Rodrigues v. Campbell Industries

• Decision Date: 19 December 1978
• Citation: 151 Cal.Rptr. 90,87 Cal.App.3d 494
• Court: California Court of Appeals Court of Appeals
• Parties: John RODRIGUES et al., Plaintiffs and Appellants, v. CAMPBELL INDUSTRIES et al., Defendants and Respondents. Civ. 16464.

Page 90

151 Cal.Rptr. 90

87 Cal.App.3d 494

John RODRIGUES et al., Plaintiffs and Appellants, v. CAMPBELL INDUSTRIES et al., Defendants and Respondents.

Civ. 16464.

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

Dec. 19, 1978.

Gordon, Holstein & Ropers, by Allan I. Shatkin, Mark Ropers, and Rita S. Grobman, San Francisco, for plaintiffs and appellants.

McInnis, Fitzgerald, Rees & Sharkey and John F. McGuire, Jenkins & Perry and James R. Sternberg, San Diego, for defendants and respondents.

COLOGNE, Associate Justice.

Plaintiffs, crew members of the purse seiner fishing vessel J/V Lucky Strike, appeal a judgment of dismissal after the trial court sustained the demurrer of the vessel's manufacturers, defendants Campbell Industries and San Diego Marine, without leave to amend.

Plaintiffs' five-count complaint against the manufacturers sought money damages for the crew members' loss of earnings and share of the catch alleged to have been a result of the manufacturer's participation in constructing ¹ the vessel and selling it to plaintiffs' employer CHB Foods, Inc. ² The gist of the complaint is the vessel's rudder and component parts were unfit, resulting in the vessel having to return from the high seas to shore for repairs, thus depriving the plaintiffs of earnings and a share of the catch during the shutdown for repair.

It is alleged as to all causes of action the plaintiffs are American merchant seaman bringing the action under the Jones Act, under General Maritime Law, and under all other applicable statutes.

The first and third causes of action sound in tort, alleging negligence and strict liability as bases of the manufacturers' liability.

The second cause of action alleges the manufacturers expressly or impliedly warranted and represented the vessel was free from defects, safe, of merchantable quality and fit for its intended purpose, and plaintiffs justifiably relied on the warranty representations; but the warranties and warranty representations were untrue and breached by the manufacturers and the vessel was made unfit with the resultant loss of earnings and share of the catch.

The fourth cause of action alleges a breach of contract by the manufacturers' failing to construct the vessel fit for its intended purpose of fishing on the high seas as agreed to in the construction contract between the manufacturers and CHB Foods.

The fifth cause of action combines all the preceding causes, alleging they are joint and concurrent causes of plaintiffs' damages.

As to the first and third causes of action sounding in tort the issue is whether under either California or federal admiralty law these third party plaintiffs may recover from a vessel manufacturer for a purely economic loss due to the manufacturer's nonintentionally tortious construction of a defective product. On apparently conflicting authority the trial court held recovery was possible under neither body of law. Our reading of the law leads us to conclude a tort remedy is available under federal admiralty jurisdiction but not under California law.

California law, on this aspect of products liability is set forth in Seely v. White Motor Co., 63 Cal.2d 9, 45 Cal.Rptr. 17, 403 P.2d 145, as follows:

"(I)n actions for negligence, a manufacturer's liability is limited to damages for physical injuries and there is no recovery for economic loss alone. (Citations.) The Restatement of Torts similarly limits strict liability to physical harm to person or property. (Citation.)" (Seely v. White Motor Co., supra, at p. 18, 45 Cal.Rptr., at p. 23, 403 P.2d, at p. 151.)

In Seely, the purchaser of a truck was permitted to recover his commercial losses (amounting to lost profits because of inability to make normal use of the defective truck and the money paid for the truck) from the truck manufacturer. The purchaser had no privity with the manufacturer, but was allowed to recover on the basis of a breach of express warranty "only because it (the manufacturer) warranted the truck to be 'free from defects in material and workmanship under normal use and service' " (Seely v. White Motor Co., supra, 63 Cal.2d 9, 16, 45 Cal.Rptr. 17, 22, 403 P.2d 145, 150). The court in Seely discussed the policy considerations leading to the conclusion the manufacturer could not be held liable for Seely's commercial losses under either a negligence theory of strict liability in tort. Those same considerations, relating to the scope of control a manufacturer should have over his responsibility for economic harm and types of risks properly to be borne by the ultimate consumer (see Seely v. White Motor Co., supra, 63 Cal.2d at pp. 17-18, 45 Cal.Rptr. 17, 403 P.2d 145), apply to the products liability case before us insofar as California law is concerned. A leading case in the area is Fifield Manor v. Finston, 54 Cal.2d 632, 7 Cal.Rptr. 377, 354 P.2d 1073, which states the rule:

"(W)ith the exception of an action by the master for tortious injuries to his servant, thus depriving the master of his servant's services, which traces back to medieval English law (citations), the courts have quite consistently refused to recognize a cause of action based on negligent, as opposed to intentional, conduct which interferes with the performance of a contract between third parties or renders its performance more expensive or burdensome. (Citations.)" (Fifield Manor v. Finston, supra, at p. 636, 7 Cal.Rptr., at p. 379, 354 P.2d, at p. 1075.)

The Fifield rule was followed in the recent case of Adams v. Southern Pac. Transportation Co., 50 Cal.App.3d 37, 123 Cal.Rptr. 216, involving a third party liability situation somewhat analogous to this case. In Adams the complaint alleged plaintiffs were employees in a plant which had been destroyed by an explosion caused by Southern Pacific's negligence. The only form of damages plaintiffs in Adams sought were those resulting from their lost employment and wages. Although criticizing the applicable rule of law the court of appeal affirmed the trial court's order dismissing the action after sustaining a demurrer without leave to amend. The case was categorized as involving negligent interference with contract relations for which no remedy is available. Similarly, the first and third causes of action in the case at bar must be put in that category as they too involve an attempt by an employee to recover his purely economic losses for a third party's negligent physical damaging of the employer's business site.

There is no tort-based recovery available to plaintiffs under California law.

Under federal law, however, we are persuaded by the holding of the Ninth Circuit Court of Appeals in Carbone v. Ursich, The Del Rio, 209 F.2d 178, there is a remedy for plaintiffs under admiralty law. Also holding admiralty law applies to actions for economic losses to fishermen in an oil spill context is Union Oil Company v. Oppen, 501 F.2d 558. It seems clear the wrong alleged here, defective manufacture of a fishing vessel, bears a significant relationship to a traditional maritime activity fishing at sea (see Jig the Third Corp. v. Puritan Mar. Ins. Under. Corp., 519 F.2d 171, 174). This being the case, admiralty jurisdiction is present (Executive Jet Aviation, Inc. v. City of Cleveland, Ohio, 409 U.S. 249, 261, 268, 93 S.Ct. 493, 501, 504, 34 L.Ed.2d 454; Union Oil Company v. Oppen, supra, 501 F.2d 558, 561-562). ³

In Carbone v. Ursich, The Del Rio, supra, 209 F.2d 178, the court in an admiralty proceeding reached the conclusion fishermen could recover from a third-party tortfeasor the economic loss (share of the catch) they suffered due to the tortfeasor's damaging and decommissioning the boat owner's net the fishermen used to catch fish. The court in Carbone distinguished the action by seamen from that of a ship charter dealt with in Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303, 48 S.Ct. 134, 72 L.Ed. 290, ⁴ saying:

"It is quite evident that the court, although dealing with a well established rule of law of torts, was not...