremptory writ will issue.

I concur in parts II, III and IV of the opinion, and in the decision to issue the peremptory writ. In my view it is unnecessary to determine in this case whether Li v. Yellow Cab Co. (1975) 13 Cal.3d 804, 119 Cal.Rptr. 858, 532 P.2d 1226 has changed the rule of joint and several liability of several tortfeasors, or whether such rule should be changed to be consistent with Li. Even if such were to be the case, the settling tortfeasor is entitled to his discharge under the provisions of section 877 of the Code of Civil Procedure. (See River Garden Farms, Inc. v. Superior Court (1972) 26 Cal.App.3d 986, 1001, 103 Cal.Rptr. 498; and Thornton v. Luce (1962) 209 Cal.App.2d 542, 552, 26 Cal.Rptr. 393.) The question of the comparative negligence of the real party in interest, if an issue, can be determined without necessarily having all possible tortfeasors joined as defendants. (See Akins v. County of Sonoma (1967) 67 Cal.2d 185, 197–200, 60 Cal.Rptr. 499, 430 P.2d 57.)

FOOTNOTES

1.  P G and E disclaims any purpose ‘to seek indemnity or contribution, but . . . rather an effort to have the extent of its liability determined by a finder of fact in order that it not be required to pay any more of the judgment than is coextensive with the degree of fault attributed to it.’ (Emphasis added.)

2.  Although the defendants were Yellow Cab Company and its driver employee, the law ordinarily treats such a vicarious relationship and liability as that of one tortfeasor. (See Code Civ.Proc., § 876, subd. (b); Truck Insurance Exchange r. American Surety Co. of N. Y., 338 F.2d 811, 814.)

ELKINGTON, Associate Justice.

BRAY, J.*, concurs.

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