Recent Application of “Betterment” Defenses – Getting No More Than You Bargained For

It has long been the law in Florida that a Plaintiff alleging faulty design or construction is entitled only to the reasonable cost of bringing the structure back to its “original condition,” plus costs of business interruption and/or loss of use – i.e. “delay damages.”  See e.g. Grossman v. Sea Air Towers, Ltd., 513 So. 2d 686, 688 (Fla. 3d DCA 1987); Grossman Holdings Limited v. Hourihan, 414 So.2d 1037, 1039 (Fla. 1982).  This doctrine, which is closely related to the basic precept of contract law that a person should be entitled to the benefit of their bargain – no more, no less – essentially holds that a construction Plaintiff may not view litigation as an opportunity to obtain a “free upgrade” over and above the quality of the construction for which they originally contracted.  This issue was recently revisited by the Florida 4^th District Court of Appeals in Kritikos v. Anderen, et al., 38 Fla. Law. Weekly D931a (Fla. 4^th DCA 2013).

In Kritikos, the 4^th District Court undertook the review of a trial court order granting a partial directed verdict on the issue of damages against a property owner and in favor of a construction superintendent, reasoning that because the property owner had failed to introduce evidence of “actual costs of repairs,” but rather relied upon estimates, then the property owner Plaintiff had failed to prove damages.  See id.  The 4^th District Court reversed the trial court, holding that the use of estimates of costs to repair were perfectly acceptable evidence and could be used to support a jury verdict for this measure of damages.  See id.  Accordingly, a Defendant in cases such as these cannot rely solely upon the fact that a Plaintiff has not gone “out of pocket” to anticipatorily make repairs in order to avoid damages measured by the costs of bringing a structure back to its original – or perhaps more accurately, its originally designed – condition.

However, the 4^th District Court also discussed in detail the application of the “betterment” defense.  As noted initially above, the Courts of Florida have repeatedly recognized that a construction Plaintiff is entitled to that for which they bargained, and not an upgraded version, so long as the costs of bringing the property back up to its originally designed and contemplated condition does not involve “unreasonable economic waste.”  See Grossman Holdings, 414 So.2d at 1039.  In Kritikos, the 4^th District Court reinforces this position and incorporates the 2^nd District Court decision in Temple Beth Shalom v. Thyne Construction Corp., holding that:

The proper measure of damages for construction defects is the cost of correcting the defects, except in certain instances where the corrections involved an unreasonable destruction of the structure and a cost which is grossly disproportionate with the results to be obtained.  If in the course of making repairs the owner elects to adopt a more expensive design, the recovery should be limited to what would have been the reasonable cost of repair according to the original design.  38 Fla. Law. Weekly D931a, quoting Temple Beth Shalom, 399 So.2d 525, 526 (Fla. 2d DCA 1981).

This holding, coupled with the relatively well developed case law in this area, should provide a construction Defendant with a ready defense, should a Plaintiff seek compensation for costs incurred in designing and/or “repairing” a structure which purports to "correct" deficiencies, but rather provides an upgraded structure or design.  Counsel should be vigilant to recognize when a construction Plaintiff seeks to essentially obtain a “free improvement” to their property, and demonstrate to the court that such an effort is inappropriate and contrary to well-established doctrine in this body of law.