Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of San Diego County, No. GIC865749 Ronald S. Prager, Judge.
O'ROURKE, J.
Plaintiffs Isabel Valdivia on behalf of herself and a proposed class, HUD Investments, LLC, and Karen Schneiter appeal from a judgment in favor of defendants CertainTeed Corporation (CertainTeed), Anlin Industries (Anlin), and Mikron Industries, Inc. (Mikron) (collectively defendants), who are manufacturers of replacement vinyl windows installed in plaintiffs' properties. Plaintiffs' operative pleading sought to recover damages in the form of costs of removing and replacing the allegedly defective vinyl windows under theories of negligence and strict liability. The trial court sustained Mikron's demurrer to plaintiffs' fourth amended complaint without leave to amend and granted the other defendants' motions for judgment on the pleadings in part on grounds the economic loss rule barred recovery of purely economic loss under strict liability and negligence causes of action.
On appeal from the ensuing judgment, plaintiffs contend (1) the economic loss rule does not preclude them from proceeding in strict liability or negligence because they pleaded and can prove at trial that property damage resulted from the defendants' product; (2) the economic loss rule does not dictate the types of compensatory damages or remedies once the elements of a tort cause of action are established; and (3) they sufficiently pleaded a cause of action for violation of the Consumer Legal Remedies Act (CLRA). We conclude the economic loss rule does not bar plaintiffs' tort causes of action. Further, we decline to find a waiver of plaintiffs' appellate arguments as to their CLRA cause of action. Accordingly, we reverse the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs own properties in San Diego County in which defendants' vinyl replacement windows were installed in 1999 and 2002. In May 2006, Valdivia sued CertainTeed and Anlin on behalf of herself, the general public, and others similarly situated, alleging defendants' vinyl windows were defective when used as replacements to aluminum frame windows and caused tangible damage to plaintiffs' properties. She set out causes of action for strict products liability, negligence, breach of express warranty, unfair business practices and, as against CertainTeed only, violation of the CLRA.
Valdivia alleged in part, "Unbeknownst to plaintiff and the members of the class, the replacement vinyl windows have caused tangible physical property damage to the real property of plaintiff and members of the class even before the leaks and increased noise intrusion and energy loss manifested themselves. The property damage has been and continues to be incurred in the form of a broken weather barrier consisting of building paper and flashing, leading to, among other things, water damage to walls, insulation and framing members, increased noise intrusion and energy loss." (Capitalization omitted.)
Following a series of demurrers and other challenges, and after naming Mikron as a defendant, Valdivia and the other plaintiffs obtained leave to file a fourth amended complaint omitting the cause of action for breach of express warranty. Though plaintiffs still alleged that they suffered "tangible physical property damage to [their] real property," they modified the compensatory damage allegations to specify that they sought "compensatory damages commensurate with the cost of removing and replacing the replacement vinyl windows and the costs of consultants and experts investigating the defects and developing solutions thereto...." (Capitalization omitted.) Plaintiffs alleged that they "do not seek to recover any consequential property damage caused by the defective replacement vinyl windows." (Capitalization omitted.)
Mikron generally demurred to the fourth amended complaint on grounds plaintiffs could not state facts sufficient to constitute a cause of action for strict products liability and negligence. Arguing that plaintiffs had conceded their sole remedy was purely economic — the replacement costs of the windows — it maintained the economic loss rule prohibited them from seeking pure economic losses under theories of negligence and strict liability. It also argued strict liability did not apply to it because it did not manufacture or sell the windows to the general public or sell them within mass produced homes. Finally, Mikron argued Valdivia's allegations showed it did not install her windows at a time when it was designing windows. Plaintiffs opposed the motion in part on grounds the economic loss rule "is concerned with the essential elements of tort theory" and had "nothing to do with the type of remedy plaintiffs may seek to recover." They argued they only needed to plead and prove property damage to preclude application of the economic loss rule and did so in their operative pleading; that in view of those allegations, the economic loss rule became a "non-issue." According to plaintiffs, under Jimenez v. Superior Court (2002) 29 Cal.4th 473 (Jimenez), "the economic loss rule does not apply to claims for... 'inadequate value, costs of repair and replacement of the defective product or consequent loss of profits' — with a claim for personal injury or property damage."
