Adams v. Southern Pac. Transportation Co.

• Decision Date: 21 July 1975
• Citation: 123 Cal.Rptr. 216,50 Cal.App.3d 37
• Court: California Court of Appeals
• Parties: James B. ADAMS et al., Plaintiffs and Appellants, v. SOUTHERN PACIFIC TRANSPORTATION COMPANY, Defendants and Respondents. Civ. 14832.

Page 216

123 Cal.Rptr. 216

50 Cal.App.3d 37

James B. ADAMS et al., Plaintiffs and Appellants, v. SOUTHERN PACIFIC TRANSPORTATION COMPANY, Defendants and Respondents.

Civ. 14832.

Court of Appeal, Third District, California.

July 21, 1975.

Hearing Denied Oct. 23, 1975.

Gladstein, Leonard, Patsey & Andersen, by Norman Leonard, San Francisco, for plaintiffs-appellants.

Fitzwilliam, Memering, Stumbos & Demers by Dianna Z. Hoffman, Sacramento, for County of Sacramento.

Evelle J. Younger, Atty. Gen. by Philip B. Laird, Jr., Deputy Atty. Gen., Sacramento, for State.

Diepenbrock, Wulff, Plant & Hannegan by Jack V. Lovell, Sacramento, for Southern Pacific.

Hoffman, Mayhew & Gallawa by Robert B. Mikel, Sacramento, for County of Placer.

FRIEDMAN, Associate Justice.

On April 28, 1973, a trainload of military bombs carried by a Southern Pacific freight train detonated in the railroad's freight yards at Roseville. A series of violent explosions occurred, causing damage throughout the neighborhood. Twenty-four plaintiffs filed this damage action against Southern Pacific Transportation Company, the State of California and the counties of Placer and Sacramento, alleging that plaintiffs had been employed by the Los Angeles By-Products Company, whose plant was destroyed by the explosion; that plaintiffs had thus lost employment and wages; that their losses were caused by Southern Pacific's negligence in transporting and handling the bombs and by the negligence of the public defendants, who failed to require buffer zones or spacer cars and failed to provide adequate emergency services.

The trial court sustained the separate demurrers of these various defendants, denying plaintiffs' leave to amend their complaint against the railroad, but granting leave to amend as to the public defendants. Plaintiffs elected to stand on their complaint and judgments of dismissal were entered from which they appeal. In testing the complaint's sufficiency, we assume the truth of its allegations, including negligence and cause in fact. (Serrano v. Priest (1971) 5 Cal.3d 584, 591, 96 Cal.Rptr. 601, 487 P.2d 1241.)

I.

Of immediate significance in the decision of this appeal in Fifield Manor v. Finston (1960) 54 Cal.2d 632, 7 Cal.Rptr. 377, 354 P.2d 1073. There the California Supreme Court rejected the suit of a medical service corporation which sought to recover its medical service outlays from an automobile driver who had negligently injured one of its clients. The Fifield opinion declared (54 Cal.2d at p. 636, 7 Cal.Rptr. at p. 379, 354 P.2d at p. 1075), '(W)ith the exception of an action by the master for tortious injuries to his servant, thus depriving the master of his servant's services, which traces back to medieval English law (citations), the courts have quite consistently refused to recognize a cause of action based on negligent, as opposed to intentional, conduct which interferes with the performance of a contract between third parties or renders its performance more expensive or burdensome. (Citations.)'

Fifield quoted with approval from an Ohio intermediate appellate decision denying recovery to a workman who lost wages when his place of employment was shut down because of an explosion in the defendant's neighboring plant. The Ohio court stated: 'It is our opinion that the courts generally have reached a wise result in limiting claims for damages in this class of cases to who (sic) may have sustained personal injuries or physical property damage and in refusing to open their doors in such cases to claims of loss of wages and other economic loss based on contract.' (Stevenson v. East Ohio Ga Co. (Ohio App.) 73 N.E.2d 200, 204, quoted in Fifield Manor v. Finston, supra, 54 Cal.2d at p. 636, 7 Cal.Rptr. 377, 354 P.2d 1073.)

The Fifield rule was reiterated in Costello v. Wells Fargo Bank (1968) 258 Cal.App.2d 90, 94--96, 65 Cal.Rptr. 612, and by this court in Stromer v. City of Yuba City (1964) 225 Cal.App.2d 286, 288--289, 37 L.Ed.2d 240. It is an expression of a general doctrine prevailing in American courts which bars recovery for negligent interference with profitable economic relations. ¹

The principle of Stare decisis requires this court to adhere to the Fifield rule and to affirm the denial of recovery for wages lost through the negligent destruction of plaintiffs' job site. As an intermediate appellate court, we must decide the liability issue in conformity with the State Supreme Court's last utterance in point. (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455, 20 Cal.Rptr. 321, 369 P.2d 937; 6 Witkin, Cal. Procedure (2d ed. 1971) Appeal, §§ 656, 664.)

