## Facts

- Barry and Sandra Erlich hired general contractor John Menezes by written contract to build a single-family residence.
- After the Erlichs moved in, heavy rains revealed extensive defects, including widespread leaks, saturated walls, standing water in the living room, and collapsing plaster in the garage.
- Menezes attempted repairs, but the problems persisted; later inspections reported additional serious structural defects.
- The Erlichs alleged significant emotional harm, including fear for family safety and Mr. Erlich’s heart attack (with a preexisting heart condition).
- The Erlichs sued for breach of contract and various tort theories, seeking repair costs and emotional distress damages.
- The jury found no fraud and no negligent misrepresentation, but found a negligent breach of contract and awarded substantial economic damages (primarily repair costs) plus damages for emotional distress and related items.
- The trial court entered judgment including emotional distress damages, despite the absence of tort liability findings.

## Issues

1. Whether emotional distress damages are recoverable for negligent breach of a residential construction contract when the contractor has not committed an independent tort.
2. Whether negligent construction, standing alone, satisfies the requirement of a duty independent of the contract sufficient to support tort-type damages.
3. Whether a contract to build a home falls within the limited category of contracts in which emotional disturbance is a particularly likely result, permitting emotional distress damages as contract damages.

## Decision

- The California Supreme Court reversed the judgment to the extent it awarded emotional distress damages.
- The court held emotional distress damages are not recoverable for negligent breach of a contract to build a home absent an independent tort or a contract whose object is protection of emotional well-being.
- Because the jury rejected fraud and negligent misrepresentation, the remaining misconduct was negligent performance of contractual duties, not breach of a tort duty imposed by law.
- The court left intact the homeowners’ economic recovery for repair costs and related contract damages.

## Legal Principles

- Tort remedies generally are not available for breach of contract; contract breach becomes tortious only when it also violates a duty independent of the contract.
- Emotional distress damages in contract actions are limited to narrow situations, including (a) breaches that independently constitute a tort supporting such damages, or (b) contracts of a kind where serious emotional disturbance is a particularly likely result.
- A residential construction contract, though important to the owner, is treated as a commercial bargain about property and does not, by itself, have the protection of emotional tranquility as its central purpose.
- Policy considerations support maintaining the contract–tort boundary to avoid unpredictable and disproportionate liability beyond the parties’ economic allocation of risk.

## Conclusion

The court limited the homeowners’ recovery to traditional contract damages for defective construction and disallowed emotional distress damages because the contractor’s negligence did not breach an independent tort duty and the construction contract was not one in which emotional disturbance is a particularly likely, contract-centered consequence.


Erlich v. Menezes, 21 Cal. 4th 543 (Cal. 1999)