Barry ERLICH et al., Plaintiffs and Respondents, v. John MENEZES, Defendant, Cross-complainant and Appellant, Ron Rebaldo et al., Cross-defendants and Respondents.
Barry and Sandra Erlich hired John Menezes to serve as the general contractor for the construction of a large, ocean-view home in Shell Beach. Seven months after construction was completed, the Erlichs sued Menezes for breach of contract, fraud, negligent misrepresentation and negligence. They alleged serious defects in the roof and structural integrity of the home. After a jury trial, the Erlichs were awarded damages for Menezes' breach of contract and negligence. The damages included relief for physical pain and suffering, emotional distress, and lost wages.
In the unpublished portion of this decision, we reject Menezes' claims that the trial court erred when it found that the Erlichs settled in good faith with the framing subcontractor and the exterior stucco and waterproofing subcontractor, denied leave to file an amended cross-complaint against the framer, and ruled admissible evidence of his alleged misrepresentations. In the published portion, we reject Menezes' contention that the Erlichs were not entitled to recover damages for their emotional distress, physical pain, and lost wages. We affirm.
In April 1990, Menezes was hired by Barry Erlich, a public school teacher, and Sandra Erlich, a registered nurse, to be the general contractor for the construction of their new home. The home was designed and structurally engineered specifically for the Erlichs and was built on a lot they had purchased several years earlier. They described it as a “dream-come-true house.”
When they interviewed Menezes for the job, the Erlichs emphasized that they expected their general contractor to do the framing with his own employees, to be present at the job site every day, and to complete construction by November 1, 1990, so they could avoid certain tax consequences. Menezes assured the Erlichs he would use his own framing crew and would fulfill their other requirements. “[H]e promised us he would build us just the most beautiful home, everything would be totally a turnkey operation, ․ [that] he would hand us the keys and we'd walk into a beautiful home and experience all the jubilation associated therewith.”
The Erlichs moved into the house on December 17, 1990. The first rain occurred on February 27, 1991, and the house leaked from every conceivable location. Walls were saturated in their daughter's bedroom upstairs, two bedrooms downstairs, and the pool room. Nearly every window in the house leaked. The living room filled with three inches of standing water. In several locations, water “poured in in streams” from the ceilings and walls. The ceiling in the garage became so saturated that the plaster liquefied and fell in chunks to the floor.
At Sandra Erlich's request, Menezes inspected the leaking on February 28. He initially attempted to stop the leaks by placing caulk around the windows, but the leaks remained so severe that “the caulking all melted․ Then it just ran down windows and stained them and ran across the driveway and ran down the house. It looked like someone threw balloons with paint in them at the house.” By mid-March, after Menezes' employees had made several attempts to repair the house, Sandra Erlich's “anger was getting up․” She “wanted something done about the water pouring in, especially into the baby's room because she [kept] getting her little feet wet.”
During the next five months, Menezes' subcontractors and employees attempted to discover the source of and to repair the leaks. Among other things, they used sledge hammers and jack hammers to cut holes in exterior and interior walls and ceilings. New waterproofing material was installed on portions of the roof and the exterior walls, and more caulk was applied around the windows. These efforts were unsuccessful. Instead, throughout 1991 and 1992, “The house was leaking from windows, it was leaking from roofs, it was leaking from between the floors. My garage, these fluorescent [light fixtures] would fill up with water, so I had to take them down. It's just been a complete nightmare.”
The Erlichs eventually had their home inspected by another general contractor and a structural engineer. In addition to confirming defects in the roof, exterior stucco, windows and waterproofing, the inspection revealed serious errors in the construction of the home's structural components. None of the 20 shear, or load-bearing walls specified in the plans were properly installed. The three turrets on the roof were inadequately connected to the roof beams and, as a result, had begun to collapse. Other connections in the roof framing were also improperly constructed. Three decks were in danger of “catastrophic collapse” because they had been finished with mortar and ceramic tile, rather than with the light-weight roofing material originally specified. Finally, the foundation of the main beam for the two-story living room was poured by digging a shallow hole, dumping in “two sacks of dry concrete mix, putting some water in the hole and mixing it up with a shovel.” This foundation is required to carry a load of 12,000 pounds, but can only support about 2,000. As a result, the beam is settling and the surrounding concrete is cracking.
