West Virginia Supreme Court Adopts “Gross Disproportionality” Rule for Construction Contract Damages

by Zachary Pyers Esq. and Kenton Steele, Esq.

The Supreme Court of Appeals of West Virginia recently issued a significant decision clarifying the proper measure of damages in construction contract disputes, formally recognizing the “gross disproportionality” rule and establishing a framework for when courts may depart from the traditional cost-of-repair measure of damages. See Corotoman, Inc.  v. Central West Virginia Regional Airport Authority, Inc., S.Ct. App. W.Va. Case No. 24-661 (2026).

The case arose from a breach of a construction-related agreement between Corotoman, Inc. and the Central West Virginia Regional Airport Authority. The Airport Authority completed part of the agreed work but failed to perform additional required grading work that would have improved the usability of Corotoman’s property.  The federal district court concluded that the Authority breached the agreement but declined to award cost-to-complete damages, finding that such damages would be grossly disproportionate to the value of the property and instead awarding only nominal damages due to a lack of evidence regarding diminution in value.  The United States Court of Appeals for the Fourth Circuit certified questions to the West Virginia Supreme Court regarding the proper application of the gross disproportionality rule in this context.

Answering the certified questions, the Court confirmed that the default measure of damages in construction contract cases remains the “cost approach,” which awards the reasonable cost to repair defects or complete the contracted work.  However, the Court held that this default rule is not absolute and may be displaced where awarding cost-of-completion damages would be grossly disproportionate to the benefit obtained.  In such circumstances, courts may apply an alternative measure of damages in order to avoid an economic windfall to the non-breaching party.

Importantly, the Court adopted the diminution-in-value method as the proper way to evaluate gross disproportionality. Under this framework, courts compare the value of the property as constructed with the value it would have had if the contract had been fully performed.  If the cost to repair or complete the work is clearly disproportionate to this difference in value, the court may limit damages to the diminution in value instead of awarding full repair costs.

The Court also clarified the burden of proof applicable to this analysis. While the plaintiff retains the obligation to establish damages under the default cost-of-repair measure, the burden then shifts to the breaching party to invoke and prove gross disproportionality.  This requires the breaching party to present evidence demonstrating that repair or completion costs are excessive in relation to the resulting benefit.

Finally, the Court held that if the breaching party fails to meet this burden, the default measure of damages controls. In that circumstance, the non-breaching party is entitled to recover its proven cost-of-repair or completion damages, even if those amounts are substantial.

This decision provides important guidance for construction defect and breach-of-contract litigation in West Virginia. It confirms that while cost-to-complete damages remain the starting point, courts have discretion to limit recovery where those damages would be economically wasteful or disproportionate. At the same time, the ruling places a clear evidentiary burden on defendants to establish disproportionality and reinforces that absent such proof, plaintiffs will recover their full repair costs.

In sum, Corotoman aligns West Virginia with the majority approach in other jurisdictions by recognizing the gross disproportionality rule, adopting the diminution-in-value test, and clearly allocating the burden of proof. The decision is likely to have significant implications for claims involving large repair estimates, valuation disputes, and construction-related insurance exposures.  If you have any questions regarding this decision or have any questions concerning insurance coverage matters, please contact a member of our Construction Practice Group.