John Menezes contracted to build a "dream home" for Mr. and Mrs. Erlich; instead a nightmare resulted when the house resembled an interior waterfall during heavy rains. In addition to damages for repair costs (over $400,000), the Erlichs were granted $165,000 for emotional distress.
Although simply reading the facts recited in Erlich v. Menezes, 98 Daily Journal D.A.R. 745 (January 23) may cause readers to suffer emotional distress in sympathy for the Erlichs' plight, the case raised an important question regarding the availability of emotional distress damages in construction defect cases. The contractor argued that no such damages should be allowed under the standards set forth in Potter v. Firestone Tire & Rubber Co., 6 Cal.4th 965 (1993) because no physical injury to the Erlichs had occurred or was threatened. Although Potter stated that emotional distress damages cannot generally be awarded in connection with property damage, the court in Erlich placed great importance on the fact that a home is more significant than other types of property. In addition, the contractor's negligence was so extensive that the Erlichs lived in fear that the house would simply collapse, thus creating a fear of physical injury. ("The defects at issue here--non-existent and non-conforming shear walls, collapsing roofs and decks, improperly constructed foundations, and pervasive leaks--render the Erlichs' home virtually uninhabitable.")The dissenting judge, while acknowledging the severity of the problems, concluded that the result was inconsistent with Potter and other California cases and might open the door to emotional distress damages in a broad variety of construction defect cases. It remains to be seen whether this concern is well-founded; however, it is certain that the result will encourage more claims of emotional distress damages.