During arguments on the matter, plaintiffs' counsel asserted that the economic loss rule was for the purpose of determining liability, and had nothing to do with the law of remedies or proper method of repair. He pointed out that plaintiffs had alleged property damage; that they needed to fix the damage that was occurring and prevent future damage. He asserted that plaintiffs did not seek to repair stains caused by water intrusion, but instead wanted a permanent repair for the consequential damage they had alleged to other parts of the property in the form of replacing the defective windows.
The trial court ultimately rejected these arguments. Holding the economic loss rule barred recovery of purely economic loss, it sustained Mikron's demurrer to plaintiffs' negligence and strict liability causes of action without leave to amend. It ruled the "costs of replacing defective windows such as those in this case are economic losses which are unrecoverable under strict liability and negligence theories." The trial court rejected plaintiffs' reliance on a statement in Jimenez, supra, 29 Cal.4th 473, finding it dicta and not enough to create an exception to the economic loss rule. Thereafter, plaintiffs sought to stay the action against the remaining defendants pending an appeal of the trial court's order. The court elected to postpone entry of the Mikron judgment to permit the remaining defendants to file motions for judgment on the pleadings (JOP).
Before those motions were filed, plaintiffs sought leave to file a fifth amended complaint against all of the defendants. They sought to add the following additional language at several places in the proposed fifth amended complaint: "Because the weather barrier is broken when the replacement vinyl windows are installed the damage to walls, insulation and framing components, which has already occurred, will continue in the future. In the words of Civil Code section 3283, said future property damage constitutes 'detriment' occurring after the commencement of this action which is 'certain to result in the future.' In order to prevent this continuing detriment which is certain to result in the future a repair is necessary. Plaintiffs are informed and believe and thereon allege that the most appropriate method of repair is to replace the replacement vinyl windows with windows having a nail-on fin. This method of repair will prevent further damages to walls, insulation and framing members." (Capitalization omitted.) Plaintiffs argued that addition of the proposed allegations would clarify that they were seeking to recover compensation for physical property damage to other property that had occurred as a result of the defective vinyl replacement windows and would recur in the future absent a repair. The trial court set plaintiffs' request for leave to amend on the same day as the motions for JOP.
Both CertainTeed's and Anlin's JOP motions sought to bar plaintiffs' claims, including their cause of action under the CLRA, under the economic loss rule. They argued that an action seeking recovery of the costs to repair and replace a defective product without a claim for consequential damages to other property was nothing more than a claim for economic loss barred under that rule. CertainTeed further argued plaintiffs' CLRA claim was similarly barred because it was essentially a strict liability claim and plaintiffs could not prove there was a basis for that claim independent of a breach of contract or warranty. It argued the "entire basis of plaintiffs' CLRA claim is that the windows are supposedly defective because they are not weatherproof and, therefore, Plaintiffs are entitled to replacement of the windows." Pointing out plaintiffs had alleged it made misrepresentations in marketing materials that the windows would be weatherproof, CertainTeed maintained plaintiffs' characterization "essentially is another way of saying that CertainTeed allegedly breached a warranty that the windows would be weatherproof."
Plaintiffs responded in part by arguing that both JOP motions were based on the false premise that plaintiffs had eliminated all claims for consequential damages from their complaint. They pointed out that the fourth amended complaint repeatedly alleged the defective windows caused property damage to building components other than the windows themselves, and argued they sought "to recover consequential damages... i.e., continued damages that will recur in the future." (Bold omitted.) Plaintiffs argued the operative pleading set out the essential elements of tort liability and "merely foregoes one aspect of the broad array of compensatory damages available once tort liability is established, to wit, the right to recover the cost of repairing property damage that has occurred in the past." (Bold omitted.) In part relying on Transwestern Pipeline Co. v. Monsanto Co. (1996) 46 Cal.App.4th 502 (Transwestern) and Orndorff v. Christiana Community Builders (1990) 217 Cal.App.3d 683, they argued that once the economic loss rule was satisfied by establishing property damage, the law of damages allowed recovery of prospective damages, i.e., the costs to prevent such property damage in the future. Plaintiffs asked that the trial court sua sponte reconsider and correct its ruling on Mikron's demurrer.
