SHERWOOD v. ALAIMO (1997)

OPINION

On April 19, 1993, James Sherwood was killed when his car was struck by a truck tractor pulling two full dump trailers.   Plaintiffs are his wife and six children.   The tractor-trailer combination was owned and operated by defendant Paul Tackett.

The accident occurred as Mr. Tackett was carrying a load of aggregate from a quarry located near Interstate 15 and Cajalco Road to a California Department of Transportation construction site near Perris.   Mr. Tackett encountered slow traffic in front of him and applied his brakes.   His tractor-trailer skidded, jackknifed, and swerved into the opposing lane of traffic.   The tractor hit a van driven by Mr. Sherwood, killing him.   Mr. Tackett subsequently pled guilty to vehicular manslaughter (Pen.Code, § 192, subd. (c)(2)).

Mr. Tackett held a highway contract carrier permit and a dump truck carrier permit issued by the Public Utilities Commission.   At the time of the accident, he was acting as a subhauler to defendant Anthony F. Alaimo.   Mr. Alaimo also held a dump truck carrier permit issued by the Public Utilities Commission.

In his motion for summary judgment, Mr. Alaimo contended that he was not responsible for the negligent conduct of his independent contractor, Mr. Tackett.   In response, Mr. Sherwood's family contended that Mr. Alaimo had a nondelegable duty to ensure that its subhaulers did not act negligently and, accordingly, Mr. Alaimo was liable for Mr. Tackett's negligence.

The trial court found the nondelegable duty doctrine inapplicable and granted Mr. Alaimo's motion for summary judgment.   The appeal raises only the legal question of whether the trial court was correct.

DISCUSSION

In 1941, our Supreme Court stated the general principles which concern us:  “An employer is generally liable for negligent acts of an employee performed within the scope of employment, but if an independent contractor rather than master and servant relationship exists, the independent contractor usually is alone liable for his negligent acts.   If, however, an individual or corporation undertakes to carry on an activity involving possible danger to the public under a license or franchise granted by public authority subject to certain obligations or liabilities imposed by the public authority, these liabilities may not be evaded by delegating performance to an independent contractor.   The original contractor remains subject to liability for harm caused by the negligence of the independent contractor employed to do the work.”  (Taylor v. Oakland Scavenger Co. (1941) 17 Cal.2d 594, 604, 110 P.2d 1044.)

In 1952, our Supreme Court applied the nondelegable duty doctrine to highway carriers in Eli v. Murphy (1952) 39 Cal.2d 598, 248 P.2d 756.   In that case, a tractor and trailer driven by defendant Murphy hit and injured plaintiffs.   Mr. Murphy was transporting freight under a contract with California Motor Transport Company (“CMT”), a common carrier.   The Supreme Court held that the trial court correctly instructed the jury that CMT was liable for Mr. Murphy's negligence.

CMT argued that it was not liable for the negligence of its independent contractor.   The plaintiffs argued that CMT, as a common carrier, could not escape responsibility by delegating its duties to an independent contractor.   Our Supreme Court agreed, saying “[t]he common law principle upon which plaintiffs rely has been enunciated in section 428 of the Restatement of Torts, and has frequently been applied to impose liability upon franchised common carriers who have engaged independent contractors to transport goods over the public highways.  [Citations.]  We have concluded that it is applicable here.”  (Eli v. Murphy, supra, 39 Cal.2d 598, 599, 248 P.2d 756, fn. omitted.)

Our Supreme Court cited two reasons for applying the nondelegable duty doctrine:  to protect the public from financially irresponsible contractors, and to strengthen safety regulations imposed by the Public Utilities Commission.   The court noted that the Legislature had classified highway common carriers differently from other carriers because they were engaged in a risky business that required that the full regulatory power of the Public Utilities Commission be used in order to protect public safety.   Emphasizing safety considerations, the court said:  “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, ․ it is necessary to treat the carrier's duties as nondelegable.”  (Eli v. Murphy, supra, 39 Cal.2d 598, 600, 248 P.2d 756.)

