Builders and Contractors Exchange
Weekly Bulletin: 29 AUG 2008
Be On The Lookout For "Betterment"
By: Edward E. "Ned" Nicholas, III
Owners sometimes seek damages in amounts that, if awarded, would leave them better off than if the breach had never occurred. The amount in excess of the “make whole” damages is sometimes called “betterment.” With the proper proof, betterment should not be included in a plaintiff’s damage award.
Aggrieved building owners often include betterment in their damage claims against builders and design professionals. For example, where after construction, an owner discovers that its architect omitted a necessary item from the plans and specifications, the owner may include the price of the item and the entire cost of installation in its claim. But part of this is betterment because, if awarded, the owner would get the item at no cost. The correct measure of damages is the extra cost of retrofitting the item.
Similarly, where wall paneling installed by the builder must be removed because it does not meet the fire code, the owner may not recover the entire cost of buying and installing the more expensive replacement paneling. The owner is entitled to the material and installation cost of the original paneling, in addition to the cost of removing the inadequate paneling. However, if the replacement paneling is more difficult to install, the extra installation cost is unrecoverable betterment.
The idea behind the betterment rule also prevents owners from recovering the entire replacement cost of an item that has served a significant part of its useful life. Based on this principle, the Supreme Court of Virginia held that a utility’s recovery for damaged power transmission poles must be determined by deducting from the replacement cost any salvage value and a “used life credit” for the damaged pole. The used life credit concept also has been applied in defective roofing cases.
It is up to the defendant to produce the evidence necessary to calculate the used life credit. The defendant probably has the burden of proof in other betterment contexts as well.
Questions?
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This article is meant to bring awareness to this topic and is not intended to be used as legal advice.