Declarations and Exclusions

Income-ing!: The D.C. Circuit Holds Congress's Power to Tax Does Not Reach Emotional Distress Damages

This weblog is not often concerned with tax law, and this is assuredly not the place to come for tax advice, but the U.S. Court of Appeals for the D.C. Circuit has issued a remarkable new decision concerning taxation of tort judgments of the sort often covered by liability insurance policies, so I will take that as an excuse to give it some attention here. 

The TaxProf Blog [pointed out via Instapundit ] reports the decision in Murphy v. United States [PDF] in which, in a surprising move, the D.C. Circuit has declared unconstitutional the taxation of tort damage recoveries representing compensation for non-physical injuries unrelated to lost wages or earnings -- in this case, damages for loss of reputation and for emotional distress sustained by a "whistle blower."  The court concludes that such damages are not "income" within the meaning of the 16th Amendment, so that Congress has no power to tax those damages as "income."

Although tax law is not my field, I did take a single-semester course in Federal Taxation in law school.  One of the most striking things the student encounters at the outset of that subject is the Internal Revenue Code's definition of "income."  You have to be able to define "income" in order to tax it, and Congress early on adopted an extra-broad definition, one that paraphrases roughly as "'income' means income . . . every imaginable kind of income and anything whatever we might characterize as income."  It is the sort of definition that ought to be pronounced from out of a burning bush.  (Cf. "I am that I am.")   "Income" is most frequently some sort of money payment received by the taxpayer but it also includes the taxpayer's receipt of other things of value, as the celebrity community in Southern California was reminded last week when the IRS declared "income" to include award show swag.

Congress has also declared certain kinds of money flows not to be "income," and one significant exception is compensatory damages in personal injury cases.  Specifically IRC section 104(a)(2) excludes from income "damages (other than punitive damages) received . . . on account of personal physical injuries or physical sickness."  [Prior to 1996, the statute excluded a broader range of damages from income, because it did not include any express requirement that the injury or sickness be "physical."] 

 In Murphy, the plaintiff Marita Murphy was a former employee of the New York Air National Guard who successfully pursued a claim before the Department of Labor for unlawful discrimination and retaliation.  That administrative proceeding resulted in an award of damages of $70,000, comprising compensation for emotional distress ($45,000) and injury to plaintiff's reputation ($25,000).  Ms. Murphy duly reported the entire award as part of her "gross income" on her income tax return and paid over $20,000 in taxes on that income.  She later filed suit seeking a refund of that payment, contending that her damage award should not be treated as "income."

Ms. Murphy made two contentions: First, she asserted that her damage award should fall within the exception from income for personal injury damages under section 104(a)(2); second, she argued that her damages simply were not characterizable as "income" at all under any proper definition of that term.  When the case reached the D.C. Circuit, it rejected the first contention -- noting that section 104(a)(2) applies only to compensation for "physical" injuries and that while there might have been physiological consequences to her emotional distress, Ms. Murphy did not receive her damages "on account of" that physical injury -- but remarkably accepted the second. 

The 16th Amendment empowered Congress only to tax "incomes."  If a payment does not fall within the meaning of "incomes" in the Amendment, Congress has no power to tax it.  Contrary to what it called a "breathtakingly expansive claim of congressional power," the Court emphasized that "incomes" does not include "every sort of revenue a taxpayer may receive."  Murphy urged that she was not "better off" from the receipt of these damages -- they did not represent a profit or betterment of any kind, and were not a substitute for wages or other cash flows commonly viewed as "income"  -- and that they should instead be viewed as a "return of capital" -- in her case "human capital."  The Court essentially agreed.  In the linchpin paragraph of the decision, the Court offers this reasoning:

As we have seen, it is clear from the record that the damages were awarded to make Murphy emotionally and reputationally 'whole' and not to compensate her for lost wages or taxable earnings of any kind.  The emotional well-being and good reputation she enjoyed before they were diminished by her former employer were not taxable as income.  Under this analysis, therefore, the compensation she received in lieu of what she lost cannot be considered income and, hence, it would appear the Sixteenth Amendment does not empower the Congress to tax her award.

Q.E.D., emotional distress and reputation damages are non-taxable.

