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Homeowner Liability

Author: LegalEase Solutions


 What must the Contractor show in order to recover the costs of constructing the house and daily change orders during the construction of the house from the homeowner?


The general law is that the contractor is entitled to recover the costs if he proves complete or full performance or even substantial performance of the building contract. The courts have observed that the contractor who continues to work to accommodate the increased scope of work demanded by the other party may subsequently recover the value of the work.[1] The courts in the 9th Circuit have accepted bills[2], invoices[3], books of accounts[4] and summary of costs[5] as proof for the work done based on requests for changes or modifications to the original work.


The Supreme Court of the Commonwealth of North Mariana Islands has held that “[t]he ‘interpretation of a contract and the determination as to its breach are a mixed question of fact and law.’” Manglona v. Gov’t of the Commonwealth of the N. Mariana Islands, No. 04-012-GA, 2005 WL 3771373, at *3 (N. Mar. I. Oct. 4, 2005) (quoting L.K. Comstock & Co. v. United Eng’rs & Constructors, Inc., 880 F.2d 219, 221 (9th Cir.1989)). The Ninth Circuit reviews de novo the facts interpreting contract principles. “In general, factual findings as to what the parties said or did are reviewed under the ‘clearly erroneous’ standard while principles of contract interpretation applied to the facts are reviewed de novo.” L.K. Comstock & Co. v. United Engineers & Constructors Inc., 880 F.2d 219, 221 (9th Cir. 1989) (internal quotations omitted).

The Supreme Court of Nevada has summarized the rule relating to recovery of contract price in building contracts as:

The rules appeal to be that if the promisor proves complete and full performance, he is entitled to recover the complete and full consideration bargained for; if the proof establishes something less than full and complete performance, that is, substantial performance only, he is entitled to recover the contract price less those necessary expenditures required to complete the performance bargained for; and, if the performance falls short of being substantial, then the promisor is entitled to no recovery.

Thompson v. Herrmann, 91 Nev. 63, 68, 530 P.2d 1183, 1186 (1975) (quoting Little Thompson Water Ass’n v. Strawn, 171 Colo. 295, 466 P.2d 915, 917 (1970); citing 3 A. Corbin, Contracts ss 700-12; 17 Am.Jur.2d Contracts s 375)).

Further, “[w]hether performance is complete, substantial, or less than substantial involves a factual determination for the trier of facts … the jury.” Id. (internal quotations omitted).

The Alaska Supreme Court and Idaho Supreme Court favors the above view of the Nevada court. “[T]he doctrine of substantial performance permits recovery by a contractor who has substantially, though imperfectly, performed his contractual undertaking.” Alaska State Hous. Auth. v. Walsh & Co., 625 P.2d 831, 835 (Alaska 1980) (citing Hopkins Construction Co. v. Reliance Insurance Co., 475 P.2d 223, 224-25 (Alaska 1970)). Therefore, “[t]he initial burden of proving substantial performance is on the contractor.” Id.

Further, the California Court of Appeals has observed that “[s]o long as the other contracting party continues to demand performance of the increased scope of work, and in the absence of any conflicting provision of the contract, the contractor may continue to work after unsuccessful negotiations and subsequently recover the value of that work.” Ted Jacob Engineering Group, Inc. v. The Ratcliff Architects (2010) 187 Cal.App.4th 945, 966 [114 Cal.Rptr.3d 644, 660].

The California courts have also held that “[w]here the extra work and materials furnished are of the same character as the work and materials named in the contract, the general rule is that they are to be paid for according to the schedule of prices fixed by the contract.” Frank T. Hickey, Inc. v. Los Angeles Jewish Community Council (1954) 128 Cal.App.2d 676, 684 [276 P.2d 52, 58]. Further, “[w]here the extras are of a different character from the work called for in the contract and no price is agreed on for extra work, their reasonable value may be recovered.” C. F. Bolster Co. v. J. C. Boespflug Const. Co. (1959) 167 Cal.App.2d 143, 151 [334 P.2d 247, 252].

The Ninth Circuit has held that “[i]t is well settled that where … the language of the contract is not entirely clear, the conduct of the parties is given great weight in construing it.” Sam Macri & Sons, Inc. v. U. S. for Use of Oaks Const. Co., 313 F.2d 119, 124 (9th Cir. 1963).

The Montana Supreme Court has held that “[t]he existence of a subsequent oral agreement for additional work was supported by evidence of agreed-upon work outside the scope of the written contract such as the pier caps, wall caps, and mechanical pad.” Weimar v. Lyons, 2007 MT 182, ¶ 26, 338 Mont. 242, 250, 164 P.3d 922, 928. Crucially, the same court accepted the testimony of the contractor on the issue of billing. The court held that “[the contractor’s] testimony, even if self-serving, was sufficient to support the District Court’s determination that his billing was the correct amount due for the additional services provided.” Weimar, supra, 2007 MT 182, ¶ 29.

