The West Virginia Supreme Court of Appeals recently issued an important decision clarifying how courts should calculate damages in construction contract disputes when a contractor or project owner fails to complete the work required by the agreement. In Corotoman, Inc. v. Central West Virginia Regional Airport Authority, Inc., No. 24-661 (W. Va. Supreme Court of Appeals 2026), the court held that the party who breaches a construction contract bears the burden of proving that the cost of completing the work is grossly disproportionate to the benefit obtained. If that burden is not met, the non-breaching party is entitled to recover its otherwise proven measure of damages.
The Dispute
The case arose from an agreement between Corotoman, Inc. (“Landowner”) and the Central West Virginia Regional Airport Authority (“Airport Authority”) concerning property located near the end of an airport runway.
The Airport Authority sought to remove a large hill, or knoll, located on the Landowner’s property. Initially, it offered the Landowner $260,125 for the property—an amount substantially higher than the appraised value—but the offer was rejected. Instead, the parties entered into an agreement allowing the Airport Authority to enter the property and remove the knoll.
The agreement required more than simply removing the hill. After completing the excavation, the Airport Authority also agreed to overblast the property, a process involving drilling holes to the required depth, placing explosives in those holes, and detonating them to further reduce the property’s elevation by approximately thirty-five feet. This additional work would leave the property flatter and significantly easier to develop.
Although the Airport Authority completed the knoll removal, it never performed the required overblasting.
The Landowner filed suit for breach of contract, and the United States District Court for the Southern District of West Virginia granted partial summary judgment in its favor, finding that the Airport Authority had breached the agreement and that no valid defense excused its failure to perform.
The Damages Issue
The remaining issue was the proper measure of damages.
Expert testimony established—and the parties agreed—that completing the overblasting would cost approximately $4,381,080.
The district court concluded that requiring the Airport Authority to pay that amount would be grossly disproportionate to the value of the land. Believing such an award would constitute a windfall to the Landowner and effectively penalize the Airport Authority, the court applied the diminution-in-value measure of damages instead of the cost of completion.
However, because the Landowner had not introduced evidence establishing the diminution in the property’s value, the district court awarded only nominal damages.
The Supreme Court’s Analysis
The West Virginia Supreme Court of Appeals reversed.
In doing so, the court formally adopted the gross disproportionality rule for breach of construction contract cases and clarified how that rule should operate.
The court explained that the gross disproportionality rule is closely associated with what courts often call the economic waste doctrine. Under that doctrine, courts may substitute diminution in value for the cost of completing the promised work when requiring completion would bear no rational relationship to the value achieved.
The court explained that, in construction contract cases, gross disproportionality is determined using the diminution-in-value approach, which measures:
- the value of the property as it exists without the contracted-for work; and
- the value the property would have had if the contracted work had been completed.
The difference between those two values represents the property’s diminution in value and provides the benchmark for determining whether the cost of completion is grossly disproportionate.
Who Bears the Burden?
Perhaps the most significant aspect of the decision is the court’s allocation of the burden of proof.
The Supreme Court held that once the plaintiff establishes a breach of contract, the breaching party bears the burden of invoking and proving gross disproportionality.
That burden cannot be satisfied simply by showing that the cost of completion is expensive or exceeds the property’s market value. Instead, the breaching party must present evidence establishing the diminution in value and demonstrate that the cost of completion is grossly disproportionate to that loss in value.
In this case, although the Airport Authority argued that spending more than $4.3 million to perform the overblasting would be excessive, it failed to present the evidence necessary to prove gross disproportionality under the court’s newly adopted framework.
Because the Airport Authority did not satisfy its burden, the Supreme Court held that the Landowner’s proven measure of damages—the cost of completing the contracted work—controlled.
Key Takeaways
The Corotoman decision provides important guidance for future construction litigation in West Virginia.
First, the decision confirms that the gross disproportionality rule may limit damages in appropriate construction contract disputes.
Second, it establishes that gross disproportionality is evaluated through a diminution-in-value analysis, comparing the property’s value as built with the value it would have had had the contract been fully performed.
Finally, and perhaps most importantly, the decision places the burden squarely on the breaching party. If the party in breach fails to prove gross disproportionality, the non-breaching party is entitled to recover its otherwise proven measure of damages, including the cost to repair, replace, or complete the work.
For contractors, owners, and construction attorneys, Corotoman provides welcome clarity regarding the economic waste doctrine and reinforces that a party who fails to perform its contractual obligations cannot avoid paying completion costs merely by asserting that those costs are high. The breaching party must prove that the costs are legally and economically grossly disproportionate. If it cannot, the ordinary measure of contract damages applies.
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