Although these same considerations would appear to dictate a similar result in this case, the parties' arguments revolve around Eli 's treatment of an earlier case, Gaskill v. Calaveras Cement Co. (1951) 102 Cal.App.2d 120, 226 P.2d 633.   In that case, a carrier hired a subcontractor who injured plaintiffs in a truck accident.   As here, both the carrier and the subcontractor were licensed highway contract carriers, and there was an independent contractor relationship between them.   The appellate court rejected the argument that the nondelegable duty doctrine and the principle stated in the Restatement of Torts section 428 should be applied.  (Id., at pp. 124-125, 226 P.2d 633.)   The court relied on the comment to the Restatement section which says that the stated principle “is principally applicable to public service corporations, which, as such, are permitted by their franchises to use instrumentalities which are peculiarly dangerous unless carefully operated․”  (Id., at p. 125, 226 P.2d 633, emphasis omitted.)   The court held that “the activity which [the subcontractor] was carrying on was not under franchise and was not one involving any unreasonable risk of harm to others.   The operation of any motor vehicle may be said to involve some risk to others but the use of [the subcontractor's] equipment involved no more risk than that of any other.”  (Gaskill, supra, at p. 126, 226 P.2d 633.)

Eli dealt with Gaskill as follows:  “C.M.T. contends, however that [Gaskill ], establishes the rule in this state that a carrier is not liable for the conduct of an independent contractor engaged to transport freight over the highways[.]  In that case, however, both the defendant and the independent contractor stood on an equal footing as contract carriers operating under permits from the Public Utilities Commission.   Such carriers are not required to secure certificates of public convenience and necessity and they are not subject to the safety regulations the commission may establish for highway common carriers.   They are entitled to permits as a matter of right on complying with the statutory provisions.  (Pub.Util.Code, § 3572.)   Thus 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.”  (Eli v. Murphy, supra, 39 Cal.2d 598, 600, 248 P.2d 756.)

The Eli court thus created a distinction between common carriers and contract carriers, based upon a legislative determination that common carriers have greater safety concerns:  “In view of the more extensive and regular operations of highway common carriers as compared with others, the Legislature could reasonably conclude that the safety of their operations is of special importance and legislate accordingly.   Highway common carriers may not, therefore, insulate themselves from liability for negligence occurring in the conduct of their business by engaging independent contractors to transport freight for them.”  (Eli v. Murphy, supra, 39 Cal.2d 598, 601, 248 P.2d 756.)

As a result of the Eli opinion, the distinction between common carriers and contract carriers became critical in the application of the nondelegable duty doctrine.   Common carriers could not shield themselves from liability by using independent contractors, but contract carriers could use independent contractors to protect themselves from liability.

Examination of subsequent cases illustrates the point.   In Gilbert v. Rogers (1953) 117 Cal.App.2d 712, 256 P.2d 574, Eli was applied in the case of a company licensed as both a radial highway common carrier and as a contract carrier.   Its subcontractor, formerly licensed as a highway common carrier, was driving with a revoked license at the time of the accident.   Examining the reasoning of Eli, the appellate court found the reasons given for distinguishing Gaskill unconvincing.   Instead, the court thought that the safety concerns mentioned in Eli were equally applicable to radial highway common carriers and contract carriers:  “There seems to be good reason why, if the duties of one class [of carrier] are nondelegable, those of the other two classes are equally so.”  (Id., at p. 715, 256 P.2d 574.)   Thus, if the question were open for decision, the court would have found that the nondelegable duty rule applied to common carriers, radial highway common carriers, and contract carriers.  (Id., at p. 716, 256 P.2d 574.)

However, the court noted that the Supreme Court had not overruled Gaskill.   Accordingly, it held that the radial highway common carrier was similar to the contract carrier, and that the nondelegable duty doctrine was therefore inapplicable.   The carrier thus successfully insulated itself from liability by using an independent contractor.