The California court of appeals has held that when “the oral agreement of the parties modifying the written contract was fully executed and the work completed as ordered by defendants, and having been fully executed defendants were liable for the additional expense.” Punton v. Sapp Bros. Const. Co. (1956) 143 Cal.App.2d 696, 701 [300 P.2d 271, 274]. Further, the court held that “[t]he amount and value of the extra work was sufficiently established by the introduction in evidence of the bills and invoices covering such work and material” and “such labor and materials were furnished with the consent of defendants and at the reasonable market value at the current market prices for such labor and materials … is supported by the record.” Id. The court affirmed the judgment of the trial court finding “that there is substantial evidence in the record to support the findings of the trial court.” Id. at 702.

In another case involving claim for extra work, the California District Court of Appeal received “Plaintiff’s books of account … in evidence.” MacIsaac & Menke Co. v. Cardox Corp. (1961) 193 Cal.App.2d 661, 672 [14 Cal.Rptr. 523, 529]. The court found that “[t]hey showed the cost under [different] classifications” and “[t]he extra work was itemized under the same classification …” Id.  The court found that “[t]he evidence of cost was comprehensive and was not controverted.” Id. Therefore, the court affirmed the trail court’s award of value of extra work done by the plaintiff relying on an “oral agreement modifying the written agreement.” Id., 193 Cal.App.2d at 674.

In Healy v. Brewster (1967) 251 Cal.App.2d 541, 553 [59 Cal.Rptr. 752, 759], the contractor’s testimony and summary of costs were accepted as evidence of extra work.  The court held that the “testimony” on the part of the contractor “as to the extra hours and equipment required to process the hardpan, over and above that which would have been required had the material encountered been sandy loam” and the “summary of costs received in evidence [disclosing the sum of] the cost of the entire work performed, on an hourly basis, without profit …” were sufficient evidence “for the reasonable value of the extra work.” Id.

In C. Norman Peterson Co. v. Container Corp. of America (1985) 172 Cal.App.3d 628, 639 [218 Cal.Rptr. 592, 598], the court held that “there was substantial evidence that change orders and extra work imposed by the Owner upon the contractor were of such magnitude as to change the scope of the work originally contemplated under the contract … [and] the parties had abandoned the original contract.” Therefore, the contractor was entitled “to recover the reasonable value of the work it performed on a quantum meruit basis, without being limited by the original contract amount.” Id. The evidence relied on by the court include “revisions in detail sheets”, “unusual nature of drawing reviews” and “cost records”. Id., 172 Cal.App.3d at 648.

Outside of the 9th Circuit, Illinois courts have summarized the burden of proving extra works as:

[T]he law assigns to the contractor seeking to recover for extras the burden of proving that (1) the work was outside the scope of the contract promises; (2) the extra items were ordered by the owner; (3) the owner agreed to pay, either expressly or by his conduct; (4) the extras were not furnished by the contractor as his voluntary act; and (5) the extra items were not rendered necessary by any fault of the contractor.

Kern v. Rafferty, 131 Ill. App. 3d 728, 731, 476 N.E.2d 52, 54 (Ill. App. Ct. 5th Dist. 1985) (internal quotations omitted).

Though not controlling law for this analysis, this case provides persuasive authority on the issue.


In the instant case, the contractor may recover the cost of the building contract by proving either full or substantial performance of the contract. Courts in at least one jurisdiction in the 9th Circuit allow a contractor to recover even the increased scope of work demanded by the other party. Further, the courts in the 9th Circuit have allowed bills, invoices, books of accounts and cost summaries in evidence to establish extra work done by the contractors.

[1] Ted Jacob Engineering Group, Inc. v. The Ratcliff Architects (2010) 187 Cal.App.4th 945, 966 [114 Cal.Rptr.3d 644, 660].

[2] Weimar v. Lyons, 2007 MT 182, ¶ 29, 338 Mont. 242, 251, 164 P.3d 922, 929.

[3] Punton v. Sapp Bros. Const. Co. (1956) 143 Cal.App.2d 696, 701 [300 P.2d 271, 274].

[4] MacIsaac & Menke Co. v. Cardox Corp. (1961) 193 Cal.App.2d 661, 672 [14 Cal.Rptr. 523, 529].

[5] Healy v. Brewster (1967) 251 Cal.App.2d 541, 553 [59 Cal.Rptr. 752, 759].