ELSEWHERE: Unsurprisingly, there is at least some skepticism among knowledgeable tax law specialists concerning the soundness of the Court's logic here.  Orin Kerr suggests that the invocation of constitutional limits on Congressional power in the ruling makes it a likely candidate for en banc review in the D.C. Circuit, or for consideration by the U.S. Supreme Court.  Professor Bainbridge, meanwhile, sees the decision as fresh fodder for the denizens of the Tax Protester demimonde.

Attentive readers will note a California connection to this case: although the opinion is authored by Chief Judge (and one-time Supreme Court nominee) Douglas H. Ginsburg, the panel also includes former California Supreme Court Justice  Janice Rogers Brown.

One Enchilada Short of a Discrimination Complaint

In March, reporting on California state appellate Justice Sills takedown  of Proposition 65 "Bounty Hunters", I remarked that the opinion provided "an illustration of how well-intentioned (if overreaching) legislation can be put to less than laudable use in the wrong hands."   Here is another example, this time involving the Americans With Disabilities Act (ADA):

Jerry Doran is disabled, confined to a wheelchair since a 1985 automobile accident left him paralyzed and unable to walk.  Since then, he has become, by his own admission, "a litigious advocate," filing more than 200 lawsuits in state and federal court against restaurants and other public establishments throughout California, alleging insufficient disability access.  He has filed so many suits, in fact, that he has begun to lose track.  That inability to recall the details of each occasion on which he has been wronged by one fast food emporium or another came back to haunt Mr. Doran when he went to trial before U.S. District Court Judge Cormac J. Carney earlier this month on a claim that he had suffered from discrimination based on his disability at Del Taco restaurant #415 in Mission Viejo -- conveniently located a mere 500 miles from his home.

Judge Carney returned judgment in favor of the defendant restaurant, on the ground that Doran had no standing to bring the action.  Although there was no question that Mr. Doran is disabled, Judge Carney was ultimately unable to persuade himself that there was evidence sufficient to prove that Doran had actually sustained any harm at, or had ever actually been to, the Mission Viejo Del Taco.

After describing and praising the purposes of the ADA, Judge Carney's Memorandum Decision [PDF] notes that it is a tool prone to misuse:

Despite the important mission of the ADA, there are those individuals who would abuse its private cause of action provision by filing lawsuits solely with the intent to profit financially.  This potential for abuse of the ADA has been well documented in the Central District of California . . . .  Courts have referred to this proliferation of ADA lawsuits as a 'cottage industry' and have labeled plaintiffs who file these lawsuits 'professional plaintiffs,' 'serial plaintiffs,' and 'professional pawns.'

* * *

The consequences of this abuse of the ADA are severe: businesses and insurers are harmed, the integrity of the bar is called into question, and the public's confidence in the courts is impaired. . . .  Simply put, this litigation abuse of the ADA results in the exact harmful consequences that Congress sought to eradicate by passing the ADA.  As more than one court has observed, the result of this abusive litigation is that 'the means for enforcing the ADA (attorney's fees) have become more important and more desirable than the end (accessibility for disabled individuals).'

Most of the remainder of the opinion focuses on the discrepancies in Doran's responses to interrogatories, his responses to questions in deposition three weeks later, and his testimony at trial, in which key details -- such as how often and when he had actually visited the Mission Viejo Del Taco -- slipped and slid uncontrollably.  Highlights:

• Doran first went to Del Taco #415 in Spring of 2002 or in Spring of 2003, unless his first visit was in 1988.

• Prior to filing suit, he went to the location twice, or perhaps three times, or possibly just once, although he may have gone there on as many as five or six occasions.

• "Mr. Doran's complaint refers to objects -- display racks and vending machines -- which do not even exist at Del Taco restaurant #415."

• "When Mr. Doran stated that he ordered an enchilada to eat during his alleged visit, he must have been testifying about a trip to a Taco Bell restaurant since Taco Bell -- and not Del Taco -- serves enchiladas."

• "When describing the barriers he encountered at Del Taco restaurant #415, Mr. Doran stated that the hand dryers in the restroom were located too high. . . .  Because Del Taco restaurant #415 does not have hand dryers in its restrooms, it is clear that Mr. Doran was testifying about a visit to another restaurant, or place of public accommodation, when asked to identify the barriers he encountered."

