West Virginia Adopts Gross Disproportionality (Economic Waste) Limit on Construction-Contract Damages; Diminution-in-Value Calculation and Breaching-Party Burden

Introduction

Case: Corotoman, Inc. v. Central West Virginia Regional Airport Authority, Inc.
Court: Supreme Court of Appeals of West Virginia
Date: May 21, 2026
Posture: Certified question from the United States Court of Appeals for the Fourth Circuit.

The dispute arose out of a land-related construction arrangement connected to the Yeager Airport runway area. The Central West Virginia Regional Airport Authority (“Airport Authority”) removed a hill/knoll near the runway but failed to perform a promised additional step—“overblasting”—to reduce elevation and improve developability of Corotoman, Inc.’s property. A federal district court found a breach and then, concluding that “gross disproportionality” applied, declined to award cost-to-complete damages and instead entered only nominal damages due to an asserted lack of diminution-in-value proof.

The Fourth Circuit asked whether West Virginia recognizes the “gross disproportionality” (often “economic waste”) limitation in construction-contract damages; how to calculate it; who bears the burden to prove it (and the alternative damages figure); and what happens if that burden is not met.

Summary of the Opinion

Applying de novo review for certified questions under Light v. Allstate Ins. Co., the Court formally adopted and operationalized the gross disproportionality rule for West Virginia construction-contract disputes. In Syllabus Point 5, the Court held:

  • The gross disproportionality rule may apply in breach of a construction contract disputes.
  • Gross disproportionality is evaluated using a diminution in value comparison: the difference in value between what exists and what should have existed if the contract had been performed.
  • The breaching party bears the burden to invoke and prove gross disproportionality.
  • If the breaching party does not prove it, the non-breaching party’s proven damages measure applies (typically the cost-to-repair/complete measure recognized in West Virginia precedent).

Analysis

1) Precedents Cited (and How They Shaped the Holding)

West Virginia authorities

  • Light v. Allstate Ins. Co. (Syl. Pt. 1): supplied the de novo standard for answering certified questions, freeing the Court to articulate a statewide rule without deference to the federal district court’s legal framing.
  • Trenton Constr. Co. v. Straub (Syl. Pt. 2), quoting Steinbrecher v. Jones: entrenched West Virginia’s default construction-contract damages rule—cost to repair defects or complete the work to place the project in the promised condition.
    The Court used this pair of decisions as the baseline “cost approach,” while emphasizing that those cases also acknowledged (without applying) an “alternate rule” in some states for situations where reconstruction costs are grossly disproportionate.
  • Steinbrecher v. Jones (discussion; and Syl. Pt. 5 referenced in the text): (a) signaled that an alternative “difference in value” measure exists elsewhere and may be appropriate when completion costs are “grossly disproportionate,” and (b) reinforced that damages cannot be speculative.
  • Sammons Bros. Const. Co. v. Elk Creek Coal Co. (Syl. Pt. 4, in part): provided the foundational rule that the claimant bears the burden of proving damages by a preponderance.
  • Kentucky Fried Chicken of Morgantown v. Sellaro (Syl. Pt. 3): supplied the “reasonable certainty” constraint on compensatory damages, a key backdrop for the Court’s allocation of who must prove what (and with what quality of evidence).
  • Valentine v. Sugar Rock, Inc. (Syl. Pt. 2): explained how the Court treats the factual record in certified-question cases (primarily as relayed by the certifying court), reinforcing the Court’s focus on law, not reweighing facts.

