Toyota Motor Sales U.S.A., Inc. v. Superior Court 220 Cal.App.3d 864

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Toyota Motor Sales Inc. v. Superior Court (1990) 220 Cal.App.3d 864. 269 647

[No. B047423. Court of of California, Second Appellate Division Three. May 22, 1990.]

MOTOR SALES U.S.A. Petitioner, v. THE SUPERIOR COURT OF LOS COUNTY, Respondent; MEICHUNG LEE et al. Real Parties in Interest

Court of Los Angeles County, No. Abraham Gorenfeld, Temporary * )

(Opinion by Croskey, J. with P. J. and Danielson, J. concurring.)

COUNSEL

Bianchi McConnell, Martin E. for Petitioner.

No appearance for Respondent.

Pave, McCord Freedman, and J. Jacobs for Real Parties in

OPINION

CROSKEY, J.

Petitioner, Motor Sales U.S.A. (Toyota), seeks a writ of directing the respondent court to its order [220 Cal.App.3d finding in good faith Civ. Proc. 877.6)fn. 1 a between the plaintiff and defendants Uno No. 12, Yang Hai Lee and Meichung Tang Lee Lee). As it appears from record that the trial ruling was based entirely on a regarding Lee’s potential for plaintiff’s injuries which is not by substantial evidence, we grant the

Factual and Procedural Background

At for purposes of the matter before us, is no real dispute as to the relevant The record presented by the parties that this case from a rear-end automobile which occurred on August 28, in the city of Torrance, California. Christopher Heard (Heard), delivering a pizza from Uno No. 12, a pizza franchise owned by so operated his vehicle as to cause it to with the rear of plaintiff’s As a result, plaintiff sustained which included $13,000 in expenses and $900 in property

On July 8, 1988, plaintiff suit against Lee, and Toyota. She alleged that was negligent in the operation of the vehicle and Lee, as his employer, was vicariously under the doctrine of respondeat The cause of action against alleged that it had defectively the seat belt installed in vehicle and that the belt’s upon impact had contributed to her 2 [220 Cal.App.3d 869]

made a demand upon the for $500,000 to settle the entire Subsequently, Heard entered a separate settlement with for $100,000 which the court, on 10, 1989, found to be in good within the meaning of section The evidence in support of that included the fact that was a 21-year-old student with if any, assets other coverage for his car under his father’s policy. The amount paid in represented the full policy Toyota did not object to the trial good faith determination respect to this settlement.

then entered into a settlement with Lee in consideration of the of the sum of $15,000 which represented the amount provided by Lee’s policy. Over Toyota’s the trial court found settlement to be in good faith.fn. 3 thereon, Toyota’s cross-complaint Lee for comparative equitable indemnity was Toyota then filed a petition for a writ of mandate.

It is from a review of the record, the good faith determination by the trial court was based on its that Heard was not an employee of but rather was an independent contractor.fn. 4 On [220 Cal.App.3d 870] Lee would have no liability to as the only theory against Lee by plaintiff was based upon the of respondeat superior. There was no that Lee was independently negligent in or using Heard’s delivery In such circumstances, a settlement of would clearly justify a that it was made in good On the other hand, if Heard was an of Lee, acting in the course and of his employment at the time of the accident, Lee might well be exposed to the of unlimited liability and the question of faith would depend the trial court’s evaluation of factors (e.g. plaintiff’s recovery and the extent of Lee’s which were not reached or by the court.fn. 5

Issue Presented

Did the trial court abuse its in finding that the settlement was in faith? In light of the court’s basis for its ruling, the answer to question turns upon there was sufficient evidence which the court, in the exercise of its could have concluded at trial the court might that Heard was an independent rather than Lee’s

Discussion

[2] The determination as to whether a is in good faith is a matter to the discretion of the trial court. Inc. v. Woodward-Clyde Associates 38 Cal.3d 488. 502 [213 256 [698 P.2d 159] The concept of judicial discretion is to define with precision. In the [the Supreme Court described it as ‘the sound of the court, to be exercised according to the of law.’ (Lent v. Tillson, 72 404, 422. ) More [the court] said. the term judicial discretion absence of arbitrary determination, disposition or whimsical thinking.’ (In re 6 Cal.3d 78. 85. ) Moreover, discretion is whenever the court exceeds the of reason, all of the circumstances being [Citations.] (People v. Giminez 14 Cal.3d 68. 72 [120 Cal.Rptr. 534 P.2d 65].)

