Kane v. Hartford Accident & Indemnity Co.

• Decision Date: 02 November 1979
• Citation: 159 Cal.Rptr. 446,98 Cal.App.3d 350
• Court: California Court of Appeals Court of Appeals
• Parties: Ruth KANE, Plaintiff and Appellant, v. HARTFORD ACCIDENT AND INDEMNITY COMPANY, Defendant and Respondent. Civ. 42232.

Page 446

159 Cal.Rptr. 446

98 Cal.App.3d 350

Ruth KANE, Plaintiff and Appellant, v. HARTFORD ACCIDENT AND INDEMNITY COMPANY, Defendant and Respondent.

Civ. 42232.

Court of Appeal, First District, Division 2, California.

Nov. 2, 1979.

Rehearing Denied Nov. 30, 1979.

Scott & Kolb, Pittsburg, Caldecott, Peck, Phillips & Stewart, Oakland, for plaintiff and appellant.

Crosby, Heafey, Roach & May, Stephen A. McFeely, Oakland, for defendant and respondent.

ROUSE, Associate Justice.

Plaintiff, Ruth Kane, appeals from a judgment of nonsuit in an action for personal injuries. Decision of the trial court was entered upon motion by defendant, Hartford Accident and Indemnity Company (Hartford), following presentation of an opening statement stipulated to contain the facts which plaintiff proposed to prove in support of her complaint.

In March 1971, plaintiff, Ruth Kane, was raped by Eddie Williams upon the premises of a Kaiser Foundation Hospital (Kaiser). Williams was an employee of Certified Janitorial and Window Cleaning Company (Certified), an independent contractor providing services to Kaiser. Williams was bonded by defendant Hartford, it being a requirement of Certified's contract with Kaiser that all its employees possess this independent proof of financial responsibility.

Plaintiff brought suit in January 1972 against Williams, Kaiser, and Certified. In August 1974, she joined Hartford as a defendant to this action by substituting Hartford in place of a Doe defendant named in her complaint. The trial court overruled Hartford's demurrer that service was improper and a misuse of the fictitious name statute. Certified and Kaiser were dismissed as defendants after settlements of $100,000 and $25,000 respectively. A default against Williams was dismissed for failure to reduce it to judgment.

In November 1976, plaintiff proceeded to trial against Hartford, the sole remaining defendant. After a jury was empaneled, but before opening statements, defendant informed plaintiff and the court that it would make a motion for nonsuit upon completion of the opening statements. In the interest of time, the trial court requested plaintiff to submit a written statement addressed only to the issue of defendant's liability. The court considered this statement and asked that it be expanded to comprise a full offer of proof of the facts plaintiff believed she could produce on the sole issue of defendant's liability. The opening statement and the offer of proof submitted by plaintiff included the following matters, the details of which were not contested by defendant:

Hartford bonded employees of Certified under a blanket commercial bond for a nine-year period ending in 1971. Hartford subjected all applications for bonds to a background investigation of the matters and representations reflected in the application. The burden of conducting these investigations was voluntarily and gratuitously undertaken by Hartford with knowledge that Certified would not hire persons with criminal histories and that Certified was relying upon Hartford's checks to reveal evidence of such activities. In 1967, Hartford determined that the premiums generated by the fidelity bond, $10,000, were insufficient to support the expense of individualized investigations and therefore discontinued this practice without notice to Certified.

Upon completion of a period of probationary employment with Certified, Williams' application for bonding was granted by Hartford in May 1970. Hartford thereby obligated itself to indemnify Certified for any loss suffered or liability incurred to a third person, due to "fraudulent" or "dishonest" acts of Williams. In conformity with its internal policy, Hartford made no investigation of Williams' background and failed to communicate this omission to Certified. Such a check would have revealed that Williams had an extensive record of property-related crimes, including youth commitments and prison terms for burglary, auto theft and robbery. The last recorded convictions were for burglary in 1964. Although Williams subsequently occupied several positions without incident, Hartford admitted that had it been aware of Williams' record, it would not have issued the bond.

The trial court granted defendant's motion for nonsuit after considering the facts recited in the opening statement and the offer of proof. Nonsuit was granted for two closely interrelated reasons: the trial court declined "to rule as a matter of law that the damage and injury suffered by the plaintiff was within the scope of foreseeable risk and that the defendant owed a duty to the plaintiff." The ruling was reduced to judgment on December 6, 1976, and this appeal followed.

