Shuler v. Capital Agricultural Property Services, Inc.

Filed 5/14/20
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
LYNN SHULER et al., 2d Civil No. B289202
(Super. Ct. No. 56-2015-
Plaintiffs and Appellants, 00469359-CU-PO-VTA)
(Ventura County)
v.
CAPITAL AGRICULTURAL
PROPERTY SERVICES, INC.,
et al.,
Defendants and Respondents.
In this negligence/trespass action, Lynn Shuler and
Michael Shuler appeal from the judgment entered after a jury
returned a special verdict in their favor and against respondents
Capital Agricultural Property Services, Inc., et al. Appellants
claim the trial court erroneously reduced by 68 percent the
economic damages awarded by the jury. The court made the
reduction because the jury found that joint tortfeasors, who were
employees of the United States, were responsible for 68 percent of
the negligence and causation. But the employees were immune
from liability because of a pretrial settlement between appellants
and the United States. We agree with appellants that the trial
court erred. We modify the judgment to vacate the 68 percent
reduction and affirm the judgment as modified.
This is the second time the parties have appeared before
this court. Their first appearance resulted in a published
opinion: Dreamweaver Andalusians, LLC v. Prudential
Insurance Co. of America (2015) 234 Cal. App. 4th 1168
(Dreamweaver).
Factual and Procedural Background1
Appellants owned a 22-acre ranch in Somis, California.
They leased the property to Dreamweaver Andalusians, LLC
(Dreamweaver). The property shared a common boundary with
Las Posas Farms, owned by Sunshine Agriculture, Inc.
(Sunshine). Capital Agricultural Property Services, Inc. (CAPS),
“was the overall manager of Las Posas Farms,” which consisted of
approximately 700 to 800 planted acres. Sierra Pacific Farms,
Inc. (Sierra) was the “on-site manager of Las Posas Farms.”
Sunshine, CAPS, and Sierra are hereafter collectively referred to
as “respondents.”
Sierra expanded its agricultural operations onto a hillside
above appellants’ property. In March 2011 the hillside collapsed
onto their property.
Appellants and Dreamweaver filed an action against
respondents, Doug O’Hara (Sierra’s president), and Haejin Lee,
who had prepared the engineering plans for the hillside
development. The complaint alleged: “The Defendants . . . were
responsible for the removal of historic watercourses and stable
1 Portions of the background information are taken from
our prior opinion in Dreamweaver, supra, 234 Cal.App.4th at pp.
1171-1173.
2
ground cover and also for unreasonable grading, irrigation,
planting and maintenance of the hillside slope above [appellants’]
. . . property. . . . Defendants acted negligently in failing to take
steps to prevent the land from collapsing.”
Haejin Lee was an employee of the Natural Resource
Conservation Service (NRCS), a division of the United States
Department of Agriculture. The trial court concluded that the
NRCS was a necessary and indispensable party. The court
observed that the NRCS “cannot be joined to the action by cross-
complaint because it is a Federal agency not amen[ ]able to being
sued in a state court.” The court therefore dismissed the action
without prejudice. Appellants and Dreamweaver appealed to this
court. We affirmed the judgment of dismissal. (Dreamweaver,
supra, 234 Cal. App. 4th 1168.)
Appellants and Dreamweaver filed an action in federal
district court against respondents and the United States. In May
2015 appellants and Dreamweaver accepted a $50,000 offer of
judgment from the United States pursuant to rule 68 of the
Federal Rules of Civil Procedure.2 The settlement was
incorporated into a judgment that provided, “Acceptance of the
offer of judgment has acted to release and discharge defendant
United States of America . . . and all past and present officials,
2
Rule 68(a) provides: “At least 14 days before the date set
for trial, a party defending against a claim may serve on an
opposing party an offer to allow judgment on specified terms,
with the costs then accrued. If, within 14 days after being
served, the opposing party serves written notice accepting the
offer, either party may then file the offer and notice of
acceptance, plus proof of service. The clerk must then enter
judgment.”