The exercise of that discretion in the of a determination as to good faith section 877.6, Like judicial determinations. [220 871] involves the resolution of a issue which, consistent time-honored rules of appellate must be upheld if supported by evidence. [Citations.] (Barajas v. USA Corp. (1986) 184 Cal.App.3d 987 [229 Cal.Rptr. 513].) A as to the good faith of a settlement, the meaning of section 877.6, requires the trial court to and weigh a number of relevant 6 one of the most important of which is the party’s proportionate liability. In such examination, the court look at the state of the evidence as it at the time the motion for a good determination is heard. (Torres v. Pacific R.R. Co. (1984) 157 499. 509 [203 Cal.Rptr. Tech-Bilt, supra, 38 Cal.3d at p. If, as we will find the case to be there is no substantial evidence to a critical assumption as to the nature and of a settling defendant’s liability, a determination of good faith upon such assumption is an of discretion.

[1b] As we have the critical and threshold question, which the trial court’s determination of good faith relates to the employment status of If the evidence on this point is that there can be but one conclusion and is that Heard was Lee’s then the ultimate factual of good faith must be in light of Lee’s exposure to liability. This obviously did not here. Indeed, the trial determination of good faith was on exactly the opposite factual

[3] Substantial evidence, of course, is not with any evidence, but is evidence is of ponderable legal significance. It be reasonable in nature, credible, and of value; it must actually be proof of the essentials which the law in a particular case. (Estate of (1952) 112 Cal.App.2d 638. 644 P.2d 54]; Kruse v. of America (1988) 202 Cal.App.3d 38. Thus, the focus is on the quality, not the of the evidence. Very little evidence may be substantial, while a lot of weak evidence might be [220 Cal.App.3d 872] Eisenberg et al. Cal. Practice Civil Appeals and Writs 8.50, pp. 8-12.)

[4] Where inferences may reasonably be drawn, the of the trial court will be on appeal even though a determination would likewise be (2 Witkin, Summary of Cal. Law ed. 1987) Agency and Employment. 24, p. 39; v. Stewart (1937) 20 Cal.App.2d 348 [67 P.2d 144].) However, the facts are undisputed, the issue is one of law and the court is free to reach its own conclusion from such (9 Witkin, Cal. Procedure (3d ed. Appeal. 288-290, pp. 300-303; v. Bratlie (1948) 33 Cal.2d 127-129 [199 P.2d Isenberg v. California Emp. Com. (1947) 30 Cal.2d 34. 40 P.2d 11]; Baugh v. (1944) 24 Cal.2d 200. 206 P.2d 633, 152 A.L.R. It appears that this rule is applicable here as is no dispute as to the facts; the parties simply emphasized different

[1c] The evidence, relevant to the status of Heard, offered by Lee and relied upon by the court, was he (1) provided his own car, expenses and (2) was paid on a commission (10 percent) for each delivery, (3) agreed to pay his own (FICA) and income taxes, (4) to provide his own workers’ compensation and (5) had signed a written agreement Lee which acknowledged his status as an contractor.fn. 7 Lee, in accordance the [220 Cal.App.3d 873] paid Heard for his services day in a cash amount equal to 10 of the total charges for the pizzas

The evidence emphasized by Toyota that Heard (1) was requested by Lee to between 5 p.m. and 9 p.m. day, (2) delivered pizzas to customers who had called in orders, (3) pizzas at the times and to the customers and in the as directed by Lee, (4) collected the indicated on the customer’s bill by Lee and returned it (with any shortages to be from the commission), and (5) could be by Lee at any time For Any Reason Whatsoever 24 hours’ written notice to

