EVANGELATOS v. SUPERIOR COURT (1987)

These consolidated petitions for writ of mandate present questions of the constitutionality, applicability, and interpretation of the Fair Responsibility Act of 1986, Civil Code sections 1431.1 through 1431.5, an initiative statute adopted by the voters at the June 3, 1986, election as ballot Proposition 51.¹  The Act abolished the principle of joint and several tort liability for nonpecuniary injury.

Plaintiff was injured in 1980 while fabricating fireworks at home.   On July 3, 1981, he filed an action for damages against the wholesaler, retailer, and four manufacturers of the chemicals he was using.   Three manufacturers won summary judgments, and plaintiff dismissed the fourth.

Three weeks after the June 1986 election, the case was assigned for trial.   Plaintiff and the two remaining defendants filed motions seeking pretrial determination of the applicability and interpretation of the Act.   The trial court ruled (1) the Act applies to cases not yet tried before its effective date, June 4, 1986;  (2) the Act was lawfully adopted and was not unconstitutional on its face or as applied to this case;  (3) the court, in allocating liability of each defendant under the Act, would consider the conduct of all whose fault contributed to plaintiff's injury, not just that of plaintiff and defendants;  (4) future medical expenses and loss of future earnings fall within the Act's definition of “economic damages,” for which liability is joint and several;  and (5) for purposes of apportioning fault, the judgments in favor of the three manufacturers constituted a determination that no causative fault was attributable to them.

Both plaintiff and defendant wholesaler petitioned for writs of mandate.   In No. B021968, plaintiff challenges the first three rulings.   He also presents two additional contentions not encompassed by the trial court's written decision:  (a) The fourth manufacturer, which plaintiff voluntarily dismissed with prejudice, must be treated the same as the three manufacturers dismissed on summary judgment, i.e. no fault may be attributed to it;  and (b) the amount by which plaintiff's overall recovery is reduced due to his contributory negligence should be charged first against his several judgments for non-economic damages, and only thereafter (if the several judgments are smaller than the amount of the contributory negligence reduction) from his joint and several judgment for economic damages.

In No. B022000, the wholesaler challenges the fourth ruling, classifying future medical expenses and future earnings loss as economic damages.   The fifth ruling is not challenged in either petition.

We denied both petitions summarily on August 5, 1986.   Both petitioners sought and obtained review in the Supreme Court, which on October 30, 1986, transferred both petitions to us with directions to issue alternative writs.   We did so, and consolidated the two petitions for briefing and oral argument.

We hold that the learned trial court was correct in all four challenged rulings;  we also reject plaintiff's request that we sustain his two additional contentions.   Accordingly, we again deny both petitions.

1. The Act applies to this case, notwithstanding that the cause of action arose in 1980.

The Act contains no language specifying whether it applies to causes of action which accrued before its effective date.²  The Act also has no legislative history.³  As is often the case, principles of statutory construction do not readily resolve the issue.   There is a presumption against retrospective operation of a statute.   Yet legislative intent overrides the presumption against retroactivity, and remedial statutes are to be broadly construed to effectuate their remedial purpose.  (See Mannheim v. Superior Court (1970) 3 Cal.3d 678, 686–687, 91 Cal.Rptr. 585, 478 P.2d 17;  Booth v. Robinson (1983) 147 Cal.App.3d 371, 378, 195 Cal.Rptr. 130.)

 The presumption of prospectivity is not to be followed blindly in disregard of factors indicative of legislative intent.   It is to be applied only if the court, after considering all pertinent factors, finds it impossible to ascertain the legislative intent.   Among these factors are the object of the legislation, the evils to be remedied, the history of the times, and public policy.   If the court can deduce the legislative intent, the presumption of prospectivity is “completely irrelevant.”  (In re Marriage of Bouquet (1976) 16 Cal.3d 583, 587, 591, 128 Cal.Rptr. 427, 546 P.2d 1371.)

Legislative intent is difficult to pinpoint when the legislators were millions of voters, acting without official legislative committee reports on the proposed law.   In this case, the statutory language demonstrates a legislative wish to cut back on personal injury recoveries against defendants not primarily to blame for plaintiffs' injuries;  to reduce the financial burden of injury claims on those defendants and on their liability insurers;  and to confer a financial benefit on the public at large, who, the statute declares, “ultimately pay for these lawsuits in the form of higher taxes, higher prices and higher insurance premiums,” and suffer resulting curtailment of essential local government services.   The statute does not mention injured plaintiffs, the individuals who (with their attorneys) will confer this financial benefit on defendants, their insurers, and the public.