• "When asked if there were any fast food chains that Mr. Doran frequented that he had not sued, he replied that he had not sued Kentucky Fried Chicken.  In fact, Mr. Doran has sued Kentucky Fried Chicken.  When asked to try again, Mr. Doran replied that he had not sued Jack in the Box.  Although apparently unbeknownst to him, Mr. Doran has sued Jack in the Box also."

At least Mr. Doran resisted the temptation to respond that "they all look alike to me."

ESPN Meets CourtTV?Sports Injury and Assumption of the Risk

This week, the appellate courts of California have had a field day of sorts, producing three new decisions on the right to recover -- or more frequently the absence of a right to recover -- for sporting and athletic injuries.  Each of these cases applies some variant on the doctrine of "primary assumption of the risk," under which a participant in sporting activity is deemed to have assumed the risk of physical injury that is "inherent" in that activity, and cannot recover damages from sponsors, coaches, or other participants unless those defendants can be shown to have significantly increased those risks beyond their natural level. 

In the most notable of this week's sports decisions, the California Supreme Court considered the claims of a college baseball player in Avila v. Citrus Community College District (Case No. S119575, April 6, 2006).  The opening paragraph sets the scene in simple terms:

During an intercollegiate baseball game at a community college, one of the home team’s batters is hit by a pitch.  In the next half-inning, the home team’s pitcher allegedly retaliates with an inside pitch and hits a visiting batter in the head.  The visiting batter is injured, he sues, and the courts must umpire the dispute.

The claim that reached the Supreme Court was only against the Community College District on whose campus the game was being played.  After disposing of the issue of whether the District can claim governmental immunity in these circumstances (it cannot), the Court turns to the question of whether the District actually owed any legal duty to visiting players to prevent this injury and, in particular, whether the District owed a duty to "supervise and control" the pitcher.  Citing the primary assumption of the risk doctrine -- and the colorful history of Our National Pastime -- the Court finds no duty:

* * * Being hit by a pitch is an inherent risk of baseball. (Balthazor v. Little League Baseball, Inc. (1998) 62 Cal.App.4th 47, 51-52; see also Mann v. Nutrilite, Inc. (1955) 136 Cal.App.2d 729, 734 [same re being hit by thrown ball].)  The dangers of being hit by a pitch, often thrown at speeds approaching 100 miles per hour, are apparent and well known: being hit can result in serious injury or, on rare tragic occasions, death.

Being intentionally hit is likewise an inherent risk of the sport, so accepted by custom that a pitch intentionally thrown at a batter has its own terminology: 'brushback,' 'beanball,' 'chin music.'  In turn, those pitchers notorious for throwing at hitters are 'headhunters.'  Pitchers intentionally throw at batters to disrupt a batter’s timing or back him away from home plate, to retaliate after a teammate has been hit, or to punish a batter for having hit a home run.  (See, e.g., Kahn, The Head Game (2000) pp. 205-239.)  Some of the most respected baseball managers and pitchers have openly discussed the fundamental place throwing at batters has in their sport.  In George Will’s study of the game, Men at Work, onetime Oakland Athletics and current St. Louis Cardinals manager Tony La Russa details the strategic importance of ordering selective intentional throwing at opposing batters, principally to retaliate for one’s own players being hit.  (Will, Men at Work (1990) pp. 61-64.)  As Los Angeles Dodgers Hall of Fame pitcher Don Drysdale and New York Giants All Star pitcher Sal “The Barber” Maglie have explained, intentionally throwing at batters can also be an integral part of pitching tactics, a tool to help get batters out by upsetting their frame of mind.  Drysdale and Maglie are not alone; past and future Hall of Famers, from Early Wynn and Bob Gibson to Pedro Martinez and Roger Clemens, have relied on the actual or threatened willingness to throw at batters to aid their pitching.  (See, e.g., Kahn, The Head Game, at pp. 223-224; Yankees Aced by Red Sox, L.A. Times (May 31, 2001) p. D7 [relating Martinez’s assertion that he would even throw at Babe Ruth].)

[Italics in original; footnotes containing additional baseball lore omitted.]

Only Justice Kennard dissents from the majority's "startling conclusion" endorsing the beanball, although she allows that the district would still not be potentially liable absent a showing that it was actively encouraging the beanball's use.  The full decision [PDF] is available here.

