Anderson-Cottonwood Disposal Service v. Workers' Comp. Appeals Bd.

• Decision Date: 25 August 1982
• Docket Number: ANDERSON-COTTONWOOD
• Citation: 185 Cal.Rptr. 336,135 Cal.App.3d 326
• Court: California Court of Appeals Court of Appeals
• Parties: DISPOSAL SERVICE et al., Petitioners, v. WORKERS' COMPENSATION APPEALS BOARD and Victor Webb, Respondents. Civ. 21151.

Page 336

185 Cal.Rptr. 336

135 Cal.App.3d 326

ANDERSON-COTTONWOOD DISPOSAL SERVICE et al., Petitioners, v. WORKERS' COMPENSATION APPEALS BOARD and Victor Webb, Respondents.

Civ. 21151.

Court of Appeal, Third District, California.

Aug. 25, 1982.

Sedgwick, Detert, Moran & Arnold, and James R. Wesolowski, San Francisco, for petitioners.

Trezza, Ithurburn & Steidlmayer, and Eugene J. Davis, Yuba City, for respondent Webb.

No appearance for respondent Workers' Compensation Appeals Board.

BLEASE, Associate Justice.

Petitioners Anderson-Cottonwood Disposal Service (Anderson) and Mission Insurance Company (Mission) seek annulment of an order of respondent Workers' Compensation Appeals Board (board) denying reconsideration

of an award in favor of Victor Webb. We affirm the order of the board.

FACTS

On March 5, 1975, Webb, employed by Anderson, was working as a mechanic on the tilt cab of a truck. While bent over the moving shaft of the motor, straddling the front wheel, the cab descended. He lost his footing and was injured when the truck rolled over him. He received temporary disability indemnity benefits and medical expenses from Mission.

Webb filed a civil action on two theories of liability, negligence and strict products liability, naming as defendants the manufacturer and seller of the truck. Mission intervened, seeking recovery of the temporary disability benefits and medical expenses it had paid.

On December 2, 1977, Webb obtained a jury verdict in the amount of $55,000. The jury returned special verdicts, finding for Webb on both theories of liability. On the negligence theory, they apportioned the degree of negligence at 10 percent for the third party defendants, 25 percent for Webb and 65 percent for Anderson. A judgment was entered on the products liability claim for the whole sum of damages. The judgment was satisfied by payment by the third parties of $34,566.07 to Webb and approximately $17,000 to Mission.

In 1978, Webb filed an application for adjudication of claim seeking further workers' compensation benefits. Mission answered claiming a credit against further liability in the amount of the remaining civil recovery. Webb disputed the credit on the basis of cases (Witt v. Jackson (1961) 57 Cal.2d 57, 17 Cal.Rptr. 369, 366 P.2d 641 and Associated Construction & Engineering Co. v. Workers' Comp. Appeals Bd. (1978) 22 Cal.3d 829, 150 Cal.Rptr. 888, 587 P.2d 684) which preclude a credit for the amount of damages attributed to the employer negligence. Mission responded that the third party recovery was based upon strict liability (Ruiz v. Minnesota Mining & Mfg. Co. (1971) 15 Cal.App.3d 462, 93 Cal.Rptr. 270 [which held that the employer's passive negligence did not offset liability for a product defect] ). The administrative law judge ruled for Webb. He awarded Webb permanent disability indemnity of $15,172.50 and further medical treatment if needed. He ruled that "[i]n light of ... case authority, and considering the total damages and percentages of negligence found by the ... jury, I conclude that [the] carrier is not entitled to any credit for applicant's third party recovery until the carrier has paid compensation benefits of $35,750 ($55,000 X 65%) ... in addition to the compensation benefits previously" reimbursed. The board adopted these reasons in denying petitioners' petition for reconsideration.

DISCUSSION

I

Petitioners contend they are entitled to a full credit for the net amount of Webb's third party recovery. They say their responsibility for the injury was adjudicated in the third party action; that "recovery [there] was based principally on a strict products liability theory, which does not take ordinary contributory negligence into account." Alternatively, they claim the board should not have relied upon the jury finding of employer negligence. We affirm the order of the board.

II

Labor Code section 3861 generally permits a credit against workers' compensation benefits of the portion of an employee's third party award which has not been applied to reimburse the employer. (§ 3861). In Witt v. Jackson, supra, 57 Cal.2d at page 69, 17 Cal.Rptr. 369, 366 P.2d 641, the Supreme Court denied reimbursement of compensation benefits out of damages in a third party action attributable to the employer's negligence. It applied common law principles of contributory negligence and held that an employer could not profit from his own wrong, notwithstanding a double recovery by the employee for his injuries. In Roe v. Workmen's Comp. Appeals Bd. (1974) 12 Cal.3d 884, 117 Cal.Rptr. 683, 528 P.2d 771, this principle was applied to the determination of credit pursuant to Labor Code section 3861. "Construed in relation to the Witt v. Jackson rule, which denies reimbursement to a concurrently negligent employer, section 3861 is a delegation of authority for appeals board inquiry into the employee's defense of employer negligence. (Nelsen v. Workmen's Comp. App. Bd. ... 11 Cal.App.3d at p. 478 .)" (Roe v. Workmen's Comp. Appeals Bd., supra, 12 Cal.3d at p. 891, 117 Cal.Rptr. 683, 528 P.2d 771.)

