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Where the defect arising from a breach of the contract is so substantial as to render a finished building partially unusable and unsafe, the measure of damage is the market price of completing or correcting the performance.
Plaintiff homeowners instituted an action against the defendant builder, alleging that the latter breached the parties’ contract in the construction of an addition to the homeowners’ home. At trial, plaintiffs produced two experts who testified that defendant failed to construct the addition in a good and workmanlike manner. They further testified that the inadequate structural support of the addition rendered unusable the third floor of the addition. The district court awarded damages to the plaintiffs for the difference between the market value of the structure had it been completed pursuant to the terms of the contract and the market value of the structure as actually completed. On appeal, defendant challenged the judgment award, arguing that the record did not support the court’s award for diminution in value.
Under the circumstances, were the damages improperly computed by the district court?
The court determined that damages were improperly calculated. The court held that the record did not support the court's award for diminution in value, because no such proof was presented. The court held that because the defect that arose from the breach of the contract was so substantial as to render the finished building partially unusable and unsafe, the measure of damage was the market price of completing or correcting the performance.