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City Sch. Dist. v. McLane Constr. Co. - 85 A.D.2d 749, 445 N.Y.S.2d 258 (App. Div. 1981)


Where the contractor's performance has been incomplete or defective, the usual measure of damages is the reasonable cost of replacement or completion. The rule does not apply if the contractor performs in good faith but defects nevertheless exist and remedying them could entail economic waste. Then, diminution in value becomes the proper measure of damages.


Plaintiff, City School District of the City of Elmira, contracted with defendant, McLane Construction Company, Inc., for the construction of a swimming pool building which was to feature a roof consisting of natural wood decking supported by laminated wood beams. The appearance of the beams was central to the aesthetics of the architectural scheme.Defendant McLane contracted with defendant M. Matri & Sons, Inc., to supply and erect the beams. Matri in turn purchased them from Defendant Weyerhaeuser Company at a contract price of $ 116,000. Though aware of the plans and specifications, Weyerhaeuser subcontracted for a method of treating the beams, which it knew would result in staining and discoloration. There was also evidence that Weyerhaeuser failed to have the beams cleaned before the subcontractor treated them and as a consequence dirt permeated the wood. When the beams arrived in Elmira, Weyerhaeuser's representative assured the school district that the clearly observable discoloration was merely road grime that could be cleaned. Based on these assurances, Plaintiff Elmira accepted them, but it soon became apparent that the beams were permanently discolored. This litigation ensued. The jury's verdict was in an amount equaling the total cost of replacing the unsightly beams, which awarded $357,000 to plaintiff school district against Weyerhaeuser, $33,500 in favor of McLane against Weyerhaeuser, $3,200 in favor of Matri against McLane. The only issue of consequence on appeal was the proper measure of the school district's damages. 


Was the award of damages equivalent to the replacement of defective beams of plaintiff school district proper?




The appellate court affirmed the trial court's decision awarding the customer damages equal to the cost of repair. The court held that the defect, in relation to the entire project, was not of inappreciable importance. One of the school district's principle objectives was to have an aesthetically prepossessing structure, and that goal had been frustrated.

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