The usual way to calculate damages in construction contract disputes is by estimating the cost to fix flaws or finish unfinished work. But there’s an exception when those repair costs are grossly disproportionate to the value the additional work would create. In such cases, some courts shift focus to the loss in property value caused by the defects or incomplete work. Last week, the West Virginia Supreme Court addressed this rule in Corotoman v. Central West Virginia Regional Airport Authority, offering clarity on how it applies.
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The case involved a defendant who agreed to remove a knoll from a property and lower its elevation by 35 feet through over-blasting. The goal was to make the land flatter and more marketable. The defendant removed the knoll but skipped the over-blasting, a step the parties had estimated would cost over $4.3 million. The federal trial court found no clear evidence of the property’s value—previously appraised at $180,000—and awarded nominal damages. The Fourth Circuit then asked West Virginia’s highest court to clarify whether the gross-disproportionality rule applies there.
The court confirmed West Virginia does recognize the rule. It defined gross disproportionality as a comparison between the cost to repair or complete the work and the decrease in property value caused by the defect or incompleteness. If the repair cost is clearly much higher than the value lost, damages are measured by the latter. The party that breached the contract must prove this imbalance. If they fail to do so, the non-breaching side’s calculated damages take precedence.
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This framework reshapes how courts assess construction disputes. Instead of automatically relying on repair costs, judges now consider whether those costs are wildly out of line with the benefit the work would provide. The ruling emphasizes that the burden of proof lies with the party that failed to deliver on the contract. This could affect how plaintiffs and defendants prepare their cases, especially in high-stakes projects.
The trial court’s original decision to award nominal damages remains under review. The Fourth Circuit has paused its ruling pending further analysis of the West Virginia court’s guidance. A full version of the opinion is available here for those seeking detailed legal context.
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The case highlights a growing trend in construction law: courts increasingly weigh the practicality of repair costs against the actual value gained. This approach can prevent plaintiffs from being overcompensated for work that may never be worth the price. At the same time, it ensures defendants aren’t unfairly held to impossible financial standards. The balance between these factors will likely shape future rulings in similar disputes.