Associated Construction & Engineering Co. v. Workers' Comp. Appeals Bd., supra, 22 Cal.3d 829, 150 Cal.Rptr. 888, 587 P.2d 684, modified Witt v. Jackson by application of the comparative negligence principles of Li v. Yellow Cab Co. (1975) 13 Cal.3d 804, 119 Cal.Rptr. 858, 532 P.2d 1226 and said that " '... where the employer's negligence has not been adjudicated in [the] third party action, the applicant is entitled to have it adjudicated before the Board.' [Citation.]" (Associated Construction & Engineering Co. v. Workers' Comp. Appeals Bd., supra, 22 Cal.3d at p. 835, 150 Cal.Rptr. 888, 587 P.2d 684.)

Here, the board relied on comparative negligence principles to defeat the claim of credit. Petitioners complain that such principles do not apply to products liability and that Ruiz v. Minnesota Mining & Mfg. Co., supra, 15 Cal.App.3d 462, 93 Cal.Rptr. 270, governs the proceeding before the board as it did in the third party action. It is not clear if they claim Ruiz is the law applicable to the board's determination or that the third party judgment is binding. We analyze the claim in both ways.

Ruiz held that an employer was not a joint tortfeasor in a products liability action by virtue of its failure to discover the product defect. ¹ It reasoned that if the employer is also a consumer of the product that injures its employee and fails to discover the product defect or guard against its existence, the law of products liability (at the time) precludes contributory liability. Since the employer is not a joint tortfeasor, Witt v. Jackson does not apply. (Ruiz, at pp. 469-470, 93 Cal.Rptr. 270.)

The board properly declined to apply Ruiz for it is no longer the law. Ruiz was eviscerated by the decision in Daly v. General Motors Corp. (1978) 20 Cal.3d 725, 144 Cal.Rptr. 380, 575 P.2d 1162, which held that the contributory negligence of a consumer is a proportionate bar to recovery for products liability. Accordingly, an employer's negligence makes it a joint tortfeasor in a products liability case and Witt v. Jackson and its progeny do apply.

III

Petitioners can prevail only if Ruiz is binding upon the board by virtue of the judgment in the third party action. This tenders an issue of collateral estoppel.

Mission intervened in the third party action. Judgment was entered for the full amount of damages against the third parties, despite a jury finding of Anderson's negligence. Because Ruiz was the law at the time of the decision, we infer that the employer's negligence was not with knowledge of the product defect. It follows that such a determination was necessary to the judgment. (See Code Civ.Proc., § 1911.) The question arises whether the board may redetermine such negligence or utilize the jury finding to impose liability for purposes of Labor Code section 3861.

Collateral estoppel operates between judicial and board determinations. Roe described the relationship of court to agency as "a statutory-decisional system in which both trial court and workmen's compensation agency are bound to accept the other's prior adjudication of employer negligence but free to adjudicate the issue if it is yet unsettled." (Roe v. Workmen's Comp. Appeals Bd., supra, 12 Cal.3d at p. 892, 117 Cal.Rptr. 683, 528 P.2d 771, see also Nelsen v. Workmen's Comp. App. Bd. (1970) 11 Cal.App.3d 472, 89 Cal.Rptr. 638.) We are thus directed to the law of res judicata.

The general rule is that "[w]hen an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim." (Rest.2d Judgments, § 27, p. 250; see also Code Civ.Proc., § 1911; Smith v. Smith (1981) 127 Cal.App.3d 203, 208, 179 Cal.Rptr. 932.) ² However, Webb's case falls squarely within an exception to the general rule of issue preclusion. Redetermination is not barred when "[t]he party against whom preclusion is sought could not, as a matter of law, have obtained review of the judgment in the initial action ...." (Rest.2d Judgments, § 28, subd. (1), p. 273.) Webb was the prevailing party in the third party action. Because of Ruiz, the jury finding of employer negligence did not affect the liability of the third parties. Webb consequently was not aggrieved and could not appeal the judgment. (See 6 Witkin, Cal.Procedure (2d ed. 1971) Appeal § 121, pp. 4118-4119.) He was not therefore collaterally estopped to tender the issue of employer fault in the administrative forum. Similarly, the board was not bound by the jury verdict of employer negligence.

Freed from the constraints of collateral estoppel the board was empowered to apply the law applicable at the time of the administrative determination. That law is to be found in Daly v. General Motors Corp., discussed supra. Daly...