The trial court denied plaintiffs' request for leave to file a fifth amended complaint on grounds the complaint failed to state a cause of action, plaintiffs had failed to comply with California Rules of Court, rule 3.1324, and plaintiffs had not presented evidence as to why they did not present the proposed amendments earlier. Finding plaintiffs had conceded they were only seeking replacement costs for the defective windows and not consequential damages caused by the windows, it granted both CertainTeed and Anlin's motions for JOP. The trial court ruled plaintiffs failed to state a cause of action for strict liability and negligence under the economic loss rule; that "[t]he costs of replacing defective windows such as those in this case are economic losses which are unrecoverable under strict liability and negligence theories." It further ruled that minimal consequential property damage does not entitle a purchaser of defective products to compensation for economic loss such as replacement costs. It rejected plaintiffs' reliance on various authorities for the proposition that mere allegation of property damage sufficed to avoid the economic loss doctrine, reasoning none of the cases stood for such a proposition because the plaintiffs there sought to recover property damages as part of a tort claim. The trial court also granted JOP as to the CLRA cause of action based on plaintiffs' failure to address the claim in opposition to the motions.
Plaintiffs dismissed their third cause of action without prejudice, and the court entered a final judgment in favor of Mikron, CertainTeed and Anlin. This appeal followed.
DISCUSSION
I. Standard of Review
Our standard of appellate review is settled: "When reviewing a judgment dismissing a complaint after the granting of a demurrer without leave to amend, courts must assume the truth of the complaint's properly pleaded or implied factual allegations. [Citation.]... In addition, we give the complaint a reasonable interpretation, and read it in context. [Citation.] If the trial court has sustained the demurer, we determine whether the complaint states facts sufficient to state a cause of action. If the court sustained the demurrer without leave to amend, as here, we must decide whether there is a reasonable possibility the plaintiff could cure the defect with an amendment. [Citation.] If we find that an amendment could cure the defect, we conclude that the trial court abused its discretion and we reverse; if not, no abuse of discretion has occurred. [Citation.] The plaintiff has the burden of proving that an amendment would cure the defect." (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.) Whether a plaintiff will be able to prove its allegations is not relevant. (Cole v. Fair Oaks Fire Protection Dist (1987) 43 Cal.3d 148, 151, fn. 1.)
A motion for judgment on the pleadings has the same function as a general demurrer, and is used to attack a pleading only as to defects disclosed on its face or by matters that can be judicially noticed. (Smiley v. Citibank (1995) 11 Cal.4th 138, 146; Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 999.) We review the court's order granting judgment on the pleadings under the same de novo standard by which we review a decision sustaining a general demurrer. (Gerawan Farming, Inc. v. Lyons (2000) 24 Cal.4th 468, 515; see Smiley v. Citibank, at pp. 145-146.) We liberally construe and accept the truth of all factual allegations in plaintiffs' operative complaint, consider matters that may be judicially noticed, and determine as a matter of law whether the complaint states a cause of action under any possible legal theory. (Gerawan Farming, at pp. 515-516; Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.)
II. The Economic Loss Rule
The California Supreme Court summarized the economic loss rule in Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979 (Robinson Helicopter): "Economic loss consists of ' " ' "damages for inadequate value, costs of repair and replacement of the defective product or consequent loss of profits — without any claim of personal injury or damages to other property.... " ' " [Citation.]' [Citation.] Simply stated, the economic loss rule provides: ' " '[W]here a purchaser's expectations in a sale are frustrated because the product he bought is not working properly, his remedy is said to be in contract alone, for he has suffered only "economic" losses.' " This doctrine hinges on a distinction drawn between transactions involving the sale of goods for commercial purposes where economic expectations are protected by commercial and contract law, and those involving the sale of defective products to individual consumers who are injured in a manner which has traditionally been remedied by resort to the law of torts.' [Citation.] The economic loss rule requires a purchaser to recover in contract for purely economic loss due to disappointed expectations, unless he can demonstrate harm above and beyond a broken contractual promise. [Citation.] Quite simply, the economic loss rule 'prevent[s] the law of contract and the law of tort from dissolving one into the other.' [Citation.]
"In Jimenez[], supra, 29 Cal.4th 473,..., we set forth the rationale for the economic loss rule: ' "The distinction that the law has drawn between tort recovery for physical injuries and warranty recovery for economic loss is not arbitrary and does not rest on the 'luck' of one plaintiff in having an accident causing physical injury. The distinction rests, rather, on an understanding of the nature of the responsibility a manufacturer must undertake in distributing his products." [Citation.] We concluded that the nature of this responsibility meant that a manufacturer could appropriately be held liable for physical injuries (including both personal injury and damage to property other than the product itself), regardless of the terms of any warranty. [Citation.] But the manufacturer could not be held liable for "the level of performance of his products in the consumer's business unless he agrees that the product was designed to meet the consumer's demands." [Citation.]' [Citation.]
