Louise Caroline Nursing Home, Inc. v. Dix Construction Co. – Case Brief
Louise Caroline Nursing Home, Inc. v. Dix Construction Co., 362 Mass. 306, 285 N.E.2d 904 (Mass. 1972).
Facts: Dix (D) did not finish a construction contract on time and Louise Caroline Nursing Home (P) sued. The case was referred to an auditor and the auditor made the following findings of fact: 1) that the nursing home had not breached; 2) that Dix Construction did breach the contract; and 3) the nursing home suffered no damages because the cost to complete the nursing home was within the contract price and less than what had been paid to Dix. P appealed.
Issue: 1) Is the benefit of the bargain a proper measure of contract damages for a breach of a construction contract if the cost of completion is less than the contract price? 2) Are contract damages limited to the extent of making a party whole as though the contract had been performed?
Holding and Rule: 1) No. The benefit of the bargain is not a proper measure of contract damages for a breach of a construction contract if the cost of completion is less than the contract price. 2) Yes. Contract damages are limited to the extent of making a party whole as though the contract had been performed.
There are no compensable damages if the cost of completing the contract is within the contract price. P argued that the proper measure of damages was the difference between the value of the building as left by D and the value it would have been had the contract been completed. The fundamental rule is to compensate the plaintiff and not to put the party in a better position than if the contract had been carried out (Ficara). Compensation is the value of the performance of the contract, i.e. what the plaintiff would have if the contract had been performed and no more. The measure of a plaintiff’s damages for delay of a construction contract is the amount of the reasonable cost of completing the contract and repairing the defendant’s defective performance less such part of the contract price as had not been paid.
Notes: A construction contract is a service contract and damages cannot place a plaintiff in a better position than he would have been in if the contract had been performed.