LEITH v. HUGHES AIRCRAFT

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

Jay LEITH et al., Plaintiffs and Respondents, v. HUGHES AIRCRAFT et al., Defendants and Appellants.

A026247.

Decided: May 22, 1987

James C. Glassford, Alfred R. Naphan, Naphan & Glassford, Oakland, Allan DeFraga, Gordon, DeFraga, Watrous Pezzalglia, Martinez, F. Joseph Bechelli, Boatwright, Adams & Bechelli, Concord, Alan M. Talbot, Brookman & Hoffman, Walnut Creek, Patrick John Zika, Law Offices of Melvin M. Belli, Sr., San Francisco, Philip D. Minter, Minter, Milward & Weinroth, Novato, for plaintiffs and respondents. Patrick G. Grattan, Nancy A. Nugent, Geary, Shea & O'Donnell, Harry A. Allen, Santa Rosa, Robert A. Seligson, Robert A. Seligson, Inc., Piedmont, for defendants and appellants.

Appellants, Thermogenics, Inc., and its parent company Hughes Aircraft, appeal from a judgment notwithstanding the verdict entered in favor of respondents.

The facts pertinent to this appeal are summarized as follows.   Appellant, Thermogenics, is a corporation engaged in the production of geothermal energy in Sonoma County.   Mud is used to lubricate equipment needed to drill steam wells.   Under its Sonoma County use permit, Thermogenics was required to take used drilling mud to a certified dump site.

On November 2, 1980, Randy Ransom, an independent contractor hired by Thermogenics, was driving a tanker fully loaded with drilling mud northbound on Highway 29 when he crossed over the double yellow line into oncoming traffic.

The tanker struck a passenger van occupied by boy scouts and their troop leaders returning from a camping expedition and continued in the southbound lane, colliding with a second van carrying other scouts from the same troop.   As a result of the collision, the second van struck a third vehicle.   Five people were killed and six sustained serious and permanent injuries.

Testimony as to the cause of the accident was conflicting.   Defendants' expert testified that the driver had probably either fallen asleep or was inattentive.   A driver who had been behind the truck prior to the accident testified that the truck had been repeatedly drifting back and forth in its lane and that she had been afraid to pass it.   Ransom, however, testified that the steering wheel locked immediately prior to the collision.   Two highway patrol investigators opined that the accident was probably caused by excessive play in the left front hub resulting from a missing part and that such a defect would have been obvious to the driver.   They also examined the steering box and found it to be free from defects.   Prior to the collision no drivers had ever complained about any problems with the truck.   And on the morning of the accident, Ransom told his employer that the truck was performing “beautifully.”

At the trial below, the judge granted respondent's motion for judgment notwithstanding the verdict on the basis that the evidence established appellants' liability as a matter of law and ordered a new trial on the issue of damages alone.

 When reviewing a motion notwithstanding the verdict, the appellate court must view the evidence in the light most favorable to the appellant.  (Hasson v. Ford Motor Co. (1977) 19 Cal.3d 530, 546, 138 Cal.Rptr. 705, 564 P.2d 857;  Dailey v. Los Angeles Unified Sch. Dist. (1970) 2 Cal.3d 741, 745, 87 Cal.Rptr. 376, 470 P.2d 360.)   The judgment will be reversed if the appellate court finds substantial evidence to support appellant's position.  (Hasson v. Ford Motor Co., supra, 19 Cal.3d at p. 546, 138 Cal.Rptr. 705, 564 P.2d 857.)

With these principles in mind, we review Thermogenics' contention that it cannot be held liable for the acts of its independent contractor.

In holding otherwise, the trial court relied on section 428 of the Restatement Second of Torts which provides as follows:  “An individual or a corporation carrying on an activity which can be lawfully carried on only under a franchise granted by public authority and which involves an unreasonable risk of harm to others, is subject to liability for physical harm caused to such others by the negligence of a contractor․”  Thus, in order to be held liable Thermogenics must:  (1) operate under a franchise and;  (2) engage in an activity which involves an unreasonable risk of danger.