[5] The most significant factor in whether the status of a person services for another is an employee or an contractor is the right to control the and means of accomplishing the result, is, the details of the work. If the employer has the [220 Cal.App.3d 874] to complete control, whether or not right is exercised with to all details, an employer-employee relationship (Empire Star Mines Co. v. Emp. Com. (1946) 28 33. 43 [168 P.2d 686], on another point in People v. (1982) 32 Cal.3d 468. fn. 8 [186 Cal.Rptr. 77, 651 P.2d Other factors are also to be They, including the issue of control, are set forth in the Restatement of Agency section 220, as

(1) A servant is a person employed to services in the affairs of another and who respect to the physical conduct in the of the services is subject to the other’s or right to control.

(2) In determining one acting for another is a servant or an contractor, the following matters of among others, are considered:

(a) the of control which, by the agreement, the may exercise over the details of the

(b) whether or not the one employed is engaged in a occupation or business;

(c) the kind of with reference to whether, in the the work is usually done the direction of the employer or by a specialist supervision;

(d) the skill required in the occupation;

(e) whether the employer or the supplies the instrumentalities, tools, and the of work for the person doing the

(f) the length of time for which the is employed;

(g) the method of payment, by the time or by the job;

(h) whether or not the is a part of the regular business of the

(i) whether or not the parties believe are creating the relation of master and and [220 Cal.App.3d 875]

(j) the principal is or is not in business. (See v. Unemployment Ins. App. Bd. 2 Cal.3d 943. 950, fn. 4 [88 175, 471 P.2d 975].)

the cases which have the Restatement’s multiple factor have emphasized that control is clearly the most and the others merely constitute elements. (Isenberg v. California Stab. Com. supra, 30 at p. 39; Tieberg v. Unemployment Ins. Bd. supra, 2 Cal.3d at p. 950.) it is not the control actually exercised, but which may be exercised which is (Malloy v. Fong (1951) 37 356. 370 [232 P.2d S.A. Gerrard Co. v. Industrial Com. (1941) 17 Cal.2d 414 [110 P.2d 377].)

of the means of ascertaining whether or not right to control exists is the of whether or not, if instructions given, they would to be obeyed.’ (Press Pub. Co. v. Acc. Com. [(1922) 190 114, 121 (210 P. 820)].) The test has been said to be the employee was subject to the employer’s and control and was liable to be discharged for or misconduct; and the fact that a amount of freedom of action is in the nature of the work does not the character of the employment where the has general supervision and control it.’ ( May v. Farrell (1928) 94 703, 710. ) ‘Perhaps no circumstance is more conclusive to the relationship of an employee than the of the employer to end the service whenever he fit to do so.’ ( Press Pub. Co. v. Acc. Com. (1922). 190 114, 120. ) (Burlingham v. (1943) 22 Cal.2d 87. 99-100 P.2d 9].)

Indeed, the right to discharge at will and cause has been stressed by a of cases as a strong factor employment. (Riskin v. Ind. Com. (1943) 23 Cal.2d 255 [144 P.2d 16]; Star Mines Co. v. Cal. Com. supra, 28 Cal.2d at p. 43; v. Fong, supra, 37 Cal.2d at p. City of Los Angeles v. Vaughn 55 Cal.2d 198. 201 [10 Cal.Rptr 358 P.2d 913].)

[1d] In light of such it appears to us that the undisputed in this case may be characterized simply. Lee hired Heard to pizzas to Lee’s customers and and controlled (1) the number, nature and of pizzas to be delivered, (2) the time such deliveries [220 876] would take (3) the persons and locations to whom would be delivered and (4) the price to be for each pizza and the total of money to be collected from customer. In short, Lee determined would be delivered, when and to and what price would be What portion of Heard’s was left to his discretion and not subject to control? Did it include anything than the route Heard take to a customer’s home or how he would drive? Such generally have been to be simply a freedom inherent in the of the work and not determinative of the employment (See, e.g. May v. Farrell 94 Cal.App. 703, 710 [271 P. Curcic v. Nelson Display Co. 19 Cal.App.2d 46. 50 [64 P.2d 1153].) it is at least arguable that Lee had the to control this aspect of work as well. It would be obvious purpose and desire, and clearly part of Heard’s to get the fresh warm pizza to the as soon as possible. Indeed, it doubtless be argued at trial Heard’s preoccupation with the for prompt delivery contributed in manner to the accident which caused plaintiff’s injuries.

