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By Marc J. Felezzola, Associate, Babst, Calland, Clements and Zomnir, P.C.
The West Virginia Supreme Court’s recent decision in the Brooks v. City of Huntington case overturned years of precedent regarding what a claimant may recover for property damage. Prior to the Brooks decision, the law in West Virginia was that a party claiming property damage was required to determine whether the cost of repair would exceed the fair market value of the property before it was damaged, and either the loss of the fair market value or the cost to repair, whichever was less.
The West Virginia Supreme Court changed this rule of law when it announced its decision in Brooks v. City of Huntington, on November 13, 2014, [enhanced version available to lexis.com subscribers]. In Brooks, the Court declared: “Where the owner of residential real property which is damaged can establish that the pre-damage fair market value of the residential real property cannot be fully restored by repairs and that a permanent appreciable residential diminution in value will exist even after such repairs are made, then the owner may recover both the cost of repair and for such remaining diminution in value.” Id. at Syl. Pt. 6.
Thus, following Brooks, residential property owners may recover both cost of repairs and loss of value if the repairs will not restore the property back to its pre-damage fair market value. The Brooks case did not involve commercial property, and thus, it remains to be determined if this new rule also extends to commercial property.
The Brooks Court further eroded the prior rule by declaring that a party alleging property damage in West Virginia “may recover the reasonable cost of repairing it even if those costs exceed the property’s fair market value before the damage.” Syl. Pt. 4, Brooks v. City of Huntington. The claimant may also recover “the related expenses stemming from the injury, annoyance, inconvenience, and aggravation, and loss of use during the repair period.” Id. Thus, pursuant to Brooks, a property damage claimant may now recover loss in fair market value and cost to repair, even if the cost to repair exceeds the fair market value of the property prior to the damage.
Damages, however, are not unlimited. Instead, at least for residential property damage, to the extent repair costs “exceed the fair market value of the property before it was damaged, damages awarded for cost of repair must be reasonable in relation to its fair market value before it was damaged.” Id. at Syl. Pt. 5. Again, it remains unclear whether this reasonableness limitation announced by the Court applies to commercial properties. Babst Calland will continue to track the Brooks decision to see if and how it is interpreted by courts in a commercial context.
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