Brennen v. City of Eugene

• Decision Date: 27 February 1979
• Citation: 285 Or. 401,591 P.2d 719
• Parties: Herbert J. BRENNEN, Petitioner, v. CITY OF EUGENE, a Municipal Corporation, and unknown defendants designated as John Doe and Mary Doe, Respondents. CA 7874; SC 25684.
• Court: Oregon Supreme Court

Page 719

591 P.2d 719

285 Or. 401

Herbert J. BRENNEN, Petitioner, v. CITY OF EUGENE, a Municipal Corporation, and unknown defendants designated as John Doe and Mary Doe, Respondents.

CA 7874; SC 25684.

Supreme Court of Oregon, In Banc.

Argued and Submitted May 5, 1978.

Decided Feb. 27, 1979.

Edward P. Thompson of Young, Horn, Cass & Scott, Eugene, argued the cause and filed a brief for petitioner.

Gary G. Williams of Jaqua & Wheatley, P. C., Eugene, argued the cause for respondents.

HOWELL, Justice.

The issue in this case is whether a municipality can be held liable in damages when its employee issues a taxicab license to an applicant who does not possess the minimum liability insurance required by city ordinance. The trial court entered a judgment on the pleadings after the court sustained defendants' demurrer and motions to strike both counts of plaintiff's second amended complaint and plaintiff refused to plead further. The Court of Appeals affirmed, 30 Or.App. 1093, 569 P.2d 1083 (1977). We granted review, 281 Or. 531 (1978).

Plaintiff alleged the following facts. On or about January 4, 1972, Terminal Taxi Service (Terminal) applied to the City of Eugene for a license to operate a taxicab service. The certificate of insurance submitted by Terminal as part of its application disclosed that the company carried only $10,000 per person insurance coverage. The Eugene Municipal Code requires all taxicab operators to carry not less than $100,000 per person insurance coverage. ¹ Nevertheless, the City granted Terminal a license.

On October 30, 1972, plaintiff was riding as a paying passenger in a taxicab operated by Terminal and was injured when the cab collided with the rear end of another automobile. Plaintiff sued Terminal and its driver for the injuries and recovered a judgment of $41,719.62. Plaintiff collected $10,000 on the judgment from Terminal's insurance carrier, but has been unable to collect the rest. The defendant's demurrer admits that at the present time the net leviable assets of Terminal and its driver do not exceed $4,500.

Plaintiff then brought the present action against the City of Eugene, ² alleging that the City and its employees were negligent in issuing the license to Terminal when its application disclosed that it failed to meet the minimum liability insurance requirements. The trial court allowed the defendants' demurrer on the ground that the complaint failed to state a cause of action. Plaintiff appealed and the Court of Appeals affirmed, holding that under general principles of tort law plaintiff had failed to state a cause of action. 30 Or.App. at 1099, 569 P.2d 1083. In a specially concurring opinion, Chief Judge Schwab stated that he believed the City was immune from suit under the "discretionary act" exception to government tort liability, ORS 30.265(3) (c). 30 Or.App. at 1102, 569 P.2d 1083.

I. Sufficiency of Defendant's Complaint

ORS 30.265(1) provides:

" * * * every public body is liable for its torts and those of its officers, employes and agents acting within the scope of their employment or duties, whether arising out of a governmental or proprietary function."

Under this statute, defendant is liable for the torts of its employees just as any private employer would be liable. Our initial inquiry therefore is whether plaintiff has alleged facts from which it can be concluded that the defendant's licensing agent committed a tort.

Because this case is before us on demurrer, we must assume the truth of all plaintiff's well pleaded allegations and any facts that might conceivably be adduced as proof of such allegations. Mezyk v. National Repossessions, 241 Or. 333, 405 P.2d 840 (1965). To state a cause of action in negligence, plaintiff must allege that defendant owed him a duty, that defendant breached that duty, and that the breach was the cause in fact of some legally cognizable damage to plaintiff. McEvoy v. Helickson, 277 Or. 781, 562 P.2d 540 (1977); Harding v. Bell, 265 Or. 202, 508 P.2d 216 (1973). If the defendant's conduct is a cause in fact of plaintiff's injury, the element of causation is satisfied, and concepts of "negligence," "risk," and " foreseeability" are considered in determining the scope of defendant's duty and whether that duty was breached. See Jacobs v. Tidewater Barge Lines, 277 Or. 809, 562 P.2d 545 (1977); Stewart v. Jefferson Plywood Co., 255 Or. 603, 469 P.2d 783 (1970); Sworden v. Gross, 243 Or. 83, 409 P.2d 897 (1966); Hills v. McGillvrey, 240 Or. 476, 402 P.2d 722 (1965); Dewey v. A. F. Klaveness & Co., 233 Or. 515, 519, 379 P.2d 560 (1963) (O'Connell, J., specially concurring).

