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

Marthe SCHREIBER, Plaintiff and Respondent, v. Stepehen K. LEE et al., Defendants and Appellants.

Marthe Schreiber, Plaintiff and Respondent, v. Golden Prosperities Management Company, LLC, Defendant and Appellant.

A149969, A150093

Decided: April 09, 2020

Brent Fiol & Pratt LLP, Peter Joseph Brent, Wesley R. Pratt and David L. Fiol, San Rafael, for Plaintiff and Respondent. Bledsoe, Diestel, Treppa & Crane LLP, Alison McNaboe Crane, San Francisco, Jamie Nicolas Bernate and Jocelyn S. Koo, San Francisco; Berding & Weil LLP, Arthur Fredrick Hagen and Daniel Rottinghaus, Walnut Creek, for Defendants and Appellants.

I. Introduction

Plaintiff Marthe Schreiber was seriously injured when she fell through a skylight built into the deck of her apartment. Defendant Stephen K. Lee built the three-unit apartment building and previously owned the property. At the time of the accident, Lee's adult children owned the property, and it was managed by defendant Golden Prosperities Property Management Company, LLC (Golden Prosperities). Prior to trial, Schreiber settled with the Lee children for $2.5 million.

At the close of Schreiber's case, Lee moved for nonsuit on the ground her claims against him were based on a patent construction defect and therefore barred by the statute of repose set forth in Code of Civil Procedure section 337.1. The trial court denied the motion, and the jury thereafter awarded Schreiber damages totaling just over $2.6 million. The jury also apportioned fault, allocating 12 percent to Schreiber, 54 percent to Lee, 16 percent to Golden Prosperities, and 18 percent collectively to the Lee children (allocations Schreiber does not challenge on appeal).

After reducing the verdict to reflect Schreiber's percentage of fault, the trial court offset the entirety of the economic damages by the amount of the settlement attributable to such damages. However, it denied any credit to Lee and Golden Prosperities as to the noneconomic damages and entered judgment against Lee for $756,000 and against Golden Prosperities for $224,000.

Lee and Golden Prosperities make numerous claims of error during trial, and also claim they are entitled to a full settlement credit as to noneconomic damages. We affirm in all respects except as to the settlement credit, concluding Golden Prosperities, but not Lee, is entitled to a credit against both economic and noneconomic damages. We publish our discussion of the settlement credit issue given the somewhat unusual circumstances, namely that the Lee children were not only found independently negligent but also bore imputed liability for Golden Prosperities’ negligence.

II. Background 1

Schreiber has resided in the apartment building at issue since it was built in 1980. Lee, who then owned the property, did the development work. The building has a garage on the ground floor and three residential units on the upper floors. Schreiber's apartment has a deck atop the roof of the garage, with an imbedded skylight that lets light into the garage.

In the late 1980's, Lee and his wife transferred ownership of the property to their six children. Although Schreiber sought to have the deed declared invalid, the trial court found the Lee children were, indeed, the lawful owners of the property.

In 2005, Golden Prosperities was formed and took over management of the property. It was a “member-owned management company,” with Lee and the Lee children serving as board members. Lee was also chairman of the board and chief executive officer. Sons Gordon Lee and Peter Lee handled day-to-day operations, and were the only ones paid.

At some point, Schreiber hired a contractor to install planter boxes around the skylight because she was concerned it might pose a danger to visiting children playing on the deck. She never thought the skylight was strong enough to stand on, and never put anything on it.

In 2013, Schreiber and an employee of hers were gardening on the deck. As she was handing him a “six-pack of flowers from one end of the skylight to the other,” she fell through the skylight.

Schreiber was hospitalized at San Francisco General Hospital for about two weeks, and at Laguna Honda for approximately five weeks. She had no insurance at the time, and was billed $230,843.06 by San Francisco General and $56,841 by Laguna Honda. Schreiber later became retroactively eligible for Medi-Cal, and under Medi-Cal's contract with San Francisco General and Laguna Honda, the medical bills were resolved for far lesser amounts, $43,243.64 for San Francisco General and $14,283.45 for Laguna Honda.

Schreiber subsequently filed the instant action, eventually naming as defendants Lee, Golden Prosperities, the Lee children, and Stephen K. Lee Enterprises, a partnership formed around 1988 that previously managed the property.2 Prior to trial, she settled with the Lee children and Stephen K. Lee Enterprises for $2.5 million.

Following the close of Schreiber's case-in-chief, Lee moved for nonsuit, asserting her claims against him were based on a patent construction defect and therefore barred by the four-year statute of repose. The court denied the motion.

