Brief Fact Summary. John L. Ubaldo, (Petitioner), appeals from a judgment awarding damages to Roger and Cynthia Williams (Respondents) for breach of a real estate contract.
Synopsis of Rule of Law. In an action for breach of contract for the sale of real property, the claimant is entitled to the “benefit of the bargain” which equals the difference between the contract price and the fair market value at the time of breach. A claimant is entitled to special damages resulting from the unique needs and characteristics of the parties, if the parties were reasonably aware of those circumstances at the time of contracting.
Petitioner entered into a contract for the sale of Respondents home in the amount of $450,000. Petitioner was unable to qualify for a mortgage loan and after several months Respondents filed suit for specific performance and an award of the $10,000 deposit. Before trial, Respondents sold their home for $430,000. The trial court found in favor of Respondents, calculating damages based on the difference between the contract price and the resale price. In addition the court assessed $3,500 for real estate taxes paid by Respondents between the time of breach and resale and $500 in connection with snow removal.
Issue. Whether the damages awarded by the court for real estate taxes and snow removal are permissible.
Held. No. There is no authority for the proposition that the avoidance of tax liability is part of the benefit of the bargain nor is there any indication that Respondents’ costs in repurchasing winter-related equipment and the extra costs of snow removal were within the contemplation of the parties when they signed the contract.
Discussion. Points of Law - for Law School Success
A monetary award based on a judgmental approximation is proper, provided the evidence establishes facts from which the amount of damages may be determined to a probability. View Full Point of Law
The claimant is entitled to the “benefit of the bargain,” which equals the difference between the contract price and the fair market value at the time of the breach. Evidence of appraisers and evidence of the price resulting from a subsequent sale are both probative of a property’s fair market value. Here, the court had only the subsequent sale before it and there is no suggestion that this sale was unreasonable or made in bad faith.
The damages resulting form the property taxes is not permissible. Respondents retained ownership, use, and occupancy of a valuable asset during that time. There is no support for the proposition that the avoidance of tax liability is part of the benefit of the bargain and may be included without considering corresponding financial benefits.
Special damages resulting from the unique needs and characteristics of the parties, if the parties were reasonably aware of those circumstances at the time of contracting are permissible. Here, there is no evidence that Plaintiff was aware of Respondents’ plans to sell their winter equipment and move to a warmer climate after the sale. Therefore the special damages award was improper.