Ficara v. Belleau

Supreme Judicial Court of Massachusetts · Contracts

Contractscontractsdamagesconstruction contractswilful breachabandonmentcost of completioncompensatory damages

Facts

The defendants agreed in writing to install a heating and cooling system for the plaintiff for a contract price of $6,200. The plaintiff paid the defendants $4,200 before they intentionally and wilfully abandoned the contract. The plaintiff then reasonably paid another contractor $2,361 to complete the remaining work. The auditor found those facts and concluded that the plaintiff was entitled to recover $2,361.

Issue

When a contractor wilfully abandons a construction contract after partial payment, may the owner recover the full reasonable cost of completion without crediting the unpaid balance of the contract price, or is recovery limited to compensatory damages measured by the cost of completion less the unpaid contract price?

Rule

For breach of a contract to construct a specified product, the injured party may recover compensatory damages for all unavoidable foreseeable harm, and for unfinished construction the measure is the reasonable cost of construction and completion in accordance with the contract, if possible and without unreasonable economic waste, less the part of the contract price that has not been paid and is not still payable. Even for a wilful breach, contract damages are compensatory only and may not place the plaintiff in a better position than full performance would have done.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Portland, Maine, Nora Kim hired Seabright Mechanical Works to install a custom ventilation system in her bakery for $18,000. Nora paid $11,000 before Seabright intentionally walked off the job, and she then reasonably paid Pine Harbor Service Group $9,500 to complete the work according to the contract.

If Nora sues Seabright for breach, what is the proper measure of her damages under the governing rule?

Explanation. For unfinished construction, the owner's damages are compensatory only: the reasonable cost of completion in accordance with the contract, if possible and without unreasonable economic waste, less the unpaid portion of the contract price. Here, completion cost was $9,500 and the unpaid contract balance was $7,000, so recoverable damages are $2,500. A wilful breach does not justify a windfall or exemplary damages.