WEST VIRGINIA Construction Law Compendium

WEST VIRGINIA

Construction Law

Compendium

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The West Virginia Construction Law Compendium is not intended to provide specific legal

advice or opinions, but rather to provide general information. If you need additional

information regarding Construction law, or in relation to a specific claim, please do not hesitate

to call upon us. (January 2020)

TABLE OF CONTENTS

Breach of Contract .............................................................................................................1

Statute of Limitations ......................................................................................1

Measure of Damages for Breach of Contract ................................................1

Contractual Exculpatory Clauses ...................................................................1

II.

Negligence ...........................................................................................................................2

General ..............................................................................................................2

Comparative Fault ...........................................................................................2

Violation of a Statute .......................................................................................3

Joint and Several Liability ..............................................................................3

III.

Breach of Warranty ...........................................................................................................4

Breach of Express Warranty ..........................................................................4

Breach of Implied Warranty ...........................................................................5

IV.

Breach of Contract/Warranty Under the U.C.C. ............................................................6

Fraud and Misrepresentation ...........................................................................................6

VI.

Strict Liability Claims .......................................................................................................7

VII.

Indemnity Claims ...............................................................................................................7

Express Indemnity ...........................................................................................8

Implied Indemnity ............................................................................................9

Comparative Indemnity ..................................................................................9

Third Party Beneficiary....................................................................................9

VIII.

Statute of Repose ................................................................................................................9

IX.

Economic Loss Rule. ........................................................................................................10

Recovery for Investigative Costs ....................................................................................10

XI.

Emotional Distress ...........................................................................................................10

XII.

Economic Waste ...............................................................................................................11

XIII.

Delay Damages .................................................................................................................11

Actual ...............................................................................................................11

Liquidated .......................................................................................................12

“No damages for delay” Clause .....................................................................12

XIV.

Recoverable Damages ......................................................................................................13

Direct Damages ..............................................................................................13

Quantum Meruit .............................................................................................13

Punitive Damages ...........................................................................................14

Lost Profits/Loss of Use .................................................................................15

Duty to Mitigate ..............................................................................................15

Attorney’s Fees ...............................................................................................16

Expert Fees & Costs ......................................................................................16

Tortious Interference with Contract ............................................................16

XV.

Insurance Coverage .........................................................................................................16

XVI.

Mechanic’s Liens ..............................................................................................................17

Notice of Mechanic’s Lien .............................................................................17

Time for Filing Notice of Mechanic’s Lien ..................................................20

Enforcement of Notice of Mechanic’s Lien ..................................................20

Demand for Account by Owner .................................................................... 21

Effect of Payment by Owner to Contractor or Subcontractor .................. 21

This outline is intended to provide a general overview of West Virginia’s construction law. The

discussion on any particular topic is not necessarily an indication of the totality of the law related

to any particular area of West Virginia’s construction law.

BREACH OF CONTRACT

Statute of Limitations

Generally, in West Virginia, a breach of contract claim on a written contract must

be brought within ten years from the time the right to bring the same shall have

accrued. See, W. Va. Code § 55-2-6. If the claim of breach of contract is based on

an oral, unwritten, or implied contract, the cause of action must be brought within

five years from the time the right to bring the same shall have accrued. W. Va. Code

§ 55-2-6.

The statute of limitations regarding written contracts and oral or unwritten or

implied contracts shall apply to suits brought by the State of West Virginia or on

its behalf unless otherwise expressly provided. See, W. Va. Code § 55-2-19.

Measure of Damages for Breach of Contract

Generally, the amount of compensatory damages recoverable by an injured party

incurred through the breach of a contractual obligation are those as may be fairly

and reasonably considered as arising naturally; that is, according to the usual course

of things, from the breach of the contract itself, or such as may reasonably be

supposed to have been in the contemplation of both parties at the time they made

the contract, as the probable result of its breach, is that which will put the injured

party in the monetary position he would have been in had the contract been

performed. See, Kentucky Fried Chicken of Morgantown, Inc. v. Sellaro, 158 W.