In other sporting news, the 3rd District Court of Appeal ruled that the operator of the Squaw Valley ski area is not liable for the injuries sustained by a child skier who collided with "a plainly visible, aluminum snowmaking hydrant" alongside the ski run:

[T]his court has listed the risks inherent in snow skiing on more than one occasion. '"'"Each person who participates in the sport of [snow] skiing accepts the dangers that inhere in that sport insofar as the dangers are obvious and necessary. Those dangers include, but are not limited to, injuries which can result from variations in terrain; surface or subsurface snow or ice conditions; bare spots; rocks, trees and other forms of natural growth or debris; collisions with ski lift towers and their components, with other skiers, or with properly marked or plainly visible snow[]making or snow[]grooming equipment...."'"'

[Italics in original.]  Souza v. Squaw Valley Ski Corp. (Case No. C049329, April 5, 2006), full decision [PDF] available here.

And if you were not already concerned about the dangers of pursuing good health and physical culture, there is the Fourth District's opinion in Rostal v. Neste Enterprises (Case No. E037544, April 5, 2006), nicely summarized by Professor Martin at California Appellate Report as holding:

[P]rimary assumption of the risk doctrine bars personal injury claims brought against a personal trainer for injuries incurred when his patron works out too hard and has a heart attack. 

So play safe, kids.  Game on!

[Super beanball illustration via The Comic Treadmill.] 

Battery Not Included: Doctor is Not Liable for Innocently Exceeding Scope of Consent to Treatment

Seven-month old Rey Piedra sustained permanent severe brain damage as the result of cardiac arrest while under the care of Dr. J.M. Dugan at Fountain Valley Regional Hospital.  Following the injury, Rey’s parents sued Dr. Dugan alleging claims of medical malpractice, battery, and failure to obtain their informed consent to certain of the treatment administered to their child.  At trial, the court granted Dr. Dugan’s motion for a nonsuit on the battery claim; the jury thereafter found on the merits that Dr. Dugan’s treatment had not been negligent, and that there was no lack of informed consent.  The Court of Appeal has affirmed those decisions.

Under general principles of medical malpractice law, a doctor who administers a treatment different from that to which the patient (or a child’s parents or guardians) has given consent may be liable for the tort of battery, i.e., harmful, unconsented or unprivileged physical contact.  The evidence at trial showed that Rey’s parents had given consent to treatment conditioned on their being consulted prior to administration of any drugs or medications.  The evidence also showed that the consent had been obtained, and the conditions on that consent communicated to, Hospital staff, but that the conditions had not been conveyed by the staff to Dr. Dugan. 

The decisions Dr. Dugan made concerning medication were shown not to be unusual or controversial under the circumstances, so that this liability was dependent on whether or not he should have obtained the parents’ consent before administering those medications.  The appellate court concludes that Dr. Dugan’s lack of knowledge that the prior consent was conditional relieved him of any potential liability for battery:

This case differs from any reported California case on conditional consent in the context of medical battery because it is undisputed (1) Rey’s parents never informed Dr. Dugan directly of the alleged condition on their consent and (2) Dr. Dugan did not otherwise learn of the condition. Battery is an intentional tort. [Citation.] Therefore, a claim for battery against a doctor as a violation of conditional consent requires proof the doctor intentionally violated the condition placed on the patient’s consent. [Citation.] Dr. Dugan could not have intentionally deviated from the scope of the consent because he was unaware of any condition on that consent. There is no authority for imputing knowledge of Fountain Valley employees to Dr. Dugan on the claim for medical battery. Given the evidence, the jury could not have found Dr. Dugan had knowledge of Rey’s parents’ conditional consent, and therefore could not have found him personally liable for battery, an intentional tort.

The decision in Piedra v. Dugan (Nov. 12, 2004), Case No. G032653, can be accessed at these links in PDF and Word formats. [Note: The links will expire in approximately 120 days; the opinion should still be accessible thereafter by substituting "archive" for "documents" in the URL.]

