OHIO SUPREME COURT HOLDS THAT OWNER OF REAL ESTATE

MAY RECOVER COSTS OF REPAIR WITHOUT

SHOWING REDUCTION IN VALUE

By Timothy P. Heather, Esq.

Benjamin, Yocum & Heather, LLC

            In its unanimous January 6, 2009 decision in Martin v. Design Construction Services, Inc., 2009-Ohio-1, the Ohio Supreme Court held that in a lawsuit which seeks to recover damages to non-commercial real estate, the real estate owner may recover the reasonable costs of restoration without first proving that the damage caused a diminution in the market value of his property. Chief Justice Thomas Moyer authored the opinion, and 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 real estate as a factor bearing on whether the costs of restoration are reasonable.

            Martin involved a 2006 verdict in which a Summit County jury awarded the Martins, homeowners, damages of $11,777 to cover the costs of repairs to the foundation of their eight-year old home which had been built by Design Construction Services, Inc. (DCS). In its Answer to two Interrogatories, the jury determined that the faulty foundation resulted from DCS’ 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 took this matter to the Court of Appeals, claiming that the Martins had failed to prove a necessary element of their claimed damages. The Court of Appeals reversed the trial court’s verdict, holding that an owner of real estate may recover his reasonable costs of repairs to his non-commercial property, provided that he establishes at trial the actual repair costs are not greater than the diminution in the fair market value of the property caused by the damage. Since the jury had 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 in error.

            In reversing the Court of Appeals, the Ohio Supreme Court held that more flexibility must be permitted in determining whether a damage award is reasonable. Stated the Court:

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 Court of Appeals had decided the case based only on the diminution of value issue, it did not review and rule on the other alleged errors by the trial court raised by DCS in its appeal. Thus, the Ohio Supreme Court remanded the case back to the Court of Appeals for consideration of those issues.