Va. 708, 214 S.E.2d 823 (1975). Compensatory damages recoverable by an injured

party incurred through the breach of a contractual obligation must be proved with

reasonable certainty. Kentucky Fried Chicken of Morgantown, Inc. v. Sellaro, 158

W. Va. 708, 214 S.E.2d 823 (1975).

In instances where the breach of a contractual obligation is in the context of a

construction contract, the West Virginia Supreme Court of Appeals has held that

the proper measure of damages in such cases involving building contracts is the

cost of repairing the defects or completing the work and placing the construction in

the condition it should have been in if properly done under the agreement contained

in the building contract. See, Steinbrecher v. Jones, 151 W. Va. 462, 153 S.E.2d

295 (1967).

Contractual Exculpatory Clauses

Contractual exculpatory clauses are generally deemed valid and enforceable, as

long as they are freely and fairly made between parties who are in an equal

bargaining position, and there is no public interest with which the agreement

interferes. See, Kyriazis v. University of West Virginia, 192 W. Va. 60, 450 S.E.2d

649 (1994). However, the West Virginia Supreme Court of Appeals has held that a

provider of home inspection services may not seek to relieve itself of liability for

failure to comply with the State Fire Commissioner’s Certification of Home

Inspections Rule (87 CSR 5), and thus, the inclusion of a limitation of liability

provision, anticipatory release, or exculpatory clause in a contract for home

inspection services which does so is invalid and unenforceable as contrary to the

public policy of the State. See, Finch v. Inspectech, LLC, 229 W.Va. 147, 727

S.E.2d 823 (2012). Please refer to the section on Indemnity, VII below.

II.

NEGLIGENCE

General

Negligence is defined as a failure to use ordinary care. Ordinary care is that which

a “reasonable person” would use under the given circumstances. If this breach of

ordinary care is found to be the proximate cause of damage to the plaintiff, the

plaintiff may recover. Thus, in West Virginia a prima facie case of actionable

negligence is that state of facts which will support a jury finding that the defendant

was guilty of negligence which was the proximate cause of plaintiff’s injuries, that

is, it is a case that has proceeded upon sufficient proof to the stage where it must be

submitted to a jury and not decided against the plaintiff as a matter of law. See,

Morris v. City of Wheeling, 140 W. Va. 78, 82 S.E.2d 536 (1954).

The theory of negligence per se suggests that the conduct of the defendant is

negligent as a matter of course without the need for further inquiry. Plaintiffs often

argue negligence per se in conjunction with a statutory provision that allows

persons injured by another’s violation of any statute to recover for the same. See,

W. Va. Code § 55-7-9. Thus, plaintiffs argue that if the defendant’s conduct

violated any statutory obligation, the defendant is guilty of negligence per se and

plaintiff should automatically recover. While the defendant may be found to be

negligent per se, the court will still require plaintiff to prove that such negligence

is the proximate cause of plaintiff’s injury.

Comparative Fault

West Virginia is a “modified comparative negligence” jurisdiction. Therefore, a

plaintiff can recover as long as the plaintiff’s own negligence does not equal or

exceed the combined negligence of the other parties involved in the accident.

Conversely, a plaintiff may not recover if his or her negligence exceeds or equals

the combined negligence of the other parties involved in the accident. See, Bradley

v. Appalachian Power Co., 163 W. Va. 332, 256 S.E.2d 879 (1979).

In 2015, the West Virginia Legislature adopted West Virginia Code § 55-7-13a,

which defines comparative fault as “the degree to which the fault of a person was a

proximate cause of an alleged personal injury or death or damage to property,

expressed as a percentage.” The statute further provides that “[i]n any action based

on tort or any other legal theory seeking damages for personal injury, property

damage, or wrongful death, recovery shall be predicated upon principles of

comparative fault and the liability of each person, including plaintiffs, defendants

and nonparties who proximately caused the damages, shall be allocated to each

applicable person in direct proportion to that person's percentage of fault.” Finally,

“[t]he total of the percentages of comparative fault allocated by the trier of fact with

respect to a particular incident or injury must equal either zero percent or one

hundred percent.” W. Va. Code § 55-7-13a.

Violation of a Statute

The West Virginia Supreme Court of Appeals has held that the violation of a statute is

prima facie evidence of negligence, and in order to be actionable, such violation must

be the proximate cause of the plaintiff’s injury. See, Anderson v. Moulder, 183 W.Va.

77, 394 S.E.2d 61 (1990).

