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April 2nd, 2018
construction
COURT OF APPEALS OF TENNESSEE HOLDS IT IS DEFENDANT’S BURDEN TO PRESENT EVIDENCE TO LIMIT A PLAINTIFF’S DAMAGES TO DIMINUTION OF VALUE

In Patrick Durkin v. MTown Construction, LLC, N No. W201701269COAR3CV, 2018 WL 1304922, (Tenn. Ct. App. Mar. 13, 2018), the Court of Appeals of Tennessee overturned an award of property damages which was predicated in part upon the diminution of property value based upon a finding that the defendant had failed to present sufficient evidence establishing the unreasonableness of the costs to repair the real property.

Patrick Durkin (“Mr. Durkin”) entered into a written contract with MTown Construction, LLC for the replacement of his roof. After workers removed about three quarters of the existing shingles, rain began falling and entered every room in Mr. Durkin's home. Mr. Durkin filed suit and sought to recover damages for construction and remediation costs to address the water damage.

During trial, Mr. Durkin and MTown both presented evidence of the estimated costs each believed were reasonable to repair the home. However, the only testimony regarding the value of the property in its damaged state was one question presented to Mr. Durkin in which he provided his lay opinion on the value of his home in its damaged state.

Following the bench trial, the court sua sponte requested additional information regarding diminution of value. After submitting briefs, the trial judge took judicial notice of the value of Mr. Durkin’s home in its damaged state and awarded damages accordingly.  

On appeal, MTown argued that the Court erred in awarding damages based upon the court’s judicial notice in light of Mr. Durkin’s testimony that his property value remained the same based upon that year’s tax assessment. MTown requested the award be reduced to $0.00 based upon this lay opinion.

The Court of Appeals agreed that trial court erred in taking judicial notice of the value of the property, but disagreed that MTown was entitled to a reduction. Instead, the Court of Appeals remanded the case with instructions to enter an award to reflect the amount it would take to repair the property.

In coming to its conclusion, the Court of Appeals noted that, generally, the proper measure of damages in cases involving damage to real property is the cost to repair. However, if evidence is presented establishing that the cost to repair is disproportionate when compared to the difference in value of the premises immediately prior to and immediately after the injury, the trier of fact may elect to award the diminution of value instead.  

Although it may be proper to enter an award for the diminution of value, the Court of Appeals held that under Tennessee law, it is the defendant who carries the burden in establishing its right to request an award other than the cost to repair.  Therefore, because MTown did not present evidence regarding the diminution of value at trial, other than Mr. Durkin’s lay opinion, it had failed to meet its burden and damages should be set based upon the cost to repair.

This case is a good reminder for any defendant in a Tennessee case involving damage to real property of its burden to present substantial evidence regarding diminution of value.  Failure to obtain and present this evidence at trial will result in an award of damages based upon the cost to repair, regardless of whether or not doing so would be unreasonable.

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