In Forbes v. Prime
Gen. Contractors, Inc., No. 2D17-353, 2018 WL 4265287, at *1 (Fla. Dist.
Ct. App. Sept. 7, 2018), Florida’s Second District Court of Appeals rejected a
trial courts decision to only consider benefit of the bargain damages, holding
that in cases involving a material breach of the contract the non-breaching
party has the option to elect either benefit of the bargain damages or damages
to put them in the place they would have been had the contract never been
formed.
The Forbeses and Prime
signed a written contract under which Prime agreed to renovate the Forbeses'
home. In exchange, the Forbeses agreed to pay Prime a total of $276,000 in five
separate draws at the completion of each phase of construction. Prime began the
job as agreed, and the Forbeses paid the first two contract draws—totaling
$138,000.
Prior to completing the
third phase of the project, Prime notified the Forbeses that the materials it
needed to complete the work had gone up. Prime estimated the additional costs
would be $550,000—almost twice the original contract price—and demanded that
the Forbeses immediately pay the third draw and adjust the payment schedule to
incorporate the additional costs. The Forbeses refused to sign a change order
to that effect and told Prime that they were prepared to move forward at the
contract price. Prime refused and walked off the job.
The Forbeses filed suit
against Prime, arguing it materially breached the contract. At trial, the
Forbeses sought damages for the amount they already payed Prime, lost equity in
their home, and damages for rent incurred during construction. The trial court
entered judgment against Prime, but only awarded damages of $5,600.00, the
amount the Forbeses paid in rent. The court concluded that the Forbeses failed
to offer persuasive or credible evidence at trial of the difference between the
market value of the home had it been completed, less such part of the contract
price that has not been paid, and the value of the construction that had been
furnished by Prime.
The Forbeses appealed,
arguing the trial court improperly calculated its damages. The Second District
Court of Appeals agreed, holding that the trial court erred by failing to honor
the Forbeses' choice to deem the contract totally breached and recover those
damages that would restore them to the position they occupied immediately
before contracting with Prime. When a party seeks damages for a total breach,
“[h]e may treat the contract as void and seek the damages that will restore him
to the position he was in immediately prior to entering the contract.” Or, in
the alternative, he may instead “affirm the contract, ‘insist upon the benefit
of his bargain, and seek the damages that would place him in the position he
would have been in had the contract been completely performed.’ In this case,
the trial court only evaluated the benefit of the bargain choice and failed to
allow the Forbeses the ability to recover damages to place them in the position
they would have been in immediately prior to entering into the contract.