Summing up the defects, the Erlichs' expert witness testified: “Well, there were so many of these problems that it would almost be easier to list what wasn't wrong with the house․” His list of properly completed items includes appliances, plumbing and fixtures, entryway tile, some drywall, shelving poles in the closets, and interior doors. “But everywhere else that related to a window or waterproofing, everywhere that there was something that related to framing, anywhere where there was any relation to stucco or the walking deck, we found major problems pretty much pervasive throughout. [¶] It just appeared to be a total negligence on the part of the people involved in putting this together to see that those areas that would mate up for the purposes of one trade to another, was just completely left unsupervised.”
Both of the Erlichs testified that they suffered emotional distress caused by the defective conditions and by Menezes' invasive and unsuccessful repair attempts. Barry Erlich testified that he felt, “sick, absolutely sick,” and had to be “carted away in an ambulance” when he learned that the house was structurally unsound. According to his cardiologist, excessive stress caused Erlich to acquire a permanent heart condition, known as superventricular tachyarrhythmia, in which the heart beats uncontrollably and unpredictably at an excessively fast rate, causing dizziness, blackouts and constant physical weakness. The condition is controlled with medication causing side effects including dizziness, vertigo, short term memory loss, sexual dysfunction, and headaches. Although he continues to teach, Erlich has had to resign from his positions as athletic director, department head and track coach, resulting in an annual loss of income of $5,400.
Sandra Erlich testified that, because of the structural defects, she is concerned “about the house collapsing in an earthquake.” Because they fear for their daughter's safety in such an emergency, the Erlichs have put “stickers” on her bedroom windows and installed “alarms on her windows and in her room, and emergency lights to flash so if anything were to happen, the firemen or rescue crews would find her room first.” Mrs. Erlich has a “love-hate relationship” with her home because, “it's a dream home, but it's also a nightmare to live in. It's caused us grief and misery for the last five years.” She described herself as “rather emotional at times, because I'm angry. It's been five years of very unpleasant living, dealing with rain water and dealing with my husband's health and him not being the same person. He can't do what he used to do.”
Although Menezes prevailed on the fraud and negligent misrepresentation claims, the jury found he breached his contract with the Erlichs and was negligent in the construction of their home. It set the cost to repair the defects at $406,700. Each spouse was awarded $50,000 for emotional distress, and Barry Erlich received an additional $50,000 for physical pain and suffering and $15,000 for lost earnings. After subtracting the amount of good faith settlements reached with several subcontractors, the trial court entered judgment against Menezes for $398,700.
Menezes contends the trial court erred in allowing the Erlichs to recover damages for the emotional distress they experienced after they discovered the negligent construction of their home.
Damages available in a negligence action include damages for physical pain and mental suffering. (6 Witkin, Summary of Cal. Law (9th ed. 1988) Torts, §§ 1409-1410, pp. 879, 880-881.) Our Supreme Court recently restated the general rule concerning the recovery of damages for emotional distress in negligence actions. “[U]nless the defendant has assumed a duty to plaintiff in which the emotional condition of the plaintiff is an object, recovery is available only if the emotional distress arises out of the defendant's breach of some other legal duty and the emotional distress is proximately caused by that breach of duty. Even then, with rare exceptions, a breach of the duty must threaten physical injury, not simply damage to property or financial interests. [Citations.]” (Potter v. Firestone Tire & Rubber Co. (1993) 6 Cal.4th 965, 985, 25 Cal.Rptr.2d 550, 863 P.2d 795.)
This case involves serious defects in the construction of a custom-built, single family home. The Erlichs suffered mental anguish as the proximate result of Menezes' breach of his duty to construct their home in a workmanlike manner. Menezes' negligence creates a threat of physical injury because defects in the construction of its structural components could cause the house, or parts of it, to collapse. Accordingly, the Erlichs are entitled, under Potter, to recover damages for their emotional distress.
Menezes contends that emotional distress damages are not available as a matter of law under Cooper v. Superior Court (1984) 153 Cal.App.3d 1008, 200 Cal.Rptr. 746 and Merenda v. Superior Court (1992) 3 Cal.App.4th 1, 4 Cal.Rptr.2d 87. Both cases are distinguishable.
