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Oles Morrison

Joint Venture Held Liable for Failure to Retrofit Building

Fri Dec 17, 2010

This case brings back some personal memories.  The California Court of Appeals, Second District, Division 6 has ruled that statutory compliance is not a defense to tort liability and that a statute limiting a defendant’s tort liability to comparative fault does not apply to joint and several liability arising from joint venture. Myrick v. Masagni 185 Cal.App 4th  1082 (2010), reported June 21, 2010.

In Myrick, the survivors of deceased building occupants who died during the 2003 Paso Robles, California earthquake brought wrongful death actions against the owners of the building, alleging that the owners were negligent in failing to perform seismic retrofitting of their building. The decedents Jennifer Lynn Myrick and Marilyn Frost-Zafuto worked at a clothing store in downtown Paso Robles.  At 11:00 a.m. the San Simeon earthquake struck.  When the shaking began they fled the building, but instead of finding safety, a portion of the building collapsed, crushing them.

California Government Code Section 8875.2 requires local building departments to identify buildings that are potentially hazardous during an earthquake and to set up a mitigation program to notify owners of their potentially dangerous structure.  To address these requirements, the City of Paso Robles enacted an ordinance in 1992 that required owners of unreinforced masonry buildings to retrofit buildings to comply with earthquake safety standards by the year 2018. The owners of the particular building were various trusts created for the benefit of the original owners and their children and managed by the original owners.  Although the owners had completed a seismic survey to determine what retrofit were necessary, at the time of the earthquake the retrofitting had not been completed.

In their defense, the owners claimed they were not liable because they were not in violation of the ordinance. The court rejected this argument, reasoning that compliance is only a minimum standard and that the true test for liability is whether the owners had acted reasonably in view of the probability of injury.  While the court allowed the jury to consider the ordinance in determining whether the owners were negligent, the court refused to rule as a matter of law that the owner’s duty was limited to compliance with the ordinance.

The jury found that each of the trusts was involved in a joint venture for ownership, management, operation and maintenance of the building.  Although the jury had allocated fault in varying percentages amongst the owner/agent and the trusts, because of the jury’s finding that a joint venture existed, each trust’s liability was joint and several. Therefore, the allocation of percentage of fault did not limit the Trust’s liability.

The lesson from this case is to not find comfort in code compliance.  And as repeatedly advised, members of business ventures must be careful in how they structure their business arrangements, conduct their activities and allocate liability.

On a more personal note, my wife is from Paso Robles. We were in Paso Robles with our children on the day of the earthquake.  On the morning of the earthquake we decided that rather than head downtown we would go to the Paso Robles city park. The day before the earthquake we went shopping at the clothing store.  We were helped by Jennifer, the young woman who was killed, who was energetic, thoughtful and considerate of our two young children.

Enjoy every sandwich. Warren Zevon.