Calculating Contractor’s Damages Under a Partially Performed Construction Contract

You represent a general contractor in a breach of contract claim against the property owner or a subcontractor in a breach of contract claim against the general contractor. The work was two thirds complete when your client was terminated from the project.  Your claim is strong – the other side did not comply with the contractually mandated termination process, your client preserved its damages claim in accordance with the terms of the contract, and your client’s records (invoices, pay applications, change orders, etc.) were well maintained.

The lawsuit (or arbitration) is proceeding quickly to final resolution. It is now time to present the trier of fact with your damages figures.  Since the work was two thirds complete at the time of termination, your thought is to take two thirds of the entire contract amount, subtract out payments received to date, and present this figure as your recoverable damages.  Is this approach, which is known as the percentage of completion method, the correct one?  Absolutely not. Nico Indus., Inc. v. Steel Form Contractors, Inc., 625 So. 2d 1252, 1252 (Fla. 4th DCA 1993).

The proper measure of damages under these facts is via one of the following two methods: (1) quantum meruit (reasonable cost of labor and materials actually furnished) or (2) the contractor’s lost profits plus the reasonable cost of labor or materials incurred in good faith in the course of performance of the contract. Plumbing Serv. Co. v. Progressive Plumbing, Inc., 46 So. 3d 144, 146 (Fla. 5th DCA 2010).

So, the takeaway here is to individually assess the appropriate damages model for each cause of action. Don’t lose a case with great facts based on something such as calculation of damages which is in your complete control.

  • James P. Terpening III

    James P. Terpening III is a partner in the Tampa office of Shutts & Bowen LLP, where he is a member of the Construction Litigation Practice Group. James is Board Certified by The Florida Bar in Construction Law.

    James represents owners ...

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