SOUTHERN PACIFIC TRANSPORTATION v. WHITE MOTOR CORPORATION (1981)

STATEMENT OF THE CASE

This is an appeal from a judgment of dismissal of the complaint in the trial court after sustaining of the demurrer without leave to amend.

The appellant had brought an action in a complaint requesting in count I full equitable indemnification from White Motor Corporation (White), and in count II for comparative equitable indemnification from White.   The trial judge agreed with White that, as to count I, there was no cause of action for full equitable indemnification, as Southern Pacific had been proven actually negligent in the underlying case and that as to count II his action came too late to obtain the benefit of the doctrine of comparative equitable indemnification set forth in American Motorcycle Assn. v. Superior Court (1978) 20 Cal.3d 578, 146 Cal.Rptr. 182, 578 P.2d 899.

FACTS

The facts of the underlying case we state here as reviewed in Campbell v. Southern Pacific Co. (1978) 22 Cal.3d 51, 148 Cal.Rptr. 596, 583 P.2d 121.   This court in May 1980 agreed to take judicial notice of the record on appeal in that case.

On May 18, 1968, Raymond Campbell was injured when a tractor he was operating on behalf of Pacific Motor Trucking Company (PMT) rolled off the side of a railroad flatcar on to which he was loading “piggyback” truck trailers.   The said employer (PMT) was a wholly owned subsidiary of appellant, Southern Pacific Transportation Company.   The tractor Campbell was driving when he was injured was designed and manufactured by respondent, White.

The procedure routinely used in the loading operation was substantially as follows:  each trailer was loaded on a flatcar by means of a tractor, which, initially pushed the trailer up a ramp onto the bed of a flatcar, and then over a succession of attached cars until the assigned car was reached.   After the trailer and tractor were disconnected, the tractor then returned over the adjoining cars, and down the ramp to ground level.   Spaces between the cars were bridged by metal endplates.   Because these endplates were frequently warped and the flatcars were of varying heights, the tractor's passage over the cars was uneven.   Once in position, the trailers were secured to the flatcars by metal saddles.   The cars were equipped with six-inch guard rails along the sides.

As Campbell was returning with the tractor across a flatcar he felt the steering wheel jam, the tractor ran off the side of the car onto the adjoining track and he was severely injured.

PMT, as a wholly owned subsidiary of Southern Pacific, was engaged by the latter to load trailers on railroad flatcars at the Southern Pacific yard in Los Angeles.   All the White tractors used there had the legend “Southern Pacific” painted prominently on the side.   All of the White tractors acquired by PMT in 1966 were for the exclusive use on the Southern Pacific ramp.   PMT employees were under Southern Pacific control.   In most instances Southern Pacific determined which trailers would be used and when and where they would be used.   Southern Pacific agreed to reimburse PMT for equipment used in the operations and for repairs and service of the equipment, including the tractors.

The Southern Pacific flatcars, onto which the trailers were loaded were not level.   Because the flatcars differed in height by several inches, the endplates were frequently warped.   These circumstances subjected the tractor steering system to shock forces.   The long history of power steering repair and fluid loss of the 10 White tractors, including the vehicle on which plaintiff was injured, gave notice to PMT and Southern Pacific that damage was being caused to the system.

An expert for Campbell testified that the irregular height of the flatcars caused the steering mechanism of the tractors to be subjected to shock.   Unsafe conditions were reported to Southern Pacific but no representative of PMT or Southern Pacific ever came to inspect.

Campbell brought action against appellant (Southern Pacific) and respondent (White) and on February 5, 1973, a jury determined that appellant was liable in negligence for injuries suffered by Campbell and that said injuries were proximately caused by a defect in the mechanism of the tractor manufactured by respondent, thus holding White and Southern Pacific jointly and severally liable for damages in the sum of $487,230.   Judgment was entered on February 7, 1963.

Both White and Southern Pacific appealed successfully to the Court of Appeal, but the Supreme Court reversed that success on August 31, 1978, when by a four to three majority it upheld the jury's verdict finding Southern Pacific and White liable.  (Campbell v. Southern Pacific (1978) 22 Cal.3d 51, 148 Cal.Rptr. 596, 583 P.2d 121.)

After that decision by the Supreme Court, Southern Pacific paid Campbell its half of the judgment, plus interest and costs in the sum of $292,835.10.   White paid Campbell an equal sum as its share of the judgment.

On February 5, 1979, Southern Pacific filed the complaint in the instant case.¹  The complaint was in two causes of action:  (1) full equitable indemnity and (2) comparative equitable indemnity.

