Rivers v. Deane
209 A.D.2d 936 (1994)
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Rule of Law:
When a contractor's breach of a construction contract results in a substantial defect that renders the building partially unusable and unsafe, the proper measure of damages is the market cost to repair the defect, not the diminution in the property's value.
Facts:
- Plaintiffs contracted with Defendant for the construction of an addition to their home.
- Plaintiffs intended to use the third floor of the new addition as a master bedroom and bathroom.
- Defendant failed to construct the addition in a good and workmanlike manner.
- The addition was built with inadequate structural support, which constituted a substantial defect.
- As a result of the inadequate structural support, the third floor of the addition was rendered unusable and unsafe.
Procedural Posture:
- Plaintiffs sued Defendant in the New York Supreme Court, Oswego County (trial court) for breach of a construction contract.
- Following a trial, the court found in favor of the plaintiffs, determining that Defendant had breached the contract.
- The trial court awarded damages to the plaintiffs, which included a $10,000 award for the diminution in the property's market value due to the inadequate structural support.
- Defendant, the appellant, appealed the judgment to the New York Supreme Court, Appellate Division (intermediate appellate court), challenging only the damage award.
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Issue:
Does the 'diminution in value' rule apply as the measure of damages when a contractor's breach of contract results in a substantial defect that makes a portion of the structure unusable and unsafe?
Opinions:
Majority - Memorandum Opinion
No. When a defect arising from a breach of a construction contract is so substantial as to render the finished building partially unusable and unsafe, the measure of damages is the market price of completing or correcting the performance. The court explained that the 'difference in value rule,' established in Jacob & Youngs v. Kent, is a narrow exception applicable only when the builder's failure to perform is 'both trivial and innocent.' In this case, the defect was not trivial; it was a substantial structural failure that impacted the usability and safety of the addition. Therefore, the general rule applies, and plaintiffs are entitled to the cost of repair, as articulated in Bellizzi v. Huntley Estates.
Analysis:
This decision reinforces the traditional 'cost of repair' as the default measure of damages for significant construction defects. It clarifies that the 'diminution in value' standard from Jacob & Youngs v. Kent is a limited exception, not a broad alternative. By categorizing a structural failure that renders a part of a building unusable as 'substantial' rather than 'trivial,' the court ensures that the non-breaching party receives funds sufficient to actually fix the problem. This precedent solidifies the principle that economic waste arguments, which underpin the diminution in value rule, do not shield contractors from liability for major, functional defects.
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