Groves v. John Wunder Co.
205 Minn. 163, 286 N.W. 235 (Minn. 1939)

  • Groves owned some rocky land that wasn’t suitable for very much. He signed a contract with a gravel company named Wunder to lease the land (for $105k), remove gravel, and regrade the land so it was flat and level (and then useable for houses or farming).
  • Wunder paid money and took the gravel, but did not level the land. Groves sued for breach of contract.
    • Wunder breached the contract on purpose because they calculated it was too expensive to level the land.
    • The land, if improved would be worth only $12k more than was before the contract, while it would cost $60k to level the land.
  • The Trial Court found for Groves and awarded $12k. Groves appealed.
    • That’s the expectation damages standard.
    • Also known as benefit of the bargain.
  • The Appellate Court reversed the damage award and said that since it would cost $60k to level the land, Wunder had to pay $60k.
    • The Appellate Court found that the standard should be cost of completion.
    • The Court found that the fact that leveling the land is not cost effective is irrelevant.
    • The Court noted that the fact it was a willful breach is important (although the trial judge did not find that to be the case).
  • There was a strong dissent.
    • The dissent argued that the difference in value should be awarded, not the cost of completion.
    • The dissent argued that Groves would become enriched beyond the contract if they were awarded $60k.
    • Compare this case to Peevyhouse v. Garland which agreed with the dissent’s reasoning.
  • In this case, Groves wanted money (aka monetary damages). However, a plaintiff could instead seek specific performance which means that they don’t want the money, they want them to do the work.
    • Groves never leveled the land, even though he won the big $$$.
      • Probably because it would be a waste of his $60k to level land that would only produce $12k in return. Groves wasn’t dumb.
  • Both the majority and the dissent in this case applied the benefit of the bargain concept, but applied it differently.
    • Should courts award cost to completion, or difference in value? In most cases, they are the same. There is no ‘black letter’ answer.
    • Courts tend to consider 3 major factors:
      • Amount of the disproportion. The less the disproportion, the more willing they are to award cost to completion.
      • The extent to which the contract is subjective and personal vs. commercial. If the person cares about the completion, as opposed to a business deal, they are more likely to award cost to completion.
      • The willfulness of the breach. The more willful the breach, the more likely to award cost to completion.