CACI 4544 Contractor’s Damages for Breach of Construction Contract—Inefficiency Because of Owner Conduct

California Civil Jury Instructions CACI

4544 Contractor’s Damages for Breach of Construction Contract—Inefficiency Because of Owner Conduct

[Name of plaintiff] claims that [name of defendant] breached the parties’ contract by [delaying/disrupting/ [or] interfering with] [name of plaintiff]’s work, causing [name of plaintiff]’s work to be less efficient than it would have been. If you find that [name of defendant] [delayed/disrupted/ [or] interfered with] [name of plaintiff]’s work, you may award damages to [name of plaintiff] for all harm caused by the [delay/disruption/ [or] interference].

You may also award damages for lost profits that [name of plaintiff] would have received from other jobs but for the [delay/disruption/ [or] interference]. To recover damages for lost profits, [name of plaintiff] must prove the following:

1.That it is reasonably certain that [name of plaintiff] would have earned those profits but for [name of defendant]’s [delay/disruption/ [or] interference]; and

2.That it was [actually foreseen/reasonably foreseeable] at the time the parties entered into the contract that [name of plaintiff] would have earned those profits.

The amount of lost profits must be proved to a reasonable certainty. Damages for lost profits that are speculative or remote cannot be recovered.

Directions for Use

This instruction should be used in an action by the contractor against the owner for economic loss incurred because the owner delayed, disrupted, or interfered with the contractor’s work in a way that caused the contractor calculable economic loss.

Lost profits from other work that the contractor could have earned but for the owner’s breach are special damages, which must have been either actually foreseen or reasonably foreseeable to the parties at the time when the contract was entered into. (Lewis Jorge Construction Management, Inc. v. Pomona Unified School Dist. (2004) 34 Cal.4th 960, 977 [22 Cal.Rptr.3d 340, 102 P.3d 257].) In element 2, select either “actually foreseen” or “reasonably foreseeable” depending on what was communicated when the contract was signed.

For additional instructions on contract damages generally, see CACI No. 350 et seq. in the Contracts series. See particularly CACI No. 351, Special Damages.

Sources and Authority

“Lost anticipated profits cannot be recovered if it is uncertain whether any profit would have been derived at all from the proposed undertaking. But lost prospective net profits may be recovered if the evidence shows, with reasonable certainty, both their occurrence and extent. It is enough to demonstrate a reasonable probability that profits would have been earned except for the defendant’s conduct. The plaintiff has the burden to produce the best evidence available in the circumstances to attempt to establish a claim for loss of profits.” (S. C. Anderson v. Bank of America (1994) 24 Cal.App.4th 529, 536 [30 Cal.Rptr.2d 286], internal citations omitted.)

“Unearned profits can sometimes be used as the measure of general damages for breach of contract. Damages measured by lost profits have been upheld for breach of a construction contract when the breaching party’s conduct prevented the other side from undertaking performance. The profits involved in [the cases cited], however, were purely profits unearned on the very contract that was breached.” (Lewis Jorge Construction Management, Inc.supra, 34 Cal.4th at p. 971, internal citations omitted.)

“Lost profits, if recoverable, are more commonly special rather than general damages, and subject to various limitations. Not only must such damages be pled with particularity, but they must also be proven to be certain both as to their occurrence and their extent, albeit not with ‘mathematical precision.’ ‘When the contractor’s claim is extended to profits allegedly lost on other jobs because of the defendant’s breach’ that ‘claim is clearly a claim for special damages.’ ” (Lewis Jorge Construction Management, Inc.supra, 34 Cal.4th at p. 975, original italics, internal citations omitted.)

“It is indisputable that the [defendant]’s termination of the school construction contract was the first event in a series of misfortunes that culminated in [plaintiff]’s closing down its construction business. Such disastrous consequences, however, are not the natural and necessary result of the breach of every construction contract involving bonding. Therefore, … lost profits are not general damages here. Nor were they actually foreseen or foreseeable as reasonably probable to result from the [defendant]’s breach. Thus, they are not special damages in this case.” (Lewis Jorge Construction Management, Inc., supra, 34 Cal.4th at p. 977.)

“As to the reasonableness of the assumptions underlying the experts’ lost profit analysis, criticisms of an expert’s method of calculation is a matter for the jury’s consideration in weighing that evidence. ‘It is for the trier of fact to accept or reject this evidence, and this evidence not being inherently improbable provides a substantial basis for the trial court’s award of lost profits … .’ ” (Arntz Contracting Co. v. St. Paul Fire & Marine Ins. Co. (1996) 47 Cal.App.4th 464, 489–490 [54 Cal.Rptr.2d 888], internal citations omitted.)

“Overhead expense allocable to the period of delay is allowed to the extent the evidence shows an increase in overhead because of the breach; or where other jobs, but for the delay, would have been obtained to absorb such overhead.” (A. A Baxter Corp. v. Colt Industries, Inc. (1970) 10 Cal.App.3d 144, 158 [88 Cal.Rptr. 842], internal citations omitted.)

Secondary Sources

1 Witkin, Summary of California Law (11th ed. 2017) Contracts, § 907
3 Stein, Construction Law, Ch. 11, Remedies and Damages, ¶ 11.02 (Matthew Bender)
15 California Forms of Pleading and Practice, Ch. 177, Damages, § 177.79 (Matthew Bender)
6 California Points and Authorities, Ch. 65, Damages: Contract, § 65.21 (Matthew Bender)
Matthew Bender Practice Guide: California Contract Litigation, Ch. 7, Seeking or Opposing Damages in Contract Actions, 7.04
Acret, California Construction Law Manual (6th ed.) § 1:82 (Thomson Reuters)
Bruner & O’Connor on Construction Law, §§ 19:87–19:90 (Thomson Reuters)