"In Jimenez, we applied the economic loss rule in the strict liability context. We explained the principles surrounding the economic loss rule in that context: '[R]ecovery under the doctrine of strict liability is limited solely to "physical harm to person or property." [Citation.] Damages available under strict products liability do not include economic loss, which includes " ' "damages for inadequate value, costs of repair and replacement of the defective product or consequent loss of profits — without any claim of personal injury or damages to other property...." ' " [Citation.] [¶]... [¶] In summary, the economic loss rule allows a plaintiff to recover in strict products liability in tort when a product defect causes damage to "other property," that is, property other than the product itself. The law of contractual warranty governs damage to the product itself.' [Citation.] We have also applied the economic loss rule to negligence actions." (Robinson Helicopter, supra, 34 Cal.4th at pp. 988-989.)
"[U]nder the economic loss rule, 'appreciable, nonspeculative, present injury is an essential element of a tort cause of action.' [Citation.] 'Construction defects that have not ripened into property damage, or at least into involuntary out-of-pocket losses,'... 'do not comfortably fit the definition of " 'appreciable harm' " — an essential element of a negligence claim.' " (Rosen v. State Farm General Ins. Co. (2003) 30 Cal.4th 1070, 1079.) In Greystone Homes, Inc. v. Midtec, Inc. (2008) 168 Cal.App.4th 1194 (Greystone), this court, relying on Rosen, explained: "[I]mportantly, the economic loss rule is not a defense to a cause of action. Rather, the existence of damages, other than purely economic loss, is an element of a plaintiff's common law cause of action." (Greystone, 168 Cal.App.4th at p. 1215; see also San Francisco Unified School Dist. v. W.R. Grace & Co.-Connecticut (1995) 37 Cal.App.4th 1318, 1327 ["Until physical injury occurs — until damage rises above the level of mere economic loss — a plaintiff cannot state a cause of action for strict liability or negligence"]; Aas v. Superior Court (2000) 24 Cal.4th 627, 646 ["appreciable, nonspeculative, present injury is an essential element of a tort cause of action"], superceded by statute on another ground as stated in Rosen v. State Farm General Ins. Co., supra, 30 Cal.4th at pp. 1079-1080.)
III. At This Pleading Stage, Plaintiffs' Causes of Action for Strict Liability and Negligence Are Not Barred By the Economic Loss Rule
A. Contentions
Plaintiffs contend the economic loss rule does not apply to the "law of damages," nor does it dictate tort remedies when the rule is overcome and a tort cause of action permitted. They review cases assertedly showing the proper operation of the economic loss rule, including Aas v. Superior Court, supra, 24 Cal.4th 627, Carrau v. Marvin Lumber & Cedar Co. (2001) 93 Cal.App.4th 281 (Carrau) and Transwestern, supra, 46 Cal.App.4th 502. Specifically, plaintiffs assert that alleging personal injury or property damage is a prerequisite to recovering under a negligence theory; that such injury must be pleaded and proved at trial, after which time a plaintiff may recover in tort damages including the cost of preventing future damage, which they characterize as "prospective damage." They argue that as long as a plaintiff alleges property damage and can prove its existence, "[t]here is no requirement that plaintiff seek monetary recovery for past property damage" and thus "plaintiffs' waiver of any claim to past property damage is not a bar to recovery of the cost of preventing such damage in the future." Plaintiffs point out that like the plaintiffs in Orndorff v. Christiana Community Builders, supra, 217 Cal.App.3d 683, they "have [pleaded] (and will prove) that the windows have already caused, and will (unless replaced) continue to cause, damage to surrounding walls, insulation and framing components."
Mikron responds that plaintiffs' allegations confirm they are not seeking to recover for resulting property damage, but rather for strictly economic loss, i.e., the costs of replacing the windows themselves, which are not recoverable losses under negligence or strict liability theories. It asserts none of plaintiffs' cited cases hold that pure economic losses are recoverable under those theories. In particular, Mikron points out that in Transwestern, supra, 46 Cal.App.4th 502, the court warned that "[e]ven if the defendant's defective product caused damage to the plaintiff's property as well as a loss of profits, the plaintiff cannot use the property damage to bootstrap recovery for economic loss in a strict liability action." (Id. at pp. 526-527.) Mikron further argues that plaintiffs made a judicial admission in opposition to its demurrer that their property damage was "de minimis," demonstrating under both California and out-of-state authorities that their action is more about their failed commercial expectations — requiring recovery under a warranty theory (which plaintiffs' had abandoned) — than about injuries to person or property, which would permit tort recovery.
