Louise Caroline Nursing Home (Nursing Home) sought damages from Dix Construction Corporation (Dix) for its failure to complete construction of a nursing home.
The measure of damages for failure to complete a construction project is the amount of the reasonable cost of completing the project, less such part of the contract price as has not been paid.
The parties submitted the case to an auditor, who determined that the Nursing Home had fulfilled all of its contractual obligations to Dix, and that Dix had breached the contract by failing to complete the contract within the time agreed. However, there were “no compensable damages” as a result of the breach because the Nursing Home’s cost to complete the facility was within the contract price, less what had been paid to Dix. The Nursing Home objected that the “no compensable damages” test was incorrect, and that the proper rule was the difference between the value of the building as left by Dix and what the value would have been if the contract was fully performed. The Nursing Home also contended it was entitled to recover damages for the delay in construction.
What is the proper measure of damages for a defendant’s failure to complete its obligations in a construction contract?
In assessing damages for failure to complete a construction project the measure of the plaintiff’s damages, in the absence of other elements of damage, can only be in the amount of the reasonable cost of completing the contract and repairing the defendant’s defective performance, less such part of the contract price as has not been paid.
There was no specific evidence that the Nursing Home suffered damages as a result of the delay, so it could not recover.
The fundamental principal is compensation. Compensation is for the value of the contract if fully performed. “The plaintiff is entitled to be made whole and no more.”