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.