CertainTeed and Anlin make similar arguments on appeal. Additionally, CertainTeed argues the mere allegation of property damage does not suffice to avoid application of the economic loss rule, that such losses must be pleaded and proved. It distinguishes plaintiffs' cited authority by characterizing plaintiffs' position as "unique," i.e., a situation where a plaintiff "alleges that property damage occurred, but does not seek recovery of such damages." (Bold omitted.)
Anlin argues that this court in Greystone, supra, 168 Cal.App.4th 1194recently applied the economic loss rule to bar recovery of economic losses under a negligence theory. It maintains plaintiffs made it clear from their pleadings that they are not seeking recovery of any compensable tort damages because they disclaimed an intent to recover for consequential property damages. Anlin further argues plaintiffs cannot be permitted to pursue economic damages indirectly because it is a type of loss they are precluded from pursuing directly. It suggests plaintiffs are simply trying to strategically avoid allegations that would destroy class certification.
Anlin argues: "In the face of California law that says one cannot recover in a tort-based products liability case for pure economic loss, and probably because Valdivia was facing certain difficulties in imminent motions to preclude her class action based on individual inquiries that are relevant to recovery for individual instances of property damage, Valdivia attempted to do indirectly that which she is precluded from doing directly.... She attempted this in the round-about fashion of merely 'asserting' in the complaint she suffered [unspecified] property damages and then claiming that the assertion (and then disavowing recovery of those damages) entitles her to that which is forbidden directly — i.e. recovery of pure economic loss."
B. Judicial Admission
The parties do not disagree over the fundamental legal principles pertaining to the economic loss doctrine, which prevents a plaintiff from maintaining a tort action under negligence and strict liability theories when the only losses he or she has sustained are purely economic. However, contrary to defendants' arguments, plaintiffs did in fact plead that they suffered property damage to other components of the property as a result of the defective windows — damage to walls, insulation and framing components — and they acknowledge they must plead and prove at trial that the defective windows caused damage to other property in order to succeed in an action for damages on negligence and strict liability theories. The crux of the matter at this pleading stage is whether plaintiffs' remaining allegations demonstrate that as a matter of law they are unable to state a cause of action for negligence or strict liability.
In our view, the issue turns on whether plaintiffs' allegations that they "seek only those compensatory damages commensurate with the cost of removing and replacing" the windows and "do not seek to recover any consequential property damage caused by the defective replacement vinyl windows" (capitalization omitted) are judicial admissions that preclude them from claiming that they do seek to recover for damages caused by the defective windows to other parts of their buildings, the measure of which is the cost of replacing the defective windows.
A judicial admission may be made in a pleading. (See Myers v. Trendwest Resorts, Inc. (2009) 178 Cal.App.4th 735, 746; Valerio v. Andrew Youngquist Construction (2002) 103 Cal.App.4th 1264, 1271; 4 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 452, p. 585.) "Facts established by pleadings as judicial admissions' "are conclusive concessions of the truth of those matters, are effectively removed as issues from the litigation, and may not be contradicted, by the party whose pleadings are used against him or her." ' " (Myers v. Trendwest Resorts, Inc., at p. 746.) Importantly, however, "a mere conclusion, or a 'mixed factual-legal conclusion' in a complaint, is not considered a binding judicial admission." (Castillo v. Barrera (2007) 146 Cal.App.4th 1317, 1324; Stroud v. Tunzi (2008) 160 Cal.App.4th 377, 384 [judicial admissions involve facts, not legal theories or conclusions].) In the context of a summary judgment motion, for example, "[a] mixed factual-legal conclusion may be contradicted by a declaration or other evidence...." (Castillo, at p. 1324.) Further, " 'inconsistent theories of recovery are permitted..., [but] a pleader cannot blow hot and cold as to the facts positively stated.' " (Brown v. City of Fremont (1977) 75 Cal.App.3d 141, 146; see Stroud, at p. 384.)
