## Facts

- Homeowners contracted with a builder to construct a custom home pursuant to architectural plans and specifications.
- As part of the purchase price, the homeowners executed a $43,000 purchase-money mortgage note payable to the builder.
- After taking possession, the homeowners discovered incomplete work and numerous construction defects.
- The homeowners sued for breach of the construction contract; the builder sought foreclosure on the purchase-money mortgage, claiming nonpayment.
- The trial court found the builder materially breached the construction contract, found the homeowners were not in default on the mortgage for foreclosure purposes, and awarded $73,068.75 as the cost to repair/complete the defective work.
- The trial court did not reduce the damages by the unpaid $43,000 mortgage balance; the intermediate appellate court affirmed.

## Issues

1. When damages are measured by cost of completion or repair for defective construction, must the award be reduced by the unpaid portion of the contract price still owed by the buyer?

## Decision

- The Supreme Court of Connecticut held that cost-of-repair/completion damages must be offset by any unpaid portion of the contract price.
- The court left intact the liability findings (builder’s breach; no foreclosure default).
- The court reversed the damages award in part and remanded with instructions to reduce the homeowners’ damages by $43,000.

## Legal Principles

- Contract damages protect the expectation interest: the injured party should be placed in the position that full performance would have produced, not a better position.
- In defective or incomplete construction cases where the buyer keeps the property and seeks cost-of-completion/repair damages, the proper measure requires deducting any unpaid contract price from the repair/completion cost.
- A determination that a buyer is not in default for foreclosure purposes does not eliminate the underlying debt when calculating compensatory damages for breach.

## Conclusion

The court ruled that awarding homeowners the full cost to repair a defective house without subtracting the unpaid contract price would create a windfall; therefore, cost-of-repair damages must be reduced by the unpaid $43,000 owed under the purchase-money mortgage.


Argentinis v. Gould, 592 A.2d 378 (Conn. 1991)