Foss v. Anthony Industries

• Decision Date: 09 February 1983
• Citation: 139 Cal.App.3d 794,189 Cal.Rptr. 31
• Court: California Court of Appeals Court of Appeals
• Parties: Kenneth FOSS, et al., Plaintiffs, Respondents, and Appellants, v. ANTHONY INDUSTRIES, Defendant and Respondent, and Jo'Dee Enterprises, et al., Defendants, Respondents and Appellants. Civ. 24469.

Page 31

189 Cal.Rptr. 31

139 Cal.App.3d 794

Kenneth FOSS, et al., Plaintiffs, Respondents, and Appellants, v. ANTHONY INDUSTRIES, Defendant and Respondent and Jo'Dee Enterprises, et al., Defendants, Respondents and Appellants.

Civ. 24469.

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

Feb. 9, 1983.

Hearing Denied March 13, 1983.

Melvin M. Belli and Daniel U. Smith, San Francisco, for plaintiffs, respondents and appellants.

Robert A. Alexander, Jr., San Francisco, for defendants, respondents and appellants.

Haight, Dickson, Brown & Bonesteel and Peter O. Ezzell, Roy G. Weatherup and Robert L. Washburn, Los Angeles, for defendant and respondent.

GERALD BROWN, Presiding Justice.

Kenneth Foss, special administrator of the estate of Harry C. Foss, Jr., deceased, appeals a nonsuit favoring Anthony Industries. Foss also seeks a new trial on the amount of damages he received against Anthony's co-defendant, Jo'Dee Enterprises. Jo'Dee appeals the judgment against it, arguing evidence showing it should not be held vicariously liable was improperly excluded.

Jo'Dee, a partnership owned and operated by Jon and Ann Mitchell, was hired by Anthony to excavate a swimming pool site. A truck owned by Jon Mitchell and driven by David Zaugg, an employee of Jo'Dee, struck a motorcycle ridden by Harry Foss, killing Foss. The accident occurred as Zaugg was returning to the pool site after dumping a load of debris from the excavation. Zaugg turned left across Foss' lane without signaling or seeing Foss.

Plaintiff brought this wrongful death action on behalf of the deceased's four minor daughters against Anthony, Jo'Dee and Zaugg. After plaintiff presented his case, Anthony moved for a nonsuit, arguing plaintiff had not shown Jo'Dee was an employee rather than an independent contractor and thus Anthony is not vicariously liable for the acts of Jo'Dee's employee. The motion was granted. The case against Zaugg and Jo'Dee continued and the jury found them liable and set damages at $200,000. Plaintiff appeals the judgment following the nonsuit favoring Anthony and seeks a new trial on damages against Jo'Dee. Jo'Dee appeals the judgment, arguing evidence showing Zaugg was acting outside the scope of his employment at the time of the accident was improperly excluded. The Nonsuit

Plaintiff's attack on the nonsuit is based in part on his contention the superior court erred in finding Labor Code section 2750.5 is inapplicable. Section 2750.5 creates

"a rebuttable presumption affecting the burden of proof that a worker performing services for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code ... is an employee rather than an independent contractor."

The section also absolutely denies independent contractor status to a person required to have such a license who is not licensed. Before trial the superior court ruled section 2750.5 inapplicable, finding it was intended to apply only in workers' compensation cases. Plaintiff correctly argues the nonsuit must be reversed if this finding was incorrect as it is undisputed Jo'Dee was required by the relevant chapter of the Business and Professions Code to be licensed to do the excavation work and yet was not licensed. Therefore, section 2750.5 would, if applicable, at least absolve plaintiff of the burden of showing Jo'Dee was an employee rather than an independent contractor; the nonsuit would thus be improper as it was based on plaintiff's failure to meet that burden.

In ruling section 2750.5 applies only in workers' compensation cases, the superior court relied heavily on the last paragraph of the section,

"For purposes of workers' compensation law, this presumption is a supplement to the existing statutory definitions of employee and independent contractor, and is not intended to lessen the coverage of employees under Division 4 and Division 5."

This provision does not show legislative intent to limit application of section 2750.5 to workers' compensation cases. To the contrary, the language "For purposes of workers' compensation law" and the location of the provision at the end of section 2750.5 rather than at the beginning as a limiting clause, imply there are other purposes for which the section is to be used. This conclusion is supported by the fact the reference to workers' compensation was not even in section 2750.5 as it was originally proposed in the Legislature; it was added by amendment. (See Assem. Bill No. 3429 (1978 Reg.Sess.).) Furthermore, section 2750.5 is not in the divisions of the Labor Code dealing with workers' compensation but rather is in Division 3, the scope of which is set by section 2700,

"The provisions of this division shall not limit, change, or in any way qualify the provisions of Divisions 4 and 4.5 (the workers' compensation divisions), but shall be fully operative and effective in all cases where the provisions of Divisions 4 and 4.5 are not applicable."

