Council Of Unit Owners Of Sea Colony East v. Carl M. Freeman Associates

564 A.2d 357 (1989)

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Nature of the Case

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Facts

Edgewater house was constructed by Freeman (D) and Sea Colony Development Corporation. Construction was completed in 1975. Sea Colony Management is the managing agent for Edgewater House and has managed the Council's (P) financial affairs. In February 1989, P filed a complaint against D for defects in construction. P estimated the cost of completely repairing or replacing all of the allegedly defective building components to be $13-15 million. D insists that there is no discernible difference or decrease in the property’s appreciation attributable to the defects and that the market value of the units have appreciated at a rate equal to or better than comparable units on the market. Both parties filed motions to resolve the issue of the measure of damages. P wants the full cost of repairs without any reduction or offset based on either diminution in value theory or useful life theory. D contends that the cost of repairing is so out of proportion to the diminution in market price of the property and as such the diminution in market price or loss of value approach is a proper measure of damages.