Laico v. Chevron U.S.A., Inc., H025585.

Citation20 Cal.Rptr.3d 307,123 Cal.App.4th 649
Decision Date27 October 2004
Docket NumberNo. H025585.,H025585.
CourtCalifornia Court of Appeals
PartiesAntonio LAICO, et. al., Plaintiffs and Respondents, v. CHEVRON U.S.A., INC., Defendant and Appellant.

ELIA, J.

In this action based on premises liability and defective product design, the jury awarded damages against defendant Chevron U.S.A., Inc. (CUSA) for negligent management of the premises on which plaintiff Antonio Laico was injured. On appeal, we are asked to review the trial court's denial of CUSA's motions for nonsuit, judgment notwithstanding the verdict and a partial new trial. CUSA contends that it owed no duty as a landowner to protect Laico from injuries arising from his employment at the facility that occupied the premises. CUSA further argues that the jury's findings of breach and causation are unsupported by the evidence, and that a new trial is necessary to apportion fault. We find merit in CUSA's first argument and therefore must reverse the judgment.

Background

Between August 15, 1991 and December 31, 1992, plaintiff Antonio Laico was a "special employee" of Chevron Research and Technology Company (CRTC).1 CRTC was engaged in scientific and applied research relating to the petrochemical business. It operated engine laboratory facilities on property owned by CUSA. Laico's job as a shift technician in the lube lab required him to test the performance of oils in both diesel and gasoline engines. He provided oil and gasoline for the tests, took oil and diesel fuel samples replaced fuel filters, measured gasoline levels in tanks, and monitored the engines. At the end of each test he would measure the oil and, for diesel engines, flush out the remaining fuel, draining it into a bucket.

To change filters he had to catch leaking fuel in a bucket and dump it into another open container. He used a rag to soak up the leaks in the lube lab and threw the rags in bins. To flush the fuel lines at the end of a test, he had to open a spigot and collect about a gallon of gasoline in a bucket or can. He flushed new fuel through the line to make sure the line was cleared of old fuel. When fuel spilled onto the floor he cleaned it up with a rag. He also flushed almost two gallons of gasoline from a day tank, again using a bucket or can to collect it. CRTC supervised Laico and provided him with all the tools and equipment he needed for the job.

Laico often smelled gasoline; it was part of the working environment. He was also exposed to exhaust from the engines when he performed tests to measure the amounts of exhaust they emitted. No one told him that just two ounces of spilled gasoline could yield as much as five parts per million of benzene; no one told him even that the gasoline he was exposed to contained benzene vapors. Cal-OSHA (California Occupational Safety and Health Act) standards allowed an average airborne concentration of benzene of up to 1 part per million over an eight-hour workday, and a short-term (15-minute) exposure limit of five parts per million. Employers were required to comply with "Hazard Communications" standards and programs to communicate with employees and ensure the safety of working conditions. According to one of the defense witnesses, the employer was 100-percent responsible for providing a healthy and safe environment. Gayle Hunting, an industrial hygienist at CRTC between 1989 and 1994, testified that air samples taken in January 1992 revealed exposure to benzene exceeding the Cal-OSHA limits.

In January 1993 CRTC merged with and became a division of CUSA. The lube lab was shut down, and Laico was transferred to the fuel lab. In February 1995 he was hired as a regular CUSA employee.

When Laico began working at CRTC he was told he would be exposed to diesel and gasoline. He was given gloves and told always to wear them. He was also issued a respirator, but he was never told to use it in the lube lab. Employees were also not required to wear respirators while working in the fuel lab. Katlyn Diaz, an industrial hygienist for CUSA between 1994 and 1998, did not believe that the respirators were necessary for shift technicians because their day-to-day tasks did not expose them to enough benzene to require respirators.

In 1997, Laico was diagnosed with myelodysplasia, or myelodysplastic syndrome, (MDS) a blood disorder in which the blood cells in bone marrow are of insufficient number or quality. Over time MDS can convert to acute myeloid leukemia (AML). Benzene exposure damages bone marrow and can cause both MDS and AML. After his diagnosis Laico was reassigned to a different position outside the lab. At the time of trial he was performing data analysis for an engineer within CUSA.

