Louise Caroline Nursing Home, Inc. v. Dix Constr. Corp.

QUIRICO, Justice. This is an action of contract in which Louise Caroline Nursing Home, Inc. (Nursing Home) seeks damages from Dix Construction Corp. (Dix) for breach of a contract to build a nursing home, and from Reliance Insurance Company (Reliance), for its default on a surety bond guaranteeing performance by Dix. Dix filed no answer, was defaulted, and did not participate in the litigation. Reliance filed an answer and defended in its own behalf. . . .

The case was referred to an auditor for hearing pursuant to a stipulation of the parties that his findings of fact would be final. After hearing the parties, the auditor filed a report in which he found generally: (1) that the Nursing Home had fulfilled all of its contractual obligations to Dix; (2) that Dix had committed a breach of its contractual obligations to the Nursing Home by failing, without justification, to complete the contract within the time agreed; and (3) that Reliance committed a breach of its obligations as surety by failing to take any action when Dix defaulted. However, he further found that the Nursing Home “suffered no compensable damages as a result of the breach by Dix . . . and the breach by Reliance . . . in that the cost to complete the nursing home . . . was within the contract price . . . less what had been paid to Dix. . .”

The Nursing Home filed a number of objections to the auditor's report. . . . The Nursing Home objected to the auditor's failure to grant four of its requests for findings. Although we could properly refuse to consider this objection because it was not argued in the Nursing Home's brief, it is sufficient to say that requests to an auditor to make findings of fact have no standing, without more, as the basis for objections, although they may be part of the foundation for a motion to recommit.

The Nursing Home objects to the auditor's action in striking the testimony of one Goggin offered by it as an expert witness to establish (1) the value of the incomplete building when Dix ceased construction and (2) the projected value of the building when completed. With reference to Goggin's testimony the auditor stated in his report: I am disregarding this opinion evidence of Goggin and striking it out without regard to its relevancy. The principal reason for striking this testimony is that the witness never stated any valid basis in fact for his opinions. Further, I have doubts about the witness's qualifications to give such testimony.” . . .

Two of the Nursing Home's objections relate to the measure of the damages applied by the auditor in reaching his conclusion that it suffered no “compensable damages.” The rule of damages applied by the auditor was that if the cost of completing the contract by the use of a substitute contractor is within the contract price, less what had already been paid on the contract, no “compensable damages” have occurred. The Nursing Home argues that the proper rule of damages would entitle it to the difference between the value of the building as left by Dix and the value it would have had if the contract had been fully performed. Under this rule the Nursing Home contends that it was entitled to the “benefits of its bargain,” meaning that if the fair market value of the completed building would have exceeded the contractual cost of construction, recovery should be allowed for this lost extra value. It bases this argument primarily upon our statement in Province Sec. Corp. v. Maryland Cas. Co. . . . that “(i)t is a settled rule that the measure of damages where a contractor has failed to perform a contract for the construction of a building for business uses is the difference between the value of the building as left by the contractor and its value had it been finished according to contract. In other words the question is how much less was the building worth than it would have been worth if the contract had been fully performed.” . . . This statement was probably not necessary to the court's decision in the Province Sec. Corp. case and, in any event, must be read in light of the cases cited by the court in support of it. All of these cases involved failure of performance in the sense of defective performance, as contrasted with abandonment of performance. In one of the cases, Pelatowski v. Black, . . . . the court expressly distinguished “cases where a contractor has abandoned his work while yet unfinished.”

The fundamental rule of damages applied in all contract cases was stated by this court in Ficara v. Belleau, in the following language: “It is not the policy of our law to award damages which would put a plaintiff in a better position than if the defendant had carried out his contract. . . . ” The fundamental principle upon which the rule of damages is based is compensation. . . . “Compensation is the value of the performance of the contract, that is, what the plaintiff would have made had the contract been performed.” . . . The plaintiff is entitled to be made whole and no more.'

Consonant with this principle we have held that in assessing damages for failure to complete a construction contract, “(t)he measure of the plaintiffs' damages (at least in the absence of other elements of damage, as, for example, for delay in construction, which the master has not found here) can be only in 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 has not been paid.” . . . This principle was recently reiterated in Providence Washington Ins. Co. v. Beck, . . . In the face of this principle the Nursing Home's arguments attempting to demonstrate the amount of alleged “benefits of its bargain” lost are to no avail. In any event, it should be noted that any such “benefits of its bargain” as would derive from obtaining a building worth much more than the actual costs of construction are preserved if the building can be completed at a total cost which is still within the contract price, less any amount which has already been paid on the contract. The auditor was correct in applying the “cost of completion” measure of damages which excluded any separate recovery for lost “benefits of its bargain.” . . .

The Nursing Home additionally contends that even under the rule of damages applied by the auditor they were entitled, in the words of the DiMare case, supra, to recover “other elements of damage, as, for example, for delay in construction.” . . . The short answer to this contention is the auditor's express statement, in his summary of the evidence, that “(t)here was no specific evidence as to the costs of delay, if any.”

The Nursing Home also argues that it is entitled to recover such additional interest as it was required to pay as a result of the default by Reliance and the breach of contract by Dix. This argument is based on the auditor's findings and summary of evidence that the interest rate on the $400,000 construction loan was to be one per cent per month “commencing with the date of maturity,” and that the total interest paid, including all discounted interest, was $120,094.76. . . . There was no evidence or finding, however, as to the rate of interest paid prior to maturity or as to the amount of alleged excess interest attributable to the defendants' defaults. The Nursing Home simply has not sustained its burden of proof on this point. . . .

For the foregoing reasons the Nursing Home's exceptions to the denial of its motion to recommit the auditor's report and to the granting of Reliance's motion for entry of judgment in accordance with the auditor's report must be overruled.

Exceptions overruled.