Beam v. Bank of America (1971)


NAME: Beam v. Bank of America
Jx/DATE/CITE: Supreme Court of California (1971)
DECISION BELOW: The trial court determined that the total community property at the time of trial was $38,000. W appeals on the grounds that the Court failed to adequately compensate the community for H’s skill and efforts in managing his separate property.
RULE: Pereira test: The Court will allocate a fair return on the separate business, and the remainder is presumed to be a result of individual effort; which makes it community property.Van Camp test: The Court will determine the “reasonable value” of the husband’s services (salary), and allocate that amount as community property; the remainder is credited as separate property.
FACTS: Married 1939, and divorced in 1968 (29 years). H inherited $1.6M (separate property). H did not work at all, but focused his efforts on managing his sep. prop. over 29 years H’s value increased to $1.8M. The only money received and spent for the family came from the profits stemming from H’s separate property. The community expenses came out to $2,000/month.
P ARGUMENT: The Pereira test would lead to the conclusion that none of the separate property’s growth was a result of H’s skill and effort, but this test does not achieve “substantial justice” between the parties, the Court should apply Van Camp. Under Van Camp, H would be entitled to 1% of the corpus, or $17,000 a year. This would amount to $357k; W is entitled to ½ of that.
D ARGUMENT: Even under the Van Camp test, the community is not entitled to any growth in the business because community expenditures are balanced against the community income. Since community expenses were $2k/month, or $24k/year; clearly the community expenses exceed the $17k community income under Van Camp.
RULE: As a general rule, profits accruing from separate property remain separate, but since income arising from a person’s skill and effort is considered community property, the community should be credited to the extent the profits were a result of those efforts.
ANALYSIS: The Court may select whichever formulation of the rule will achieve substantial justice between the parties. The Court below had all the information, and determined that the Pereira test, was the appropriate test toapply; adopting 7% as a “reasonable return” on H’s capital investment. Based on the 7% base, the Court ruled that H’s separate property was $4.2M, and therefore, none of the growth is attributable to H’s skill ad effort.

Molien v. Kaiser Foundation Hospitals (1980) -831, 616 P.2d 813.



Case Name: Molien v. Kaiser Foundation Hospitals
Date: 1980
Jurisdiction: Supreme Court of California
Rule: In cases other than where proof of mental distress is of a medically significant nature, the general standard of proof required to support a claim of mental distress is some guarantee of genuineness in the circumstances of the case.
Brief Analysis: In the light of contemporary knowledge, emotional injury may be fully as severe and debilitating as physical harm, and is no less deserving of redress; the refusal to recognize a cause of action for negligently inflicted injury in the absence of some physical consequence is an anachronism. Further, it is no less regressive to deny recovery for loss of consortium simply because the plaintiff’s spouse has suffered a disabling but non-physical injury. Accordingly.  Plaintiff permitted to take this case to trial. the unqualified requirement of physical injury is no longer justifiable.
Topic Area: Negligent Infliction of Emotional Distress


Facts: Plaintiff and his wife, Valerie G. Molien, are members of the Kaiser Health Plan. Mrs. Molien went to Kaiser for a routine multiphasic physical examination. There, Dr. Kilbridge, a Kaiser staff physician, negligently examined and tested her, and subsequently advised her she had contracted an infectious type of syphilis. The diagnosis was erroneous, as she did not in fact have the disease. Nevertheless she was required to undergo treatment for syphilis, including the administration of massive and unnecessary doses of penicillin. As a result of defendants’ conduct she suffered ‘‘injury to her body and shock and injury to her nervous system.’’ As a result of the negligently erroneous diagnosis, plaintiff’s wife became upset and suspicious that he had engaged in extra-marital sexual activities; tension and hostility arose between the two, ‘‘causing a breakup of their marriage and the initiation of dissolution proceedings.’’
P Argument: Defendants knew plaintiff husband would learn of the diagnosis, as they instructed Mrs. Molien to so advise him. Thereafter plaintiff was required to undergo blood tests himself in order to ascertain whether he had contracted syphilis and was the source of his wife’s purported infection. The tests revealed that he did not have the disease.
D Argument:  
Rule: OLD RULE: There can be no recovery of damages for emotional distress unaccompanied by physical injury where such emotional distress arises only from negligent conduct.


NEW RULE: A claim for negligent infliction of emotional distress no longer requires physical injuries before damages can be recovered. Physical harm  includes ‘‘shock to the nervous system’’ is an accepted aspect of the  law of negligence. long continued nausea or headaches may amount to physical illness, which is bodily harm; and even long continued mental disturbance may be classified by the courts as illness, notwithstanding [its] mental character.

