Medina County Courthouse

Sunday, January 11, 2009

Ohio Supreme Court Rules Reasonable Cost of Repair Proper Measure of Damages for Residential Real Estate Cases

The following is from the Ohio Supreme Court's website:

Owner May Recover Reasonable Costs to Repair Property Without Showing Reduction in Value

2007-2023 and 2007-2024. Martin v. Design Constr. Servs., Inc., Slip Opinion No. 2009-Ohio-1.Summit App. No. 23422, 2007-Ohio-4805. Certified question answered in the negative, and judgment of the trial court reversed.Moyer, C.J., and Pfeifer, Lundberg Stratton, O'Connor, O'Donnell, Lanzinger, and Cupp, JJ., concur.Opinion:

Please note: Opinion summaries are prepared by the Office of Public Information for the general public and news media. Opinion summaries are not prepared for every opinion released by the Court, but only for those cases considered noteworthy or of great public interest. Opinion summaries are not to be considered as official headnotes or syllabi of Court opinions. The full text of this and other Court opinions from 1992 to the present are available online from the Reporter of Decisions: In the Full Text search box, enter the eight-digit case number at the top of this summary and click "Submit."
(Jan. 6, 2009)

In a unanimous decision announced today, the Supreme Court of Ohio held that in a lawsuit seeking recovery for temporary damages to noncommercial real estate, the property owner may recover the reasonable costs of restoration without proving that the damage caused a diminution (reduction) in the market value of the property. The Court’s opinion, authored by Chief Justice Thomas J. Moyer, went on to state that either the plaintiff or the defendant in such a case may offer evidence of diminution in the market value of the property as a factor bearing on the reasonableness of the cost of restoration.

The case involved a 2006 verdict in which a Summit County jury awarded homeowners Michael and Jennifer Martin of Uniontown damages of $11,777 to cover the costs of repairs to the foundation of their 8-year-old home, which was built by Design Construction Services Inc. (DCS). In its answers to two specific interrogatories, the jury found that the faulty foundation resulted from the builder’s negligence, and that the Martins had not made a showing that the market value of their home was diminished by the defects in construction.

DCS appealed, arguing that the Martins had failed to prove a necessary element of their claimed damages. On review, the 9th District Court of Appeals reversed and vacated the trial court’s judgment. The appellate panel cited a 1923 decision of the Supreme Court of Ohio, Ohio Collieries Co. v. Cocke,which held that an owner may recover his reasonable costs of repairing damage to his noncommercial property provided that the owner establishes at trial that the actual repair costs are not greater than the diminution in the fair market value of the property caused by the damage. Because the jury found that the Martins had not proved at trial that the damage to their foundation had diminished the market value of their home, the court of appeals ruled that the trial court’s award of damages was improper and must be reversed.

The 9th District subsequently certified that its ruling requiring proof of a diminution of value was in conflict with decisions by two other Ohio courts of appeals on the same legal question. The Supreme Court agreed to hear arguments to resolve the conflict among appellate districts.

In today’s decision, which reversed the 9th District and remanded the case to the court of appeals for further proceedings, Chief Justice Moyer pointed to two decisions issued after Ohio Collieries in which he said the Supreme Court modified its holding in that case to allow for more flexibility in determining whether a damage award is reasonable.

He wrote that in the first of those cases, Northwestern Ohio Natural Gas Co. v. First Congregational Church of Toledo (1933), “(T)he court moved away from strict market-value limits on damages, toward an approach to damages based on the reasonable costs of restoration. With regard to temporary damage, the court in First Congregational excised the diminution-in-value portion of the Ohio Collieries rule and offered instead the unqualified rule that ‘the measure of damages is the reasonable cost of restoration or repairs.’ ... First Congregational held that, even in cases in which the property has no market value, damages could still be awarded based on the reasonable cost of restoration, with consideration of the condition of the property prior to the damage. ... That holding serves to make the injured party whole by allowing for restoration of the property, when the restoration is accomplished for a reasonable cost.”

The Chief Justice continued: “The second case demonstrating a shift from the Ohio Collieries rule is Apel v. Katz (1998), which addressed the damages available for temporary injury to property from trespass. In Apel, the appellant claimed that the trial court erred in not instructing the jury that damages were limited to the diminution in market value owing to the wrongful conduct. This court disagreed, holding that such a rule was too rigid and did not allow for flexibility in appropriate cases. In Apel,as in First Congregational, the court’s opinion did not cite Ohio Collieries. Yet Apel, like First Congregational, recognized that diminution in market value would not always provide a sufficient measure of damages. Further, Apel held that, under the circumstances in that case, failure to prove diminution in market value was not fatal to the claim for damages.”

“... Now we make express what First Congregational and Apel implied. The rule expressed in Ohio Collieries, that damages for temporary injury to property cannot exceed the diminution in market value immediately before and after the injury, is limited. ... While evidence of loss in market value of the property may be relevant, the essential inquiry is whether the damages sought are reasonable. Either party may introduce evidence to support or refute claims of reasonableness, including evidence of the change in market value attributable to the temporary injury. But proof of diminution in value is not a required element of the injured party’s case. Applying this rule to the case before us, the damages awarded by the trial court are supported by the evidence. ... Moreover, the award itself appears reasonable under the circumstances. The jury award of $11,770 equals the amount that the Martins paid to repair the defects to a house purchased for $167,000. Although Design Construction offered evidence that the repairs could have been performed for less, it appears that the jury found that the Martins’ expenditures were appropriate. Therefore, it is reasonable to assume that the damages awarded by the jury represented the reasonable costs incurred by the Martins to repair the deficiencies in the structure of the garage.”

Chief Justice Moyer noted that because the 9th District decided the case based on the diminution of value issue, it did not review and rule on other alleged errors by the trial court raised by DCS in its appeal. Accordingly, he remanded the case to the court of appeals for consideration of those issues.


Kristen E. Campbell, 330.305.6400, for Design Construction Services Inc.

James R. Russell, 330.376.8336, for Michael and Jennifer Martin.

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