Brief Fact Summary.
Hubbell Homes appealed a judgment that only awarded the difference between the fair market value and contract price of a home that was agreed to be purchased by Billy Michael Key.
Synopsis of Rule of Law.
Lost profits may be awarded if the defaulting party contemplated the lost profits and the lost profits can be determined with reasonable certainty.
Key was reassigned to work in Norwalk, Iowa and was given a monthly rental-house allowance for the reassignment. Key entered into an agreement to purchase a house from Hubbell Homes for $376, 900. The Keys agreed to a delayed closing where they would lease the premises for a year and then purchase the home. Key’s reassignment was terminated after a year however and he refused to close on the home. Hubbell later accepted an offer to sell the home for $350,000, but the house remained unsold. Hubbell sought a judgment for breach of damages in the amount of $36,137.50 along with incidental damages. Hubbell was only awarded the difference between the fair market value and the original purchase price, $26,900, along with incidental damages. Hubbell appealed.
Whether lost profits may be awarded if the defaulting party contemplated the lost profits and the lost profits can be determined with reasonable certainty?
Yes. The trial court judgment is affirmed. The fair market value of the home was established by the offer accepted by Hubbell after placing the home on the market following the Keys’ breach. Therefore Hubbell is entitled to $26,900 in damages.
Expectancy damages places the injured party in the position that he would have been in if the contract had been performed. Real Estate damages are awarded based on the difference between the contract price and the fair market value of the property on the date of the breach.