Opinion ID: 2606174
Heading Depth: 1
Heading Rank: 1

Heading: the superior court erred in permitting kandik & associates to use a total cost approach without also instructing the jury as to the specific damages recoverable for breach of contract

Text: The Borough argues that the superior court erred in permitting Kandik & Associates to argue a total cost approach to damages because it did not fairly segregate the excess costs incurred by Kandik & Associates as a direct result of the faulty design plans. Kandik & Associates contends that it is entitled to recover its total actual cost of the project, plus 20.20% overhead and profit, less actual payments made by the Borough. [5] Although a contractor need not prove damages with mathematical precision, it may only recover those damages which it proves with reasonable certainty. State v. Northwestern Constr., 741 P.2d 235, 237 (Alaska 1987). Recovery of damages for a breach of contract is not allowed unless acceptable evidence demonstrates that the damages claimed resulted from and were caused by the breach. Boyajian v. United States, 191 Ct.Cl. 233, 423 F.2d 1231, 1235 (1970). In F.H. McGraw & Co. v. United States, 131 Ct.Cl. 501, 130 F. Supp. 394, 399-401 (1955), the court rejected the use of the total cost approach to prove damages resulting from defective plans and specifications. The court stated: The plaintiff claims the difference between the original contract price for all the work, as increased by change orders, and its direct cost of completing the job... . This method of proving damages is by no means satisfactory, because, among other things, it assumes plaintiff's costs were reasonable and that plaintiff was not responsible for any increases in cost, and because it assumes plaintiff's bid was accurately computed, which is not always the case, by any means. Id. at 399-400. See also U.S. Indus. v. Blake Constr. Co., 217 U.S.App.D.C. 33, 671 F.2d 539, 547 (1982) (total cost method is disfavored because it assumes that the defendant's breach was the cause of all the extra cost); Laburnum Constr. Corp. v. United States, 163 Ct.Cl. 339, 325 F.2d 451, 459 (1963) (measure of damages resulting from delay caused by defective specifications is the contractor's actual costs during the period of delay). Although the total cost approach may be a permissible starting point for the assessment of damages, the plaintiff must relate the specific amount of increased costs to the particular breach. Boyajian, 423 F.2d at 1235. The contractor's failure to present any evidence demonstrating its increased costs justifies dismissal of its claims. Id. at 1235-36. In this case, the court refused to give the jury any specific instruction which would have enabled the jury to limit the award of damages to those proximately flowing from the Borough's breach of contract. We believe that the evidence combined with the jury instructions permitted the jury to impose liability on the Borough far in excess of the damages proximately resulting from its breach of contract; therefore, we believe that the jury verdict must be set aside unless, as Kandik & Associates contends, it may be justified under an alternate theory of quantum meruit. [6]