Novel Damage Theory, for Loss of Use Claim, Fails
A developer marketed condominiums for sale. Several units were damaged by a burst water pipe, but the repaired units were eventually sold for the original price. (Insurance covered the cost of repair.) The developer then sued some of the parties involved in the original construction, arguing damages from “loss of use” of the units, claiming that the defendants’ negligence effectively deprived the developer of use of the units for a period of time. The Supreme Court of Rhode Island, however, has held that there were no damages from loss of use, as the developer was not trying to rent the units and they sold for full market value.
As noted by the RI court, the “sole issue before this Court is whether the plaintiff can recover loss-of-use damages during the time that the condominium units were under repair.” The developer cited to prior decisions involving loss of use, but in those cases the defendant had taken control of the property for a period of time. Here the developer maintained control, and was not marketing the units for rental. With no diminution in value to be claimed, the court considered the claim for loss of use to be an attempt to unfairly profit from the incident, and not an attempt to be made whole for losses actually sustained.
The law allows a party to seek losses caused by the negligent actions of others. But here there was no loss – no diminution in value of the damaged and repaired property, and no loss of rental income since the units were not being marketed for rental. And even if the defendants were negligent, causing the water damage, there was no “loss” to be recovered.
The case is Newstone Development, LLC v. East Pacific, LLC, et al., 2016 R.I. LEXIS 92 (June 24, 2016).