Facts
- George and Katrina Hourihan contracted with Grossman Holdings Limited and related entities for the construction and purchase of a house on a particular lot.
- The contract required a dwelling “substantially the same” as either (a) the plans and specifications on file at the seller’s office or (b) the model home.
- The plans/model shown to the Hourihans oriented key living areas to benefit from prevailing winds and to provide a residential view.
- Before construction began, the Hourihans learned Grossman intended to build a “mirror image” of the model/plan and objected.
- Grossman proceeded anyway and built the mirror-image home, changing the orientation so the home faced a different direction and resulting in blocked winds and a view of a major roadway.
- The Hourihans sued for breach of contract.
- After a bench trial, the trial court found Grossman breached the contract but awarded no money damages, reasoning that damages would be economic waste and that the home’s value as built had increased substantially over the contract price.
- The Hourihans appealed the denial of damages; Grossman cross-appealed the breach finding.
Issues
- Did constructing a mirror-image version of the model/plan breach a contract requiring a house “substantially the same” as the plans/specifications or model?
- Did the trial court err by awarding no damages based on economic waste and the house’s increased value?
- What measure of damages applies for this breach: the cost to reconstruct the dwelling to conform to the contract, or some other measure?
Decision
- The court affirmed the trial court’s finding that Grossman breached the contract by building a mirror-image house rather than one “substantially the same” as the plans/model.
- The court held Grossman’s willful, intentional deviation from the plans defeated its claim of substantial compliance.
- The court reversed the judgment denying all monetary damages, concluding the trial court used the wrong measure of damages.
- Relying on its earlier decision in Edgar v. Hosea, the court ruled that damages should be measured by the amount necessary to reconstruct the dwelling to conform to the plans and specifications.
- The case was remanded for a new trial on damages.
Legal Principles
- A construction-and-sale contract requiring a home “substantially the same” as identified plans/specifications or a model is breached when the builder intentionally constructs a materially different version after the buyers object.
- A builder’s willful and intentional failure to perform as promised can defeat a substantial-performance defense.
- In this Third District decision, the proper measure of damages for a residential deviation from plans was the cost necessary to reconstruct the dwelling to conform to the contract.
- A court may not deny all damages solely because the property’s market value rose above the contract price; the buyer may still recover for loss of the contracted-for performance.
Conclusion
The Third District affirmed liability because Grossman intentionally built a mirror-image house that was not “substantially the same” as the promised model and plans, and it reversed the trial court’s zero-damages judgment, remanding for a new trial on damages to be measured by the cost to reconstruct the home to conform to the contract.