The Indemnitor of My Indemnitee is My Indemnitee

When putting together construction projects, most general contractors will require (1) that any subcontractor indemnify or "hold harmless" the general contractor for any liabilities other than those caused entirely by the general contractor's own negligence and (2) that the subcontractor provide liability insurance coverage in which the general contractor is named as an additional insured. In such an arrangement, the Court of Appeal has ruled that the subcontractor's "hold harmless" agreement also operates to bar the subcontractor's insurer from pursuing a reimbursement claim against the general contractor's insurer. "To hold otherwise," the court remarks, "would negate the indemnity provision in the construction contract."

PCS, a general contractor, entered into an agreement of this sort with a subcontractor, Valley Metal. When a Valley Metal employee was injured on the job, he brought suit againt PCS. [He could not bring a claim against his own employer, against which his sole remedy is workers' compensation.] Valley Metal's insurer, Hartford, defended PCS -- which was named as an additional insured under its policy -- and settled the claim. Hartford then turned to PCS' own insurer, Mt. Hawley, and sought to obtain reimbursement of half of the amounts it had spent on PCS' defense and the settlement. The trial court found that Hartford was entitled to be reimbursed, based on principles of "equitable contribution." The Court of Appeal reversed:

[I]n this case, the indemnity provision in the subcontract stated that PCS would not be liable for any claims or damages unless caused by its sole negligence or willful misconduct. In its complaint, Hartford alleged that PCS was solely negligent in causing the accident. The complaint did not allege nor does Hartford contend on appeal that PCS engaged in willful misconduct. In moving for summary judgment,
Mt. Hawley established as an undisputed fact that PCS was not solely negligent.... Valley Metal included PCS as an additional insured under the Hartford policy as part of the consideration for the construction job. And it appears both insurers knew that they might have to satisfy a full judgment. In short, the indemnity provision precludes any recovery by Valley Metal against PCS.

* * *

Just as Valley Metal has no right of recovery against PCS, so Valley Metal’s insurer, Hartford, has no right to recover from PCS’s insurer, Mt. Hawley. It would be unjust to 'impose liability on [Mt. Hawley] when [PCS] bargained with [Valley Metal] to avoid that very result as part of the consideration for the construction agreement.' [Citation] Hartford does not point to any language in the subcontract or the insurance policies suggesting otherwise.

Given that their respective insureds clearly intended, by the indemnity agreement, that PCS would pay nothing to Valley Metal in the circumstances of the case, the court concludes that there is no basis on which PCS' insurer should be held to pay what PCS does not owe.

The decision in Hartford Casualty Ins. Co. v. Mt. Hawley Ins. Co. (Oct. 21, 2004), Case No. B172449, can be accessed at these links in PDF and Word formats. [Note: The links will expire in approximately 120 days; the opinion should still be accessible thereafter by substituting "archive" for "documents" in the URL.]

In the Pursuit of the Trivial: Minimally Uneven Sidewalk is Not Defective, As a Matter of Law

Homeowners and building owners with actual or theoretical control over adjacent sidewalks are always in danger of lawsuits from those who slip, trip or fall while strolling by. Generally, these cases reduce themselves to the question of whether the uneven surface of the sidewalk was dangerously defective or, alternatively, whether any irregularities were "trivial" and therefore provide no basis for imposing civil liability. In the latest California decision on the subject, the Court of Appeal for the Second District finds that any defective condition in the sidewalk under cnsideration was "trivial" as a matter of law, entitling the homeowner to summary judgment in his favor, despite the best efforts of the plaintiffs' expert witness.

While walking past the premises of Larry Hathaway, Mrs. Josephine Caloroso tripped, fell and was injured. "The accident occurred on a dry and sunny morning. The elevation difference along the edge of the crack ranged from zero to either 0.4 or seven-sixteenths of one inch." There was no evidence of any prior accidents or injuries at that location. Mrs. Caloroso and her husband sued for damages for her injuries. Hathaway moved for summary judgment, contending that the condition was trivial and could not provide a basis for civil liability. In opposition to the motion, the Calorosos submitted testimony from a civil engineer, Brad Avrit, who "testified that the elevation difference was seven-sixteenths of one inch at one point, and the 1994 Uniform Building Code and 1996 ASTM Standard Practice for Safe Walking Surfaces prohibit height differentials greater than one-quarter of one inch absent a ramp or slope."

