Let’s say that you own a business such as a bar or restaurant. You notice that there are leaks coming from the ceiling. You are forced to close your restaurant as a result of the water damage. Six months later, the landlord finally replaces the roof. Unfortunately, your business goes under in the meantime because no money is coming in.
What damages are recoverable (if any) and what period of time will be considered in determining the amount of damages?
Can you only recover damages for the six month period when the roof replacement was finished? Or is the failure to repair or replace the roof caused you to cease doing business permanently. As a result, you are entitled to all provable damages without restriction as to time?
In Vidas Cousins Realty Corp. v PB & J Assoc., Inc. , the court held that the tenant can recover damages for the landlord’s breach of its covenant to repair the roof. As a result, the tenant is entitled to recover:
- The diminution of the rental value for the six month period.
- The loss of profits because such damages were fairly within the contemplation of the parties. The loss of profits, if any, naturally flows from Petitioner’s breach of the covenant to repair. Petitioner knew or had reason to know that its failure to repair or replace the leaking roof could and did, in fact, cause the Respondent to close its business resulting in possible loss of profits. These damages are also restricted to the six month period.
- Loss of profits, if any, recoverable by tenant must be demonstrated with certainty that such damages were caused by Landlord’s’s failure to comply with the covenant to repair and must be capable of proof with reasonable certainty. Of course, damages recovered must not be duplicative.
The Law Office of Frederic R. Abramson represents businesses and individuals in New York. If you have a question about breach of contract, feel free to call at 212-233-0666.