California Civil Jury Instructions (CACI) (2017)

4531. Owner’s Damages for Breach of Construction Contract—Failure to Complete Work

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4531.Owner’s Damages for Breach of Construction
Contract—Failure to Complete Work
If you decide that [name of plaintiff] has proved [his/her/its] claim
against [name of defendant] for failure to complete the [project/describe
construction project, e.g., kitchen remodeling], 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
completing the [project/short term for project, e.g., remodeling] so that it
complies with the terms of the contract, including the plans and
specifications, agreed to by the parties.
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 complete all the work required by
the contract. For an instruction for use if the owner claims that the contractor
breached the contract by failing to complete the work in conformity with the
contract, see CACI No. 4530, Owner’s Damages for Breach of Construction
Contract—Work Does Not Conform to Contract.
The basic measure of damages for failing to complete a construction project is
ordinarily the reasonable cost to the owner of completing the work. (Glendale Fed.
Sav. & Loan Assn. v. Marina View Heights Dev. Co. (1977) 66 Cal.App.3d 101,
123 [135 Cal.Rptr. 802].) With regard to defective or nonconforming work, the
contractor may attempt to prove that the cost or repair is unreasonable in light of
the damage to the property and the value of the property after repair. 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 v. Schmidt (1958) 164
Cal.App.2d 350, 366 [330 P.2d 817]; see also Orndorff v. Christiana Community
Builders (1990) 217 Cal.App.3d 683, 687 [266 Cal.Rptr. 193] [cost of repair may
exceed diminution in value if owner has personal reason for wanting repairs].)
No reported case has been found that applies a reasonableness limitation on the
cost of completing a contract, though the Restatement Second of Contracts requires
that the cost of completion not be clearly disproportionate to the probable loss in
value. (See Rest.2d of Contracts, § 348(2).) The last paragraph of CACI No. 4530
may be adapted to provide for a reasonableness limitation on cost of repair. There
may, however, be different concerns regarding the cost of completing a contract as
opposed to the cost of repairing construction defects. It might be argued that the
owner is entitled to have the work completed as required by the contract, regardless
of any unexpected increases in the cost of completion.
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 measure of damages for breach of contract to construct improvements on
real property where the work is to be done on plaintiff’s property is the
reasonable cost to the plaintiff to finish the work in accordance with the
contract.” (Walker v. Signal Companies, Inc. (1978) 84 Cal.App.3d 982, 993
[149 Cal.Rptr. 119].)
• “Although the defendants inferentially contend to the contrary, the plaintiff was
entitled to recover damages from them for their breach of the contract even
though [plaintiff] had not completed the work in question.” (Fairlane Estates,
Inc. v. Carrico Constr. Co. (1964) 228 Cal.App.2d 65, 72–73 [39 Cal.Rptr. 35].)
• Restatement Second of Contracts, section 348(2) provides: “If a breach results
in defective or unfinished construction and the loss in value to the injured party
is not proved with sufficient certainty, he may recover damages based on: (a)
the diminution in the market price of the property caused by the breach, or (b)
the reasonable cost of completing performance or of remedying the defects if
that cost is not clearly disproportionate to the probable loss in value to him.”
Secondary Sources
1 California Construction Contracts, Defects, and Litigation (Cont.Ed.Bar) Ch. 5,
Private Contracts: Disputes and Remedies, § 5.96
3 Stein, Construction Law, Ch. 11, Remedies and Damages, ¶ 11.02 (Matthew
10 California Forms of Pleading and Practice, Ch. 104, Building Contracts,
§ 104.256 (Matthew Bender)
5 California Points and Authorities, Ch. 50, Contracts, § 50.41 (Matthew Bender)
10 Miller & Starr, California Real Estate, Ch. 27, Construction Law and
Contracting, §§ 27:106, 27:107 (Thomson Reuters 3d ed.)
11 Miller & Starr, California Real Estate, Ch. 29, Defective Construction, § 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, § 19:56 (Thomson Reuters 2002)