The jury eventually awarded Schreiber just over $2.63 million in damages: $1.23 million in economic damages and $1.4 million in noneconomic damages.3 It allocated 12 percent of the fault to Schreiber, 54 percent to Lee, 16 percent to Golden Prosperities, and 18 percent collectively to the Lee children (3 percent each).

Prior to entry of judgment, Lee and Golden Prosperities moved for an offset for the full amount of the settlement. Following further briefing on whether the Lee children, as the owners of the property, had a nondelegable duty with respect to its condition, the court denied the motion. Thereafter, the court offset the economic damages in full and entered judgment against Lee for $756,000 (his proportional share of the noneconomic damages) and against Golden Prosperities for $224,000 (its proportional share). The court also denied motions for a new trial, to set aside the verdict, and for judgment notwithstanding the verdict.4

III. Discussion


G. Settlement Credit

Lee and Golden Prosperities lastly claim the trial court erred in providing a settlement credit only as to economic damages and not as to noneconomic damages. This is a significant issue, as a credit against both the economic and noneconomic damages would result in a zero net judgment given the size of the pretrial settlement. (See Syverson v. Heitmann (1985) 171 Cal.App.3d 106, 110, 214 Cal.Rptr. 581, abrogated by statute on another ground as stated in Goodman v. Lozano 47 Cal.4th 1327, 1330, 104 Cal.Rptr.3d 219, 223 P.3d 77.)

As we explain, this is not a typical Proposition 51 case, where all defendants faced joint and several liability for economic damages, but only several liability for noneconomic damages in accordance with their percentages of fault. Here, the settling defendants faced joint and several liability not only for the entirety of the economic damages but also for that portion of the noneconomic damages attributable to a defendant for which they faced imputed liability, as well as several liability for that portion of the noneconomic damages attributable to their own negligence. As a result, a different settlement credit analysis is required from that employed in the usual Proposition 51 case. Under this analysis, Golden Prosperities is entitled to a full settlement credit, but Lee is not.

To recap the salient facts, the Lee children, who owned the property, settled with Schreiber before trial for $2.5 million. The jury subsequently found Schreiber sustained past and future damages totaling just over $2.6 million. It also apportioned fault, allocating 12 percent to Schreiber, 54 percent to Lee (as the developer of the property), 16 percent to Golden Prosperities, and 18 percent collectively to the Lee children (as the owners of the property). Thus, taking into account Schreiber's own comparative fault, the jury found she was entitled to recover $2.3 million—an amount she had already recovered in full through the settlement.

In resolving the settlement credit issue before us, we first examine the nature of the liability the Lee children faced as the owners of the property. Specifically, the question is whether the Lee children would have been entitled to the benefit of Proposition 51's limitation on liability for noneconomic damages. (See Rashtian v. BRAC-BH, Inc. (1992) 9 Cal.App.4th 1847, 1851–1852, 12 Cal.Rptr.2d 411 (Rashtian) [first examining the nature of a vehicle owner's liability for the negligence of a permissive driver in determining whether Prop. 51 applied].)

Henry v. Superior Court (2008) 160 Cal.App.4th 440, 448–450, 72 Cal.Rptr.3d 808 (Henry), nicely summarizes the backdrop against which Proposition 51 was enacted: “ ‘Under well-established common law principles, a negligent tortfeasor is generally liable for all damage of which his negligence is a proximate cause․ A tortfeasor may not escape this responsibility simply because another act—either an “innocent” occurrence such as an “act of God” or other negligent conduct—may also have been a cause of the injury.’ (American Motorcycle Assn. v. Superior Court (1978) 20 Cal.3d 578, 586 [146 Cal.Rptr. 182, 578 P.2d 899] ․ (American Motorcycle); [citation].) [¶] ‘In cases involving multiple tortfeasors, [this] principle ․ has commonly been expressed in terms of “joint and several liability.” ’ ” (Henry, at p. 448, 72 Cal.Rptr.3d 808, quoting American Motorcycle, at p. 586, 146 Cal.Rptr. 182, 578 P.2d 899.)

