S.C. Court Articulates Damages POA was Entitled to Recover in Construction Defect Litigation

South Carolina Appellate Court decision (August 2, 2017)

This case involved claims by a property owners association (“POA”) for defective construction of a 36 unit condominium project. Claims alleged by the POA included damages for: (i) failure to soundproof as represented in marketing materials; (ii) leaks caused by air-conditioning units, plumbing, and improperly installed windows and doors; and (iii) resulting warping floors and mold in individual units.  The POA alleged that the cost of repairs was estimated at $11,807,884 and prior to going to trial, the POA settlement with some of the parties that were sued for $7,702,552.

The trial court found the remaining defendants liable to the POA and awarded damages against them damages for such items as: (i) $7,934,704 for the costs of necessary repairs; (ii) $793,470 for engineering fees; (iii) $641,520 for owner moving, storage, and replacement lodging. The trial court also awarded various individual unit owners damages in differing amounts for items such as: (i) loss of market access; (ii) loss of  rent; (iii) inconvenience; (iv) out of pocket costs; and (v) costs due to defective floors. The appealing defendants contended that the trial court had to allocate damages among the various causes of action and setoff the total amount the POA received from the settlements before the trial against the amount of the trial court’s judgment.

In affirming the trial court’s decision, the appellate court stated that the requirement for reducing the amount of a verdict to account for funds that were received from a settlement only applies to a situation where the settlement funds were paid to compensate the same plaintiff on a claim for the same injury. Thus, in cases where there was a settlement that involved more than one claim, the manner in which the settlement proceeds is allocated between different causes of action impacts the amount that a non-settling defendant can claim as an offset against the damages that it is responsible for. The appellate court also affirmed the trial court’s damage awards for the following items:

• Cost of repairs (the cost to place the buildings and units in the physical condition they should have been in when they were initially sold).
• Loss of access to the market / market value (the loss unit owners experienced in the value of their units due to the downturn in the housing market).
• Loss of quiet enjoyment (the loss unit owners experienced by having to live in the units that were not as represented when they were purchased and in having to move out for several months during the period of repairs).

See case decision: Oaks_At_Rivers_Edge_Prop._Owners_Ass’n_Inc._v._Daniel_Island_Riverside_Developers_LLC