Plaintiffs argue that Fifield and its companion decisions are not in point. Their lawsuit, they argue, is not cast in terms of interference with employment contracts but alleges physical destruction of the property which enabled them to earn a livelihood. Indeed the argument has substance. There is only a skimpy analogy between the Fifield plaintiff (i.e., an indemnitor or insurer seeking to recoup the cost of a deliberate business risk) and the wage earner whose job site is destroyed. To subsume both losses under the 'negligent interference with contract' rubric ignores a multitude of policy distinctions. Yet the Fifield opinion indulges in that assumption. In citing the Ohio case, which denied recovery for a wage loss, the Fifield decision identified physical destruction of the job site as one sort of negligent interference with contract relations. In unmistakable terms, the California Supreme Court announced its adherence to the doctrine of the Ohio decision. In labeling as an 'exception' the employer's right to recover for loss of his employees' services, Fifield firmly placed within the general rule the employees' recovery for physical damage to his employer's business. The jaws of the Fifield precedent may gape too widely; yet they encompass plaintiffs' claim.

II.

Principled obedience to the Fifield rule need not prevent awareness that it may be ripe for renunciation or limitation. In following a rule of decisional law, an intermediate court of appeal may appropriately analyze the factors which cast doubt upon its viability. ²

The Fifield rule is inconsistent with two later developments of California tort doctrine. The first finds expression in Dillon v. Legg (1968), 68 Cal.2d 728, 69 Cal.Rptr. 72, 441 P.2d 912, and Rowland v. Christian (1968) 69 Cal.2d 108, 70 Cal.Rptr. 97, 443 P.2d 561. Earlier California decisions had firmly established a method for the analysis of negligence liability. That method had its starting point in a judicial (i.e., nonjury) inquiry into the existence of a duty of care. (See Amaya v. Home Ice, Fuel & Supply Co. (1963) 59 Cal.2d 295, 29 Cal.Rptr. 33, 379 P.2d 513, overruled in Dillon v. Legg, supra; Richards v. Stanley (1954) 43 Cal.2d 60, 271 P.2d 23; 4 Witkin, Summary of Cal.Law (8th ed. 1974) Torts, §§ 488, 493.) Conventional negligence analysis next turned to the question of foreseeability. The duty of care was limited by the doctrine of Palsgraf v. Long Island R. Co., 248 N.Y. 339, 162 N.E. 99, which excluded recovery by persons outside a reasonably foreseeable zone of danger. (See 4 Witkin, Op. cit., Torts, § 489.)

Dillon v. Legg inaugurated an apparent revision of the conventional methodology. Dillon (68 Cal.2d at p. 741, 69 Cal.Rptr. 72, 441 P.2d 912) postulated reasonable foreseeability as the primary, court-determined test of liability and relegated to a secondary, negative role the policy factors involved in the duty of care issue. Although Dillon v. Legg emanated from a sharply divided court, its analytical approach was confirmed by a heavier majority in Rodriguez v. Bethlehem Steel Corp. (1974) 12 Cal.3d 382, 115 Cal.Rptr. 765, 525 P.2d 669.

In Rowland v. Christian the court set forth Civil Code section 1714 as the fundamental rule of negligence liability in California, ³ rejecting common law rules which had traditionally limited the liability of land possessors. The court referred to the duty of care concept as a 'departure from (the) fundamental principle' voiced in Civil Code section 1714 (69 Cal.2d at p. 112, 70 Cal.Rptr. 97, 443 P.2d 561). Like Dillon, the Rowland decision relegated duty determinations to a secondary, rejective role.

Nothing in the language, purpose, or history of Civil Code section 1714 confines it to suits against land possessors. Indeed, Rowland v. Christian refers to the real estate cases as 'One of the areas' where the courts had departed from the fundamental concept of section 1714. (69 Cal.2d at p. 113, 70 Cal.Rptr. 97, 443 P.2d 561.) Later decisions explicitly or implicitly recognize section 1714 as a general principle of negligence liability in California. (Li v. Yellow Cab Co. (1975) 13 Cal.3d 804, 821, 119 Cal.Rptr. 858, 532 P.2d 1226; Brown v. Merlo (1973) 8 Cal.3d 855, 865, 106 Cal.Rptr. 388, 506 P.2d 212; Mark v. Pacific Gas & Electric Co. (1972) 7 Cal.3d 170, 177, 101 Cal.Rptr. 908, 496 P.2d 1276, fn. 2; Holliday v. Miles, Inc. (1968) 266 Cal.App.2d 396, 400--401, 72 Cal.Rptr. 96.)

The Supreme Court has not yet revealed the doctrinal relationship between Dillon v. Legg and Civil Code section 1714. Dillon and Rowland have this much in common: they move the duty-of-care inquiry from its conventional position as the starting point of liability analysis and relegate it to a secondary, rejective role. Inferably, Rowland v. Christian relies--no less than Dillon v. Legg--upon foreseeability of harm as the prime test of negligence liability.

The alteration in analytical method effected by Dillon and Rowland has little impact on run-of-the-mill negligence suits, where the parties occupy a fairly direct spatial or legal relationship. It plays a significant, sometimes pivotal, role at the outer fringes of negligence liability, where (as here) the plaintiff is physically remote from the wrong or lacks contractual privity with the wrongdoer. ⁴

The second...