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Insurance Adjuster's Estimate Supports Damage Award Against Contractor (NJ)

December 12, 2013

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We frequently see articles and cases about conflicts between insurers and homeowners due to storm damage.  But recently, the alignment between the insurer and policyholder lead to a damage award against a contractor.

In <em><a href="http://www.judiciary.state.nj.us/opinions/a0740-12.pdf" target="_blank" rel="noopener">Peltier v. Barbera</a>, </em> plaintiff had the defendant construction contractor provide an estimate for necessary storm repairs for her home.  Defendant suggested that plaintiff file a claim with her homeowner's insurance carrier, which plaintiff did, and the carrier provided a detailed breakdown of damages and costs of repair as determined by an adjuster retained by the carrier.

The contract between the plaintiff and the defendant specifically and expressly relied upon the cost breakdown provided by the carrier.  Despite receiving full payment, the defendant only completed part of the work, leading to a lawsuit by the homeowner.

During the lower court bench trial, the judge found that the defendant had indeed breached the contract with the plaintiff by failing to complete the agreed upon work.  However, the judge also determined that the plaintiff failed to prove damages, primarily because she relied exclusively upon the estimate prepared by the insurance company and its adjuster, rather than expert testimony to substantiate her claim for damages.

Relying on long-standing principles of fairness and equity, the Appellate Division determined that where a breach of contract and subsequent damage occurred with certainty (as was the case here), uncertainty about the amount of damages should not serve as a bar to making a party whole.  Finding that the insurance estimate and cost breakdown was sufficient evidence to establish the scope and cost of the necessary work, the appellate court reversed the lower court decision and directed entry of an award of damages against the contractor for the cost of work he failed to perform.

Thanks to Emily Kidder for her contribution to this post.  If you would like more information please write to <a href="mailto:mbono@wcmlaw.com" target="_blank" rel="noopener">Mike Bono.</a>

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