Filed 11/12/19 Dufresne v. Gryphon Aircraft Services CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION TWO

NANCY MERRIS DUFRESNE et al.,

Plaintiffs and Appellants,

v.

GRYPHON AIRCRAFT SERVICES, LLC et al.,

Defendant;

GUIDEONE MUTUAL INSURANCE COMPANY,

Intervener and Respondent.

E071199

(Super.Ct.No. MCC1500414)

OPINION

APPEAL from the Superior Court of Riverside County. Irma Poole Asberry, Judge. Reversed.

Bailey & Partners, Patrick E. Bailey, Keith A. Lovendosky; Nelson & Fraenkel and Stuart R. Fraenkel for Plaintiffs and Appellants.

No appearance for Defendant.

Burnham Brown, Paul Caleo, Robert M. Bodzin, Stephen P. Randall and Gerald K. Carroll for Intervenor and Respondent.

Edward Dufresne (Edward) and Mitchell Morgan (Mitchell) perished in an airplane crash while working for the Word of Life Outreach Church (the Church). Edward’s and Mitchell’s surviving wives and children, plaintiffs and appellants Nancy Merris Dufresne, Carole J. Dufresne De la Fuente, Steven Edward Dufresne, Grant Wesley Dufresne, Suzanne M. Penir, Stephanie J. Taylor, Sharon Morgan, Harrison L. Morgan and Alexander Morgan (collectively, plaintiffs), sued various entities, including defendant Gryphon Aircraft Services (Gryphon). Plaintiffs settled with Gryphon.

The Church’s worker’s compensation insurance was provided through intervener and respondent GuideOne Mutual Insurance Company (Insurer). Insurer paid “workers’ compensation medical and death benefits totaling $582,148.38 for both decedents.” After plaintiffs’ and Gryphon’s settlement, Insurer applied, in the trial court, for a 60 percent reimbursement, i.e., $349,289, from the Gryphon settlement funds. (Labor Code, § 3860, subd. (b).) The trial court ordered Insurer receive a reimbursement of $291,074.

Plaintiffs raise four issues on appeal. One of the issues raised by plaintiffs is that the trial court erred by not conducting a trial to assign percentages of fault and allocate damages. Insurer contends the appeal should be dismissed. We reverse the order.

FACTUAL AND PROCEDURAL HISTORY

A. PLEADINGS

Edward and Mitchell were employed by the Church. Dufresne, Inc. owned “a Cessna 500 fixed-wing, multi-engine, jet aircraft” (the plane), which it used for “traveling ministries nationwide and abroad.” On the morning of October 18, 2013, Mitchell piloted the plane, and Edward was a passenger on the plane. The plane took off from Wichita, Kansas bound for New Braunfels, Texas.

In plaintiffs’ complaint, they alleged, “[S]hortly after take-off, during the climb, a portion of the left wing, among other parts, separated from the [plane], causing the [plane] to depart controlled flight and crash.” Gryphon, which is located in California, provided inspection, repair, and maintenance for the plane. In Gryphon’s first amended answer, it alleged “[T]he National Transportation Safety Board (‘NTSB’) found no evidence of a mechanical problem with the [plane].”

Gryphon further alleged, “[T]he NTSB found, ‘Following the previous flight, the pilot reported to a maintenance person in another state that he had several malfunctioning flight instruments, including the autopilot, the horizontal situation indicator, and the artificial horizon gyros. The pilot, who was not a mechanic, had maintenance personnel replace the right side artificial horizon gyro but did not have any other maintenance performed at that time. The pilot was approved under an FAA exemption to operate the [plane] as a single pilot; however the exemption required that all equipment must be operational, including a fully functioning autopilot, flight director, and gyroscopic flight instruments. Despite the malfunctioning instruments, the pilot chose to take off and fly in instrument meteorological conditions.’ ”

Gryphon asserted, “Further, the NTSB determined, ‘The [plane]’s encounter with severe icing conditions, which resulted in structural icing, and the pilot’s increased workload and subsequent disorientation while maneuvering in instrument flight rules (IFR) conditions with malfunctioning flight instruments, . . . led to the subsequent loss of [plane] control. Contributing to the accident was the pilot’s decision to takeoff in IFR conditions and fly a single-pilot operation without a functioning autopilot and with malfunctioning flight instruments.’ ”

In plaintiffs’ complaint, they brought one cause of action for negligence. Plaintiffs alleged Gryphon and the other defendants were negligent in inspecting, repairing, and maintaining the plane. In their prayer for relief, plaintiffs requested “wrongful death and survival general damages and special damages according to proof.” Insurer intervened in the lawsuit.