Analysis: The risk of harm to plaintiff was reasonably foreseeable to defendants. It is easily predictable that an erroneous diagnosis of syphilis and its probable source would produce marital discord and resultant emotional distress to a married patient’s spouse; Dr. Kilbridge’s advice to Mrs. Molien to have her husband examined for the disease confirms that plaintiff was a foreseeable victim of the negligent diagnosis. Because the disease is normally transmitted only by sexual relations, it is rational to anticipate that both husband and wife would experience anxiety, suspicion, and hostility when confronted with what they had every reason to believe was reliable medical evidence of a particularly noxious infidelity.  Multiplication of psychic stimuli’’ that society presently faces, and the ‘‘increasing widespread knowledge of the debilitating effect mental distress may have on an individual’s capacity to carry on the  functions of life. The unqualified requirement of physical injury is no longer justifiable.
Concurrence: N/A
Dissent: N/A
Conclusion: Multiplication of psychic stimuli’’ that society presently faces, and the ‘‘increasing widespread knowledge of the debilitating effect mental distress may have on an individual’s capacity to carry on the  functions of life. the unqualified requirement of physical injury is no longer justifiable.


Thompson v. County of Alameda (1980) – 614 P.2d 728.


Case Name: Thompson v. County of Alameda
Date: 1980
Jurisdiction: Supreme Court of California
Rule: With regards to a duty to warn, there are several factors to look to for a “duty”: (1) The foreseeability of harm to the Plaintiff, (2) The degree of certainty that Plaintiff will be harmed, (3) The nexus between Defendant’s conduct [failure to warn] and the Plaintiff’s harm, (4) The moral blame attached to Defendant’s conduct, (5) Extent of the burden to Defendant, (6) The consequences to the community of preventing Defendant’s actions, and (7) The availability of insurance for the risk involved.

Where a public agency is involved, there are further factors: (8) The extent of the agency’s powers, (9) the role imposed upon it by law, and (10) budget restrictions.

Brief Analysis: Here, (1) there was a certain degree of certainty that someone would be hurt, but, (2) the threat was to a generalized class of people. (3) Defendant’s failure to warn society is too attenuated to form a nexus. (4)(6) There is no moral blame attached to Defendant not warning society as a whole each time they allow someone out; the purpose of release is to help people assimilate.  (5)(10) To police every release with the scrutiny required would be impossible
Topic Area: Affirmative Duties – Special Relationship with 3rd Parties


Facts: Plaintiffs, husband and wife, and their minor son lived a few doors from the residence of the mother of James F. (James), a juvenile offender.  Prior to the incident in question, James had been confined in a county institution under court order. County knew that James had ‘‘latent, extremely dangerous and violent propensities regarding young children and that sexual assaults upon young children and violence connected therewith were a likely result of releasing him into the community.’’  County also knew that James had ‘‘indicated that he would, if released, take the life of a young child residing in the neighborhood.’’  (James gave no indication of which, if any, young child he intended as his victim.)  The County released James on temporary leave into his mother’s custody at her home, and at no time did [County] advise and/or warn [James’ mother], the local police and/or parents of young children within the immediate vicinity of [James’ mother’s] house of the known facts Within 24 hours of his release on temporary leave, James murdered plaintiffs’ son in the garage of James’ mother’s home.
P Argument:
D Argument:
Rule: The existence of ‘‘duty’’ in a given case several factors require consideration including ‘‘the foreseeability of harm to the plaintiff, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant’s conduct and the injury suffered, the moral blame attached to the defendant’s conduct, the policy of preventing future harm, the extent of the burden to the defendant and consequences to the community of imposing a duty to exercise care with resulting liability for breach, and the availability, cost, and prevalence of insurance for the risk involved.  When public agencies are involved, additional elements include the extent of [the agency’s] powers, the role imposed upon it by law and the limitations imposed upon it by budget
Analysis: Whenever a potentially dangerous offender is released and thereafter commits a crime, the possibility of the commission of that crime is statistically foreseeable. Yet the Legislature has concluded that the benefits to society from rehabilitative release programs mandate their continuance. Within this context and for policy reasons the duty to warn depends upon and arises from the existence of a prior threat to a specific identifiable victim.  Plaintiffs’ decedent was not a known, identifiable victim, but rather a member of large amorphous public group of potential targets.  Under these circumstances we hold that County had no affirmative duty to warn plaintiffs, the police, the mother of the juvenile offender, or other local parents.
Concurrence: N/A
Dissent: N/A
Conclusion: Under these circumstances, we hold that County had no affirmative duty to warn plaintiffs, the police, the mother of the juvenile offender, or other local parents.