August 27, 2007

EDITOR'S NOTES

In the context of construction, especially home construction, stigma damages may arise from defects associated with mold damage, environmental contaminants, defective work, etc. A stigma may be determined when the fair market value of the structure decreases because of a defect that cannot be reasonably corrected. When it becomes a viable option in determining an award, the biggest question is this: How are damages determined? According to a conglomeration of cases around the country, the amount is usually calculated by comparing the fair market value of the building with the stigma or defect to a similar building without the stigma. Corrective measures are also considered when reaching the final amount, as buildings with corrective construction may still have lower resale values than similar structures with no major defects.

In this week’s first case, homeowners sued their builder for stigma damages, among other things, when they began noticing defects in the construction of their dream home—a slanted floor, windows that wouldn’t shut, cracks in the concrete, tilted pillars, missing expansion joints in the exterior brick walls, a collapsing porte-cochere, etc. A Texas appeals court upheld a jury verdict that awarded $250,000 to the couple for their trouble and another $300,000 to fix the repairable damages.

Next, a payment bond settlement that contains language restricting additional claims does not prohibit a contractor from filing a bad faith claim against the surety, rules a Florida appeals court.

The final case presents an issue seen time and time again. A subcontractor did not meet the deadline for filing more than 60 claims against the owner. In this case, the prime contractor was to present the claims on behalf of the sub, but the contractor could not submit claims for which it had no information. Hence, the subcontractor lost out.

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