Six months later, another appellate court faced the issue in Lehman v. Robertson Truck-A-Way (1953) 122 Cal.App.2d 82, 264 P.2d 653.   In that case, Robertson was a common carrier licensed under the federal Interstate Commerce Act. Its independent contractor injured plaintiffs in a traffic collision.   The appellate court applied Eli to Robertson and found that Robertson had a nondelegable duty as a common carrier.   The court reached this conclusion even though the independent contractor was also licensed by the Interstate Commerce Commission and the Public Utilities Commission.   “Respondent Robertson was a common carrier and defendants Harmon and Delaney were transporting vehicles for Robertson.   Even though Harmon and Delaney were independent contractors and were licensed by the Interstate Commerce Commission and the Public Utilities Commission, this would not allow respondent Robertson to escape liability for the negligent conduct of its contractors for the reasons stated in Eli ․”  (Id., at pp. 86-87, 264 P.2d 653.)   Accordingly, the trial court erred in ordering a nonsuit in favor of Robertson.

In 1969, an appellate court applied the nondelegable duty doctrine to a carrier, J & L Transit Company, licensed as a radial common carrier and a contract carrier.  (Klein v. Leatherman (1969) 270 Cal.App.2d 792, 76 Cal.Rptr. 190.)   The subhauler in that case did not have a valid permit or insurance.   The court also questioned the Eli distinction between common carriers and contract carriers, saying “[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.)   After discussing later Supreme Court cases not mentioned above, the appellate court found that the Supreme Court had expanded the area of nondelegable duty of care in specific situations.   It therefore found that law and public policy required it to find that the duties of J & L Transit Company were nondelegable.   The court thus disagreed with Gaskill.

Two more recent cases are instructive.   In Millsap v. Federal Express Corp. (1991) 227 Cal.App.3d 425, 277 Cal.Rptr. 807, the court considered a car accident in which defendant Pence was allegedly liable.   Mr. Pence was an employee of North Country Express.   At the time of the accident he was delivering parcels for Federal Express Corporation pursuant to a contract between North Country Express and Federal Express Corporation.   After considering Eli and Restatement Second of Torts section 428, the court held them inapplicable because it found that North Country Express was not regulated by either the Public Utilities Commission or the Interstate Commerce Commission due to an air freight motor carrier exemption.   Mr. Pence was thus an independent contractor, and North Country Express could delegate package delivering functions to him without incurring liability for his negligence.

Finally, in Gamboa v. Conti Trucking, Inc. (1993) 19 Cal.App.4th 663, 23 Cal.Rptr.2d 564, Conti Trucking was a licensed highway common carrier.   It had entered into a subhaul agreement with Alberg Trucking.   Alberg had a highway contract carrier permit.   The court thus applied the principles of Eli to find Conti liable under the nondelegable duty doctrine.   Relying on Klein v. Leatherman, supra, 270 Cal.App.2d 792, 76 Cal.Rptr. 190, Conti argued that it had fulfilled its nondelegable duty under Eli by ensuring that its subhauler was licensed to haul freight and had the required amount of liability insurance.   The Gamboa court rejected the argument, finding that it was based on dicta in Klein when the actual holding was an expansion of the nondelegable duty doctrine that the Klein court created by applying Restatement section 428 to a nonfranchised highway contract carrier.

The parties argue both sides of the issue by citing these cases and others.¹  However, we find plaintiffs' statutory argument persuasive.

As noted above, the Eli distinction between common carriers and other permitted carriers was based on a permissible classification by the Legislature based on safety concerns.   As a consequence of this decision, our Supreme Court found that the Legislature had subjected common carriers to the full regulatory power of the Public Utilities Commission.  (Eli v. Murphy, supra, 39 Cal.2d 598, 599-600, 248 P.2d 756.)   The court cited Public Utilities Code sections 213, 761, 762, 768, and 1062.

