Bush v. Superior Court

• Decision Date: 10 November 1992
• Docket Number: No. C011374,C011374
• Court: California Court of Appeals Court of Appeals
• Parties: William BUSH et al., Petitioners, v. SUPERIOR COURT OF SACRAMENTO COUNTY, Respondent; D.W. RAINS et al., Real Parties in Interest.

Page 382

13 Cal.Rptr.2d 382

10 Cal.App.4th 1374

William BUSH et al., Petitioners, v. SUPERIOR COURT OF SACRAMENTO COUNTY, Respondent D.W. RAINS et al., Real Parties in Interest.

No. C011374.

Court of Appeal, Third District, California.

Nov. 10, 1992.

Review Denied Feb. 18, 1993.

Wilke, Fleury, Hoffelt, Gould & Birney, Philip R. Birney, Peter J. Pullen, Hardy, Erich, Brown & Wilson, and John Quincy Brown, III, Sacramento, for petitioners.

No appearance for respondent.

Randy D. Curry, Upland, Shernoff, Bidart & Darras and William M. Shernoff, Claremont, for real parties in interest.

BLEASE, Acting Presiding Justice.

In this mandamus proceeding we decide that plaintiffs (the Rains) may settle their claims against one concurrent tortfeasor by taking as part of the settlement an assignment of that tortfeasor's American Motorcycle We will deny the petition. The California rule is that a chose in action is presumptively assignable (Civ.Code, §§ 953, 954) and petitioners have shown no good reason why they should be excepted from its application.

¹ claim for equitable indemnity against other concurrent tortfeasors. The petitioners are defendants in an action brought by the Rains as assignees of the American Motorcycle claim. Petitioners seek relief from the overruling of their demurrers. They say the assignment violates public policy and the action should be abated because there is another action pending on the same cause of action, the Rains' personal injury tort action against them. We issued an alternative writ of mandate to consider the novel questions of law posed.

Petitioners' most troublesome claim is that if the Rains prevail in both the indemnity and tort actions they will recover more than full compensation for their injuries because the assignment has value only if the settling tortfeasor paid more for the Rains' injuries than is warranted by its comparative share of fault. The rhetorical force of this argument lies in the failure to recognize that in the indemnity action the Rains stand in the shoes of the settling party; it is the settling party's money that is in issue. If the assignment has value it is the petitioners who seek a windfall, an offset of the excess paid by the settling party which is attributable to petitioners ' share of fault.

Thus, we will reject petitioners' claim for two reasons. First, if such a recovery occurs it will not be at the expense of petitioners--the most they will be asked to bear is "liability for damage ... in direct proportion to their respective fault," the same exposure to liability that existed before the assignment. (Li v. Yellow Cab Co. (1975) 13 Cal.3d 804, 813, 119 Cal.Rptr. 858, 532 P.2d 1226, emph. added.) The Rains would receive by means of the assignment only that to which the settling tortfeasor was entitled. Second, the policy against overcompensation does not outweigh the policy of fostering settlement which is advanced by permitting such an assignment.

FACTS AND PROCEDURAL BACKGROUND

In light of the generic nature of petitioners' claims the necessary background may be stated briefly. After their home burned, D.W. and O.L. Rains, real parties in interest, sued their fire insurance carrier, State Farm Fire and Casualty Insurance Company (State Farm), alleging that in bad faith it failed to pay benefits due them under the insurance policy and that O.L. Rains suffered consequential and severe emotional distress. In a separate action O.L. Rains sued petitioners Robert Wright and William Bush for medical malpractice and American Therapeutics, Inc. for products liability alleging that permanent physical injuries arose from the side effects of a drug prescribed in the treatment of the emotional distress.

The Rains settled the bad faith action with State Farm for $1,750,000 and an assignment of its claims against the petitioners and American Therapeutics, Inc. for equitable indemnity. The Rains then filed the complaint in this action for the amount paid by State Farm to them which is attributable to petitioners' comparative fault. Petitioners demurred on grounds that the complaint failed to state a cause of action and that there is another action pending between the same parties on the same cause of action. The superior court overruled the demurrers.

DISCUSSION

Introduction

In Li v. Yellow Cab Co., supra, 13 Cal.3d 804, 119 Cal.Rptr. 858, 532 P.2d 1226, the California Supreme Court discarded the common law rule under which a plaintiff's contributory negligence barred recovery in tort. It adopted a rule of comparative negligence, "a system under which liability for damage will be borne by those whose negligence caused it in direct proportion to their respective fault." (Id. at p. 813, 119 Cal.Rptr. 858, 532 P.2d 1226, fn. omitted.) In American Motorcycle, supra, 20 Cal.3d 578, 146 Cal.Rptr. 182, 578 P.2d 899, it discarded the analogous all-or-nothing cause of action for equitable indemnity between tortfeasors and replaced it with a rule of partial indemnity. "In order to attain [the system envisioned in Li ], in which liability for an indivisible injury caused by concurrent tortfeasors will be borne by each individual tortfeasor 'in direct proportion to [his] respective fault,' we conclude that the current 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.)

