Advanced, Inc. v. Wilks - 711 P.2d 524 (Alaska 1985)

Rule:

An owner's recovery is not necessarily limited to diminution in value whenever that figure is less than the cost of repair. The fact finder is the one in the best position to determine whether the owner will actually complete performance, or whether he is only interested in obtaining the best immediate economic position he can. Where the property is held solely for investment, the court may conclude as a matter of law that the damage award can not exceed the diminution in value. Where, however, the property has special significance to the owner and repair seems likely, the cost of repair may be appropriate even if it exceeds the diminution in value.

Facts:

In June of 1980, Advanced, Inc. (Advanced) contracted with Michael and Jody Wilks to construct an elliptical earth-sheltered concrete house. The original contract price was $81,875.00. The Wilks were not satisfied with the workmanship and thereafter brought suit against Advanced for breach of contract, breach of warranty, and violation of the Unfair Trade Practices and Consumer Protection Act, AS 45.50.471. The jury returned a special verdict in favor of the Wilks, awarding damages of $150,402.75. On appeal, Advanced argued that the jury’s damage award was excessive and based on erroneous instructions. Advanced argued that the jury should have used the value measure of damages and awarded the difference between the value of the house as promised and the present value of the house.

Issue:

Was the award of damages in favor of the Wilks excessive under the circumstances?

Answer:

No

Conclusion:

The Court held that the cost of completion or repair was the preferred measure for calculating damages when a building contractor breached a construction contract by incomplete or defective performance. In this case, the jury specifically found that Advanced had not substantially performed, and that it would not be impractical and grossly wasteful for the Wilks to repair the house. The jury also found, in accordance with the Wilks' testimony, that the value of the house without any defects would be between $150,000-$160,000. Anent Advanced’s contention that the value measure of damages should be the difference between the value of the house as promised and the present value of the house, the Court determined that the jury correctly found that it could not determine the value of the house when constructed without resorting to impermissible speculation. Accordingly, the Court affirmed the judgment in favor of the Wilks.