CONSTRUCTION LAW: Appellate Decision Has Far Reaching Implications for
Subcontractors who supply and incorporate defective products into construction
now may be held strictly liable for such conduct according to the Second
Appellate District. The holding in the
Hernandezcueva case stands a departure from establish precedent which insulated subcontractors
who followed project specifications and plans. In doing so, it has provided
another avenue for hungry plaintiff's attorneys to seek relief. This
decision is yet another example of the California's trend of liability
expansion in defective construction actions.
E.F. Brady Co., Inc. was a subcontractor whose trade specialties included
plastering and the installation of drywall and fireproofing materials.
In the early 1970's, Brady served as a subcontractor in the construction
of several office buildings in Irvine, California. As part of its scope
of work, Brady installed drywall and drywall taping mud. Unbeknownst to
Brady, both the drywall and drywall taping mud contained asbestos.
In the early 1990's, Joel Hernandezcueva worked as a janitor at the
offices buildings. During his time of employment, the office buildings
were remodeled with the drywall in certain areas removed and replaced.
Hernandezcueva cleaned up drywall debris and dust as part of his job responsibilities.
In or about 2011, Hernandezcueva was diagnosed with mesothelioma. Hernandezcueva
then filed suit including Brady as one of the defendants in his action.
At trial, Brady moved for partial nonsuit on Hernandezcueva's cause
of actions for strict liability, misrepresentation, and intentional failure
to warn, plus his request for punitive damages. The trial court granted
the motion for the causes of action but denied it on the request for punitive
damages. After the motion, only a cause of action for negligence remained.
After Brady's presentation of evidence, the jury returned a verdict
in favor of Brady. Hernandezcueva appealed.
Hernandezcueva v. E.F. Brady Co., Inc. (2015) 243 Cal.App. 4th 249, the Second Appellate District reversed the trial court's decision
and found that Brady could be held liable under a strict liability theory.
Previously, California law provided that a subcontractor who supplies
and installs a product is not liable under a strict liability theory if
that product is defective.
Monte Vista Development Corp. v. Superior Court (1991) 226 Cal.App. 3d 1681 (a tile subcontractor not strictly liable
for supplying and installing a defective soap dish).
The appellate court also ignored or distinguished the decision in
La Jolla Village Homeowners Association v. Superior Court (1989) 212 Cal.App. 3d 1131. The
La Jolla decision previously afforded subcontractors who provide products in compliance
with the project's plans and specifications a defense, finding that
they cannot be held strictly liable for a defective product. The Second
Appellate District reasoned that the
La Jolla decision was not consistent with existing law because it predated the
imposition of strict liability on a party's "participatory connection
– rather than its precise legal relationship – to the stream
of commerce." The court determined that a fact sensitive inquiry
into a party's activities concerning the defective product was required
for the imposition of strict liability.
Hernandezcueva, the Second Appellate District focused upon a "stream of commerce"
analysis, finding that Brady always provided and installed the products
on its projects. With respect to the Irvine project, evidence showed that
Brady's workmen contacted the manufacturer and supplier of the drywall
mud due to a problem with its application. The manufacturer and supplier
of the product both sent representatives to the site to meet with Brady
and observe the problem. The court found that Brady's ability to "summon"
the manufacturer and supplier to investigate the problem and that 25%
of Brady's bid was for the supply of product or materials supported
liability under a strict liability theory. Based upon these considerations,
the Second Appellate District held that the question of whether Brady
was in the "stream of commerce" for strict liability should
have gone to the jury.
The California Supreme Court subsequently denied Brady's petition for
review of the Second Appellate District's decision.
Given the Second Appellate District's decision in
Hernandezcueva, subcontractors can anticipate the following potential negative impacts
from that decision. First, subcontractors can anticipate that more personal
injury plaintiffs will seek to hold them accountable for asbestos-related
injuries from construction projects in the 1970's and prior. Second,
because the decision is not limited to only asbestos-related injuries,
subcontractors should anticipate that plaintiffs in construction defect
actions will pursue them for strict liability where plaintiffs can show
that the subcontractor installed a defective product, or in the context
of mass produced residential housing, for strict liability where plaintiffs
alleged that the home itself is a defective product. Under either scenario,
the subcontractor may no longer be able to rely on the
La Jolla defense that it complied with the plans and specifications a defense to
a strict liability claim. Finally, given that the
Hernandezcueva decision concerned a commercial construction project, an ambitious plaintiff
may attempt to extend strict liability for defective construction from
mass produced residential construction to commercial construction.
The decision in
Hernandezcueva should be viewed as a continuation of the expansion of liability for defective
construction, similar to the California Supreme Court's holding in
Beacon Residential Community Association v. Skidmore, Owings & Merrill LLP, California Supreme Court No. S208173 (July 3, 2014). Moreover, based
upon the decision in
Hernandezcueva, California subcontractors should anticipate an increase in litigation
filed against them with likely increases in liability resulting from the
same. This, in turn, could likely result in increased insurance costs
for California subcontractors. Accordingly, subcontractors need to find
a means to limit their exposure to strict liability claims. One such method
may be to require the general contractor to purchase all of the products
to be used and installed in the construction of a project.
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