Lewin v. Levine

Appellate Division, Second Department
44 N.Y.S.3d 540 (2017)

ELI5:

Rule of Law:

In a breach of a construction contract case, the proper measure of damages is the cost to complete the work and correct any defects. The plaintiff bears the burden of proving these specific costs; merely proving the total amount paid to the breaching contractor is insufficient to establish damages.

Facts:

The plaintiffs entered into a contract with Harmon Development Corp. for the renovation of their home.
Harmon Levine, as president of the corporation, executed the contract.
The plaintiffs made payments totaling hundreds of thousands of dollars to the defendants under the contract.
Becoming dissatisfied with the quality of the work, the plaintiffs terminated Harmon Development Corp.'s employment.
The plaintiffs then hired other contractors to complete the project and remediate the allegedly improper and poor work.

Procedural Posture:

The plaintiffs commenced an action in the Supreme Court, Westchester County (a state trial court) against Harmon Development Corp., Harmon Levine, and Randy Levine, alleging breach of contract, conversion, and negligence.
The plaintiffs filed a motion for summary judgment on the complaint.
The trial court granted the plaintiffs' motion for summary judgment on the issue of liability only.
A nonjury trial was then held solely on the issue of damages.
Following the trial, the court issued an order directing entry of a judgment for the plaintiffs in the principal sum of $300,500, representing the amount they had paid to the defendants.
The defendants (as appellants) appealed the trial court's order to the Appellate Division of the Supreme Court.

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Issue:

Does an award of damages for breach of a construction contract, based solely on the total amount the plaintiff paid to the contractor rather than on the proven cost to complete and correct the defective work, constitute a proper measure of damages?

Opinions:

Majority - Per Curiam (Leventhal, J.P., Cohen, Miller and LaSalle, JJ., concurring)

No. An award of damages based solely on the total amount paid to the breaching contractor is not the proper measure of damages. The law requires a party complaining of injury to bear the burden of proving the actual extent of the harm suffered. For a breached construction contract, the correct measure of damages is the cost of completing the construction and correcting the defects in the defendant's work. In this case, the plaintiffs only proved the amount they paid to the defendants ($300,500) but failed to provide any evidence demonstrating what portion of that payment was for work that was never done or for work that was defective. Since the plaintiffs failed to meet their burden of proving actual damages under the correct legal standard, their complaint must be dismissed.

Analysis:

This case reinforces the fundamental principle that contract damages are compensatory and must be proven with reasonable certainty. It solidifies the 'cost of completion/correction' as the standard measure of damages in New York for breached construction contracts, preventing plaintiffs from receiving a windfall by recovering the full contract price while potentially retaining some value from the partially completed work. The decision serves as a crucial reminder to litigants that proving a breach is only half the battle; they must also present specific, detailed evidence of their actual financial losses—such as invoices from replacement contractors—to succeed on a damages claim. Failure to provide such evidence can result in a complete dismissal of the case, even if liability has already been established.

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