Newstone Development, LLC v. East Pacific, LLC
140 A.3d 100
| R.I. | 2016Background
- Newstone Development owned three condominium units (203, 204, 206) at The Residences in Newport; units were vacant and being marketed for sale when damaged by flooding from a ruptured pipe in neighboring unit 205.
- The flood (December 19, 2009) caused $1.6 million in damage to Newstone’s units; insurance paid for repairs and the units later sold at full market value.
- Newstone sued East Pacific, the Rabinowitzes (owners of unit 205), and multiple construction-related defendants alleging negligence and seeking, among other things, loss-of-use damages measured by fair rental value during repair.
- At summary judgment the plaintiff conceded it suffered no diminution in value and produced no evidence it would have rented the units during repairs.
- The trial justice granted summary judgment for defendants, and the Rhode Island Supreme Court affirmed, holding that actual injury/damage was required to recover loss-of-use under these facts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether owner can recover loss-of-use damages (fair rental value during repairs) absent actual economic loss | Restatement §§ 929 and 931 permit recovery of loss-of-use measured by fair rental value even if owner in fact suffered no economic harm | Recovery requires proof of actual injury or economic loss; here plaintiff conceded no loss and presented no evidence it would have rented units | Held for defendants: plaintiff must show actual injury/economic loss to recover loss-of-use under these facts |
| Whether Restatement illustration (detention) supports recovery when property was not wrongfully possessed | Plaintiff: Restatement illustration allows recovery for period even if owner wouldn’t have used property | Defendants: Illustration involves wrongful detention/possession — not analogous to negligent damage here | Held: Restatement inapplicable because there was no wrongful possession or detention |
| Whether precedents permitting recovery without proof of use (e.g., replevin/trespass cases) apply | Plaintiff relied on cases allowing loss-of-use where chattel or land was wrongfully detained/occupied | Defendants: Those cases involve intentional wrongful possession/trespass, distinguishable from negligent accidental damage | Held: Cases are distinguishable; trespass/replevin law does not govern negligent property damage here |
| Whether summary judgment was appropriate given concessions and lack of evidence | Plaintiff claimed prospective loss-of-use but presented no evidence of intent to rent or actual deprivation | Defendants argued plaintiff conceded no economic loss and failed to raise a cognizable claim that waives need for actual damage | Held: Summary judgment affirmed because plaintiff conceded no loss and presented no evidence to support loss-of-use damages |
Key Cases Cited
- Daniels v. Fluette, 64 A.3d 302 (R.I. 2013) (standard of appellate review for motions for summary judgment)
- Nationwide Property & Casualty Ins. Co. v. D.F. Pepper Constr., Inc., 59 A.3d 106 (R.I. 2013) (elements of negligence include actual loss or damage)
- Hawkins v. Scituate Oil Co., 723 A.2d 771 (R.I. 1999) (recovery for inconvenience requires interference with possessory interest)
- Banville v. Brennan, 84 A.3d 424 (R.I. 2014) (temporary damage measure is cost of repair; loss-of-use may be recoverable for encroachments under Restatement § 929)
- Morabit v. Hoag, 80 A.3d 1 (R.I. 2013) (damages aim to restore pre-injury position, not confer a windfall)