Opinion
C.A. No. 06C-02-030 WLW.
Submitted: July 25, 2006.
Decided: October 25, 2006.
John E. Tarburton, Esquire of Procino Tarburton, LLP, Seaford, Delaware; attorneys for the Plaintiff.
Randy Oswald t/a R-K Masonry, pro se.
ORDER Upon Plaintiff's Application for Damages. Deferred for Further Submissions.
Plaintiff, D. Lee Leary, filed a complaint against Defendant, Randy Oswald (t/a R-K Masonry), on February 17, 2006 for Breach of Contract, violation of the Buyer Property Protection Act, Consumer Fraud, Negligence, Breach of Implied Warranty, Trespass, and Conversion arising out of the Defendant's defective construction of a garage on Plaintiff's property. The Defendant failed to file an answer or otherwise attempt to defend the action. Plaintiff filed a Motion for Entry of Default Judgement on May 6, 2006, and a hearing on the Motion occurred on June 16, 2006. The Defendant failed to appear at the scheduled hearing, and this Court granted Plaintiff's Motion for Entry of Default Judgement. The Court further directed the Plaintiff to submit an affidavit specifying damages. An inquisition hearing was scheduled for July 21, 2006, and both parties failed to appear at the hearing. Consequently, the Court determined that it would attempt to decide the issue of damages on the papers filed.
The Court will adopt the facts set forth in the Complaint concerning the Plaintiff's underlying cause of action, pursuant to Superior Court Civil Rule 8(d) , due to the Defendant's failure to submit a responsive pleading. The salient facts are as follows: On or about July 11, 2005, the parties entered into an agreement which called for the Defendant to construct a three car garage on Plaintiff's real property. Construction began on July 13, 2005 and was to take no longer than one week. Construction of the garage took over one month. The constructed garage contains the following defects: The building is not square and is 5 and 3/8 inches off plumb at the top of the wall. The garage doors fail to close flush with the floor, as a result of the defect, causing rainwater to leak inside. Also, the defect prohibits the doors and windows from being installed. The concrete garage floor is not level and has blade cuts and lumps throughout the floor. The soil beneath the floor was not tamped down prior to the concrete being poured. There are three seams in a row in the blocks over the garage's side door, and there is no rebar or wire in the blocks. The Plaintiff claims that the structure is useless for the purpose for which it was constructed, and that it does not conform with the Sussex County building code. The Defendant has been paid in full for the construction of the garage. The Defendant has refused numerous times to return to the site and refused to reimburse the Plaintiff pursuant to the Plaintiff's requests. The Plaintiff's affidavit specifying damages focuses on recovery for Defendant's breach of contract.
Super. Ct. Civ. R. (8)(d) in relevant part states: Averments in a pleading to which a responsive pleading is required, other than those as to the amount of damage, are admitted when not denied in the responsive pleading.
The Plaintiff paid $8,800 to the Defendant for construction of the garage.
Standard
The standard remedy for breach of contract is based upon the reasonable expectations of the parties ex ante. This principle of expectation damages is measured by the amount of money that would put the promisee in the same position as if the promisor had performed the contract. Specifically, when there is a breach of contract involving improvements to real property, the basic measure of damages is the amount required to remedy the defect by replacement or repair, unless the amount is disproportionate to the probable loss in value or it constitutes economic waste. If the remedy is disproportionate to the probable loss in value or if it constitutes economic waste , then the proper measure of damages may be diminution in value. In other words, when there is a tremendous disparity between restoration cost and the diminished value of the property, diminution in value may be an appropriate measure of damages. However, the courts may diverge from a strict application of this formula in order to achieve a just and reasonable result. In particular, the courts may allow a party to provide a substitute remedy which will produce a result similar in value to the result for which the aggrieved party contracted. Damages for breach of contract are confined to such damages as may fairly and reasonably be considered as arising naturally from such breach itself.
Duncan v. TheraTx, Inc., 775 A.2d 1019, 1022 (Del. 2001).
Id.
Shipman v. Hudson, 1995 WL 109009, *5 (Del.Super.).
Economic waste exists when the repairs will result "in undue loss or expenses . . . an expenditure for reconstruction disproportionate to the end to be obtained or endangering unduly other parts of the building . . . " Council of Unit Owners of Sea Colony East, Phase II Condominium v. Carl M. Freeman Associates, Inc., 564 A.2d 357, 361 (Del.Super. 1989).
Shipman, 1995 WL 109009 at *5.
Carl M. Freeman Associates, Inc., 564 A.2d at 361.
Shipman, 1995 WL 109009 at *5.
Id.
Clemens v. Western Union Telegraph Co., 28 A.2d 889, 890 (Del.Super. 1942).