B. SETTLEMENT

Plaintiffs and Gryphon agreed to settle the lawsuit. In the redacted settlement agreement, Gryphon agreed to pay a redacted sum of money in exchange for dismissal of the case and a full release of all claims. The settlement agreement reflects, “[T]he settling claimants will allocate the settlement payment among themselves and that they will have no recourse against Gryphon . . . in the event they are unable to reach an agreement as to allocation.” The settlement agreement further provides, “The Dufresne [and] Morgan plaintiffs will satisfy all liens, including the lien of [Insurer,] for payment of workers compensation benefits. The Morgan and Dufresne plaintiffs will defend and indemnify Gryphon . . . for any claims asserted by lienholders including [Insurer].”

C. APPLICATION FOR REIMBURSEMENT

Insurer filed an application for reimbursement in the trial court. Insurer requested “a minimum of $349,289, which represents 60% of the total workers compensation benefits it paid relative to the subject loss.” Insurer provided the declaration of Joe Pitts, a claims director, who declared (1) Insurer paid $315,135 to Mitchell’s family, and (2) Insurer paid $267,013.38 to Edward’s family. The total amount paid by Insurer was $582,148.38. It appears Insurer’s points and authorities were filed under seal and are not part of the record on appeal.

D. OPPOSITION

Plaintiffs opposed Insurer’s application for reimbursement. Plaintiffs asserted that Insurer was seeking “reimbursement of incurred attorneys’ fees and litigation costs in the total sum of $52,673.78.” Plaintiffs argued, “Because a wrongful death action is not an asset in the estate of a decedent [citation], [Insurer] is not entitled to any attorneys’ fees and costs from any of the settlement proceeds.” Further, plaintiffs asserted, “Because [Insurer’s] counsel did not assist in any meaningful manner in effecting settlements in this case, [Insurer] is a mere passive beneficiary which has no legal right to make any claim under any common fund doctrine as established by case law or referenced in Labor Code section 3860. Therefore, any claim by [Insurer] for reimbursement of attorneys’ fees or costs should be denied in its entirety.” Plaintiffs concluded, “Like the plaintiffs, [Insurer] must bear its own costs of litigation.”

E. REPLY

Insurer replied to plaintiffs’ opposition. Insurer asserted plaintiffs’ settlement did not solely concern a wrongful death cause of action because, in the complaint, plaintiffs sought damages in their individual and successor-in-interest capacities. Insurer contended the settlement made no apportionment between the settlement funds paid for the wrongful death claims and the settlement funds paid for the survivor claims.

Insurer asserted it “meaningfully participated in this lawsuit to achieve the settlements.” Insurer explained that it intervened in the lawsuit, attended a deposition, attended mediation, and attended case management and trial setting conferences, as well as completing other pretrial tasks.

F. FIRST HEARING

On May 11, 2018, the trial court held a hearing on Insurer’s application for reimbursement. Plaintiffs’ attorney asserted there was not a settlement agreement because Insurer did not sign the settlement agreement and Insurer advised Gryphon that it would not sign the settlement agreement until it was informed of the amount of reimbursement. Plaintiffs asserted that because there was not a settlement agreement, there was nothing for the trial court to rule upon.

The attorney for Insurer who attended the trial court hearing was not the same attorney who participated in the mediation that resulted in the settlement. Insurer said that it believed there was an agreement that a lump sum of $472,000 would be shared by Insurer and plaintiffs, but the precise apportionment could not be agreed upon. The trial court said it did not want to go forward if there were doubt as to whether a settlement agreement had been reached. The trial court continued the matter and asked the parties to provide briefing “as to whether there is authority for the court to go forward if we have—we don’t have a complete settlement, if it’s just the case that allocation needs to be resolved.”

