IN THE SUPREME COURT OF IOWA

No. 08–2008

Filed December 17, 2010

LEWIS ELECTRIC CO.,

Appellee,

vs.

RONALD E. MILLER and KATHLEEN F. MILLER,

Appellants.

On review from the Iowa Court of Appeals.

Appeal from the Iowa District Court for Woodbury County, 

Jeffrey A. Neary, Judge.

Contractor seeks further review of court of appeals’ reversal of 

district court judgment on breach-of-contract claim, as well as reversal of 

the district court’s denial of defendants’ breach-of-contract counterclaim. 

DECISION OF COURT OF APPEALS AFFIRMED AS MODIFIED;

DISTRICT COURT JUDGMENT REVERSED, AND CASE REMANDED.

Jeffrey A. Sar of Baron, Sar, Goodwin, Gill & Lohr, Sioux City, for 

appellants.

Jeffrey L. Poulson and Jessica R. Noll of Thomas & Poulson Law 

Firm P.C., Sioux City, for appellee.
2

TERNUS, Chief Justice.

We have taken this breach-of-contract matter on further review to 

consider the contention of appellee, Lewis Electric Co., that the court of 

appeals’ instructions on remand require further clarification. See 

Anderson v. State, 692 N.W.2d 360, 363 (Iowa 2005) (“On further review, 

we can review any or all of the issues raised on appeal or limit our review 

to just those issues brought to our attention by the application for 

further review.”).1 Agreeing that additional direction is required, we 

affirm the court of appeals’ decision with the specific directive that the 

scope of remand is limited to a determination of the damages incurred by

the appellants, Ronald E. Miller and Kathleen F. Miller (collectively 

“Miller”), for Lewis Electric’s breach of contract with regard to the work it 

performed at Miller’s store located in Le Mars, with judgment to be 

entered in accordance with the directions given in this opinion. 

I. Background.

Lewis Electric is an electrical contractor in Sioux City. Miller owns

The Tool Depot, a store with locations in Sioux City and Le Mars. At 

various times during 2003 and 2004, Lewis Electric provided electrical 

services on a time-and-material basis in Miller’s Sioux City store, billing 

Miller $4164.53 for this work. In 2003, Miller hired Lewis Electric to 

perform electrical work in the Le Mars store, which was in the process of 

opening. The parties’ agreement as to the scope of this work was set 

forth in two bid documents. Lewis Electric was to be paid $49,200 for 

this work. After Miller had paid Lewis Electric $30,000 for electrical 

services at the Le Mars store, a dispute over Lewis Electric’s performance

 1The court of appeals’ decision stands as the final ruling on all other issues 

raised on appeal. See Everly v. Knoxville Cmty. Sch. Dist., 774 N.W.2d 488, 492 (Iowa 

2009).
3

arose. This dispute primarily involved the number of light fixtures to be 

installed and the foot-candles the fixtures would provide. 

The parties attempted to resolve their dispute. As a result of these 

efforts, Lewis Electric deducted a small amount from the remaining 

balance on the contract price for work it conceded it did not do, bringing 

the amount it claimed under the contract to $18,871.64.

When the parties could not reach a full resolution of their dispute, 

Lewis Electric brought a breach-of-contract action seeking payment of 

$4164.53 for the services performed at the Sioux City store and

$18,871.64 for services rendered at the Le Mars store. Miller asserted 

that no money was owed on the Le Mars account because Lewis 

Electric’s work was defective. In addition, Miller filed a counterclaim 

under a breach-of-contract theory, seeking recovery for the cost of 

repairs to Lewis Electric’s defective work at the Le Mars store. Miller did 

not dispute the work or amount owed with regard to the Sioux City store.

At the bench trial of this action, Lewis Electric presented evidence 

in support of its breach-of-contract damages. Likewise, Miller submitted 

evidence of its damages, specifically that it had paid $4045.15 for 

engineering services to design a fix for Lewis Electric’s defective work and 

$18,930 for electrical installation services to make the fix, for total 

damages of $22,975.15. 

The district court found that Lewis Electric had not breached the 

Le Mars contract. Accordingly, it awarded damages to Lewis Electric on 

its claim and denied Miller’s counterclaim. With respect to the Le Mars 

contract, the district court reduced Lewis Electric’s damages from 

$18,871.64 to $16,927.50 to reflect additional work the court found 

Lewis Electric had not performed. The court also entered judgment in 

favor of Lewis Electric on the Sioux City account in the sum of $4164.53.
4

Miller appealed, challenging only the rulings with respect to the 

Le Mars contract.2 Miller claimed there was not substantial evidence to 

support the district court’s finding that Lewis Electric had not breached 

this contract. The court of appeals agreed and reversed the judgment for 

Lewis Electric with regard to the work performed at the Le Mars store as 

well as the district court’s denial of Miller’s counterclaim. The court of 

appeals’ disposition of the matter was as follows: 

The portion of the judgment for the Sioux City account, 

separate from the Le Mars account, is affirmed in the sum of 

$4164.53. The remainder of the judgment ($16,927.50) is 

vacated, and the matter of the Le Mars account and the 

defendant’s counterclaim is reversed and remanded for 

resolution. We assess appellate court costs one-half to Miller 

and one-half to Lewis Electric.