Russell v. Superior Court (1986) 185 Cal.App.3d 810, 230 Cal.Rptr. 102, review den. Oct. 30, 1986, held the Act inapplicable to causes of action which accrued before its effective date.⁴  The court concluded there is no clear intent of the electorate to apply the Act to such cases;  it relied on the absence of statutory language indicating intended retroactivity, the repeated use of the word “shall” (said to connote the future), the absence of any implications of retroactivity in the ballot materials, and the belief that immediate application would bestow an unintended windfall on the insurance industry.

Russell wisely rejected the notion that the applicability problem could be solved neatly by choosing whether to label the statute procedural or substantive.   As the Supreme Court explained in Aetna Cas. & Surety Co. v. Ind. Acc. Com. (1947)  30 Cal.2d 388, 393–395, 182 P.2d 159, the substantive-procedural distinction is not clearcut.   A statute which might ordinarily be classified as procedural might have such a substantial effect on existing rights and obligations that it would be “substantive in its effect.”

The Act is not procedural in the sense of governing procedures to be employed in future pretrial or trial proceedings, without directly affecting the legal rights of the parties.   But it is procedural in that it changes the procedure by which the court translates a verdict into a judgment.   In changing this procedure, however, it has a significant effect on the plaintiff's recovery and each defendant's liability.   Yet it is not substantive in the sense of changing the legal rules distinguishing lawful from actionable conduct.   The parties offer different characterizations of the effect of the statute to support their respective positions.   We believe that a neutral and fair characterization of the effect of the statute is that it alters the measure of damages recoverable in personal injury tort cases.⁵  Formerly a tortfeasor was liable for all legally compensable harm suffered by the plaintiff.   Under the Act, a tortfeasor is liable for all compensable pecuniary harm suffered by the plaintiff, plus a proportionate share of the compensable nonpecuniary harm.⁶

In altering the measure of damages recoverable in personal injury tort cases, the Act is less substantive than would be a change in the elements of liability.   But, as noted in Russell, its substantive effect is evident.

 The issue for decision is whether the statute was intended to effectuate this change only for torts committed in the future, or for all tort claims which had not yet been merged into (or barred by) final judgments, or on some middle ground.  Russell, of course, held that due to the absence of any affirmative indication of intended retroactivity, the Act could be applied only to causes of action arising after its effective date.   We reach a contrary conclusion.   In our view, the legislative intent was for the statute to take effect immediately and to apply to as many cases as feasible.  (See In re Marriage of Bouquet, supra, 16 Cal.3d 583, 588, 128 Cal.Rptr. 427, 546 P.2d 1371.)   But we also believe the intent was not to disrupt the orderly functioning of the judicial system by requiring retrial of all tort cases which had been tried but in which judgments had not yet become final.   The maximum feasible application of the Act is to all cases yet to be tried, including the instant one.

We find Russell unpersuasive, for three reasons.   First, it frustrates the legislative will of the voters by postponing effectuation of their decision by several years, on average.   Secondly, its heavy reliance on the word “shall” as an indicator of intended futurity seems grammatically and logically incorrect.   Thirdly, its analysis of an insurance industry windfall is inaccurate.   Insurance premiums are regulated by free market forces, and carriers' loss experiences undoubtedly influence their future premium levels by affecting the minimum future profit levels at which they are willing to operate.

 Nor is this interpretation precluded by the principle that statutes must be construed in such a way as to avoid constitutional infirmity.   Application of the Act to tort claims which accrued before its effective date is not an unconstitutional abrogation of vested rights.   An injured person's expectancy of a tort recovery is an inchoate, unliquidated claim contingent on his or her ability to persuade a trier of fact of the merits of the claim.   Such an expectancy falls short of being a vested right.   A plaintiff has no vested property right in a particular measure of damages;  the Legislature has broad authority to modify the scope and nature of such damages.  (American Bank & Trust Co. v. Community Hospital (1984) 36 Cal.3d 359, 368, 204 Cal.Rptr. 671, 683 P.2d 670;  see Tulley v. Tranor (1878) 53 Cal. 274, 279–280.)