“In American Motorcycle the Court concluded its adoption of principles of comparative negligence in Li v. Yellow Cab Co. (1975) 13 Cal.3d 804 [119 Cal.Rptr. 858, 532 P.2d 1226] ․, which eliminated the all-or-nothing doctrine of contributory negligence, ‘does not warrant the abolition or contraction of the established “joint and several liability” doctrine; each tortfeasor whose negligence is a proximate cause of an indivisible injury remains individually liable for all compensable damages attributable to that injury.’ (American Motorcycle, [supra, 20 Cal.3d] at p. 582 [146 Cal.Rptr. 182, 578 P.2d 899].) However, to minimize the hardship on defendants from such a rule, ‘the American Motorcycle court held (1) that plaintiffs should no longer have the unilateral right to determine which defendant or defendants should be included in an action and that defendants who were sued could bring other tortfeasors who were allegedly responsible for the plaintiff's injury into the action through cross-complaints [citation], and (2) that any defendant could obtain equitable indemnity, on a comparative fault basis, from other defendants, thus permitting a fair apportionment of damages among tortfeasors.’ ”11 (Henry, supra, 160 Cal.App.4th at p. 449, 72 Cal.Rptr.3d 808, quoting Evangelatos v. Superior Court (1988) 44 Cal.3d 1188, 1197, 246 Cal.Rptr. 629, 753 P.2d 585.)

Such “doctrinal advances went a considerable distance toward ensuring an injury caused by two or more tortfeasors would be apportioned according to their respective shares of comparative responsibility. Nonetheless, joint and several liability imposed on the remaining defendants the risk of paying more than their proportionate share if one or more tortfeasors liable for the plaintiff's damages were insolvent or otherwise unavailable to respond to a judgment. (See Evangelatos v. Superior Court, supra, 44 Cal.3d at p. 1199 [246 Cal.Rptr. 629, 753 P.2d 585] [‘[a]lthough these various developments served to reduce much of the harshness of the original all-or-nothing common law rules, the retention of the common law joint and several liability doctrine produced some situations in which defendants who bore only a small share of fault for an accident could be left with the obligation to pay all or a large share of the plaintiff's damages if other more culpable tortfeasors were insolvent’].)” (Henry, supra, 160 Cal.App.4th at pp. 449–450, 72 Cal.Rptr.3d 808.)

“To ameliorate this ‘inequity and injustice,’ at least in part, in 1986 the California electorate passed Proposition 51.” (Henry, supra, 160 Cal.App.4th at p. 450, 72 Cal.Rptr.3d 808, citing DaFonte v. Up–Right, Inc. (1992) 2 Cal.4th 593, 599, 7 Cal.Rptr.2d 238, 828 P.2d 140 (DaFonte).) Civil Code section 1431.2, subdivision (a), thus, provides: “In any action for personal injury, property damage, or wrongful death, based upon principles of comparative fault, the liability of each defendant for noneconomic 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.”12 Accordingly, “ ‘Proposition 51 ․ retains the joint liability of all tortfeasors, regardless of their respective shares of fault, with respect to all objectively provable expenses and monetary losses,’ but ‘the more intangible and subjective categories of damage [are] limited ․ to a rule of strict proportionate liability. With respect to these noneconomic damages, the plaintiff alone now assumes the risk that a proportionate contribution cannot be obtained from each person responsible for the injury.’ ” (Henry, supra, 160 Cal.App.4th at p. 450, 72 Cal.Rptr.3d 808, quoting DaFonte, at p. 600, 7 Cal.Rptr.2d 238, 828 P.2d 140.)

However, even in cases seeking recovery for personal injury, property damage, or wrongful death, there are some contexts in which Proposition 51 does not limit a defendant's liability for noneconomic damages. A number of courts have held Proposition 51 inapplicable where liability is imposed on a defendant solely because of his or her relationship with a cotortfeasorsor, or because of statutory mandate or legal principle, and not because the defendant acted in a manner that caused or contributed to the plaintiff's injury—that is, when liability is “ ‘imputed,’ ” rather than based on actual fault or culpable conduct. (Henry, supra, 160 Cal.App.4th at pp. 458–459, 72 Cal.Rptr.3d 808; see Rashtian, supra, 9 Cal.App.4th at p. 1851, 12 Cal.Rptr.2d 411 [Prop. 51 cannot “as a matter of logic or common sense, be applied to those who are without fault and only have vicarious liability by virtue of some statutory fiat”].)

For example, in Miller v. Stouffer (1992) 9 Cal.App.4th 70, 85, 11 Cal.Rptr.2d 454 (Miller), the court concluded, “Proposition 51 does not shield a vicariously liable employer who is liable under the doctrine of respondeat superior from liability for noneconomic damages.” The doctrine of respondeat superior “imposes liability ‘irrespective of proof of the employer's fault.’ [Citation.] Liability is imposed on the employer as ‘ “a rule of policy, a deliberate allocation of a risk.” ’ ” (Id. at p. 84, 11 Cal.Rptr.2d 454.) Such “ ‘[v]icarious liability means that the act or omission of one person ․ is imputed by operation of law to another’ ” (Ibid., italics omitted.) “If ․ Proposition 51 shields every defendant from liability for noneconomic damages beyond that attributable to that defendant's own fault, it largely would abrogate the vicarious tort liability of persons for the acts of others. Nothing in the language or intent of Proposition 51 conveyed to the voters in June 1986 dictates such a drastic change in California tort law.” (Miller, at p. 85, 11 Cal.Rptr.2d 454; see Rashtian, supra, 9 Cal.App.4th at pp. 1853–1854, 12 Cal.Rptr.2d 411 [Prop. 51 not applicable where vehicle owner's liability is not based upon culpability, but on status as owner pursuant to permissive user statute].) In effect, “vicariously liable defendants are viewed, for policy reasons, as a single entity.” (Arena v. Owens–Corning Fiberglas Corp. (1998) 63 Cal.App.4th 1178, 1197, 74 Cal.Rptr.2d 580 (Arena).)