Joint and Several Liability

As a modified comparative jurisdiction, a plaintiff may elect to sue any or all of those

responsible for his injuries and collect his damages from whomever is able to pay,

irrespective of their percentage of fault. See, Sitzes v. Anchor Motor Freight, Inc., 169

W. Va. 698, 289 S.E.2d 679 (1982). However, the State of West Virginia has abolished

joint liability, and adopted several liability in any action based on tort or any other legal

theory seeking damages for personal injury, property damage, or wrongful death,

predicated on the amount of compensatory damages allocated to a defendant in direct

proportion to that defendant’s percentage of fault. See, W.Va. Code § 55-7-13(c). Joint

and Several Liability still applies where a defendant whose conduct constitutes driving

a vehicle under the influence of alcohol, a controlled substance, or any drug or

combination thereof, which is a proximate cause of the damages suffered by the

plaintiff; where a defendant whose acts or omissions constitute criminal conduct, which

is a proximate cause of the damages suffered by the plaintiff; or where a defendant

whose conduct constitutes an illegal disposal of hazardous waste, which is a proximate

cause of the damages suffered by the plaintiff. If a plaintiff through good faith efforts

is unable to collect from a liable defendant, the plaintiff may, not one year after

judgment becomes final, move the court for the reallocation of any uncollectible

amount among the other parties found to be liable. The court may not reallocate to any

defendant an uncollectible amount greater than that defendant’s percentage of fault

multiplied by the uncollectible amount, and there shall be no reallocation against a

defendant whose percentage of fault is equal to or less than the plaintiff’s percentage of

fault.

As a modified comparative jurisdiction, a right of comparative contribution exists

between joint tortfeasors inter se based upon their relative degrees of primary fault or

negligence. See, Sitzes v. Anchor Motor Freight, Inc., 169 W. Va. 698, 289 S.E.2d 679

(1982). Once comparative fault in regard to contribution is recognized, recovery can be

had by one joint tortfeasor inter se regardless of their respective degree of fault so long

as the one has paid more than his pro tanto share to the plaintiff. Sitzes v.

Anchor Motor Freight, Inc., 169 W. Va. 698, 289 S.E.2d 679 (1982).

III.

BREACH OF WARRANTY

Breach of warranty claims in construction cases generally involve defect claims

and/or workmanship claims. These types of breach of warranty claims may be

based on express warranty terms contained within a written contract, or on implied

warranty terms. At common law, a plaintiff was required to prove four elements:

1) the existence of a warranty, 2) the breach of that warranty, 3) causation, and 4)

damages. West Virginia follows the majority rule, which does not require privity

of contract between the plaintiff and defendant in an action for breach of an express

or implied warranty. See, Dawson v. Canteen Corp., 158 W. Va. 516, 212 S.E.2d

82 (1975).

Breach of Express Warranty

Written warranty clauses in contracts typically define the warranty terms and

quantify the length of time that a contractor will be liable to the owner for defects.

Moreover, these written clauses often define each party’s obligations relative to the

giving of notice regarding a defect, and the period of time necessary to either

replace or repair said defect after notice is given. It is important to note that on

many jobs, contractors utilize subcontractors for the performance of work contained

in the main contract between the contractor and the owner. To that end, the

subcontractors will be liable to the contractor for breach of their own warranty as

defined in their written subcontractor agreement. It is typical in West Virginia for

subcontractors to warrant their work for a period of one year from the final

acceptance of the project.

Under the West Virginia Uniform Commercial Code (U.C.C.), express warranties

may be created by the seller of goods even though the seller did not use formal

words or have a specific intention to make an express warranty. Specifically, the

U.C.C. provides that express warranties are created by the seller by any affirmation

of fact or promise made by the seller to the buyer which relates to the goods and

becomes part of the basis of the bargain, or any description of the goods which is

made part of the basis of the bargain, or by any sample or model with is made part

of the basis of the bargain. See, W. Va. Code §46-2-313.