the only evidence offered in of the claim that Heard was an contractor was that he provided his own expenses and insurance. As already such circumstance would at be a secondary element and, more, worthy of little Moreover, any emphasis on this is only justified if Heard can be to a route driver or distributor who by of the absence of control and the nature and of the performance of the services, could not be but an independent contractor. (See, Briggs v. California Emp. (1946) 28 Cal.2d 50. 54-55 P.2d 696]; Mt. Meadow, v. Indus. Acc. Com. 25 Cal.App.2d 123. 129 [76 P.2d Bates v. Industrial Acc. (1958) 156 Cal.App.2d 713. 719 P.2d 167].)fn. 8 [220 877]

When his relationship Lee is compared to such occupations it is that Heard could not be characterized as an independent route or salesman. He was subject to Lee’s control as to all aspects of his job. Heard reported to work, how he worked, when he made and to whom and for what purpose all dictated and controlled by Lee. was at no risk whatever with to Lee’s business or any of the pizza which were the subject of delivery services (except his commission was subject to a charge for any His only responsibility was to deliver, the money and return. Finally, Lee the express contractual right to the relationship at any time and without

The remaining factors relied by Lee are entirely self-serving or equivocal and are of or no value on the issue. The fact Heard was paid on a commission is equally consistent with status. The agreement characterizing the as one of client — independent will be ignored if the parties, by actual conduct, act like — employee. (Empire Mines Co. v. Cal. Emp. supra, 28 Cal.2d at p. 45; Tieberg v. Ins. App. Bd. supra, 2 at p. 952.) Indeed, attempts to employment by formal documents to create other relationships led the courts to disregard such whenever the acts and declarations of the are inconsistent therewith. (See, Lbr. Co. v. Ind. Acc. (1943) 22 Cal.2d 410, 422 P.2d 892]; White v. Inc. (1984) 155 Cal.App.3d 1. 27 Cal.Rptr. 141]; Bemis v. (1952) 109 Cal.App.2d 253. 266 P.2d 638]; Lewis v. Life Co. (1950) 96 Cal.App.2d 194 [215 P.2d 55].)

the requirements that Heard pay his own and income taxes and provide his own compensation insurance are of no help to Lee. These are merely the consequences of an independent contractor not a means of proving it. An employer change the status of an employee to one of contractor by illegally requiring him to burdens which the law imposes on the employer.

Thus, given the facts which were to the trial court in this there was no substantial evidence to its apparent [220 Cal.App.3d finding that Heard was an contractor. [6, 7] (See fn. 9.) In our view, is no reasonable conclusion that can be from this record that Heard was Lee’s 9 In the context of the good faith Lee must be deemed exposed to the of full vicarious liability to the for any negligent act or omission of Heard in the course and scope of his employment.fn. 10 being so, it was an abuse of discretion for the court to find the settlement Lee to be in good faith based on the conclusion that no such existed.

Disposition

The alternative writ is Let a peremptory writ of mandate directing the trial court to its order of January 4, 1990, and to a further hearing and proceedings in with the views [220 879] expressed herein respect to Lee’s motion to that the settlement with the was in good faith within the of section 877.6. Klein, P. J. and J. concurred.

. FN *. Pursuant to California article VI, section 21.

. FN 1. Unless indicated, all statutory references are to the of Civil Procedure. Section provides, in pertinent part:

(a) Any to an action wherein it is alleged two or more parties are joint or co-obligors on a contract debt be entitled to a hearing on the issue of the faith of a settlement entered by the plaintiff or other claimant and one or alleged tortfeasors or co-obligors.

(b) The of the good faith of a settlement may be by the court on the basis of affidavits with the notice of hearing, and any filed in response thereto, or the may, in its discretion, receive evidence at the hearing.

