Scalice v. Performance Cleaning Systems

• Decision Date: 24 October 1996
• Docket Number: No. A071823,A071823
• Citation: Scalice v. Performance Cleaning Systems, 57 Cal.Rptr.2d 711, 50 Cal.App.4th 221 (Cal. App. 1996)
• Parties: , 61 Cal. Comp. Cases 1152, 96 Cal. Daily Op. Serv. 7840, 96 Daily Journal D.A.R. 12,962 William SCALICE, Plaintiff and Appellant, v. PERFORMANCE CLEANING SYSTEMS, Defendant and Respondent.
• Court: California Court of Appeals

Page 711

57 Cal.Rptr.2d 711

50 Cal.App.4th 221, 61 Cal. Comp. Cases 1152,

96 Cal. Daily Op. Serv. 7840,

96 Daily Journal D.A.R. 12,962

William SCALICE, Plaintiff and Appellant, v. PERFORMANCE CLEANING SYSTEMS, Defendant and Respondent.

No. A071823.

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

Oct. 24, 1996.

As Modified Nov. 15, 1996.

Review Denied Dec. 18, 1996.

Abraham Virdeh, Virdeh & Virdeh, Santa Rosa, for Appellant/Plaintiff.

Nancy A. McPherson, Peter Fortune, Fortune, Drevlow, Holmes, Carmody, Schmidt & Nakano, San Francisco, for Respondent/Defendant.

Paul Peyrat, West Sonoma, for amicus curiae.

DOSSEE, Associate Justice.

William Scalice obtained a judgment against Performance Cleaning Systems for injuries caused by a fall at work on a slippery floor which Performance had maintained. The principal issue on appeal is the appropriate method of crediting workers' compensation payments against Performance's liability to Scalice under Proposition 51 (Civ.Code, §§ 1431-1431.5). ¹ We hold that workers' compensation benefits are not merely "economic damages" under Proposition 51, and that the correct rule for allocating the credit is the same rule used for apportioning settlement proceeds set forth in Espinoza v. Machonga (1992) 9 Cal.App.4th 268, 11 Cal.Rptr.2d 498.

BACKGROUND FACTS

On February 4, 1993, Scalice filed an action for damages arising out of his fall on a slippery floor while at work in a Safeway Store. Performance provided janitorial and maintenance services for the store, and allegedly caused the slippery condition of the floor. Performance answered the complaint, and affirmatively alleged negligence by Scalice and his employer, Safeway, and requested a credit against the verdict for sums Scalice had received as workers' compensation benefits. Safeway filed a complaint in intervention, seeking reimbursement for workers' compensation benefits paid to Scalice.

On August 4, 1995, the jury returned a total verdict in favor of Scalice in the amount of $677,000, with $274,000 allocated to economic damages and $403,000 to noneconomic damages. Scalice was found to be 0 percent negligent, Safeway was 30 percent negligent, and Performance was 70 percent negligent. The amount of workers' compensation benefits paid by Safeway was $162,008.53, which was found to be less than Safeway's percentage of responsibility for the injuries, and Safeway received nothing on the complaint in intervention. The parties were given the opportunity to address the appropriate method of allocating the credit to Performance for workers' compensation payments received by Scalice. When the matter was heard on September 27, 1995, the court ordered that judgment be entered nunc pro tunc as of September 1, 1995. The trial court accepted the calculations submitted by counsel for Performance, as follows:

    $274,000.00  total economic damages
                    -162,008.53  total of workers' compensation benefits paid to Scalice
                    -----------
                    $111,991.47  remaining economic damages
                    k282,100.00  Performance's 70% share of non-economic damages of $403,000
                    -----------
                    $394,091.47  Performance's liability to Scalice (before costs and interest)
                ----------
                

Scalice appeals, arguing that the court miscalculated the offset for workers' compensation benefits and erred in entering the judgment nunc pro tunc.

DISCUSSION

Appellant contends that the trial court improperly deducted the entire amount of the workers' compensation benefits from economic damages, which, when coupled with the deduction mandated by Proposition 51 from noneconomic damages for the employer's fault gave respondent a double reduction. He also claims that the court improperly denied him an additional four weeks of interest by entering judgment as of September 1 instead of on the date of the verdict. Although we do not accept appellant's suggested method of calculating the workers' compensation credit, we find some merit in his argument that the court failed to properly allocate the credit. We requested supplemental briefing on this point and have reviewed briefs from respondent and amicus curiae discussing the issue in depth.

Allocation of Workers' Compensation Benefit Payments

Prior to Proposition 51, the amount of workers' compensation benefits paid to appellant would have been subtracted from the total verdict, for a total joint and several judgment of $514,991.47 ($677,000 minus $162,008.53). (Aceves v. Regal Pale Brewing Co. (1979) 24 Cal.3d 502, 512, 156 Cal.Rptr. 41, 595 P.2d 619, overruled on other grounds in Privette v. Superior Court (1993) 5 Cal.4th 689, 696, 21 Cal.Rptr.2d 72, 854 P.2d 721.) Respondent's allocation, as accepted by the trial court, of 100 percent of the workers' compensation benefits to economic damages reduces respondent's liability by $120,900 from its pre-Proposition 51 liability. This result is based on respondent's characterization of workers' compensation benefits as special damages, which respondent equates with economic damages under Proposition 51. On the other extreme, appellant proposed a formula which allocates the workers' compensation benefits entirely to noneconomic damages, which would give him the same amount as he would have received prior to Proposition 51.