Plaintiffs’ attorney then apologized to the trial court for failing to cite a case in his papers that was directly on point: Associated Construction & Engineering Co. v. Workers’ Comp. Appeals Bd. (1978) 22 Cal.3d 829 (Associated Construction). Plaintiffs asserted that, pursuant to Associated Construction, the trial court needed to conduct an “an evidentiary hearing on the total valuing of damages and the pro rata allocation of the settlement amongst the plaintiffs.”

Plaintiffs asserted the evidentiary hearing needed to address “the degree of fault of the employer.” Plaintiffs contended the purpose of the evidentiary hearing was to prevent an employer from benefitting from “its own malfeasance.” Plaintiffs requested to include argument about Associated Construction in their supplemental brief, and the court permitted them to do so.

G. PLAINTIFFS’ SUPPLEMENTAL BRIEF

Plaintiffs submitted a supplemental brief. Plaintiffs asserted the plane was “operated by and on behalf of [the Church]. The accident flight was an extended business trip around the country for purposes of [the Church’s] ministry work.” Plaintiffs contended the trial court needed to determine the Church’s percentage of fault for the crash. Plaintiffs wrote, “[A]n employer’s recovery of workers’ compensation benefits paid is reduced when the employer is negligent. Plaintiffs explained, “[W]hen the employer’s percentage share of responsibility for the employee’s total recovery is greater than the compensation benefits paid, then it is not entitled to collect anything, and its claim for reimbursement will be denied.” Plaintiffs asserted, “The court in the instant action is required to conduct an evidentiary hearing to determine the percentage of fault attributable to all the parties to the action [citation].”

Plaintiffs contended, “It is undisputed that [the Church], the operator of the [plane], is primarily responsible for maintaining the [plane] i[n] an airworthy condition and hired incompetent maintainers [citation] and is required to ensure that proper maintenance is conducted [citation].” Plaintiffs continued, “In determining the fault of [the Church], the court will have to review the facts and law based upon two separate and distinct wrongful death cases: the Dufresne case and the Morgan case.” Plaintiffs wrote, “For example, assume the court found that Nancy Dufresne’s total damages were $4,000,000. [Insurer] paid Nancy Dufresne $23,101.63. If the [Church] is found to be 0.57 percent at fault or more, [Insurer] will recover nothing.” Plaintiffs concluded, “The wealth of evidence implicating [the Church] . . . indicates that [the Church] will likely be found to be at least 50% liable for the crash and deaths of [Edward and Mitchell].”

H. INSURER’S SUPPLEMENTAL BRIEF

Insurer submitted a supplemental brief. Insurer wrote, “[Insurer] has submitted the Declaration of Kenneth Slomski, along with an executed copy of the Gryphon Release and Settlement Agreement to confirm that [Insurer] agrees with the settlement amount, subject to allocation . . . by the Court.” Insurer asserted the issue of the Church’s liability had been briefed prior to the first hearing. Insurer contended, “In their Opposition, Plaintiffs did not dispute the contention made by [Insurer] that despite exhaustive discovery and investigation in this case, there is no evidence to suggest, let alone establish, that the Church was in any way responsible for this loss. [Citation.] Rather, the NTSB concluded, that pilot error was the cause of the crash and the pilot’s comparative negligence cannot be imputed to the Church, as a matter of law. [Citation.] Their supplemental brief is similarly devoid of any evidence of negligence or liability on the part of the Church.”

Insurer asserted the Church did not own or operate the plane. Insurer contended, “The owner of the [plane] was Dufresne, Inc., a wholly separate legal entity from the Church. [Citation.] Both the [plane’s] registration and the NTSB accident report confirm that Dufresne, Inc., not the Church, was both the owner and operator of the [plane].” Insurer contended the trial court could decide the reimbursement issue on the briefs and evidence already submitted.