Discussion
The Plaintiff paid $8,800 to the Defendant for construction of a three car garage, and the garage was defectively constructed for the reasons discussed above. The Plaintiff submitted an affidavit specifying damages pursuant to this Court's request. The Plaintiff attached two estimates to the affidavit showing price quotations for removal and replacement of the defective garage. The first estimate quotes a price of $40,000 for removal and replacement of the garage, and the second estimate quotes a price of $52,000 for the same. The second estimate also contains a $5,392.50 price quote for an "Option #1". The Plaintiff fails to explain to the Court the extent that "Option #1" may be able to correct deficiencies in the garage. It appears to the Court that "Option #1" may quote the cost of repairing the garage's defects. Neither price quotation is itemized, so the Court cannot distinguish between the separate cost of (1) removing the current garage and (2) rebuilding a new garage. Both quotes simply have a total for the combined tasks of removing and rebuilding. Also, neither estimate expressly addresses the cost of repairing the current defective garage. The Plaintiff believes that the higher price quote is more realistic, so they ask for $52,000 plus $8,800 for the initial cost of construction equaling $60,800 in total damages.The Plaintiff can recover on a breach of contract theory, because the Defendant constructed a defective garage on Plaintiff's property in breach of the parties' contract. The basic measure of the Plaintiff's damages is the amount required to remedy the defect by replacement or repair, unless the amount is disproportionate to the probable loss in value. The Court lacks concrete evidence concerning the cost to repair the current garage, although "Option #1" appears to address the cost of repair. Damages equal to the cost of repairing the defective garage is the most preferable amount to award the Plaintiff. Repairment of the garage would put the Plaintiff in the same position they would have been in had the Defendant properly performed his contractual duties. If "Option #1" is an accurate estimate concerning the cost to repair the current garage, then the $5,392.50 would be an appropriate amount of damages to award the Plaintiff. If "Option#1" is an inaccurate representation of the cost to repair the current garage, then the Court would like the Plaintiff to submit accurate information addressing the cost to repair the garage's defective condition.
Replacement of the current garage, by removal of the defective garage and construction of a new garage, would cost either $40,000 or $52,000 pursuant to the Plaintiff's price quotations. If replacement (removal and rebuilding), and not repairment, is the only adequate way to remedy the defective garage, then the amount is disproportionate to the property's probable loss in value. The Court has not been presented with evidence concerning the probable loss in value, but the Plaintiff's $60,800 claim for replacement of the garage seems to be disproportionate to the property's probable loss in value. The Defendant contracted to construct an $8,800 garage on the Plaintiff's property. Due to the defective construction of the garage, the Plaintiff did not receive a garage worth $8,800. Therefore, the value of the property did not increase by the intended $8,800. No evidence has been submitted concerning the property value, but it is difficult to conceive a situation where the value of the Plaintiff's property could have decreased by an amount close to $40,000 $60,800 due to the defective construction of an $8,800 garage. Whatever decrease in value the Plaintiff's property suffered in the case sub judice, it is highly likely that the probable loss in value of the property is disproportionate to the $60,800 damages claim.
When there is a tremendous disparity between restoration (replacement) costs and the diminished value of the property, diminution in value may be an appropriate measure of damages. There is a tremendous disparity in the Plaintiff's damages claim for replacement costs compared to the probable loss in value of the Plaintiff's property. The amount of Plaintiff's damages concerning the replacement remedy should, therefore, equal the amount that the property diminished in value as a result of not receiving a properly constructed $8,800 garage. Consequently, the Court would like the Plaintiff to submit evidence addressing the amount that the property has diminished in value.
The Court may diverge from a strict application of the damages formula to achieve a just and reasonable result. Therefore, in an appropriate situation, it is possible for the Court to consider damages alternatives that are outside the scope of the damages formula. In addition to the measure of damages based on repair costs and diminution in value of the property (for the replacement scenario), a third damages alternative that the Court may consider is to put the non-breaching Plaintiff in the same position as they would have been had the contract never been entered into. To put the Plaintiff in their pre-contractual position would require the Defendant to return the $8,800 construction costs paid by the Plaintiff in addition to the Defendant paying for removal of the defective garage. The Plaintiff's price quotations fail to distinguish between the cost of removing the current garage and the cost of building a new garage. Therefore, the Court would ask the Plaintiff to submit specific information on the cost of removing the current garage.
Conclusion
Based on the application of the damages formula, the most preferable amount of damages to award the Plaintiff for the Defendant's breach of contract is the amount necessary to repair the defective garage. Secondly, if replacement of the garage is the only adequate remedy, then damages should be equal to the amount that the property has diminished in value due to the garage's defective condition, because the cost to replace the garage is disproportionate to the probable loss in value of the property. The Court may diverge from the damages formula above in order to achieve a just result. A third damages alternative the Court may consider, in an appropriate situation, is to put the non-breaching Plaintiff in the same position as they were in before the Plaintiff entered into the contract with the Defendant. The Plaintiff must proffer evidence concerning these measure of damages alternatives, so the Court can appropriately determine the amount of damages that the Plaintiff should be awarded for the Defendant's breach of contract.
The Plaintiff is to submit the above evidence to the Court within thirty (30) days from the date of this Order. IT IS SO ORDERED.