Although Proposition 51 was enacted in 1986, until this year no reported decision has directly analyzed the issue of the proper allocation of workers' compensation benefits after its effective date. (DaFonte v. Up-Right, Inc. (1992) 2 Cal.4th 593, 604, 7 Cal.Rptr.2d 238, 828 P.2d 140 [stating that the issue is difficult and important, but not within the order granting review in that case].) Prior to oral argument of the instant appeal, Division Four of this court filed its opinion in Torres v. Xomox (1996) 49 Cal.App.4th 1, 56 Cal.Rptr.2d 455, concluding that the proper method of allocating worker's compensation benefits under Proposition 51 is the method used for preverdict settlements by the court in Espinoza v. Machonga (1992) 9 Cal.App.4th 268, 11 Cal.Rptr.2d 498. The Torres court carefully considered different approaches to the calculation as suggested by the parties, but concluded that the compromise solution used in Espinoza was the most suitable method of allocating workers' compensation benefits. (Torres v. Xomox, supra, 49 Cal.App.4th 1, 34-37, 56 Cal.Rptr.2d 455.) Although amicus curiae in the instant case has argued that the approach of the Torres court is not supported by the words of Proposition 51, we note that the approach advocated by amicus results in a verdict that is identical to a pre-Proposition 51 verdict. After reviewing the history of the workers' compensation benefit offset, the impact of Proposition 51, and the character of workers' compensation benefits, we conclude that such benefits are in the nature of a statutorily imposed settlement, and should be treated as any other pre-verdict settlement proceeds. We find that the view expressed by the courts in Torres v. Xomox, supra, 49 Cal.App.4th 1, 56 Cal.Rptr.2d 455, and Espinoza v. Machonga, supra, 9 Cal.App.4th 268, 11 Cal.Rptr.2d 498, best serve the multiple policies at issue, without unduly favoring either side in the dispute.

The Workers' Compensation Benefit Offset

In general, when an employee is injured at work, the exclusive remedy against the employer is workers' compensation. (Privette v. Superior Court (1993) 5 Cal.4th 689, 697, 21 Cal.Rptr.2d 72, 854 P.2d 721.) This fact does not prevent an employee from suing a culpable third party for damages resulting from the work injury. (DaFonte v. Up-Right, Inc., supra, 2 Cal.4th 593, 598, 7 Cal.Rptr.2d 238, 828 P.2d 140.) The employer may also make a claim against the award in a third party action for reimbursement of workers' compensation benefits paid to the employee. (Lab.Code, § 3852.) When our Supreme Court decided Witt v. Jackson (1961) 57 Cal.2d 57, 17 Cal.Rptr. 369, 366 P.2d 641, a tort plaintiff's concurrent negligence was a bar to recovery in a third party action. The Witt court stated that a negligent employer could not be allowed to "profit from his own wrong" and was also barred from obtaining reimbursement from the third party for workers' compensation benefits. (Witt v. Jackson, supra, 57 Cal.2d 57, 73, 17 Cal.Rptr. 369, 366 P.2d 641.) The portion of the Witt opinion which is relevant to the instant case is the corollary to the above rule, as stated by the Witt court: "[s]ince, however, the injured employee may not be allowed double recovery, his damages must be reduced by the amount of workmen's compensation he received." (Ibid.) "In Witt v. Jackson, denial of the concurrently negligent employer's recovery from the third party was premised on the law's policy to prevent the former from taking advantage of his own wrong; while the latter's credit for workmen's compensation payments against his own tort liability was grounded on the policy of denying the employee double recovery." (Roe v. Workmen's Comp. Appeals Bd. (1974) 12 Cal.3d 884, 888, 117 Cal.Rptr. 683, 528 P.2d 771 [mod. in Associated Construction & Engineering Co. v. Workers' Comp. Appeals Bd. (1978) 22 Cal.3d 829, 842, 150 Cal.Rptr. 888, 587 P.2d 684].) As noted above, we are concerned in the instant case solely with the third party's credit for workers' compensation benefits paid to Scalice, because Safeway has not appealed from the determination denying reimbursement.

In 1975, the Supreme Court decided Li v. Yellow Cab Co. (1975) 13 Cal.3d 804, 119 Cal.Rptr. 858, 532 P.2d 1226, and replaced the doctrine of contributory negligence with one of comparative negligence which assesses liability "in direct proportion to the amount of negligence of each of the parties." (Id. at pp. 828-829, 119 Cal.Rptr. 858, 532 P.2d 1226.) The impact of Li in a third party case was that when the third party established the employer's share of negligence, that share, up to the amount of benefits paid, was credited against the third party's liability to the...