Aas v. Superior Court

• Decision Date: 11 June 1998
• Docket Number: D030399,Nos. D030218,s. D030218
• Court: California Court of Appeals Court of Appeals
• Parties: Previously published at 64 Cal.App.4th 916 64 Cal.App.4th 916, 98 Cal. Daily Op. Serv. 4465, 98 Daily Journal D.A.R. 6106 Alan O. AAS et al., Petitioners, v. The SUPERIOR COURT of San Diego County, Respondent; The William Lyon Company et al., Real Parties in Interest. PROVENAL COMMUNITY ASSOCIATION, Petitioner, v. The SUPERIOR COURT of San Diego County, Respondent; The William Lyon Company et al., Real Parties in Interest.

Page 581

75 Cal.Rptr.2d 581

Previously published at 64 Cal.App.4th 916

64 Cal.App.4th 916, 98 Cal. Daily Op. Serv. 4465,

98 Daily Journal D.A.R. 6106

Alan O. AAS et al., Petitioners, v. The SUPERIOR COURT of San Diego County, Respondent;

The William Lyon Company et al., Real Parties in Interest.

PROVENAL COMMUNITY ASSOCIATION, Petitioner, v. The SUPERIOR COURT of San Diego County, Respondent;

The William Lyon Company et al., Real Parties in Interest.

Nos. D030218, D030399.

Court of Appeal, Fourth District, Division 1, California.

June 11, 1998.

As Modified June 12, 1998.

Rehearing Denied July 9, 1998.

Review Granted Sept. 16, 1998.

Procopio, Cory, Hargreaves & Savitch, Steven M. Strauss, Edward I. Silverman, Victor M. Felix, San Diego, for Petitioners in No. D030218; Epstein & Grinnell, Douglas W. Grinnell, Luis E. Ventura and Duane E. Shinnick, San Diego, for Petitioner in No. D030399 and as Amicus Curiae on behalf of Petitioners in D030218.

Burdman & Benson, Linda Angle-Keny, San Diego, are Amicus on behalf of the Petitioners in No. D030218.

No appearance for Respondent.

Newmeyer & Dillion, Timothy S. Menter, Gregory L. Dillion, Gene M. Witkin, Lincoln, Gustafson & Cercos, Thomas J. Lincoln, Charles K. Egan, Newport Beach, Dale, Braden & Hinchcliffe, Walnut Creek, Suzanne M. Martin, Wilson, Elser, Moskowitz, Edelman & Dicker, San Diego, Andrew S. Blackburn, Long Beach, William S. Roberts, Kring & Brown, Jeffrey A. Lake, Jon A. Van de Grift, Maxie, Rheinheimer, Stephens & Vrecich, Barry M. Vrecich, San Diego, Kelegian & Thomas, Michael Paul Thomas, Newport Beach, Bullard & Olin, Robert M. Granafei, Lee H. Graham, Brownwood, Rice & Zurawski, Michael F. Saydah, San Diego, Acker, Kowalick & Whipple, Anthony H. Whipple, W. Frederick Kowalick, Linwood Warren, Jr., Los Angeles, Catherine L. Rhodes, Tawnya L. Southern, Mark S. Siegel, Farmer, Weber & Case, David C. Weber, San Diego, Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone, Timothy A. Nicholson, Stephen L. Weber, Irvine, Perkins & Miltner, Timothy E. Salter, Callahan, McCune & Willis, Norma Marshal, Kolod, Wager & Gordon, Jerome A. Wager, Scott Kolod, Vekeno Kennedy, and Elisa J. Nemeth, San Diego, for Real Parties in Interest. Balestreri, Pendleton & Potocki, Thomas A. Balestreri, Jr., Mary B. Pendleton, Michael M. Freeland, San Diego, Maurine P. Brand for Real Parties in Interest in D030399 and as Amicus Curiae on behalf of Real Parties in Interest in D030218.

Fred J. Hiestand, Sacramento, as Amici Curiae on behalf of Real Parties in Interest in No. D030218.

Lewis, D'Amato, Brisbois & Bisgaard, Robert V. Closson, Terrell A. Quealy, Judith A. Lewis, Morris, Polich & Purdy, Randy Koenig, Gary L. Jacobsen, Parker & Stanbury, Jenna L. Price and Mary-Tyler Crenshaw, San Diego, as Amici Curiae on behalf of Real Parties in Interest in Nos. D030218 and D030399.

NARES, Associate Justice.

These are consolidated proceedings in mandate commenced in construction defect actions after the trial court (1) ruled petitioners had not established a "special relationship" with real parties under J'Aire Corp. v. Gregory (1979) 24 Cal.3d 799, 157 Cal.Rptr. 407, 598 P.2d 60 (J'Aire ); (2) granted real parties' in limine motions excluding evidence of alleged construction defects which had not resulted in personal injury or physical damage to other property, and of related economic losses sustained by the petitioners; and (3) issued an order excluding evidence of post-repair "stigma" damages. Petitions denied.

BACKGROUND

These consolidated writ proceedings were brought by the plaintiffs in two separate construction defect actions. In the first action (the Provenal case), petitioner Provenal Community Association (the Association) is the homeowners association for a condominium project developed and built by real parties in interest The William Lyon Company and Lyon Communities, Inc. (together, Lyon). In the second action (the Aas case), the petitioners (Aas petitioners) are the owners of homes in a subdivision also developed and built by Lyon.