However, in 1996, the Legislature eliminated Public Utilities Commission supervision of the safety of motor carriers of property, and transferred safety functions to the California Highway Patrol.  (Stats.1996, ch. 1042.)   Section 213, the definition of common carrier, was repealed.  (Stats.1996, ch. 1042, § 5, p. 5181.)   The definition of “common carrier” in section 211 was changed to exclude motor carriers of property from the definition.   (Stats.1996, ch. 1042, § 3, p. 5180.)  Sections 761, 762 and 768 deal with the Commission's rulemaking powers.  Section 768 was amended by the 1996 legislation to provide that the Commission will defer to the California Highway Patrol with regard to the safety of highway carriers.  Section 1062, which gave the Commission specific powers to regulate highway common carriers, was also repealed by the 1996 legislation.  (Stats.1996, ch. 1042, § 23, p. 5182.)   In addition, the Legislature repealed the chapter dealing with highway carriers.  (Stats.1996, ch. 1042, § 28, p. 5183.)   In short, under current legislation, all property carriers are classified as “motor carriers of property,” and the Highway Patrol is responsible for their safe operation.   (Veh.Code, § 34600 et seq.)   Thus, while the legislation is not retroactive, the Legislature has removed the basis for distinguishing between the safe operation of common carriers and other carriers.²

We therefore agree with plaintiffs that the distinction made in Eli between common carriers and other carriers is based on a presumed legislative intent which no longer exists.   The current legislative intent is to eliminate the distinction between common carriers and other carriers, particularly in safety and insurance matters.   Accordingly, the distinction made by our Supreme Court is no longer viable.

Defendant contends that this conclusion violates our duty to follow decisions of our Supreme Court under Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455, 20 Cal.Rptr. 321, 369 P.2d 937.   We disagree.   We are not refusing to follow our Supreme Court's decision, nor are we declaring it erroneous.   The Supreme Court's decision was based on the statutory framework that existed at that time, a framework which led the court to conclude that the legislative distinction between common carriers and other carriers was a sufficient basis for distinguishing between them for purposes of the nondelegable duty rule.   We are merely applying the rationale of Eli to the current statutory scheme, which is a scheme in which the Legislature has determined that all motor carriers of property shall be treated alike in safety regulation.   Since the statutory scheme has changed, the reasons for the Eli distinction have been eliminated by the Legislature.  “When the reason of a rule ceases, so should the rule itself.”  (Civ.Code, § 3510.)

 Without consideration of the distinction between common carriers and other carriers, the question becomes whether the nondelegable duty doctrine applies to all motor carriers of property, or to none of them.   As noted above, the nondelegable duty doctrine is based on the concept that a permittee cannot avoid its responsibilities by delegating performance of the work to an independent contractor.   The principles stated by the Supreme Court in Eli, i.e., to protect the public from financially irresponsible contractors, and to strengthen safety regulation of carriers, still apply under the current statutory scheme.   In fact, the legislation declares the goal of providing a safe and efficient transportation system (Stats.1996, ch. 1042, § 48, pp. 5188-5191), and establishes a motor carrier safety improvement fund (Stats.1996, ch. 1042, § 48, pp. 5188-5191).   Nothing in the legislation evidences a legislative purpose to lessen safety standards.   We therefore conclude that the principles stated in Eli should be applied to all motor property common carriers.   Accordingly, the nondelegable duty doctrine applies to Alaimo Trucking, and it is unable to delegate duties to a subcontractor to avoid liability.   In other words, the responsibilities of Alaimo are the same whether it was its own truck that killed the victim, or whether it was its subcontractor's truck that killed the victim.

Alaimo contends that the Legislature, in making the 1996 changes, did not intend to deviate from traditional concepts of liability.   It cites Vehicle Code section 34624, which provides that the Department of Motor Vehicles shall establish a subcategory of motor carriers of property known as owner-operators.   Its operative section provides that the department, upon suspending or revoking the driving privilege of an owner-operator, shall also suspend the owner-operator's motor carrier permit.   It then states:  “This section shall not be construed to change the definition of ‘employer,’ ‘employee,’ or ‘independent contractor’ for any other purpose.”   Alaimo argues that this section shows that the Legislature did not intend that the nondelegable duty doctrine would be applied to all motor carriers of property.

 We disagree.   The subsection specifically is limited in operation to the section relating to owner-operators.   It does not affect other sections, and cannot be taken as a legislative statement on the nondelegable duty doctrine.   If the reference to independent contractors was intended to overturn the nondelegable duty doctrine as applied to independent contractors who were not common carriers, the Legislature would have said so.   Instead, it eliminated the distinctions between common carriers and other carriers.   As discussed above, the reasons for applying the nondelegable duty doctrine to all motor carriers of property are compelling.   Accordingly, we conclude that defendant Alaimo had a nondelegable duty which it could not avoid by employing a subcontractor to carry out its contract.