In Cooper, the defendant's negligently parked tractor rolled into the plaintiff's house, damaging it, the grounds and the pool. Cooper held the homeowner was not entitled to recover damages for her emotional distress because defendants were strangers to her. “No California case has allowed recovery for emotional distress arising solely out of property damage, absent a threshold showing of some preexisting relationship or intentional tort. This case involves no preexisting relationship between the parties. Thus, we do not feel it appropriate to extend recovery for emotional distress here.” (Cooper v. Superior Court, supra, 153 Cal.App.3d at p. 1012, 200 Cal.Rptr. 746; see also Burgess v. Superior Court (1992) 2 Cal.4th 1064, 1074, 9 Cal.Rptr.2d 615, 831 P.2d 1197[“[A] cause of action to recover damages for negligently inflicted emotional distress will lie ․ in cases where a duty arising from a preexisting relationship is negligently breached.”]; Lubner v. City of Los Angeles (1996) 45 Cal.App.4th 525, 532-534, 53 Cal.Rptr.2d 24.)
Cooper does not preclude the Erlichs' recovery of emotional distress damages because they had a preexisting contractual relationship with Menezes. It has long been established that contracts involving the performance of services give rise to a duty of care which requires such services be provided in a competent and reasonable manner, and that causes of action for both breach of contract and tort are permissible in the event the contracts are negligently performed. (North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 773-776, 69 Cal.Rptr.2d 466.) Here, under the parties' contract Menezes assumed a duty to construct the Erlichs' residence with reasonable care, i.e., to construct a home without significant structural defects. Unlike the negligent stranger in Cooper, Menezes had every reason to foresee that the Erlichs would suffer emotional distress if he negligently performed that construction.
Merenda is distinguishable for similar reasons. There, the court held that an attorney, who negligently failed to pursue a client's claims for sexual battery against her former employer, was not liable for the client's emotional distress because the injury was not sufficiently foreseeable. “The duty to avoid negligence in the practice of law is imposed to protect a client from the legal consequences of a miscarriage of justice. The interest protected is typically economic, as in the loss of damages or the imposition of damages․ Where the interest of the client is economic, serious emotional distress is not an inevitable consequence of the loss of money and, as noted, the precedents run strongly against recovery.” (Merenda v. Superior Court, supra, 3 Cal.App.4th at p. 10, 4 Cal.Rptr.2d 87; see also Camenisch v. Superior Court (1996) 44 Cal.App.4th 1689, 1691, 52 Cal.Rptr.2d 450; Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1039-1040, 13 Cal.Rptr.2d 133.)
The situation here is markedly different. Menezes' negligence damaged more than the Erlichs' bank account; it literally invaded the physical security of their home. Most people attach more than economic value to their homes. Indeed, for most, buying or building a home is also a highly personal choice concerning how and where they will live their lives.3
Merenda also denied recovery of emotional distress damages because the causal link between the client's emotional distress and the attorneys' negligence was too tenuous. “[T]he degree of certainty that the client suffered [serious emotional distress] by loss of an economic claim [is] tenuous. Litigation is an inherently uncertain vehicle for advancing one's economic interests. The expectation of a recovery is rarely so certain that a litigant would be justified in resting her peace of mind upon the assurance of victory․ In our judgment a reasonable person, normally constituted, ought to be able to cope with the mental stress of loss of hoped for tort damages without serious mental distress.” (Merenda v. Superior Court, supra, 3 Cal.App.4th at p. 10, 4 Cal.Rptr.2d 87; see also Mercado v. Leong (1996) 43 Cal.App.4th 317, 326, 50 Cal.Rptr.2d 569.)
This case presents a far greater degree of certainty that Menezes' negligence caused the Erlichs to suffer serious emotional distress. The defects at issue here-non-existent and non-conforming shear walls, collapsing roofs and decks, improperly constructed foundations, and pervasive leaks-render the Erlichs' home virtually uninhabitable. These circumstances go far beyond the irregularities and mistakes “which must be endured as among the normal vicissitudes of modern life.” (Mercado v. Leong, supra, 43 Cal.App.4th at p. 326, 50 Cal.Rptr.2d 569.)
