Altman v. John Mourier
Construction























Filed 1/10/13
Altman v. John Mourier Construction CA3













NOT TO BE PUBLISHED



California Rules of Court, rule 8.1115(a), prohibits
courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115>.





IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD
APPELLATE DISTRICT

(Sacramento)

----






>

BRIAN ALTMAN et al., Plaintiffs and Appellants, v. JOHN MOURIER CONSTRUCTION, INC., Defendant and Appellant.

C064340 (Super. Ct. No. 06AS01823)

Plaintiffs,
homeowners Brian Altman et al.,href="#_ftn1" name="_ftnref1" title="">[1] filed suit against home designer/builder, defendant John Mourier
Construction, Inc. (JMC), alleging that design defects and construction
defects of their homes allowed water intrusion causing damage. Plaintiffs alleged theories of strict products
liability (design defect), breach of
express and implied warranty, breach of contract, and negligence. By special verdicts, the jury rejected
the strict liability and warranty claims, finding the houses did >not fail to perform “structurally” as an
ordinary consumer would have expected or as represented. The jury nevertheless found JMC breached
contracts and was negligent in the design or construction of the houses.
The jury awarded plaintiffs damages for negligence and breach of
contract.

In
a bifurcated bench trial, the trial
court awarded plaintiffs some but not all of their investigative costs as
damages for successfully prosecuting a tort claim in a construction defect case
pursuant to Stearman v. Centex Homes
(2000) 78 Cal.App.4th 611 (Stearman).

JMC
appeals from the judgment, arguing evidentiary error, insufficiency of the
evidence, inconsistency of the verdicts, and duplicative damages. JMC also appeals from the trial court’s
refusal to offset the judgment by an amount plaintiffs received from
subcontractors’ good faith settlements.
(Code Civ. Proc., § 877.)href="#_ftn2" name="_ftnref2" title="">[2]

Plaintiffs
separately appeal from the trial court’s partial denial of investigative costs.

We
reverse that portion of the judgment that awarded damages for breach of
contract, because there was no substantial
evidence of contract. We affirm the
trial court’s ruling regarding investigative costs. We otherwise affirm the judgment.

>FACTUAL AND PROCEDURAL
BACKGROUND

>Plaintiffs’ Claims

In May 2006,
plaintiffs filed this lawsuit against JMC and subcontractors who are not
parties to this appeal.href="#_ftn3"
name="_ftnref3" title="">[3] Some plaintiffs bought their
homes directly from JMC between 2000 and 2001, before the homes were completed,
after seeing model homes. These
plaintiffs asserted claims for strict products liability, breach of express
warranty, breach of implied warranty, breach of contract, and negligence. The plaintiffs who bought their homes from
original buyers sued JMC for strict products liability and negligence only.

Plaintiffs’ Evidence

Plaintiffs
presented evidence of design defects
and construction defects by JMC,
resulting in water intrusion causing cracks and leaks. Design
defects involved wind deflection standards and framing. Construction
defects involved framing and roofing.
Thus, there was an overlap of framing issues -- some attributed to >design defect and some attributed to >construction/installation defects.
Roofing was presented as a separate issue, with separate witnesses and
repair costs.

Plaintiffs’
expert architect and general contractor Norbert Lohse opined the design plans
were defective in calling for wind deflection criteria of “L [length] over 240”
(exposure B) which is 50 percent less stiff than L over 360
(exposure C). Exposure C was
required to make the buildings stiff enough so that wind would not cause the
framing to bow. Lohse said the deficient
wind deflection criteria resulted in water intrusion and cracks in the
stucco. Lohse also considered the design
plans defective in allowing “conventional” braced framing of the second floors,
rather than “engineered” framing. The
framing is too weak for the wind load.
Lohse opined that plywood shear panels were improperly installed with
inadequate spacing to allow the wood to expand and contract in response to
movement and moisture; he described this as a failure in both design and
construction. Lohse also said nails were
placed too close to the edge of the plywood, which can happen if workers are
not paying attention to what they are doing.
Lohse also opined the roofs were improperly installed, with inadequate
stapling, which allowed water to get under the roofs. Lohse attributed stucco cracks to the fact
the buildings were failing, and “The structural components of the building are
failing due to poor design and poor
construction of the framing.” (Italics
added.)

Plaintiffs
also presented, as an expert in building standards, George Thomas, the chief
building safety official for the City of Pleasanton, who
does separate consulting work as a civil engineer. He said building officials do not check
everything on design plans for multiple-unit developments; they rely on the
engineers who signed and stamped the plans.
He opined the design plans used the wrong wind deflection criteria and
erroneously called for conventional braced framing on the second floors. As a result, the buildings are too
flexible, causing brittle materials like stucco to break.

Plaintiffs’
expert on repair costs, William Thomas, developed two sets of repair estimates,
excluding the roof problems, one for wind exposure B and the other for
wind exposure C. The total cost for
repairs, excluding the roofs, for all plaintiffs was $1,332,592.58 for wind
exposure B, and $1,600,607.34 for wind exposure C.

Plaintiffs
presented evidence that the total repair cost for all roofs was $124,670.85. At
trial, JMC’s own expert agreed the roofs needed repair, but disputed what
needed to be done to repair the roofs and the cost.

The
express warranty admitted into evidence said, “your new home . . .
represents the finest achievement in workmanship and design. It is built to last and complies with the
rigid building and material standard of [JMC].
[¶] . . . [JMC’s one-year warranty] will warrant that we
have built your home in compliance with local, state, and federal codes. We will correct, upon notification, defects
in your home during the first year of your ownership. [¶]
JMC Homes is noted for quality. . . .” The warranty documents also stated,
however, that JMC was not responsible for wind damage beyond its control,
damaged roof tiles, or hairline cracks in stucco, and referred homeowners to
the manufacturer’s warranty for window problems.

>Defendant’s Evidence

JMC
presented its own expert engineer, Stephen Pelham, who opined the wind exposure
and framing were fine in design and installation and did not cause the stucco
cracks. As we discuss >post, the trial court prevented the
defense from calling as a witness the expert of the stucco subcontractor who
settled out of the case.

>Jury Instructions

The
parties stipulated to the instructions.

The trial court
instructed on strict liability -- that plaintiffs claimed JMC “defectively
designed and constructed”href="#_ftn4"
name="_ftnref4" title="">[4] the houses; that each plaintiff could recover under strict
liability when a defect in one component of the house causes injury to other
components of the house, even though the damage is not to persons or property
apart from the structure; and that “[e]ach plaintiff claims their home’s design
was defective because the homes did not perform as an ordinary consumer would
have expected it to perform.”

