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Tennessee Court Discusses Methods For Calculating Damages

Legal News GavelThere are two distinct phases to most negligence cases. First, the court must determine whether the defendant was in fact negligent and is liable for damages. Second, the court must decide what the amount of damages owed is. Often, these issues are addressed simultaneously at trial. In other cases, the court may divide a Tennessee negligence case into a “liability” stage and a “damages” stage.

Calculating damages can be extremely complicated, since the parties often disagree about the amount of certain damages or injuries, as well as how the overall category of damages should be calculated. While courts have some guidance as to how to calculate damages, often much of the work is left up to their discretion, as illustrated in a recent Court of Appeals Case.

In this negligence case, P.D. hired MTown Construction to replace his roof. On the day that MTown arrived and began taking shingles off the home, a huge thunderstorm began pouring rain onto the property. MTown was unprepared for the rain and attempted to cover the empty holes in P.D.’s roof. They were unsuccessful, and rain flooded into P.D.’s home. After the storm was over, P.D. contacted MTown’s owner, who agreed to come out and survey the damage. He initially offered to make repairs, but after speaking with several contractors, the house was considered a loss due to the water damage.

MTown brought in its insurance carrier to review the damages P.D. was entitled to receive but valued the damage only at approximately $30,000. P.D. felt this was much too low and spoke with other contractors and environmental remediation experts, who said it would cost closer to $100,000 to repair the property. P.D. then filed this lawsuit.

At trial, MTown essentially conceded liability, and most of the case focused on the damages amount. The judge had difficulty deciding how to calculate the damages but ultimately awarded P.D. the difference between the alleged value of the property before the damage and the value of the land after the damage (since the house was considered a loss). This totaled $108,000. MTown appealed this damages determination.

The Court of Appeals explained that in property damage cases, there are two ways of valuing a party’s damages. First, the court can go with the cost of repair. If the defendant can show that the cost of repair is disproportionate to the value of the house, the court can instead go with the difference in value between the house before the damage and the house after the damage.

In this case, the court hinted that it found the cost of repair (which P.D. presented as $118,000) to be disproportionate, but it did not engage in an actual analysis of this factor. Instead, the lower court turned immediately to the differential value of the property and awarded P.D. damages based on this amount. On appeal, the Court of Appeals determined that since MTown made no effort to show that the cost of repair was disproportionate, the lower court was required to go with the cost of repair, rather than the difference in value. Thus, it overturned the lower court’s award of $108,000 in damages.

However, the Court of Appeals also held that the lower court failed to undertake a thorough analysis of the actual cost of repair, and it did not consider the damages information presented. Accordingly, it remanded the case back to the lower court to make the proper factual determination as to the true cost of repairing P.D.’s property.

When dealing with a claim for negligence based on property damage, this case makes clear that there are two avenues for damages:  (1) cost of repair and (2) difference in value.  Unless a defendant protests the cost of repair as unreasonable and presents evidence to this effect, courts must use the cost of repair analysis.

Tennessee premises liability attorney Eric Beasley can help you evaluate your options for damages, whether they are based on property damage, medical bills, or injuries. If you have recently been injured and are uncertain about what you might recover, contact the Law Office of Eric Beasley today at 615-859-2223.

Related Blog Posts:

Tennessee Court Finds Homeowner Not Responsible For Worker’s Fall, Tennessee Personal Injury Blog, March 20, 2018.

Tennessee Court Holds No Duty to Keep Parking Spots Safe, Tennessee Personal Injury Blog, December 15, 2017.

Tennessee Court Rejects Claim that Doorframe Was Dangerous Condition, Tennessee Personal Injury Blog, November 9, 2017.