In a decision that attorneys said potentially could save BKK Corp. millions of dollars, a Los Angeles Superior Court judge has ruled that Proposition 51, passed by voters in June, applies to three lawsuits brought by homeowners against the company's dump in West Covina.
The Fair Responsibility Act limits a defendant's liability for causing pain, suffering, inconvenience and emotional distress.
The homeowners already have obtained a settlement of $5.2 million from the company that built their homes next to the dump, according to legal documents, and are seeking $150 million from BKK Corp., which runs the 583-acre dump where more than 3.4 million tons of hazardous waste are buried.
Victory for BKK
Judge Bonnie Lee Martin last week ruled in favor of BKK Corp., which had sought to bring the case under the provisions of Proposition 51.
The ruling affects three consolidated lawsuits filed by attorney Herbert Hafif on behalf of 167 people who own or formerly owned homes near the dump and contend that they have been harmed by it.
The homeowners claim that the dump has affected their physical and emotional health, interfered with the use of their property and hurt property values.
Much of the alleged harm involves what would be classified as non-economic damages with limited liability under the new act.
Hafif said that the pretrial decision will be appealed directly to the state Supreme Court on grounds that Proposition 51 should not apply retroactively to this case and, in any event, should be declared unconstitutional.
Hafif said that the act creates barriers that could prevent people from suing in cases, such as toxic dumping, in which fault could be attributed to numerous companies or individuals.
The Fair Responsibility Act limits liability for so-called non-economic damages, such as pain and suffering, to a defendant's share of fault.
Thus in this case, if a jury finds that homeowners have been harmed, BKK Corp. could reduce the amount it must pay by showing that the fault lies with others, such as the company that built homes next to the landfill, the regulatory agencies that supervised operations or the companies that disposed of toxic waste.
Before Proposition 51, all of those who were judged to cause an injury shared responsibility for paying damages, and the amount an injured party could collect from any one of them was not tied to responsibility.
Defendants could bring others into a case and have the court apportion damages but were responsible for any costs that others could not pay. Thus, a person who was 25% at fault could be ordered to pay 100% of the damages.
That remains the rule for economic damages, such as medical bills, loss of earnings or property losses. But such matters as mental suffering, inconvenience and emotional distress would come under the non-economic, limited-liability category.
Thousands of companies shipped toxic waste to the landfill before BKK Corp. decided in 1984 to accept only non-hazardous materials, such as household trash.
The closure to toxic waste came after landfill gas leaked into an adjoining neighborhood, forcing the evacuation of 21 homes and raising doubts about the landfill's ability to keep toxic materials from escaping into the air or leaking into ground water.
In the three lawsuits scheduled for trial in September, Hafif named BKK Corp.; W & A Builders, which built the Hearthstone tract next to the landfill; Professional Brokers Inc., which sold the Hearthstone homes to the plaintiffs; the city of West Covina and the state of California.
The city and state were dismissed as defendants two years ago, and a default judgment was entered against Professional Brokers, which is defunct.
According to a petition prepared by Hafif to appeal the Proposition 51 ruling, W & A Builders has agreed to pay $5.2 million to settle the case, but its cross-complaint litigation with BKK Corp. must be resolved before the settlement becomes effective. The amount of the settlement had not been made public previously.
In her pretrial ruling, Judge Martin said that the jury must weigh BKK's fault, if any, against the total fault of all others, whether named in the lawsuit or not.
Those who are not named could not be compelled to pay damages, but their amount of fault would be deducted from any liability assigned to BKK.
Martin said that the jury would have to decide the total amount of the award, separate the economic and non-economic categories and assign the proportion of fault.
Argued Against Retroactivity
Hafif argued that since the lawsuits were filed in 1980 and 1981 and should already have reached trial, the initiative should not apply. To impose the act retroactively, he said, would violate due process of law.
But Martin said that voters intended the initiative to apply to pending cases and that constitutional guarantees are not being violated.