The
court instructed on liability for design
defects: “Each plaintiff claims that
their home was improperly designed and constructed
by [JMC], which caused the defects and damages alleged. In determining if [JMC] is liable, you should
decide if each plaintiff has proved that the design was improper. In
deciding whether the homes were designed improperly you may consider the
actions of the [JMC] design department and/or the conduct of the engineers
hired by [JMC].” (Italics added.)

>Jury Deliberation and
Verdicts

During
deliberations, the jurors asked if they could award damages for incidentals and
were told yes.

In
special verdicts -- approved by counsel for both sides -- the jury found as
follows as to the individual homes purchased directly from JMC:

“STRICT PRODUCTS LIABILITY - DESIGN DEFECT

“1. Did [JMC] manufacture or sell the house?

“
X Yes No

“If
your answer to question 1 yes, then answer
question 2. . . .

“2. Did the house fail to structurally perform as
an ordinary consumer would have expected?

“___
Yes X No

“. . .
If you answered no, then go to the next section -- Implied Warranty. [¶] . . . [¶]

“IMPLIED WARRANTY

“6. Did MR. & MRS. ALTMAN buy the
house from [JMC]?

“
X Yes No

“If
your answer to question 6 is yes, then answer
question 7. . . .

“7. At the time of purchase, did [JMC] know that
MR. & MRS. ALTMAN were relying on [JMC’s] skill and judgment to
design or structurally design or construct the house that was suitable for the
particular purpose?

“
X Yes No

“If
your answer to question 7 is yes, then answer
question 8. . . .

“8. Did MR. & MRS. ALTMAN
justifiably rely on [JMC’s] skill and judgment?

“
X Yes No

“If
your answer to question 8 is yes, then answer
question 9. . . .

“9. Was the failure of the house to be
structurally suitable a substantial factor in causing harm to MR. &
MRS. ALTMAN?

“___
Yes X No

“. . .
If you answered no, then go to the next section -- Express Warranty. [¶] . . . [¶]

“EXPRESS WARRANTY

“11. Did [JMC] warrant to MR. &
MRS. ALTMAN the home was properly designed or structurally designed or
constructed?

“
X Yes No

“If
your answer to question 11 is yes, then answer
question 12. . . .

“12. Did MR. & MRS. ALTMAN rely on
[JMC’s] design or structural design or construction in deciding to purchase the
house?

“
X Yes No

“If
your answer to question 12 is yes, then answer
question 13. . . .

“13. Did the house fail to structurally perform as
represented?

“___
Yes X No

“. . . f
you answered no, then go to the next section -- Breach of Contract. [¶] . . . [¶]

“BREACH OF CONTRACT

“[¶] . . .
[¶]

“16. Did MR. & MRS. ALTMAN and [JMC]
enter into a contract?

“
X Yes No

“If
your answer to question 16 is yes, then answer question
17. . . .

“17. Did [JMC] fail to do something that the
contract required it to do in the design or structural design or construction
of the house?

“
X Yes No

“If
your answer to question 17 is yes, then answer
question 18. . . .

“18. Were MR. & MRS. ALTMAN harmed
by that failure?

“
X Yes No

“If
your answer to question 18 is yes, then answer
question 19. . . .

“19. What are MR. & MRS. ALTMAN’s
damages?

“a. Economic loss (cost of repair) $24878.16.

“CONTINUE
TO THE NEXT SECTION

“NEGLIGENCE

“20. Was [JMC] negligent in the design or
structural design or construction of
the home owned by MR. & MRS. ALTMAN?[href="#_ftn5" name="_ftnref5" title="">[5]] [Italics added.]

“
X Yes No

“If
your answer to question 20 is yes, then answer
question 21. . . .

“21. Was [JMC’s] negligence a substantial factor
in causing harm to MR. & MRS. ALTMAN?

“
X Yes No

“If
your answer to question 21 is yes, then answer
question 22. . . .

“22. What are MR. & MRS. ALTMAN’s
total damages?

“a) Economic loss (cost of repair) $25321.25.”

The
jury returned the same findings for the other plaintiffs, but with differing
amounts of damages.

Thus,
the jury found against plaintiffs on the claims for strict products liability
and breach of warranty, finding the houses did not fail “to structurally
perform” as an ordinary consumer would expect or as represented, but the
jury found in favor of plaintiffs for breach of contract and negligence. Each special verdict awarded an
amount for contract damages for “Economic loss (cost of repair)” and a
different amount for negligence damages for “Economic loss (cost of
repair).”

As
for the other plaintiffs, the jury awarded the following damages:

For
Bruce and Christine Magnani, the jury awarded $35,572.45 for contract damages
and $35,252.13 for negligence damages.

For
Richard and Suzanne Sparacio, the jury awarded $24,248.56 in contract damages
and $29,252.20 for negligence damages.

For
Randolph Pedigo and Lisa Senter, the jury awarded $13,454.41 in contract
damages and $25,303.88 for negligence damages.


For
Aaron and Gwen Cullen, the special verdict covered only (1) strict
liability -- design defect, which the jury rejected with a finding that the
house did not fail to perform structurally as an ordinary consumer would
expect, and (2) negligence in the design or structural design or construction
of the home, which the jury found true and awarded $29,225.20 in damages for
economic loss (cost of repair).

For
Steve and Margaret Fairchild, the jury found no strict liability, but did find
liability for negligence with damages of $6,093.34, corrected to $20,755.60 by
interlineation.

In
November 2009, the trial court entered a “JUDGMENT ON VERDICT,” stating the
trial court accepted the verdict rendered by the jury, for plaintiffs to
recover from JMC “the sum of (See attached individual verdict forms), with
interest . . . .”

JMC
filed motions for judgment notwithstanding the verdict (JNOV) (§ 629), for
a new trial on damages (§ 657), to vacate the judgment and enter a new
judgment (§ 663), and to set off the judgment by the settlement amounts
paid by the settling subcontractors (§ 877). JMC claimed, among other things, that the
jury’s verdicts were inconsistent in that they relieved JMC of liability for
strict products liability and breach of warranty but found JMC liable for
breach of contract and negligence. JMC
acknowledged plaintiffs presented the roofs as distinct from the other
problems. JMC argued the distinction was
between (1) “[s]tructural design and construction” and (2) “[r]oof
construction.” JMC asked the trial court
to enter judgment in its favor as to the breach of contract cause of action, or
at least to reduce the judgment to $124,670.85 for the roof repairs, though JMC
argued plaintiffs could not recover roof repairs under a negligence theory
because the “economic loss rule” requires construction defects to cause damage
to other property in order to warrant an award.


