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J'Aire Corp. v. Gregory - 24 Cal. 3d 799, 157 Cal. Rptr. 407, 598 P.2d 60 (1979)

Rule:

A court determining that defendants owed plaintiffs a duty of care should apply the following criteria. Those criteria are (1) the extent to which the transaction was intended to affect the plaintiff, (2) the foreseeability of harm to the plaintiff, (3) the degree of certainty that the plaintiff suffered injury, (4) the closeness of the connection between the defendant's conduct and the injury suffered, (5) the moral blame attached to the defendant's conduct, and (6) the policy of preventing future harm.

Facts:

J'Aire Corporation operated a restaurant at the Sonoma County Airport in premises leased. Under the terms of the lease, the contractor was to provide heat and air conditioning. The lease contract, however, did not specify any date for completion of the work of the contractor to provide heat and air condititoning. Despite requests that the contractor complete the construction promptly, the work was not completed within a reasonable time. Because the restaurant could not operate during part of the construction and was without heat and air conditioning for a longer period, the restaurant suffered loss of business and resulting loss of profits. The restaurant filed for damages against the contractor for business losses suffered by the contractors' failure to complete the project with due diligence. The contractor filed a demurrer without leave, which was sustained by the court. The case was appealed.

Issue:

Was the restaurant entitled to damages for business losses?

Answer:

Yes

Conclusion:

The Supreme Court of California reversed the dismissal of the complaint, holding that the contractor, hired by the landlord airport,  owed a duty of care to the restaurant to complete its construction work in a manner that did not cause undue injury to appellant's business, where such injury was reasonably foreseeable. Court found that the contractor had the duty to complete construction in a manner that would have avoided unnecessary injury to the restaurant's business, even though construction contract was with owner of a building rather than with the restaurant, the tenant. Court held it was settled that contractor owed a duty to avoid injury to the person or property of third parties. Court held risk of harm to the restaurant was foreseeable and its injury should not go uncompensated merely because it was unaccompanied by any injury to his person or property. Thus, the contractor was liable since his lack of ordinary care caused foreseeable injury to the economic interests of the restaurant

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