Although Often Sought by Overreaching Claimants, Betterment Is Typically Not Recoverable
Sarah A. Johnson, Esq.
When there is a problem with a construction project, the property owner often tries to obtain the highest amount of damages possible. It is not unusual for the owner to calculate damages based on a different, better design with materials or products the owner did not actually contract for, even if the design, materials, or products were initially rejected by the owner as too costly.
In other words, the owner attempts to make the design professionals and/or contractors pay for an upgrade as part of the damages in the lawsuit.
It is always upsetting for an engineer to discover an error or omission in his or her work and realize they may have potential liability. It can be particularly challenging when the client attempts to abuse the situation by overreaching with respect to damages. One such example involves a design presented by an engineer that is rejected by the client because it is too costly. The engineer then provides an alternative, less costly design. Unfortunately, mistakes are made in the alternative design for which the engineer is liable. However, now the client claims the engineer must pay damages to implement the more costly design which the client rejected when the engineer first recommended it.
Fortunately, most jurisdictions do not allow the client or property owner to recover for such “betterment.”1 The correct measure of damages in tort and contract is the amount it will take to put the plaintiff back in the position they would have been in had the tort not been committed or the contract breached.2 In other words, the injured party’s recovery is limited to the loss actually suffered, and the injured party is not entitled to be in better position by recovery of damages for the breach than they would have been in if there had been performance.3
Therefore, the correct calculation of damages is typically the cost of correction and completion in accordance with the contract documents or the reasonable cost of repair according to the original design.4 Further, where the original design or originally specified material or product is not appropriate or feasible in the first instance, the measure of damages will likely be the amount necessary to reimburse the client for the costs incurred in building according to the unsuitable design. Or, in some instances, in purchasing and/or installing the inappropriate material as opposed to the costs to build some other design or purchase and install the correct material or product.5
In St. Joseph Hospital v. Corbetta Construction Co., Inc., the Appellate Court of Illinois found the hospital plaintiff was not entitled to a windfall in the form of more expensive paneling and the extra labor costs required by its more difficult installation because the defendant architect failed to specify it.6 The case involved a claim for declaratory judgment (based on breach of contract) by the plaintiff hospital against the defendant architect.7 The architect specified paneling that did not meet the city building code, and as a result, the defendant hospital’s license to operate was disapproved.8 The hospital replaced the original paneling with a more expensive and difficult to install material.9 The court found if the correct paneling had been specified, the plaintiff hospital would have had to pay for the more expensive materials and the price to install it.10 Accordingly, the defendant architect was liable only for the cost of the originally specified, inappropriate paneling and the cost to install same (with adjustments for increases in construction costs over time) as that paneling would not have been purchased and installed if the correct material was specified in the first instance.11
Likewise, in Magnum Construction Management v. City of Miami Beach, the Court of Appeal of Florida found the plaintiff city could not calculate its damages against the defendant contractor for landscaping deficiencies based on the cost associated with planning, permitting, and construction of a park that was fundamentally different from the one the contractor was hired to build.12
Although the aforementioned cases involve an architect and a contractor, the same principal applies to engineers on a construction project. Engineers should not be forced to pay for betterment, or to place the injured party in a better position than it would have been if they had not been negligent or complied with the contract. If it seems like the injured party/plaintiff is overreaching in damages by attempting to make you pay for an upgrade, the injured/party plaintiff is probably seeking unrecoverable betterment, and you and your attorney should make this clear to the court or finder of fact as it may significantly reduce the amount of damages at issue.
CITATIONS
1 St. Joseph Hosp. v. Corbetta Constr. Co., Inc., 316 N.E.2d 51, 62-63 (Ill. App. Ct. 1974); Magnum Constr. Mgmt. Corp. v. City of Miami Beach, 209 So.3d 51, 56 (Fla. Ct. Ap. 2016).
2 St. Joseph Hosp., 316 N.E.2d at 59.
3 Id.
4 Magnum Constr., 209 So.3d at 56.
5 St. Joseph Hosp., 316 N.E.2d at 59-63
6 Id. at 62-63.
7 Id. at 54-55.
8 Id. at 54.
9 Id. at 54, 61-62.
10 Id. at 62.
11 Id. at 62-63.
12 Magnum Constr., 209 So.3d at 56.