The trial court granted the motion, finding not dispute as to any material fact and ruling that any defect was trivial and non-actionable. The Court of Appeal affirms. The appellate court concurs that the expert's testimony raises no triable dispute:

The court properly found no foundation for Avrit’s opinion that noncompliance with certain building codes and standards made the crack dangerous. Avrit failed to indicate that these codes and standards have been accepted as the proper standard in California for safe sidewalks. Moreover, there is no indication regarding whether such codes apply to existing walkways as opposed to new construction. Notably, the Calorosos presented evidence that the crack predated both the code and the standard. Accordingly, the court properly excluded Avrit’s opinion that Hathaway’s noncompliance with certain building codes and standards creates a triable issue whether the condition was dangerous.

Having rejected the expert testimony, the court has no difficulty concluding that what occurred in this case is a true "accident" -- unfortunate, but not the basis for imposing any monetary responsibility on the defendant homeowner:

* * * Drawing all inferences favorably to Mrs. Caloroso, we assume that bright, dappled light blinded her view of the crack. Nonetheless, the inescapable fact is the crack at its greatest was less than one-half inch, and the disputed issues about light and shadow in the circumstances of this case are immaterial.

Where reasonable minds can reach only one conclusion -- that there was no substantial risk of injury -- the issue is a question of law, properly resolved by way of summary judgment. [Citation.] The evidence does not support the conclusion that reasonable minds could differ regarding whether the risk of injury was trivial. Despite their contentions regarding various aggravating conditions, the Calorosos failed to demonstrate that there is any triable issue of material fact as to whether Hathaway owed them a duty to warn of danger or repair the walkway. It is impossible to maintain heavily traveled surfaces in perfect condition.

Minor defects such as the crack in Hathaway’s walkway inevitably occur, and the continued
existence of such cracks without warning or repair is not unreasonable. Thus, Hathaway is not liable for this accident irrespective of the question whether he had notice of the condition. * * *

The decision in Caloroso v. Hathaway (Sept. 28, 2004), Case No. B170132, can be accessed at these links in PDF and Word formats. [Note: The links will expire in approximately 120 days; the opinion should still be accessible thereafter by substituting "archive" for "documents" in the URL.]

Dogged Determination

Part of the fun of practicing insurance coverage law is the opportunity to read appellate decisions that start like this:

“The cat will mew, and dog will have his day.” (Shakespeare, Hamlet, act 5, scene 1.) Here, Dwayne Vandagriff’s dog elected to have his day by biting Robert Grisham’s leg after escaping from Vandagriff’s parked pickup truck.

What is the coverage issue here? It is this: Does a dog bite occurring 20 to 25 feet away from the dog owner’s pickup truck, in which the dog has been left for between 30 and 120 minutes, “arise out of the use of” that truck, so as to be covered under the dog owner’s automobile insurance policy?

A surprisingly large number of California decisions have wrestled with similar questions. At its most basic, the question boils down to whether there is some identifiable causal connection between the way in which a vehicle has been used and the plaintiff’s injury. For instance, automobile coverage has been held to exist when a gun goes off inside a car as a result of a combination of its hair-trigger and the bouncing inherent in driving off-road. On the other hand, merely driving in a car to get to the scene of an otherwise unrelated criminal or tortious act has been held not to be covered. As for dogs: bites that occur inside the vehicle, when humans and dogs are sharing the space, or injuries that occur when humans and dogs both try to exit the vehicle simultaneously, may be covered by the auto policy. The Court of Appeal in this latest case, however, found that the dog bite was too far removed from the pickup truck in both time and space, and that the auto coverage does not apply. You cannot say the victim’s attorney didn’t try hard in a losing cause:

Finally, Grisham argues that Vandagriff was using his truck as a temporary pet storage, and this was a substantial rather than a trivial factor in causing Grisham’s injury. Grisham points to the water dish that Vandagriff left for the dogs in the pickup cab. One problem with this argument is that Grisham was not bit when the dogs were being stored in the vehicle. Of course, Grisham would say that’s the point --Vandagriff was negligently storing the dogs in the truck. Nevertheless, the temporary storage of the dogs in the truck is not much different from their transport in the truck. As we have seen, the transport of the dogs here is akin to the situation of transporting a tortfeasor who departs the vehicle and commits a tort; the tort is not considered to have resulted from the use of the vehicle. [Citations omitted.] . . . The fact remains, at the time of the biting, neither Grisham nor the dog had anything to do with Vandagriff’s truck; they were 20 to 25 yards away from it. The issue is not whether Grisham’s injury resulted from Vandagriff’s negligence, but whether that injury resulted from the use of Vandagriff’s truck.