I. TENTATIVE RULING

The trial court issued a tentative ruling. The trial court explained, “[Insurer] has not established that it solely effected the recovery in this action. Therefore, the request for attorneys’ fees and litigation expenses to [Insurer] is denied.” The trial court granted insurer “a 50% reimbursement in the amount of $291,074.00.” The trial court explained that the settlement agreement made no distinction between wrongful death and survivor claims. The trial court reasoned, “[P]resuming both types of claims were resolved, only the survival claims derived from the Decedents would be subject to [Insurer’s] claim of reimbursement. Presuming the survival claims represent 50% of Plaintiffs[’] total claims as suggested by [Insurer], the most that [Insurer] would be entitled to reimbursement of is $291,074.00.”

The trial court tentatively ruled that an evidentiary hearing was not required “because there is no evidence that the decedents’ employer was negligent.” The trial court continued, “As [Insurer] points out, the [plane] was owned by Dufresne, Inc., a separate entity, and the NTSB report identifies the [plane’s] ownership as Dufresne, Inc., and not [the Church]. Moreover, the evidence indicates that pilot error has been cited as the cause of the accident and not [the Church]. The negligence of the employee here cannot be imputed to [the Church].”

J. SECOND HEARING

On June 5, 2018, the trial court held a second hearing concerning Insurer’s application for reimbursement. Plaintiffs asserted the NTSB report “cannot be used for any purpose in a civil action.” Plaintiffs moved to exclude the NTSB report. Plaintiffs argued that an evidentiary hearing was needed to determine “the liability of the employer.” Plaintiffs argued, “[T]he court can’t rule at this juncture because there is no evidence. [Insurer] has not produced any evidence. We haven’t produced any evidence. [¶] The plaintiffs claim that it was improper maintenance that caused the crash. The defendants claim that [the Church] had liability for the crash, separate and distinct from pilot error. The Court doesn’t know one way or the other.”

Plaintiffs conceded that, in Mitchell’s case, any negligence by Mitchell could not be imputed to the Church. Plaintiffs asserted that if Edward or the Church had been negligent in maintaining the plane, then “that negligence is imputed to the [Church], and [Mitchell] then, in his case, can use that to reduce the comp benefit.” Plaintiffs explained that in aviation cases, ownership of the plane “is not the issue.” Instead, “[t]he real issue relating to liability in an aviation case is who was the, quote, ‘operator,’ end quote of the [plane] . . . . The operator, who is [the Church], has the duties and responsibilities.” The trial court adopted its tentative ruling as its ruling.

DISCUSSION

A. TRIAL

Plaintiffs contend the trial court erred by failing to conduct a trial on the issues of the Church’s negligence and plaintiffs’ damages.

An employer may seek, from an allegedly negligent party, full reimbursement of workers’ compensation benefits paid to an employee. (Labor Code, § 3860, subd. (b).) However, “[a] concurrently negligent employer or its compensation carrier is entitled to reimbursement only for the amount by which its workers’ compensation liability exceeds its proportional share of responsibility for the employee’s total tort damages.” (Kemerer v. Challenge Milk Co. (1980) 105 Cal.App.3d 334, 337.) The purpose of this rule is that “the negligent employer (or its workers’ compensation insurer) should not profit from the employer’s wrongdoing and therefore would not be entitled to reimbursement out of the employee’s recovery.” (C.J.L. Construction, Inc. v. Universal Plumbing (1993) 18 Cal.App.4th 376, 386 (C.J.L.).)

Once the issue of the employer’s concurrent/comparative negligence is raised, “the trier of fact should determine the employer’s degree of fault according to the principles of American Motorcycle.” (C.J.L. Construction, Inc. v. Universal Plumbing, supra, 18 Cal.App.4th at p. 387.) In American Motorcycle, our high court held “that under the common law equitable indemnity doctrine a concurrent tortfeasor may obtain partial indemnity from cotortfeasors on a comparative fault basis.” (American Motorcycle Assn v. Superior Court (1978) 20 Cal.3d 578, 608.)

Our high court described the procedure as follows: “When the issue of an employer’s concurrent negligence arises in the context of his credit claim based on a third party settlement, the [trier of fact] must determine the appropriate contribution of the employer . . . . Specifically, the [trier of fact] must determine (1) the degree of fault of the employer, and (2) the total damages to which the employee is entitled. The [trier of fact] must then deny the employer credit until the ratio of his contribution to the employee’s damages corresponds to his proportional share of fault.” (Associated Construction, supra, 22 Cal.3d at p. 842.) The trier of fact should determine an employer’s negligence following “evidentiary presentations.” (Id. at p. 845.)

