IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION THREE
December 20, 2010
SOSSI PALANJIAN, PLAINTIFF AND RESPONDENT,
CARNATION VILLAGE, LLC, ET AL., DEFENDANTS AND APPELLANTS.
Appeals from a judgment of the Superior Court of Orange County, Josephine Staton Tucker, Judge. Affirmed as modified. Request for judicial notice. Denied. (Super. Ct. No.07CC04838)
The opinion of the court was delivered by: Fybel, J.
Palanjian v. Carnation Village CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
Carnation Village, LLC (Carnation), constructed a condominium unit at 310 Carnation Avenue in Corona del Mar, California (the property). Carnation sold the property to Sossi Palanjian in 2006. After Palanjian moved into the property, mold was discovered, having been caused by water intrusion. Palanjian sued Carnation, Maclovio Espinoza, and Lorenzo Espinoza (collectively, defendants) for damages. (Maclovio Espinoza is the sole owner of Carnation. Lorenzo Espinoza is Maclovio Espinoza's son, who was involved in the construction and repair of the property. We will refer to Maclovio Espinoza and Lorenzo Espinoza by their first names to avoid confusion; we intend no disrespect.) A jury found Carnation, Maclovio, and Lorenzo liable for a variety of claims, and awarded damages to Palanjian. Defendants appealed.
We conclude there was substantial evidence supporting the jury's findings that Maclovio and Lorenzo were liable for negligence; that Maclovio was liable for violating the Right to Repair Act (Civ. Code, § 895 et seq.) (the Act); that Carnation and Maclovio were liable for concealment; and that Carnation was liable for negligent misrepresentation.
We further conclude there was not substantial evidence supporting some of the damages awarded to Palanjian, and modify the judgment accordingly. As modified, the judgment is affirmed.
STATEMENT OF FACTS
In 2001, Carnation purchased and demolished three apartment buildings on a parcel of land in Corona del Mar, California. Carnation then constructed condominium units on the site, one of which is the property and the subject of this litigation. Palanjian purchased the property for $2.46 million in 2006.
During escrow, Carnation disclosed in a real estate transfer disclosure statement that the property showed evidence of a water leak, and advised Palanjian to have the property inspected by a qualified inspector "to satisfy [herself] as to the condition of the property including but not limited to geological conditions, physical conditions, air quality & the existence of mold and/or mildew." An inspector hired by Palanjian discovered evidence of moisture and mold in the property's kitchen area. Carnation performed repairs based on Palanjian's request for repairs. Palanjian, her agent, and Carnation's agent conducted a final inspection of the property in June 2006. Palanjian and her agent signed a buyer final inspection form after the inspection, approving the repairs performed by Carnation.
After Palanjian moved into the property, she noticed a strong odor in the kitchen, and complained to Carnation. Lorenzo and Larry Diek, a licensed contractor, discovered wet spots and black material behind the drywall in the kitchen.
Palanjian hired her own industrial hygienist to inspect the kitchen. The hygienist determined there was mold in the kitchen, and issued a report stating the steps needed to remediate the problem. Palanjian also obtained a bid for mold remediation work.
Carnation hired someone else to do the mold remediation work, based on the scope of work in Palanjian's industrial hygienist's report. A third party consultant certified the remediator's work on or about August 15, 2006. Palanjian's industrial hygienist, however, claimed the mold remediation had not been performed properly. Palanjian's attorney then instructed Carnation's mold remediator to stop all work immediately, preventing him from waterproofing the interior walls and cleaning the ducts.
In November 2006, Palanjian hired the industrial hygenist's husband to perform the mold remediation work. He completed the remediation work, and his wife certified it.
Palanjian sued Carnation and Maclovio in April 2007. Lorenzo was added as a Doe defendant in November 2007.
