Bracket v. State of California

• Decision Date: 15 May 1986
• Citation: 180 Cal.App.3d 1171,226 Cal.Rptr. 1
• Court: California Court of Appeals Court of Appeals
• Parties: George BRACKET & House of Lamps, Plaintiffs and Respondents, v. STATE of California, et al. Defendants and Appellants. A027875.

Page 1

226 Cal.Rptr. 1

180 Cal.App.3d 1171

George BRACKET & House of Lamps, Plaintiffs and Respondents, v. STATE of California, et al. Defendants and Appellants.

A027875.

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

May 15, 1986.

Review Denied Aug. 28, 1986.

James C. Hyde, Popelka, Allard, McCowan, Jones & Howard, San Jose, for plaintiffs and respondents.

Robert F. Carlson, Chief Counsel, Robert J. DeFea, Kenneth G. Nellis, Robert E. Brown, San Francisco, for defendants and appellants.

NEWSOM, Associate Justice.

The instant appeal is from judgment in an action for comparative equitable indemnity. The factual background may be summarized as follows.

Larry Edward Spencer sustained serious injuries when a motor vehicle which he was driving on State Route 17 in Santa Clara County collided head-on with a truck driven by James Gardner. The accident was precipitated by an unsafe lane change made by respondent George Bracket, who at the time was driving a vehicle owned by respondent House of Lamps, which caused Gardner to swerve his truck across the center line of the highway and collide with Spencer's oncoming car.

Spencer filed suit for his personal injuries against Gardner and respondents. Gardner settled with Spencer before trial for the full amount of his insurance coverage, $350,000. The action then proceeded to trial, and the jury awarded Spencer $2,500,000. Respondents satisfied the remainder of the judgment by paying Spencer $2,150,000. Appellant was not a party to Spencer's action for personal injuries.

Respondents subsequently commenced an action against the State of California (hereafter the state or appellant) for comparative equitable indemnity, alleging that Spencer's injuries were primarily caused by the state's failure to provide a median barrier separating the northbound and southbound directions of traffic on State Route 17. The issues of liability and damages were severed for trial. The jury found that the state's failure to remedy the dangerous condition of State Route 17 was a cause of Spencer's injuries, and apportioned the comparative responsibility of the parties as follows: 85 per cent to respondents; 10 per cent to appellant; and 5 per cent to Gardner. Thereafter, the trial court entered judgment for respondents against the state for $226,315.66, computed according to the following formula: "$2,500,000 less $350,000 credit times 10/95." In so doing, the trial court essentially determined that, after subtracting the full amount of Gardner's contribution to the judgment, respondents and appellants should share in the judgment in proportion to their fault as found by the jury.

Appellant does not challenge the allocation of fault made by the jury, but objects to the trial court's apportionment and award of damages. In appellant's view the trial court erred in crediting respondents with the payment made by James Gardner before apportioning damages in accordance with the relative fault of the parties as determined by the jury. According to appellant, the proper measure of damages to respondents in this indemnity action was $25,000: an amount representing the contribution made by respondents "in excess of their proportionate share of the $2,500,000 judgment recovered by Larry Edward Spencer." Appellant submits that such an award fairly compensates respondents for their loss, and asks us to modify the judgment accordingly.

The issue may be stated as follows: where a joint tortfeasor settles with the plaintiff before trial for an amount later determined to be an overpayment, as did Gardner, should the remainder of the plaintiff's judgment, after deduction of the overpayment, be allocated among the nonsettling joint tortfeasors in accordance with their proportionate share of fault; or, instead, is it proper to limit a nonsettling joint tortfeasor's recovery in an indemnity action to that amount paid the plaintiff by the party seeking indemnity which exceeds its comparative share of fault, without first deducting the overpayment from the total judgment for respondent? In the case before us, the difference in the two measures of damages is $201,315.66--that is, the difference between $226,315.66, which sum was arrived at by subtracting Gardner's contribution to the judgment ($350,000) then multiplying the remainder, $2.15 million by appellant's comparative fault, 10/95ths, and $25,000, which represents the sum due respondents' were we merely to award indemnification for the amount they paid Spencer in excess of their total proportionate share of the liability.