Courts have reached the same conclusion in some products liability cases, specifically as to defendants within the same chain of distribution of a single defective product. (E.g., Bostick v. Flex Equipment Co., Inc. (2007) 147 Cal.App.4th 80, 93–95, 54 Cal.Rptr.3d 28 (Bostwick); Wimberly v. Derby Cycle Corp. (1997) 56 Cal.App.4th 618, 628–633, 65 Cal.Rptr.2d 532 (Wimberly); see Arena, supra, 63 Cal.App.4th at pp. 1193–1199, 74 Cal.Rptr.2d 580 [while defendants within the same chain of distribution of a single product remain jointly and severally liable, Prop. 51 applies in asbestos cases where multiple products cause the plaintiff's injuries and the evidence provides a basis to allocate liability]; cf. Romine v. Johnson Controls, Inc. (2014) 224 Cal.App.4th 990, 1011, 169 Cal.Rptr.3d 208 [observing a “split in authority of sorts has developed over Prop. 51's application to strict products liability actions”].)

In Wimberly, for example, the court recounted the similarities between vicarious liability and strict products liability. As the Supreme Court had observed in Far West Financial Corp. v. D & S Co. (1988) 46 Cal.3d 796, 813, footnote 13, 251 Cal.Rptr. 202, 760 P.2d 399: “ ‘In many instances—for example, strict product liability—tort law places “direct” liability on an individual or entity which may have exercised due care in order to serve the public policies of a fair allocation of the costs of accidents or to encourage even greater safety efforts than are imposed by the due care standard. [Citation.] As a leading text on torts explains, the modern justification for vicarious liability closely parallels the justification for imposing liability on the nonnegligent manufacturer of a product: “What has emerged as the modern justification for vicarious liability is a rule of policy, a deliberate allocation of risk. The losses caused by the torts of employees, which as a practical matter are sure to occur in the conduct of the employer's enterprise, are placed upon that enterprise itself, as a required cost of doing business. They are placed upon the employer because, having engaged in an enterprise, which will on the basis of all past experience involve harm to others through the torts of employees, and sought to profit by it, it is just that he, rather than the innocent plaintiff, should bear them; and because he is better able to absorb them, and to distribute them, through prices, rates or liability insurance, to the public, and so to shift them to society, to the community at large.” ’ ” (Wimberly, supra, 56 Cal.App.4th at p. 630, 65 Cal.Rptr.2d 532, italics omitted.) Wimberly thus concluded, “Proposition 51 has no application in a strict product liability case” because liability is not based on comparative fault. (Id. at p. 633, 65 Cal.Rptr.2d 532.)

The courts have similarly concluded Proposition 51 does not apply where a property owner's liability is based on the doctrine of “nondelegable duty.” “Under this doctrine, a landlord cannot escape liability for failure to maintain property in a safe condition by delegating such duty to an independent contractor. [Citations.] Simply stated, ‘ “[t]he duty which a possessor of land owes to others to put and maintain it in reasonably safe condition is nondelegable. If an independent contractor, no matter how carefully selected, is employed to perform it, the possessor is answerable for harm caused by the negligent failure of his contractor to put or maintain the buildings and structures in reasonably safe condition[.]” ’ ”13 (Srithong v. Total Investment Co. (1994) 23 Cal.App.4th 721, 726, 28 Cal.Rptr.2d 672 (Srithong), quoting Brown v. George Pepperdine Foundation (1943) 23 Cal.2d 256, 260, 143 P.2d 929.) “Thus, for example, a landlord's duty to maintain elevators in a safe condition is nondelegable (Brown v. George Pepperdine Foundation, at p. 259 [143 P.2d 929]), as is the owner's duty to maintain a water heater which is a fixture (Knell v. Morris (1952) 39 Cal.2d 450, 456–457 [247 P.2d 352]), and the duty to maintain and repair a roof or other portions of the premises over which the landlord retains possession and control. (Poulsen v. Charlton [(1964)] 224 Cal.App.2d [262,] 268 [36 Cal.Rptr. 347].)” (Srithong, at p. 726, 28 Cal.Rptr.2d 672.)

