Morgan v. J-M Mfg. Co.

• Decision Date: 27 January 2021
• Docket Number: B297393
• Court: California Court of Appeals Court of Appeals
• Parties: Norris MORGAN et al., Plaintiffs and Respondents, v. J-M MANUFACTURING COMPANY, INC., Defendant and Appellant.

60 Cal.App.5th 1078

275 Cal.Rptr.3d 349

Norris MORGAN et al., Plaintiffs and Respondents,

v.J-M MANUFACTURING COMPANY, INC., Defendant and Appellant.

B297393

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

Filed January 27, 2021

Manning Gross & Massenburg, John T. Hugo, Carrie S. Lin ; Greines, Martin, Stein & Richland, Kent L. Richland, David E. Hackett, and Nadia A. Sarkis, Los Angeles, for Defendant and Appellant.

Bowman & Brooke and Jennifer T. Persky, Torrance, for Association of Southern California Defense Counsel as Amicus Curiae on behalf of Defendant and Appellant.

Simmons Hanly Conroy, Paul C. Cook, El Segundo, Deborah R. Rosenthal, San Francisco, and William A. Kohlburn for Plaintiff and Respondent.

CHANEY, J.

Norris Morgan was exposed to asbestos at construction jobsites where he worked in the 1970s and 80s. After he was diagnosed with mesothelioma

in December 2017, Morgan and his wife, Lori, sued a number of defendants, including J-M Manufacturing Company (J-MM)—Mr. Morgan for his injuries and Mrs. Morgan for loss of consortium.¹

By the time trial commenced in October 2018, only J-MM and another defendant, Familian Corp., remained as defendants. Familian settled with the Morgans during trial, leaving J-MM as the only remaining defendant when the case went to the jury.

The jury concluded that Morgan was exposed to asbestos from products that J-MM sold, and that J-MM was partly (45%) responsible for Morgan's mesothelioma

. The jury awarded the Morgans a total of $15,270,501 in compensatory damages. The jury also concluded that J-MM had acted with malice, oppression, or fraud, and awarded an additional $15,000,000 as punitive damages. Based on the jury's apportionment of fault, the trial court entered judgment for the Morgans against J-MM for $22,213,704.39. J-MM filed motions for judgment notwithstanding the verdict and new trial, which the trial court denied.

J-MM challenges the trial court's judgment and rulings on three grounds. First, J-MM contends that there is no evidence that Morgan was exposed to pipe supplied by J-MM. As explained below, we disagree with this contention; the record contains evidence from which the jury could reasonably have concluded that Morgan was exposed to asbestos from pipe supplied by J-MM. Second, J-MM contends that the trial court erred when it declined J-MM's request for a jury instruction that J-MM was not liable for the conduct of another company—the Johns-Manville Corporation. We also disagree with this contention; the trial court was not required to give J-MM's requested instruction. Finally, J-MM contends that the jury's punitive damage award is not supported by substantial evidence. We agree with this contention, and will reverse the trial court's award of punitive damages.

BACKGROUND

One of the businesses of the Johns-Manville Corporation and its related companies (JMC) was manufacturing and selling asbestos-cement pipe—sometimes called transite pipe. A common application of asbestos-cement pipe is to carry water and sewer between water and sewer providers and their customers. JMC declared bankruptcy in the early 1980s, and sold its asbestos-cement pipe business to two companies that began operations on January 1, 1983: J-M A/C Pipe Corporation (J-M A/C), which manufactured asbestos-cement pipe, and J-MM, which sold asbestos-cement pipe that J-M A/C manufactured. Pursuant to a bankruptcy court order, the JMC assets that J-MM acquired were "free of ... all present and future liabilities ... and all claims attributable to periods prior to the transfer which relate ... to personal injury or property damage allegedly attributable to asbestos-fiber ...."

The asbestos-cement pipe that J-MM sold after January 1, 1983 was similar to the pipe that JMC sold. According to J-MM, "J-M A/C pipe [that J-MM sold] and [JMC] pipe looked alike. Both were colloquially referred to as ‘Transite’ and had the same stencil label: ‘J-M Transite.’ "

Morgan began working in the construction industry in 1972, including as a construction superintendent from 1979 to 1985 for Spriggs and Company (Spriggs) and moved in 1985 to Bumbarger and Associates. Morgan oversaw day-to-day construction activity on jobsites that included retail, industrial, and office buildings.

Among other construction activities, Morgan supervised plumbers installing asbestos-cement water and sewer pipe on his worksites. To install the pipe, Morgan testified, plumbers "would either use a gas or electric saw" to cut the pipe, which "created dust." According to Morgan, each cut took "[a] couple minutes." The plumbers would also bevel the ends of the pipe to make them easier to connect—another process that created dust to which Morgan was exposed. At two to three projects per year from 1979 through 1985, Morgan estimated that he observed 20 to 50 cuts of asbestos-concrete pipe at each project, and then each pipe was beveled on both ends.