On May 17, 1979, White filed a demurrer to the indemnity complaint.   The trial court sustained the demurrer to the complaint without leave to amend.   The judge ruled that, as to count I, full equitable indemnity cannot be recovered by a defendant who was actually negligent.   He also ruled that, in that the Campbell case had established that Southern Pacific was actively negligent, it was collaterally estopped to prove otherwise.   As to count II, the court held that Southern Pacific did not state a cause of action of comparative equitable indemnity, because that doctrine was not retroactively applicable to the facts of the instant case.

Contentions of Appellant

(1) Full equitable indemnity.   Appellant contends that the trial court erred in sustaining the demurrer as to count I, because in holding that the count did not state a cause of action in full equitable indemnity, the judge misapplied the facts of the underlying case in determining that appellant was proven actively negligent.

(2) Comparative equitable indemnity.   Appellant further contends that in sustaining the demurrer to count II the judge was in error in not applying retroactively the rule of comparative equitable indemnity established by our Supreme Court in American Motorcycle Assn. v. Superior Court (1978) 20 Cal.3d 578, 146 Cal.Rptr. 182, 578 P.2d 899.

DISCUSSION

 (1) Full equitable indemnity issue.   We hold that the trial judge was correct in sustaining the demurrer against appellant as to count I.   Under the full equitable indemnity rules the appellant could recover the entire amount of its payment of the Campbell judgment from White if it should prove that Campbell's injuries were caused by White's active negligence without Southern Pacific's own active participation in the wrong which proximately caused the injury.  (Taggart v. State of California (1975) 45 Cal.App.3d 768, 770–771, 119 Cal.Rptr. 696.)   Under the implied equitable indemnity doctrine one of two tortfeasors may recover his loss from the other when without active fault on his part he has paid a legal obligation caused by the active fault of another.  (Ford Motor Co. v. Robert J. Poeschl (1971) 21 Cal.App.3d 694, 696, 98 Cal.Rptr. 702.)

Some of the cases applying the doctrine would serve to illustrate the meaning of the principle stated.   In the Ford Motor Co. case (Ibid.)   Ford was held not able to recover indemnity from its automobile dealer who leased a defective Ford automobile to a third party who was injured by the defect, because Ford was found actively negligent, having manufactured the defective car in the first place and having failed in its duty to recall the defective product.

In S. F. Unified Sch. Dist. v. Cal. Bldg. etc. Co. (1958) 162 Cal.App.2d 434, 328 P.2d 785, the school district was held to have stated a prima facie cause of action for equitable indemnity against a maintenance company when the employee of the maintenance company was injured on the job on school property.   The court stated that “․ whether the conduct of the district helped to bring about the damage ․ [in a manner which would bar its indemnity] ․ is at least a question of fact․”

In City & County of S. F. v. Ho Sing (1958) 51 Cal.2d 127, 330 P.2d 802, the plaintiff city was allowed indemnity against an abutting landowner who had altered a portion of a public sidewalk for the benefit of his property and where a pedestrian brought action against both the city and the owner because of a defective condition of the sidewalk which caused a fall and injury.   The court based its decision on equitable considerations that the city has a right of action over the landowner whose negligence has caused the city to become liable to a member of the general public.

 In the instant case we hold that Southern Pacific was determined in the trial court in the Campbell lawsuit and by the Supreme Court in affirming the judgment against it to have actively contributed to the injury by its negligence.   It is estopped to have this issue relitigated.

The Supreme Court in affirming the judgment against Southern Pacific described the evidence of negligence on its part.   It pointed out Southern Pacific's control over PMT's employees and over the tractors and their repair, and the operation of the loading itself.   The alignment of flatcars as related to causing the damage to the steering mechanism of the tractors was noted, as was the failure of Southern Pacific to respond to complaints of the foreman about unsafe conditions of the steering apparatus.

The Supreme Court concluded that “․ certainly cumulatively the foregoing items of substantial evidence add up to sufficient facts to justify the jury verdict and judgment that Southern Pacific, concurrently with PMT, was negligent.”  (Italics added.)  (Campbell v. Southern Pacific Co., supra, at p. 62, 148 Cal.Rptr. 596, 583 P.2d 121.)

(2) Comparable equitable indemnity.   Appellant asks this court to extend the principle of comparative equitable indemnity enunciated in American Motorcycle Assn. v. Superior Court (1978) 20 Cal.3d 578, 146 Cal.Rptr. 182, 578 P.2d 899, to the instant case.

