Trinity Church in the City v. John Hancock Mut. L. Ins.
502 N.E.2d 532, 399 Mass. 43, 1987 Mass. LEXIS 1108 (1987)
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Rule of Law:
For 'special purpose property' that has no ascertainable market value, damages for physical harm may be measured by the reasonable cost of restoration, which can include a percentage of the total future reconstruction cost representing the incremental structural damage caused by the defendant.
Facts:
- Trinity Church, a national historic landmark built in the 1870s, is constructed of heavy, brittle stone masonry and rests on over 4,500 foundation pilings.
- Prior to 1968, the church had experienced slow, uniform settlement that caused no significant structural damage.
- John Hancock Mutual Life Insurance Company (Hancock) began construction of a large tower on an adjacent property.
- During Hancock's construction, its excavation support system failed, causing the ground to shift and undermine Trinity Church's foundation.
- The shifting ground caused the church's foundation to settle unevenly and move laterally, resulting in numerous cracks throughout the masonry and compromising the building's structural integrity.
- By December 1969, Hancock acknowledged that the settlement of the church was related to its construction project.
- During subsequent negotiations, Hancock's insurer, CNA, made several payments to Trinity for repairs.
- An attorney for CNA, acting on behalf of Hancock, agreed to waive the statute of limitations defense for Hancock, and later extended that waiver.
Procedural Posture:
- Trinity Church filed a complaint in the trial court against John Hancock and seventeen other defendants.
- The claims for excavation-related damages against Hancock and seven of the other defendants were tried separately.
- At the close of Trinity's evidence at trial, the judge granted directed verdicts in favor of the seven other defendants, dismissing them from the case.
- The trial judge denied Hancock's motion for a directed verdict.
- A jury returned verdicts in favor of Trinity against Hancock for $4,170,300.
- Hancock, as appellant, appealed the judgment against it.
- Trinity, as appellant, appealed the judgment dismissing its claims against the seven other defendants.
- The appeals were consolidated, and the state's highest court granted direct appellate review.
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Issue:
Is a method of calculating damages to a special purpose property, which quantifies the harm as a percentage of the property's ultimate disassembly and reconstruction cost (the 'takedown' theory), a reasonable measure of damages when diminution in market value is not available?
Opinions:
Majority - Lynch, J.
Yes. This method of damage assessment is a reasonable and acceptable measure of the amount of damage attributable to the defendant's acts. The general rule for property damage is diminution in market value, but this is inapplicable to 'special purpose property' like Trinity Church, for which there is no market. In such cases, courts allow more flexible methods, such as the cost of reproduction less depreciation. Trinity's theory, which quantifies the incremental damage sustained as a percentage of the total cost of future reconstruction, is consistent with this standard. It reasonably calculates a present value for harm that has already occurred, ensuring that the damage caused by Hancock does not become non-recoverable depreciation should a future event necessitate a total reconstruction.
Dissenting - O'Connor, J.
No. The 'takedown' theory of damages is not appropriate because damages should only compensate for actual loss, and Trinity has not proven any such loss. There is no evidence that the church has lost any use, that its usable life has been shortened, or that it will ever actually need to be taken down and reconstructed. The majority correctly states that replacement or reconstruction must be 'reasonably necessary,' but then fails to apply this principle as there is no evidence of such necessity. This damage award constitutes a windfall to Trinity, as it compensates for a hypothetical future event that may never occur.
Analysis:
This case is significant for establishing a flexible and creative approach to calculating damages for unique, 'special purpose' properties lacking a market value. It endorses the 'takedown' theory, which allows a plaintiff to recover for latent structural harm by quantifying it as a fraction of a hypothetical future reconstruction. This creates a precedent for recovering for a reduction in a property's structural integrity, even if immediate, full-scale repairs are not yet necessary or planned, thereby expanding the concept of 'cost of repair' damages.