 We have first to determine whether the governmental permit under which Thermogenics operates is a franchise within the meaning of section 428.1  In Eli v. Murphy (1952) 39 Cal.2d 598, 600, 248 P.2d 756, construing section 428 our high court held that a highway common carrier franchised by the Public Utilities Commission was liable for the acts of its independent contractor.   In so holding, the court discussed the rationale behind imposition of liability, noting that the legislature had subjected highway common carriers “to the full regulatory power of the Public Utilities Commission to protect the safety of the general public.  [Citation.] The effectiveness of safety regulations is necessarily impaired if a carrier conducts its business by engaging independent contractors over whom it exercises no control.   If by the same device it could escape liability for the negligent conduct of its contractors, not only would the incentive for careful supervision of its business be reduced, but members of the public who are injured would be deprived of the financial responsibility of those who had been granted the privilege of conducting their business over the public highways.   Accordingly, both to protect the public from financially irresponsible contractors, and to strengthen safety regulations, it is necessary to treat the carrier's duties as nondelegable.  [Citations.]”  (Id. at pp. 599–600, 248 P.2d 756.)

Appellants rely on Gaskill v. Calaveras Cement Co. (1951) 102 Cal.App.2d 120, 226 P.2d 633, for the proposition that businesses open to all are not franchises within the meaning of section 428.   In Eli v. Murphy, supra, 39 Cal.2d 598, 248 P.2d 756, the court discussed Gaskill, noting that “the carriers in that case were engaged in a business open to all, and accordingly, the principle enunciated in section 428 of the Restatement of Torts was inapplicable.”  (Id. at p. 600, 248 P.2d 756.)

Appellants contend that the production of geothermal energy is a business open to all and that section 428 is hence inapplicable.   We observe, however, that in Snyder v. Southern Cal. Edison Co. (1955) 44 Cal.2d 793, 285 P.2d 912, decided after Eli, our high court appeared to broaden the scope of section 428, stating:  “Where an activity involving possible danger to the public is carried on under public franchise or authority the one engaging in the activity may not delegate to an independent contractor the duties or liabilities imposed on him by the public authority․”  (Id. at p. 799, 285 P.2d 912;  emphasis added.)   The court then went on to discuss the weakening foundations of the independent contractor distinction.

Subsequently, in Klein v. Leatherman (1969) 270 Cal.App.2d 792, 76 Cal.Rptr. 190, the court interpreted Snyder to expand the scope of section 428 to include entities or individuals operating under public permits in order to further the policies behind imposition of liability for acts of independent contractors, stating:  “[I]n Snyder v. Southern Cal. Edison Co., 44 Cal.2d 793, 799 [285 P.2d 912], the Supreme Court restated the premise:  [regarding section 428]:  ‘Where an activity involving possible danger to the public is carried on under public franchise, or authority the one engaging in the activity may not delegate to an independent contractor the duties or liabilities imposed on him by the public authority․’  (Italics supplied.)”  (Id. at p. 795, 76 Cal.Rptr. 190.)

Relying on the broadened scope of Snyder, the court held that a common contract carrier operating under a public permit was liable for the acts of its independent contractor, observing that “[o]ne truck upon the highway tends to be like any other.   It is difficult to discern wherein classification of the operation on the highway as a privilege under franchise, or as a right under a permit, changes the degree of protection required.”   (Id. at p. 795, 76 Cal.Rptr. 190.)

Thermogenics argues that in Klein liability was imposed because the employer was in the same business as the independent contractor, and the court disfavored an employer's evasion of liability through employment of independent contractors.   Here, Thermogenics argues, the independent contractors appellant hired to haul drilling mud were not in the business of producing geothermal energy and the policy reasons underlying imposition of liability in Klein are therefore absent.

A similar argument was rejected by our high court in Snyder v. Southern Cal. Edison Co., supra, 44 Cal.2d 793, 285 P.2d 912.   There, appellant utility company argued that an independent contractor's installation of poles for utility lines was an activity incidental to the franchise and therefore delegable.   The court noted that the manner of installation was regulated by statute, and observed that “[t]he construction and maintenance of lines, which includes poles, is a necessary part of the utility's business.”  (Id. at p. 802, 285 P.2d 912.)   Similarly, the removal of drilling mud is a necessary part of Thermogenics' business, directly related to the production of geothermal energy.   The wells used to produce geothermal energy cannot be operated without the lubricating drilling mud which must thereafter be hauled away to prevent water contamination problems.   The removal of drilling mud is as necessary to Thermogenics' business as the installation of poles was to the utility's business in Snyder.

