The gross disproportionality rule may apply in a breach of a construction contract dispute. Gross disproportionality is calculated by using the diminution in value approach, which measures the difference in value between what is built (the value of the property/structure without the contracted work) and what was supposed to have been built (the value of the property/structure if the contracted work had been performed). The breaching party has the burden of invoking and proving gross disproportionality. If the breaching party does not prove gross disproportionality, then the non-breaching party’s proven measure of damages applies. Corotoman, Inc. v. Central West Virginia Regional Airport Authority, Inc., No 24-661,WVA Supreme Ct of Appeals, (2026)
This question arises from a breach of a construction contract lawsuit filed by Corotoman,Inc. (“Landowner” or “Owner”), against Central West Virginia Regional Airport Authority (“AirportAuthority”). The United States District Court for the Southern District of West Virginia (“district court”) ruled that the Airport Authority breached the contract by failing to remove a hill from the owner’s land andgranted partial summary judgment in the owner’s favor. However, the district court determined that the gross disproportionality rule applied and only awarded the owner nominal damages. This was reversed on appeal because the appellate court found that the Airport Authority failed to prove gross disproportionality.
In this case, the Airport Authority decided to remove a large hill at the end of the airport’s runway. The Authority offered the owner $260,125 for the property (an amount significantly more than its appraised value) and the Owner rejected that offer. The parties then entered into an agreement providing, among other things, that the Airport Authority could enter the property and remove the knoll. Per the agreement, after the Airport Authority removed the knoll, it would overblast the property to decrease the elevation an additional thirty-five feet, making it flatter and easier to develop.
The Airport Authority completed the knoll removal project but failed to perform the overblasting, a process by which holes are drilled to the required depth and then explosives are placed in the holes and detonated to loosen the land. The landowner then sued the Airport Authority claiming breach of contract. The court granted the landowner’s motion for partial summary judgment, concluding that the Airport Authority breached the agreement by failing to overblast the land, and that no valid defenses excused the breach.
The next step in the litigation was to determine the measure of damages to be awarded the landowner. Expert witnesses provided opinions on the cost of performing the overblasting, and the parties agreed it would cost $4,381,080.
This amount, concluded the trial court, would be grossly disproportionate to the land value. The court determined this would service only to penalize the Authority and act as a windfall to the landowner and, therefore, concluded the proper remedy for the Authority’s breach of contract was to award damages for the diminution in value of the land. The landowner, however, failed to present evidence to allow the court to determine the diminution in value, the court awarded only nominal damages.
In deciding that West Virginia courts should apply the gross disportionality rule in construction contract disputes, the appellate court explained:
“The gross disproportionality rule is often used interchangeably with“the economic waste doctrine.” As one law review article noted:
In contract law, the economic waste doctrine is often described as the jurisprudential justification for providing an alternative measure of damages (i.e., diminution in value) in connection with the breach of a contract when it is shown that the preferred measure of cost of performance has no rational relationship to the objective or market value such cost will achieve. This alternative measure of damages generally has been reserved for construction contracts.”
In a breach of a construction contract case, the appellate court concluded, “gross disproportionality is calculated by using the diminution in value approach which measures the difference in value between what is built (the value of the property/structure without the contracted work) and what was supposed to have been built (the value of the property/structure if the contracted work had been performed).”
Once a plaintiff proves there has been a breach of contract, as was done in this case, the party that breached the contract then has the burden of proving gross disproportionality. In the case at hand, the appellate court found the breaching party failed to prove gross disproportionality. The landowner, therefore, argued, the court should apply the non-breaching party’s proven measure of damages, i.e., the cost to repair, replace, or complete. The court agreed and held that where the breaching party does not prove gross disproportionality, the non-breaching party’s proven measure of damages applies.
About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with ConstructionRisk Counsel, PLLC) representing design professionals, contractors and project owners. He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects. He is publisher of ConstructionRisk Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932. This article is published in ConstructionRisk Report, Vol. 28, No. 5 (July 2026).
Copyright 2026, ConstructionRisk, LLC
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