Harry Homeowner and his wife Happy (the “Homeowners”) decide to renovate their house after 15 years. They hire Reckless Ruins, Inc. (“RRI”), a general contractor, to perform the work. RRI is not particularly experienced and has been in business for less than a year. The “Project” was structured in three phases: (I) the Powder Room, (II) the Family Room, and (III) a man cave in the basement (the “Man Cave”).

The project called for a down payment of $10,000 and progress payments of $15,000 upon the completion of each of the three phases, for a total of $55,000, 15% of which is profit and 85% costs. Each phase of the Project is equal in the amount of work to be performed. The contract contains the following clauses:

Warranties. RRI warrants that it will complete the Project in a workmanlike fashion and will perform its work in accordance with the knowledge and practices of a superior contractor in the industry.

Scope of Work. RRI recognizes and acknowledges that Homeowners have not and will not retain an architect or an engineer for the Project and accepts any and all risks that may result, if any. Assignability. No part of this contract is assignable without the express written consent of the Homeowners.

Site Conditions. Both parties recognize there exist site conditions that are unknown at the time of this contract. In the event additional and necessary work is warranted based on actual site conditions discovered during demolition, Homeowners agree to pay RRI the reasonable cost thereof.

Time of Completion. RRI covenants and agrees that the Project will be completed by no later than December 31, time being of the essence, because of a special Super Bowl party that Homeowners will host in February. RRI agrees to pay Homeowner liquidated damages in the sum $2,500 per day for each day the Project is late.

Consequential Damages. Homeowners waive all claims for consequential damages arising from site conditions unknown at the time of this Contract.

The Homeowners paid RRI the down payment of $10,000. The Powder Room was completed seamlessly and on time. But Harry and Happy Homeowner declined to pay RRI.

Notwithstanding the Homeowners’ failure to pay RRI, RRI nevertheless proceeded with the Family Room renovation that would involve a combination of two rooms, the large, formal living room that no one uses and the small den in which everyone spends their time watching TV. On September 1, RRI commenced the demolition work. Sam Sledgehammer, an employee of RRI, performed most of the demolition work. While working on the job, Sam falls off a ladder given to him by the Homeowners and breaks both legs. The demolition reveals two rather large posts in the walls that appear to be structural in nature. RRI suggests to Homeowner that they hire an architect or engineer to assess whether the posts are load-bearing or not and whether they can be removed without causing structural damage to the house. Homeowners explain they did not budget for either an architect or an engineer and direct RRI to do what is “best.” On behalf of Homeowners, RRI hires the Helix Engineering Labs Project, Inc. (“HELP”) and pays it $5,000 to survey the project. Based on HELP’s engineering report, RRI advises Homeowners that the posts are structural in nature and cannot be removed without installing a structural “I” beam for the additional cost of $5,000. Homeowners refuse to pay RRI for the cost of HELP’s bill and the cost of an additional “I” beam. On October 1, RRI walks-off the job, afraid they may cause structural damage to the house.

Homeowners freak out and don’t know what to do. In an effort to clear their minds, they travel to Key West for an extended vacation to chill and learn bone fishing. They return home on November 1. Upon their return, they talk with other contractors and hire Supreme Contractors, Inc. (“SCI”). SCI agrees to complete the work on the Family Room for $25,000 and the Man Cave for $25,000. The contract between Homeowners and SCI is identical to the contract between Homeowners and RRI. SCI is very, very experienced and examines the original drawings for the house and determines that the posts between the living room and den are not structural in nature.

SCI proceeds to remove the posts without incident and completes the Family Room expansion. Homeowners pay $25,000 to SCI. SCI next proceeds with the Man Cave portion of the Project. In the middle of the construction, SCI notices that groundwater is seeping into the basement through cracks in the foundation. SCI advises Homeowners they should consult with an engineer, and with Homeowners’ consent, SCI hires Earnest Engineers (“EE”). EE advises that waterproofing material should cure the problem and recommends to SCI that it use ABC sheeting and WonderSealant compound. SCI covers the foundation with the ABC sheeting but uses a generic brand of sealant compound. Homeowners pay SCI the remaining $25,000. Homeowners also pay EE’s bill of $2,500.

The work is finally completed by February 1 and Harry's Homeowner schedules a Super Bowl party for February 4. Harry invites his supervisors at his company, European Express, including its President, Elvis Presby. Harry knows that Elvis is a huge Justin Timberlake fan and knows that his new Man Cave equipped with the best Surround Sound system will make Justin sound GREAT! He is sure this will result in a promotion.

It rains cats and dogs before the Super Bowl party. As a result, the Man Cave is flooded with three feet of water. The renovations in the basement are water damaged and moldy and need to be replaced, along with the furnishings and the new 55-inch flat-screen TV and Surround Sound system, costing $10,000. Harry embarrassingly tells his boss Elvis that he must cancel the party. Elvis yells at Harry and calls him irresponsible for not being able to put the party together. He publically posts on Instagram: “Harry Homeowner is the worst salesman I’ve ever employed.”

Two weeks later, European Express announces the need to lay off employees. Harry is on the list and loses his $ 75,000-a-year job, which he has had for a year. Harry is European Express’ top salesman. The Homeowners pay $25,000 to The Best Contractors, Inc. (“TBC”) to repair the Man Cave.

1. Identify and define each legal cause of action applicable (the legal theories) specifying the elements of each cause of action. Your analysis should include, but should not be limited to, the following concepts: (i) material and minor breach of contract, (ii) breach of contract remedies, (iii) compensatory and consequential damages, (iv) anticipatory repudiation, (v) liquidated damages, (vi) mitigation of damages, (vii) negligence and malpractice, (viii) agency, and independent contractors, and (ix) workers compensation.

2. Argue both sides of each case.

3. Define the damages, if any, and quantify them where possible.

4. What would be the court's final verdict?

Answer rating: 100% (QA)

Answer The labor cost and consultant cost charged by RRI to owner is also the consequential In this case also the RRI is nonbreaching party iv Anticipatory repudiation The Anticipatory repudiation is ... View the full answer