The third amended complaint alleged causes of action for (1) intentional fraud, (2) constructive fraud, (3) deceit, (4) negligent misrepresentation, (5) failure to disclose, (6) rescission, (7) breach of contract, (8) unfair business practices, (9) reformation, (10) violation of the Act, (11) strict liability, (12) negligence, and (13) breach of warranty. The causes of action for reformation and breach of warranty were alleged only against Carnation; all the other causes of action were alleged against all three defendants.
The jury found Carnation and Maclovio, but not Lorenzo, liable for concealment. The jury found none of defendants liable for making a false promise. The jury found Carnation, but not Maclovio or Lorenzo, liable for negligent misrepresentation. As to the fraud claims, the jury awarded Palanjian $418,000, as follows: $277,000 for the difference between the sales price and the actual value of the property as of the date of the sale; $16,000 for the amounts "actually and reasonably expended"; and $125,000 for loss of use and enjoyment of the property. The jury found Palanjian was not entitled to recover punitive damages on her fraud claims.
The jury also found that Carnation breached a contract with Palanjian; that defendants were liable for negligence; and that Carnation and Maclovio were builders of the property, and violated the Act, causing harm to Palanjian. On those claims, the jury found Palanjian suffered damages in the total amount of $309,000, as follows: $141,000 for past economic damages, including $16,000 for investigation and repair, and $125,000 for loss of use and enjoyment of the property; and $168,000 for future economic loss, including the cost of investigation, repairs, and loss of use and enjoyment of the property.
After the jury rendered its verdict, Palanjian filed a statement of
equitable issues for the trial court's decision. Palanjian asked the
trial court to determine that Maclovio and Lorenzo were alter egos of
Carnation, and that rescission was a proper remedy. The court found
the evidence at trial was insufficient to disregard the corporate
entity and determine Maclovio and Lorenzo were the alter egos of
Carnation. The court also found rescission was an appropriate remedy,
and ordered Palanjian to file a notice of election of remedies.*fn1
Palanjian elected to withdraw her request for
rescission, and proceed with the damages awarded by the
Judgment was entered on February 11, 2009. Lorenzo filed a motion for judgment notwithstanding the verdict, and Maclovio and Carnation filed motions for judgment notwithstanding the verdict and for a new trial. The trial court denied all three motions. Defendants timely appealed.
THERE WAS SUBSTANTIAL EVIDENCE TO SUPPORT THE JURY'S FINDINGS THAT MACLOVIO AND LORENZO WERE LIABLE FOR NEGLIGENCE.
Defendants initially argue the trial court's conclusion that there was insufficient evidence presented at trial to establish alter ego liability on the part of Lorenzo or Maclovio "should be the end of the discussion with respect to" the individual claims against Lorenzo and Maclovio. Defendants are incorrect. The alter ego doctrine allows the corporate form to be disregarded so that an individual shareholder may be personally liable for corporate debts. (Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510, 1513.) The doctrine does not affect an individual's liability for tortious conduct the individual commits.
Defendants also argue the trial court declined to find an alter ego relationship between Lorenzo and his company, Sunset Homes. However, Palanjian's request that the trial court make findings on the equitable issue of alter ego was limited to whether Maclovio and Lorenzo were alter egos of Carnation; the request did not address any relationship between Lorenzo and Sunset Homes, and the trial court's minute order does not even mention Sunset Homes.
As to Lorenzo's liability for negligence, Maclovio testified Lorenzo was the supervisor of the construction of the property, who obtained the contractors and made the purchases. Lorenzo was in charge of the investigation of and repairs to the property after Palanjian made her claim regarding the odor in the kitchen; Lorenzo hired the workers to do the repairs. Lorenzo did not have a contractor's license. Lorenzo's role as supervisor of the construction of the property, coupled with his lack of a contractor's license, is sufficient evidence to support the jury's finding that Lorenzo was liable for negligence.