Srithong accordingly concluded “the nondelegable duty rule is a form of vicarious liability because it is not based on the personal fault of the landowner who hired the independent contractor.” (Srithong, supra, 23 Cal.App.4th at p. 727, 28 Cal.Rptr.2d 672.) Rather, “the party charged with a nondelegable duty is ‘held liable for the negligence of his agent, whether his agent was an employee or an independent contractor’ ”—the rationale being “there will be a financially responsible defendant available to compensate for the negligent harms caused by that defendant's activity” (i.e., the ownership of commercial property). (Ibid., italics omitted, quoting Maloney v. Rath (1968) 69 Cal.2d 442, 446, 71 Cal.Rptr. 897, 445 P.2d 513, abrogated by statute on other grounds as stated in SeaBright Ins. Co. v. US Airways, Inc. (2011) 52 Cal.4th 590, 602, 129 Cal.Rptr.3d 601, 258 P.3d 737.) The commercial property owner in Srithong was therefore not entitled to the benefit of Proposition 51's limitation on noneconomic damages, but rather was “fully liable for” the negligence of the roofing contractor it had hired. (Srithong, at p. 728, 28 Cal.Rptr.2d 672; accord Koepnick v. Kashiwa Fudosan America, Inc. (2009) 173 Cal.App.4th 32, 35, 92 Cal.Rptr.3d 453 [owner of commercial building fully liable for negligence of elevator contractor].)

Accordingly, in cases where one of several defendants is vicariously liable for the wrongful conduct of another, the court must, in entering judgment, take into account that Proposition 51 does not apply to the vicariously liable defendant.14 In cases where there are only two defendants, one of which is vicariously liable for the negligence of the other, sorting out the extent of liability for purposes of entering judgment is straightforward—the vicariously liable defendant is jointly and severally liable for the entirety of both the economic and noneconomic damages, while the negligent defendant is also jointly and severally liable for the economic damages, but only severally liable for its proportional share of the noneconomic damages.

The situation is more complicated where, in addition to two defendants of the sort described above, there are additional tortfeasors whose acts contributed in some way to the plaintiff's injury. In Miller, the court addressed this situation after concluding a vicariously liable employer cannot seek the protection of Proposition 51 to avoid liability for an employee's negligence. This does not mean, said the court, that a vicariously liable defendant is wholly deprived of the benefit of Proposition 51—a vicariously liable employer “does enjoy the benefit of Proposition 51 in that the employer's liability for noneconomic damages is restricted to the percentage of fault allocated to its employee.” (Miller, supra, 9 Cal.App.4th at p. 84, 11 Cal.Rptr.2d 454.) Thus, “had [the plaintiff] also sued another motorist, a public entity, or a vehicle manufacturer, under Proposition 51 [the employer] would have been shielded from liability for noneconomic damages beyond those attributable to ․ her own employee.” (Ibid.)

Citing Miller, a leading treatise on personal injury law, California Practice Guide: Personal Injury, states: “[I]f both employee and employer are joined as defendants (employee on a direct negligence theory and employer solely on a vicarious liability theory) along with other defendants whose fault is being compared, as between employer and employee, they would be jointly and severally liable for the employee's share of noneconomic damages according to the employee's fault (as well as for the employee's full joint and several economic damages liability).” (Haning et al., Cal. Practice Guide: Personal Injury (The Rutter Group 2019) ¶ 2:618, p. 2(II)-3.)

This treatise further observes, “There may be cases where the employer can be sued on other theories as well—e.g., negligent entrustment, negligent supervision or perhaps negligent hiring. If there is an independent basis for holding the employer liable, it will usually be to [the plaintiff's advantage to plead both the respondeat superior and independent liability theories. Reason: In multidefendant cases, the trier of fact will have to make a separate determination of what percentage of fault is attributable to the employer under the independent theory; the employer, in turn, will be liable for that protion of noneconomic damages resulting from both the fault allocated to the employee and the fault allocated to the employer on the independent theory.” (Haning et al., Cal. Practice Guide: Personal Injury, supra, ¶ 2:619, at p. 2(II)-4.) The treatise then provides the following example: “In a multi-defendant work-related injury case, it is determined that Defendant A is 10% at fault, Defendant B (Employee) is 70% at fault, and Defendant C (Employer) is 20% at fault (on a theory of negligent supervision of Employee). Employer, who presumably has the ‘deepest pockets,’ could be reached for 90% of the noneconomic damages (70% on the vicarious liability theory, plus 20% on the negligent supervision theory).” (Ibid.)

