No Double Dipping: Court of Appeals Slashes Damages Award for Breach of Construction Contract

Joy & Yoo Properties, Inc. v. Roeder Holdings, LLC

Dallas Court of Appeals, No. 05-22-00699-CV (November 28, 2023)

Justices Pedersen (Opinion, linked here), Garcia, and Kennedy

Brent M. Rubin

MDK owned a tract of land in Burleson, Texas. In 2009, Joy & Yoo Properties purchased one of the lots on the tract and agreed to construct improvements on the entire tract (not just its lot), including fire lanes, access drives, sewers, and water lines. But the property was never developed according to the agreement. In 2011, the bank foreclosed on MDK’s property, and the bank sold the property to Roeder in 2017. In 2019, Roeder demanded that Joy & Yoo complete the improvements required under the contract with MDK. Roeder sued Joy & Yoo and obtained summary judgment on liability for breach of contract.

The case went to a jury trial on damages, and the jury awarded two measures of damages: $618,718.07, the cost to construct the improvements, and $480,000, the lost value of Roeder’s land without the improvements. The trial court entered a judgment that included both damages measures, totaling $1,098,718.07. Joy & Yoo appealed.

Joy & Yoo argued that the trial court awarded Roeder overlapping measures of damages, resulting in an improper double recovery, and the appeals court agreed. The Court explained that there are two measures of damages for breach of a construction contract: (1) remedial damages, which assess the cost to complete or to repair the subject of the contract; and (2) difference-in-value damages, which assess the difference between the value with the improvements as constructed versus the value had the improvements been constructed according to the contract. Remedial damages are appropriate when the contractor has substantially performed. The difference-in-value measure applies when the contractor has not substantially complied with the contract terms.

The Court of Appeals concluded that remedial damages and difference-in-value damages are alternative measures and held that allowing a party to recover both would be an improper double recovery. Roeder argued that it was proper for the judgment to include both measures of damages, because the remedial damages were direct damages whereas the difference-in-value damages were consequential damages. The Court rejected this argument, concluding the difference-in-value damages are direct damages and noting that Roeder did not plead for consequential damages.

The appeals court therefore vacated the damages award. Because undisputed evidence showed that Joy & Yoo had not substantially performed, the Court remanded to the trial court and instructed it to enter a $480,000 judgment based on the difference-in-value measure and to recalculate interest based on the reduced damages award.