Superior Court Rules in Favor of Homeowners in Defective Construction Work Case

In Woullard v. Sanner Concrete & Supply, 2020 Pa. Super. LEXIS 897 (Pa. Super. Ct. Oct. 30, 2020), the Pennsylvania Superior Court recently determined that homeowners were not required to present evidence of diminution in value of their home attributable to the defective construction work as part of calculating the damages due to them against contractors they hired and instead the homeowners were entitled to an award of damages equaling how much it would cost them to correct the defective work product.

In Woullard, homeowners in Somerset County hired several contractors to perform work on their home’s stonework, back porch, fireplaces, windows, staircase and the flooring in the garage, the opinion said.

As a result of the defective construction work, the homeowner filed suit against two of their contractors, the opinion said.

The trial court found in favor of the homeowners and calculated the cost to repair all of the defective work product to be $221,500. This award of damages was based upon the individual costs to repair each of the defectively constructed items in the home.

In support of their decision, the trial court in Woullard relied upon the Superior Court’s decision in Fetzer v. Vishneski, 582 A.2d 23 (Pa. Super. Ct. 1990), which explained the diminution in market value does not have to be weighed against the cost to repair the defective work product because that calculation is more appropriate in single builder-vendor cases where the underlying claim is a breach of the implied warranty of habitability.

Furthermore, according to the trial court in Woullard, to the extent diminution in value applies outside of the builder-vendor context, once the homeowner presented evidence as to the cost of remedying the defective work product, the burden is on the contractor to challenge this evidence.

The trial court’s decision in Woullard was based, in part, on the fact the contractors did not present evidence of how each individual defect affected the market value, in that they would have had to present an “all else being equal” figure to explain the impact of a particular defect on the market value, which they failed to do.

Thus, because the trial court in Woullard found that the contractors failed to establish that the diminution in value is significantly less than the cost of repairs or that such a formula even applies in this situation, it declined to apply the diminution in market value measure of damages.

The trial court in Woullard explained that in a case like this, a party would have to offer evidence of the market value of the property only with the particular defect that they caused—without any of the other defects—against the value of the property without any defects at all; otherwise, apportioning the overall diminution of market value would be excessively speculative.

On appeal, the contractors contended that the trial court in Woullard erred as a matter of law in calculating the damage award based upon the cost to repair the defects instead of basing their calculations on to the diminution in value of the home attributable to the aggregate defects.

In addition, the contractors alleged that the trial court abused its discretion when it denied their request for a new trial strictly on the issues of damages

Citing to Freeman v. Maple Point, 574 A.2d 684 (Pa. Super. Ct. 1990), the Superior Court in Woullard highlighted that the trier-of-fact must avoid awarding damages that amount to a windfall for the injured party.

Referring to its prior decisions in both Freeman and Gloviak v. Tucci Construction, 608 A.2d 557 (Pa. Super. Ct. 1992), the Superior Court in Woullard reiterated that, in cases where the cost of repair is clearly disproportionate to the probable diminution in value, damages must be limited to diminution in value.

In doing so, the Superior Court in Woullard reasoned that the determination of damages is a balancing between the probable diminution in value, which is often quite unclear, and the cost of repairs, which may be determined with greater accuracy.

In Freemen, the Superior Court explained that the rationale behind limiting damages and, in turn, avoiding a windfall to the injured party, is that an injured party will not, even if awarded an excessive amount of damages, usually pay to have the defects remedied if to do so will cost him or her more than the resulting increase in value.

The Superior Court in Gloviak, stated that, to establish a claim for damages when the cost of repair is grossly disproportionate on its face to the market value of the real property, the injured party is required to present evidence of diminution in value of the real property in order to demonstrate that the cost of repair, if awarded as damages, would not result in a windfall to the injured party.

In contrast, where the cost of repair is not grossly disproportionate on its face to the market value of the real property, the injured party is not required to present evidence of diminution in value of the real property.

Applying the framework of Gloviak and Freeman, the Superior Court in Woullard rejected the contractors’ argument that, because the cost of repair was 52% of the home’s market value and grossly disproportionate to the value of the home, the homeowner was required to present evidence of the diminution in value of the home that was attributable to the defective construction.

The Superior Court in Woullard stated that, when examining whether the cost of repair is grossly disproportionate on its face compared to the market value of the home without the defect, each defect and its corresponding cost of repair must be considered individually against the market value of the home without the defect.

In this case, as an example, the cost to repair the defective construction of the stone veneer was $61,000, which was 12% of the home’s market value of $528,000, while the cost to repair the defective construction of the back porch was $39,700, which was 8% of the home’s $528,000 market value.

The Superior Court in Woullard noted that the record demonstrated that the contractors did not meet their burden of proof because at trial they did not present evidence of a diminution in value of the home that was attributable to either the defective installation of the stone veneer or the defective construction of the back porch.

Consequently, in the Superior Court’s estimation, the trial court’s award of damages was not grossly disproportionate on its face when compared individually to the present market value of the home without the corresponding defect.

As such, according to the Superior Court in Woullard, the homeowner was not required to present evidence of diminution in value of the home attributable to the defective construction and the burden of demonstrating any potential diminution in value shifted to the contractors.

Lessons Learned

The Superior Court’s decision in Woullard provides homeowners with insight as to the damages they can expect when dealing with defective construction of multiple contractors.

Once the homeowner has presented evidence as to the cost of remedying the defects, the trial court will then compare the cost of repairs individually to the present market value of the home without the corresponding defect.

The burden then shifts to each of the contractors to challenge this evidence and demonstrate any potential diminution in value as to the defect they alleged caused.

If the contractor fails to rebut this evidence, the homeowner will likely prevail and be awarded damages that are calculated based upon the individual cost of replacement for each defect.

—Clementa Amazan, an associate at Nochumson P.C., is the co-author of this article.

Reprinted with permission from the November 11, 2020 edition of The Legal Intelligencer © 2020 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382, reprints@alm.com or visit www.almreprints.com.