Defendants argue the evidence of Lorenzo's actions during the postescrow remediation work period is insufficient to support the jury's negligence finding. Because the evidence of his negligence during the construction period is sufficient to support the jury's findings, we need not address whether his later actions were also negligent. We note, however, that the third amended complaint clearly ties the negligence claim to the construction of the property, not to acts or omissions during the remediation work period.
As to Maclovio's liability for negligence, Maclovio's own testimony established failures reaching the level of negligence. Maclovio admitted doing little or nothing in response to Palanjian's request that the kitchen area be checked for mold, and that the source of the water intrusion problem be remedied. Maclovio did not actually investigate for mold as requested by Palanjian, "[b]ecause it was a new house, and visually you couldn't see that there was any mold. It was a brand new home." As noted ante, however, Palanjian's inspector had observed a mushroom growing inside the property, and the drywall was admittedly damp. Maclovio also testified he repaired everything Palanjian had requested, although he could not remember seeing the request for repairs. Darel Wells, who performed the repairs requested by Palanjian on behalf of Carnation, was not asked to investigate the cause of the water damage to the drywall and baseboard, or to investigate if there was mold present. Maclovio nevertheless signed off on the repairs as Carnation's managing member. There was sufficient evidence of Maclovio's negligence to find him individually liable to Palanjian.
THERE WAS SUBSTANTIAL EVIDENCE TO SUPPORT THE JURY'S FINDING THAT MACLOVIO WAS LIABLE FOR VIOLATING CALIFORNIA'S CONSTRUCTION STANDARDS.
The jury found Carnation and Maclovio liable for violating the Act. Defendants' only argument on appeal challenging Maclovio's liability is that "[t]o have liability under Civil Code section 895 as an individual builder, the individual must have personally participated in creating or knew about the defective condition in dispute." This argument is not supported by the statutory definition of "builder" for construction defect claims: "(a) For purposes of this title, except as provided in subdivision (b), 'builder' means any entity or individual, including, but not limited to a builder, developer, general contractor, contractor, or original seller, who, at the time of sale, was also in the business of selling residential units to the public for the property that is the subject of the homeowner's claim or was in the business of building, developing, or constructing residential units for public purchase for the property that is the subject of the homeowner's claim. [¶] (b) For the purposes of this title, 'builder' does not include any entity or individual whose involvement with a residential unit that is the subject of the homeowner's claim is limited to his or her capacity as general contractor or contractor and who is not a partner, member of, subsidiary of, or otherwise similarly affiliated with the builder. For purposes of this title, these nonaffiliated general contractors and nonaffiliated contractors shall be treated the same as subcontractors, material suppliers, individual product manufacturers, and design professionals." (Civ. Code, § 911.) (The jury was instructed with the language of Civil Code section 911; defendants do not argue on appeal that the trial court erred in giving this instruction to the jury.)
Civil Code section 911 does not, by its terms, include any requirement of personal participation or knowledge by an individual alleged to have violated the Act. Defendants rely on Reynolds v. Bement (2005) 36 Cal.4th 1075, 1087, in which the California Supreme Court held the individual defendants were not liable for violating California's wage laws solely based on their status as officers, directors, and shareholders of the corporate defendant. We do not find Reynolds v. Bement to be applicable to the present case, both because its analysis is tied to the specifics of California's wage and hour laws and to California's common law regarding wages, and because Maclovio's liability was not based solely on his status as an owner of Carnation.
There was substantial evidence to support the jury's findings that Carnation and Maclovio were liable for concealment.
"[T]he elements of a cause of action for fraud based on concealment are: '"(1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage. [Citation.]" [Citation.]' [Citation.]" (Kaldenbach v. Mutual of Omaha Life Ins. Co. (2009) 178 Cal.App.4th 830, 850.)
Defendants argue Maclovio could not be liable for concealment because he was not aware of any defective waterproofing or defective drain lines during construction.
