McKay

In this case we hold that Health and Safety Code section 13007 permits recovery of lost profits from a business connected to property that is damaged by a negligently set fire. The State of California (the State) appeals from a money judgment for damages resulting when employees of the Department of Forestry and Fire Prevention set a controlled-burn fire adjacent to property owned by Steven A. McKay and Burt Cohen. We affirm.

McKay and Cohen own a 50-acre parcel of agricultural property and a retail produce outlet. Beginning in 1982, they improved a section of the property with trellises and irrigation pipe. They planted fruit trees, nut trees, grapevines and berry plants, which were designed to supply the retail outlet.

On October 22, 1988, employees of the Department of Forestry and Fire Prevention negligently started a controlled-burn fire on adjacent property. The fire spread to the McKay-Cohen farm and burned 25 acres, including 6 acres of trees, plants, trellises, irrigation pipe and other improvements. The business was destroyed as a result of the fire.

The State conceded liability for negligence but disputed the measure of damages. The market value of the…