Prior to Li v. Yellow Cab Co. (1975) 13 Cal.3d 804, 119 Cal.Rptr. 858, the thought of apportioning liability on any basis other than all or nothing was not in harmony with California law.   The contributory negligence doctrine set the tone by telling the plaintiff in a tort action who was himself negligent that he would recover nothing at all;  a correlative concept was that between joint tortfeasors one could recover no part of a judgment he paid if he actively contributed to the damages for which they were both responsible.

American Motorcycle, supra, took the notion of comparative fault from the Li case and allowed an organization which was charged with negligence in causing injury to a teenage boy to file a cross-complaint against the boy's parents to compare the organization's negligence with the parent's and require the parents to pay for their share of negligence in failing to supervise their child.

American Motorcycle, supra, was a case in which the defendant in the original action brought up the issue of comparative negligence of the parents by seeking to file a cross-complaint for their “allocable negligence.”   In the instant case the issue is first being presented in a separate lawsuit after the original judgment was made final and paid.   However, appellant cites People ex rel. Dept. of Transportation v. Superior Court (1980) 26 Cal.3d 744, 163 Cal.Rptr. 585, 608 P.2d 673 (hereinafter cited as “Frost ” Real Party in Interest), as holding that such preservation of the issue is not necessary for application of the rule of American Motorcycle.   The Frost decision, which was issued after their trial court's dismissal of Southern Pacific's indemnity action was filed, held that American Motorcycle applies to equitable indemnity, whether or not the issue of comparative fault was presented in the underlying tort action.   Frost, injured in an automobile accident, sued a number of people but failed to file a timely claim against the state within 100 days after the accident, as required by the tort claims act, and did not join the state in the complaint.   Several defendants filed cross-complaints against the state for equitable indemnity.   The state's demurrer was overruled.   The state brought a writ of prohibition and mandamus.   The Supreme Court denied the withholding that the demurrer was properly overruled.   It held that the cause of action for equitable indemnity accrued at the time the original tort defendant paid a judgment, so cannot be barred by the statute of limitations as to the tort action itself.   The court said “․ the defendant's indemnity action does not accrue until he has suffered actual loss through payment.”  (People ex rel. Dept. of Transportation v. Superior Court, supra, 26 Cal.3d 744, 759, 163 Cal.Rptr. 585, 608 P.2d 673.   See also, County of Riverside v. Loma Linda University (1981) 118 Cal.App.3d 300, 315–316, 173 Cal.Rptr. 371.)

 The condition of the law now is that the rule of comparative negligence applies between plaintiff and defendant (Li) and between tortfeasors during the trial of the original action (American Motorcycle) and also between tortfeasors after payment of a judgment, whether or not the issues were preserved in the original action (Frost ).

RETROACTIVITY

 This brings us to the only remaining question:  Under what circumstances will the principle of comparative equitable indemnity between joint tortfeasors as first applied in American Motorcycle be applied retroactively?

The problem of retroactivity of the principle whereby California courts will compare negligence and apportion damages accordingly was first recognized by the Supreme Court in the Li decision that created the rule in California.   The court in the Li decision realized that it was making new law and destroying old on which the California litigating public had relied for many years and on which reliance was still being given as the opinion went to press.   It had cast aside the doctrine of contributory negligence with its attendant concepts of last clear chance and assumption of risk and subsumed then under the general process of assessing liability in proportion to negligence.  (Li v. Yellow Cab Co., supra, 13 Cal.3d 804, 829, 119 Cal.Rptr. 858.)

The court then stated as follows:

“It remains for us to determine the extent to which the rule here announced shall have application to cases other than those which are commenced in the future.   It is the rule in this state that determinations of this nature turn upon considerations of fairness and public policy.  [Citations.]  Upon mature reflection, in view of the very substantial number of cases involving the matter here at issue which are now pending in the trial and appellate courts of this state, and with particular attention to considerations of reliance applicable to individual cases according to the state of litigation which they have reached, we have concluded that a rule of limited retroactivity should obtain here.   Accordingly we hold that the present opinion shall be applicable to all cases in which trial has not begun before the date this decision becomes final in this court, but it shall not be applicable to any case in which trial began before that date (other than the instant case)—except that if any judgment be reversed on appeal for any reasons, the opinion be applicable to any retrial.”