The key to the concealment claim lies in a series of documents from March 2006. On March 2, Palanjian's inspector provided a report for the property. In the report, the inspector made the following observations regarding the kitchen in the property: "There is some moisture or dampness in the lower cabinets in the desk area of this room. There is a strong musty or damp smell in this area. Check for any mold and remove or repair as needed. There is evidence of moisture or possible mold to the lower cabinet at the base board area near the gas range in this same area. There is a mushroom growing on the wall in this area. Check for any mold in this area. Repair as needed. [¶] . . . [¶] . . . The walls are wet when tested with the use of a moisture meter on the left side of the gas range area. This is near the desk area of the kitchen. Check for any mold in this wall area and remove or repair as needed. Cut into the wall to check for the source of this moisture and repair any leaks, water damage and mold in this area of the kitchen as needed."
On March 9, 2006, Palanjian, through her real estate agent, submitted a request for repairs to Carnation's agent. Palanjian asked that, with respect to the kitchen counters and cabinets, Carnation "[c]heck for mold in this area[,] repair as needed." Regarding the kitchen walls, ceilings, and floors, Palanjian asked Carnation to "[c]heck for mold in this area source of moisture and repair any leaks, water damage and mold in this area of kitchen."
On March 15, 2006, Carnation responded to the request for repairs, attaching a letter to Palanjian's real estate agent dated March 10, 2006, which addressed the specific items in Palanjian's request. Both the request for repair form and the letter were signed by Maclovio, as the "Managing Member" of Carnation. Specific to the kitchen counters and cabinets, the letter states: "This area was opened and checked for moisture was left opened and dried - no existing leaks or water - patched and painted to match existing." Regarding the kitchen walls, ceilings, and floors, the letter states: "This wall area at oven/desk was opened. No existing leaks or water. During finish plumbing on the above bathroom, a small amount of water has escaped to below. The area of drywall was cut out and repaired." Palanjian accepted Carnation's repairs.*fn2
Palanjian does not point to any evidence that Maclovio or Carnation intentionally concealed a material fact from her with the intent to defraud. Palanjian's entire argument rests on what the jury could reasonably have inferred about the alleged concealment. A judgment may be supported by reasonable inferences deduced from the facts. (Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1632-1633.) Only if the inferences were either the result of mere speculation or conjecture, or rebutted by uncontradicted evidence, can we reject them from our analysis. (Id. at p. 1633 & fn. 4; Western Digital Corp. v. Superior Court (1998) 60 Cal.App.4th 1471, 1487.) Based on the evidence, the jury could reasonably have concluded and inferred Maclovio and Carnation were aware of a water intrusion problem that was more serious than a small leak from a bathroom above the kitchen, and failed to advise Palanjian of the problem.
Given our holding, we need not address whether Maclovio or Carnation could be liable for concealment based on the alleged concealment of modifications to the roof of the property, or of the use of fill in the construction of the property. In any event, the trial court concluded Palanjian could not offer evidence regarding the roof modification because such evidence was not relevant. As to the alleged use of fill, Maclovio and the architect both testified no fill was brought onto the property. In fact, evidence was admitted that the grade was reduced, not increased. Evidence was also admitted that Bay Grading Inc. and Bobby Bobcat Company were paid to grade the property and haul away dirt. The testimony of a resident of a neighboring property that fill was used was speculative. Moreover, there was no evidence that even if fill had been used on the property, it caused any damage.
THERE WAS SUBSTANTIAL EVIDENCE TO SUPPORT THE FINDING OF NEGLIGENT MISREPRESENTATION AGAINST CARNATION.
The elements of a cause of action for negligent misrepresentation are the assertion, as fact, of an untrue statement, without reasonable ground for believing it to be true, on which the plaintiff justifiably relies to his or her detriment. (Conroy v. Regents of University of California (2009) 45 Cal.4th 1244, 1255; Friedman v. Merck & Co. (2003) 107 Cal.App.4th 454, 476.) Neither actual knowledge of the falsity of the representation (Gagne v. Bertran (1954) 43 Cal.2d 481, 487) nor actual intent to defraud is required (Civ. Code § 1572, subd. 2; Agosta v. Astor (2004) 120 Cal.App.4th 596, 603).