Morgan recalled that when he first began working for Spriggs, most of the asbestos-cement pipe came from a company called CertainTeed, "[t]hen later for whatever reasons they—most of my subcontractors went to using J-M Transite pipe." Morgan recalled that he knew the pipe was "J-M Transite" because of the stencil on the side of the pipe and, he testified, from invoices.

The Morgans filed their complaint in the trial court on February 23, 2018. In it, they alleged seven causes of action covering Mr. Morgan's personal injuries and one cause of action alleging Mrs. Morgan's loss of consortium against more than 20 defendants who had all allegedly supplied asbestos or manufactured or supplied products containing asbestos. By the time the case was tried in October 2018, all defendants other than J-MM and Familian Corp. had either been dismissed or settled.

The matter was tried to a jury in October and November 2018. After the parties rested and before closing argument, the Morgans and Familian announced that they had settled. After the case was submitted to the jury, J-MM filed a motion for a directed verdict arguing, among other things, that plaintiffs had not introduced substantial evidence that Morgan had ever been exposed to asbestos supplied by J-MM or that J-MM had acted with fraud, malice, or oppression, which would be required to support a punitive damage award. The trial court denied the motion.

The jury returned a verdict in favor of the Morgans against J-MM on November 13, 2018. Among other findings on a special verdict form, the jury concluded that Mr. Morgan had been "exposed to respirable asbestos from products supplied, distributed, or sold by [J-MM]," that Mr. Morgan had suffered a total of $14,270,501 in compensatory damages and that Mrs. Morgan's loss of consortium damages were $1,000,000, that the fault of Mr. Morgan's injuries were 45 percent attributable to J-MM, and that J-MM "acted with malice, oppression, or fraud in connection with the conduct which caused [Mr. Morgan's] mesothelioma

."

The jury returned on November 15, 2018 for a trial regarding the amount of punitive damages, and based on the evidence it heard awarded Mr. Morgan $15,000,000 in punitive damages.

The trial court reduced the jury's compensatory damage awards based on the jury's allocation of fault and settlement credits to $7,213,704.39. Together with the jury's punitive damage award, the trial court entered judgment for the Morgans against J-MM for $22,213,704.39.

J-MM moved the trial court for judgment notwithstanding the verdict and for a new trial on February 14, 2019. The trial court denied both motions in an order it issued on April 3, 2019.

J-MM filed timely notices of appeal from the judgment and the trial court's order denying the motion for judgment notwithstanding the verdict. ( Code Civ. Proc., §§ 904.1, subds. (a)(1), (4), 659 ; Cal. Rules of Court, rules 8.104(a), 8.108(b).)

DISCUSSION

J-MM challenges the judgment on three grounds. First, J-MM contends that Morgan presented no evidence that he was exposed to products supplied by J-MM. On that basis, J-MM contends that its actions could not have caused Morgan's mesothelioma

, and the judgment should be reversed in its entirety. Second, J-MM points out that it requested the trial court to instruct the jury that J-MM could not be liable for JMC's torts because of the bankruptcy court order referenced in the first paragraph of the background section above; the trial court denied J-MM's request. J-MM argues that Morgan convinced the jury that J-MM was merely a continuation of JMC, and the requested jury instruction would have prevented any confusion. Finally, J-MM contends that Morgan failed to produce evidence in support of punitive damages sufficient to meet Morgan's burden under Civil Code section 3294, subdivision (b). We address each of J-MM's arguments in turn.

A. Morgan's Exposure to J-MM Asbestos-Cement Pipe

Our Supreme Court examined causation in asbestos cases in depth in Rutherford v. Owens-Illinois, Inc. (1997) 16 Cal.4th 953, 67 Cal.Rptr.2d 16, 941 P.2d 1203. "[U]ncertainty frequently exists," the Supreme Court said, "whether the plaintiff was even exposed to dangerous fibers from a product produced, distributed or installed by a particular defendant." ( Id. at p. 975, 67 Cal.Rptr.2d 16, 941 P.2d 1203.) Nevertheless, "plaintiffs [bear] the burden of proof on the issue of exposure to the defendant's product." ( Ibid. ) "If there has been no exposure, there is no causation." ( McGonnell v. Kaiser Gypsum Co., Inc. (2002) 98 Cal.App.4th 1098, 1103, 120 Cal.Rptr.2d 23.)

J-MM contends that Morgan has not met that burden here—that there was not substantial evidence adduced at trial that Morgan had ever come into contact with any J-MM product as opposed to a JMC product. J-MM contends the trial evidence is "equally balanced" that Morgan was exposed to J-MM asbestos-cement pipe as to JMC asbestos-cement pipe. J-MM argues that the trial evidence demonstrates that J-MM only ever sold 13-foot lengths of asbestos-cement pipe, but that Morgan's...