Here, plaintiffs' allegation that they do not seek to recover consequential property damage but seek only compensatory damages "commensurate with the cost of removing and replacing" the windows, is not a clear and positive statement of fact, but instead is a statement about the measure of damages, akin to making assertions about a theory of recovery. (E.g., Brown v. City of Fremont, supra, 75 Cal.App.3d at p. 146; Stroud v. Tunzi, supra, 160 Cal.App.4th at p. 384.) Further, "[a]n unclear or equivocal statement" as plaintiffs' allegation is here, does not create a binding judicial admission. (Stroud v. Tunzi, at p. 385.) We further reject Mikron's assertion that plaintiffs made a judicial admission that their property damage was de minimis. As Mikron acknowledges in a footnote, the statement was made by plaintiffs' counsel in opposition points and authorities. Plaintiffs' opposition papers containing the argument of counsel do not constitute pleadings from which a judicial admission can be extracted. (See Myers v. Trendwest Resorts, Inc., supra, 178 Cal.App.4th at pp. 746-748.)
In sum, we cannot characterize plaintiffs' allegation in the fourth amended complaint as a binding judicial admission (and defendants do not point to any other admission of fact) either that the property damage caused by the defective windows was de minimis, or they did not in fact suffer damages to property other than to the windows themselves, which would preclude recovery under theories of strict liability and negligence.
C. Application of the Economic Loss Rule at the Demurrer Stage
Applying the economic loss doctrine in its proper manner (see Rosen v. State Farm General Ins. Co., supra, 30 Cal.4th at p. 1079; Greystone, supra, 168 Cal.App.4th at p. 1215) demonstrates that appreciable and nonspeculative injury to persons or property is a prerequisite element of pleading and proof in order to recover under a tort theory. Having concluded that plaintiffs did not disclaim such injury by any judicial admissions, we turn to whether the fourth amended complaint sufficiently states a cause of action for negligence and strict liability against defendants.
Here, in their fourth amended complaint, plaintiffs expressly allege the replacement vinyl windows "have caused tangible physical property damage to the real property of plaintiffs and members of the class. The property damage has been and continues to be incurred in the form of a broken weather barrier consisting of building paper and flashing, leading to, among other things, water damage to walls, insulation and framing members. The property damage is latent. It occurs beneath the stucco or other exterior cladding and beneath the drywall or other interior wall surface.... In the spring of 2006 plaintiffs learned of the defective nature of the replacement vinyl windows installed in their residences and the damage inside the walls caused by said windows when experts removed drywall and performed water tests." These are allegations of cognizable physical injury to their property. As we have stated, at this stage, it is not for us to decide whether plaintiffs can prove these allegations. (Cole v. Fair Oaks Fire Protection Dist, supra, 43 Cal.3d at p. 151, fn. 1.)
We cannot infer from these allegations that the damage to other property caused by the alleged defect is de minimis or not appreciable. Thus, these allegations of injury are sufficient to support negligence and strict liability causes of action for the alleged defective windows.
To the extent defendants contend the economic loss rule absolutely bars recovery of out-of-pocket economic losses — losses such as costs of repair or replacement — in any strict liability or negligence action based on a defective product, they misread Jimenez, supra, 29 Cal.4th at p. 482, the holding of which was reiterated in Robinson Helicopter, supra, 34 Cal.4th at p. 988. Removing the definitional parenthetical clause in its summary, the high court emphasized that "[d]amages available under strict products liability do not include economic loss... without any claim of personal injury or damages to other property." (Robinson Helicopter, at p. 988.) The economic loss doctrine precludes recovery of costs of repair or replacement only when they are not sustained as a consequence of compensable injury to persons or property: when the plaintiffs' sole compensable injury is economic. Stated another way, "[t]he economic loss rule bars recovery in tort for economic damages caused by a defective product unless those [economic] losses are accompanied by some form of personal injury or damage to property other than the defective product itself." (KB Home v. Superior Court (2003) 112 Cal.App.4th 1076, 1079, italics added.) Thus courts, including this one, have made it clear that compensable damages in a strict liability or negligence actions cannot amount to solely economic damages. (Zamora v. Shell Oil Co. (1997) 55 Cal.App.4th 204, 210 ["In a strict liability or negligence case, the compensable injury must be physical harm to persons or property, not mere economic loss"]; accord County of Santa Clara v. Atlantic Richfield Co. (2006) 137 Cal.App.4th 292, 318 [citing Zamora].)
