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Court Rules on Fault and Judgment Credits in Premises Liability Claim

When people are injured in accidents because of the negligence of others, they are entitled to recover damages for their economic and noneconomic losses. However, in cases involving multiple defendants, the jury may allocate different percentages of fault to each defendant. The defendants will then be responsible for paying their percentage of fault for the noneconomic losses. In Schreiber v. Lee, Cal. Ct. App., Case No. A149969, the California Court of Appeal considered a case involving multiple defendants and the apportionment of fault when the plaintiff settled with some of the defendants before trial for more than what the jury awarded to the plaintiff at trial.[1]

Factual and procedural background

Stephen K. Lee built a three-unit apartment building with the units above garages. When he constructed the building, he installed skylights in the floors of the decks of the apartments to allow light into the garages. Marthe Schreiber had lived in one of the units since 1980. Because she was concerned that the skylight in her deck’s floor was unsafe, she had never walked on it. She installed flower boxes around its perimeter to keep visiting children off of the skylight. In 2013, Schreiber was working with her employee to plant flowers in the boxes around the skylight. She tried to hand the worker a six-pack of flowers by reaching across the length of the skylight. When she did so, she lost her balance and fell through the skylight, suffering serious injuries.

Lee and his wife had transferred ownership of the apartment building to their children in the late 1980s. In 2005, Lee and his children formed Golden Prosperities as a property management company to manage the apartment building. Lee and his children served on the board of directors, and Lee was the chairman of the board. Two of Lee’s children handled the daily operations of the company and were paid for their services.

Schreiber filed a lawsuit against the Lee children, Stephen K. Lee, Golden Prosperities, and Stephen K. Lee Enterprises. She settled with the Lee children and Stephen K. Lee Enterprises before trial for $2.5 million and proceeded to trial against Stephen K. Lee in his individual capacity and Golden Prosperities. After Schreiber closed her case, the defendants moved for a nonsuit, arguing that her claim was based on a construction defect that was barred by a four-year statute of repose. The judge denied the motion.

The jury awarded Schreiber a gross award of $2.63 million, including $1.23 million for her economic losses and $1.4 million for her noneconomic losses. The jury assigned 12% of the fault to Schreiber, 3% of the fault to each of the Lee children or 18% collectively, 16% to Golden Prosperities, and 54% to Lee. Golden Prosperities and Lee moved to have the judgment offset. The court offset the economic damages and entered judgment against Golden Prosperities for $224,000 and against Lee for $756,000, which were their proportional shares of the noneconomic damages. Lee filed an appeal, arguing that the statute of repose should have barred Schreiber’s claim and multiple other allegations of error, including that Schreiber’s entire award should have been offset by the settlement she had reached with the Lee Children and Stephen K. Lee Enterprises.

Issues: 1)Whether the skylight was a patent defect covered by the four-year statute of repose, and 2) Whether the court erred by failing to offset the award for economic and noneconomic losses in its entirety for both Golden Prosperities and Stephen K. Lee?

Stephen K. Lee and Golden Prosperities alleged multiple grounds of error in their appeal. The primary grounds of error that they alleged included that the court erred when it denied the motion for nonsuit based on the statute of repose for patent defects and that the court should have given Lee and Golden Prosperities 100% settlement credit for the settlement that Schreiber had reached with the Lee children. The defendants argued that while the skylight may have initially been a latent defect, it became a patent defect when Schreiber recognized that it might be dangerous and took steps to avoid walking on it.

Rules: 1) Observation of a defect does not make it patent when a reasonable person would not have understood the danger. 2) Joint tortfeasors are jointly and severally liable for economic damages but only severally liable for noneconomic damages.

The statute of repose for patent defects is four years. A patent defect is one that is apparent from a reasonable inspection. However, when an average person simply observes a patent defect without understanding its dangers, a defect will not be transformed from a latent to a patent defect. Under the rules of comparative negligence, tortfeasors are jointly and severally liable for the economic losses suffered by a plaintiff after subtracting the plaintiff’s percentage of fault. For noneconomic losses, defendants are severally liable for their portions of the fault.

The court first considered whether the defect was patent and thus subject to the four-year statute of repose. Lee argued that since Schreiber thought that it might be dangerous and took steps to prevent people from walking on the skylight, the defect was patent. The court found that an average person’s observation of a defect is not enough to make it a patent defect. This is because the average person will not have enough knowledge to fully understand the defect and its dangers. The court then considered some of the other claims that the defendants raised before turning to the issue of whether Golden Prosperities and Stephen K. Lee should have received a full offset of the noneconomic damages from the settlement that Schreiber had received from the Lee children. The court first found that unlike normal cases, the defendants faced joint and several liability for both the economic and noneconomic damages.

Schreiber had received $2.5 million in her settlement with the Lee children before trial. The jury allocated 18% of the fault to the children and awarded Schreiber a total of $2.3 million at trial. The court found that the Lee children did not have any imputed liability for the actions of Lee as the developer of the property. It found that Golden Prosperities should have been granted full settlement credit from the settlement with the Lee children for both the economic and noneconomic damages.

With Stephen K. Lee, however, the jury allocated 54% of the fault to him, and the judge awarded Schreiber $756,000 from Lee for his percentage of her noneconomic losses. The court found that Lee could not avoid his percentage of liability by shielding himself with the settlement that Schreiber reached with the other defendants. Lee was individually liable based on his work developing the property as its previous owner. As a nonsettling defendant, Lee was not entitled to look to the settlement reached by the settling defendants to absolve him of his percentage of liability.

The court reversed the trial court’s award of noneconomic damages for Golden Prosperities and awarded it full settlement credit. However, the court affirmed the court’s award of $756,000 from Stephen K. Lee to Schreiber. Both parties were ordered to be responsible for their own costs on appeal.
Get help from an experienced personal injury lawyer

If you have suffered serious injuries in an accident involving multiple defendants, you should talk to an experienced personal injury lawyer about how comparative negligence and joint and several liability might work in your case. Contact the Steven M. Sweat Personal Injury Lawyers today by calling us at 310.592.0445.



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