Commercial Division Blog
Damages for Trespass Do Not Include Value to Trespasser of Use of Plaintiff's Property
On March 4, 2016, Justice Kornreich of the New York County Commercial Division issued a decision in Madison 96th Associates, LLC v. 17 East 96th Owners Corp., 2016 NY Slip Op. 30383(U), holding that a claim for trespass could not be based on the value to the trespasser rather than the damages to the plaintiff, explaining:
The proper measure of damages for injury to real property is the lesser of the decline in market value and the cost of restoration. Otherwise expressed, the measure of damages is generally the diminution in value, but if the cost of restoring the property to its former condition is less than the diminution in value, the measure of damages is the cost of restoration.
The measurement of damages in trespass focuses on compensating the property owner for the damage to his property, or the use value of his invaded property. Where the trespass does not cause damage, the measure of damages is the use value of the invaded property. Notably, no authority cited by plaintiff, or found by the court's independent research, holds that the measure of damages is the increase in value of the trespasser's property. Use value means the value of the use of the property upon which the defendant trespassed.
Three appellate New York courts have rejected the notion that the measure of damages includes profits made by the trespasser, as distinguished from use value of the property he invaded. In Cassata v New York New England Exchange, the defendant telephone company trespassed by placing a telephone cable on the wall of the plaintiff's building. The plaintiff argued that he was entitled to the gross revenues the defendant generated from the use of the telephone cable. The First Department rejected that measure of damages, holding that the correct measure of damages was the value of the right of way on the plaintiffs roof. The First Department made clear that the ordinary measure of damages for a trespass is the value of the defendant's use and occupation or damage to the freehold and, as there was no damage caused by the placement of the cable, the correct measure was the value to the trespasser of the use of the plaintiffs property. Similarly, in Granchelli v Walter S. Johnson Building Co., Inc., the appellate Court ruled that the plaintiff could not recover the profits made on a construction contract by a contractor who had trespassed. The plaintiff had argued that due to the trespass, the contractor saved money and increased his profit. The Fourth Department rejected that theory ruling that damages are intended to compensate the plaintiff for the value of the use of his property and that there was no authority allowing plaintiff to share in the trespasser's increased profits.
. . . 17 East may not recover Madison's profits measured by the difference in value of the new building and the hypothetical building. That measure of damages would not compensate 17 East for the diminution in value of its freehold or the value of the use of the 17 Property for underpinning.
(Internal quotations and citations omitted) (emphasis in original).