To uphold the superior court's finding section 2750.5 applies only in workers' compensation cases, we would have to assume the Legislature did not realize the scope of the division in which it placed the new section, an assumption we cannot make.

Interpreting section 2750.5 as applying in areas other than workers' compensation is also supported by the factors the section says a party must prove to rebut the presumption of employee status (subds. (a)-(c) of § 2750.5). These are the same factors which have traditionally been used in tort cases involving injuries to third parties. (See 1 Witkin, Summary of Cal.Law (8th ed. 1973) Agency and Employment, §§ 12, 13, pp. 651-652.) The test set by section 2750.5 for independent contractor status is also the one used in the cases Anthony would have us apply here to determine the status of Jo'Dee (Green v. Soule, 145 Cal. 96, 78 P. 337; Sparks v. L.D. Folsom Co., 217 Cal.App.2d 279, 31 Cal.Rptr. 640; Winther v. Industrial Acc. Com., 16 Cal.App.2d 131, 60 P.2d 342); Anthony takes the untenable position of arguing for application of a standard while contending the codification of that standard is inapplicable.

Anthony's argument section 2750.5 is inapplicable in tort cases because it is found in the Labor Code is also unpersuasive. As stated above, section 2750.5 codifies the general tort standard for independent contractor status. Furthermore, it is clear the basic provisions of the Labor Code on employee status are not limited to cases involving disputes between employer and employee because those provisions were originally in the Civil Code and were transferred to the Labor Code when it was created in 1937 in order to group all provisions on employment status in the same code (1 Witkin, Summary of Cal.Law (8th ed. 1973) Agency and Employment, § 3, p. 645). This has long been recognized as courts have cited the Labor Code on employment status in tort cases involving injuries to third parties. (See, e.g., Phillips v. Larrabee, 32 Cal.App.2d 720, 724, 90 P.2d 820.) This has also been recognized in the context of section 2750.5 by commentators who have noted the enactment of the section without finding it limited to employer-employee disputes (1 Witkin, Summary of Cal.Law (Supp.1982) Agency and Employment, § 20A, pp. 157-158; 38 Cal.Jur.3d (Supp.1982) Independent Contractors; §§ 1/2, p. 53). One commentator has expressly recognized the section's application in tort cases (Comment, Review of Selected Cal. Legislation, 10 Pac.L.J. 247, 347-349).

Despite the authority discussed above, we cannot conclude section 2750.5 applies in cases involving injuries to third parties without identifying a policy behind the section which is applicable in such cases; presumptions affecting the burden of proof, such as that created by section 2750.5, are designed to effectuate some public policy (Law Revision Commission Comment to Evidence Code, § 605). There is a strong public policy behind section 2750.5 as it is consistent with the reasoning behind imposing vicarious liability under the doctrine of respondeat superior.

" 'The principal justification for the application of the doctrine of respondeat superior in any case is the fact that the employer may spread the risk through insurance and carry the cost thereof as part of his costs of doing business.' " (Hinman v. Westinghouse Elec. Co., 2 Cal.3d 956, 960, 471 P.2d 988.)

The courts have recognized this policy is frustrated by allowing an employer to escape liability by asserting his employee is an independent contractor; the courts have carved out numerous exceptions to the independent contractor rule.

"There are numerous considerations which have led courts to depart from the rule of nonliability of a private employer for the torts of an independent contractor. Some of the principal ones are that the enterprise, notwithstanding the employment of the independent contractor, remains the employer's because he is the party primarily to be benefited by it, that he selects the contractor, is free to insist upon one who is financially responsible, and to demand indemnity from him, that the insurance necessary to distribute the risk is properly a cost of the employer's business, and that the performance of the duty of care is of great importance to the public. [Citations.]" (Van Arsdale v. Hollinger, 68 Cal.2d 245, 253, 66 Cal.Rptr. 20, 437 P.2d 508.)

Shifting the burden to the employer to show his employee was in fact an independent contractor and denying an employer the opportunity to raise the independent contractor defense if he has hired a worker who has not shown the competence and financial responsibility prerequisites to obtaining a contractor's license are entirely consistent with this policy approach.

The context of section 2750.5, the factors it lists as dispositive of the independent contractor issue and its underlying policy all show the superior court erred in finding the section does not apply in tort cases....