In sum, when a party raises the issue of an employer’s concurrent negligence, the trial court should conduct a trial wherein evidence is presented concerning (1) the alleged negligence that led to the injury, and (2) the employee’s damages. The trier of fact should then determine (A) the percentage of fault, if any, attributable to the employer, and (B) the total damages suffered by the employee. (Associated Construction, supra, 22 Cal.3d at p. 845.)

In the instant case, the parties’ settlement agreement was essentially an agreement pertaining only to Gryphon in that it settled Gryphon’s liability. The issues of negligence and damages are still outstanding and need to be tried as they pertain to plaintiffs and Insurer/Church. The trial court’s conclusion that Insurer is entitled to a 50 percent share of the settlement proceeds cannot be made without a trial on the issues of negligence and damages. (Associated Construction, supra, 22 Cal.3d at p. 845.)

The trial court concluded a trial on the issue of negligence was unnecessary “because there is no evidence that the decedents’ employer was negligent.” It is a procedural error to make this conclusion before a trial is conducted on the issue of negligence. If plaintiffs had been afforded a trial on the issue of the Church’s negligence, then it is possible plaintiffs would have presented evidence of the Church’s negligence. For example, there is dispute as to who operated the plane. Plaintiffs assert the Church operated the plane. Insurer contends Dufresne, Inc. operated the plane. A trial might produce evidence concerning who operated the plane, and who had liability, if any, as the operator. (See Boyd v. White (1954) 128 Cal.App.2d 641, 651 [operator liability]; see also Pub. Util. Code, § 21404 [pilot liability].)

We note that we cannot fault plaintiffs for not alleging the Church’s negligence in their complaint because “an employer cannot be sued in tort for the work-related injury of an employee. The employer’s sole liability is for benefits payable, regardless of fault, under the workers’ compensation law.” (DaFonte v. Up-Right, Inc. (1992) 2 Cal.4th 593, 598.) In other words, the Church’s negligence did not arise as an issue for plaintiffs until the Church sought reimbursement from the Gryphon settlement.

In its ruling, the trial court wrote, “Moreover, the evidence indicates that pilot error has been cited as the cause of the accident and not [the Church].” As set forth ante, it is premature to reach this conclusion because a trial has not yet been conducted on the issue of negligence. While pilot error may have been the sole cause of the crash, it is possible that a trial will produce evidence that other factors also contributed to the crash. In sum, findings concerning negligence and damages should be made following a trial on those issues.

In its ruling, the trial court concluded, “The parties do not dispute that [Insurer] is entitled to reimbursement.” Contrary to the trial court’s conclusion, plaintiffs did dispute that Insurer was entitled to reimbursement. Plaintiffs asserted, “The wealth of evidence implicating [the Church] . . . indicates that [the Church] will likely be found to be at least 50% liable for the crash and deaths of [Edward and Mitchell].” Plaintiffs assertion can be understood as contending Insurer is not entitled to a reimbursement because the Church has a high percentage of liability for the crash. We will reverse the order to permit a trial to occur on the issues of liability and damages.

Insurer contends, “The Court had everything it needed to render an allocation, including declarations from the decedents’ family members about their relationships with the decedents, photos of the families engaged in activities important to them, as well as jury instructions regarding the amount of damages to award. The Court was in possession of all of the facts, evidence and law it needed to allocate the settlement proceeds and determine the amount to which [Insurer] is entitled.” Insurer’s contention appears to focus on the issue of damages. Insurer does not explain in what respect the trial court had all the necessary evidence relevant to the issue of negligence, i.e., apportionment of fault, therefore, we are not persuaded that the trial court had all the relevant evidence at the time it rendered its ruling.

Insurer contends, “Without any evidence of employer fault, there was no need for a further evidentiary hearing under the Associated Construction case.” There was no evidence of the Church’s negligence because plaintiffs were asking for the opportunity to present evidence—the case was not yet at the trial stage. If the trial court had agreed with plaintiffs’ argument, then a trial would have occurred wherein plaintiffs presumably would have provided evidence of the Church’s alleged negligence. Because the proceedings had not yet reached the trial stage (wherein plaintiffs would be expected to present evidence of the Church’s negligence), plaintiffs cannot be faulted for failing to present such evidence.

