Brief Fact Summary.
Plaintiff sued to recover damages from Defendant when Defendant failed to pay for Plaintiff’s services. The trial court ruled in favor of Plaintiff. Defendant appealed.
Synopsis of Rule of Law.
In a breach by a person who has contracted to have services performed, damages paid to the service provider may include actual expenditures plus profits that would have been realized from full performance.
In 1973, Nationwide Tractor Trailer Training and Placement Corp. (Defendant) contracted to have Aiello Construction, Inc. (Plaintiff) level a gravel yard for use in Defendant’s business. The contract provided that Defendant would pay Plaintiff a sum of $33,000 in five monthly installments of $6,600 each. Defendant paid the first installment but did not pay any additional installments. However, Defendant made a series of partial payments that, when combined with the first installment, totaled $10,500. Plaintiff sued to recover damages from Defendant. The trial judge awarded damages to Plaintiff based on reimbursement for expenditures already made, minus Defendant’s previous payments. Additionally, the trial judge awarded Plaintiff the profits it would have realized for full performance plus interest. The total sum of damages awarded to Plaintiff was $16,800. Defendant appealed.
Whether the appropriate remedy for a breach by a person who has contracted to have services performed may encompass reimbursement to the services provider of expenditures plus payment for profits that would have been realized from full performance.
Yes. The trial court’s ruling is affirmed. In a breach by a person who has contracted to have services performed, damages paid to the service provider may include actual expenditures plus profits that would have been realized from full performance.
The defendant's theory falls short and plaintiff's hits the mark, however, for an owner or prime contractor who fails to pay an installment due on a construction contract is guilty of a breach that goes to the essence of the contract and that entitles the injured party to bring an action based on a quantum meruit theory for the fair and reasonable value of the work done.View Full Point of Law
The trial judge, in assessing damages payable to Plaintiff by calculating reimbursement for expenditures plus payment for profits that would have been realized by full performance, chose the most appropriate remedy for this factual situation. The rule from George v. George F. Berkander, Inc., 169 A.2d 370 (1961) states that the rule of damages for breach of contract would be such “as will serve to put the injured party as close as is reasonably possible to the position he would have been in had the contract been fully performed.” Plaintiff already spent $21,500 on materials and labor in furtherance of the contract. Additionally, if full performance had been realized pursuant to the contract, Plaintiff would have earned $3,000. From this sum, the trial judge appropriately deducted the $10,500 already paid by Defendant, leaving a judgment of $14,000 payable to Plaintiff. Finally, this amount was overdue to Plaintiff, and thus the trial judge appropriately assigned a rate of eight percent interest per year from the time of filing of the complaint to the date of judgment. The final amount of $16,800 accurately takes into account all factors necessary for putting Plaintiff as close as reasonably possible to the position it would have been in had the contract been fully performed.