3
employees, representatives and agents of United States of
America, from any claims that were or could have been alleged by
[appellants and Dreamweaver] in this action.”
Pursuant to Code of Civil Procedure section 877.6, the
federal district court granted the application of the United States
for a determination that the settlement was made in good faith.3
The federal district court dismissed appellants’ and
Dreamweaver’s action against respondents for lack of federal
subject matter jurisdiction.
In July 2015 appellants and Dreamweaver filed a new state
court action against respondents and Sierra’s President, Doug
O’Hara. The complaint consisted of four causes of action,
including negligence and trespass. The cause of action for
trespass alleged that defendants had “negligently caused the
uphill property to come upon the plaintiffs’ property without
permission or license or necessity.”
The case was tried to a jury. The jury returned a special
verdict finding that Doug O’Hara was not negligent but that
respondents had “negligently trespass[ed] or cause[d] a landslide
to trespass upon Plaintiffs’ property.” The jury also found that
Haejin Lee and Travis Godeaux were negligent and that their
negligence was a substantial factor in causing harm to plaintiffs.
Godeaux was an engineer and employee of the NRCS. He
performed a “geologic reconnaissance” of the hillside above
appellants’ property. He “went to the site on several occasions
and instructed the people implementing the plan that they
needed to make certain changes.”
3Unless otherwise stated, all statutory references are to
the Code of Civil Procedure.
4
In its special verdict the jury apportioned negligence and
causation as follows: Sierra – 10 percent; CAPS – 10 percent;
Sunshine – 10 percent; appellants – 2 percent; Travis Godeaux –
34 percent; Haejin Lee – 34 percent. Thus, respondents together
were responsible for 30 percent of the total negligence and
causation, while Godeaux and Lee together
were responsible for 68 percent.
Although Lee and Godeaux were immune from liability
under the federal district court consent judgment, the special
verdict form properly required the jury to determine their
comparative fault. “[I]t is error for a trial court not to allow the
jury to assess the comparative fault of defendants who settled
before trial. [Citation.]” (Romine v. Johnson Controls, Inc. (2014)
224 Cal. App. 4th 990, 1011.)
The jury awarded appellants economic damages of
$1,756,499.99 and noneconomic damages of $50,000. It did not
award any damages to Dreamweaver.
In its judgment, the trial court noted that it had earlier
ruled “that [respondents] are not liable for the conduct of the
Federal Government, and its employees, Haejin Lee and Travis
Godeaux, based upon the preclusive effect of the Federal Court
Judgment.” Therefore, as to economic damages, the court
ordered that respondents are jointly and severally liable to
appellants only for their 30 percent share of the negligence:
$526,950 less an offset of $66,666.67 for amounts paid by settling
tortfeasors. Accordingly, respondents’ joint and several liability
for economic damages was reduced from $1,756,499.99 to
$460,283.33.
5
The Trial Court Erroneously Reduced Respondents’
Joint and Several Liability for Economic Damages
Appellants contend that respondents are jointly and
severally liable for 100 percent of the economic damages, reduced
by 2 percent for appellants’ contributory negligence and an offset
for amounts paid by settling tortfeasors. We agree.
For economic damages, California has adopted the “joint
and several liability” doctrine. Pursuant to this doctrine, “each
tortfeasor whose negligence is a proximate cause of an indivisible
injury remains individually liable for all compensable damages
attributable to that
injury. . . . The joint and several liability doctrine . . . play[s] an
important and legitimate role in protecting the ability of a
negligently injured person to obtain adequate compensation for
his injuries from those tortfeasors who have negligently inflicted
the harm.” (American Motorcycle Assn. v. Superior Court (1978)
20 Cal. 3d 578, 582-583.)
On the other hand, “liability for noneconomic damages
is several only, so that defendants pay in proportion to their
share of fault.” (Rashidi v. Moser (2014) 60 Cal. 4th 718, 720; see
Civ. Code, § 1431.2, subd. (a) [“In any action for personal injury,
property damage, or wrongful death, based upon principles of
comparative fault, the liability of each defendant for non-
economic damages shall be several only and shall not be joint”].)