Defendants contend Carnation cannot be held liable for negligent misrepresentation as a matter of law because the jury did not find Maclovio or Lorenzo, the only Carnation representatives who made disclosures to Palanjian, liable for negligent misrepresentation. We reject defendants' contention.
Corporations and limited liability companies can be held liable for the collective knowledge of their employees as well as their employees' negligent failure to obtain knowledge. (Sanfran Co. v. Rees Blow Pipe Mfg. Co. (1959) 168 Cal.App.2d 191, 204-205.) When evaluating whether a company is liable for negligent misrepresentation, the jury may consider the knowledge, or lack thereof due to negligence, of all agents of the company. The jury need not find that an employee who made a false statement to a plaintiff did so without reasonable grounds for believing it to be true. Instead, a jury may find a company liable as long as the false representation made by the company to the plaintiff involved information that at least one agent of the company should have known was false.
In the case before us, the jury did not find Maclovio or Lorenzo liable for negligent misrepresentation because their individual behavior did not satisfy the elements of negligent misrepresentation. The jury's decision to find Carnation liable for negligent misrepresentation, on the other hand, was apparently based on the collective behavior of all the company's agents. Despite defendants' contentions, we conclude this is a proper basis for finding a company liable for negligent misrepresentation and affirm the jury's determination of liability against Carnation.
It was reasonable for the jury to infer that Carnation did not have a reasonable belief that the wet drywall, the significant moisture in the kitchen area, and the existence of a mushroom growing on an interior wall of the property were the result of a "small amount of water" escaping from an upstairs bathroom. It was also reasonable for the jury to infer that Carnation did not reasonably believe the remedial steps it was taking, as described in the March 10, 2006 letter responding to Palanjian's request for repairs, would resolve the problem in the property. The finding of negligent misrepresentation against Carnation is supported by substantial evidence.
A. General Principles of Law Regarding Damages
Damages recoverable for Palanjian's fraud claims are generally the lesser of the diminution of the property's value or the cost to repair the property. "A plaintiff injured by tortious misconduct is entitled to recover damages in an 'amount which will compensate for all the detriment proximately caused thereby, whether it could have been anticipated or not.' [Citation.] For tortious injury to real property, the general rule is that the plaintiff may recover the lesser of (1) the diminution in the property's fair market value, as measured immediately before and immediately after the damage; or (2) the cost to repair the damage and restore the property to its pretrespass condition, plus the value of any lost use. The practical effect of this rule is to limit damages to property to the fair market value of the property prior to the damage. [Citations.]" (Kelly v. CB&I Constructors, Inc. (2009) 179 Cal.App.4th 442, 450.)
The damages permissible for the violation of the Act are specified by statute: "If a claim for damages is made under this title, the homeowner is only entitled to damages for the reasonable value of repairing any violation of the standards set forth in this title, the reasonable cost of repairing any damages caused by the repair efforts, the reasonable cost of repairing and rectifying any damages resulting from the failure of the home to meet the standards, the reasonable cost of removing and replacing any improper repair by the builder, reasonable relocation and storage expenses, lost business income if the home was used as a principal place of a business licensed to be operated from the home, reasonable investigative costs for each established violation, and all other costs or fees recoverable by contract or statute." (Civ. Code, § 944.)
Damages resulting from Carnation's breach of contract are also set forth in a statute: "For the breach of an obligation arising from contract, the measure of damages, except where otherwise expressly provided by this Code, is the amount which will compensate the party aggrieved for all the detriment proximately caused thereby, or which, in the ordinary course of things, would be likely to result therefrom." (Civ. Code, § 3300.)
