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

California Civil Jury Instructions CACI

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

If you decide that [name of plaintiff] has proved [his/her/nonbinary pronoun/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.

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 Bender)
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)
Miller & Starr, California Real Estate 4th, §§ 27:106, 27:107, 29:10 (Thomson Reuters)
Acret, California Construction Law Manual (6th ed) §§ 1:71, 1:72 (Thomson Reuters)
Bruner & O’Connor on Construction Law, § 19:56 (Thomson Reuters)