## Facts

- A developer agreed to sell a lot to John A. Bellizzi and build a house consistent with its “1951 Kent” model, which included an attached garage served by a driveway substantially at street level.
- During construction, rock was encountered near the surface; the builder placed the house on the rock rather than excavate.
- The constructed driveway dropped 9 feet 8 inches over 43 feet (a 22.5% grade), making it unsafe and not reasonably usable; evidence indicated a 12% grade was considered the maximum permissible.
- The written plans did not specify driveway grade, but the builder did not contend the existing grade was reasonable.
- Bellizzi sued for breach of contract, seeking damages equal to the cost to obtain a reasonably usable driveway.

## Issues

1. In a construction-contract breach producing an unsafe and unusable driveway, is the proper measure of damages the reasonable cost to remedy the defect or the difference in market value between the structure as built and as promised?
2. When, if ever, does the “difference in value” measure apply to limit repair-cost damages on economic-waste grounds?

## Decision

- The Court of Appeals reversed the Appellate Division and reinstated the trial judgment for Bellizzi.
- The proper measure of damages was the fair and reasonable cost to remedy the defect and obtain a reasonably usable driveway.
- The “difference in value” measure was treated as a narrow exception, applicable only where repair would cause economic waste and the loss in value from the deviation is nominal.

## Legal Principles

- The default measure of expectation damages for substantial construction defects is the reasonable cost of completion or repair necessary to provide the performance promised.
- Diminution-in-value is an exception used to avoid economic waste when (a) the deviation is minor or technical, and (b) the repair cost is grossly disproportionate to the resulting loss in value.
- A defect that materially impairs safety and functional use is not treated as a trivial deviation; repair-cost damages are appropriate absent a showing of economic waste.

## Conclusion

Because the driveway defect materially impaired safe and convenient use and was not shown to involve repair costs so disproportionate as to constitute economic waste, the buyer was entitled to recover the reasonable cost to remedy the defect rather than being limited to diminution in market value.


Bellizzi v. Huntley Estates, Inc., 3 N.Y.2d 112 (N.Y. 1957)