The U.C.C. also provides that words or conduct of the parties can negate or limit

an express warranty and can exclude or modify the implied warranty of

merchantability. See, W. Va. Code §46-2-316. In construing the foregoing U.C.C.

provision in the context of the sale of used mining and construction equipment

wherein the seller made express assurances as to repairs and performance of said

equipment, the West Virginia Supreme Court of Appeals held that where a seller

promises to pay for repairs to goods delivered to the buyer in a defective condition

and the buyer accepts the defective goods in reliance upon the

promise to repair, such promises of the seller constitute express warranties. See,

Mountaineer Contractors, Inc. v. Mountain State Mack, Inc., 165 W. Va. 292, 268

S.E.2d 886 (1980).

Similar in fashion to the creation of the foregoing U.C.C. express warranties, the

West Virginia legislature has created express warranties of quality for the

protection of purchasers who buy units created under the West Virginia Uniform

Common Interest Ownership Act. See, W. Va. Code §36B-4-113. Under the Act,

the express warranties made by the seller to a purchaser of a unit, if relied upon by

the purchaser, are created by any affirmation of fact or promise which relates to the

unit, any model or description of the physical characteristics of the common interest

community, and any model of the quantity or extent of the real estate comprising

the common interest community.

Breach of Implied Warranty

An implied warranty of fitness for particular purpose exists if, at the time of

contracting, the seller has reason to know any particular purpose for which the

goods are required and that the buyer is relying of the seller’s skill or judgment to

select or furnish suitable goods. See, W. Va. Code §46-2-315.

An implied warranty of merchantability exists when a merchant sells goods.

Merchantable goods must: pass without objection in the trade under the contract

description; in the case of fungible goods, be of fair and average quality within the

description; be fit for the ordinary purposes for which such goods are used; run

within the variations permitted by the contract, of even kind, quality and quantity

within each unit and among all units involved; be adequately contained, packaged,

and labeled as the contract may require; and conform to any promises or

affirmations of fact made on the container or label. See, W. Va. Code §46-2-314.

The foregoing implied warranties created under the U.C.C. also extend to

subcontractors and their liability to contractors relative to the workmanlike manner

of their work and fitness for the intended use.

In the area of home construction and implied warranties, the West Virginia Supreme

Court of Appeals has held that the purchaser of a new home is entitled to an implied

warranty of habitability or fitness which requires that the dwelling be constructed

by the builder in a workmanlike manner and that the property be reasonably fit for

its intended use of human habitation. See, Gamble v. Main, 171 W. Va. 469, 300

S.E.2d 110 (1983). While creating the implied warranty of habitability or fitness,

the Court also evaluated the Plaintiff’s claims relative to adverse soil conditions,

and further held that the implied warranty of habitability or fitness does not extend

to adverse soil conditions which the builder is unaware of or could not have

discovered by the exercise of reasonable care. Gamble v. Main, 171 W. Va. 469,

300 S.E.2d 110 (1983).

Subsequently, the West Virginia Supreme Court of Appeals has held that the

implied warranties of habitability and fitness for use as a family home may be

extended to second and subsequent purchasers for a reasonable length of time after

construction, but such warranties are limited to latent defects which are not

discoverable by the subsequent purchasers through reasonable inspection and

which become manifest only after purchase. See, Sewell v. Gregory, 179 W. Va.

585, 371 S.E.2d 82 (1988). Thus, in applying the discovery rule to such latent

defects, the Court further held that the two year statute of limitation for a tort action

arising from latent defects in the construction of a house begins to run when the

injured parties knew, or by the exercise of reasonable diligence should have known,

of the nature of their injury and its sources, and determining that point in time is a

question of fact to be determined by the jury. Sewell v. Gregory, 179 W. Va. 585,

371 S.E.2d 82 (1988).

The West Virginia legislature has created implied warranties of quality for the

protection of purchasers who buy units created under the West Virginia Uniform

Common Interest Ownership Act. See, W. Va. Code §36B-4-114. Under the Act,

the declarant and any dealer impliedly warrants that a unit and the common

elements in the common interest community are suitable for the ordinary uses of

real estate of its type and that any improvements will be free from defective

materials, and will be constructed in accordance with applicable law, according to

sound engineering and construction standards, and in a workmanlike manner.

IV.

BREACH OF CONTRACT/WARRANTY UNDER THE U.C.C.

The statute of limitations on contracts for sales of goods is four years after the cause of

action accrued. The original agreement between the parties can reduce the period of

limitations to not less than one year, but may not extend it. See, W. Va. Code §46-2-725.