Plaintiffs
opposed JMC’s motions and filed their own motion
for new trial regarding damages.
Plaintiffs opposed the setoff motion on the ground that the jury heard
evidence only of damages not covered
by the settlements.

The trial court
denied the posttrial motions. The
court’s written ruling denying setoff said the purpose of setoff under
section 877 is to prevent double recovery, which was not at issue here,
because the subcontractors’ settlements were for claims different than the
claims that were tried to this jury. As
to the other motions, the trial court said the verdicts were not inconsistent,
because the jury could find that despite an absence of design defects, there were problems that were not design
defects. Notably, at the hearing on the
motions, JMC’s attorney admitted that JMC’s own expert “agreed there are roof
problems,” though he disagreed with what repairs were required and the
cost. JMC’s counsel also admitted the
need for roof work in closing argument to the jury. Although
the jury awarded more than the amount requested by plaintiffs for roof repairs,> the trial court indicated the jury may have
found some of the nonroof problems to be defects in construction rather than
defects in design. The court stated
there was no inconsistency between the jury finding the houses did not fail “to
structurally perform” for the warranty claims, and the jury award for construction
defects in the contract and negligence claims.
The court observed the contract and negligence verdicts referred not
only to “structural” (design) defects, but to “structural design >or construction.” (Italics added.)

Meanwhile,
plaintiffs sought to recover investigative costs of $287,195.11 as damages,
pursuant to Stearman. Pursuant to stipulation, the trial court
conducted a bench trial on declarations and in April 2010 issued a ruling
awarding plaintiffs only $82,334.

An
amended judgment filed May 7, 2010 reflected the November 2009 judgment
awarding $263,263.84 to plaintiffs, and added investigation costs of $82,334,
plus other costs of $14,685.53.

JMC
appeals from the amended judgment and the denial of its posttrial motions.

Plaintiffs
appeal from the postjudgment order denying in part their Stearman motion.

>DISCUSSION

>I. JMC’s Appeal

JMC
raises a variety of contentions -- (1) evidentiary error; (2) no
substantial evidence supports the award for breach of contract; (3) the jury
awarded double recovery for contract and tort; (4) the verdicts are
inconsistent in awarding damages despite jury findings that the houses did not
fail to perform structurally; (5) there is no substantial evidence the
roof problems caused damage to other parts of the house to support the
negligence award, as assertedly required by the “economic loss rule”; and
(6) the trial court declined a setoff for the subcontractors’ good faith
settlements.

We
conclude the contract award must be reversed due to insufficient evidence of a
contract. We conclude plaintiffs’ other
contentions do not warrant reversal.

>A. Claims of Evidentiary Error

1. Exclusion
of Evidence

JMC
argues the trial court improperly refused to allow JMC to offer evidence
of plaintiffs’ settlements with the subcontractors or to show the stucco
subcontractor as an alternate cause for the damages. Assuming the matter is not forfeited, as
urged by plaintiffs,href="#_ftn6"
name="_ftnref6" title="">[6] we conclude JMC fails to meet its burden to demonstrate grounds for
reversal.

a. Background

Before
trial, plaintiffs’ counsel submitted a declaration in connection with the
stucco subcontractor’s motion for good faith settlement. Plaintiffs’ counsel attested plaintiffs would
not assert any claims against JMC for damages arising out of the work performed
by Stucco Works, Inc., and the only issues at trial would be unresolved claims
caused by JMC or nonsettling subcontractors.href="#_ftn7" name="_ftnref7" title="">[7] The trial court order
approving the stucco subcontractor’s good faith settlement for $85,000 stated,
“Plaintiff[s] are precluded from raising at trial any issues pertaining to
stucco mix, curing, texture, or anything to do with stucco installation or any
other work performed by Stucco Works.
However, plaintiff[s] [are] not precluded from raising at trial issues of
stucco cracks that may have resulted from other work, such as grading or
framing.”href="#_ftn8" name="_ftnref8"
title="">[8]

In
motion in limine No. 15 (MIL 15), JMC sought to preclude “all parties and
their attorneys” and “any party” from introducing evidence of defects for which
plaintiffs had already been compensated in good faith settlements with
subcontractors.href="#_ftn9"
name="_ftnref9" title="">[9] JMC’s attorney argued,
“There are stucco cracks which were related to the work of the stucco
contractor that even plaintiffs’ expert states there are some
installation-related items that should not be in evidence in this case because
they have settled.” JMC’s counsel agreed
with the trial court that multiple actors can be responsible for the same
injury, but stated, “. . . I still don’t believe we can proceed
in this trial without making sure we understand that there are . . .
stucco cracks attributable to contracted work that settled out of the
case.” Plaintiffs’ attorney said his
experts would testify that JMC’s structural and framing deficiencies caused
stucco cracks and other damage. JMC’s
counsel said, “I’m not so much concerned about what his experts are going to
say, I’m concerned about the homeowners, who may get on the stand, talk about
window leaks, talk about cracked stucco, or other things which they’ve already
received compensation for.” Plaintiffs’
attorney said the homeowners would testify only about their percipient
observations, not offer opinions about causation.

The
trial court denied MIL 15 without prejudice.href="#_ftn10" name="_ftnref10" title="">[10]

At
trial, plaintiffs’ expert, Norbert Lohse, testified he drew maps of stucco
cracks -- “crack maps.” The maps were
not admitted into evidence, but were used during Lohse’s testimony. Lohse testified the maps showed, highlighted
in yellow, stucco cracks observed in 2006 or 2007 by him and his staff. The maps showed in red ink stucco cracks
Lohse observed personally on July 10, 2009. Lohse opined that all of the stucco cracks
about which he testified were the result of improper design and engineering and
improper framing.

JMC
sought to call a witness inadvertently omitted from its witness list,
Alan Phillips, a general contractor, who had been a designated expert by
the stucco subcontractor before the settlement.
Phillips would testify that stucco cracks plaintiffs attributed to JMC
were instead caused by improper stucco installation by the stucco
subcontractor.

Plaintiffs
objected, asserting that Phillips’ testimony would be irrelevant, because
“We’re not allowed to provide testimony as to failures of the stucco
subcontractor and any damage associated thereby. That’s in fact, a jury instruction submitted
by the defendants. [¶] And that it would just take up time and be
prejudicial because it would distract the jury from what is relevant in the
case which is the structural claims and damages associated therefrom.”