(c) A determination by the that the settlement was made in faith shall bar any other tortfeasor or co-obligor from any claims against the settling or co-obligor for equitable comparative or partial or comparative indemnity, on comparative negligence or comparative

(d) The party asserting the lack of faith shall have the of proof on that issue.

(e) a determination of the good faith or of good faith of a settlement is any party aggrieved by the determination may the proper court to review the by writ of mandate. The petition for of mandate shall be filed 20 days after service of notice of the determination, or within additional time not exceeding 20 as the trial court may allow.

. FN 2. the record reflects an apparent dispute as to whether plaintiff was wearing a seat belt. the ultimate resolution of this will have a major on plaintiff’s claim against

. FN 3. The record reflects that the orally announced its ruling on 22, 1989, at the time of the hearing on motion to have the settlement plaintiff determined to be in good The court signed and filed its order on January 4, 1990.

. FN 4. At the of the good faith hearing on 22, 1989, the court stated:

The At the moment we’re persuaded Heard was an independent contractor and there would be no liability on the of the moving parties, the Lees.

And now we’re inclined to grant motion and find that was a good faith settlement by of the fact that their seems to be very limited.

argument by counsel in which was discussed the various factors to a determination of employee or independent status, the court announced its in the following terms:

The Court: My show that in addition to the [see fn. 7, post], contrary to you say, the evidence indicates Heard provided his own automobile, he his own expenses and insurance.

He was paid on a basis depending on the jobs. It was not an — it was not based on any hourly of performance. He pays his own Social and taxes. Nothing is withheld his paycheck. And although the Lees that he work during the hours, this was not a strict and he more or less selected his own of employment.

* * *

The Court: Now I know pointed to some evidence to the but today this is not a motion for judgment where the court is from weighing evidence.

is a motion for a good faith where we can weigh the evidence. And we look at the factors in favor of the party as opposed to the evidence by you in opposition [referring to counsel for it seems to me the Lees make out a case for relief.

* * *

Toyota CAL-1


The Court: Okay. His motion be granted for relief.

. FN 5. Toyota evidence, developed on discovery, Lee had significant assets and thus could respond to damages in excess of the $15,000 policy

. FN 6. The factors and considerations to be taken account in the trial court’s of whether a settlement is in good include: 1. whether the amount of the is within the reasonable range of the tortfeasor’s proportional share of liability for the plaintiff’s injuries; 2. a approximation of plaintiff’s total and the settlor’s proportionate liability; 3. the paid in settlement; 4. the allocation of proceeds among plaintiffs; 5. a that a settlor should pay in settlement than he would if he found liable after a 6. the financial conditions and insurance limits of settling defendants; 7. the of collusion, fraud, or tortious aimed to injure the interests of defendants; [and] 8. the evaluation be on the basis of information available at the of the settlement. (Barajas v. USA Petroleum supra, 184 Cal.App.3d 974. Tech-Bilt, supra, 38 Cal.3d at pp.

. FN 7. Because it is apparently central to the court’s good faith as well as Lee’s arguments in thereof, we set out the terms of the agreement in

Agreement

This Agreement and entered into this day of ______________________, by and between Christopher Heard (hereinafter referred to as Contractor), and Yang Hai Lee dba ______________________ referred to as the Client) located at Hawthorne Boulevard, Torrance, Ca. is made with reference to the facts.

A. Independent Contractor is in the of providing (delivery service) to on a (contract) basis.

B. The Client to hire Independent Contractor to (delivery) service for the store at the listed above.

The Parties Agree as Follows:

1. The Client to pay the Independent Contractor as follows:

(a) per delivery. (This amount is directly from the customer, as the is built into the cost of the

(b) At the end of the night or the next day (as agreed by the Management and the Independent Contractor), the will pay a sum equal to 10% of the delivery less the $1.00 charge into the price of the delivery

(c) The Independent Contractor pays the for all delivery items. The store charge the Independent Contractor the amount of the delivery including but less the $1.00 delivery As the $1.00 delivery charge is in the delivery charge, the Independent receives his $1.00 delivery when he collects from the for the delivery.

