Court of Appeal, affirming trial court’s judgment

Court of Appeal, affirming trial court’s judgment, held that group self-insurer failed to prove that defendants breached contract with it, when Court of Appeal found that Department of Industrial Relations determined that plaintiff group self-insurer lacked sufficient assets to cover its liabilities and ordered it to take corrective action, that plaintiff group self-insurer, relying on “joint and several liability” language in indemnity agreement signed by group self-insurer and each group member/employer, levelled assessments against present and former members/employers of group self-insurance program that disregarded whether former members were members at time when group self-insurer incurred liabilities, that indemnity agreement provided that “compensation liability results from an occurrence with a date of date of injury during the period of membership in said Group Self-Insurer,” and that this language meant that group self-insurer’s assessments could be levelled against former members only for compensation liabilities incurred by group self-insurer during period when former members were members.

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Procedural Posture

Appellant buyer sought review of the judgment of the Superior Court of San Diego County (California) that was in favor of appellee sellers in the buyer’s breach of warranty action regarding the sale of orange trees.

Overview

The buyer purchased 1122 orange trees, warranted to be Valencias, from the sellers. However, when the first 40 trees bore fruit, they were Navel orange trees. The buyer waited more than two years from that date, until all of the trees produced fruit, to filed an action against the sellers. The sellers filed a motion for nonsuit, which the trial court granted. The court reversed, finding that the contract was severable and the various breaches were separate, each affecting the trees about which the fact became apparent in a particular year. It followed that the first breach did not start the running of the statute, except with respect to the 40 trees involved therein, and that a nonsuit should not have been granted.

Outcome

The court reversed the judgment in favor of the sellers in the buyer’s breach of warranty action.