Settlement Amount:
$6,250,000 total ($3,000,000 by Coast Citrus; $2,500,000 by Alcoa
and Paccar; $750,000 - policy limits - from Maxwell)

Case Name:
L. NEWHOUSE, ETC., et al., v. MAXWELL TRANSPORT COMPANY, ET AL.

Case Number:
San Diego County Superior Court Case No. 671033

Plaintiffs:
L. and L. Newhouse

Defendants:
Maxwell Transport Company; Aluminum Company of America; Paccar,
Inc.;
Peterbilt Motors Company; and Coast Citrus Distributors, Inc. dba
Rapido Freight Lines

Facts and Background:
This case involved an action for personal injuries and loss of
consortium based on theories of negligence, vicarious liability
and failure to warn.

On October 17, 1993, plaintiff L. Newhouse was driving home from
his office northbound on the 805 Freeway in San Diego,
California. A 1990 Peterbilt 3-axle tractor and trailer rig owned
by defendant Maxwell was driving southbound on the 805 Freeway.
The truck was carrying a load of Coast’s produce to its San Diego
warehouse.

Two days before this accident, the 14-year old grandson of one of
the owners of defendant Maxwell had completed a brake job on the
Peterbilt tractor. In replacing the wheels, plaintiffs contended
he failed to properly torque the lug nuts on the inner and outer
wheels.

The dual wheels (manufactured by Alcoa) on the left-third axle
suddenly broke off the truck. The two wheels separated with one
bouncing over the center divider and striking plaintiffs’ vehicle
head-on at the driver’s side A-pillar. Mr. Newhouse was able to
drive his car safely off the highway and bring it to a stop.

The negligence and vicarious liability case involved a
sub-contractor agreement between a trucking company, defendant
Maxwell Transport, and a produce company, defendant Coast Citrus.
Prior to 1985, Coast had contracted with a separate company
called Rapido Freight Lines to haul all of Coast’s own produce.
Rapido held an I.C.C. permit to operate as a common carrier. In
1985, the two companies merged. The new name of the merged
companies was Coast Citrus Distributors, Inc., dba Rapido Freight
Lines. (There were also many other dba’s under the Coast name.)

Following the merger, Coast continued to haul its own goods and
also hauled produce and certain commodities for other companies
as well. Over the 5 years before this accident, Coast usually
retained Maxwell to transport Coast’s produce from fields in
Northern California down to its warehouse in San Diego.

Plaintiffs’ Contentions:
Plaintiffs contended defendant Maxwell had failed to properly
maintain their truck, negligently entrusted the maintenance to an
unqualified 14-year old, and failed to properly torque the lug
nuts on the inner and outer wheels, thereby causing the wheel
studs to fracture and allow the wheels to come free.

Plaintiffs contended defendants Alcoa and Paccar had failed to
properly warn users of the dangers and hazards of over-torquing
the lug nuts on semi tractor-trailer wheels. Plaintiffs contended
the warnings in the manual were insufficient and that defendants
should have placed a warning label somewhere on the tractor near
the wheels, or should have placed a warning somewhere on the rim
of the aluminum wheel. Plaintiffs contended that without such a
warning, the wheels were defective.

Plaintiffs contended defendant Coast was vicariously liable for
the negligence of Maxwell. Plaintiffs contended that under
applicable California case law, including Eli v. Murphy (1952) 39
Cal.2d 598, a trucking company which held either an I.C.C. common
carrier certificate or a P.U.C. permit could not escape liability
by subcontracting the work to an independent contractor. Thus,
under the doctrine of non-delegable duty, plaintiffs contended
defendant Coast was vicariously liable, as a matter of law, for
the negligence of its independent contractor, Maxwell.

Defendants’ Contentions:
Defendant Maxwell denied liability and denied the lug nuts had
been improperly torqued. Maxwell contended the air impact wrench
that had been used to tighten the lug nuts was set to "maximum"
torque. Maxwell contended the brake job had been supervised and
checked by a qualified maintenance employee.

Defendants Alcoa and Paccar denied the aluminum wheels were
defective without a warning, contended sufficient instructions
and warnings had been incorporated into the owners and
maintenance manuals, denied an additional warning was necessary
or appropriate, and contended that even if a warning label had
been in place, it would not have prevented this accident.
Defendants contended the lug nuts had been under-torqued, rather
than over-torqued as plaintiffs contended. Thus, defendants
contended that a warning regarding over-torquing would have been
ineffective and unnecessary. Defendants did extensive testing on
the air impact wrench that had been used to tighten the lug nuts.
Defendants contended their testing established that the maximum
torque the air wrench was capable of producing at the time of the
accident was significantly less than the minimum amount
recommended by Alcoa, which was a torque range on the lug nuts of
between 350 and 450 foot lbs. Thus, defendants contended
regardless of whether a warning had been placed on or around the
wheel or not, it would not have prevented the accident.
Defendants also conducted testing on an exemplar tractor-trailer
using various torque values while running the truck on a testing
track for the same distance the tractor had run between the
Maxwell brake job and the accident. Defendants contended the
post-testing inspection of the wheels, lug nuts and studs
established that Maxwell had under-torqued the lug nuts. Finally,
defendants contended Maxwell was solely negligent in causing this
accident by allowing an inexperienced 14-year old to do the work
on the tractor-trailer.

Defendant Coast denied they were vicariously liable, claiming the
case law did not apply to the particular transaction in which
they had engaged with Maxwell. Coast contended the particular
"activity" in which they engaged in contracting with Maxwell did
not require any governmental permit or certificate, thus removing
themselves from the holdings of Eli, and the other cases. Coast
contended it was a "produce" company which contracted with a
trucking company (Maxwell) to haul Coast’s produce. Coast also
contended it was not a trucking company and that even if it did
engage in trucking, the particular "transaction" at issue in this
case did not involve Coast’s trucking company, but rather,
involved Coast’s produce company. Finally, Coast contended the
Alcoa wheel and Peterbilt truck were defective because of the
absence of sufficient warnings regarding the danger of
over-torquing.

Defendants’ Contentions Regarding Damages:
Defendants agreed plaintiff L. Newhouse had suffered brain
damage. Defendants claimed plaintiff did not need 24-hour
custodial care. Defendants all disputed that plaintiff was
entitled to any compensation for loss of earnings, claiming he
had not worked for compensation for over 10 years before the
accident. Defendants also discovered evidence that plaintiff had
been flying a small plane after the accident, which they
contended cast some doubt on the severity of plaintiff’s claimed
permanent injuries.

Damages:
L. Newhouse: Skull and facial fractures on left side of head,
brain damage resulting in global aphasia (more expressive than
comprehension) and seizures. Plaintiff was unemployable and
required supervision, although he was able to care for himself,
feed himself, walk and communicate through a few words, gestures
and some writing.

L. Newhouse: Loss of consortium.