## Facts

- Maricopa County hired Walsh & Oberg Architects, Inc. to design a county complex that included an underground parking garage covered by a large steel-reinforced concrete slab.
- The project specifications required that the concrete slab be “impermeable,” and the top of the slab was finished with extensive landscaping and related improvements.
- After completion and acceptance, cracks appeared in the slab and moisture leaked into the underground parking area.
- Evidence attributed the defects to (1) specified expansion-joint caulking that failed to waterproof the joints and (2) a specified concrete additive that contributed to corrosion of embedded aluminum conduits and related cracking and leakage.
- Making the slab waterproof as specified would require removing and later replacing the landscaping and surface features, at an estimated total cost of $350,000–$500,000, with much of that cost tied to landscaping work rather than waterproofing itself.
- The trial court found a cheaper alternative could make the garage functionally adequate: install a system to capture and manage infiltrating water, repair/protect damaged electrical components, and include an estimate for future payments to users for water-related vehicle damage.
- The trial court awarded the County approximately $107,358 based on the cost of the alternative remedial scheme.
- The County appealed only the measure of damages, arguing it was entitled to the full cost to achieve literal compliance with the impermeability specification.

## Issues

1. In a design/specification breach causing construction defects, whether damages must equal the full cost of repair to achieve literal compliance when that repair would require disproportionately expensive reconstruction.
2. Whether a court may limit damages to the cost of a functionally adequate alternative remedy to avoid economic waste.

## Decision

- The Court of Appeals affirmed the judgment awarding approximately $107,358.
- The court held the trial court applied the correct measure of damages by using the cost of the alternative remedial scheme rather than the full cost of reconstructing the slab and restoring landscaping.
- The court accepted the trial court’s findings that the cost of strict compliance was grossly disproportionate to the additional benefit obtained over the alternative remedy and would constitute economic waste.

## Legal Principles

- Contract damages for defective construction/design generally seek to place the injured party in as good a position as if the contract had been performed, without overcompensation.
- When the cost to correct defects to achieve literal compliance is unreasonably disproportionate to the benefit gained, courts may reject the cost-of-completion measure to avoid economic waste.
- In such circumstances, damages may be measured by the cost of a reasonable alternative remedy that provides functional equivalence and compensates for related past and anticipated future losses.

## Conclusion

The court upheld a damages award based on a lower-cost, functionally adequate alternative repair plan because forcing literal compliance through costly reconstruction would have produced economic waste and risked overcompensating the owner.


Maricopa County v. Walsh & Oberg Architects, Inc., 16 Ariz. App. 439, 494 P.2d 44 (Ct. App. 1972)