 In addition, even a vested right may be abrogated without violating the constitution, so long as a weighing of several factors leads to the conclusion that the impairment is reasonably necessary to protect the general welfare of the people.  (In re Marriage of Buol (1985) 39 Cal.3d 751, 760–761, 218 Cal.Rptr. 31, 705 P.2d 354;  see In re Marriage of Fabian (1986) 41 Cal.3d 440, 448, 224 Cal.Rptr. 333, 715 P.2d 253.)   These factors are “the significance of the state interest served by the law, the importance of the retroactive application of the law to the effectuation of that interest, the extent of reliance upon the former law, the legitimacy of that reliance, the extent of actions taken on the basis of that reliance, and the extent to which the retroactive application of the new law would disrupt those actions.”   (In re Marriage of Buol, supra, 39 Cal.3d at p. 761, 218 Cal.Rptr. 31, 705 P.2d 354.)   While tort law influences the primary conduct of potential defendants, it is unlikely to affect the pre-accident conduct of potential plaintiffs.   The instinct for self-preservation is a stronger incentive to careful conduct than the hope of receiving a damages award is to careless conduct.   The Buol factors all support our view that the Act may constitutionally be applied to actions arising before its adoption.⁷

Two familiar illustrations bolster this conclusion.  Li v. Yellow Cab Co. (1975) 13 Cal.3d 804, 119 Cal.Rptr. 858, 532 P.2d 1226 abolished a negligence defendant's right to be free of liability to a negligent plaintiff.   That decision applied to all cases not yet brought to trial and all cases that might be retried in the future.  (13 Cal.3d at p. 829, 119 Cal.Rptr. 858, 532 P.2d 1226.)   The Court described this application as “a rule of limited retroactivity.”  (Id.)  In reaching this decision on applicability, the Court said it was directing “particular attention to considerations of reliance.”  (Id.)  The Court apparently saw no constitutional difficulty in imposing a new liability on defendants arising from past accidents.

Similarly, Daly v. General Motors Corp. (1978) 20 Cal.3d 725, 743–744, 144 Cal.Rptr. 380, 575 P.2d 1162, which created a new defense of comparative negligence in strict products liability cases, applied this new rule to all cases not yet brought to trial, without mention of any constitutional barrier.

Accordingly, we hold that the Act applies to the instant case because it had not yet come to trial on June 4, 1986, the effective date of the Act.

2. The Act was validly adopted and is not unconstitutional.

 Plaintiff contends the Act is void because the ballot summary prepared by the Attorney General was false and misleading in its statement that “Approval of this measure would result in substantial savings to state and local governments.”   This sentence appeared as part of the Attorney General's summary of the legislative analyst's estimate of the measure's fiscal impact on state and local governments, an estimate required by Elections Code section 3572.   Plaintiff's contention is frivolous.

Plaintiff's constitutional attack on the Act raises several assertions:  that it establishes classifications not rationally related to a legitimate state interest;  that it is unconstitutionally vague;  that it discriminates impermissibly against poor tort victims by creating “insurmountable economic barriers” to tort litigation;  and that it takes property from injured tort victims for public use without compensation.⁸

 We reject these contentions.  Fein v. Permanente Medical Group (1985) 38 Cal.3d 137, 159–160, 211 Cal.Rptr. 368, 695 P.2d 665, in upholding the constitutionality of a ceiling on noneconomic damages recoverable in medical malpractice cases, observed:  “no California case of which we are aware has ever suggested that the right to recover for such noneconomic injuries is constitutionally immune from legislative limitation or revision.”   Indeed, that power extends even to the abolition of tort causes of action.  (Cory v. Shierloh (1981) 29 Cal.3d 430, 439, 174 Cal.Rptr. 500, 629 P.2d 8.)   Here, as in American Bank & Trust Co. v. Community Hospital (1984) 36 Cal.3d 359, 369, 204 Cal.Rptr. 671, 683 P.2d 670, there can be no serious question that the provisions of the Act are rationally related to a legitimate state interest, which is all that is required.

The vagueness challenge also lacks merit.  (See American Bank & Trust Co. v. Community Hospital, supra, 36 Cal.3d at pp. 377–378, 204 Cal.Rptr. 671, 683 P.2d 670.)

 The reduction in incentives for attorneys to represent injured plaintiffs for a contingent fee is likewise not unconstitutional.  (Roa v. Lodi Medical Group, Inc. (1985) 37 Cal.3d 920, 925–930, 211 Cal.Rptr. 77, 695 P.2d 164.)

 The argument that the Act takes private property without compensation is frivolous. (Cf. Fein v. Permanente Medical Group (1985) 38 Cal.3d 137, 157–158, 211 Cal.Rptr. 368, 695 P.2d 665.)

3. In allocating liability under the Act, the courts must consider the conduct of all whose fault contributed to plaintiff's injury, not just that of defendants.

