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Stevens v. 396 Investment Co.5/17/2005
revealed a host of additional defects. (Id. at pp. 548-549.) As a result of the defects, the homeowners suffered serious emotional distress. The husband's heart condition was aggravated, and the wife feared the house would collapse in an earthquake. (Id. at p. 549.)
The homeowners sued on several theories, including breach of contract, fraud, negligent misrepresentation, and negligent construction. (Erlich, supra, 21 Cal.4th at p. 549.) The contractor prevailed on the fraud and negligent misrepresentation claims, but the jury found he had breached the contract by negligently constructing the home; the jury awarded the cost of repair and also awarded emotional distress damages. (Ibid.) The Court of Appeal affirmed. (Id. at p. 550.) The Supreme Court granted review on the issue of whether the homeowners could recover damages for emotional distress based upon the breach of contract. (Ibid.)
The court began by reviewing the differences between damages for torts and damages for breach of contract. (Erlich, supra, 21 Cal.4th at pp. 550-551.) While contract damages are generally limited to those within the contemplation of the parties at the time the contract was formed, tort damages are intended to fully compensate the victim for all harm suffered. (Id. at p. 550.) The limitation on contract damages encourages contractual relations and commercial activity by helping parties assess the possible risk in advance. (Id. at p. 550.) Noting the blurring of the boundaries between the law of contracts and torts, the court considered whether a negligent breach of contract would support an award of tort damages either as negligence or special contract damages.
The court ultimately held that neither would apply. (Erlich, supra, 21 Cal.4th at pp. 554, 561.) It carefully reviewed the situations in which a breach of a contract could also be considered a tort, in circumstances where an independent duty was breached. (Id. at p. 551.) The court observed that " his is a claim for negligent breach of a contract, which is not sufficient to support tortious damages for violation of an independent tort duty." (Id. at p. 554.) It rejected emotional distress damages as incidental contract damages entirely. (Id. at pp. 558-561.)
We need not explore the contours of Erlich, supra, 21 Cal.4th 543 in more depth, because its holding simply does not apply to the instant case. In Erlich, the jury found the defendant had negligently breached a contract. (Id. at p. 549.) Here, the jury found Anaheim legally culpable on three tort theories: dangerous condition of public property, nuisance, and trespass. Erlich, which focused entirely on the nexus between the law of torts and the law of contracts, is simply inapposite. It did not hold that emotional distress damages are unavailable in nuisance and trespass cases; indeed, it did not address the availability of emotional distress damages in such causes of action at all.
By way of contrast, Smith, supra, 214 Cal.App.3d 266, considered this very issue. In that case, the county cut a road into a hillside, creating such a landslide danger that the plaintiffs' homes had to be demolished. (Id. at pp. 273-274.) The plaintiffs sued for inverse condemnation and nuisance, and alleged they suffered emotional distress as a result. (Id. at p. 273.) The jury found the county liable on the theories of dangerous condition of public property and nuisance, and awarded a total of $112,000 in emotional distress damages. (Id. at p. 276.)
On appeal, the county argued the same position Anaheim asserts here - that emotional distress damages are not available when there is no pre-existing relationship or intentional tort. (Smith, supra, 214 Cal.App.3d at p. 287
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