The cause of action accrues when the breach occurs, regardless of whether or not the

injured party knows of the breach. W. Va. Code §46-2-725.

FRAUD AND MISREPRESENTATION

In West Virginia, the essential elements in an action for fraud are: 1) that the act complained

to be fraudulent was the act of the defendant or induced by him; 2) that it was material and

false; that plaintiff relied on it and was justified under the circumstances in relying upon it;

and 3) that he was damaged because he relied on it. See, Lengyel v. Lint, 167 W. Va. 272,

280 S.E.2d 66 (1981). Moreover, the West Virginia Supreme Court of Appeals has

examined fraud in the contractual context, and has held that where one person induces

another to enter into a contract by false representations, which he is in a situation to know,

and which it is his duty to know, are untrue, he, in contemplation of law, does know the

statements to be untrue, and, consequently, they are held to be fraudulent, and the person

injured has a remedy for the loss sustained by an action for damages. See, Horton v. Tyree,

104 W. Va. 238, 139 S.E. 737 (1927).

In West Virginia, the statute of limitations for an action for fraud is two years from the date

of the fraud or misrepresentation. See, W. Va. Code § 55-2-12. However, the West Virginia

Supreme Court of Appeals has held that the discovery rule applies such that the statute of

limitations for a claim for an action for fraud does not begin to run until the injured person

knows, or by the exercise of reasonable diligence should know, of the nature of his injury,

and determining that point in time is a question of fact and should be answered by the jury.

See, Stemple v. Dobson 184 W. Va. 317, 400 S.E.2d 561 (1990).

VI.

STRICT LIABILITY CLAIMS

Strict liability is not generally recognized in West Virginia, except for "abnormally

dangerous and ultra-hazardous activities” (such as blasting, aviation, and aerial broadcast

spraying). See, Bailey v. S. J. Groves & Sons Co., 159 W. Va. 864, 230 S.E.2d 267 (1951);

Parcell v. United States, 104 F. Supp. 110 (S.D. Wa. 1951); Kell v. Appalachian Power

Co., 170 W. Va. 14, 289 S.E.2d 450 (1982).

To that end, the West Virginia Supreme Court of Appeals has held that the use of explosives

in blasting operations, though necessary and lawfully used by a contractor in the

performance of a construction contract, being intrinsically dangerous and extraordinary

hazardous, renders the contractor liable for damages proximately resulting to the property

of another from such blasting, without negligence on the part of the contractor; and no

exception to this general rule results from the fact that the contractor, while using the

explosives in blasting operations, is on the land of the complaining property owner and

using such explosives in blasting operations pursuant to a written contract with the

landowner to perform a construction project on the complaining property owner’s land. See

Moore, Kelly, & Reddish, Inc. v. Shannondale, Inc., 152 W. Va. 549, 165 S.E.2d 113

(1968).

Moreover, the West Virginia Supreme Court of Appeals has adopted the Restatement

(Second) of Torts, § 519 (1976), to determine abnormally dangerous activities that trigger

strict liability based on the following six factors: 1) existence of a high degree of risk of

some harm to the person, land or chattels of others; 2) likelihood that the harm that results

from it will be great; 3) inability to eliminate the risk by the exercise of reasonable care; 4)

extent to which the activity is not a matter of common usage; 5) inappropriateness of the

activity to the place where it is carried on; and 6) extent to which its value to the community

is outweighed by its dangerous attributes. See Peneschi v. National Steel Corp., 170 W.

Va. 511, 295 S.E.2d 1 (1982).

VII.

INDEMNITY CLAIMS

The right to indemnity – the right to be held harmless or to be secure against loss or damage

from the occurrence of an anticipated loss – can arise from either a written agreement

amongst the parties (express), or from the parties conduct and actions as a matter of law

(implied). Typically, the parties to construction contracts negotiate the right of

indemnification from and against all claims, damages, losses, and expenses

arising out of and resulting from performance of the work where such claims are caused

by any negligent act or omission of a party, including its subcontractors, or their agents or

employees.

In determining the type of indemnity between parties, the West Virginia Supreme Court of

Appeals has held that there are two basic types of indemnity: express indemnity, based on

a written agreement, and implied indemnity, arising out of the relationship of the parties.