The dissent's conclusion that the Erlichs are only entitled to damages for property loss under their breach of contract cause of action is misplaced. The jury properly found that Menezes also was negligent. A contractual obligation may create a legal duty and the breach of that duty may support an action in tort. (North American Chemical Co. v. Superior Court, supra, 59 Cal.App.4th at pp. 773-776, 69 Cal.Rptr.2d 466.) “Contract law exists to enforce the intentions of the parties to an agreement while tort law is designed to vindicate social policy. (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 683, 254 Cal.Rptr. 211, 765 P.2d 373.) ․ [T]he same wrongful act may constitute both a breach of contract and an invasion of an interest protected by the law of torts. (3 Witkin, Cal. Procedure (4th ed. 1996) Actions, § 139, pp. 203-204.)[¶] ․ A contract to perform services gives rise to a duty of care which requires that such services be performed in a competent and reasonable manner. A negligent failure to do so may be both a breach of contract and a tort. (Perry v. Robertson (1988) 201 Cal.App.3d 333, 340, 247 Cal.Rptr. 74.) ․ [¶] ․ In general, it has been held that an action based on the negligent performance of contractual duties, although involving elements of both contract and tort, is regarded as a delictual action, since negligence is considered the gravamen of the action. (Eads v. Marks  39 Cal.2d [807,] 811-812, 249 P.2d 257; see also Distefano v. Hall (1963) 218 Cal.App.2d 657, 678, 32 Cal.Rptr. 770.)” (Id., at pp. 774-775, 69 Cal.Rptr.2d 466.)
Recovery in a negligence action can include damages for a host of injuries, including impaired earning capacity, medical costs, physical pain, mental suffering, loss of consortium, and susceptibility to subsequent disease or injury. (6 Witkin, supra, Torts, § 1403, pp. 874-875.)
Here, the jury's decision to award the Erlichs damages for physical pain, emotional distress and lost earnings is substantially supported by the record. As the dissent itself states, this was an aggravated case of negligent construction. It involves much more than the inevitable delays and mistakes involved in most construction projects. Who can realistically assert that a homeowner would not be emotionally traumatized by a house which is in jeopardy of collapsing in numerous parts? In such a situation, a homeowner is unlikely to remain stoic. Menezes could easily have guessed that the disaster he created would cause the Erlichs mental suffering.
Nor can we agree that Menezes must escape liability for emotional distress damages based on the jury's finding that he did not commit the intentional tort of fraud. The issue says nothing about the damages the Erlichs may recover for Menezes' negligence. This negligence has exposed the Erlichs to intolerable living conditions and a constant, justifiable fear about the physical safety of their home. Under these circumstances, the emotional distress they suffered should be compensated.
The judgment is affirmed. Costs to respondents.
I concur with the majority opinion except insofar as it affirms the $l65,000 for emotional distress, physical pain and suffering, and lost wages. In my opinion, this portion of the judgment should be reversed.
There is no question but that appellant breached his contract with homeowners and negligently constructed the subject custom built home. Indeed, this seems, even on the cold record, to be an aggravated case. Nevertheless, no reported California case has upheld an award of emotional distress damages based upon simple breach of the contract to build a residence and simple negligence in the building of the residence. Appellant was exonerated by the jury of intentional wrongdoing. While the facts are aggravated, I fear that this holding will spawn similar litigation seeking emotional distress damages and that “Erlich” will become an all too familiar name in construction lawsuits.
“[U]nless the defendant has assumed a duty to plaintiff in which the emotional condition of the plaintiff is an object, recovery is available only if the emotional distress arises out of the defendant's breach of some other legal duty and the emotional distress is proximately caused by that breach of duty. Even then, with rare exceptions, a breach of the duty must threaten physical injury, not simply damage to property or financial interests. [Citations]” (Potter v. Firestone Tire & Rubber Co. (1993) 6 Cal.4th 965, 985, 25 Cal.Rptr.2d 550, 863 P.2d 795; see also Gonzales v. Personal Storage, Inc. (1997) 56 Cal.App.4th 464, 472-475, 65 Cal.Rptr.2d 473 [collecting the cases on emotional distress damages for tort].)