The rule governing appellate review of a judgment of nonsuit is set forth in Raber v. Tumin (1951) 36 Cal.2d 654, 656, 226 P.2d 574. There, the court specified that nonsuit is warranted when, and only when, the appellate court has examined all the evidence and drawn all the possible inferences that support the plaintiff's cause of action and then determines that there is no evidence of sufficient substantiality to support a verdict in favor of the plaintiff.

Plaintiff's complaint was framed on a theory of negligence alleged with particularity. She contends that a case sufficient to go to trial was made out by her allegations that: incidental to its bond coverage, Hartford assumed the duty of investigating applicants; that Certified knew of this practice and relied upon it to the extent of foregoing making its own inquiries; that Hartford halted the investigations without informing Certified; that Williams was bonded without an investigation which would have disclosed his criminal record; that had the criminal past of Williams been discovered, Hartford would not have issued the bond and Certified would not have assigned Williams to work at Kaiser; and that the breach of this assumed duty was the direct and proximate cause of plaintiff's injuries.

The indispensable precondition to liability founded upon negligence is the existence of a duty of care owed by the alleged wrongdoer to the plaintiff, or to a class of which plaintiff is a member. (McEvoy v. American Pool Corp. (1948) 32 Cal.2d 295, 298-299, 195 P.2d 783.)

Plaintiff contends that a duty of care was owed her by the defendant, the scope of which is measured by the extent to which defendant voluntarily relieved Certified of the obligation to investigate the criminal histories of applicants for bonding. She cites numerous decisions and collateral sources which, she asserts, support recognition of this duty. However, we have concluded that none of plaintiff's authorities justify the imposition of liability in a situation such as that before us.

The threshold determination that a duty is owed the plaintiff is a question of law within the exclusive province of the court. (Weirum v. RKO General, Inc. (1975) 15 Cal.3d 40, 46, 123 Cal.Rptr. 468, 539 P.2d 36.) A determination that as a matter of law no duty is owed to the plaintiff is particularly common in situations in which the defendant's responsibility for the activities of third persons is involved. (Richards v. Stanley (1954) 43 Cal.2d 60, 67, 271 P.2d 23.) Among the various policy considerations whose aggregate effect comes to be stated in terms of the legal conclusion that there is a "duty," foreseeability of the risk actually encountered is of primary importance. (Dillon v. Legg (1968) 68 Cal.2d 728, 739, 69 Cal.Rptr. 72, 441 P.2d 912.)

The trial court found, as a matter of law, that plaintiff had suffered a harm the risk of which was not foreseeable by defendant, thus precluding her recovery. In his written decision, the trial judge cited Palsgraf v. Long Island R. Co. (1928) 248 N.Y. 339, 162 N.E. 99, to bolster his conclusion, and both parties now seek to strengthen their respective positions by reference to this venerable precedent. Palsgraf initiated the modern theory of duty and proximate cause in the law of negligence.

Mrs. Palsgraf had purchased a ticket for defendant's railroad. She was standing on the station platform when a man carrying a package wrapped in newspaper rushed to board a train just pulling out of the station. As he reached the train car, he faultered. He was pulled aboard by a conductor on the train, and simultaneously pushed from behind by a guard on the platform. The package, which contained fireworks, fell upon the tracks and exploded. The shock of the detonation caused a set of scales at the other end of the platform to topple onto the plaintiff. She brought suit for the injuries which resulted.

Speaking for a closely divided court, Chief Judge Cardozo said that while the conduct of the railroad's servants may have been negligent in relation to the other passenger, "(r)elatively to her it was not negligence at all. Nothing in the situation gave notice that the falling package had in it the potency of peril to persons thus removed." (162 N.E. p. 99.) Any negligence by defendant must have some concrete reference to a duty owed plaintiff: she could not maintain a suit as the vicarious beneficiary of a breach of duty to another.

Rather than continue adherence to the common law rule that a negligent actor is responsible for all the consequences of his act, however freakish or unforeseeable, the court formulated a new rule to determine when liability would halt. Henceforth, a plaintiff injured by an act of negligence to which he was not a direct party must show a breach of a duty which unreasonably increased the likelihood that a hazard within the range of ordinary apprehension would occur. A duty would be found only as the antecedent to the foreseeable harm which befell plaintiff. In Judge Cardozo's phrase, "the orbit of the danger as disclosed to the eye of reasonable vigilance would be the orbit of the duty." (162 N.E. p. 100.)

The problems presented by the facts of this case are not unlike those in Palsgraf. At the outset, it may be...