One of the fundamental distinctions between express indemnity and implied indemnity is

that an express indemnity agreement can provide the person having the benefit of the

agreement, the indemnitee, indemnification even though the indemnitee is at fault. Such a

result is allowed because express indemnity agreements are based on contract principles.

Courts have enforced indemnity rights so long as they are not unlawful. See, Valloric v.

Dravo, Corp., 178 W. Va. 14, 357 S.E.2d 207 (1987).

Express Indemnity

When a potential liability exists, that may be covered by an indemnity agreement,

the indemnitee must show in his indemnity suit that the original claim is covered

by the indemnity agreement, that he was exposed to liability which could

reasonably be expected to lead to an adverse judgment, and that the amount of

settlement was reasonable. See, Valloric v. Dravo, Corp., 178 W. Va. 14, 357

S.E.2d 207 (1987). In addition, the indemnitee has a duty to notify the indemnitor,

and where an indemnitor is given reasonable notice by the indemnitee of a claim

that is covered by the indemnity agreement and is afforded an opportunity to defend

the claim and fails to do so, the indemnitor is then bound by the judgment against

the indemnitee if it was rendered without collusion on the part of the indemnitee.

See, Vankirk v. Green Construction Company, 195 W. Va. 714, 466 S.E.2d 782

(1995). Finally, in regard to attorney’s fees and costs, if an indemnitor does not

assume control of the indemnitee’s defense, he will be held liable for the attorney’s

fees and costs incurred by the indemnitee in the defense of the original action. This

rule is predicted on the fact that the indemnitor has originally been notified of the

underlying action, has been requested to assume the defense, and has refused to do

so. See, Valloric v. Dravo, Corp., 178 W. Va. 14, 357 S.E.2d 207 (1987).

The West Virginia legislature enacted West Virginia Code §55-8-14 which

specifically states as follows:

“ A covenant, promise, agreement or understanding in or in connection with or

collateral to a contract or agreement entered into on or after the effective date of

this section, relative to the construction, alteration, repair, addition to, subtraction

from, improvement to or maintenance of any building, highway, road, railroad,

water, sewer, electrical or gas distribution system, excavation or other structure,

project, development or improvement attached to real estate, including moving and

demolition in connection therewith, purporting to indemnify against liability for

damages arising out of bodily injury to persons or damage to property caused

by or resulting from the sole negligence of the indemnitee, his agents or employees

is against public policy and is void and unenforceable and no action shall be

maintained thereon. This section does not apply to construction bonds or insurance

contracts or agreements.”

Implied Indemnity

The right to implied indemnity is based upon principles of equity and restitution

and one must be without fault to obtain implied indemnity. See, Sydenstricker v.

Unipunch Products, Inc., 169 W. Va. 440, 288 S.E.2d 511 (1982). In the context of

multi-party non-product liability civil actions, the West Virginia Supreme Court of

Appeals has held that a good faith settlement between a plaintiff and defendant will

extinguish the right of a non-settling defendant to seek implied indemnity unless

such non-settling defendant is without fault. See, Hager v. Marshall, 202 W. Va.

577, 505 S.E.2d 640 (1998).

Comparative Indemnity

West Virginia courts have not addressed the issue of comparative indemnity.

Third Party Beneficiary

Currently, a third party outside the scope of a contract cannot maintain a cause of

action for indemnification in West Virginia. Specifically, the West Virginia

Supreme Court of Appeals has held that in the absence of a provision in a contract

specifically stating that such contract shall inure to the benefit of a third person,

there is a presumption that the contracting parties did not so intend and in order to

overcome such presumption the implication from the contract as a whole and the

surrounding circumstances must be so strong as to be tantamount to an express

declaration. See, Ison v. Daniel Crisp Corp., 146 W. Va. 786, 122 S.E.2d 553

(1961).

VIII.

STATUTE OF REPOSE

West Virginia has enacted a statue of repose that seeks to protect architects and builders

from claims asserted many years after construction is complete. West Virginia’s statute of

repose states that no action to recover damages for any deficiency in the planning, design,

surveying, observation or supervision of any construction or the actual construction of any

improvement to real property, or, to recover damages for any injury to real or personal

property, or, for an injury to a person or for bodily injury or wrongful death arising out of

the defective or unsafe condition of any improvement to real property, may be brought

more than ten years after the performance or furnishing of such services or construction:

provided, that the above period shall be tolled according to the provisions of section

twenty-one of this article. The period of limitation provided in this section shall not

commence until the improvement to the real property in question has

been occupied or accepted by the owner of the real property, whichever occurs first.