 Thermogenics operates under the authority of a governmental permit and is required to comply with the Public Resource Code mandate that the production of geothermal energy shall be carried on “in such manner as to safeguard life, health, property, and the public welfare․”  (Public Resources Code § 3700.)   An integral part of appellants' energy production involves the transportation of drilling mud to approved dumping sites.   Thus, Thermogenics had a non-delegable duty to ensure that drilling mud was hauled in a manner consistent with the mandates of Public Resource Code section 3700.   We conclude that the governmental permit under which Thermogenics operates is sufficient to meet the first criterion of section 428.  (Snyder v. Southern Cal. Edison Co., supra, 44 Cal.2d at p. 795, 285 P.2d 912.) 2

 Having so concluded, we shall determine whether trucking involves “an unreasonable risk of harm to others․”  (Rest.2d Torts, § 428.)   Thermogenics contends that the question of whether trucking involves an unreasonable risk of harm to others is a question of fact, which the jury found in its favor by declining to hold it liable for the acts of its independent contractor.

Respondents, however, correctly assert that trucking presents an unreasonable risk of harm as a matter of law.   In Taylor v. Oakland Scavenger Co. (1941) 17 Cal.2d 594, 604, 110 P.2d 1044 the court held that “the operation of large motor vehicles upon the public streets ․ clearly involved ․ [a] risk of danger to the public” sufficient to confer liability under section 428.   And in Eli v. Murphy, supra, 39 Cal.2d 598, 248 P.2d 756, liability was imposed pursuant to section 428, the court noting that the defendant, “operating as a highway common carrier, ․ [was] engaged in a ‘business attended with very considerable risk.’  [Citations.]”  (Id. at p. 599, 248 P.2d 756.)   Relying upon Eli, the court in Lehman v. Robertson Truck-A–Way (1953) 122 Cal.App.2d 82, 264 P.2d 653, construed section 428 and held that the defendant, a common carrier engaged in the transportation of vehicles by means of semi-trucks, was conducting an activity “which involved an unreasonable risk of harm to others.  [Citations.]”  (Id. at p. 86, 264 P.2d 653.)   And in Klein v. Leatherman, supra, 270 Cal.App.2d 792, 76 Cal.Rptr. 190, the court simply took it for granted that trucking was an unreasonably dangerous activity within the meaning of section 428.   In all of the cases cited it was undisputed that trucking constituted an activity which involved an unreasonable risk of harm within the meaning of section 428.

Moreover, in Snyder v. Southern Cal. Edison Co., supra, 44 Cal.2d 793, 285 P.2d 912, the court gave a broad interpretation of section 428, stating:  “Where an activity involving possible danger to the public is carried on under public franchise or authority the one engaging in the activity may not delegate to an independent contractor the duties or liabilities imposed on him by the public authority․  [Citations.]”  (Id. at p. 799, 285 P.2d 912;  emphasis added.)   Thus, the Snyder court considerably expanded the scope of section 428 by including activities which involve a “possible danger to the public․”  There can be little doubt that massive semi-trucks pose a considerable danger to the public because of limited visibility, maneuverability and braking ability.   Fully loaded with drilling mud, the truck involved here weighed approximately 80,000 pounds.   And while nothing in the mechanism of the truck itself caused the driver to cross into oncoming traffic, the truck's enormous loaded weight contributed to infliction of far greater damage than an ordinary passenger vehicle could have caused.

Appellants rely on A. Teichert & Son, Inc. v. Superior Court (1986) 179 Cal.App.3d 657, 225 Cal.Rptr. 10 for the proposition that as a matter of law ordinary trucking is not an unreasonably dangerous activity.   In Teichert, the court held that a construction company could not be held vicariously liable under the “peculiar risk” doctrine for the negligence of its independent contractor who struck and killed a child while driving a dump truck.   In so holding, the court stated:  “Plaintiff has failed to identify any peculiar risk inherent in the work Farmer was engaged in, apart from the ordinary risk that he would not use due care in the driving of his dump truck.   There was no direct relationship between the particular work performed by Farmer, i.e., hauling a truck load of asphalt, and the accident.   The incident could have occurred just as easily if Farmer were driving a standard passenger vehicle or an ‘eighteen-wheeler.’ ”  (Id. at p. 662, 225 Cal.Rptr. 10.)

Teichert, however, is inapposite, for it was construing the “peculiar risk” doctrine of section 416 of the Restatement Second of Torts.   As noted previously, cases construing section 428 hold that trucking constitutes an activity involving “an unreasonable risk of harm to others․”  (Rest.2d Torts, § 428.)  (Taylor v. Oakland Scavenger Co., supra, 17 Cal.2d 594, 604, 110 P.2d 1044;  Eli v. Murphy, supra, 39 Cal.2d 598, 599, 248 P.2d 756;  Klein v. Leatherman, supra, 270 Cal.App.2d 792, 795, 76 Cal.Rptr. 190;  Lehman v. Robertson Truck-A–Way, supra, 122 Cal.App.2d 82, 86, 264 P.2d 653.)