Here, defendant contracted to build a personal residence for the homeowners. To be sure, everyone seeks emotional tranquillity in the building of a home. But can it truly be said that the object of the contract was to secure the emotional tranquillity of the homeowners? “The purpose of the law of contracts is to protect the reasonable expectations of the parties.” (Ben-Zvi v. Edmar Co. (1995) 40 Cal.App.4th 468, 475, 47 Cal.Rptr.2d 12.) Appellant entered into the contract to make money. The homeowners entered into the contract to have a house competently built. The homeowners did not receive a competently built house and was compensated with money damages for breach of contract. That is sufficient.
Here, the breach of the duty to construct a competently custom built house arose directly from the contract to do so. There was no other independent duty owing from appellant to the homeowners. (Potter v. Firestone Tire & Rubber Co., supra, 6 Cal.4th at p. 985, 25 Cal.Rptr.2d 550, 863 P.2d 795.) At no time did appellant guarantee the emotional tranquillity of the homeowners. He should not be required to respond in money damages for a harm which he did not guarantee to prevent. This is so notwithstanding the fact that this breach of contract may in the future threaten physical injury if the house collapses. While the house was negligently constructed, there was no showing that it is unsafe for occupancy. Homeowners lived in the house for five years. As to the physical injury of heart disease caused by stress presumably exacerbated by the construction problems, it is sufficient to observe that this physical injury flows from the emotional distress. It was not directly caused by negligent construction, e.g., a negligently installed beam falling on the homeowner. (Compare Fuentes v. Perez (1977) 66 Cal.App.3d l63, l68, fn. 2, 136 Cal.Rptr. 275.)
Appellant's negligence resulted only in economic injury and property damage. Under Potter, its progeny and its long line of predecessors, they are not also entitled to recover damages for their emotional distress. (See e.g., Burgess v. Superior Court (1992) 2 Cal.4th 1064, 1074, 9 Cal.Rptr.2d 615, 831 P.2d 1197; Molien v. Kaiser Foundation Hospitals (1980) 27 Cal.3d 916, 928, 167 Cal.Rptr. 831, 616 P.2d 813; Lubner v. City of Los Angeles (1996) 45 Cal.App.4th 525, 532-533, 53 Cal.Rptr.2d 24; Camenisch v. Superior Court (1996) 44 Cal.App.4th 1689, 1691, 52 Cal.Rptr.2d 450; Mercado v. Leong (1996) 43 Cal.App.4th 317, 324, 50 Cal.Rptr.2d 569; Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1039-1040, 13 Cal.Rptr.2d 133; Merenda v. Superior Court (1992) 3 Cal.App.4th 1, 10, 4 Cal.Rptr.2d 87; Cooper v. Superior Court (1984) 153 Cal.App.3d 1008, 1010-1012, 200 Cal.Rptr. 746.)
Most California courts have denied recovery of emotional distress damages in cases involving only economic injury for two related reasons: emotional injury is not a sufficiently foreseeable result of negligence relating to the plaintiff's economic well-being, and the causal link between emotional distress and the negligence is too tenuous. Merenda v. Superior Court, supra, 3 Cal.App.4th 1, 4 Cal.Rptr.2d 87, illustrates both points. There, the court held that a negligent attorney, who failed to pursue a client's claims for sexual battery against her former employer, was not liable for the client's emotional distress because the injury was not sufficiently foreseeable. “The duty to avoid negligence in the practice of law is imposed to protect a client from the legal consequences of a miscarriage of justice. The interest protected is typically economic, as in the loss of damages or the imposition of damages․ Where the interest of the client is economic, serious emotional distress is not an inevitable consequence of the loss of money and, as noted, the precedents run strongly against recovery.” (Id. at p. 10, 4 Cal.Rptr.2d 87, see also Camenisch v. Superior Court, supra, 44 Cal.App.4th 1689, 1691, 52 Cal.Rptr.2d 450; Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1039-1040, 13 Cal.Rptr.2d 133.)