See, W. Va. Code § 55-2-6a.

In an attempt to harmonize issues regarding other statutes of limitations, as well as the

relationship of the statute of repose time limit and original construction and

modifications relative to the “improvements,” the West Virginia Supreme Court of

Appeals has held that the statute of repose time limit begins to run when the builder or

architect relinquishes access and control over the construction or improvement and the

construction of the improvement is (1) occupied or (2) accepted by the owner of the

real property, whichever occurs first, and that pre-existing statutes of limitations for

both contract and tort actions continue to operate within this outside limit. See, Neal v.

Marion, 222 W. Va. 380, 664 S.E.2d 721 (2008). In its further analysis of the Plaintiff’s

claims arising from the foundation of the house, the Court provided that the statue of

repose governs only the alleged defects themselves, not claims arising from a

representation that there were no defects or knowingly concealing the extent of the

defects or prior repairs. Neal v. Marion, 222 W. Va. 380, 664 S.E.2d 721 (2008).

IX.

ECONOMIC LOSS RULE

The economic loss rule prevents a plaintiff from recovering pure economic losses in

tort actions that have no physical injury or damage to real property. Typically, this rule

arises when a plaintiff alleges negligence in a case that is truly a breach of contract case

in order to try to avoid certain procedural problems and damage limitations inherent in

contract law. In its analysis of this rule, the West Virginia Supreme Court of Appeals

held that an individual who sustains purely economic loss from an interruption in

commerce caused by another’s negligence may not recover damages in the absence of

physical harm to that individual’s person or property, a contractual relationship with

the alleged tortfeasor, or some other special relationship between the alleged tortfeasor

and the individual who sustains purely economic damages sufficient to compel the

conclusion that the tortfeasor had a duty to the particular plaintiff and that the injury

complained of was clearly foreseeable to the tortfeasor. See, Aikens v. Debow, 208 W.

Va. 486, 541 S.E.2d 576 (2000).

RECOVERY FOR INVESTIGATIVE COSTS

In West Virginia, if the investigative costs are included as part of an express written

contract, those costs may be recoverable. Conversely if investigative costs are not

included as a provision in the express written contract between the parties, those costs

are not recoverable.

XI.

EMOTIONAL DISTRESS

The West Virginia Supreme Court of Appeals has not addressed whether a cause of

action would lie for emotional distress associated with a construction defect. However,

the Court, in the context of a breach of contract action between the owner and builder

stated that a claim for emotional distress made under a Commercial

General Liability policy as a “bodily injury” resulting from defective workmanship

would, at a minimum, need to have physically manifested itself in order to trigger

coverage under the policy for “bodily injury.” Cherrington v. Erie Ins. Prop. & Cas.

Co., 231 W. Va. 470, 484, 745 S.E.2d 508, 522 (2013). Despite this absence, West

Virginia recognizes the tort of negligent infliction of emotional distress. To recover

under this theory, a plaintiff must prove that the serious emotional injury suffered by

the plaintiff was reasonably foreseeable to the defendant based on the following

factors: (1) the plaintiff was closely related to the injury victim; (2) the plaintiff was

located at the scene of the accident and was aware that it was causing injury to the

victim; (3) the victim is critically injured or killed; and (4) the plaintiff suffers serious

emotional distress. See Heldreth v. Marrs, 188 W. Va. 481, 425 S.E.2d 157 (1992).

Moreover, the West Virginia Supreme Court has held in the context of a negligent

infliction of emotional distress claim absent physical injury, that a party may assert a

claim for expenses related to future medical monitoring necessitated solely by fear of

contracting a disease from exposure to toxic chemicals. See Bower v. Westinghouse

Electric Corporation, 206 W. Va. 133, 522 S.E.2d 424 (1999).

