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.)


Bianchi McConnell, Martin E. for Petitioner.

No appearance for Respondent.

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



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


[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 of such rules, it appears to us the undisputed evidence in this may be characterized very simply. Lee Heard to deliver pizzas to customers and directed and controlled (1) the nature and type of pizzas to be (2) the time when such [220 Cal.App.3d 876] take place, (3) the persons and to whom they would be and (4) the price to be charged for each and the total amount of money to be from each customer. In Lee determined what would be when and to whom and what would be charged. What of Heard’s work was left to his and not subject to Lee’s control? Did it anything more than the Heard would take to a home or how fast he would Such factors generally been considered to be simply a inherent in the nature of the work and not of the employment relation. (See, May v. Farrell (1928) 94 Cal.App. 710 [271 P. 789]; Curcic v. Display Co. (1937) 19 Cal.App.2d 46. 50 [64 1153].) Moreover, it is at least that Lee had the right to control aspect of Heard’s work as It would be Lee’s obvious and desire, and thus clearly of Heard’s responsibility, to get the fresh pizza to the customer as soon as Indeed, it will doubtless be at trial that Heard’s with the necessity for prompt contributed in some manner to the which allegedly caused injuries.

Essentially, the only evidence in support of the claim that was an independent contractor was that he his own car, expenses and insurance. As suggested, such circumstance at most be a secondary element without more, worthy of weight. Moreover, any emphasis on factor is only justified if can be likened to a route driver or who by reason of the absence of control and the and manner of the performance of the services, not be anything but an independent contractor. e.g. Briggs v. California Com. (1946) 28 Cal.2d 50. [168 P.2d 696]; Mt. etc. v. Indus. Acc. (1938) 25 Cal.App.2d 123. 129 [76 724]; Bates v. Industrial Com. (1958) 156 Cal.App.2d 719 [320 P.2d 167].)fn. 8 Cal.App.3d 877]

When his with Lee is compared to such it is clear that Heard not be properly characterized as an independent driver or salesman. He was subject to total control as to all aspects of his When Heard reported to how long he worked, when he deliveries and to whom and for what were all dictated and controlled by Heard was at no risk whatever respect to Lee’s business or any of the sales which were the of Heard’s delivery services that his commission was subject to a for any shortages). His only responsibility was to collect the money and return. Lee retained the express contractual to terminate the relationship at any time and cause.

The remaining factors upon by Lee are entirely self-serving or and are of little or no value on the issue. The that Heard was paid on a basis is equally consistent employee status. The agreement the relationship as one of client — contractor will be ignored if the by their actual conduct, act employer — employee. Star Mines Co. v. Cal. Com. supra, 28 Cal.2d at p. 45; v. Unemployment Ins. App. Bd. 2 Cal.3d at p. 952.) Indeed, to conceal employment by formal purporting to create other have led the courts to disregard terms whenever the acts and of the parties are inconsistent therewith. Pacific Lbr. Co. v. Ind. Com. (1943) 22 Cal.2d 422 [139 P.2d 892]; v. Uniroyal, Inc. (1984) 155 1. 27 [202 Cal.Rptr. 141]; v. People (1952) 109 Cal.App.2d 266 [240 P.2d 638]; v. Constitution Life Co. (1950) 96 191. 194 [215 P.2d

Finally, the requirements that pay his own payroll and income taxes and his own worker’s compensation insurance are of no whatever to Lee. These are the legal consequences of an independent status not a means of proving it. An cannot change the status of an to one of independent contractor by illegally him to assume burdens which the law directly on the employer.

Thus, the undisputed facts which presented to the trial court in case, there was no substantial to support its apparent [220 878] finding that was an independent contractor. [6, 7] (See fn. 9.) In our there is no reasonable conclusion can be drawn from this except that Heard was employee.fn. 9 In the context of the good motion, Lee must be deemed to the possibility of full vicarious to the plaintiff for any negligent act or omission of occurring in the course and scope of his 10 That being so, it was an abuse of for the trial court to find the with Lee to be in good faith on the unsupportable conclusion that no liability existed.


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


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


By /s/ Chris Heard

License Number: C4685974

Date of Drivers License:

Vehicle License Number:

Insurance Policy Company State Farm Insurance

Policy Number: 1N69U7C178616

. FN 8. In v. California Emp. Com. 28 Cal.2d at pages 54-55, the in a case involving a route of bottled water, described the which are typical of route or distributor cases:

The uncontradicted evidence concerning the of the distributors and the operations carried on to those agreements clearly that the water company had no to control, nor did it, in practice, control the or means by which the route men water. Each of them was to do as he pleased. He worked few or many with no requirement that he sell any minimum quantity of in a given period. He serviced his whenever and as often as he chose and was not to report at the company’s plant at any time. He received no instructions and was not to make reports. He extended or required cash at his discretion and all losses on debts. He did all of the work or hired helpers whom he Although the record discloses some of the equipment was furnished by the the distributor had to pay the company the market of all equipment not returned or accounted and all but two of the distributors owned their own As the agreement was for a three-year period, the company did not have the right to the distributors at will without Routes were sold asking the permission of the company and without its knowledge. Under circumstances, in every respect, the was an independent contractor.

. FN 9. We, of course, do not by our decision to suggest that (1) the of Heard’s employee status, or (2) the of whether he was, at the time of injury, acting within the and scope of such employment, been finally resolved. are issues which may ultimately be and litigated at trial. On a motion for a faith determination under 877.6, the trial court is only with making a approximation of a settling defendant’s liability based on information at the time of settlement. ( Tech-Bilt, 38 Cal.3d at p. 499.) The trial must decide this by reliance upon affidavits obviously precludes cross-examination) and it not necessarily have before it all of the which may ultimately be offered at on a disputed issue. Moreover, any faith determination once is unaffected by subsequent determinations at trial as to the actual liability of the or the amount of damages sustained by a (Barajas v. USA Petroleum Corp. 184 Cal.App.3d at p. 987.) Thus, any findings or determinations made on issues of liability or damages are and solely for the purposes of evaluating the faith of a proposed settlement as of the of such evaluation.

On writ our determination is similarly circumscribed. It is solely to the question of the trial abuse of discretion in ruling on the faith motion. As must the court, we rely upon the of the record, and the respective showings by the parties, as of the time of the motion.

. FN 10. such a result would be consistent with the rationale for respondent superior liability. An quite apart from the of control, should be liable for risks which are inherent in, or by, the operation of the enterprise from he stands to profit. Here, the occurrence (i.e. the injury to as a result of Heard’s negligence) was a foreseeable consequence of Lee’s in a business activity involving deliveries of temperature-sensitive food This was a risk of Lee’s and he, rather than the innocent should be required to bear it. result is grounded upon deeply rooted sentiment a business enterprise cannot disclaim responsibility for accidents may fairly be said to be characteristic of its (Ira S. Bushey Sons, v. United States, 398 F.2d 171. ) (Rodgers v. Kemper Co. (1975) 50 Cal.App.3d 608. [124 Cal.Rptr. 143]; see Hinman v. Westinghouse Elec. Co. 2 Cal.3d 956. 959-962 [88 188, 471 P.2d 988].)

Toyota CAL-1


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