Lynn v. Medema Homes, Inc., 80CA0443

• Decision Date: 16 April 1981
• Docket Number: No. 80CA0443,80CA0443
• Citation: 632 P.2d 623
• Parties: Theodore J. LYNN and Mary E. Lynn, Plaintiffs-Appellants, v. MEDEMA HOMES, INC., Defendant-Appellee. . I
• Court: Colorado Court of Appeals

Page 623

632 P.2d 623

Theodore J. LYNN and Mary E. Lynn, Plaintiffs-Appellants, v. MEDEMA HOMES, INC., Defendant-Appellee.

No. 80CA0443.

Colorado Court of Appeals, Div. I.

April 16, 1981.

Rehearing Denied May 28, 1981.

Certiorari Granted Aug. 17, 1981.

Michael F. Scott, P. C., Michael F. Scott, Denver, for plaintiffs-appellants.

Calkins, Kramer, Grimshaw & Harring, James S. Bailey, Jr., Denver, for defendant-appellee.

SMITH, Judge.

Plaintiffs, Theodore J. Lynn and Mary E. Lynn, appeal a judgment entered by the trial court awarding them $500 in damages against defendant, Medema Homes, Inc. for breach of contract, and denying other claims for relief. We affirm in part, reverse in part, and remand with directions.

This is the second appeal to this court of this case. The facts are essentially as follows. On May 9, 1976, plaintiffs entered into a contract with defendant for the purchase of a home to be constructed by Medema. In pertinent part, the contract provided that the home would be completed within one hundred twenty days from the time construction commenced, and that if construction was not completed within that time, plus a thirty day grace period, $25 per day would be paid to the Lynns as liquidated damages for each day thereafter until the house was completed, and conveyed to the Lynns. It was determined at trial that construction began on June 25, 1976, and that thus, under the contract, the home should have been completed on October 23, 1976.

On July 26, 1976, since construction efforts on their new home seemed to be making no progress, the Lynns wrote a letter to Medema requesting a construction schedule. As no response was received, the Lynns called Medema and requested an answer to their letter. Medema wrote back, simply saying that it "would stick to" the agreement. By the end of August the Lynns were very concerned that their then home would not be completed by the time they would have to vacate their current home. After an unsuccessful attempt to lease another house, the Lynns contracted to purchase another home to serve as an interim residence. At no time did the Lynns repudiate their contract with Medema.

In March 1977, this action was commenced by the Lynns seeking specific performance of their contract with Medema, and damages. On September 13, 1977, after a trial to the court, the trial court entered judgment denying Lynns' claim for specific performance and their claim for damages.

In their first appeal to this court (decided February 15, 1979 not selected for official publication) this court concluded that, inasmuch as the Lynns had fully complied with their contract, the trial court erred in failing to grant specific performance. Accordingly, the judgment was reversed and the cause was remanded for a new trial to determine plaintiffs' damages. Since the home in question had been sold to a bona fide purchaser during the pendency of the first appeal, this was the only remaining remedy for plaintiffs.

On remand, the trial court determined that the market value of the property on the date that the conveyance should have taken place, October 23, 1976, was the same as the contract price, and thus, plaintiffs were not entitled to damages based upon any appreciation of the real property. The trial court did, however, award $500 damages which represented the value of a Pinery Country Club membership that plaintiffs would have received had the property been conveyed to them. The trial court also denied plaintiffs any damages for failure to complete the home on schedule.

I.

Plaintiffs first contend that the trial court erred in using the market value of the property on October 23, 1976, the anticipated date of closing, as the comparative value for determining actual damages. They argue that the "benefit of bargain" damages should have been calculated based upon the market value of the property, either on March 17, 1978, the date the property was ultimately sold to a third party, or on November 5, 1979, the date of the retrial. We agree with the Lynns' assertion that the property should have been valued as of March 17, 1978, the date after which acquisition of the property by the Lynns became impossible.

This court has previously held that where property has been sold by a vendor to a third party, thereby making specific performance impossible, the proper measure of damages is the purchaser's loss of his bargain. Bennett v. Moring, 33 Colo.App. 390, 522 P.2d 741 (1974). In Bennett this court ordered a retrial on the issue of damages to be calculated as "the market value of the property at the time the conveyance was to take place, minus the contract price." See Piano & Organ Warehouse, Inc. v. Wulf, 161 Colo. 457, 423 P.2d 26 (1967).

Insofar as the rule in Bennett states that the measure of damages is the amount of loss sustained by the non-breaching purchaser in losing his bargain, we accept it as a correct statement of the law. We do not, however, concur with the reasoning of the trial court that the damage equation set forth in Bennett is applicable here.

Here, the trial...