The foregoing discussion leads to the following conclusions as to the nature, and extent, of the liability faced by the Lee children. As the owners of a commercial property, they not only faced liability for their own negligence, they also faced imputed liability, under the nondelegable duty doctrine, for any wrongdoing on the part of persons and entities assisting them in the care and management of their property. They therefore faced liability for both their own negligent acts and the acts of their property manager, Golden Prosperities.

They did not, however, face imputed liability for Lee's conduct as the developer of the property, including his constructing the defective skylight. They are, as the owners of the property, and as Lee points out, wholly responsible for maintaining the property in a reasonably safe condition and correcting, or warning of, dangerous conditions thereon, including preexisting conditions they did not create. However, they are not liable beyond the confines of a traditional tort analysis. Rather, their liability as owners to maintain and repair is predicated on a duty of care that extends not to any dangerous condition, but to dangerous conditions of which they are aware or reasonably should be aware. (See Ortega v. Kmart Corp. (2001) 26 Cal.4th 1200, 1205–1207, 114 Cal.Rptr.2d 470, 36 P.3d 11 [duty to exercise reasonable care encompasses only conditions known to the possessor of premises or which the possessor should reasonably discover, and only conditions the possessor should realize create an unreasonable risk of injury]; Alcaraz v. Vece (1997) 14 Cal.4th 1149, 1156–1159, 60 Cal.Rptr.2d 448, 929 P.2d 1239 [possessor's duty to maintain property in reasonably safe condition arises regardless of whether possessor creates the dangerous condition]; see generally 6 Miller & Starr, Cal. Real Estate (4th ed. 2019) § 19:53, pp. 19-245 to 19-247 [landlord has affirmative duty to maintain premises in a reasonably safe condition and this duty includes an inspection to discover any dangerous condition that can be reasonably discovered].) In short, in contrast to the vicarious liability the Lee children bore for any acts of their property manager under the nondelegable duty doctrine, they were not liable, regardless of their own fault (i.e., their own duty of care and breach thereof), for Lee's development and construction work.

As a consequence of the nature of their liability, the Lee children were not entitled to the full benefit of Proposition 51, and they faced joint and several liability not only for all of Schreiber's economic damages, but also for Golden Prosperities’ share of her noneconomic damages, as well as several liability for their own proportional share of those damages. Thus, using the jury's allocation to illustrate, had the Lee children proceeded to trial, they would have been liable for all of Schreiber's economic damages and also for 34 percent of her noneconomic damages (based on the 18 percent of fault allocated to them, plus the 16 percent of fault allocated to Golden Prosperities). They would, however, have received the benefit of Proposition 51 as to Lee, who was found individually liable solely on the basis of his prior ownership and development of the property (and not as a participant in Golden Prosperities).

Having determined the nature and extent of the Lee children's potential liability, we turn to the question of how their pretrial $2.5 million settlement should be credited.

The courts have long recognized that when Proposition 51 applies, nonsettling defendants are entitled to a settlement credit as to economic damages, but not as to noneconomic damages. (Espinoza v. Machonga (1992) 9 Cal.App.4th 268, 275–276, 11 Cal.Rptr.2d 498.) The rationale for this is as follows: Because Proposition 51 limits a tortfeasor's liability for noneconomic damages to his or her own proportional share of these damages, “a personal injury plaintiff's valid ‘claim’ against one such tortfeasor for noneconomic damages can never be the liability of ‘the other[ ]’ [tortfeasors].” (Espinoza, at p. 274, 11 Cal.Rptr.2d 498.) Accordingly, “[t]he payment of such a claim by one tortfeasor is not the payment of a claim for which ‘the other[ ]’ [tortfeasors] might ever be held jointly and severally liable.” (Id. at pp. 274–275, 11 Cal.Rptr.2d 498.)

In other words, when a defendant entitled to the full benefit of Proposition 51 settles, he or she is resolving, with respect to noneconomic damages, only his or her own share of those damages. (See generally Cal. Practice Guide: Personal Injury, supra, ¶ 4:85, p. Haning et al., 4-11; Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2019) ¶ 12:775, p. 12(II)-73.) And nonsettling defendants cannot look to that payment as resolving, in whole or in part, their proportional shares of those damages.

