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Florida Construction Law News

23MAR 2017

Useful Life: A Valuable Theory for Reducing Damages

by Brooke E. Beebe, Esq.

The situation is one all too familiar to construction defect litigants. A homeowner contracts with a roofing contractor to install a new roof with a life expectancy of ten years.[1] After only five years, the homeowner brings a claim for construction defects in the roof alleging that the roof requires complete replacement due to water intrusion. The homeowner seeks damages for the full replacement cost of the roof. However, under a “useful life” theory, the homeowner would not be entitled to damages for the full amount of the replacement cost. Instead, the homeowner would be entitled to one-half of the cost of the replacement roof, taking into account the fact that he or she had been deprived of only five, rather than ten, years of use. “Useful life” is best understood as the expected length of time that a newly built construction element can be reasonably anticipated to last, subject to routine maintenance and ordinary wear and tear. The “useful life” theory holds that granting the homeowner damages for the full replacement cost of the roof would result in unjust enrichment to the homeowner, who had contracted for a roof with a ten-year, rather than a fifteen-year, useful life.

Indeed, Florida’s Fourth District Court of Appeal decided this very issue in Mall v. Pawelski.[2] The buyer in Mall purchased a seventeen-year-old house with a seventeen-year-old roof from the seller.[3] Shortly after the buyer moved into the house, the roof began leaking.[4] The buyer waited two years and then replaced the entire roof.[5] The buyer sued the seller to recover the replacement cost of the new roof.[6] The court reversed the trial court’s award of damages on the basis that it unjustly enriched the buyer. The court determined that since the old roof was near the end of its life expectancy, and since the new roof had a “guarantee,” e.g., life expectancy, of twenty to twenty-five years, the new roof gave the buyer a roof for which he did not bargain.[7] The court reasoned that the proper measure of damages was the replacement cost of the roof “prorated to account for the increased life expectancy of the new roof.”[8]

Under the “useful life” theory, the measure of damages is premised on the belief that a party should not be compensated in excess of its loss. Per this theory, when calculating the award for damages in a construction defect case, the cost of repair or replacement of a defective item must take into account the fact that a party had the benefit of the use of that property for a percentage of its useful life expectancy. Therefore, when measuring damages, the cost to repair or replace the defective item should be subject to a pro rata reduction to account for the increased life expectancy a party would receive if it were awarded a full replacement.[9] The purpose of employing such a reduction is to ensure that a party is left in the same position he or she was in prior to the alleged defect. Not accounting for the increased lifespan of the replaced property would arguably result in a windfall, and a disproportionate award of damages, to a party.

It is important to take into account the useful life expectancy when litigating construction defect claims because many construction components have an expected useful life. The ability to successfully reduce a party’s damages under a “useful life” theory hinges on expert witness testimony on the component’s life expectancy, and demonstrating the party’s beneficial use of the component.

If you have questions regarding whether the alleged damages associated with a claim are subject to a “useful life” reduction, please contact one of the construction defect attorneys at CSK.

 

 

[1] In this context, a life expectancy of ten years means that the roof should remain in good condition for roughly ten years, subject to ordinary wear and tear.

[2] 626 So. 2d 291 (Fla. 4th DCA 1993).

[3] Id. at 292.

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] Id.

[9] As the Fourth District held in Mall, “we believe the proper measure of damages is the replacement cost of the roof, prorated to account for the increased life expectancy of the new roof.” Id. at 292.

Posted By Brooke E. Beebe, Esq.

Brooke E. Beebe is a Partner in CSK’s Construction Group and practices in the Bonita Springs and Naples offices.  Ms. Beebe focuses her practice in the areas of general commercial and civil litigation, with an emphasis in construction litigation, landlord-tenant law, and employment law. Ms. Beebe has tried over two dozen jury trials and numerous bench trials. Prior to joining CSK, Ms. Beebe worked as in-house counsel for a real estate developer where she regularly worked with several prominent restaurant and supermarket corporations.