Hancock v. Northcutt

Carol and Melvin Northcutt (plaintiffs) contracted with Herb and Marge Hancock (defendants) for the construction of an earth-sheltered concrete house, consisting of seven joined pods. Under the contract, the Northcutts were required to pay $65,000 to the Hancocks for all structural concrete work. After the work was completed, the Northcutts claimed that construction was defective. The Northcutts sued the Hancocks, alleging breach of contract. The Hancocks alleged that the Northcutts owed money under the contract and also additional money because of extra work required. The Northcutts finished out the house and closed on a mortgage totaling $160,000. The Northcutts moved into the home but did not occupy the seventh pod because of the structural defects. The trial court instructed the jury that the typical damages award for construction-defect cases is the cost to repair the property so that the property is in the condition it should have been in if the defendant had properly performed under the contract. The trial court also instructed that the cost of repair may be disproportionate and wasteful in some cases, which should instead award the difference between the value of the property as delivered and the value of the property as it would have been if the defendant had performed. Finally, the trial judge instructed that there was an exception to this rule if any of three conditions were met: the house had special significance, the house creates a dangerous condition, or the plaintiffs would likely demolish and rebuild the house. The jury awarded the Northcutts approximately $686,000 in compensatory damages, including approximately $455,000 as the cost to demolish and rebuild the home. The Hancocks appealed.