Like the duty to avoid negligence in the practice of law, the duty to avoid negligence in residential construction is imposed to protect the homeowner from the high monetary cost of repairing or replacing a defective home. Serious emotional distress is not an inevitable result of incurring those costs. (Merenda, supra, 3 Cal.App.4th at p. 10, 4 Cal.Rptr.2d 87. See also Mercado v. Leong, supra, 43 Cal.App.4th at p. 326, 50 Cal.Rptr.2d 569 [“The pivotal issue of policy is whether the emotional injury flows naturally from acts invading an established duty in tort․”].) Indeed some homeowners are able to cope with the inevitable delays, mistakes and irregularities without suffering anything more than annoyance. Others react to the same circumstances more dramatically. General contractors like appellant should not be required to guess which potential clients are at risk of suffering emotional injury and which will react to negligent work with equanimity.
Merenda also denied recovery of emotional distress damages because the link between the client's emotional distress and the attorneys' negligence was too tenuous. “[T]he degree of certainty that the client suffered [serious emotional distress] by loss of an economic claim [is] tenuous. Litigation is an inherently uncertain vehicle for advancing one's economic interests. The expectation of a recovery is rarely so certain that a litigant would be justified in resting her peace of mind upon the assurance of victory․ In our judgment a reasonable person, normally constituted, ought to be able to cope with the mental stress of loss of hoped for tort damages without serious mental distress.” (Merenda v. Superior Court, supra, 3 Cal.App.4th at p. 10, 4 Cal.Rptr.2d 87. See also Mercado v. Leong, supra, 43 Cal.App.4th 317, 326, 50 Cal.Rptr.2d 569.)
The same analysis applies here. No reasonable homeowner can embark on a building project with certainty that the project will be completed to perfection. Indeed, errors in construction are so likely to occur that few if any homeowners would be justified in resting their peace of mind on the timely or correct completion of such a building project. Moreover, the cost of correcting those inevitable errors is adequately compensated for by traditional contract damages. (See, e.g., Armitage v. Decker (1990) 218 Cal.App.3d 887, 904-906, 267 Cal.Rptr. 399; Orndorff v. Christiana Community Builders (1990) 217 Cal.App.3d 683, 688-690, 266 Cal.Rptr. 193; Heninger v. Dunn (1980) 101 Cal.App.3d 858, 865-866, 162 Cal.Rptr. 104.)
The homeowners contend they are entitled to recover damages for emotional distress because appellant's negligence invaded their home, in much the same way as would a trespasser or a neighboring property owner who negligently maintained a nuisance. Several cases have allowed the recovery of damages for loss of enjoyment, anxiety and emotional distress where a trespass or nuisance occurs. (Smith v. County of Los Angeles (1989) 214 Cal.App.3d 266, 288-289, 262 Cal.Rptr. 754; Stoiber v. Honeychuck (1980) 101 Cal.App.3d 903, 922-923, 162 Cal.Rptr. 194; Sturges v. Charles L. Harney, Inc. (1958) 165 Cal.App.2d 306, 323, 331 P.2d 1072.) The cases are, however, distinguishable. First, the homeowners neither pled or tried a cause of action for trespass or nuisance. Second, unlike the cases on which they rely, this case involves no intentional wrongdoing.
Appellant's negligence caused only economic injury and property damage. While I have no doubt that the homeowners truthfully reported their emotional reaction to the negligent construction work, recovery for emotional distress damages should not be permitted as a matter of law.
FOOTNOTE. See footnote *, ante.
3. The law recognizes and protects the unique attachment homeowners form toward their property. For example, because courts recognize that homeowners may have “personal reasons” to repair rather than replace a damaged home, homeowners are generally allowed to recover repair costs, even if those costs exceed other available measures of damages. (Armitage v. Decker (1990) 218 Cal.App.3d 887, 904-906, 267 Cal.Rptr. 399; Orndorff v. Christiana Community Builders (1990) 217 Cal.App.3d 683, 688-690, 266 Cal.Rptr. 193; Heninger v. Dunn (1980) 101 Cal.App.3d 858, 865-866, 162 Cal.Rptr. 104.) Similarly, it has long been recognized that damages for loss of enjoyment, and for anxiety and emotional distress, may be recovered where a trespass or nuisance negligently created by the defendant invades a plaintiff's home. (Smith v. County of Los Angeles (1989) 214 Cal.App.3d 266, 288-289, 262 Cal.Rptr. 754; Sturges v. Charles L. Harney, Inc. (1958) 165 Cal.App.2d 306, 323, 331 P.2d 1072.)
STEVEN J. STONE, Presiding Justice.
GILBERT, J., concurs.