## Facts

- Homeowners contracted with a builder to construct a multistory addition, including a third-floor master bedroom and bathroom.
- The homeowners presented expert testimony that the builder failed to perform in a good and workmanlike manner.
- Experts attributed the problem to inadequate structural support, rendering the third floor unusable and unsafe.
- The trial court found the builder breached the construction contract.
- The trial court awarded $10,000 in damages using a diminution-in-value measure (difference between market value as promised and as built).
- On appeal, the builder did not contest liability and challenged only the damages measure.

## Issues

1. In a residential construction-defect breach, when defects render part of the structure unusable and unsafe, is the proper measure of damages diminution in market value or the market value of the cost to repair/complete?

## Decision

- The appellate court modified the judgment by vacating the $10,000 diminution-in-value award and otherwise affirmed.
- The court held the proper measure of damages was the market value of the cost to repair/correct the faulty construction.
- The court remitted the matter for further proceedings to determine repair costs, given conflicting testimony and the trial court’s superior position to assess credibility.
- The court also noted the record lacked proof supporting any quantified diminution in value.

## Legal Principles

- In faulty construction cases, the general measure of damages is the market value of the cost to repair the defective work.
- Diminution-in-value damages are a limited exception, applicable where the contractor’s deviation is both trivial and innocent.
- When a defect is substantial and makes the building partially unusable and unsafe, damages are measured by the market price of completing or correcting performance.
- Even if a damages theory could apply, an award requires evidentiary support in the record for the amount claimed.

## Conclusion

Because the structural defects were substantial and affected safety and usability, the correct contract damages measure was the market value of the repairs needed to conform the addition to the contract, not diminution in market value; the case was remitted to determine the repair-cost amount.


Rivers v. Deane, 209 A.D.2d 936, 619 N.Y.S.2d 419 (N.Y. App. Div. 4th Dep’t 1994)