California Civil Jury Instructions (CACI) (2017)

4541. Contractor’s Damages for Breach of Construction Contract—Change Orders/Extra Work—Total Cost Recovery

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4541.Contractor’s Damages for Breach of Construction
Contract—Change Orders/Extra Work—Total Cost Recovery
[Name of plaintiff] claims that [name of defendant] breached the parties’
contract by increasing or changing the scope of the [project/describe
construction project, e.g., apartment building] beyond what was required
by the contract. [Name of plaintiff], therefore, seeks to recover the total
cost of all of [his/her/its] work on the [project/e.g., apartment building].
In order to recover the total cost of all of [his/her/its] work, [name of
plaintiff] must prove all of the following:
1. That the scope of work under the original contract had been
altered by the changes so much that the final project was
significantly different from the original project;
2. That because of the scope of the changes, it is not practical to
prove the actual additional costs caused by each change
demanded by [name of defendant];
3. That [name of plaintiff]’s original bid that was accepted by [name
of defendant] was reasonable;
4. That [name of plaintiff]’s actual costs were reasonable; and
5. That [name of plaintiff] was not responsible for incurring the
additional costs.
If you find that [name of plaintiff] has established all of the above,
determine [name of plaintiff]’s damages by subtracting the contract price
from the total cost of [name of plaintiff]’s performance of the work.
New December 2010
Directions for Use
This instruction should be used in an action by the contractor against the owner if
the contractor claims that changes demanded by the owner were such that damages
must be measured by computing the total cost to the contractor to complete the
contract minus the contract price. (Cf. CACI No. 4540, Contractor’s Damages for
Breach of Construction Contract—Change Orders/Extra Work.) The difference is
then considered to be the costs associated with all of the changes. For an
instruction on quantum meruit recovery under the related but different theory of
contract abandonment, see CACI No. 4542, Contractor’s Damages for Abandoned
Construction Contract—Quantum Meruit Recovery.
For additional instructions on contract damages generally, see CACI No. 350 et
seq. in the Contracts series.
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Sources and Authority
• “Under [the total-cost] method, damages are determined by ‘subtracting the
contract amount from the total cost of performance.’ ” (Amelco Electric v. City
of Thousand Oaks (2002) 27 Cal.4th 228, 243 [115 Cal.Rptr.2d 900, 38 P.3d
1120].)
• “Although not favored, the total cost method—along with its subcategory, the
modified total cost method—has been recognized in California as an appropriate
way of computing damages.” (JMR Construction Corp. v. Environmental
Assessment & Remediation Management, Inc. (2015) 243 Cal.App.4th 571, 589
[198 Cal.Rptr.3d 47].)
• “[T]o invoke the total cost method for recovering damages, a contractor must
establish ‘(1) the impracticality of proving actual losses directly; (2) [its] bid
was reasonable; (3) its actual costs were reasonable; and (4) it was not
responsible for the added costs.’ ” (JMR Construction Corp. supra, 243
Cal.App.4th at p. 589].)
• “If some of the contractor’s costs were unreasonable or caused by its own
errors or omissions, then those costs are subtracted from the damages to arrive
at a modified total cost. ‘If prima facie evidence under this test is established,
the trier of fact then applies the same test to determine the amount of total cost
or modified total cost damages to which the plaintiff is entitled.’ ” (Dillingham-
Ray Wilson v. City of Los Angeles (2010) 182 Cal.App.4th 1396, 1408 [106
Cal.Rptr.3d 691], internal citations omitted.)
• “ ‘The total cost method is not a substitute for proof of causation,’ and ‘should
be applied only to the smallest affected portion of the contractual relationship
that can be clearly identified.’ As the United States Court of Appeals for the
Federal Circuit has stated, ‘Clearly, the “actual cost method” is preferred
because it provides the court . . . with documented underlying expenses,
ensuring that the final amount of the equitable adjustment will be just
that—equitable—and not a windfall for either the government or the
contractor.’ ” (Amelco Electric,supra, 27 Cal.4th at p. 244, internal citations
omitted.)
• “We conclude [plaintiff] failed to adduce substantial evidence to warrant
instructing the jury on the four-part total cost theory of damages. In particular,
[plaintiff] failed to adduce evidence to satisfy at least the fourth element of the
four-part test, i.e., that it was not responsible for the added expenses. A
corollary of this element of the test is that the contractor must demonstrate the
defendant, and not anyone else, is responsible for the additional cost.” (Amelco
Electric,supra, 27 Cal.4th at p. 245.)
• “[W]e do not determine whether total cost damages are ever appropriate in a
breach of public contract case . . . .” (Amelco Electric,supra, 27 Cal.4th at p.
242.)
Secondary Sources
CACI No. 4541 CONSTRUCTION LAW
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1 Witkin, Summary of California Law (10th ed. 2005) Contracts, § 910
1 California Construction Contracts, Defects, and Litigation (Cont.Ed.Bar) Ch. 5,
Private Contracts: Disputes and Remedies, § 5.108
1 California Construction Contracts, Defects, and Litigation (Cont.Ed.Bar) Ch. 6,
Public Contracts: Disputes and Remedies, § 6.72
3 Stein, Construction Law, Ch. 11, Remedies and Damages, ¶ 11.02 (Matthew
Bender)
12 California Real Estate Law and Practice, Ch. 440, Construction Contract
Remedies, § 440.14 (Matthew Bender)
10 California Forms of Pleading and Practice, Ch. 104, Building Contracts,
§ 104.14 (Matthew Bender)
Miller & Starr California Real Estate 4th, Ch. 31, Construction Law and
Contracting, § 31.70 (Thomson Reuters)
Acret, California Construction Law Manual (6th ed. 2005) Ch. 7, Public Contracts,
§ 7:93 (Thomson Reuters)
Bruner & O’Connor on Construction Law (2002) Ch. 19, Remedies and Damage
Measures, §§ 19:39, 19:94–19.95 (Thomson Reuters)
CONSTRUCTION LAW CACI No. 4541
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