Persuasive authorities from other jurisdictions and secondary sources

  • Jacob & Youngs, Inc. v. Kent: treated as the seminal articulation of the idea that cost of completion may be denied where it is “grossly and unfairly out of proportion” to the benefit, substituting a “difference in value” measure to avoid economic waste/windfall.
  • Restatement (Second) of Contracts § 348(2): supplied a modern black-letter formulation: cost-to-complete is available only if not “clearly disproportionate” to the probable loss in value; otherwise diminution in market price applies. The Court adopted this logic as consistent with its own earlier hints in Steinbrecher and Straub.
  • Comparative case support for (a) recognizing the doctrine and (b) using diminution in value as the alternative measure included:
    • Champion Cos. of Wisconsin, Inc. v. Stafford Dev., LLC (windfall rationale; value-based comparison).
    • Eastlake Constr. Co. v. Hess (cost of replacement unless clearly disproportionate to benefit).
    • Nichols Constr. Corp. v. Virginia Mach. Tool Co., LLC (economic waste; value comparison framed as “properly completed” vs “defective”).
    • John Thurmond & Assocs., Inc. v. Kennedy (cost rule default; disproportionality exception; evidentiary responsibilities).
    • Montara Owners Ass'n v. La Noue Dev., LLC (economic waste triggers diminution-in-value measure).
    • Ince v. Money's Bldg. & Dev., Inc. (two-method framework: cost of repair vs diminution in value).
    • Douglass v. Licciardi Construction Co., Inc. (Restatement-aligned “clearly disproportionate” limitation).
    • GSB Contractors, Inc. v. Hess; Rogers v. Superior Metal, Inc.; Legacy Builders, LLC v. Andrews; Andrulis v. Levin Constr. Corp.; Stangl v. Todd (burden allocation: breaching party must show disproportionality/economic waste).
    • St. Louis, L.L.C. v. Final Touch Glass & Mirror, Inc. (flexibility; “good sense” over rigid formula, cited in a footnote to caution that fact patterns vary).
    • Additional citations (Willie's Constr. Co., Inc. v. Baker; Council of Unit Owners of Sea Colony East, Phase III Condominium, on Behalf of Ass'n of Owners v. Carl M. Freeman Associates, Inc.; Rivers v. Deane) reinforced that the doctrine is widely used.

2) Legal Reasoning

A. Recognizing the gross disproportionality rule as compatible with West Virginia’s default rule

The Court began with the settled West Virginia baseline: under Trenton Constr. Co. v. Straub / Steinbrecher v. Jones, the ordinary measure is the cost to repair defects or complete the promised work. But the Court emphasized that Steinbrecher and Straub themselves had already acknowledged, as an “alternate rule in some states,” that a value-based measure may be appropriate where completion costs are “grossly disproportionate.”

The 2026 opinion converts that earlier acknowledgment into an operative West Virginia doctrine: in an “appropriate case,” cost-to-complete can be limited to avoid awards that function as punishment or windfall rather than compensation.

B. How to calculate “gross disproportionality”: the diminution-in-value comparison

The Court rejected the Airport Authority’s suggestion that disproportionality should be assessed by comparing completion cost to the property’s raw “value of the structure” (as a standalone metric). Instead, it adopted the comparison embedded in the Restatement and the majority of jurisdictions:

  • Value if performed: the value of the property/structure had the contracted work been done.
  • Value as built: the value of the property/structure without the contracted work (or with the defect).
  • Diminution in value: the difference between these two figures.
  • Gross disproportionality: whether cost to complete/repair is grossly disproportionate to that diminution figure.

C. Burden allocation: claimant proves damages; breacher proves the limitation

The opinion carefully separates (1) the plaintiff’s ordinary burden to prove damages with reasonable certainty from (2) the breaching party’s burden to justify a limitation on the ordinary cost measure.

  • Step 1 (Plaintiff’s burden): Under Sammons Bros. Const. Co. v. Elk Creek Coal Co. and Kentucky Fried Chicken of Morgantown v. Sellaro, the claimant must prove damages—typically by establishing reasonable cost-to-repair/complete.
  • Step 2 (Breacher’s burden): If the breaching party wants to avoid the default cost measure by invoking gross disproportionality, it must prove gross disproportionality (and thereby justify switching to diminution in value).

The Court grounded this allocation in “clear weight of authority,” citing multiple jurisdictions and treatises. Conceptually, the rule treats gross disproportionality not as an element of the plaintiff’s claim, but as a defendant-driven constraint on the otherwise applicable remedy.