This is so even when a defendant entitled to the full benefit of Proposition 51 overestimates his or her share of fault and “overpays” to resolve his or her share of the plaintiff's noneconomic damages. (Hoch v. Allied-Signal, Inc. (1994) 24 Cal.App.4th 48, 65–67, 29 Cal.Rptr.2d 615 (Hoch).) Rather, as to noneconomic damages, the parties must live with the bargain they struck. “If the settlement was ‘low,’ the plaintiff loses; he or she cannot recover the difference in noneconomic damages from the remaining defendants. If the settlement was ‘high,’ ․ the plaintiff wins; he or she retains the benefit of the settlement bargain as well as receiving the amounts allocated by the jury to the nonsettling defendants. The nonsettling defendants bear no risk and can reap no benefit from divergence; the settlement does not affect their liability for noneconomic damages.” (Id. at p. 65, 29 Cal.Rptr.2d 615.) Or stated another way, because the plaintiff bears the risk of recovery as to noneconomic damages (by having to look to each tortfeasor to fully recover these damages where Prop. 51 applies), equity dictates that the plaintiff “also be entitled to retain the benefit of [his or her] bargain when the settlement is generous” (i.e., where the settling defendant overestimates its degree of fault and overpays to settle its share of the noneconomic damages). (Hoch,. at p. 66, 29 Cal.Rptr.2d 615.)

However, the fundamental predicate of the Espinoza/Hoch analysis—that the settling defendant is only severally liable for noneconomic damages and thus is resolving only his or her own proportional share of those damages—is absent where, as here, the settling defendant is not entitled to the full benefit of Proposition 51 and continues to face joint and several liability for some or all of the plaintiff's noneconomic damages. In this situation, the settling defendant must resolve not only his or her own proportional share of those damages (based on the settling defendant's own negligence), but also the share of those damages for which he or she is vicariously liable. In short, when a vicariously liable defendant settles, he or she is in a sense “prepaying,” in whole or in part, the liability of the defendant for whom the settling defendant is vicariously liable.

The conclusion that naturally follows is that full credit for such a settlement must be given to the defendant for whom the settling defendant bears imputed liability. Proposition 51 is not an impediment to such credit because, as we have discussed, it does not apply to a settling tortfeasor to the extent he or she bears imputed liability to the plaintiff. The equitable issue addressed in Hoch likewise does not exist because the plaintiff and the vicariously liable defendant bargain to resolve a liability that exceeds the latter's own proportion of fault.

A credit for both economic and noneconomic damages in this context also fulfills the long-standing acknowledgment embedded in our law outside of Proposition 51, that a settlement, while not releasing other tortfeasors, reduces their liability by the amount of the settlement. Where a settlement is determined to be in “good faith,” this mandate is set forth in Code of Civil Procedure section 877, which additionally protects the settling party from any claims for contribution. (Code Civ. Proc., § 877, subd. (a); see generally Leung v. Verdugo Hills Hospital (2012) 55 Cal.4th 291, 301, 303–304, 145 Cal.Rptr.3d 553, 282 P.3d 1250.) Where, as here, a trial court declines to find a settlement in “good faith,” a settlement credit is nevertheless required, but the settling party remains subject to claims for contribution.15 (Id. at pp. 307–308, 145 Cal.Rptr.3d 553, 282 P.3d 1250.)

Ultimately, settlement credits are predicated on the principle that while a plaintiff is entitled to full compensation for his or her proven injuries, he or she is not entitled to a “double recovery” of these damages. (See Poire v. C.L. Peck/Jones Brothers Construction Corp. (1995) 39 Cal.App.4th 1832, 1840, 46 Cal.Rptr.2d 631 [the “ ‘fundamental purpose’ ” of a settlement credit under Code of Civ. Proc., § 877 “ ‘is to preclude a double recovery arising out of the same wrong.’ ”]; see also Bostick, supra, 147 Cal.App.4th at p. 111, 54 Cal.Rptr.3d 28 [“one of the purposes of the setoff requirement ․ is to avoid an unjust double recovery”] (conc. opn. of Croskey, Acting P.J.).) “When multiple defendants are responsible for the same compensatory damages, a setoff ․ is required by the fundamental principle that ‘․ a plaintiff may not recover in excess of the amount of damages which will fully compensate him for his injury.’ ” (Hoch, supra, 24 Cal.App.4th at p. 67, 29 Cal.Rptr.2d 615, quoting Jaramillo v. State of California (1978) 81 Cal.App.3d 968, 970, 146 Cal.Rptr. 823.) A “plaintiff cannot, by proceeding separately against each of several defendants, ‘ “convert a joint into a several [injury], and thereby secure more than one compensation for the same injury.” ’ (May v. Miller [1991] 228 Cal.App.3d [404,] 410 [278 Cal.Rptr. 341], ․) In a case of joint liability, the damages for which each defendant is responsible to the plaintiff cannot be divided, and a settlement is rationally assumed to be intended to cover the entire damages.” (Hoch, at p. 67, 29 Cal.Rptr.2d 615.)