In analyzing the sufficiency of the complaint, we will consider each of the above elements separately.

A. Duty

In negligence law, "duty" is simply "an expression of the sum total of those considerations of policy which lead the law to say that the particular plaintiff is entitled to protection." Mezyk v. National Repossessions, supra, 241 Or. at 336, 405 P.2d at 842, Quoting W. Prosser, Law of Torts 333 (3d ed. 1964). As a general rule, the scope of the duty owed is governed by the concept of "foreseeability," and a defendant whose act injures another will be held liable for the injury only if the injury was a reasonably foreseeable consequence of the act. See McEvoy v. Helickson, supra; Sworden v. Gross, supra.

In the instant case, the Court of Appeals concluded that the duty of defendant was something less than that which would exist in an ordinary negligence action. Noting that the City of Eugene had no legal obligation to license taxicabs, the court held that the City was "in the position of a person who acts when there is no duty to do so," and that consequently it had "only a duty to avoid making the situation worse than it was prior to (its) undertaking." 30 Or.App. at 1098, 569 P.2d at 1086, Citing Prosser, Law of Torts 343 (4th ed. 1971).

The problem with the analysis used by the Court of Appeals is that it fails to distinguish between the duty of the City itself and the duty of its agent. It is true that there was no duty on the part of the City to license taxicabs. The act complained of in this case, however, is not the enactment of the municipal ordinance, but the negligent issuance of the license by the City's agent. The question of duty must therefore be analyzed in terms of the agent's actions, not the City's.

Viewing the problem from this perspective, we conclude that the agent's duty should be defined in terms of foreseeability. Unlike the City, the licensing agent was not "in the position of a person who acts when there is no duty to do so." The agent had an employment responsibility to process license applications pursuant to the requirements of the ordinance. Under general principles of common law negligence, the agent was required to perform this duty so as to avoid creating a foreseeable risk of harm to others.

Defendant argues that no duty whatsoever can exist because in enacting the ordinance defendant did not intend to become the insurer of all its citizens. This argument misconceives the source of the licensing agent's duty to act with reasonable care. The responsibility to perform the act may arise from the ordinance, but the duty to perform the act With reasonable care arises from principles of common law negligence. It is immaterial whether or not the licensing agent intended to assume a duty in this case, just as it would be immaterial whether or not a private individual intended to assume a duty in doing a particular act. Virtually all government activities have their ultimate source in some legislative enactment, and to adopt defendant's theory would, in effect, restore the doctrine of sovereign immunity, which has been abolished by statute in Oregon. ORS 30.265.

We appreciate the problem that arises in treating the government under the "reasonable person" standard, for government does many things that normal persons do not. We also appreciate the concern expressed by some courts that imposition of unlimited liability upon municipalities may "dissuade (municipalities) from enacting ordinances designed for the protection and welfare of the general public, and thereby the general public would lose the benefit of salutary legislative enactments." Stigler v. City of Chicago, 48 Ill.2d 20, 268 N.E.2d 26, 29 (1971); Gerneth v. City of Detroit, 465 F.2d 784, 787 (6th Cir. 1972), Cert. den. 409 U.S. 1109, 93 S.Ct. 913, 34 L.Ed.2d 690 (1973). In Oregon, however, municipalities are protected from unlimited liability by ORS 30.270, which imposes monetary limits on the liability of any public body, both with respect to individual claims and claims arising out of a single accident or occurrence. ³ Within this range of limited liability, municipalities can further protect themselves by obtaining liability insurance, the cost of which can be allocated through taxation and licensing fees. ORS 30.282; See Henke, Oregon's Governmental Tort Liability Law From a National Perspective, 48 Or.L.Rev. 95, 118-20 (1968). Finally, the requirement that the risk created by the activity of the municipal agent fall within the "zone of foreseeability" imposes an additional limitation on the scope of governmental liability. Should these limitations prove insufficient, the legislature may act to provide additional restrictions.

Defendant argues that despite the provisions of ORS 30.265 it should nevertheless escape liability because the agent's duty runs only to the public generally, not to individual members of the public. Defendant relies on numerous cases for this proposition, including Gerneth v. City of Detroit, supra; Whitney v. City of New York, 27 App.Div.2d 528, 275 N.Y.S.2d 783 (1966); Leger v. Kelley, 142 Conn. 585, 116 A.2d 429 (1955); Chambers v. Palaggi, 88 Ill.App.2d 221, 232 N.E.2d 69 (1967); Georges v. Tudor, 16 Wash.App. 407, 556 P.2d 564 (1976); Duran v. City of Tucson, 20 Ariz.App. 22, 509 P.2d 1059 (1973); Trautman v....