[CLC-Discussion] proper measure of damages in professional negligence action when only option is complete tear-down of structure

Wed Mar 20 12:34:40 PDT 2019

In some cases the measure of damages  used may depend on the structure.  For example, if an owner has designed and constructed a building with significant special features to suit the owner' intended use, the cost to repair  should be used. A diminution in value doesn't work because those special features may not be reflected In a customary fair market analysis or appraisal.

Raymond L. Robinson, Esq.

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From: clc-discussion-bounces at lists.flabarrpptl.org <clc-discussion-bounces at lists.flabarrpptl.org> On Behalf Of Brian Bennett
Sent: Wednesday, March 20, 2019 2:09 PM
To: Justin Zinzow <JZinzow at zinzowlaw.com>; clc-discussion at lists.flabarrpptl.org
Subject: Re: [CLC-Discussion] proper measure of damages in professional negligence action when only option is complete tear-down of structure

For what it is worth:

"Generally, damages for the wrongful injury of property are measured either by the diminution in value or the costs of repairing or restoring the property to its condition prior to the injury, usually referred to as the 'restoration' rule." Davey Compressor Co. v. City of Delray Beach, 639 So. 2d 595, 596 (Fla. 1994) (emphasis added); Grossman Holdings Ltd. v. Hourihan, 414 So. 2d 1037, 1039 (Fla. 1982). "If a plaintiff can be made whole by being compensated by a repair, the law generally does not allow an additional windfall type of recovery for any diminution in value which occurs beyond the cost of repair." Orkin Exterminating Co., Inc. v. DelGuidice, 790 So. 2d 1158, 1160 (Fla. 5th DCA 2001); Tree Constr. Corp. v. Caplinger, 446 So. 2d 245, 245 (Fla. 4th DCA 1984) ("[T]he court here used an improper measure of damages in resorting to the diminution in value rather than employing the cost of repair.").  Damages for diminution in value are only appropriate in limited circumstances, such as to avoid substantial economic waste. Orkin Exterminating Co., Inc., 790 So. 2d at 1159; Tree Constr. Corp., 446 So. 2d at 245; Temple Beth Sholom & Jewish Ctr., Inc. v. Thyne Constr. Corp., 399 So. 2d 525, 526 (Fla. 2d DCA 1981). "If the cost of repairs or restoration exceeds the diminution in value or if repairing or restoring the property is impracticable, then the law requires that damages be measured by the diminution in value." Santa Rosa Golf Assocs., Inc. v. Haraway, 998 So. 2d 1166, 1167 (Fla. 1st DCA 2008).

So, based on the facts as you outlined, if the property has been rendered worthless, and the cost of repair amounts to economic waste, it seems to me that the measure of damage is the fair market value of the building assuming no defect exists (which is essentially diminution of value as the building's value has been reduced to zero in your fact scenario).

Hope this helps and curious what others think on this.

Sincerely,

Brian W. Bennett
Board Certified Construction Attorney
Bennett Legal Group, P.A.
Construction & Business Litigation
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From: clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org> <clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org>> On Behalf Of Justin Zinzow
Sent: Wednesday, March 20, 2019 1:31 PM
To: clc-discussion at lists.flabarrpptl.org<mailto:clc-discussion at lists.flabarrpptl.org>
Subject: [CLC-Discussion] proper measure of damages in professional negligence action when only option is complete tear-down of structure

Good afternoon:  I write to inquire if any among us has located and applied legal authorities on the proper measure of damages in a professional negligence action where the structure is not legally useable in any form.  Specifically, is the owner limited to diminution in value of the property only, or are consequential damages also recoverable? If the damages are limited to diminution in value, how is diminution calculated when the "improvements" to the property are worthless (the structure is an uncurable code violation because it is built below the benchmark flood elevation and cannot be elevated without the old structure being destroyed in the process) and actually creating ongoing liability to the owner in the form of code enforcement penalties for as long as the structure remains standing?

Grossman Holdings, Ltd. v. Hourihan, 414 So. 2d 1037 (Fla. 1982) seems to be premised on a breach of contract action, not one sounding in negligence.  It relies upon section 346 of the Restatement (First) of Contracts.  Grossman also appears to apply only when there would be unreasonable economic waste.  To the extent a tear down and rebuild is "waste," it does not seem unreasonable under the circumstances, which include active code enforcement prosecution by the county for being below the benchmark.

Similarly, Heine v. Parent Construction, Inc., 4 So. 3d 790 (Fla. 4th DCA 2009) (a case in which a house was built a foot lower than contracted for), seems distinguishable because it is a contract case rather than a tort case and it does not involve FEMA/building code violations.

However, there are tort cases limiting damages to diminution in value if cost of repairs or restoration exceeds the diminution in value: Davey Compressor Co. v. City of Delray Beach, 639 So. 2d 595 (Fla. 1994) (actually decided on an exception to the general rule but in dicta mentions the general rule and cites Keyes Co. v. Shea, 372 So. 2d 493, for the general rule); Bisque Assoc. v. Towers of Quayside No. 2 Cond. Assn., 639 So. 2d 997 (Fla. 3d DCA 1994); and Santa Rosa Golf Assocs. v. Haraway, 998 So. 2d 1166 (Fla. 1st DCA 2008).

The Florida Standard Jury Instructions - Civil Cases, seem partially instructive.  Although Section 402 applies to professional negligence, it does not have an instruction for damages for professional negligence. Section 409.9 addresses claims for false information negligently supplied for the guidance of others, and Section 409.13 describes the damages available, citing to the Restatement (Second) of Torts, section 552B.  The diminution in damages limitation is not stated in 409.13, and consequential damages are available under 552B, subsection (1)(b).

Any insights are most appreciated.

Justin R. Zinzow
Admitted to Practice Florida & Texas
AV Preeminent(r) Rated Attorney
Fla. Board Certified in Construction Law

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