 Unlike cases construing the “peculiar risk” doctrine, trucking cases involving section 428 do not require a causal connection between the harm suffered and the risk which justified the departure from the non-liability rule.   For example, in Taylor v. Oakland Scavenger Co., supra, 17 Cal.2d 594, 110 P.2d 1044 a defendant who was driving a garbage truck struck a student running across the school grounds.   As in Teichert, there seemed to be no relationship between the accident which occurred and the fact that a truck was involved, yet our high court found the defendant liable under section 428.   Similarly, in Eli, the plaintiffs were injured when their car was struck from the rear by the defendant's truck.  (Eli v. Murphy, supra, 39 Cal.2d 598, 248 P.2d 756.)   Again, liability was found although there did not appear to be a causal connection between the accident and the fact that a truck was involved.

 Appellants contend further that even if there was an unreasonable risk involved in conducting trucking operations on mountain roads, the plaintiffs were not injured as a result of that risk.   In granting respondents' motion for judgment notwithstanding the verdict, the trial court found that trucking over mountainous roads posed an unreasonable risk to the public.   Relying on the “peculiar risk” doctrine, appellants contend that specific risk did not exist at the time of the collision, since the accident occurred on a flat stretch of road.   In support of that proposition, appellants cite Smith v. Lucky Stores (1976) 61 Cal.App.3d 826, 132 Cal.Rptr. 628 wherein the court found the “peculiar risk” doctrine inapplicable because there was no relationship between the contractor's negligence and the peculiar risk which justified departure from the non-liability rule.   The court held the case to be “a textbook example of ‘collateral’ or ‘casual’ negligence by an employee of the independent contractor for which the employer is universally held to be not responsible.   This doctrine rests on the premise that where harm results from a risk other than the one which makes the employer liable for the negligence of the independent contractor, the reason for imposing such liability no longer applies.”  (Id. at p. 830, 132 Cal.Rptr. 628;  fn. omitted.)

 In contrast, Thermogenics' liability here was not founded upon the “peculiar risk” doctrine embodied in section 416 of the Restatement Second of Torts.   Instead, liability was imposed pursuant to section 428, which, as interpreted in Snyder v. Southern Cal. Edison Co., supra, 44 Cal.2d 793, 799, 285 P.2d 912, encompasses activities involving “possible danger to the public․”  (Emphasis added.)   It was therefore not necessary for the trial court to predicate liability upon the dangers inherent in operating trucks in mountainous regions.   Rather, trucking per se constitutes an unreasonable danger of harm so as to fall within the scope of section 428.  (Taylor v. Oakland Scavenger Co., supra, 17 Cal.2d 594, 604, 110 P.2d 1044;  Eli v. Murphy, supra, 39 Cal.2d 598, 599, 248 P.2d 756;  Klein v. Leatherman, supra, 270 Cal.App.2d 792, 76 Cal.Rptr. 190;  Lehman v. Robertson Truck-A–Way, supra, 122 Cal.App.2d 82, 86, 264 P.2d 653.)   The fact that the accident occurred on a flat portion of the road, rather than in a mountainous region is therefore of no legal significance.3

Appellants next argue that the negligence of their independent contractor was not established as a matter of law, and that the trial court for that reason erred by granting a judgment notwithstanding the verdict.

“ ‘[A] motion for judgment notwithstanding the verdict may not be granted unless, indulging in every presumption in favor of the opposing party's evidence, there is no evidence of substantial value to support a verdict in favor of the opposing party.’  [Citation.]  ‘The court may not weigh the evidence but must resolve all conflicts in the evidence in favor of the ․ [defendant] and decide, as a matter of law, that ․ [defendant] would not be entitled to a verdict in his favor.’  [Citation.]”  (Vandermost v. Alpha Beta Co. (1985) 164 Cal.App.3d 771, 774, 210 Cal.Rptr. 613;  see also Lazar v. Thermal Equipment Corp. (1983) 148 Cal.App.3d 458, 462, 195 Cal.Rptr. 890.)

 In the case at bench, the evidence overwhelmingly established the negligence of the independent contractor as a matter of law.   California Highway Patrol experts Shelton and Sauer testified that the left wheel hub appeared to be in a defective condition which would have been obvious to the driver prior to the accident.   The driver testified that the steering “locked up” prior to the collision.   Expert analysis, however, showed no evidence of any malfunction in the steering box.