Different approaches have been developed for apportioning
economic damages among a plaintiff, a settling tortfeasor, and a
nonsettling tortfeasor. (See Leung v. Verdugo Hills Hospital
(2012) 55 Cal. 4th 291, 303-304.) Where, as here, a determination
has been made under section 877.6 that a tortfeasor (the United
States) has made a good faith settlement, “the Legislature has
6
statutorily adopted” the approach of “setoff without contribution
by the settling torfeasor to the nonsettling tortfeasor.” (Id. at p.
304; see §§ 877, 877.6, subd. (c).) Pursuant to this approach,
“nonsettling tortfeasors [respondents] are entitled to a credit in
the amount paid by the settling tortfeasor. But . . . nonsettling
tortfeasors may not obtain any contribution from the settling
tortfeasor.” (Leung, supra, at p. 303.)
Respondents argue that the rule of joint and several
liability for economic damages is inapplicable because the
settlement between the United States and appellants was
incorporated into a federal court judgment. Respondents assert:
“[T]he judgment precludes future state claims arising from the
acts or omissions of the NRCS and its employees, Lee and
Godeaux.” Therefore,“[r]es judicata prevented [appellants’]
recovery against respondents for any conduct of the NRCS and its
employees.” “Because [appellants] were barred from any recovery
from respondents based on the conduct of the NRCS [and
appellants’ claims against respondents were based on such
conduct], the trial court’s decision to apply res judicata to reduce
the damages here was correct. The trial court’s failure to do so
would have amounted to an effective dodging of the finality that
must be accorded to parties and their privies by a final
judgment.”
There are two aspects to res judicata. “Claim preclusion,
the ‘“‘primary aspect’”’ of res judicata, acts to bar claims that
were, or should have been, advanced in a previous suit involving
the same parties. [Citation.] Issue preclusion, the ‘“‘secondary
aspect’”’ historically called collateral estoppel, describes the bar
on relitigating issues that were argued and decided in the first
suit.” (DKN Holdings LLC v. Faerber (2015) 61 Cal. 4th 813, 824
7
(DKN Holdings).) Respondents are invoking the claim preclusion
aspect of res judicata.4
To resolve the res judicata issue, we must interpret the
effect of the federal court judgment. “‘The interpretation of the
effect of a judgment is a question of law within the ambit of the
appellate court.’” (Mendly v. County of Los Angeles (1994) 23
Cal. App. 4th 1193, 1205.) Questions of law are reviewed
independently. (Haworth v. Superior Court (2010) 50 Cal. 4th
372, 384; see also City of Oakland v. Oakland Police & Fire
Retirement System (2014) 224 Cal. App. 4th 210, 228 [“Whether
the doctrine of res judicata applies in a particular case is a
question of law which we review de novo”].)
In the settlement with the United States, appellants did
not waive their right to seek full compensation for their loss from
other tortfeasors under the California rule of joint and several
liability. They waived their right to seek further compensation
from the United States and its employees. Therefore, the
incorporation of the settlement into a judgment does not shield
respondents from joint and several liability. “‘Although a
stipulated judgment is no less conclusive than a judgment
entered after trial and contest [citations][,] it is axiomatic that its
res judicata effect extends only to those issues embraced within
the consent judgment. . . .’” (Louie v. BFS Retail & Commercial
Operations, LLC (2009) 178 Cal. App. 4th 1544, 1559.)
4We reject Sierra’s claim at oral argument that it is relying
on issue preclusion, not claim preclusion. The issue of
respondents’ joint and several liability to appellants for economic
damages was not “actually litigated and necessarily decided” in
the federal action. (DKN Holdings, supra, 61 Cal.4th at p. 825.)