When American Motorcycle extended Li to joint tortfeasor it said nothing about its retroactive effects on cases tried earlier.   This was because the case was decided in a pretrial mandamus context.   However, two months later it spoke again on retroactivity in Daly v. General Motors Corp. (1978) 20 Cal.3d 725, 144 Cal.Rptr. 380, 575 P.2d 1162.   In Daly it extended the comparative negligence concept to strict products liability cases and then said:

“It remains for us to decide the extent to which comparative principles are to be applied to strict liability actions other than those hereinafter filed.   We conclude that, for reasons of public policy and reasonable expectations of the parties to this action and litigants generally, the principles herein expressed shall apply to all cases in which trial has not begun before the date this opinion becomes final in this court.   No judgment based upon a trial which was commenced prior to the finality of this opinion shall be reversible on appeal on the sole ground that principles of comparative fault were not applied.   If any such judgment is reversed on appeal for other reasons, the principles herein expressed shall be applicable to any retrial commenced after this opinion becomes final in the Court [citations].  As in Li, we give particular emphasis to ‘considerations of reliance applicable to individual cases according to the stage of litigation which they have reached ․’ ”

The Supreme Court again faced the retroactivity problem in Safeway Stores, Inc. v. Nest-Kart (1978) 21 Cal.3d 322, 146 Cal.Rptr. 550, 579 P.2d 441.   In a personal injury action the jury gave plaintiff judgment against the Safeway Stores for injury by a defective shopping cart on the theory of negligence and strict liability and against Nest-Kart for strict liability.   In a special verdict the jury found the market's comparative fault to be 80 percent and Nest-Kart 20 percent.   The judge, however, granted Safeway's motion to grant judgment against both defendants for 50 percent of the damages.   The case had been tried and judgment rendered prior to the American Motorcycle case, and since American Motorcycle did not rule on its retroactivity, the Safeway Stores court needed to consider whether the time factor would bar comparative indemnity to Safeway Stores.

The Supreme Court concluded in Safeway Stores that the principle of comparative contribution or indemnity between tortfeasors would be applied retroactively.   It said at page 333, 146 Cal.Rptr. 550, 579 P.2d 441 that “․ when as in the instant case—the issue of comparative contribution or indemnity has been properly preserved below, no undue surprises or unfairness will result in applying the American Motorcycle decision to cases presenting pending upon appeal.  [¶] We have no reason to suspect that the application of American Motorcycle to those cases in which comparative contribution or comparative indemnity questions has been properly preserved at trial and on appeal will result in such a serious disruption of the administration of justice so as to warrant denying the benefits of the American Motorcycle doctrine to those defendants who have diligently pursued the issue.”

We note that one theme runs through the Supreme Court's writings on the subject of “limited retroactivity.”   It has been limiting retroactivity in a manner which will be consistent with “fairness and public policy” (Safeway Stores Inc., supra, p. 333, 146 Cal.Rptr. 550, 579 P.2d 441), and without “undue surprise or unfairness' (ibid.), and without “serious disruption of the administration of justice․”  (Safeway Stores Inc., supra, at p. 334, 146 Cal.Rptr. 550, 579 P.2d 441), and “for reasons of public policy and reasonable expectations of the parties.”  (Daly, supra, p. 743, 144 Cal.Rptr. 380, 575 P.2d 1162.)

Applying these principles, we conclude that in no way could the rule of “limited retroactivity” be found suitable for the facts of the instant case.   For a trial court, litigants and witnesses to be asked to pick up the threads of events which took place on and before May 18, 1968, would not be in line with “fairness and public policy,” nor would it be “without undue surprise or unfairness” or for “reasons of public policy and the reasonable expectations of the parties.”   The disruption to administration of justice would be draconian.

In his dissent in Safeway Stores Inc., supra, Justice Clark said of the comparative fault doctrine that “․ we have bred a horse which can be neither saddled nor raced.   Rather, he runs wild awarding at whim.”  (Safeway Stores Inc., supra, p. 335, 146 Cal.Rptr. 550, 579 P.2d 441.)

We hold that the facts of the instant case cannot be fitted within the limited retroactivity rule which the Supreme Court fashioned to rein the comparative negligence doctrine within boundaries the courts can control.

The judgment is affirmed.

FOOTNOTES

FOOTNOTE.  

1.   Southern Pacific had previously in 1974 filed a complaint for indemnity in the nature of an action for declaratory relief but subsequently voluntarily dismissed this without prejudice.

FLETCHER, Associate Justice.* FN* Assigned by the Chairperson of the Judicial Council.

SPENCER, P. J., and LILLIE, J., concur.