What was said in a somewhat different context is applicable to Alaimo here:  “If [licensee] were correct, effective regulation would be impossible.   He could contract away the daily operations of his business to independent contractors and become immune to disciplinary action by the licensing authority.  [¶] ‘If a licensee elects to operate his business through employees he must be responsible to the licensing authority for their conduct in the exercise of his license and he is responsible for the acts of his agents or employees done in the course of his business in the operation of the license.’  [Citation.]  [¶] We view the duties of a licensee, including the ones breached here, to be nondelegable to either an independent contractor or to an employee [citation], and we hold [licensee] to the conduct prescribed by statute for operating his licensed business.   He may not insulate himself from regulation by electing to function through employees or independent contractors.”  (Camacho v. Youde (1979) 95 Cal.App.3d 161, 164-165, 157 Cal.Rptr. 26;  see also Snyder v. Southern Cal. Edison Co. (1955) 44 Cal.2d 793, 800-801, 285 P.2d 912;  Rob-Mac, Inc. v. Department of Motor Vehicles (1983) 148 Cal.App.3d 793, 797-798, 196 Cal.Rptr. 398.)

In addition to the statutory argument, and independently of it, the cases discussed above support the conclusion that the public policy reasons for the imposition of a nondelegable duty on the primary contractor are compelling.   Thus, we agree with Klein that safety of the public is the greatest concern, and the safety concern compels the conclusion that the primary contractor cannot eliminate its liability by employing an independent contractor to perform its duties.  (Klein v. Leatherman, supra, 270 Cal.App.2d 792, 795-796, 76 Cal.Rptr. 190.)   The same conclusion was reached in Gamboa.   (Gamboa v. Conti Trucking, Inc., supra, 19 Cal.App.4th 663, 667-668, 23 Cal.Rptr.2d 564.)   The legislative scheme has always reflected a need to reassure members of the driving public that large dump trucks being operated on the highway are mechanically safe, and that those trucks are being driven by qualified operators in a safe manner.   If an accident occurs, the person hit by the truck, or his or her survivors, want the assurance of compensation by the trucker's insurer.   Thus, as Gamboa explains, it is sound public policy to make the primary contractor liable under the nondelegable duty doctrine in the event that the insurance coverage of the subcontractor is inadequate to cover the loss.  (Id., at p. 668, 23 Cal.Rptr.2d 564.)

We also agree with plaintiffs that competitive pressures resulting from the deregulation of the trucking industry could possibly lead primary carriers to seek lower costs by hiring cost-cutting independent contractors, to the detriment of the public.   If this is so, application of the nondelegable duty doctrine to the primary carrier furthers public safety by making the primary carrier liable for its independent contractors, at least to the extent that the liability is not covered by the independent contractor's insurance.  (Gamboa v. Conti Trucking, Inc., supra, 19 Cal.App.4th 663, 668, 23 Cal.Rptr.2d 564.)   In short, we find that the primary carrier's responsibility for safe performance of its contracts is too important to be delegable.

DISPOSITION

The judgment is reversed.   Plaintiffs are to recover costs on appeal.

FOOTNOTES

1.   Plaintiffs request us to take judicial notice of documents showing that Mr. Tackett's insurance company filed for bankruptcy.   Finding the documents to be legally irrelevant, we deny the request.

2.   At oral argument, defendant argued that we were giving retroactive or ex post facto application to the statute.   We disagree.   As explained more fully in the subsequent text, we are using the current statutory scheme to show that the presumed legislative intent that was the basis for the Eli distinction between highway common carriers and others no longer exists.  (Eli v. Murphy, supra, 39 Cal.2d 598, 601, 248 P.2d 756.)   Since the presumed legislative intent no longer exists, we should no longer seek to give it effect.

HOLLENHORST, Associate Justice.

RAMIREZ, P.J., and GAUT, J., concur.