Thus, economic losses are the sole harm and are not recoverable under the economic loss rule in cases where the " 'defect and damage are one and the same....' " (County of Santa Clara v. Atlantic Richfield Co., supra, 137 Cal.App.4th at p. 321, quoting Sacramento Regional Transit Dist. v. Grumman Flxible (1984) 158 Cal.App.3d 289, 294.) In that event, the " 'expenses of repair plaintiff has incurred, and will incur in the future, are purely economic damages.' " (Ibid.) This was the case in County of Santa Clara, where the plaintiffs alleged that as a result of the presence of lead paint in their buildings, they were required to spend money on abatement programs to identify and remove the lead, inspect and test the buildings, and spend money to demolish, refurbish or remedy the harmful effects of their properties. (County of Santa Clara, 137 Cal.App.4th at pp. 320-321.) The Court of Appeal explained that such allegations showed only economic loss and would not support an action for damages based on negligence or strict liability (Id.. at p. 321) and as a result, those causes of action had not accrued for purposes of applying a statute of limitations defense. (Id. at pp. 325-326.)
We believe that defendants' arguments mistake the measure of damage with the nature or type of damage. In applying the economic loss rule, it is important to distinguish these principles. (Transwestern, supra, 46 Cal.App.4th at p. 531; see also County of Santa Clara v. Atlantic Richfield Co., supra, 137 Cal.App.4th 292, 339 (conc. opn. of McAdams, J.) ["In deciding whether out-of-pocket costs represent economic loss or property damage in a given case, it is important to avoid confusing 'the measure of the damages with the nature of the damage' "].) " 'While economic loss is measured by repair costs, replacement costs, loss of profits or diminution of value, the measure of damages does not determine whether the complaint is for physical harm or economic loss.... In other words, the fact that the measure of the plaintiff's damages is economic does not transform the nature of its injury into a solely economic loss.... Physical harm to property may be measured by the cost of repairing the buildings to make them safe." ' " (Transwestern, 46 Cal.App.4th at p. 531; see also Collins Development Co. v. D.J. Plastering, Inc. (2000) 81 Cal.App.4th 771, 779 [the "fact that damages for this physical damage were calculated on the basis of the cost of repair[ ]... so that the damage to the other parts of the building would abate did not change the nature of the damage"].)
In Collins Development Co., supra, a case involving claims of defective exterior stucco, this court upheld a jury award of damages to a homeowners' association calculated on a cost of repair basis, holding the method of calculating those damages did not make them unrecoverable in a strict liability action. We explained, relying on Transwestern, supra, 46 Cal.App.4th at p. 531,"Although we agree [the association] was required to show that it had suffered some physical harm to its property aside from the installation of defective stucco, it more than met this burden by presenting testimony that the defective stucco had allowed water to seep into walls and caused damage to lathing and tar paper. The fact that damages for this physical damage were calculated on the basis of the cost of repairing the stucco so that the damage to the other parts of the building would abate did not change the nature of the damage [the association] suffered." (Collins Development Co. v. D.J. Plastering, Inc., supra, 81 Cal.App.4th at pp. 778-779.)
We agree with defendants that a claim of future injury alone is insufficient without proof of actual compensable injury. Plaintiffs cannot circumvent the economic loss rule by merely alleging they expect to suffer property damage as a consequence of the alleged defects in defendants' windows. They will be required to prove at trial not only that the defendants' windows are defective, but that the defects caused actual appreciable physical damage to other parts of the home or building in which they were installed. (E.g., Rosen v. State Farm General Ins. Co., supra, 30 Cal.4th at p. 1079 [requiring "appreciable, nonspeculative, present injury"], quoting Aas v. Superior Court, supra, 24 Cal.4th at p. 646; see e.g., Hicks v. Kaufman and Broad Home Corp. (2001) 89 Cal.App.4th 908, 923-924 [in the class action certification context, the court explained that to recover under strict liability and negligence theories for allegedly defective foundations, "each class member would have to come forward and prove specific damage to her home (e.g., uneven floors, insect infestation, misaligned doors and windows), and that such damage was caused by cracks in the foundation, not some other agent"].) It is not enough for plaintiff to prove that the defects might result in physical injury. (See Aas, at p. 640.) Thus, for example, plaintiffs could not recover damages (in any measure) in negligence or strict liability for replacement costs for windows known to be defective, but which had not yet leaked nor caused damage to other property. (Ibid.) Plaintiffs will also be required to present expert testimony as to the measure of damage: that the appropriate method of repairing or abating the property damage is to replace the windows. And fundamental principles pertaining to damages will apply: Whatever their measure in a given case, damages that are " 'speculative, remote, imaginary, contingent, or merely possible cannot serve as a legal basis for recovery.' " (Piscitelli v. Friedenberg (2001) 87 Cal.App.4th 953, 989.)