B. There was substantial evidence of the diminution of the value of the property.
Defendants challenge the award of $277,000 in damages to Palanjian, representing the diminution in value of the property due to the "stigma" attached to it as a result of the mold damage. Defendants contend the expert witness's testimony as to the diminution in value lacked a proper evidentiary foundation.
Palanjian argues defendants waived any error by failing to object to the expert witness's testimony at trial. According to defendants, the challenge on appeal is not to the expert's opinion testimony, but to the sufficiency of the evidence supporting the jury's damages findings. A claim that the judgment is not supported by substantial evidence may be raised for the first time on appeal. (Tahoe National Bank v. Phillips (1971) 4 Cal.3d 11, 23.)
Considering only whether there was substantial evidence to support the expert witness's opinion, we must conclude there was. The expert's opinion as to the stigma damages that would attach to the property was based on the results of a survey of several real estate brokers who had recent experience in the Corona del Mar market. Those brokers provided to the expert the amount they believed the property would be devalued, and the expert averaged those amounts to develop his opinion. Defendants make much of the fact that three of the eight brokers surveyed did not believe the property would suffer any stigma damages if the mold problem was fully remedied, and only two brokers believed the property could not be marketed at its full value. But when the question is simply whether substantial evidence supports the jury's finding--which defendants claim is the only question before us on appeal--we must conclude the answer is yes.
Defendants note that the expert witness testified the diminution of value was $261,875, but the jury awarded $277,000 as the difference between the amount Palanjian paid for the property and its actual value as of the date of the sale. There is no substantial evidence supporting the difference between those two amounts. We order the judgment modified to reflect that the correct amount of damages for diminution in value of the property on the fraud-related claims is $261,875.
In support of their reply brief, defendants requested this court take judicial notice of an agent listing report for the property, dated June 10, 2010, to rebut the expert's testimony regarding the diminution of value of the property. Reviewing courts generally do not take judicial notice of evidence not presented to the trial court. (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, fn. 3.) The agent listing report was not even in existence at the time judgment was entered in the trial court. We deny the request to take judicial notice.
C. There was substantial evidence of $37,538 in damages for loss of use and enjoyment of the property, and we order the judgment modified accordingly.
Defendants argue there was not substantial evidence supporting the jury's award of $125,000 for loss of use and enjoyment of the property.
As to the fraud claims, the jury found Palanjian had suffered $125,000 in damages for loss of use and enjoyment of the property. As to the nonfraud claims, the jury found Palanjian suffered $125,000 in damages for past loss of use and enjoyment of the property. On the nonfraud claims, the jury also found Palanjian had suffered $168,000 in damages for future economic damages, including, but not limited to, future loss of use and enjoyment of the property; these damages will be addressed separately, post, in part V.D.
Based on the general authorities regarding damages, cited ante in part V.A., we conclude Palanjian is entitled to damages for loss of use of the property, both those damages that have already occurred and those that are reasonably foreseeable to occur due to the need to conduct further repairs on the property to prevent further water damage.
Palanjian testified she moved out of the property in August 2006, and did not move back in until March 2007. While the mold problem was being remediated, Palanjian stayed at the Balboa Bay Club, for a total out-of-pocket expense of $3,500. Palanjian's expert calculated the damages due to Palanjian's loss of use of the property from July 1, 2006 through March 31, 2007 to be $34,038. (Defendants do not argue about the inclusion of loss of use of the property in July 2006.) The loss of use damages were calculated by examining rental values for similar properties during that time period. Defendants therefore contend the jury's award of $125,000 is not supported by the evidence, and ask that the damages for loss of use of the property be reduced to $37,538.
