By: Alexander A. Miuccio Thomas H. Welby Published: January 2008

Court Rules on Measure of Damages to Repair and Complete Contract Work

What is the proper measure of damages an owner can recover from the contractor as a result of defective work and failure to complete the work under a contract? As a general rule, the reasonable value of the cost to repair defective work and to complete the work required under a contract is the appropriate measure of damages. The reasonable cost to complete the contract work may be substantially higher than the actual contract price for that work, as demonstrated in the recent case of Caggianelli v. Son’s Masonry.

Background

A husband and wife, as homeowners, entered into a written agreement with a concrete contractor for the installation of a stamped concrete patio, associated walkways and ramps, together with planters and a retaining wall. The contract price was $16,600.00.

The contractor failed to properly perform the work required under the contract and the homeowners sued for breach of contract. In the lawsuit, the homeowners sought recovery for the costs of repairing the contractor’s defective work and for completing the work required under the contract.

A hearing was held, where the homeowners were required to prove the amount of their damages. The homeowners presented the testimony of a licensed contractor who stated that the total cost to repair and complete the work under the written contract was $52,100.00. The judge who presided over the hearing granted judgment in favor of the homeowners and against the contractor in the sum of $26,600.00, representing damages consisting of $10,000.00 as the reasonable value for the demolition and clean-up associated with the removal and remediation of the contractor’s defective work and $16,600.00 as the reasonable value of the uncompleted work under the written contract. The homeowners appealed.

Decision

The appellate court overruled the lower court, holding that the $26,600.00 award was inadequate. The court stated, “it is well settled that, in a case of defective construction, the appropriate measure of damages is the reasonable market cost to repair the defects, if the defects are reparable, less any amount still due under the contract.” The court also noted “this general rule does not impose a condition that precludes hiring a contractor to perform the necessary remediation at a cost greater than the original contract price, provided that the new contract terms are the reasonable market cost of the work to be performed.”

The court held that since the there was no evidence suggesting the $52,100.00 customarily charged by the licensed contractor for such work did not represent the reasonable market cost, the award of $52,100, less the amount unpaid on the original contract, was appropriate.

Comment

Calculating the measure of damages based on the reasonable market cost is a fair-minded remedy, aimed at making the owner “whole.” This reasoning insures that the owner would be in as good a position as if the contract was fully performed. Here, the homeowners contracted for the installation of specific items for a set price. Given the contractor’s failure to properly perform and complete the work, the court necessarily looked to the reasonable market costs of replacing the defective work and completing the contract.

It does not matter that the reasonable cost of completing the work was substantially higher than the price contracted for. When looking to make an owner whole, courts will focus on the reasonable market cost of repair and completion as the appropriate measure of damages.

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