JMC
argued the primary issue in this case was the cause of the stucco cracks, which
plaintiffs claimed were all related to the structural problems attributed to
JMC, and which JMC claimed had other causes for which it was not responsible. Phillips would testify the stucco cracks
resulted from poor workmanship by the stucco subcontractor.

Plaintiffs
claimed JMC was trying to introduce the very same evidence it had sought to
exclude in its prior motion, MIL 15.
Plaintiffs’ counsel said, “at numerous times throughout my case in chief
I was prohibited from putting on evidence as to failures of the stucco
contractor and the stucco work. [¶] We’ve had numerous side bars on that
topic. We’ve had numerous objections on
and off the record, and the only time I was allowed to continue on with regard
to my expert witness[’s] testimony and client[s’] testimony is if I was able to
show the link between the failures in the framing or design that caused damage
to stucco or windows or whatever else, tile and whatnot. [¶] So
in my case in chief I was prohibited from putting on evidence as to failures of
the stucco contractor in his work.
[¶] And I was only allowed to put
on evidence of damage caused by alleged failures by JMC and its designers and
engineers. [¶] And now . . . [JMC] seeks to
put on evidence of that which I was prohibited.”

The
trial court read aloud from the declaration of plaintiffs’ counsel in support
of the stucco subcontractor’s good faith settlement -- stating that
plaintiffs were not interested in advancing any argument or any claim or any
entitlement to damages out of work performed by the stucco
subcontractor. Plaintiffs’ counsel
clarified he was fine with the prohibition against plaintiffs, because he
considered evidence of the subcontractor’s fault irrelevant to the current
claims, but the point was that JMC was now changing its position. If JMC was allowed to adduce evidence of
failings by the stucco subcontractor, then plaintiffs would be forced to rebut the
evidence and seek to void the settlement.


When
the court asked the relevance of whether the stucco was properly applied, JMC’s
attorney made an offer of proof that Phillips would testify that “Stucco
workmanship was not up to par. . . . There are gaps in the joints of the foam
boards, both vertical gaps and horizontal gaps. Those create a weak spot in the plane. Those, that allows [sic] the stucco to crack.
[¶] There’s also the curing
issues. There’s -- Mr. Lohse
testified about curing issues. He
testified about the lath not being properly embedded. [¶]
And those are all the issues that Mr. Phillips will testify about
that may be a cause of these stucco cracks.
It’s the workmanship of the stucco contractor which is a potential
cause. [¶] [Plaintiffs’] claim is that it’s
structural. We don’t agree with that as
you know. We think there [is] another
cause, there is another cause or other causes that [are] resulting in stucco
cracks . . . .”

JMC’s
counsel pointed out he explored these other causes in the cross-examination of
Lohse, who disagreed, as was to be expected.
Counsel contended JMC had the right to present evidence refuting
plaintiffs’ expert. Counsel said JMC was
not seeking indemnity from the stucco subcontractor, and its cross-complaint
against the stucco subcontractor had been dismissed. The attorney for the stucco subcontractor
announced her presence in the courtroom and said that, despite the full
dismissal of her client on both the complaint and cross-complaint, she received
an e-mail from plaintiffs’ counsel threatening to sue the stucco subcontractor
if the trial court allowed the stucco expert to testify.

The
trial court asked if Phillips would testify to an opinion about whether the
cracks were related at all to the engineering.
JMC’s attorney said yes. Phillips
was not an engineer, had not been retained to evaluate the structural
components, and did not study the framing.
But he would testify that he did not see any structural reason for the
stucco cracks and therefore did not recommend that his client obtain a
structural analysis. JMC’s attorney
argued the good faith settlement precluded plaintiffs
from presenting any claims relative to the stucco subcontractor’s work, but it
did not preclude the defense from doing
so. JMC’s attorney said the good faith
settlement was between plaintiffs and the stucco subcontractor only; however,
JMC’s attorney conceded that JMC reached its own settlement of its indemnity
cross-complaint against the stucco subcontractor and released the stucco
subcontractor from any indemnity claim.

Plaintiffs’
counsel argued that, since Phillips did not do any structural analysis,
he could not say that structural issues did not cause cracks. Plaintiffs argued the court should exclude
his testimony under Evidence Code section 352 as more prejudicial than
probative. It had minimal probative
value due to Phillips’ limited qualifications, and it would require plaintiffs
to call rebuttal witnesses.

Defense
counsel said that, after calling Phillips to testify, he would have the
engineer, Mr. Pelham, testify about structural integrity, that the houses
are not moving such as will result in the damages as described by
plaintiffs.

The
trial court granted plaintiffs’ motion to exclude Phillips as a witness, not
because of his omission from the witness list, but in an exercise of the trial
court’s discretion under Evidence Code section 352. The court ruled that the testimony would be
time-consuming, confusing and irrelevant given the stucco subcontractor’s good
faith settlement barring plaintiffs from introducing evidence concerning the
stucco contractor’s workmanship and because Phillips was not an engineer who
could testify about the framing. The
court further ruled that it was not going to have a “mini-trial” about the
application of the stucco and the materials used. As for the good faith settlement, the
trial court further stated, “it seems fundamentally unfair to preclude one
party from introducing evidence and then allowing another party to do the
opposite, that is, in light of the good faith settlement order previously
issued by the law and motion Judge.”

b. Analysis

JMC’s
complaint on appeal is that the jury heard evidence about damages for which
plaintiffs had been compensated by the subcontractors’ settlements, but JMC
was not allowed to tell the jury that plaintiffs had already been
compensated for these particular damages.

Even
assuming JMC did not forfeit the contention, e.g., by stating in the trial
court that its only concern was about homeowner testimony rather than expert
testimony, JMC fails to demonstrate grounds for reversal.

The
standard of review for a trial court’s ruling to exclude evidence under
Evidence Code section 352 is abuse of discretion. (People v.
Waidla (2000) 22 Cal.4th 690, 724.)

Some
cracks were caused by the stucco subcontractor; some cracks were caused by
JMC’s defective installation of the framing.href="#_ftn11" name="_ftnref11" title="">[11] Plaintiffs put on evidence
of the cracks which, according to plaintiffs’ witnesses, were all caused by JMC.href="#_ftn12" name="_ftnref12" title="">[12] JMC fails to show its
proposed evidence would rebut plaintiffs’ expert. JMC wanted to call Phillips, but his area of
expertise was limited to stucco installation.
JMC’s counsel admitted to the trial court that Phillips was not an
engineer and had not been retained to evaluate the structure of the homes. The best JMC could offer was that Phillips
did not see any reason to recommend that his client, the stucco contractor,
obtain a structural analysis.