8
Respondents argue that the rule of joint and several
liability applies only to “separate and independent tortfeasors,”
not to a situation where, as here, liability is based on “vicarious
or derivative liability, which flows from the acts of others.”
“[U]nder California principles of res judicata, [appellants’] cannot
recover from the NRCS directly, and then recover a second time
from the respondents, who were sued vicariously for the same
conduct.”
Respondents’ argument is based on DKN Holdings, supra,
61 Cal. 4th 813. There, our Supreme Court enunciated the
following principle: “When a defendant's liability is entirely
deriv[ative] from that of a party in an earlier action, claim
preclusion bars the second action because the second defendant
stands in privity with the earlier one. [Citations.] The nature of
derivative liability so closely aligns the separate defendants’
interests that they are treated as identical parties.” (Id. at pp.
827-828, italics added.)
The principle enunciated in DKN Holdings is inapplicable
here. Respondents’ liability is not “entirely derivative” from that
of the NRCS and its employees, Lee and Godeaux. (DKN
Holdings, supra, 61 Cal.4th at pp. 827-828.) The complaint
alleges that respondents were independently at fault: They
“failed to conduct a Slope Stability Analysis, failed to obtain a
soils study, failed to investigate the landslide history of the area
and failed to provide for a proper factor of safety.”
“[Respondents] learned that several areas of [the hillside] were
unstable and that large scale and long term deterring and other
remediation measures were required to stabilize the condition.
[Respondents] knew or should have known that their failure to
immediately implement a meaningful stabilization program
9
would expose [appellants] . . . to severe risk of bodily harm and
property damage. [¶] . . . [Respondents] failed and refused to
implement an adequate stabilization program and failed to
immediately warn their neighbors of both the degree and scope of
instability [of the hillside] and their intent to avoid mitigating
measures. These acts and failure to act . . . contributed, as
substantial factors, to the catastrophic earth movements of
March 2011.”
In the special verdict form, the jury was asked, “What
percentage of negligence and causation for plaintiffs’ harm do you
assign to the following [persons]?” The jury found respondents to
be independently, not derivatively or vicariously, at fault for 30
percent (10 percent for each respondent) of the negligence that
caused the landslide. The trial court instructed the jury that
respondents “are not responsible for any actions or conduct on the
part of Travis Godeaux and/or Haejin Lee.” “It is presumed that
the jury followed that instruction.” (Rodgers v. Kemper Constr.
Co. (1975) 50 Cal. App. 3d 608, 630.) This is not a case where
respondents “had no liability apart from that of [Lee and
Godeaux] . . . and were thus . . . the same parties for purposes of
[claim] preclusion.” (DKN Holdings, supra, 61 Cal.4th at p. 827.)
Harmless Error
Sierra maintains that “[t]he trial court’s judgment limiting
[its] liability to the jury-allocated 10% is harmless, because the
court should have granted judgment notwithstanding the verdict
to Sierra.” (Bold and capitalization omitted.) Sierra reasons:
“[A]ny potential negligence on the part of Sierra was entirely tied
to O’Hara, its only managerial employee overseeing the hillside
development. [The jury found that O’Hara was not negligent.]
Accordingly, the trial court should have granted Sierra’s motion
10
for judgment notwithstanding the verdict, and enter judgment
allocating 0% of the ‘negligence and causation’ to Sierra to make
it identical to O’Hara’s 0% fault allocation.” Because Sierra did
not file an appeal, it forfeited any challenge to the judgment’s
allocation of 10 percent of the negligence to Sierra. (Celia S. v.
Hugo H. (2016) 3 Cal. App. 5th 655, 665.)