In 1998 Laico and his wife, Carol, sued several Chevron entities, including CRTC and CUSA, along with various other gasoline manufacturers. Plaintiffs alleged that these entities had manufactured and supplied the gasoline tested at CRTC. According to the complaint, by failing to warn Laico about exposure to the toxic chemicals contained in their products, and by failing to instruct him about safe handling of these products, these defendants were liable for negligence and fraudulent concealment. Plaintiffs further alleged strict liability for defective design and failure to warn, breach of implied warranty, and premises liability. Carol Laico alleged loss of consortium.

Plaintiffs specifically argued that CUSA "was negligent with respect to the management of the land on which [CRTC] operated the engine lube and fuel labs." They also claimed that CUSA's gasoline product was defective in design, and that CUSA had failed to warn Laico of the hazard in the foreseeable use of the product. The parties stipulated that between 70 and 80 percent of the gasoline tested between 1991 and 1997 was a Chevron product. Plaintiffs presented expert testimony that Laico's exposure to gasoline during the relevant period (August 1991 to December 31, 1992) was a substantial factor in the development of his MDS.

Plaintiffs' counsel urged the jury to find CUSA liable as owner of the property because it must have been aware of the working conditions at CRTC, including the frequency and consequences of gasoline spills. Counsel pointed out that CUSA knew that testing was being performed at CRTC, since 70-80 percent of the gasoline tested had been sold to CRTC by CUSA. However, counsel also urged the jury to find a negligent failure to warn because Laico's injury "resulted from the use of the product." (Italics added.) In arguing causation, counsel relied on the abundant evidence that exposure to CUSA's gasoline was a substantial factor in producing Laico's illness. Plaintiffs' counsel acknowledged in closing argument (and the court instructed) that all of the Chevron entities were "separate and distinct from one another," and that the "acts and omissions, if any, of one of these companies are not the acts or omissions of any of the others...."

In response, CUSA's counsel focused not on CUSA's nonliability as a mere landowner, but on the question of Laico's medical condition and the safety of the workplace. Through its own expert witnesses, CUSA maintained that CRTC was a safe place to work, that CRTC was "heavily invested" in educating its workers about avoiding risks in the workplace, and that Laico did not have MDS. Regarding causation, CUSA's counsel insisted that exposure from Chevron gasoline did not cause Laico's injury. Counsel continued to argue that CRTC was not at fault, but if the jurors were to disagree, "then, obviously, CRTC has to be allocated a very major percentage of the fault."

After presenting their case, plaintiffs withdrew their warranty cause of action, and the trial court granted a motion by the "non-Chevron defendants" for nonsuit on all other causes of action. The court also granted CUSA's motion for nonsuit on the cause of action for fraudulent concealment and deemed the negligence claim to be subsumed within the claim of premises liability.

CUSA also moved for nonsuit with respect to the premises liability claim, contending that as a landowner it had no duty to Laico in his capacity as CRTC's employee. The court deferred ruling on the motion and allowed plaintiffs to reopen their case to allow evidence of CUSA's relationship to CRTC and the degree of CUSA's involvement in CRTC's operations. After examining the deposition excerpts plaintiffs proposed to introduce, however, the court found none of the proposed evidence to be relevant. Nevertheless, the court denied the nonsuit motion, ruling that CUSA had a duty as a landlord to inspect the premises, and that it was a jury question whether CUSA had breached this duty. Although the record was "very sparse in this regard," it could be inferred that CUSA was not an absentee owner of bare land, but had "some relationship" to CRTC. As the jury could reasonably infer that CUSA knew that fuel testing was taking place at CRTC, and because CRTC was located on CUSA's land, the court concluded that "the law imposes a duty of reasonable care on the part of CUSA to satisfy itself that the activities carried on by the tenant, or by whatever the relationship is between CUSA and CRTC, that those activities are reasonably safe and don't present [an] unreasonable hazard to individuals that CUSA knows are coming [onto] the premises, such as employees of CRTC."

Consistently with the trial court's rulings, the special verdict form asked the jury to consider the following questions: (1) was CUSA negligent in the management of the CRTC premises during the period from August 15, 1991 through December 31, 1992; (2) if so, was that negligence a cause of Laico's injury; (3) was there a design defect in CUSA's...

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