B. DISMISSAL

Insurer contends the appeal should be dismissed because “no judgment was entered in the trial court and the Order upon which [plaintiffs] base their appeal is not one of specified [sic] in Rule 904.1 [sic].” “A judgment is the final determination of the rights of the parties in an action or proceeding.” (Code Civ. Proc., § 577.) “Generally, a judgment [or order] is final ‘ “where no issue is left for future consideration except the fact of compliance or noncompliance with” ’ the order.” (Baker v. Castaldi (2015) 235 Cal.App.4th 218, 223.)

In the trial court’s ruling, it determined, “[T]here is no evidence that [the Church] was negligent.” The trial court also allocated 50 percent of the settlement funds to Insurer. Thus, the trial court determined liability and awarded the settlement funds. As a result, it appears the trial court’s order left nothing to be determined between plaintiffs and Insurer. Insurer does not explain what issues remain pending before the trial court in relation to Insurer’s claims against plaintiffs or in relation to plaintiffs’ claims against Insurer. As a result, we conclude the trial court’s order was a final determination concerning plaintiffs and Insurer. Therefore, the trial court’s order is appealable.

C. PLAINTIFFS’ REMAINING THREE ISSUES

1. WRONGFUL DEATH CLAIMS

Plaintiffs assert the settlement funds pertain only to the wrongful death claims because those were plaintiffs’ “only viable claims”—not the survivor claims. We infer plaintiffs are asserting that Insurer is not entitled to any of the settlement proceeds because all the settlement proceeds are for wrongful death damages.

Plaintiffs have requested a trial wherein damages will be determined by the trial court, and we are reversing the trial court’s order so that trial can occur. We will not preempt the trial court by assessing the wrongful death and survivor claims at this court. In other words, it is not for this court to determine, at this stage, whether there is merit to plaintiffs’ wrongful death and survivor claims.

The trial court can make findings concerning damages for the various claims after hearing the evidence. In sum, we will not address the merits of this issue because we cannot render advisory opinions. (People ex rel. Lynch v. Superior Court (1970) 1 Cal.3d 910, 912 [“The rendering of advisory opinions falls within neither the functions nor the jurisdiction of this court”].)

2. CESSNA SETTLEMENT

Plaintiffs assert Insurer had no right to funds from plaintiffs’ separate settlement with another defendant (Cessna). It is unclear why plaintiffs have included this section in their argument because the trial court did not rule that Insurer could collect from the Cessna settlement. Because the basis for the argument is unclear, we find the assertion to be unpersuasive.

3. NUMBER OF PLAINTIFFS

Plaintiffs assert only five of nine plaintiffs received workers’ compensation benefits from Insurer and therefore Insurer could not seek reimbursement from all nine plaintiffs’ settlement proceeds. Plaintiffs fail to explain in what portion of the ruling the trial court awarded Insurer a reimbursement from all nine plaintiffs’ settlement proceeds. Our review of the ruling reflects the trial court awarded Insurer 50 percent of the settlement funds because that represents half the damages sought by plaintiffs—half was for wrongful death and half was for survivor claims. The survivor claims belong to the respective estates of Edward and Mitchell (Code Civ. Proc., §§ 377.11, 377.30), so Insurer could be reimbursed from funds relating to those damages, but not from the funds related to the wrongful death damages (Eli v. Travelers Indemnity Co. (1987) 190 Cal.App.3d 901, 904-905). In other words, the trial court’s apportionment focused on the two types of damages claimed (wrongful death and survivor), not the number of plaintiffs. In sum, because plaintiffs fail to explain where, in the ruling, the trial court awarded Insurer money from all nine plaintiffs’ settlement proceeds, we find their assertion to be unpersuasive.

DISPOSITION

The order is reversed. Appellants are awarded their costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1).)

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

MILLER

Acting P. J.

We concur:

CODRINGTON

J.

SLOUGH

J.