## Facts

- Michael Yurchak contracted with Jack Boiman Construction Company to waterproof his basement, with an express ten-year guaranty that the basement would be waterproof.
- The contract price was $3,200; Yurchak paid $2,400 up front and agreed to pay the remaining $800 upon completion.
- After the work was completed but before final payment, rain caused the basement to leak again in a manner similar to the pre-contract condition.
- Defendants made multiple repair attempts but did not stop the water intrusion.
- Yurchak sued for breach of the guaranty seeking return of money paid; defendants counterclaimed for the unpaid $800, asserting performance.
- Trial evidence indicated Yurchak received some minimal benefit from the work, but the primary objective (a waterproof basement) was not achieved.
- A jury awarded Yurchak $2,000 and rejected defendants’ counterclaim; defendants appealed.

## Issues

1. Whether Yurchak’s withholding of the final $800 constituted a breach, or was justified because payment was conditioned on satisfactory completion of the guaranteed waterproofing.
2. Whether, after a material and substantial breach with substantial failure of consideration, Yurchak could elect rescission and restitution of amounts paid, reduced by the value of any benefit retained.

## Decision

- The appellate court affirmed the judgment for Yurchak.
- The trial court properly denied defendants’ motion for a directed verdict because evidence supported a finding that defendants substantially failed to perform the guaranteed waterproofing.
- Final payment was conditioned on satisfactory completion; Yurchak was justified in withholding the $800 until the basement was waterproofed.
- The jury could award restitution of payments made, with a deduction reflecting the minimal benefit retained, supporting the $2,000 verdict.

## Legal Principles

- After a substantial breach of contract, the nonbreaching party may elect to recover either expectation damages or the benefits conferred on the breaching party through performance.
- Where there is a material and substantial breach and an entire or substantial failure of consideration, the injured party is entitled to rescission and restitution of money paid.
- Restitution may be reduced to account for benefits retained by the nonbreaching party despite the breach.

## Conclusion

Because the promised waterproofing failed and the breach was material, Yurchak could withhold final payment and elect restitution for amounts paid, subject to a reasonable reduction for the limited benefit he retained; the appellate court therefore upheld the jury’s $2,000 award and denial of defendants’ counterclaim.


Yurchak v. Jack Boiman Constr. Co., 3 Ohio App. 3d 15, 443 N.E.2d 526 (Ohio Ct. App. 1981)