Our high court's decision in American Motorcycle Assn. v. Superior Court (1978) 20 Cal.3d 578, 146 Cal.Rptr. 182, 578 P.2d 899, serves as the foundation for our inquiry. In American Motorcycle, the court declared that the "equitable indemnity rule should be modified to permit a concurrent tortfeasor to obtain partial indemnity from other concurrent tortfeasors on a comparative fault basis." (Id., at p. 598, 146 Cal.Rptr. 182, 578 P.2d 899; see also People ex rel. Dept. of Transportation v. Superior Court (1980) 26 Cal.3d 744, 756, 163 Cal.Rptr. 585, 608 P.2d 673; Easton v. Strassburger (1984) 152 Cal.App.3d 90, 111, 199 Cal.Rptr. 383.) " 'This change in the law was a response to California's adoption in 1975 of the system of comparative fault where "liability for damage [would] be borne by those whose negligence caused it in direct proportion to their respective fault." ' (Li v. Yellow Cab Co. (1975) 13 Cal.3d 804, 813 ... [119 Cal.Rptr. 858, 532 P.2d 1226], fn. omitted.)" (Angelus Associates Corp. v. Neonex Leisure Products, Inc. (1985) 167 Cal.App.3d 532 536, 213 Cal.Rptr. 403.) Thus, American Motorcycle Assn. calls for "apportionment of loss between the wrongdoers in proportion to their relative culpability" (id., 20 Cal.3d at p. 595, 146 Cal.Rptr. 182, 578 P.2d 899), so as to "permit the equitable sharing of loss between multiple tortfeasors" (id., at p. 597, 146 Cal.Rptr. 182, 578 P.2d 899) rather than the imposition of the loss upon one or the other tortfeasor. (See also People ex rel. Dept. of Transportation v. Superior Court, supra, 26 Cal.3d at p. 744, 163 Cal.Rptr. 585, 608 P.2d 673.)

The very cornerstone of the equitable indemnity doctrine outlined in American Motorcycle is a fair distribution of loss among joint tortfeasors in proportion to fault. Such is the general nature of indemnity, which seeks as a matter of fairness to have one party " 'make good a loss or damage another [party] has incurred.' " (Valley Circle Estates v. VTN Consolidated, Inc. (1983) 33 Cal.3d 604, 614, 189 Cal.Rptr. 871, 659 P.2d 1160.) Thus, in determining the effect of an overpayment by a settling joint tortfeasor upon the competing rights of the remaining joint tortfeasors to indemnification, we seek to further the goal of equitable indemnity in order to effectuate a fair apportionment of loss according to relative culpability. (American Motorcycle Assn., supra, 20 Cal.3d at p. 595, 146 Cal.Rptr. 182, 578 P.2d 899.)

The formula proposed by the state, however, fails to comport with the American Motorcycle apportionment of loss standard. Were we to limit respondents' recovery in the instant indemnity action to the amount they paid to Spencer which was in excess of their subsequently determined comparative fault, i.e., $25,000, appellant would receive the entire benefit of Gardner's overpayment while ultimately contributing a much smaller percentage--1 per cent, in fact--than the 10 per cent relative culpability found attributable to them by the jury. In contrast, respondents would not share in the overpayment, but would continue to be liable for a full 85 per cent share of the loss despite the "windfall" created by Gardner's excessively generous contribution to plaintiff's judgment. The inequity of such an apportionment is palpable.

Several recent cases have confronted the problem of apportionment of damages where one of several joint tortfeasors is judgment proof as a result of insolvency or settlement with a plaintiff for less than the subsequently decreed comparative responsibility of that party. ¹ (Ambriz v. Kress (1983) 148 Cal.App.3d 963, 196 Cal.Rptr. 417; Lyly & Sons Trucking Co. v. State of California (1983) 147 Cal.App.3d 353, 195 Cal.Rptr. 116; Paradise Valley Hospital v. Schlossman (1983) 143 Cal.App.3d 87, 191 Cal.Rptr. 531.) In each of such cases there has been an underpayment, or shortfall, and the remaining joint tortfeasors in an indemnity action have sought to avoid liability for the additional loss caused thereby.

The rule which has emerged is that solvent tortfeasors in an indemnity action must share in direct proportion to their respective degree of fault the liability of their judgment-proof co-actors, with the apportionment made as though the judgment-proof tortfeasors had not been involved in the accident. (Sagadin v. Ripper (1985) 175 Cal.App.3d 1141, 1174, 221 Cal.Rptr. 675; Ambriz v....