1. FRESNO, CA
McCormick Barstow LLP
7647 N. Fresno Street
Fresno, CA 93720
(559) 433-1300
(559) 433-2300 fax
CINCINNATI, OH
McCormick Barstow LLP
Scripps Center, Suite 1050
312 Walnut Street
Cincinnati, OH 45202
(513) 762-7520
(513) 762-7521 fax
DENVER, CO
McCormick Barstow LLP
999 18th Street, Suite 3000
Denver, CO 80202
(720) 282-8126
(720) 282-8127 fax
LAS VEGAS, NV
McCormick Barstow LLP
8337 W. Sunset Road, Suite 350
Las Vegas, NV 89113
(702) 949-1100
(702) 949-1101 fax
MODESTO, CA
McCormick Barstow LLP
1125 I Street, Suite 1
Modesto, CA 95354
(209) 524-1100
(209) 524-1188 fax
www.mccormickbarstow.com
Subcontractors Beware: Choose Your Products Carefully
Based on a recent Court of Appeal decision, subcontractors should exercise considerable care in
selecting their products that are incorporated into a home, commercial building, and most likely, any
work of improvement. In Hernandezcueva v. E.F. Brady Co., Inc., the Court of Appeal, Second District,
held that a subcontractor who bought and installed defective drywall and joint compound was liable for
damages under a strict liability theory. This holding undercuts what generally had been characterized
as the “per se immunity” rule afforded to subcontractors articulated in the decision of La Jolla Village
Homeowners’ Assn. v. Superior Court (1989) 212 Cal.App.3d 1131 that held that subcontractors could
not be liable under a strict liability theory.
In Hernandezcueva, Plaintiff sued E. F. Brady, a plastering and drywall installer, among other
defendants, for asbestos related injuries sustained during his work as a janitor at a building owned
by Fluor. E.F. Brady was a subcontractor on the Fluor complex and was paid under the contract for
labor and materials. Initially, E.F. Brady used Kaiser “all purpose” joint compound and later changed
to a joint compound made by Hamilton because concerns arose about the effectiveness of the Kaiser
compound.
At trial, Plaintiff presented expert testimony that the Hamilton compound contained asbestos and that
his exposure, as a result of E.F. Brady’s use of the product in the Fluor building, caused mesothelioma.
E. F. Brady presented evidence that during the pertinent period, the building code did not prohibit the
use of drywall compound that contained asbestos and that asbestos did not become a “hot topic” until
the 1980’s. E.F. Brady’s motion for nonsuit on the strict liability, misrepresentation and intentional failure
to warn claims was granted and Plaintiff appealed the trial court’s order on the strict liability claim.
In evaluating whether the doctrine of strict liability should apply to a subcontractor, the Court noted that
the doctrine makes manufacturers strictly liable for injuries caused by their defective products. The
doctrine was later extended to those parties “passing the product down the line to the consumer” as the
rationale was that retailers, wholesalers and developers could bear the cost of the risk. However, the
“stream of commerce” theory was not limitless and required that a party “play more than a random and
accidental role in the overall marketing enterprise of the product.” Thus, the Court in LaJolla Village,
supra, had previously held that a subcontractor was not liable under a strict liability theory.
In rejecting a blanket prohibition against applying the theory to subcontractors, the Court noted that
imposing liability under a “stream of commerce” theory requires a fact intensive analysis. Because E.F.
Brady bought and installed the defective product, the Court focused its inquiry on the fact that it was
providing a service which passed along the defective asbestos products to the ultimate user.
Finding that the trial court erred in granting the motion for nonsuit on the strict liability theory, the Court
found persuasive the fact that by the mid-1970’s, E.F. Brady was doing heavy commercial projects for
Fluor in excess of $2 million per job and this was a “common job” for E. F. Brady. Further, E.F. Brady’s
bids for these projects included materials and the bids included the costs of materials, along with
sales tax and markups for the product. While E.F. Brady’s use of the particular brand of drywall was
regulated by the architect’s specifications, E.F. Brady was the party who originally selected the Kaiser
compound and changed to the Hamilton compound after performance issues arose. Given the size of
the contracts and E.F. Brady’s bids, the Court found that a trier of fact could find that E.F. Brady derived
a considerable benefit from supplying the products, was in a position to bear the costs of compensating
for the injuries and to create change if necessary.
In remanding the matter back to the trial court, the Court found that the “per se” prohibition against strict
liability being imposed upon subcontractors by complying with the architect’s specifications was not
applicable as the fact-sensitive inquiry required by the “stream of commerce” theory dictated that E.F.
Brady was more akin to that of a dealer than a subcontractor following specifications.
The Court’s decision represents a remarkable shift from the “per se” prohibition of strict liability as to
subcontractors. Although it is anticipated that the decision will be challenged to the Supreme Court,
the present state of the law imposes upon subcontractors the possibility that they could be found
liable under a strict liability theory if they select and install defective products that cause injuries.
While the Court found persuasive the volume of E.F. Brady’s work and its communications with the
manufacturers, the Court’s holding does not require a dollar threshold for the application of strict liability.
Thus, subcontractors are cautioned to investigate the selection of their products as the consequences
for using a defective product has potentially become pricey.
Mandy L. Jeffcoach is a partner in the Fresno office of McCormick Barstow LLP. She regularly represents public
entities, contractors or subcontractors in construction litigation and handles commercial litigation and business
dispute cases for a variety of clients throughout the San Joaquin Valley. Mrs. Jeffcoach can be reached at (559)
433-1300 or mandy.jeffcoach@mccormickbarstow.com.