Opinion
No. H040776.
11-30-2016
ZF MICRO DEVICES, INC. et al., Plaintiffs and Appellants, v. TAT CAPITAL PARTNERS, LTD., et al., Defendants and Respondents.
[Modification of opinion (5 Cal.App.5th 154; ___ Cal.Rptr.3d ___), upon denial of rehearing.]
THE COURT. — IT IS ORDERED that the opinion filed herein on November 4, 2016 be modified as follows:
On page 24, line 20 [5 Cal.App.5th 172, advance report, 2d full par., line 22], change "1172-1174" to "1772-1774"
On page 25, lines 12 through 17 [5 Cal.App.5th 173, advance report, 1st full par., lines 1-5], delete:
Under the principles discussed above, when a business enters into a contract with a service provider clearly aimed at aiding the business in discharging its duty to supply information or benefits to certain individuals, those individuals constitute third party creditor beneficiaries of the contract between the business and service provider.
And substitute:
Under the principles discussed above, when an employer enters into a contract with a service provider by which the provider is to take over the employer's payroll tasks, including the preparation of the payrolls themselves, the employees constitute third party creditor beneficiaries of the contract between the employer and service provider.
On page 45, line 14 [5 Cal.App.5th 183, advance report, 1st full par., line 12], following the sentence ending with the word "ADP," insert the following footnote:
In a petition for rehearing, ADP asserts that the economic loss rule bars the professional negligence claim. As that contention was not raised prior to the filing of our opinion, it has been forfeited. (Alameda County Management Employees Assn. v. Superior Court (2011) 195 Cal.App.4th 325, 338, fn. 10 .)
Moreover, we would reject the contention were we to consider it. The economic loss rule provides that "`"`[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.'" ... "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." (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988 [22 Cal.Rptr.3d 352, 102 P.3d 268].) Under the rule, a plaintiff is permitted to recover purely economic losses due to negligence in the performance of a contract if a "`special relationship'" exists (Greystone Homes, Inc. v. Midtec, Inc. (2008) 168 Cal.App.4th 1194, 1215 ), which may arise when the plaintiff, though not in privity to the contract, is a third party beneficiary of the contract and the Biakanja factors are appropriately present (J'Aire Corp. v. Gregory (1979) 24 Cal.3d 799, 803-807 [157 Cal.Rptr. 407, 598 P.2d 60]; see Ratcliff Architects v. Vanir Construction Management, Inc. (2001) 88 Cal.App.4th 595, 605 ). Under the allegations in the 6AC, that is the case here.
The petition for rehearing by respondents is denied. The modification does not change the judgment.