CACI 4530 Owner’s Damages for Breach of Construction Contract—Work Does Not Conform to Contract
California Civil Jury Instructions CACI
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/nonbinary pronoun] 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.
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 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 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.)