Palanjian raises several arguments, none of which is compelling. Palanjian argues defendants cannot claim excessiveness of damages on appeal without having raised the issue in the trial court. But the argument on appeal is whether the jury's damages finding was supported by substantial evidence. Such an argument may be raised for the first time on appeal. (Tahoe National Bank v. Phillips, supra, 4 Cal.3d at p. 23.) Palanjian also argues defendants failed to object to the proposed verdict form. But there is nothing wrong with the verdict form that confused the jury into making an award which was not supported by substantial evidence. Palanjian also argues damages for loss of use are permitted in construction defect cases by Civil Code section 944. This is a true statement of the law, but it does not relate to defendants' argument that the damages awarded were not supported by substantial evidence. In short, Palanjian has failed to respond to defendants' argument.
We order the judgment modified to award Palanjian $37,538 in damages for loss of use and enjoyment of the property between July 2006 and March 2007.
D. There was substantial evidence of $159,535 in damages for future repairs.
On the claims for breach of contract, negligence, and violation of the Act, the jury awarded damages of $168,000 for "[f]uture economic loss including cost of investigation and repairs, including to repair defective wall/waterproofing, damages caused by the repairs, and damages resulting from loss of use and/or enjoyment of [the] property." Defendants challenge this damages award on three grounds.
First, defendants argue there was not an evidentiary foundation for the expert's testimony regarding future costs to repair the property. Rick Hamm testified it would cost $159,535 to repair the property to prevent further water damage. Hamm did not testify that any of the repairs was necessary, but relied on another expert's opinion of what needed to be done. Defendants did not object to Hamm's testimony on the ground it lacked an evidentiary foundation; therefore, they cannot raise the issue for the first time on appeal. (Evid. Code, § 353, subd. (a); Broden v. Marin Humane Society (1999) 70 Cal.App.4th 1212, 1227.) The fact the jury awarded damages for the future cost of repairs indicates the jury accepted the testimony that the repairs were necessary and appropriate.
Defendants also argue that future economic damages were not recoverable as a matter of law. To recover under any of the causes of action that led to the jury's finding of future economic damages (breach of contract, negligence, violation of the Act), Palanjian had to demonstrate the defective construction of the property or violations of statutory requirements caused nonspeculative injury. To recover for construction defects based on breach of contract, a plaintiff must demonstrate the defects have caused actual property damage. (Bramalea California, Inc. v. Reliable Interiors, Inc. (2004) 119 Cal.App.4th 468, 473.) A plaintiff must demonstrate "appreciable, nonspeculative, present, injury" to recover on a negligence theory. (Aas v. Superior Court (2000) 24 Cal.4th 627, 646.) When attempting to recover for a violation of the Act, the only cause of action that does not require property damage, a plaintiff must still demonstrate the construction defect caused a violation of one of the Act's standards. (Civ. Code, § 942.)
Whether a contractor has substantially performed the construction contract in a satisfactory manner, and whether there are defects in the improvements, are ordinarily questions of fact. (Roscoe Moss Co. v. Jenkins (1942) 55 Cal.App.2d 369, 375, 378-379.) The jury heard testimony regarding damage to drywall at the property, which occurred immediately before trial. This evidence supported Palanjian's contention that the property had suffered present, cognizable damage and that defendants were in violation of construction standards of the Act, both adequate bases to award future economic damages. Thus, the jury's award of "[f]uture economic loss" was based on current, not future, consequences of the defective construction of the property, which were not yet remedied.
Defendants then assert that the jury erred in calculating the amount of the award because it included"[f]uture economic loss including cost of investigation and repairs, including to repair defective wall/waterproofing, damages caused by the repairs, and damages resulting from loss of use and/or enjoyment of property." Defendants argue that, under Palanjian's three causes of action, a jury may not make an award for the cost of future repairs and for future loss of use and/or enjoyment of property.*fn3 We reject this argument.