Both the Association and the Aas petitioners (collectively, petitioners) seek peremptory writs of mandate compelling the superior court to (a) vacate its orders granting the motions in limine brought by Lyon and the other real parties in interest (subcontractors) to exclude or limit petitioners' introduction of evidence (in support of their respective negligence claims) of construction defects (including governing building code violations and other defects resulting from allegedly negligent failures to meet the standard of care for reasonable and workerlike construction and deviations from approved plans and specifications) that have not caused present physical harm to persons or other property but have allegedly caused economic loss to the petitioners; and (b) to enter a new order denying the in limine motions.

The Aas petitioners also seek an order compelling the superior court to vacate its sua sponte pretrial order preventing petitioners from introducing evidence of post-repair "stigma" damages, and enter an order allowing the introduction of this evidence.

Three issues are presented. The first is whether developers, general contractors and subcontractors owe a duty of care to homeowners associations and individual homeowners with respect to the construction of mass-produced housing. We conclude they owe such a duty of care. We also conclude that the court, in ruling that petitioners had not established a "special relationship" with real parties in interest within the meaning of J'Aire, supra, 24 Cal.3d 799, 157 Cal.Rptr. 407, 598 P.2d 60, implicitly and erroneously found that real parties in interest did not owe petitioners a duty of care.

The second issue presented is whether homeowners associations and individual owners of mass-produced housing may recover damages in negligence actions against developers, general contractors and subcontractors for construction defects involving violations of minimum construction standards set forth in the Uniform Building Code and other codes, which defects have not resulted in personal injury or physical damage to other property, and thus have allegedly caused the plaintiffs to sustain only economic loss damages. We conclude homeowners associations and individual homeowners do not have a private right of action in negligence against developers, general contractors, and subcontractors for recovery of purely economic losses they sustain as a proximate result of construction defects in mass-produced housing (including but not limited to those involving violations of governing building codes) which have not yet caused personal injury or physical damage to property other than the defectively constructed portions of the residential structures themselves.

The third issue presented is whether homeowners associations and individual homeowners may recover damages for post-repair injury to the reputation of real property ("stigma" damages). For policy reasons we shall discuss, we conclude such "stigma" damages are not recoverable.

Accordingly, we deny both petitions.

STANDARD OF REVIEW

Evidentiary rulings and orders on motions in limine are generally reviewed for an abuse of discretion. (Las Palmas Associates v. Las Palmas Center Associates (1991) 235 Cal.App.3d 1220, 1241-1242, 1 Cal.Rptr.2d 301.) However, where the facts are undisputed, the matters before us present pure questions of law subject to independent review. (Ghirardo v. Antonioli (1994) 8 Cal.4th 791, 799, 35 Cal.Rptr.2d 418, 883 P.2d 960.)

Here, the issues of duty, the recoverability in negligence of economic loss damages in construction defect cases absent personal injury

or physical damage to other property, and the recoverability of "stigma" damages in such cases, are all questions of law. Accordingly, we independently review the trial court's in limine rulings on these issues. (Ghirardo v. Antonioli, supra, 8 Cal.4th at p. 799, 35 Cal.Rptr.2d 418, 883 P.2d 960.)

DISCUSSION

I DUTY

We agree with Lyon that the principal issue in these consolidated writ proceedings "is not one of duty, but rather of damage." However, although Lyon apparently concedes in its supplemental letter briefing that it and subcontractors owed petitioners a duty of care, ¹ we note that Lyon contends in its original petition response in the Provenal case that a "special relationship" under J'Aire, supra, 24 Cal.3d 799, 157 Cal.Rptr. 407, 598 P.2d 60, does not exist between petitioners and Lyon and subcontractors because the criteria set forth in Biakanja v. Irving (1958) 49 Cal.2d 647, 320 P.2d 16 ², as adopted by the J'Aire court (24 Cal.3d at p. 804, 157 Cal.Rptr. 407, 598 P.2d 60), are not met. We further note that the court, in granting Lyon's and subcontractors' in limine motions on the issue of the recoverability in negligence of pure economic loss damages (discussed post ), agreed with Lyon's contention that a "special relationship" under J'Aire does not exist between petitioners and real parties. ³

In this regard, Lyon's diverging contentions illustrate the extent to which the J'Aire decision has resulted in analytical confusion in negligence actions involving claims for economic loss damages by suggesting the six Biakanja factors (see fn. 2, ante ) are to be applied in determining whether a "special relationship," as distinguished from a duty of care, exists between plaintiffs and defendants such that plaintiffs in a given case may recover pure economic loss damages in negligence. (See J'Aire, supra, 24 Cal.3d at p. 804, 157 Cal.Rptr. 407, 598 P.2d 60 ["Where a special relationship exists between the parties, a plaintiff may recover for loss of expected economic advantage"], citing Biakanja v. Irving, supra, 49 Cal.2d 647, 320 P.2d 16 and other case authorities.)

We share the view of the court in Ott v. Alfa-Laval Agri, Inc. (1995) 31 Cal.App.4th 1439, 1450, 37 Cal.Rptr.2d 790 (hereafter Ott ), that the issue of whether a ...