Lewis Electric seeks further review of the court of appeals’ decision 

on two grounds. First, Lewis Electric contends it was error to reverse, as 

there was substantial evidence supporting the district court’s judgment

with respect to the Le Mars contract. Second, Lewis Electric contends 

the instructions on remand were insufficiently specific in that they did 

not direct the action to be taken by the district court to resolve the 

parties’ claims on remand. As stated above, we have taken the case to 

consider the second ground.

II. Analysis.

As stated above, the district court found that Lewis Electric had 

substantially performed its contract with Miller, with the exception of a 

few minor deviations that the court deducted from the contract price. 

See Farrington v. Freeman, 251 Iowa 18, 23, 99 N.W.2d 388, 391 (1959) 

(“[W]here substantial performance has been proven by the builder, he is 

 2The district court also considered and rejected a tort theory of recovery under 

Miller’s counterclaim. Miller does not challenge this ruling on appeal. 
5

entitled to his contract price less deduction for the value of any defects in 

performance.”). The court of appeals held there was not substantial 

evidence to support the trial court’s factual finding that Lewis Electric 

did not breach the Le Mars contract. Although not expressly stated in its 

opinion, the court of appeals held, in essence, that the record showed as 

a matter of law that Lewis Electric did not substantially perform the 

Le Mars contract due to its defective performance.3 To address the 

appropriate scope of the remand ordered by the court of appeals, it is 

necessary to understand the rules governing recovery under the 

circumstances presented here. 

We begin with the potential recovery by Lewis Electric for its 

performance under the contract. Due to the court of appeals’ reversal of 

the district court’s finding of substantial performance, Lewis Electric may 

not recover under “the general rule”

that a contractor who substantially performs under a 

building or construction contract is entitled to recover the 

contract price minus the cost of repairing the defects or 

completing the unfinished part of the work so as to bring the 

construction up to the level required by the contract.

24 Richard A. Lord, Williston on Contracts § 66:14, at 448–51 (4th ed. 

2002) (noting any recovery under this rule is “subject to the qualification 

that the contractor cannot recover more than the contract price”) 

[hereinafter Williston on Contracts]. Instead, Lewis Electric’s recovery 

under the contract, if any, will be governed by the following principle: “A 

construction contractor who fails to perform substantially under the 

contract can recover at most only in quantum meruit for the value of the 

 3The court of appeals appears to have held that there was not substantial 

evidence to support the trial court’s finding that Lewis Electric’s “failure to provide 

ninety-six light fixtures with seventy-six foot-candle levels did not constitute a breach of 

the terms of the parties’ contract.” 
6

work . . . .” Id. § 66:14, at 451. The measure of recovery under this rule,

“where the performance is incomplete but remediable,” is “the unpaid 

contract price” minus “the cost of completing any unfinished work and 

remedying any defective work,” “plus any other damages suffered by the 

owner, not to exceed the benefit actually received by the owner.” Id.

§ 66:14, at 451–53.

Of course, recovery by Lewis Electric will occur only if the 

remaining contract price is greater than Miller’s cost of completing or 

remedying Lewis Electric’s work. If Miller’s damages4 exceed the 

remaining contract price of $19,200, Miller will be entitled to a judgment 

in the amount of that excess. See Conrad v. Dorweiler, 189 N.W.2d 537, 

540–41 (Iowa 1971) (applying rule that “party left with an uncompleted 

contract could secure its completion and recover from the wrongdoer the 

reasonable cost of finishing the work in excess of the original contract 

price”); Restatement (Second) of Contracts § 347, at 112 (1981) (“[T]he 

injured party has a right to damages . . . measured by (a) the loss in the 

value to him of the other party’s performance caused by its failure or 

deficiency, plus (b) any other loss . . . caused by the breach, less (c) any 

cost or other loss that he has avoided by not having to perform.”) 

[hereinafter Restatement];5 Restatement § 348(2)(b), at 119–20 (“If a 

 4“In defective construction cases, damages may include diminution in value, 

cost of construction, and completion in accordance with the contract, or loss of rentals.” 

R.E.T. Corp. v. Frank Paxton Co., 329 N.W.2d 416, 421 (Iowa 1983). Depending on the 

circumstances, only one measure of damages may be appropriate or a combination of 

them may be required to place the injured party in as favorable a position as though no 

breach had occurred. Id. Here, Miller seeks the expenses he incurred to remedy and 

complete the work that was required under his contract with Lewis Electric. 

5As an illustration of the rule that the injured party is limited to damages based 

on his actual loss in the context of a construction contract, the Restatement provides:

A contracts to build a house for B for $100,000, but repudiates the 

contract after doing part of the work and having been paid $40,000. 

Other builders would charge B $80,000 to finish the house, but B finds a 

builder in need of work who does it for $70,000. B’s damages are limited 
7

breach results in defective or unfinished construction . . . [the injured 

party] may recover damages based on . . . the reasonable cost of 

completing performance or of remedying the defects if that cost is not 

clearly disproportionate to the probable loss in value to him.”);6 Williston 

on Contracts § 66:17, at 462 (“If the defect causing the breach is 

remediable from a practical standpoint, recovery generally will be based 

on the market price of completing or correcting the performance, minus 

the unpaid part of the contract price.”). 