"'"Physical harm to property may be measured by the cost of repairing the buildings to make them safe."'" (County of Santa Clara v. Atlantic Richfield Co. (2006) 137 Cal.App.4th 292, 339 (conc. opn. of McAdams, J.).) An owner need not make the repairs before trial to recover for contractual damages stemming from the original construction of his or her property. (Greenwald v. Royal Indemnity Co. (1952) 112 Cal.App.2d 183, 185.) The costs to repair when the repair has not been completed by the time of trial are measured as of the time of trial. (Camrosa County Water Dist. v. Southwest Welding & Mfg. Co. (1975) 49 Cal.App.3d 951, 957.) An owner must mitigate damages only if the preventative measures and costs of repair are reasonably within the owner's means to effect. (Shaffer v. Debbas (1993) 17 Cal.App.4th 33, 40-41, 46-47.)
For violations of the Act, the cost of repair may include "the reasonable cost of repairing and rectifying any damages resulting from the failure of the home to meet the [Act's] standards." (Civ. Code, § 944.) While no statute or case law explicitly addresses the appropriate measurement of future, unperformed repairs in cases stemming from violations of the Act, the broad, remedial nature of the Act supports applying the legal framework discussed ante. Under the Act, a homeowner can sue a builder for violation of the Act's standards once the builder fails to take advantage of an opportunity to remedy the defect. (Civ. Code, § 920.) The stage at which the homeowner can sue demonstrates the Legislature's intent to protect homeowners. Like the negligence cases discussed ante, the intent of the Act militates against requiring homeowners to make costly repairs before bringing suit for damages based on violations of the Act's standards.
The jury properly based its award on the cost to remedy the problem causing the wet drywall, not only the cost of replacing the wet drywall. Despite defendants' contentions otherwise, expert testimony regarding the cost to repair the cause of the problem, and the length of time to complete those repairs, gave an adequate basis to determine the finite amount of damages owed to Palanjian to make the property safe and remedy damages for violations of the Act's standards. Given the legal framework governing recovery of damages for breach of contract, negligence, and violation of the Act, this was an appropriate measure of damages.
Similarly, the jury properly awarded damages to Palanjian before she had made the necessary repairs. From the testimony at trial, the cost of repair was beyond the means of the average homeowner, and Palanjian had no duty to mitigate further damage to the property by making those costly repairs. Defendants present no authority to show Palanjian needed to pay for the repairs before filing suit in order for the award to be proper. Thus, future, unperformed repairs were a correct measure of damages.
Defendants also argue generally that future economic damages were not recoverable as a matter of law on the claim for violation of the Act. That claim permits recovery of "the reasonable value of repairing any violation" of the Act's standards. (Civ. Code, § 944.) Palanjian offered evidence that the violation of the Act had not yet been fully remedied, evidence the jury obviously accepted. The award of damages for the cost to repair the property in the future is not prohibited as speculative damages which are not reasonably certain to arise in the future.
Finally, defendants argue there was no evidence to support an award of damages for future loss of use and enjoyment of the property. Defendants are correct. Hamm testified the repair work would take two months. Hamm did not testify Palanjian would be required to move out of the property, although he did testify specifically that Palanjian's neighbor would have to be relocated during the restoration process. The floor of the neighbor's unit would have to be removed to access the area under the property; the neighbor's washer and dryer, water heater, and cabinets would have to be removed.
However, the award of future economic damages on the nonfraud claims does not separate future loss of use and enjoyment from future repair costs, so we cannot be sure the jury's verdict contained damages for Palanjian's future loss of use and enjoyment. As noted, ante, Hamm testified the cost of repairs would be $159,535, and the jury awarded damages of $168,000. We order the judgment modified to award damages for future economic loss in the amount of $159,535.
The judgment is modified as follows: (1) the damages for diminution of the value of the property are reduced from $277,000 to $261,875; (2) the damages for past loss of use and enjoyment are reduced from $125,000 to $37,538; and (3) the future economic damages are reduced from $168,000 to $159,535. As so modified, the judgment is affirmed. Respondent to recover costs on appeal.
WE CONCUR: BEDSWORTH, ACTING P. J. IKOLA, J.