Accordingly,
JMC failed to show that Phillips could rebut the testimony of plaintiffs’
expert that the crack maps he drew were of cracks caused by JMC.

We
observe that, during JMC’s cross-examination of plaintiffs’ expert, George
Thomas, JMC’s counsel asked if the witness was aware of Alan Phillips, the
stucco expert. The witness said he had
heard the name. JMC’s counsel asked, “is
it fair to say, you would agree with me that some of the cracks are resulting
from the work installing the stucco by the stucco contractor?” The trial court sustained plaintiffs’
objection. Nevertheless, the witness was
allowed to testify that he did not believe all of the cracks were the result of
building movement; he assumed there were other causes. The witness also testified that it is highly
unusual to have cracks in the one-coat stucco material (a fiber-reinforced
proprietary material with Elastomeric paint) specified in the plans in
this case, as long as the stucco was installed correctly. JMC’s counsel asked, without objection: “[I]f there is a possibility, as you have
acknowledged, that some of the cracks may not be the result of building
movement, doesn’t that suggest that perhaps the stucco installation wasn’t
exactly per the documents you have just referenced [the plans]?” The witness said, “I didn’t see cracks that I
could attribute to poor installation, but that is why I left it open that there
is a possibility that there are other cracks that aren’t related to building
movement.”

This
testimony supports a conclusion that the cracks about which plaintiffs’ experts
testified were cracks attributable to JMC, but those were not the only
cracks. We observe there was testimony
about different types of cracks having different causes.

JMC’s
counsel also asked Thomas if a gap present in the joint of a horizontal foam
board could be the cause of stucco cracks on these houses. The trial court overruled plaintiffs’
objection, and Thomas answered, “The foam board is not a structural member, and
although cracks can occur at those levels, it’s not causing -- it’s not causing
cracking unless there is building movement.”
The witness did not believe that the gap in itself could result in any
cracking of the stucco. The stucco fills
the gap, making that location thicker and stronger. It does, however, create a discontinuity,
“[s]o if the building moves, it cracks at that location. Like having a little bulge, it’s going to be
more rigid. The force will be there, and
it will crack parallel to that thicker portion of the stucco.”

We
conclude JMC fails to demonstrate that plaintiffs put on evidence of damages
for which plaintiffs had already been compensated. We further conclude that the trial court did
not abuse its discretion in precluding Phillips’ testimony.

2. Contention
that Jury Saw Excluded Evidence -- Exhibit 36

JMC
complains the trial court let the jury see excluded portions of Exhibit 36
(“PRELIMINARY LIST OF CONSTRUCTION PROBLEMS with RECOMMENDED REPAIRS”), by
sending the entire exhibit to the jury deliberation room without redacting
portions for which the trial court had sustained JMC’s evidentiary
objections. However, JMC fails to prove
that the entire exhibit went into the jury room. JMC relies on the fact that, when asked to
produce the exhibit for this appeal, plaintiffs produced the entire document. This does not prove the entire document went
into the jury room. The reporter’s
transcript shows the trial court, in ruling on which exhibits would go to the
jury room, said, “. . . Trial Exhibit number 36, but
limited to pages -- the cover page, pages 16 through 18 and pages 22
through 46.” We presume that official
duty was regularly performed. (Evid.
Code, § 664.)

Moreover,
even assuming for the sake of argument that the entire exhibit went
into the jury room, JMC fails to show any possible prejudice, as required
by California Constitution, article VI, section 13 (no judgment shall
be set aside for improper admission of evidence unless the error “resulted in a
miscarriage of justice”) and Evidence Code section 353.href="#_ftn13" name="_ftnref13" title="">[13] JMC merely says, without
explanation, that the excluded portions contained plaintiffs’ expert opinions,
fact statements, building code interpretations, and other hearsay relating to
issues not cross-examined or argued by JMC because of the trial court’s
ruling.

We conclude JMC fails to show
grounds for reversal based on Exhibit 36.

>B. Evidence of Contract

JMC
argues no substantial evidence supports the awards for breach of contract
because there was no evidence of the existence and terms of any written
contract, and the trial court should have granted JMC’s motion for JNOV
(§ 629)href="#_ftn14"
name="_ftnref14" title="">[14] as to the breach of contract claims. We agree.

“Where
appropriate, a partial JNOV may be granted.”
(Hansen v. Sunnyside
Products, Inc. (1997) 55 Cal.App.4th 1497, 1510, italics
omitted.) In deciding a motion for JNOV,
the trial court cannot reweigh the evidence or witness credibility. (Ibid.) A motion for JNOV may be granted “ ‘only
if it appears from the evidence, viewed in the light most favorable to the
party securing the verdict, that there is no substantial evidence to support
the verdict. If there is any substantial
evidence, or reasonable inferences to be drawn therefrom, in support of the
verdict, the motion should be denied.’ ”
(Ibid.) On review, we must resolve any conflict in
the evidence, and draw all reasonable inferences in favor of the jury’s
verdict. (Ibid.)

A
judgment awarding breach of contract damages to a plaintiff must be reversed
where there is no substantial evidence of a contract. (Sublett v.
Henry’s Turk & Taylor Lunch (1942) 21 Cal.2d 273,
276-277.) Additionally, a trial court
errs in denying a JNOV on a breach of contract action where the evidence is
insufficient to establish a contract. (>Carter v. CB Richard Ellis, Inc.
(2004) 122 Cal.App.4th 1313, 1326-1328.)

Here,
plaintiffs’ complaint alleged a written contract, consistent with the
requirement that contracts for the sale of real property must be in
writing. (Civ. Code, § 1624,
subd. (a)(3).) To prevail on their
claim for breach of contract, plaintiffs had to provide the written contracts
or, under certain circumstances, admissible oral testimony as to their
contents. (Evid. Code,
§§ 1520-1523; Code Civ. Proc., § 1856; Prato-Morrison v. Doe (2002) 103 Cal.App.4th 222,
230.) Plaintiffs did not submit the
contracts into evidence or justify their absence; nor did plaintiffs provide
any evidence regarding contract terms allegedly breached.