A vicariously liable defendant and a negligent defendant for whom the vicariously liable defendant bears liability, are responsible for the same damages. And while a plaintiff can look to either the vicariously liable defendant or the actively negligent defendant to pay these damages, the plaintiff cannot recover these same damages from both.

It is for this reason that Golden Prosperities is entitled to full credit for the settlement by the Lee children, since, as the owners of the property, they were jointly and severally liable for the negligent conduct of their management company. Any other outcome would result in a double recovery, with Schreiber recovering the same noneconomic damages from both the Lee children and Golden Prosperities. Proposition 51 was intended to make the tort system more equitable by eliminating the “ ‘deep pocket’ rule” and requiring that noneconomic damages be paid by the party who is at fault for inflicting them. (DaFonte, supra, 2 Cal.4th at p. 599, 7 Cal.Rptr.2d 238, 828 P.2d 140.) It was not designed to allow double recovery for the same injury. We also observe that, taking into account Schreiber's own percentage of fault, the jury found she sustained total damages of just over $2.3 million, an amount she fully recovered through her $2.5 million settlement with the Lee children. And while Schreiber cannot recover any additional amount from Golden Prosperities, she will recover an additional $756,000 from Lee and thus receive an amount considerably in excess of the total damages found by the jury.

IV. Disposition

The judgment as to Golden Prosperities is reversed and the trial court is directed to enter a net zero judgment. The judgment as to Lee is affirmed. Parties are to bear their own costs on appeal.

Appellant's petition for review by the Supreme Court was denied July 22, 2020, S261897.


2.   Lee, himself, had no ownership interest in, nor was he otherwise involved with, this partnership.

3.   We have rounded the amounts for ease of reference.

4.   Lee and Golden Prosperities separately appealed. On our own motion, we consolidated the appeals for purposes of oral argument and opinion.

11.   “[A]lthough American Motorcycle referred to ‘ “concurrent tortfeasors,” ’․, the term properly refers to both concurrent and successive tortfeasors: ‘[I]t matters not whether the tortfeasors acted in concert to create a single injury, or successively, in creating distinct and divisible injury.’ ([Blecker v. Wolbart (1985) 167 Cal.App.3d 1195,] 1200, fn. 2, 1203 [213 Cal.Rptr. 781] [,abrogated by statute on other grounds as stated in Henry, supra, 160 Cal.App.4th at p. 452, 72 Cal.Rptr.3d 808]; see BFGC Architects Planners, Inc. v. Forcum/Mackey Construction, Inc. (2004) 119 Cal.App.4th 848, 852 [14 Cal.Rptr.3d 721] ․ [‘[J]oint and several liability in the context of equitable indemnity is fairly expansive․ [I]t is not limited to “the old common term ‘joint tortfeasor”․’ ‘It can apply to acts that are concurrent or successive, joint or several, as long as they create a detriment caused by several actors.’]․)” (Henry, supra, 160 Cal.App.4th at p. 453 fn. omitted, 72 Cal.Rptr.3d 808.)

12.   “[E]conomic” damages encompass all “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.” (Civ. Code, § 1431.2, subd. (b)(1).) “[N]on-economic” damages are such “subjective, non-monetary losses [as] ․ pain, suffering, inconvenience, mental suffering, emotional distress, loss of society and companionship, loss of consortium, injury to reputation and humiliation.” (Id., § 1431.2, subd. (b)(2).)

13.   The Restatement of Torts, section 422 likewise provides: “A possessor of land who entrusts the repair of a building or other structure thereon to an independent contractor is subject to the same liability to persons within or outside the land who are injured by the contractor's negligent failure to put or maintain the building or structure in reasonably safe condition as though he had retained the making of the repairs in his own hands.”

14.   As have prior cases, we use the term “vicariously liable” broadly to include those circumstances in which liability is imputed, rather than based on the defendant's own wrongful conduct.

15.   Several of the Lee children moved for a “good faith” settlement determination, but made a scant showing in support of their motion. Not surprisingly, the trial court denied the motion, including because they failed to carry their burden to demonstrate the extent of their liability and because several of the Lee children opposed the settlement. The dissenting members of the Lee family felt the entire case should have been resolved and believed their attorney (paid for by their insurance company) and the plaintiff's attorney had agreed to a deal not in the Lee family's best interests.

Banke, J.

Humes, P. J., and Margulies, J., concurred.

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Docket No: A149969, A150093

Decided: April 09, 2020

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

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