In addition, West Virginia recognizes the tort of intentional infliction of emotional

distress. To recover under this theory, a plaintiff must prove that: (1) the defendant’s

conduct was atrocious, intolerable, and so extreme and outrageous as to exceed the

bounds of decency; (2) the defendant acted with the intent to inflict emotional distress,

or acted recklessly when it was certain or substantially certain emotional distress would

result from his conduct; (3) the actions of the defendant caused the plaintiff to suffer

emotional distress; and (4) the emotional distress suffered by the plaintiff was so severe

that no reasonable person could be expected to endure it. See Travis v. Alcon

Laboratories, 202 W. Va. 369, 504 S.E.2d 419 (1998).

XII.

ECONOMIC WASTE

As stated in a previous section above, in instances where the breach of a contractual

obligation is in the context of a construction contract, the West Virginia Supreme Court

of Appeals has held that the proper measure of damages in such cases involving

building contracts is the cost of repairing the defects or completing the work and

placing the construction in the condition it should have been in if properly done under

the agreement contained in the building contract. See, Steinbrecher v. Jones, 151 W.

Va. 462, 153 S.E.2d 295 (1967). In the instance of a damaged building, the measure of

recovery for property destroyed through negligence is the fair market value of the

property at the time of destruction. See, Stenger v. Hope Natural Gas Co., 139 W. Va.

549, 80 S.E.2d 889 (1954). The measure of recovery for negligent damage to property

not destroyed, where the damage is of a permanent nature, is the diminution in the

market value of the property by reason of the injury. Stenger v. Hope Natural Gas Co.,

139 W. Va. 549, 80 S.E.2d 889 (1954).

XIII.

DELAY DAMAGES

Actual

The West Virginia Supreme Court of Appeals has held, in a case in which the

defendant owner terminated the contract prior to full performance by the

plaintiff contractor, that the plaintiff contractor is entitled to damages for delay,

caused by the defendant owner, in beginning or completing the work. See,

Miller v. County Court of Barbour County, 116 W. Va. 380, 180 S.E. 440

(1935). Moreover the Court further held that the item of damages claimed

for delay caused by the defendant before its formal breach of the contract and

his damages for anticipated profits, had he been permitted to complete the

contract after the delay, are distinct and separate. Miller v. County Court of

Barbour County, 116 W. Va. 380, 180 S.E. 440 (1935).

Liquidated

Liquidated damage clauses are commonplace in today’s construction contracts.

Generally, liquidated damage clauses are negotiated between the owner and the

contractor in the context of each party’s risk of loss relative to the possibility of

actual damages exceeding the established liquidated damage amount. Moreover,

once the owner and contractor have established the liquidated damage amount to

be forfeited under the clause, the damage amount cannot be so large as to constitute

a penalty.

In West Virginia, there are two rules for inferring if the sum to be paid for a breach

of contract is to be construed as liquidated damages, and not a penalty: (1) Where

the damages are uncertain and not readily capable of ascertainment in amount by

any known or safe rule, whether such uncertainty lies in the nature of the subject,

or in the particular circumstances of the case; or (2) where from the nature of the

case and the tenor of the agreement it is apparent that the damages have already

been the subject of actual fair estimate and adjustment between the parties. See,

Charleston Lumber Co. v. Friedman, 64 W. Va. 151, 61 S.E. 815 (1908). Moreover,

a clause for damages in a contract is a penalty rather than a liquidated damage

provision when the amount is grossly disproportional in comparison to the damages

actually incurred. This is true even though the provision is denominated as

liquidated damages in the contract. See, Stonebraker v. Zinn, 169 W. Va. 259, 286

S.E.2d 911 (1982). Finally, when a building contract provides that the contractor

shall pay the owner a sum per day for delay in completion of the building, and the

case is such that such provision is one of liquidated damage, there need be no proof

of actual damage from delay. See, Charleston Lumber Co. v. Friedman, 64 W. Va.

151, 61 S.E. 815 (1908).

“No damages for delay” Clause

“No damages for delay” clauses are generally drafted to provide that if a contractor

is delayed due to reasons beyond the contractor’s control, the contractor will be

limited to a time extension only to complete his performance. These clauses are

generally valid and enforceable, unless the delay was unreasonable or caused by

the actions of the owner.

XIV.

RECOVERABLE DAMAGES

Direct Damages

Generally, the amount of compensatory damages recoverable by an injured party

incurred through the breach of a contractual obligation are those that may be fairly

and reasonably considered to arise naturally; that is, according to the usual course