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Aas v. Superior Court of San Diego County12/4/2000
al relationship" (J'Aire, at p. 804) permitting recovery of economic losses (i.e., the relationship defined by the Biakanja test) existed between the contractor and the tenant. The court dismissed concerns that such a theory of recovery would threaten liability, out of proportion to fault, for remote consequences and speculative damages. (J'Aire, at pp. 807-808.) In the court's view, the Biakanja factors, in combination with "the ordinary principles of tort law such as proximate cause," were "fully adequate to limit recovery" of purely economic damages "without the drastic consequence of an absolute rule which bars recovery in all such cases." (J'Aire, at p. 808.)
The lower courts have applied the theory of liability articulated in J'Aire, supra, 24 Cal.3d 799, in a wide variety of cases. To mention just a few, courts have relied on J'Aire to assess a chemical manufacturer's claim against a transportation company for business losses caused by the contamination of its product in shipment (North American Chemical Co. v. Superior Court, supra, 59 Cal.App.4th 764, 781-785); a dairy's claim against the manufacturer of an allegedly defective milking machine for lost profits and property damage (Ott v. Alfa-Laval Agri, Inc. (1995) 31 Cal.App.4th 1439, 1448-1457); a construction lender/mortgagee's claim against a builder for construction defects (Sumitomo Bank v. Taurus Developers, Inc., supra, 185 Cal.App.3d 211, 223-226); an abalone packer's claim for lost profits against the manufacturer of unusable cans (Ales-Peratis Foods Internat., Inc. v. American Can Co. (1985) 164 Cal.App.3d 277, 284-290); and real estate investors' claims for the cost of repairing construction defects in an apartment building (Huang v. Garner, supra, 157 Cal.App.3d 404, 422-425; see post, at p. 24 et seq.).
The lower courts have also expanded upon J'Aire, supra, 24 Cal.3d 799. While the court in J'Aire purported only to address duties owed to persons not in contractual privity with the defendant (id. at p. 804), courts subsequently have applied J'Aire to cases in which privity did exist. These courts have concluded that "the reasoning of J'Aire is wholly incompatible with a limitation of the cause of action to those instances in which the plaintiff and defendant are not in privity . . . ." (Ott v. Alfa-Laval Agri, Inc., supra, 31 Cal.App.4th 1439, 1448; see also North American Chemical Co. v. Superior Court, supra, 59 Cal.App.4th 764, 783; Pisano v. American Leasing (1983) 146 Cal.App.3d 194, 197 [both applying J'Aire in cases apparently involving privity].)
Plaintiffs contend that J'Aire, supra, 24 Cal.3d 799, when it applies, displaces the general rule (Seely, supra, 63 Cal.2d 9, 18) that damages are not recoverable for product defects that have not caused property damage. Plaintiffs base the contention on the following statement in J'Aire: "Where the risk of harm is foreseeable, . . . an injury to the plaintiff's economic interests should not go uncompensated merely because it was unaccompanied by any injury to his person or property." (J'Aire, at p. 805.) The validity of the orders on review depends largely on the significance of that statement. Paraphrasing it, one might ask the dispositive question this way: Does the law of negligence protect plaintiffs' economic interests in having houses that fully comply with the building codes, measured by the cost of repairs or diminished value associated with noncompliance, even though the asserted harm to those interests is unaccompanied by any injury to person or property?
To apply the multifactored balancing test set out in J'Aire, supra, 24 Cal.3d 799, 804, tends to involve a court in making fairly subjective judgments. In this case, however, a relative
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