On
appeal, plaintiffs respond that a single page labeled “HOME WARRANTY” is “the
portion of the written agreement which was entered into evidence at trial,
which provides substantial evidence to support the jury’s verdict for breach of
contract.” We disagree. The single page states in part: “We want you to be happy in your new
home. It represents the finest
achievement in workmanship and design.
It is built to last and complies with the rigid building and material
standard of [JMC]. [¶] At the close of escrow you will receive a one
year warranty. This will warrant that we
have built your home in compliance with local, state, and federal codes. We will correct, upon notification, defects
in your home during the first year of your ownership. [¶]
JMC Homes is noted for quality. . . .”

The
breach of contract action was based, not on the home warranty, but on the
alleged purchase contracts. The
instructions for breach of contract refer to the “contract for the purchase of
a single family residence.” The home
warranty is not signed by plaintiffs or JMC.
The jury expressly rejected plaintiffs’ warranty claims. The “HOME WARRANTY” document cannot be the
basis for an award for breach of contract.


Plaintiffs
also respond, without citation to authority, that they were not required to
present a written contract at trial, because (1) evidence did exist in
that the opening statement of JMC’s counsel informed the jury that plaintiffs
went through a “process” to buy the homes, which plaintiffs apparently
view as evidence of the existence of contracts; and (2) some plaintiffs
testified they bought their homes from JMC.


However,
the content of a writing must be proved by an admissible original, admissible
secondary evidence or, in limited circumstances, by oral testimony. (Evid. Code, §§ 1520-1523.) Statements and arguments of counsel are not
evidence (Gdowski v. Gdowski
(2009) 175 Cal.App.4th 128, 138-139), as this jury was instructed. Plaintiffs’ testimony that they bought their
homes from JMC was insufficient to establish the terms of any contract to
support the breach of contract claims.

We
also observe that plaintiffs’ counsel did not argue breach of contract in
closing argument to the jury. He focused
on strict products liability, which he told the jury was “the most important
cause of action, most important thing to think about when evaluating this
case . . . .” In
rebuttal argument to the jury, plaintiffs’ counsel said, “This case has several
claims or causes of action that [defense counsel] identified for you. [¶]
You are going to get instructed by the Judge as to what each of those
claims or causes of action are. [¶] In my mind, there is only one that you need to
consider yourself with [sic] strict
liability.”

On
appeal, plaintiffs fault defense counsel for failing to elicit contract terms
on cross-examination. However, it was
plaintiffs’ burden to prove each element essential to their claims, including
the existence and terms of the alleged contracts. (Evid. Code, § 500; Roddenberry v. Roddenberry (1996) 44 Cal.App.4th 634,
654.)

We
conclude insufficiency of the evidence requires reversal of the awards for
breach of contract. Accordingly, we
reverse the judgment and remand to the trial court to enter a new judgment
deleting the contract damages.
(§ 906 [reviewing court may modify judgment]; Munoz v. City of Union City (2007) 148 Cal.App.4th 173,
183, 186 (Munoz) [judgment reversed
and remanded to trial court with directions to enter new judgment];
5 Cal.Jur.3d (2007) Appellate Review, § 693, p. 266.)

>C. Double Recovery

JMC
argues plaintiffs received an unlawful double recovery because the tort
and contract damages are duplicative.
(Singh v. Southland Stone,
U.S.A., Inc. (2010) 186 Cal.App.4th 338, 360.) Since we are reversing the contract award due
to insufficient evidence of breach of contract, we need not address this
contention.

>D. Claims of Inconsistent/Ambiguous Verdicts

JMC
argues the special verdicts are fatally inconsistent because the jury’s
findings that JMC is liable for negligence are inconsistent with the
jury’s express findings, in rejecting the products liability theory, that the
houses did not fail “to structurally perform” as expected. JMC also argues the verdicts are ambiguous in
awarding damages in excess of the roof repair costs, or that no substantial
evidence supports the damages award. JMC
claims the trial court abused its discretion in denying JMC’s motion for new
trial.

Plaintiffs
respond JMC forfeited its claim of inconsistent verdicts by failing to object
in the trial court before the jury was discharged.

We
conclude the verdicts are not inconsistent but merely ambiguous; the ambiguity
derives from the form of the verdicts submitted by the parties; JMC forfeited
the ambiguity by failing to raise it before the jury was discharged; and even
if not forfeited, the ambiguity may be resolved, as the trial court properly
concluded, by interpreting the verdicts as reflecting that the jury found >construction defects -- >installation defects in roofing and
framinghref="#_ftn15" name="_ftnref15"
title="">[15] -- but no design defects,
and viewed the products liability and warranty claims as limited to design
defects.

1. Standard
of Review

Our standard of
review of denial of a new trial motion is as follows: “[A] trial judge is accorded a wide
discretion in ruling on a motion for new trial and . . . the exercise
of this discretion is given great deference on appeal. [Citations.]
However, we are also mindful of the rule that on an appeal from the
judgment it is our duty to review all rulings and proceedings involving the
merits or affecting the judgment as substantially affecting the rights of a
party [citation], including an order denying a new trial. In our review of such order >denying a new trial, as distinguished
from an order granting a new trial,
we must fulfill our obligation of reviewing the entire record, including the
evidence, so as to make an independent determination as to whether the error
was prejudicial.” (City of Los Angeles v. Decker (1977) 18 Cal.3d 860,
871-872, italics in original; see also Sherman v.
Kinetic Concepts, Inc. (1998) 67 Cal.App.4th 1152, 1160-1161.)

Unlike
a general verdict, which comes clothed with a presumption of correctness (see >Hasson v. Ford Motor Co. (1977)> 19 Cal.3d 530, 540-541 (>Hasson), the correctness of a special
verdict (§ 624)href="#_ftn16"
name="_ftnref16" title="">[16] “ ‘must be analyzed as a matter of law.’ [Citations.] . . . When a special verdict is involved
. . . a reviewing court does not imply findings in favor of the
prevailing party. [Citations.] This rule stems from the nature of a special
verdict and its ‘ “recognized pitfalls,” ’ namely, that it requires
the jury to resolve all of the controverted issues in the case, unlike a
general verdict which merely implies findings on all issues in one party’s
favor. [Citations.] Under these circumstances,
‘ “ ‘[t]he possibility of a defective or incomplete special verdict,
or possibly no verdict at all, is much greater than with a general verdict that
is tested by special findings. . . .’ ” ’ ” (City
of San Diego v. D.R. Horton San Diego Holding Co., Inc. (2005) 126 Cal.App.4th 668, 678, fn. omitted; see also >Mendoza v. Club Car, Inc. (2000)
81 Cal.App.4th 287, 303 (Mendoza).)

