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Formet v. Lloyd Termite Control Co.

June 10, 2010


Appeal from a judgment of the Superior Court of Orange County, Robert D. Monarch, Judge. (Retired judge of the Orange Super. Ct. assigned by the Chief Justice pursuant to art. VI, § 6 of the Cal. Const.) Affirmed. (Super. Ct. No. 07CC04071).

The opinion of the court was delivered by: Rylaarsdam, Acting P. J.



This appeal by plaintiff Kelly Formet is from a summary judgment in favor of defendant Lloyd Termite Control Co., a licensed pest inspection company. In furnishing a "Wood Destroying Pests and Organisms Report," defendant allegedly failed to discover and disclose a specified area of dry rot damage, which caused plaintiff to fall from a balcony. At the time, plaintiff was a guest of the property owners to whom the property had been transferred by the previous owner who, in turn, had contracted with defendant to provide the report. The trial court granted summary judgment, finding defendant owed no legal duty to plaintiff. Upon de novo review, we agree with the trial court and affirm.


Sandra Jean Caskey inherited the property from her mother, who had resided there for over forty years. Before inheriting the property, Caskey had enlisted the services of a licensed home inspector to evaluate the property. The inspection noted "evidence of wood destroying insects[,] organisms and/or rot observed at posts, doors, trim, etc. Recommend further evaluation by licensed structural pest control company." (Capitalization omitted.) The report also noted "[f]lashing loose at balcony deck, susceptible to moisture intrusion. Recommend sealing overlap to reduce chance of leakage." (Capitalization omitted.) Following the home inspector's recommendation, Caskey retained defendant to perform a "Wood Destroying Pests and Organisms Report" (capitalization omitted).

Defendant's report noted drywood termites throughout the main house and observed termite damage in the support post at the connected apartment's stair landing. It recommended Caskey fumigate the property for the drywood termites and contact a licensed contractor to repair the termite damage. Caskey paid defendant for its fumigation services, but did not hire anyone to repair the structural damage to the property. In fact, as defendant points out, "both [defendant's] inspection report and the prior ICBO [International Conference of Building Officials] home inspection noted wood damage in the patio area where [plaintiff] fell, and advised . . . Caskey to hire a licensed contractor to make the necessary repairs" (italics omitted); she did not contract for these repairs.

Four months later, Brian and Jennifer Villeneuve purchased half of the property and moved in. When plaintiff was a guest of the Villeneuves, he leaned against the balcony railing and fell approximately 10 feet to the ground when the railing failed. Defendant failed to note in the termite report any damage to the specific balcony railing that gave way. In plaintiff's negligence action he alleged defendant should have discovered and reported the dry rot damage in the railing.

In granting summary judgment, relying on FSR Brokerage, Inc. v. Superior Court (1995) 35 Cal.App.4th 69, the trial court determined defendant did not owe a duty to plaintiff. "The [s]tructural pest control professional has specific duties defined by statute. These duties are owed only to the homeowner with whom it was in privity of contract and intended beneficiaries. Invitees to the property, such as plaintiff, do not qualify as intended beneficiaries."


Appeal from a motion for summary judgment is subject to a de novo review. (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476.) Here, summary judgment was based upon the trial court's determination there was no duty, which is a legal question (Shin v. Ahn (2007) 42 Cal.4th 482, 488) also subject to de novo review (Garcia v. Paramount Citrus Ass., Inc. (2008) 164 Cal.App.4th 1448, 1453).

1. Contractual Privity as a Limitation on Duty

The parties note "there are relatively few decisions that discuss a pest inspection professional's potential liability to third parties for a negligent inspection" and "[t]hat we are in uncharted territory is a true statement." Commentators addressing the issue also agree. (See e.g., 11 Miller & Starr, Cal. Real Estate (3d ed. 2009) § 29:60, pp. 29-223 to 29-224.) Hence, we ask whether FSR Brokerage, Inc. v. Superior Court, supra, 35 Cal.App.4th 69 limits the duty owed by pest inspectors to third parties. We answer this question in the affirmative.

The general rule arises from Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370 (Bily), which held a provider of information in a commercial context is not liable to third parties who are neither the beneficiaries of, nor parties to, a contract. (Id. at p. 392.) In Bily, investors in a computer company sued the defendant, an accounting firm, for an allegedly negligent audit of the company. The audit contract was between the computer company and defendant; the investors were not parties to the contract. The investors contended they suffered injury as a result of their decision to invest in the company in reliance on the defendant's negligent ...

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