D. Consequence of failing to prove gross disproportionality

The Court adopted a straightforward consequence: if the breaching party does not carry its burden, the court applies the non-breaching party’s proven measure of damages—normally the cost approach.

The Court also noted (in a footnote) a practical burden-shifting dynamic: once the breaching party proves gross disproportionality and proposes a diminution-in-value figure, the plaintiff may rebut that valuation. The holding, however, is anchored in the breaching party’s initial obligation to raise and prove the disproportionality limitation.

3) Impact

A. A new, administrable syllabus-point rule for West Virginia

Syllabus Point 5 is the decision’s core contribution: it formally integrates the gross disproportionality/economic waste doctrine into West Virginia contract damages for construction disputes, specifies the correct calculation method, and fixes the burden of proof. This resolves uncertainty left by Steinbrecher and Trenton Constr. Co. v. Straub, which referenced but did not apply the doctrine.

B. Litigation and evidentiary strategy shifts

  • Defendants (breaching parties) must come prepared with valuation evidence. Because diminution-in-value proof is now the key to establishing gross disproportionality, a breaching party seeking the limitation will typically need competent appraisal testimony comparing “as built” versus “as promised” values.
  • Plaintiffs can still lead with cost-to-complete evidence. The decision preserves the cost approach as the default; plaintiffs are not required in every case to present alternative diminution evidence merely to avoid nominal damages—unless and until the defendant successfully proves gross disproportionality and places a diminution figure at issue.
  • Trial courts receive a clearer sequence. The opinion supplies an order-of-operations: determine reasonable cost-to-complete; then, only if the defendant proves gross disproportionality via diminution in value, pivot to diminution damages.

C. Substantive damages outcomes

The ruling may reduce the frequency of “all-or-nothing” outcomes (full completion cost vs nominal damages) by encouraging parties—especially defendants—to develop a record on diminution in value when they claim that completion costs would be wasteful. At the same time, plaintiffs retain strong leverage where defendants cannot prove a reliable diminution figure: the default cost approach remains available if proven with reasonable certainty.

D. Limits of the holding

The Court addressed a certified question focused on measures of damages and burdens of proof in construction-contract breaches. It did not decide how particular contract clauses (including the agreement’s liquidated-damages language) apply to the parties’ facts; nor did it resolve whether the federal district court correctly applied the doctrine on that record. The opinion’s principal contribution is the governing West Virginia rule.

Complex Concepts Simplified

  • Cost to complete (cost approach): Money required to finish the promised work or fix defects so the project matches the contract.
  • Diminution in value: How much less the property is worth because the work was not done (or was defective). It is measured as:
    (value if contract performed) − (value as built/without contracted work).
  • Gross disproportionality / economic waste: A limitation used when paying the full cost to complete would be wildly out of proportion to the actual loss in property value—suggesting the award would overcompensate the plaintiff and function as a windfall.
  • Burden of proof (in this context):
    • The plaintiff must prove damages with reasonable certainty (usually cost to complete).
    • The breaching defendant must prove the special limiting doctrine—gross disproportionality—if it wants the court to switch to diminution in value.
  • Nominal damages: A small, symbolic amount awarded when a breach occurred but compensatory damages are not proven with sufficient certainty.

Conclusion

Corotoman, Inc. v. Central West Virginia Regional Airport Authority, Inc. makes West Virginia’s construction-contract damages law more explicit and structured. Cost-to-complete remains the default under Trenton Constr. Co. v. Straub and Steinbrecher v. Jones, but West Virginia now recognizes that, in appropriate cases, a breaching party can limit damages through the gross disproportionality (economic waste) rule—if it proves, using a diminution-in-value calculation, that completion costs are grossly disproportionate to the value loss. If the breaching party cannot prove that limitation, the plaintiff’s proven cost-to-complete measure controls. This syllabus-point rule will shape pleading, discovery, expert selection, and trial proof in future West Virginia construction disputes.