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June 30, 2021

A disturbing trend in construction litigation is the filing of lawsuits without knowing what the damages are and without knowing whether any damages are recoverable. Often this leads to even more protracted litigation and frustration from both sides. The plaintiff is frustrated because it cannot understand why its demands are not being met. The defendant is frustrated because it cannot understand why the plaintiff’s demands are so unreasonable.

A major source of this problem is the failure to consider the proper measure of damages. What does the law allow you to recover? In some states, the law prohibits recovery that would result in an unreasonable destruction of property and the unreasonable waste of money. That means a claimant cannot tear out an entire wall to replace three screws that did not meet specifications.

In one Illinois case, Witty v. C. Casey Homes, a plaintiff alleged a contractor used ordinary brick as opposed to the specified “face brick veneer”. The court concluded that the contractor had failed to provide the brick called for in the contract. The court stated that normally the owner would be entitled to receive the cost to replace the defect. However, the court held that “this general rule only applies where correction or completion of the work would not involve the unreasonable destruction of work done by the contractor”, and that if the cost of repair would require substantial portions of the building to be torn down and rebuilt, “the measure of damages is the difference between the work if had been performed according to the contract and that which was actually performed.”

The court said that if the residence was to be brought into compliance with the specifications, the builder would have to replace every brick on the home, shore up part of the structure and remove all wood trim, and that all this could result in extensive damages to doors, door frames, window frames and sliding glass doors, resulting in excess waste of economic resources.

In another Illinois case, Arch of Illinois, Inc. v. S.K. George Painting Contractors, Inc., the plaintiff hired S.K. George Painting Contractors to paint the inside of a building for $59,000. The paint later started to peel off and the owner sued the painter. The estimated cost of repair ranged from $120,000 to $248,000, which included sandblasting the entirety of the building and then repainting it.

The court looked at whether the cost of repair could be presented to a jury since it was substantially more than the original work. The court held that it could and reasserted the rule that typically correcting defective work is the measure of damages unless either the cost of correction unreasonably benefited the purchaser or correction resulted in unreasonable destruction of the work. In those two situations, the reduced value of the property is the proper measure of damages. The court held that the jury should hear evidence regarding all possible measures of damages and decide what is appropriate. The court also implied that it might not be unreasonable for repair costs to be more than three to four times the original contract if that is the result of the defect.

These two cases provide important guidance for litigants, and especially plaintiffs in construction cases. An owner that wants to sue a contractor who installed incorrect wood flooring might be disappointed to learn the maximum it will ever recover is the reduction in market value of the building as a result of the improper product.