Monarch Bay II v. Professional Service Industries, Inc.

This appeal invites us to extend the so-called product line exception, which allows the imposition of strict liability for a defective product on the purchaser of the manufacturer’s assets, to claims for mere negligence. We decline the invitation.

Monarch Bay II (MBII) is the owner of an apartment complex in Laguna Niguel that was severely damaged by a landslide. Alleging negligence on the part of the geotechnical engineering firms that certified the building site, MBII sought to recover from Professional Service Industries, Inc. (PSI), which purchased all of one engineering firm’s assets. The trial court granted summary judgment against MBII, finding it could not recover from PSI because the asset purchase did not fall within the exceptions to nonliability enumerated in Ray v. Alad Corp. (1977) 19 Cal.3d 22 [ 136 Cal.Rptr. 574 , 560 P.2d 3 ]. We affirm.

Background

In the 1980’s, a 450-unit luxury apartment complex was developed on the bluffs of Laguna Niguel. South Coast Geologic Services, Inc., provided soils engineering services on the project from 1986 to 1989, issuing a final compaction report and certifying the sites for the construction of three of the apartment…