 Plaintiff contends that a proper application of the Act requires that defendants should be precluded from asserting the proportionate responsibility of another person unless one or more defendants either join that person as a party or establish that the person is immune from suit or unamenable to service.   We find nothing in the Act requiring that the burden of naming and serving tortfeasors, traditionally placed on plaintiffs, should be shifted to defendants who wish to realize the benefits intended by the Act.   The plaintiff should sue and serve each person from whom he or she wishes to seek recovery.   American Motorcycle Assn. v. Superior Court (1978) 20 Cal.3d 578, 604–607, 146 Cal.Rptr. 182, 578 P.2d 899 is not to the contrary.   There defendants were given the burden of bringing in parties not sued by the plaintiff, but only in pursuit of affirmative recoveries for equitable indemnity.   In cases governed by the new Act, by contrast, defendants are not seeking relief from unsued tortfeasors, so there is less reason to require defendants to file pleadings against them.

During discovery each defendant can be compelled to disclose what nonparties it intends to argue were at fault in producing the plaintiff's loss.   Plaintiffs will then be able to amend their complaints to bring these persons in as defendants if they wish.   The statute of limitations should not be an insurmountable difficulty because of the rule that such amendments relate back to the date of the original complaint where plaintiff was earlier unaware of the added defendant's identity.

4. Future medical expenses and loss of future earnings are “economic damages” under the Act.

Defendants urge that those elements of plaintiff's loss consisting of future medical expenses and future loss of earnings are non-economic damages, which the Act describes as “subjective” losses, rather than economic damages, which are described as “objectively verifiable.”

 This contention is specious.   Non-economic damages are defined as “subjective, non-monetary losses including, but not limited to, pain, suffering, inconvenience, mental suffering, emotional distress, loss of society and companionship, loss of consortium, injury to reputation and humiliation.”   Economic damages are defined as “objectively verifiable monetary losses including medical expenses, loss of earnings, burial costs, loss of use of property, costs of repair or replacement, costs of obtaining substitute domestic services, loss of employment and loss of business or employment opportunities.”   No extended discussion is needed to conclude that future medical expenses and future lost earnings represent part of the injury to a plaintiff's financial interest, and belong with economic damages under the statutory classification scheme.

5. Plaintiff's remaining contentions.

The record does not show that plaintiff's two additional contentions, identified on pages 346 of this opinion, were presented to or ruled on by the trial court.   Accordingly, appellate consideration of those questions is premature.

The alternative writ is discharged, and both petitions for writ of mandate are denied.

FOOTNOTES

1.   Section 1431.2, the operative section of the Act, reads:(a) In any action for personal injury, property damage, or wrongful death, based upon principles of comparative fault, the liability of each defendant for non-economic damages shall be several only and shall not be joint.   Each defendant shall be liable only for the amount of non-economic damages allocated to that defendant in direct proportion to that defendant's percentage of fault, and a separate judgment shall be rendered against that defendant for that amount.(b)(1) For purposes of this section, the term “economic damages” means objectively verifiable monetary losses including medical expenses, loss of earnings, burial costs, loss of use of property, costs of repair or replacement, costs of obtaining substitute domestic services, loss of employment and loss of business or employment opportunities.(2) For the purposes of this section, the term “non-economic damages” means subjective, non-monetary losses including, but not limited to, pain, suffering, inconvenience, mental suffering, emotional distress, loss of society and companionship, loss of consortium, injury to reputation and humiliation.

2.   Both parties claim to find significance in the word “shall,” which appears repeatedly in the Act.   Plaintiff argues that “shall” connotes future torts;  defendant that it refers to future trials.   In fact, the Act's choice of this word has no significance whatever to the present issue.   Used in the second or third person, “shall” expresses compulsion, not futurity.   And it appears routinely throughout the Code of Civil Procedure.

3.   The ballot arguments and the broadcast commercials for and against the Act did not, so far as we are aware, take a position on whether the Act would apply to torts committed before its effective date.

4.   Of course, the Supreme Court's denial of review in Russell is not a binding precedent.  (See Advisory Committee Comment (1985) to rule 28, Calif.Rules of Court, at par. 7.)

5.   The Act also governs property damage tort claims, but its effect on them appears insignificant.

6.   Both before and after the Act, of course, this liability is reduced by the percentage of fault attributable to the plaintiff.A defendant's liability to cotortfeasors for partial indemnity is also affected by the Act, but only indirectly.

7.   A plaintiff who had settled with one cotortfeasor before the Act was adopted may be aggrieved by passage of the Act's more restrictive rule for recovery against nonsettling defendants.   This problem is not presented by the case before us, and we express no view on the potential right of such a plaintiff to avoid application of the Act on the ground that he or she entered into a partial settlement in detrimental reliance on the former law.

8.   We have earlier discussed plaintiff's other constitutional contention, that application of the Act to torts committed before its passage impermissibly abrogates the vested rights of tort victims.  (See pages 348, supra.)

COMPTON, Associate Justice.

ROTH, P.J., and GATES, J., concur.