California Civil Jury Instructions (CACI) (2017)

4530. Owner’s Damages for Breach of Construction Contract—Work Does Not Conform to Contract

Download PDF
4530.Owner’s Damages for Breach of Construction
Contract—Work Does Not Conform to Contract
If you decide that [name of plaintiff] has proved [his/her] claim against
[name of defendant] for failure to properly build the [project/describe
construction project, e.g., apartment building], you also must decide how
much money will reasonably compensate [name of plaintiff] for the
harm. This compensation is called “damages.”
To recover damages, [name of plaintiff] must prove the reasonable cost of
repairing the [project/short term for project, e.g., building] so that it
complies with the terms of the contract, including the plans and
specifications, agreed to by the parties.
If, however, [name of defendant] proves that the cost of repair is
unreasonable in light of the damage to the property and the property’s
value after repair, then [name of plaintiff] is entitled only to the
difference between the value of the [project/short term for project, e.g.,
remodeling] as it was performed by [name of defendant] and what it
would be worth if it had been completed according to the contract,
including the plans and specifications, agreed to by the parties. The cost
of repair may be unreasonable if the repair would require the
destruction of a substantial part of [name of defendant]’s work.
New December 2010
Directions for Use
This instruction should be used when the owner claims that the contractor has
breached the construction contract by failing to meet the requirements of the
contract or its plans and specifications. If the owner claims that the contractor
breached the contract by failing to complete all work required by the contract, see
CACI No. 4531, Owner’s Damages for Breach of Construction Contract—Failure
to Complete Work.
The basic measure of damages is the cost of repair to bring the project into
compliance with the contract. (Glendale Fed. Sav. & Loan Assn. v. Marina View
Heights Dev. (1977) 66 Cal.App.3d 101, 123–124 [135 Cal.Rptr. 802].) However,
the contractor may attempt to prove that the cost of repair is unreasonable in light
of the damage to the property and the value of the property after repair. (Orndorff
v. Christiana Community Builders (1990) 217 Cal.App.3d 683, 687 [266 Cal.Rptr.
193]; see Shell v. Schmidt (1958) 164 Cal.App.2d 350, 366 [330 P.2d 817] [burden
of proof on contractor].) If the cost of repair is unreasonable, the measure of
damages is the diminution in the value of the property because of the defective
work. (Shell,supra, 164 Cal.App.2d at pp. 360–361.)
There is no cap, however, at diminution of value. The cost of repair may be
1151
0039
awarded even if greater than diminution in value if the owner has a personal reason
for wanting to repair and the costs are not unreasonable in light of the damage to
the property and the value after repair (Orndorff,supra, 217 Cal.App.3d at p. 687.)
For a related instruction on damages for tortious injury to property, see CACI No.
3903F, Damage to Real Property (Economic Damage). For additional instructions
on contract damages generally, see CACI No. 350 et seq. in the Contracts series.
Sources and Authority
• Damages for Breach of Contract. Civil Code section 3300.
Damages Must Be Reasonable. Civil Code section 3359.
• “The available damages for defective construction are limited to the cost of
repairing the home, including lost use or relocation expenses, or the diminution
in value.” (Erlich v. Menezes (1999) 21 Cal.4th 543, 561 [87 Cal.Rptr.2d 886,
981 P.2d 978].)
• “The proper measure of damages for breach of a contract to construct
improvements on real property where the work is to be done on plaintiff’s
property is ordinarily the reasonable cost to the plaintiff of completing the work
and not the difference between the value of the property and its value had the
improvements been constructed. A different rule applies, however, where
improvements are to be made on property not owned by the injured party. ‘In
that event the injured party is unable to complete the work himself and, subject
to the restrictions of sections 3300 and 3359 of the Civil Code, the proper
measure of damages is the difference in value of the property with and without
the promised performance, since that is the contractual benefit of which the
injured party is deprived.’ ” (Glendale Fed. Sav. & Loan Assn.,supra, 66
Cal.App.3d at pp. 123–124, internal citations omitted.)
• “[E]ven where the repair costs are reasonable in relation to the value of the
property, those costs must also be reasonable in relation to the harm caused.
Here the trial court’s finding that fill settlement was likely to continue and the
[plaintiff]s’ appraiser’s opinion the home was worth only $67,500 in its present
condition, suggest the damage sustained was indeed significant. Plainly this is
not a case where the tortfeasors’ conduct improved the value of the real
property or only diminished it slightly. Rather we believe where, as here, the
damage to a home has deprived it of most of its value, an award of substantial
repair costs is appropriate.” (Orndorff,supra, 217 Cal.App.3d at pp. 690–691.)
• “[T]he defendant did not prove, or offer to prove, the other factors of the
American Jurisprudence rule, to wit: ‘a substantial part of what has been done
must be undone.’ To the contrary, defendant’s expert witness . . . testified that
it would not be necessary to undo any of the work. [¶ ] As quoted, Professor
Corbin argues that the burden is on the defendant to affirmatively and
convincingly prove that economic waste would result from the replacement of
the omissions and defects. In all fairness this would appear proper as it is the
defendant who is seeking to prove a situation whereby he will get equitable
CACI No. 4530 CONSTRUCTION LAW
1152
0040
relief from a rule of law. The same reasoning would apply as to proof that a
substantial part of what has been done must be undone.” (Shell,supra, 164
Cal.App.2d at p. 366.)
Secondary Sources
1 Witkin, Summary of California Law (10th ed. 2005) Contracts, § 909
1California Construction Contracts, Defects, and Litigation (Cont.Ed.Bar) Ch. 5,
Private Contracts: Disputes and Remedies, § 5.90 et seq.
2 California Construction Contracts, Defects, and Litigation (Cont.Ed.Bar) Ch. 9,
Handling Disputes During Construction, §§ 9.92–9.93
2 Stein, Construction Law, Ch. 5B, Contractor’s and Construction Manager’s
Rights and Duties, ¶ 5B.01 (Matthew Bender)
10 California Forms of Pleading and Practice, Ch. 104, Building Contracts,
§ 104.25 (Matthew Bender)
15 California Forms of Pleading and Practice, Ch. 177, Damages, § 177.47
(Matthew Bender)
10 Miller & Starr, California Real Estate, Ch. 27, Construction Law and
Contracting, § 27:99 (Thomson Reuters 3d ed.)
11 Miller & Starr, California Real Estate, Ch. 29, Defective Construction, §§ 29:3,
29:10 (Thomson Reuters 3d ed.)
Acret, California Construction Law Manual, Ch. 1, Contracts, §§ 1:71, 1:72
(Thomson Reuters 6th ed. 2005)
6 Bruner & O’Connor on Construction Law, Ch. 19, Remedies and Damage
Measures, §§ 19:57–19:61 (Thomson Reuters 2002)
CONSTRUCTION LAW CACI No. 4530
1153
0041