Mesa Vista South Townhome Association v. California Portland Cement Co. (Economic Loss Rule)

Court

California Supreme Court

NAHB Involvement

Amicus Letter 

Mesa Vista South Townhome Association brought an action to recover damages for alleged defects in the construction of condominium buildings. In particular, Mesa Vista claimed that the concrete slabs and foundations of the buildings were defective because the ready-mixed concrete used in constructing the concrete system was more porous and permeable than it should have been, which allowed, and would continue to allow, the concrete system to be damaged by attack from sulfates existing in the underlying soils. Defendant California Portland manufactured and supplied the concrete used for the construction of the concrete system.

Mesa Vista sued California Portland in a tort action based on negligence. The trial court found that it was more likely than not that the concrete system had sustained some submicroscopic damage from sulfate attack and that damage to the concrete system from sulfate would likely continue in the future but the defective concrete system product had not caused any physical damage to any other component part of the condominium.

California Portland contended at trial and on appeal that recovery by Mesa Vista under its negligence action was barred by the economic loss rule because the only damage suffered by Mesa Vista was to the defective concrete system product itself. The trial court rejected the economic loss defense and awarded Mesa Vista damages for the estimated cost of repairing and remedying the defective concrete system in an amount in excess of $5,000,000. The court of appeal affirmed the trial court opinion.

NAHB joined the California Building Industry Association in sending an amicus letter to the California Supreme Court asking the Court to review the case. On Aug. 11, 2004, the Court denied the Petition for Review, but directed the Reporter of Decisions not to publish the opinion in the Official Appellate Reporters. Accordingly, the case cannot be cited as precedent in California.