Unpublished Disposition, 902 F.2d 39 (9th Cir. 1990)

MEMORANDUM^* 

In this products liability action, commercial peach grower K. Darpinian & Sons, Inc. (Darpinian), appeals the district court's summary judgment in favor of Du Pont, the manufacturer of Benlate^R, an agricultural chemical used to prevent the development of brown rot, a fungus which destroys peaches. Darpinian sued Du Pont under the tort theories of strict liability, negligence and fraud because the Benlate^R failed to prevent the development of brown rot in its peach crop. We reverse in part and affirm in part.

Darpinian first contends that the district court erroneously found that the damage to its peach crop was an economic loss for which recovery was not available under the theories of negligence and strict products liability. We agree.

Economic losses consist 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...." Sacramento Regional Transit Dist. v. Flxible, 158 Cal. App. 3d 289, 294, 204 Cal. Rptr. 736, 739 (1984) (citations omitted).

California law does not permit recovery in tort under a strict liability theory where the damages caused by a defective product consist solely of economic losses. Id., 158 Cal. App. 3d at 294, 204 Cal. Rptr. at 738. Similarly, California law generally precludes recovery in tort under a negligence theory where the damages caused by a defective product consist solely of economic losses. Id., 158 Cal. App. 3d at 298-99, 204 Cal. Rptr. at 742; but see Ales-Peratis Foods Int. v. American Can Co., 163 Cal. App. 3d 277, 284-91, 209 Cal. Rptr. 917, 921-25 (1985) (expressing disapproval of limitation on recovery and setting forth exception).

Darpinian's claim is for the damage to its property, a peach crop, caused by the failure of the Benlate^R to prevent brown rot. This is a claim for property damage, not a claim for lost profits. A plaintiff may recover for physical damage to property under a strict liability or a negligence theory. Pisano v. American Leasing, 146 Cal. App. 3d 194, 197, 194 Cal. Rptr. 77, 79 (Cal.App.1983). We therefore reverse the summary judgment on Darpinian's strict liability and negligence causes of action. The claim for property damage presents material questions of fact and must proceed to the next step of litigation.

Darpinian next contends that the district court erred in granting summary judgment to Du Pont on its claim that Du Pont fraudulently misrepresented that Benlate^R would control, and would not develop a resistance to, brown rot. Specifically, Darpinian argues that the affidavit submitted by Ara Darpinian, the president of K. Darpinian and Sons and a partner in A & S Darpinian, raised a triable issue of fact regarding whether Darpinian justifiably relied on Du Pont's alleged misrepresentations. This ground of appeal lacks merit.

Justifiable reliance is an essential element of the tort of fraud. Wilhelm v. Pray, Price, Williams & Russell, 186 Cal. App. 3d 1324, 1332, 231 Cal. Rptr. 355, 358 (Cal.App.1986). To show justifiable reliance, a plaintiff must show that circumstances were such to make it reasonable for the plaintiff to accept the defendant's representations without an independent inquiry or investigation. Id.

Under Fed. R. Civ. P. 56(c), summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law." When a motion for summary judgment is made and properly supported, an adverse party must set forth specific facts showing that there is a genuine issue for trial. Fed. R. Civ. P. 56(e).

In support of its motion for summary judgment, Du Pont submitted a certified copy of the Benlate^R label and the deposition of Ara Darpinian, who admitted having read the label. The label contained a warning that brown rot and other fungi could develop a resistance to Benlate^R through repeated use of the chemical, resulting in a loss of disease control.

In opposition to Du Pont's motion for summary judgment, Ara Darpinian submitted an affidavit in which he admitted that he had read the Benlate^R label containing the warning that fungi could develop a resistance to Benlate^R. Rather than relying on the information contained on the label, Ara Darpinian stated that he relied upon his own experience, information received from local pest control advisers, and information from Du Pont's advertisements and grower meetings sponsored by Du Pont.

Du Pont cannot be liable in damages for fraud if Ara Darpinian was misled by his own experience and by erroneous information received from local pest control advisers. With respect to Du Pont's alleged misrepresentations in its advertisements and at grower meetings it sponsored, Ara Darpinian's affidavit, submitted in opposition to Du Pont's summary judgment motion, fails to identify the allegedly misleading advertisements or the misleading statements Du Pont allegedly made in these advertisements. Nor does his affidavit specify at which grower meetings Du Pont representatives made misleading statements and what these misleading statements were. Because Darpinian failed to set forth specific facts showing that there was a genuine issue of material fact regarding its allegation of fraud, the district court properly granted summary judgment to Du Pont on the fraud claim. Fed. R. Civ. P. 56(e); cf. Scott v. Rosenberg, 702 F.2d 1263, 1271-72 (9th Cir. 1983) (conclusory statements are insufficient to defeat a properly supported motion for summary judgment), cert. denied, 465 U.S. 1078 (1984).

The summary judgment is therefore REMANDED with reference to the strict products liability and negligence claims and AFFIRMED with reference to the fraud claim.

Neither party to recover costs in this court.