We note that California law recognizes that a plaintiff in a tort action may recover for a "loss reasonably certain to occur in the future" also known as "prospective damage." (6 Witkin, Summary of Cal. Law (5th ed. 2008) Torts, § 1552, p. 1026; see also Civ. Code, § 3283 ["Damages may be awarded, in a judicial proceeding, for detriment resulting after the commencement thereof, or certain to result in the future"], italics added; see Bihun v. AT & T Information Systems, Inc. (1993) 13 Cal.App.4th 976, 995, disapproved on other grounds in Lakin v. Watkins Associated Industries (1993) 6 Cal.4th 644, 664.) But applying the economic loss doctrine as articulated by the above authorities compels us to conclude that until the defective instrument causes present and appreciable property damage or personal injury, a tort action cannot be maintained regardless of the likelihood that damage will result. (E.g., Zamora v. Shell Oil Co., supra, 55 Cal.App.4th at pp. 208-213 [reversing 14 judgments against homeowners for defective plumbing systems where the pipes, though alleged to be inherently defective, did not leak and thus suffered no damage; "appreciable present harm, not merely the threat of future harm is required"].) Orndorff v. Christiana Community Builders, supra, 217 Cal.App.3d 683, cited by plaintiffs, is not inconsistent with this conclusion. In Orndorff, the parties agreed that plaintiffs' house was suffering damage ("the effects of fill settlement") from the defectively compacted soil; the question at hand on appeal was the measure of damage for further additional settlement. (Id. at pp. 685, 691.)Though Orndorff did not discuss the economic loss rule, its conclusion supports its requirement that a plaintiff must have actual and appreciable property damage stemming from the defect to obtain some measure of tort damage in strict liability.
IV. Cause of Action for Violation of the CLRA
Plaintiffs did not specifically discuss their CLRA cause of action in opposition to CertainTeed's motion for JOP, in which CertainTeed argued that cause of action, like the others, was barred by the economic loss doctrine. As a result, on appeal, CertainTeed maintains plaintiffs have waived any argument as to the sufficiency of their CLRA cause of action on appeal.
The economic loss rule was the sole ground for CertainTeed's JOP motion, and plaintiffs extensively argued why the court should deny its and Anlin's motions for JOP as to their fourth amended complaint because they had alleged the defective windows caused physical property damage. Based on these arguments, we decline to find plaintiffs waived appellate arguments as to their CLRA cause of action, as CertainTeed asserts. In any event, our role following a demurrer without leave to amend is to ascertain if the complaint states a claim for relief under any theory. (Smith v. Commonwealth Land Title Ins. Co. (1986) 177 Cal.App.3d 625, 630; see also 20th Century Ins. Co. v. Quackenbush (1998) 64 Cal.App.4th 135, 139, fn. 3.) We have held the economic loss rule does not bar plaintiffs from proceeding under tort theories at this pleading stage, and we find no other basis for applying the doctrine to their CLRA claim, which is based on fundamentally different conduct, including alleged misrepresentations made to plaintiffs in marketing devices. We hold the trial court erred in granting JOP on plaintiffs' CLRA cause of action.
"The CLRA is a pro-consumer statute that prohibits specific deceptive or unfair acts in any 'transaction intended to result or which results in the sale or lease of goods or services to any consumer.' (Civ. Code, § 1770, subd. (a).)... For example, the CLRA prohibits '[r]epresenting that goods or services have... characteristics... benefits, or quantities which they do not have' (Civ. Code, § 1770, subd. (a)(5)).... The CLRA allows for restitutionary and injunctive relief, as well as compensatory and punitive damages and attorney fees. (Civ. Code, § 1780, subds. (a)(1)-(5), (d).)" (Broberg v. Guardian Life Ins. Co. of America (2009) 171 Cal.App.4th 912, 923-924.)
DISPOSITION
The judgment is reversed. Valdivia shall recover costs on appeal.
WE CONCUR: BENKE, Acting P. J., IRION, J.