Storebo v. Foss

• Decision Date: 20 October 1982
• Docket Number: No. 10186,10186
• Citation: 325 N.W.2d 223
• Parties: Donald STOREBO, dba Storebo Construction, Plaintiff and Appellant, v. Gerald F. FOSS and Geraldine D. Foss, Defendants and Appellees. Civ.
• Court: North Dakota Supreme Court

Page 223

325 N.W.2d 223

Donald STOREBO, dba Storebo Construction, Plaintiff and Appellant, v. Gerald F. FOSS and Geraldine D. Foss, Defendants and Appellees.

Civ. No. 10186.

Supreme Court of North Dakota.

Oct. 20, 1982.

Rosenberg & Baird, Bismarck, for plaintiff and appellant; argued by LaRoy Baird, Bismarck.

Wheeler, Wolf, Peterson, Schmitz, McDonald & Johnson, Bismarck, for defendants and appellees; argued by David L. Peterson, Bismarck.

PAULSON, Justice.

Donald Storebo, d/b/a Storebo Construction [Storebo] brought an action against Gerald F. Foss and Geraldine D. Foss (The Fosses) to enforce a mechanic's lien and collect the unpaid amount due on a building construction contract. The Fosses counterclaimed seeking damages for breach of contract. The District Court of Morton County dismissed Storebo's complaint, vacated the mechanic's lien, and awarded the Fosses $3,560 in damages on their counterclaim. Judgment was entered on January 20, 1982. Storebo appeals from this judgment. ¹ We affirm.

The following facts are pertinent to this appeal:

In June 1979 Storebo entered into a contract with the Fosses for certain construction work. The work included construction of a cement foundation and basement for a mobile home, and cement work for a garage and driveway. Total cost of the construction according to the written contract was to be $6,500.

Some time after June 25, 1979, Storebo commenced work on the project. A subcontractor was employed to excavate the basement. Storebo then poured the footings for the basement, completed the basement walls, and poured the floor for the garage. About this time the Fosses made a payment of $3,500 to Storebo.

It was during the process of leveling the cement for the basement floor that problems began to occur. When Storebo finished leveling the floor with a power trowel, the surface was irregular and wavy and cracks began to develop. Although the contract specified that the cement floor was to be four inches in thickness, there were depressions and variations in the thickness of the floor ranging from 3/8 of an inch to 1 1/4 inches. Mr. Foss wanted the floor torn out and replaced, but Storebo believed the floor could be repaired by pouring a cement cap over it. After some discussion, the parties agreed to attempt to remedy the defective floor by pouring a two-inch cement cap over it. The cap was poured in December 1979.

In January 1980 Storebo sent the Fosses a bill in the amount of $2,531.25 for work done. This figure was determined by deducting $468.75 for the cement driveway which was never constructed from the $3,000 balance due on the original construction contract. Storebo did not bill the Fosses any additional amounts for costs incurred in pouring the cap for the basement floor. Mr. Foss initially refused to pay Storebo because he believed the deduction allowed for the driveway was not sufficient. When numerous large cracks began to develop in the cap of the basement floor, Mr. Foss absolutely refused to pay Storebo any additional amounts for work done.

Storebo proceeded to file a mechanic's lien against the Fosses' property. The Fosses filed a demand for commencement of suit to enforce the mechanic's lien and on October 10, 1980, suit was commenced by Storebo for collection of the unpaid amount of the contract, that is, $2,531.25, plus costs. The Fosses filed an answer and a counterclaim seeking damages in the amount of $5,630 for breach of the construction contract by Storebo. ²

On January 7 and 8, 1980, a trial was held in the District Court of Morton County. The trial court found that Storebo had substantially performed the construction contract but had nonetheless breached the contract by failing to comply with specifications that required the floor to be four inches in thickness and that all work be completed in a workmanlike manner according to standard practices. The trial court further found that Storebo's breach could be remedied without taking down or reconstructing a substantial portion of the Fosses' residence and, therefore, the Fosses were granted relief on their counterclaim in the amount of $3,560, which the trial court determined to be the cost of making the work conform to the contract. Storebo's complaint was dismissed and the mechanic's lien was discharged and vacated. Judgment was entered accordingly and from this judgment Storebo appeals.

Storebo raises two contentions on appeal. First, Storebo contends that the district court did not apply the correct measure of damages when it allowed the Fosses to recover the cost to repair the defective basement floor. Second, Storebo contends that the agreement to cap the basement floor was an oral modification of the original construction contract which relieved it from complying with the specifications in the original contract concerning the thickness of the floor and the obligation to complete the construction in a workmanlike manner according to standard practices.

The trial court found that Storebo had substantially performed its contract with the Fosses and neither party contests the finding of substantial performance on this appeal. We have held that when a building contractor has substantially performed, the contractor may recover the contract price, less the expense of repairing the defects or omissions. Dittmer v. Nokleberg, 219 N.W.2d 201, 209 (N.D.1974); Karlinski v. P.R. & H. Lumber & Construction Co., 68 N.D. 522, 281 N.W. 898, 901 (1938); Braseth v. State Bank, 12 N.D. 486, 98 N.W. 79 (1904); Anderson v. Todd, 8 N.D. 158, 77 N.W. 599 (1898). Applying this principle in the instant case we find that Storebo would be entitled to recover the contract price of $3,000 less $5,930 for the expense of repairing the defects in the basement floor, and less a deduction in the amount of $630 for the driveway that was included in the original contract but never completed by Storebo. This formula yields damages in the amount of $3,560 in favor of the Fosses, which is the amount of damages awarded by the trial court.

Storebo, however, contends that the cost of repairing the defective floor should not have been used as the measure of damages in this case. Rather, Storebo argues that the correct measure of damages should be the difference in the value of the residence with the defective basement and the value of the residence if the basement had been properly constructed.

The rule in this State was established in Karlinski v. P.R. & H. Lumber & Construction Co., 68 N.D. 522, 281 N.W. 898 (1938), and restated in Dittmer v. Nokleberg, 219 N.W.2d 201, 206 (N.D.1974), as follows:

"Where defects resulting in a breach of a building contract may be remedied without taking down and reconstructing a substantial portion of the building, the amount of damages which the owner may recover is the expense of making the work conform to the contract, but where such defects cannot be so remedied, the measure of damages is the difference between the value of the defective structure and what the value of the structure would have been if properly completed according to the contract."

This is not an appropriate case in which to apply diminution in value as the measure of damages. Diminution in value is the appropriate measure of damages where a contractor's violation of a building contract results in defects...