The issues are whether such a cause of action lawfully may be assigned to the plaintiff, and if so, whether an action upon the assignment can be maintained when the plaintiff is also suing other concurrent tortfeasors on the underlying tort. Petitioners contend that in these circumstances an action on the assignment would offend traditional principles of equity and indemnity and violate public policy.

I

A. An American Motorcycle Claim Is Assignable to a Third Party.

The right to equitable indemnity stems from the principle that one who has been compelled to pay damages which ought to have been paid by another wrongdoer may recover from that wrongdoer. Petitioners argue that the Rains' complaint is deficient because it fails to plead that they were compelled to pay damages. The argument neglects the elementary consideration that an assignee of a chose in action does not sue in his own right but stands in the shoes of the assignor. (See, e.g., Brown v. Guarantee Ins. Co. (1957) 155 Cal.App.2d 679, 695-696, 319 P.2d 69.) A thing or chose in action would never be assignable if the assignee independently had to meet the requirements already satisfied by the assignor. If he could meet the requirements he would need no assignment; if not he could not use the assignment.

Under the early English common law the doctrines of champerty and maintenance prohibited an assignment of a chose in action. (See, e.g., 14 Am.Jur.2d, Champerty and Maintenance, § 1, p. 842.) In California this common law doctrine has been superceded by statute. "[S]ections 953 and 954 of the Civil Code [of 1872] have lifted many of the restrictions imposed by the rule of the common law upon this subject." (Wikstrom v. Yolo Fliers Club (1929) 206 Cal. 461, 464, 274 P. 959; Jackson v. Deauville Holding Co. (1933) 219 Cal. 498, 501, 27 P.2d 643.) These presently provide: "A thing in action is a right to recover money or other personal property by a judicial proceeding." (Civ.Code, § 953.) "A thing in action, arising out of the violation of a right of property, or out of an obligation, may be transferred by the owner." (Civ.Code, §§ 954, 1458.)

These statutes establish the policy of the state, the " 'assignability of things [in action] is now the rule; nonassignability, the exception; and this exception is confined to wrongs done to the person, the reputation, or the feelings of the injured party....' " (Webb v. Pillsbury (1943) 23 Cal.2d 324, 327, 144 P.2d 1, brackets in Webb; see also Wikstrom, supra, 206 Cal. at p. 463, 274 P. 959; Jackson, supra, 219 Cal. at p. 500, 27 P.2d 643.) For this reason it is petitioners' burden to show that some exception to the rule applies in this case. They fail to do so.

They argue that no precedent has "authorized" a plaintiff in a tort action to acquire an American Motorcycle claim by assignment. They offer nothing to suggest that such a claim is per se unassignable, e.g., unassignable to a bona fide third party purchaser. The thing assigned is not a wrong which is personal to the holder of the right of indemnity, as is shown by analogous rights which have been held assignable. For example, a subrogation right is assignable. (See, e.g., Quinn v. Warnes (1983) 144 Cal.App.3d 309, 192 Cal.Rptr. 660, upholding an assignment of subrogation rights by a worker's compensation insurance carrier to the third party tort defendant.)

A subrogation right bears a strong resemblance to the right to equitable indemnity sanctioned by American Motorcycle.

"Subrogation is an equitable remedy which arises under the following basic circumstances: (1) The obligor (defendant) owes a debt or duty of some kind to the creditor (subrogor). (2) The subrogee (plaintiff), pursuant to his own obligation to the creditor, pays that debt or discharges that duty. (3) These circumstances make it inequitable that the subrogee should bear the loss while the obligor is unjustly enriched." (4 Witkin, Cal.Procedure (3d ed. 1985) Pleading, § 112, p. 147, orig. emphasis.)

Under American Motorcycle the tortfeasor from whom the plaintiff first recovers is in effect a subrogee, entitled to recover insofar as it has borne liability for damages attributable to the fault of other concurrent tortfeasors.

Another analogous remedy is contribution. (See 4 Pomeroy, Equity Jurisprudence (5th ed. 1941) § 1416, p. 1070.) While we have found no California authority on point, out-of-state cases hold that such a chose in action is assignable. (See, e.g., McKay v. Citizens Rapid...