2. Analysis


Section 619
provides, “When the verdict is announced, if it is informal or insufficient, in
not covering the issue submitted, it may be corrected by the jury under
the advice of the Court, or the jury may be again sent out.”

Section 619
applies to “inconsistent” verdicts and also applies to “ambiguous”
verdicts. (Mendoza, supra,
81 Cal.App.4th at p. 302.)
“ ‘[D]efects apparent when the verdict was read, and that could
have been corrected, are waived [forfeited] by counsel’s failure to timely
object . . . unless the verdict
itself is inconsistent.’ ” (>Keener v. Jeld-Wen, Inc. (2009)
46 Cal.4th 247, 265, italics added.)

Verdicts
are inconsistent when the jury reaches different conclusions between two or
more causes of action where the liability for each is necessarily the
same. (Lambert v. General Motors (1998) 67 Cal.App.4th 1179,
1182-1186 [where there is no evidence of negligence except negligent
design, a finding that there was no design defect is irreconcilable with a
finding of negligence].) Verdicts are
deemed inconsistent when they are “beyond possibility of reconciliation under
any possible application of the evidence and instructions.” (Hasson,
supra, 19 Cal.3d at p. 540.)
Where the jury’s findings are so inconsistent that they are incapable of
being reconciled, the decision is “ ‘ “against law” ’ ”
warranting a new trial. (>Oxford v. Foster Wheeler LLC (2009)
177 Cal.App.4th 700, 716.)
“ ‘Where there is an inconsistency between or among answers within
a special verdict, both or all the questions are equally against the law. [Citation.]
The appellate court is not permitted to choose between inconsistent
answers.’ [Citation.]” (Ibid.)

If
a verdict is not inconsistent but merely ambiguous, “ ‘the party adversely
affected should request a more formal and certain verdict. Then, if the trial judge has any doubts
on the subject, he may send the jury out, under proper instructions, to correct
the informal or insufficient verdict.’
[Citations.] But where no
objection is made before the jury is discharged, it falls to ‘the trial judge
to interpret the verdict from its language considered in connection with the
pleadings, evidence and instructions.’
[Citations.] Where the trial
judge does not interpret the verdict or interprets it erroneously, an appellate
court will interpret the verdict if it is possible to give a correct
interpretation. [Citations.] If the verdict is hopelessly ambiguous, a reversal
is required, although retrial may be limited to the issue of damages. [Citations.]”
(Woodcock v. Fontana
Scaffolding & Equip. Co. (1968) 69 Cal.2d 452, 456-457, fn.
omitted (Woodcock); accord, >Zagami, Inc. v. James A. Crone,
Inc. (2008) 160 Cal.App.4th 1083, 1091-1092 (Zagami).)

Courts
distinguish between “ ‘hopelessly ambiguous’ ” and “merely ambiguous”
verdicts. If the verdict is
“ ‘hopelessly ambiguous’ ” and the jury has been discharged, “the
judgment must be reversed. [Citations.] A court reviewing a special verdict does
not infer findings in favor of the prevailing party [citation], and there is no
presumption in favor of upholding a special verdict when the inconsistency is
between two questions in a special verdict.
[Citation.] ‘Where there is an
inconsistency between or among answers within a special verdict, both or all
the questions are equally against the law.’
[Citations.] ‘The appellate court
is not permitted to choose between inconsistent answers.’ [Citation.]
In those instances, however, retrial may be limited to the issue of
damages. [Citations.]” (Zagami,> supra, 160 Cal.App.4th at
p. 1092, fn. omitted.)

On
the other hand, if a verdict is ambiguous but not “ ‘hopelessly
ambiguous,’ ” the court may “ ‘ “interpret the verdict from its
language considered in connection with the pleadings, evidence and
instructions.” ’ [Citations.]” (Zagami,> supra, 160 Cal.App.4th at
p. 1092.) “If the verdict is merely
ambiguous, a party’s failure to request a correction or clarification of the
verdict before the jury is discharged may amount to a waiver of the ambiguity
or defect, particularly if the party’s failure to object was to reap a
‘ “technical advantage” ’ or to engage in a ‘ “litigious
strategy.” ’ [Citations.]” (Zagami,> supra, 160 Cal.App.4th at
p. 1092, fn. 5.)

Here,
JMC argues the verdicts are inconsistent in finding JMC liable in negligence
despite having found (regarding strict products liability) that the houses did
not fail “to structurally perform” as an ordinary consumer would expect. We disagree.


The
special verdicts are not inconsistent or hopelessly ambiguous. The verdicts for negligence expressly
referred to design or construction
defects, whereas the verdict forms for strict products liability may be
interpreted as limited to design
defect. As we have noted, the heading
for the strict products liability questions read, “STRICT PRODUCTS LIABILITY - DESIGN DEFECT.”href="#_ftn17" name="_ftnref17" title="">[17] (Boldface and underlining in
original.) Defects in the >form of the verdict are forfeited if not
timely raised. (Zagami, supra,
160 Cal.App.4th at p. 1093, fn. 6, citing Woodcock, supra,
69 Cal.2d at p. 457.) Given
the state of the verdict forms, the jury’s rejection of strict products
liability, which was predicated on design defect, is not inconsistent with the
jury’s findings that JMC was liable for negligence, predicated on >installation defects in roofing and
framing.

Indeed,
it appears JMC itself views structural performance as design
related, because JMC complains the verdicts are ambiguous in awarding
negligence damages in excess of the roof repair costs, despite the jury’s
findings of no structural performance problems in connection with the warranty
claims. JMC does not contend the jury
findings of no structural performance problems under the warranty theory are
inconsistent with finding JMC liable in negligence.

We
nevertheless observe that the jury’s warranty finding that the houses did not
fail “to structurally perform” as represented is not inconsistent with findings
that JMC was negligent or breached a contract in the houses’ “design >or structural design >or construction.” (Italics added.) Although the warranty verdict questions asked
if JMC warranted or knew that plaintiffs were relying on its skill and judgment
“to design or structurally design or construct” the houses properly, to which
the jurors answered yes, the warranty verdict questions then asked whether the
failure of the houses to be “structurally suitable” was a substantial factor in
causing harm (implied warranty verdict) and whether the houses failed to
“structurally perform” (express warranty verdict). The jurors answered no. The verdict forms linked the word
“structural” to design only (“design or structural design or
construction”). Neither the products
liability nor the warranty verdicts asked the jury to answer whether there were
any construction (installation)-related defects. In contrast, the negligence and breach of
contract verdict questions did ask whether JMC was negligent or failed to do
something required by contract “in the design or structural design or
construction” of the houses, and the jurors answered yes. (Italics added.)

