As a construction attorney the issue of how to calculate damages comes up often. Generally, a contractor has their own idea on how to calculate its damages, but generally they are not correct. In the case where a contract is substantially completed , the contract price between the parties will likely govern the value of work in place. In that case, a party attempting to prove their damages may not need to demonstrate the value of the labor and materials used or incorporated into the Project or attempt to proffer what a reasonable overhead and profit is, since the contract amount should, in most cases, account for such issues.
The trouble arises when a contractor has only partially performed its work on the project and then is terminated or otherwise dismissed from working on the Project. Florida Court’s have held that you may not properly look at the contract amount and than apply a percentage calculation of the work in place to calculate damages. Rather, when a construction project is partially completed the proper measure of damages is ‘the contractor’s lost profit together with the reasonable cost of labor and materials incurred in good faith in the course of partial performance of the contract.’ It is noteworthy, that this standard is not objective, meaning not what the reasonable value of the work is generally, but the standard is what did it reasonably cost the contractor, here, to perform the partial work on the contract .
This standard is plainly articulated in the 4th DCA case PUYA v. SUPERIOR POOLS, reproduced in relevant part below.
Ernest PUYA, Appellant, v. SUPERIOR POOLS, SPAS & WATERFALLS, INC., Appellee.
902 So.2d 973
Nos. 4D04-3733, 4D04-4867. June 8, 2005.
(Relevant Portions reproduced below.)
“[T]he measure of damages for breach of a partially performed construction con- tract is, ‘either quantum meruit or * the contractor’s lost profit together with the reasonable cost of labor and materials incurred in good faith in the course of partial performance of the contract.’ ” Nico Indus., Inc. v. Steel Form Contractors, Inc., 625 So.2d 1252 (Fla. 4th DCA 1993) (quoting Brooks v. Hol- sombach, 525 So.2d 910, 911 (Fla. 4th DCA 1988) ). A contractor may prove lost profit damages “by showing the total cost and expenses of labor, ser- vices and materials necessary to perform the con- tract and then deducting that sum from the contract price.” Ballard v. Krause, 248 So.2d 233, 234 (Fla. 4th DCA 1971). A contractor may establish quantum meruit damages by showing “those dam- ages that would put him in the same position that he was [in] immediately prior to the making of the agreement, in which case the contractor’s measure of damages is the reasonable value of the labor and services rendered, and materials furnished.” Id. Be- cause contractors must prove their damages under one of those methods, this court has recognized that evidence concerning the “[p]ercentage of completion is not competent evidence to prove damages for breach of a partially performed construction contract.” Nico Indus., Inc., 625 So.2d at 1252; see also Teca, Inc. v. WM-TAB, Inc., 726 So.2d 828, 830 (Fla. 4th DCA 1999) (en banc); First Atl. Bldg. Corp. v. Neubauer Constr. Co., 352 So.2d 103, 104-05 (Fla. 4th DCA 1977).