Consequently, the district court on remand must first determine 

the costs incurred by Miller to complete or repair Lewis Electric’s work. 

If that figure is less than the remaining contract price, $19,200,

judgment for the difference will be entered in favor of Lewis Electric. If 

Miller’s damages exceed the unpaid contract price, judgment for the 

excess will be entered in favor of Miller.7 The determination of Miller’s 

________________________

to the $70,000 that he actually had to pay to finish the work less the 

$60,000 cost avoided or $10,000, together with damages for any loss 

caused by the delay. See Illustration 2 to § 348.

Restatement § 347 cmt. e, illus. 12, at 116. 

6To illustrate the rule providing the measure of damages for incomplete or 

defective construction, the Restatement states: 

A contracts to build a house for B for $100,000 but repudiates the 

contract after doing part of the work and having been paid $40,000. 

Other builders will charge B $80,000 to finish the house. B’s damages 

include the $80,000 cost to complete the work less the $60,000 cost 

avoided or $20,000, together with damages for any loss caused by delay. 

See Illustration 12 to § 347.

Restatement § 348 cmt. c, illus. 2, at 121–22.

7For example, if the district court finds all the costs claimed by Miller, 

$22,975.15, were incurred to complete the contract work or repair defective contract 

work, Miller would be entitled to a judgment on his counterclaim of $3775.15 

($22,975.15 minus $19,200), plus interest and the costs of this action. The full 

remaining balance under the contract of $19,200 is the appropriate deduction, not the 

balance found owing under the contract by the district court, $16,927.50. The amount 

found by the district court to be due to Lewis Electric for the work it performed reflects 

a deduction in the contract price for work not performed by Lewis Electric, a sum 

already included in the $22,975.15 costs to repair and complete Lewis Electric’s work. 
8

damages shall be made on the basis of the current record. We find this 

mandate to be appropriate, as the parties had a full and fair opportunity 

in the proceedings below to present their evidence as to all issues and 

have identified no error that would warrant a new trial. Therefore, there 

is no basis for a retrial upon remand. See State v. Gordon, 732 N.W.2d 

41, 44–45 (Iowa 2007) (“The State has pointed to no error in the district 

court proceeding that would entitle the State to a new hearing . . . . In 

sum, the State had a full and fair opportunity to support its accusation 

. . . , but its evidence was insufficient. In view of these circumstances, 

the [State] is not entitled to a second bite of the apple to remedy its 

failure of proof.”); see also M-Z Enters., Inc. v. Hawkeye-Sec. Ins. Co., 318 

N.W.2d 408, 416 (Iowa 1982) (stating that parties should not rely on 

appellate court’s power of remand “as a substitute for careful trial 

preparation and presentation of evidence”).

III. Disposition.

We affirm the court of appeals’ decision with the following specific 

instructions. Upon remand, the district court shall enter judgment for 

Lewis Electric on its Sioux City contract claim in the sum of $4164.53,

plus interest and costs. The court shall also determine Miller’s damages

resulting from Lewis Electric’s breach of the Le Mars contract, and enter 

judgment in favor of Lewis Electric on its Le Mars contract claim or in 

favor of Miller on its counterclaim, depending on whether Miller’s 

damages exceed the remaining contract price of $19,200.8 

 8Should the district court determine Miller is entitled to a judgment on his 

counterclaim, under Iowa Rule of Civil Procedure 1.957, the court may not set off 

damages awarded on Miller’s counterclaim against Lewis Electric’s recovery under the 

Sioux City contract, as the parties have neither agreed to such an arrangement nor 

have they brought the court’s attention to a statute that requires a setoff. See City of 

Sioux City v. Siouxland Eng’g Assocs., 611 N.W.2d 777, 778–79 (Iowa 2000) (discussing 

rule 225, now rule 1.957).
9

The court of appeals ordered that the costs on appeal be taxed one

half to Lewis Electric and one half to Miller. Iowa Rule of Appellate 

Procedure 6.1207 provides that “[a]ll appellate fees and costs shall be 

taxed to the unsuccessful party, unless otherwise ordered by the 

appropriate appellate court.” We have recently held that it is an abuse of 

discretion to divide costs equally between the parties when one party was 

fully successful on appeal. Solland v. Second Injury Fund, 786 N.W.2d 

248, 249–50 (Iowa 2010). Here, the only matter contested on appeal was 

the respective liability of the parties regarding the Le Mars contract. 

Miller was entirely successful on that matter, obtaining a reversal of the 

judgments in favor of Lewis Electric on Lewis Electric’s contract claim 

and on Miller’s contract counterclaim. Therefore, costs on appeal are 

taxed to Lewis Electric, the unsuccessful party. 

DECISION OF COURT OF APPEALS AFFIRMED AS MODIFIED;

DISTRICT COURT JUDGMENT REVERSED, AND CASE REMANDED.