(d) The Independent Contractor keep all gratuities (tips) he from his delivery service.

will consist only of of items deemed appropriate by the management.

2. Independent contractor that he is not being hired by the but the Client is strictly contracting mentioned in Paragraph 1 above.

3. Contractor agrees that he is for the following:

(a) Maintaining a valid insurance policy with to be approved by Numero Uno, and up-keep, gas and safe operating

(b) Payment of appropriate payroll to state and federal taxing

(c) Maintaining appropriate workmans compensation coverage for principles and

4. Independent Contractor agrees the Client shall be held against any lawsuits which may from any act of the Independent Contractor’s

5. Independent Contractor agrees any cash value of product or stolen will be the responsibility of the Contractor and any shortages will be from the fee paid to the Independent by Numero Uno.

6. The Client has the to terminate this Agreement, For Any Whatsoever, upon twent-four (24) hours written to Independent Contractor.

In Witness the parties hereto have this Agreement this 4th day of at Torrance, California.

By /s/ Yang Hai Lee

Contractor

By /s/ Chris Heard

License Number: C4685974

Date of Drivers License:

Vehicle License Number:

Insurance Policy Company State Farm Insurance

Insurance Policy Number:

. FN 8. In Briggs v. California Emp. supra, 28 Cal.2d at pages the court, in a case involving a salesman of bottled water, the factors which are typical of salesman or distributor cases:

The evidence concerning the contract of the and the operations carried on pursuant to agreements clearly shows the water company had no right to nor did it, in practice, control the manner or by which the route men sold Each of them was free to do as he He worked few or many hours no requirement that he must any minimum quantity of water in a period. He serviced his route and as often as he chose and was not required to at the company’s plant at any particular He received no instructions and was not required to reports. He extended credit or cash at his discretion and bore all on debts. He did all of the work himself or helpers whom he paid. the record discloses that of the equipment was furnished by the company, the had to pay the company the market price of all not returned or accounted for, and all but two of the owned their own trucks. As the was for a three-year period, the water did not have the right to discharge the at will without cause. were sold without the permission of the company and often its knowledge. Under these in every respect, the distributor was an contractor.

. FN 9. We, of course, do not intend by our to suggest that (1) the question of employee status, or (2) the issue of he was, at the time of plaintiff’s acting within the course and of such employment, have finally resolved. These are which may ultimately be contested and at trial. On a motion for a good determination under section the trial court is charged with making a rough of a settling defendant’s proportionate based on information available at the of settlement. ( Tech-Bilt, supra, 38 at p. 499.) The trial court decide this issue by upon affidavits (which precludes cross-examination) and it will not have before it all of the evidence may ultimately be offered at trial on a issue. Moreover, any good determination once made is by subsequent determinations made at as to the actual liability of the parties or the of damages sustained by a plaintiff. v. USA Petroleum Corp. supra, 184 at p. 987.) Thus, any factual or determinations made on contested of liability or damages are tentative and for the purposes of evaluating the good of a proposed settlement as of the date of evaluation.

On writ review, our is similarly circumscribed. It is limited to the question of the trial court’s of discretion in ruling on the good motion. As must the trial we rely upon the state of the and the respective showings made by the as of the time of the motion.

. FN 10. Certainly, a result would be entirely with the rationale for imposing superior liability. An employer, apart from the issue of should be liable for those which are inherent in, or created by, the of the enterprise from which he to profit. Here, the actual (i.e. the injury to plaintiff as a of Heard’s negligence) was a reasonably consequence of Lee’s engaging in a activity involving multiple of temperature-sensitive food products. was a risk of Lee’s enterprise and he, than the innocent plaintiff, be required to bear it. This is grounded upon ‘a rooted sentiment that a enterprise cannot justly responsibility for accidents which may be said to be characteristic of its activities.’ S. Bushey Sons, Inc. v. States, 398 F.2d 167, ) (Rodgers v. Kemper Constr. Co. 50 Cal.App.3d 608. 618-619 Cal.Rptr. 143]; see also, v. Westinghouse Elec. Co. (1970) 2 956. 959-962 [88 Cal.Rptr. 471 P.2d 988].)

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