Though
not mentioned on appeal by JMC, we recognize the written warranty submitted
into evidence spoke of both “workmanship and design,” and plaintiffs’ counsel
spoke of the roof problems in his closing argument to the jury regarding breach
of warranty, and JMC’s counsel admitted to the jury in closing argument that
work needed to be done on the roofs.
Nevertheless, the jury answered the questions as they were presented in
the verdict forms. It was not the jury’s
job to assure that the questions were adequately framed. We also observe the express warranty was good
for one year only, and the roof problems did not manifest themselves until
later, according to the homeowners’ testimony.


Accordingly,
JMC’s liability was not necessarily the same for all causes of action. There was evidence of negligence attributable
to JMC, other than negligent design.
There was evidence of negligence in installing the framing and
roofing. Plaintiffs’ expert, Norbert Lohse,
testified the framing problems were due to both design and construction
(installation) defects. He also
testified to the roof problems as installation issues, not design issues.

While
a builder may be liable for both design and construction defects under theories
of both negligence and breach of warranty, here the verdict forms linked the
word “structural” to design only by referring to “design or structural design
or construction.” The jury instructions
spoke of design and construction and told the jurors to consider the actions of
the design department and engineers in deciding design defects. No jury instruction spoke of a distinction
between design and structural design.
The jury may have found liability in negligence and breach of contract based
on construction (installation) defects in roofing and framing, while rejecting the
products liability and warranty claims on the ground the verdict questions made
these claims seem predicated on design
defects only.

“To
preserve for appeal a challenge to separate components of a plaintiff’s damage
award, a defendant must request a special verdict form that segregates the
elements of damages.” (>Greer v. Buzgheia (2006)
141 Cal.App.4th 1150, 1158.) That
did not happen here.

We
conclude JMC fails to show grounds for reversal based on inconsistent or
ambiguous verdicts.

>E. Economic Loss Rule

JMC
argues the negligence award violates the “economic loss rule” (>Aas v. Superior Court (2000)
24 Cal.4th 627 (Aas), superseded
by statute as stated in Greystone Homes,
Inc. v. Midtec, Inc. (2008) 168 Cal.App.4th 1194, 1202 (>Greystone Homes),href="#_ftn18" name="_ftnref18" title="">[18] which prohibits contract-type damages (economic loss) under a
negligence theory in construction defect cases unless the loss is accompanied
by some tort-type damages, i.e., physical harm to body or property other
than the defective product. We decline
the invitation in JMC’s reply brief to treat plaintiffs’ failure to respond to
this contention as a concession of its merit and conclude the negligence award
does not violate the “economic loss rule” but rather allows proper recovery
where construction defects caused actual physical damage to the property.

The
trial court instructed the jury: “Each
plaintiff cannot recover cost of repair damages for [JMC’s] failure to comply with
the building codes where those failures are not accompanied by damage to other
parts of the house.”

The
verdicts did not specify how the amounts were determined. As we have noted, the jury asked and was told
it could award damages for “incidentals.”


Aas held
that construction defects that have not ripened into property damage,
or at least into involuntary out-of-pocket losses, do not fit the
definition of appreciable harm -- an essential element of a negligence claim. (Aas,> supra, 24 Cal.4th at pp. 632,
640.) Appreciable, nonspeculative,
present injury is an essential element of a tort cause of action. (Aas,> supra, at p. 646.) Aas
held that the trial court properly granted defense motions to exclude evidence
of alleged construction defects that had not caused property damage or
personal injury, e.g., building code violations including failure properly to
construct shear walls and fire walls, failure to support electrical cables, and
improper labeling of electrical circuits.
(Id. at p. 633, fn. 1.)

The
Supreme Court said of the economic loss rule:
“Speaking very generally, tort law provides a remedy for construction
defects that cause property damage or personal injury. Focusing on the conduct of persons involved
in the construction process, courts in this state have found such a remedy in
the law of negligence. [Fn.
omitted.] Viewing the home as a product,
courts have also found a tort remedy in strict products liability, [fn.
omitted] even when the property damage consists of harm to a sound part of the
home caused by another, defective part.
[Fn. omitted.] For defective
products and negligent services that have caused neither property damage nor
personal injury, however, tort remedies have been uncertain. Any construction defect can diminish the
value of a house. But the difference
between price paid and value received, and deviations from standards of quality
that have not resulted in property damage or personal injury, are primarily the
domain of contract and warranty law or the law of fraud, rather than of
negligence. In actions for negligence, a
manufacturer’s liability is limited to damages for physical injuries; no
recovery is allowed for economic loss alone.
[Citation.]” (>Aas,
supra, 24 Cal.4th at pp. 635-636.) “Over time, the concept of recoverable
physical injury or property damage expanded to include damage to one part of a
product caused by another, defective part.”
(Aas, supra, 24 Cal.4th at p. 641.)

“ ‘Economic
loss [is] “marked by the loss of the benefit of the bargain for the goods
purchased, lost profits, and replacement costs for ineffective goods. Physical
damage to property and personal injury,
however, are not considered to be ‘>economic loss.’ ” ’ ” (Stearman,> supra, 78 Cal.App.4th at
p. 617.) “Economic loss” is
“ ‘[T]he diminution in value of the product because it is inferior in
quality and does not work for the general purposes for which it was
manufactured and sold. . . .
“ ‘[It] generally means pecuniary damage that occurs through loss
of value or use of the goods sold or the cost of repair together with
consequential lost profits when there has been no claim of personal injury or
damage to other property.’ ” . . .’ [Citation.]”
(Id. at
pp. 620-621.)

Although
Stearman involved an award for strict
products liability, it relied on negligence
case law for the definition and application of the economic loss rule. (Stearman,> supra, 78 Cal.App.4th at
pp. 618, 620, citing, e.g., San
Francisco Unified School Dist. v. W.R. Grace & Co.
(1995) 37 Cal.App.4th 1318.) >Stearman held that plaintiffs could
recover under strict liability when a defect in one component part of a house
(in that case, defective construction of the foundation) caused injury to other
component parts of the house (slab movement and cracks throughout the interior
and exterior surfaces of the home), even though the damage was not to persons
or property apart from the structure. (>Stearman, supra, at pp. 617-623.)
For purposes o