Defendants' expert witness testified that the driver had either fallen asleep or was inattentive.   And one witness, who had been driving behind the truck prior to the collision, testified that the truck had been drifting back and forth in its lane and that she had been afraid to pass it.   There was no evidence of braking before the collision.

The only rational inferences to be drawn from the evidence presented were that the driver was negligent either by falling asleep at the wheel or by continuing to drive the truck when an obviously unsafe condition existed.   We are compelled to conclude that negligence was established as a matter of law.

 In conclusion, it is established that “nonliability [for the negligence of independent contractors] is now the exception, and [that] the so-called ‘general rule’ will be followed only where no good reason is found for departing from it.  [Citations.]”  (Caudel v. East Bay Mun. Utility Dist. (1985) 165 Cal.App.3d 1, 5–6, 211 Cal.Rptr. 222;  see also Fonseca v. County of Orange (1972) 28 Cal.App.3d 361, 365, 104 Cal.Rptr. 566.)  “Compelling reasons have led the courts to depart from the rule of nonliability of an employer for the torts of an independent contractor:  the employer benefits from the work of the contractor he selects;  the employer is free to insist upon a competent contractor, one who is financially responsible;  the employer is in a position to demand indemnity;  the insurance necessary to distribute the risk is properly a cost of the employer's business;  and the performance of the duty of care is one of great public importance.  [Citations.]”  (Widman v. Rossmoor Sanitation, Inc. (1971) 19 Cal.App.3d 734, 747, 97 Cal.Rptr. 52.)

In the case at bench, we find compelling reasons to hold Thermogenics liable for the acts of its independent contractor.   The transportation of drilling mud was a necessary and integral part of appellant's geothermal activities, rather than an isolated occurrence.   Thermogenics should not be permitted to escape liability by employing an independent contractor to perform a job which forms an integral part of its business.   Thermogenics' liability for the negligence of its independent contractor was established as a matter of law, and accordingly the trial court did not err in granting the plaintiffs' motion for judgment notwithstanding the verdict.4

The order granting the judgment notwithstanding the verdict is affirmed and the case remanded for a determination of damages.   Costs to respondents.

FOOTNOTES

1.   Appellant cites numerous cases for the proposition that the governmental permit under which it operates does not rise to the level of a franchise.   None of the cases cited, however, defined a franchise for purposes of section 428 and are therefore inapposite.

2.   Thermogenics also argues that it is not a public service corporation and that accordingly section 428 is inapplicable.   In so arguing, Thermogenics relies on comment a to section 428 which states that section is “principally applicable to public service corporations․” (Rest.2d Torts, § 428, com. a, at p. 420.)   We first observe that the comment does not indicate that section 428 applies exclusively to public service corporations.   Rather it merely indicates the kind of enterprises which should be governed by section 428.   Thermogenics operates under a public permit and is regulated in the public interest under the Public Resources Code just as defendants in section 428 cases were regulated in the public interest pursuant to the Public Utilities Code.  (See Eli v. Murphy, supra, 39 Cal.2d 598, 600, 248 P.2d 756;  Klein v. Leatherman, supra, 270 Cal.App.2d 792, 796, 76 Cal.Rptr. 190.)   We therefore conclude that Thermogenics falls within the scope of section 428.

3.   Thermogenics' also argues that in order to find a non-delegable duty, the independent contractor must violate a specific duty imposed on the employer by the franchising authority.   Specifically, appellant contends no violation of any Public Resource code governing its activities occurred and therefore plaintiffs were not within the class of persons intended to be protected by the Public Resources Code.Respondents correctly observe that no violation of a statutory duty imposed on the employer need occur in order to impose liability under section 428.   For example, in Eli v. Murphy, supra, 39 Cal.2d 598, 248 P.2d 756, the plaintiffs were injured when their car was rear-ended by defendant's truck.   It may reasonably be presumed that no regulation in the Public Utilities Code imposed a direct duty upon truck operators to avoid rear-ending other vehicles on the road.   Similarly, the defendant garbage truck operator in Taylor v. Oakland Scavenger Co., supra, 17 Cal.2d 594, 110 P.2d 1044, violated no specific duty imposed by the public authority granting its franchise when he struck and injured a child running across a school yard.   Thus, contrary to appellants' contention no violation of a statutory duty need be shown to impose liability under section 428.

4.   Because we are affirming the judgment notwithstanding the verdict, we need not address questions concerning the order granting a new trial.

NEWSOM, Associate Justice.

RACANELLI, P.J., and HOLMDAHL, J., concur.