Strict Products Liability for Non Selling Contractors?
In Hernandezcueva v. E.F. Brady Company, Inc., California Court of Appeals for the Second District, Case No. B251933 (December 22, 2015), the Court of Appeals has held for the first time that a contractor who installed drywall using a joint compound – both of which contained asbestos – which the contractor was not aware of – could be found liable for strict products liability. The case’s subject matter can be simplified to the following scenario. During the 1970’s a commercial building was remodeled by E.F. Brady. Part of the remodeling project included drywall which was bid by Brady with a one percent (1%) built in adjustment for unknown material price fluctuations. Evidence supported Brady’s contention that it was not a seller of any asbestos containing product as its contract price also clearly set forth 75% to labor and 25% for materials with no mark up or profit other than the 1% floating adjustment.
The Plaintiff, Hernandezcueva, worked at the remodeled facility where his duties included cleaning up drywall debris. While performing those duties he inhaled dust. In or about 2011, he was diagnosed with mesothelioma which his medical experts attributed to his exposure to asbestos-containing products installed by E.F. Brady.
At trial, the court found that Brady could not be found liable on a strict products liability theory of liability. The Plaintiff appealed and California’s Court of Appeals reversed based on some fairly creative reasoning.
The Court of Appeals decision appeared to base its reversal on a rationale that would be considered favorable to Brady. The decision makes a distinction between parties whose primary objective involves the sale of a product (manufacturers, distributors, etc) in which case strict products liability applies; and service providers who are identifiable by the fact a “service aspect predominates and any product sale is merely incidental to the provision of the service…..” In the latter distinction, strict liability would not apply based on traditional rationale and reasoning.
The Court reaches its decision in a manner resembling a storyline which dove tails. Notwithstanding the fact that Brady made profits from labor and not materials, the Court reasoned that Brady placed large quantities of products in the stream of commerce.
The court further reasoned that even though Brady paid sales tax on the materials in a manner such resembling an end user rather than supplier, its close participatory connection to the products caused Brady to become a quasi supplier and significant factor leading to the exposure of harmful materials.
Contractors providing services have always been considered outside the stream of commerce of products supplied incidentally to services. The “primary objective or essence of the transaction” between a customer and a contractor is the provision of services, not obtaining a product, and California courts have long recognized that this fact places contractors outside the stream of commerce of products they provide under their contracts. (E.g., Monte Vista Development Corp. v. Superior Court (1991) 226 Cal.App.3d 1681 [tiling subcontractor not strictly liable for defective soap dish].
At the risk of editorializing, I am going to provide some editorial opinion. The decision, when read verbatim, overrules previous notions that a contractor or laborer is free from liability for defective products so long as the service provider abided by instructions and architectural plans. While the facts leading to this decision involved a very controversial product (asbestos), there is no limiting or qualifying language such that we are left with a broad net which might subject the lowest tier subcontractor or handyman liable for installing a product which is later deemed to be defective. The decision, for example, leaves open the possibility that a residential framing contractor might face strict liability for the installation of properly specified windows which are later found to be defective.
As this case has been appealed to the Supreme Court, time will tell if the Court of Appeals sweeping decision holds.