We conclude that Grisham’s injury did not result from the use of Vandagriff’s truck.

The decision in State Farm Mut. Auto. Ins. Co. v. Grisham (Sept. 20, 2004), Case No. C045912, can be accessed at these links in PDF and Word formats. [Note: The links will expire in approximately 120 days; the opinion should still be accessible thereafter by substituting "archive" for "documents" in the URL.]

Some Couple Are More Equal Than Others When Death Does Them Part (Not That There's Anything Wrong With That)

The Court of Appeal has rejected a claim that the extension of the right to sue for wrongful death to the members of registered “domestic partnerships” violates the equal protection rights of unmarried couples who do not qualify, by age or sexual orientation, for domestic partner status.

California law has long permitted a surviving spouse to sue for damages for “wrongful death” when the other spouse is killed through a third party’s negligence. The Legislature has consistently declined to extend any comparable right to sue to the surviving member of an unmarried couple, regardless of the length of time the relationship has endured or other indicia of the couple’s commitment. In 2002, however, the Legislature extended the right to sue for wrongful death to the surviving member of a registered “domestic partnership.” Under the domestic partnership law, adopted in 2000, a couple may register their relationship as a domestic partnership with the office of the Secretary of State if the two of them are of the same sex or if at least one of them is over the age of 62 and eligible for Social Security.

In the newest case, Tamara Booth was killed in a traffic accident involving a big rig truck. For the three years prior to her death, she had been living in a continuous, committed but non-marital relationship with Jack Holguin. Because Holguin and Booth were not of the same sex, and neither was over 62 years old, they did not qualify to register as domestic partners.

Holguin filed suit against the negligent driver of the big rig, seeking damages for the wrongful death of Booth. The trial court dismissed the case, holding that Holguin did not fall into any of the categories of person permitted to sue under the wrongful death statute. The Court of Appeal has affirmed the dismissal. In doing so, the Court reemphasizes that the right to sue for wrongful death is defined entirely by statute, and finds that there is a constitutionally sound rational basis for the Legislature to extend that right to some unmarried couples -- those who by gender or age are permitted to register as domestic partners -- but not to all.

The Legislature rationally could have concluded the survivors of same sex couples and couples with an aged member eligible for Social Security benefits are deserving of solicitude because they are as likely to suffer economic loss from the death of their partners as are spouses but, because of other statutory schemes, they are legally or practically prevented from marrying. Couples such as Holguin and Booth are not entitled to the same solicitude because the law did not prevent them from marrying.

Furthermore, the Legislature could reasonably have concluded the failure of opposite sex couples “to adopt the responsibility of the marital vows and the legal obligation resulting from a formal marriage ceremony evidenced a lack of permanent commitment which made compensation for loss of monetary support too speculative to calculate.” In the case of married couples this permanency is evidenced by the marriage certificate which provides a public record to all that a legal relationship exists between two persons. In the case of domestic partners this permanency is evidenced by the Declaration of Domestic Partnership which also provides the parties and the public with a record of the partners’ legal relationship. No equivalent public record exists for unmarried cohabiting couples who are of opposite sex.

[Footnotes omitted.]

The decision in Holguin v. Flores (Sept. 15, 2004), Case No. B168774, can be accessed at these links in PDF and Word formats. [Note: The links will expire in approximately 120 days; the opinion should still be accessible thereafter by substituting "archive" for "documents" in the URL.]

Punitive Damages: Not a Double Jeopardy Category

The Court of Appeal has concluded that the fact that a defendant in a wrongful death case is already being punished criminally by imprisonment is no bar to that defendant also sustaining civil penalties through imposition of punitive damages.

With her driving ability significantly impaired by the influence of alcohol, defendant Deborah Gurnett swerved off the highway and struck and killed a cyclist. She later entered a "no contest" plea to charges of gross vehicular manslaughter while intoxicated and received the maximum sentence of ten years' imprisonment. The heirs of the deceased cyclist brought a civil action against Gurnett to recover damages for wrongful death. At trial, the jury awarded compensatory damages of $7.5 million and punitive damages of $35,000.

