Prop. 51 Applied to Asbestos

Proposition 51 Accrual of Injury

On Monday, August 18, 1997, the California Supreme Court issued its long awaited decision in Buttram v. Owens-Corning Fiberglass (97 C.D.O.S. 6459), deciding when Proposition 51 will apply in asbestos cases. The Court held:

“that a cause of action for damages arising from a latent and progressive disease such as asbestos-related pleural mesothelioma will be deemed to have “accrued”–thereby precluding retroactive application of Proposition 51 under this Court’s holding in Evangelatos–if the plaintiff was diagnosed with the disease for which damages are being sought, or otherwise discovered his asbestos-related illness or injuries prior to June 4, 1986, the effective date of Proposition 51.”

Proposition 51, adopted by the voters by initiative on June 4, 1986 as The Fair Responsibility Act of 1986 (Civil Code Sections 1431-1431.5), provides that those defendants held liable in a tort action for injuries to the plaintiffs will be jointly and severally liable for economic damages and each will be separately liable only for each defendant’s portionate share of the plaintiffs’ non-economic damages based upon the degree of fault. Also referred to as the “deep pocket initiative,” the law is intended to correct the perceived inequity of public entities, corporations and some individuals who are perceived to be very wealthy or heavily insured, being included in lawsuits where they were only tangentially or minimally involved, because the plaintiff could recover the entire judgment from such persons under joint and several liability, while the plaintiffs might not pursue collection against defendants who bore a much greater share of the fault, either because collection from those defendants was more difficult or barred by bankruptcy. Particularly with respect to bankruptcy, the drafters of the initiative effected a compromise between the plaintiff bearing the risk of being unable to collect bankrupt defendants’ share of the judgment and the other defendants bearing bankrupt defendants’ shares of the judgment, by providing that all culpable defendants would be jointly and severally liable for economic damages, and applying the limitation of prorating based on culpability only to non-economic damages.

Previously, in Evangelatos v. Superior Court (1988) 44 Cal.3rd 1188, the California Supreme Court held that Proposition 51 would be applied prospectively only and would be applied only to causes of action which “accrued” on or after the election of June 4, 1986. However, with respect to latent disease cases, no one knew whether Proposition 51 applied or did not apply to a given case. In the Buttram case and the accompanying Coughlin case, the First District Court of Appeals, held that in asbestos cancer cases, the cause of action would be deemed to have accrued for purposes of Proposition 51 when the first cancer cells mutated. The Court pointed out, and the lone dissent by Justice Mosk admitted, that such a holding would mean that Proposition 51 would not apply to any asbestos cases, since plaintiffs’ medical experts estimate in asbestos cases the first cell mutates 10-15 years before the plaintiff perceives or suffers from any symptoms. The plaintiff and Justice Mosk also argued that a defendant’s liability should be determined when the defendant’s misconduct causing the injury occurred, such as the date the asbestos plaintiff was exposed to asbestos.

The majority holding is based upon the reasoning that prior to the plaintiff’s discovery of his latent injuries, neither the plaintiff nor the defendants had any opportunity to calculate potential liability under the former rule of unrestricted joint and several liability. From the plaintiff’s standpoint, he made no decision when to sue, whom to sue, or whom not to sue prior to discovering his injury, which are the only decisions which would have been effected by the new law. From the defendants’ perspective, no defendant will have made any decision regarding settlements or potential equitable indemnity against non-settling tortfeasors prior to the discovery of the injury, which are the only decisions by defendants which would be effected by enactment of the new law. The decision quotes extensively from the Evangelatos decision which relied on such reasoning in holding that Proposition 51 would not be applied retroactively.

The Court stated:

“As we have explained, in the latent disease context, until the plaintiff is diagnosed with or otherwise learns he has the disease, he has not placed any reliance on rules of law governing potential tort causes of action of which he is as yet unaware. It would make little sense to look to the occurrence of the “wrongful act” (in essence, plaintiff’s exposure to defendants’ asbestos products) as the sole event establishing accrual of a cause of action for the purpose of determining whether Proposition 51 is being retroactively applied. Diagnosis or discovery of actual injury or symptoms is the earliest point at which it might reasonably be said, in the latent disease context, that the plaintiff has been placed on actual notice of his injuries such that he might contemplate suit and place reasonable reliance on the rules of laws governing recovery of damages for his compensable injuries.”

Interestingly, the majority decision gives a second justification which is limited to a single sentence providing no case authority:

“Moreover, until there has been actual harm or injury and an awareness of same, there can be no non-economic damages to be pled–such as pain, mental suffering, inconvenience, emotional distress, loss of society and companionship, loss of consortium or injury to reputation and humiliation–the category of damages to which Proposition 51 is addressed (Civ. Code Section 1431.2, Subdivision (b)(2).) (Court’s own emphasis.)

The Court specifically states that its holding and reasoning in this case applies only to Proposition 51, clearly indicating that this reasoning is not intended to apply to statutes of limitation. The decisions of whom to sue, whom not to sue, whether to settle and whether to settle with the intent of seeking equitable indemnity from others, which the Court relies upon to reach its conclusion, apply only to the joint and several liability aspects of Proposition 51 and have no applicability to statutes of limitation.

The effect of this decision is that Proposition 51 will apply in almost every asbestos case. While California’s peculiar statute of limitation does not prohibit a plaintiff from filing suit many years after the symptoms first appear on X-rays or cause him pain or inconvenience, Proposition 51 already is over 11 years old, and the plaintiff who waits to file suit until more than 11 years after suffering asbestos related symptoms, will be rare. This decision will have its greatest effect in cases that go to trial, and less effect on settlements, since plaintiffs’ counsel and defense counsel take proportionate culpability into account in negotiating their settlements.

Should you have any questions concerning the Buttram decision and Proposition 51, or if you would like a copy of the Supreme Court’s decision, please call Joanne or me.

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