CAPS and Sunshine make their own harmless error
argument. They contend: “[I]f not for the trial court’s ruling on
the application of res judicata, [appellants’] outcome would have
been far worse than the result they obtained.” “At the outset of
this case, respondents demurred to [appellants’] complaint based
on the prior appellate court holding in Dreamweaver, supra, 234
Cal.App.4th at [p.] 1175, that the NRCS was a necessary and
indispensable party to the case. In overruling respondents’
demurrer here, the trial court relied on the preclusive effect of
the prior federal judgment.” “[T]here is no prejudice to
[appellants] because the alternative to the trial court’s order
giving preclusive effect to the federal judgment would have been
the complete dismissal of the entire action [for failure to join an
indispensable party – the NRCS] following an
order sustaining respondents’ demurrer without leave to amend.”
CAPS’ and Sunshine’s harmless error argument is devoid of
merit. The NRCS was not an indispensable party in the present
action against respondents because the extent of its liability had
been determined by the federal consent judgment. “Where [as
here] an alleged joint tortfeasor . . . in good faith settles the claim
against him, he is forever discharged of further obligation to the
claimant, and to his joint tortfeasors, by way of contribution or
otherwise.” (Stambaugh v. Superior Court (1976) 62 Cal. App. 3d
231, 235.) Thus, the absence of the NRCS from the present
11
action did not mean that “complete relief [could not] be accorded
among those already parties.” (§ 389, subd. (a).) Nor did the
absence of the NRCS “leave any of the persons already parties
subject to a substantial risk of incurring double, multiple, or
otherwise inconsistent obligations by reason of [its] claimed
interest.” (Ibid.)
Attorney Fees
The trial court awarded attorney fees to appellants
pursuant to section 1021.9, which provides, “In any action to
recover damages to personal or real property resulting from
trespassing on lands either under cultivation or intended or used
for the raising of livestock, the prevailing plaintiff shall be
entitled to reasonable attorney’s fees in addition to other
costs . . . .” The court found: “The unchallenged evidence at trial
included that [appellants] were intending to raise cattle, were
engaged in the breeding of Andalusian horses, and had a few
cows, goats, and chickens on the property.”
Appellants claim that they are also entitled to attorney fees
on appeal. The claim has merit. (Center for Biological Diversity
v. County of San Bernardino (2010) 185 Cal. App. 4th 866, 901.)
Disposition
The trial court’s order reducing economic damages by 68
percent is vacated. The judgment is modified to award
appellants economic damages in the amount determined by the
jury - $1,756,499.99 - less the amount paid by settling tortfeasors
to appellants,5 less $35,130 for appellants’ two percent
5
In its judgment the trial court concluded that respondents
“are entitled to an offset of 2/3rds the settlement amount of
$100,000 (i.e., $66,666.67) against any award of economic
damages arising from the judgment.” But in their opening brief
12
contributory negligence. The matter is remanded to the trial
court with directions to enter a modified judgment pursuant to
this formula. Respondents shall be jointly and severally liable for
the full amount of economic damages, which shall draw interest
from the date of the original judgment, not the date of the
modified judgment. (See Ehret v. Congoleum Corp. (2001) 87
Cal. App. 4th 202, 209-210.) In all other respects, the judgment is
affirmed.
As the prevailing parties in this appeal, appellants shall
recover their costs on appeal. They shall also recover their
reasonable attorney fees on appeal in an amount to be
determined by the trial court.
CERTIFIED FOR PUBLICATION.
YEGAN, J.
We concur:
GILBERT, P. J.
PERREN, J.
appellants concede that respondents are actually entitled to a
“[r]eduction for 2/3 of $150,000 in pre-trial settlements,” i.e., an
offset of $100,000.
13
Harry Walsh, Judge
Superior Court County of Ventura
______________________________
Law Offices of Richard R. Bredlau and Richard R. Bredlau;
The Ventura Law Group and Glenn J. Campbell; The Ehrlich
Law Firm and Jeffrey I. Ehrlich for Plaintiffs and Appellants.
Klinedinst, Robert G. Harrison, Robert M. Shaughnessy
and Catherine M. Asuncion for Defendants and Respondents.
Grant, Genovese & Baratta and Lance D. Orloff; Proctor,
Shyer & Winter and James N. Procter II for Defendants and
Respondents.