On appeal, Gurnett argued that the punitive damage award violated her constitutional rights, because she is already being punished through her criminal sentence. She urged that punitive damages violated the Fifth Amendment's prohibition of "double jeopardy," the prohibition on double punishment under the "excessive fines" clause of the Eighth Amendment, and the requirements of due process under the Fourteenth Amendment. The appellate court rejects all of these arguments: the Fifth and Eighth amendment prohibitions only control multiple punishments inflicted by the government in a criminal context and have no bearing on the rights of civil litigants to recover damages for behavior that is also a crime. The court further declined to adopt a "single suit" rule that would effectively limit the pursuit of a wrongdoer to whichever case, criminal or civil, first came to trial:

The mere absence of case authority supporting Gurnett’s substantive due process argument would be a minor impediment if we thought the argument tenable, but we do not. Sound policy dictates rejection of a constitutional rule barring the filing of both a criminal complaint and a civil complaint for punitive damages for a single course of conduct that injures an individual and violates the criminal law. There is no doubt that the goal in each of these cases would be to impose a penalty on the wrongdoer. But, a constitutional prohibition against imposing both penalties would apply regardless of the order in which the cases occurred. Here, the criminal case was filed first and resolved first. There is nothing that mandates this primacy, however. To accept appellant’s argument would lead ineluctably to the conclusion that a defendant who had been subjected to civil punitive damages would be immune from a subsequent criminal prosecution. [Citation.] We decline Gurnett’s invitation to create such a rule.

The decision in Shore v. Gurnett (Sept. 10, 2004), Case No. A101916 can be accessed at these links in PDF and Word formats. [Note: The links will expire in approximately 120 days; the opinion should still be accessible thereafter by substituting "archive" for "documents" in the URL.]

An Ounce of Prevention II -- Child Care Facility Not Liable for Third Party’s Murderous Automobile Rampage on Playground

In May, 1999, Steven Abrams intentionally drove his Cadillac Coupe De Ville at high speed through the fence surrounding a playground at a child care facility in Costa Mesa, California. He killed two children and injured may others. He was later convicted of numerous counts of murder, attempted murder and other serious crimes, and is now imprisoned for life without parole.

The parents of the two children killed by Abrams brought suit against the operator of the child care facility, alleging that it had failed in its duty to prevent the crime. In the trial court, the defendants moved successfully for summary judgment, demonstrating that the fence around the premises fully complied with applicable regulations and urging that Abrams’ conduct had been entirely unforeseeable. The Court of Appeal reviewed that judgment and reversed, holding that the general peril of “an ‘errant’ motorist careening through the fence accidentally was a foreseeable event, so that defendants’ failure to build a stronger fence was a legal cause of the incident.” The California Supreme Court granted review, and has now reversed the Court of Appeal’s determination and ordered that judgment be entered in favor of the defendants.

The Supreme Court provides a lengthy analysis on the issue of foreseeability, reviewing a number of earlier decisions. Ultimately, the court concludes that (a) there was nothing in the layout or condition of the playground that made it particularly prone to accidental entry by passing vehicles and (b) the egregiously criminal nature of Abrams’ assault on the playground could not possibly have been anticipated. The Court sums up its reasoning:

No evidence indicated defendants’ child care facility had ever been the target of violence in the past and no hint existed that either defendants or any other similar business establishment had ever been the target of any criminal acts. Indeed, here, the foreseeability of a perpetrator’s committing premeditated murder against the children was impossible to anticipate, and the particular criminal conduct so outrageous and bizarre, that it could not have been anticipated under any circumstances.

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Plaintiffs have not shown they can prove Abrams’s murderous act was foreseeable. Without prior similar criminal acts, or even any indication of prior criminal acts or intrusions of any type in the surrounding businesses, defendants here could not have been expected to create a fortress to protect the children, or to take further steps to deter or hinder a vicious murderer, unconcerned about the safety of innocent children, from committing his crime.

The Court’s opinion in Wiener v. South Coast Childcare Centers, Inc. (May 6, 2004), Case No. S116358 can be found at these links in PDF and Word formats.