We handle a lot of first-party cases. However, there are times when a lawyer will get hired in a case where a third-party has done damage to a house or building. I represent a building owner whose building was hit by a truck and damaged. We all know the measure of damages in first-party insurance cases, but what is the measure of damages in a third-party case? In Pasadena State Bank v. Isaac,1 the Texas Supreme Court laid out how damages are measured in third-party property damage cases.
The general rule is that the measure of damages to property is the difference in the market value immediately before and immediately after the injury to the property and in the place (the county or parish) where the damage occurred. While this measure of damages may make sense for a property that is a total loss, like a building burned to the ground, it is not a very fair way of measuring damages where the property is damaged but still repairable. And while it is easy to measure the difference in market value between a building before a total loss and after a total loss, it is not so easy to do when there are only partial damages.
Therefore, the Isaac court recognized that different factual situations require different yardsticks to measure damages. The court followed Restate of the Law of Torts, Vol. 4, Sec. 928 in holding that when property is damaged, but repairable, the owner may elect to receive as damages (1) the reasonable cost of repair or restoration, and (2) the loss of use of the property during the time of repairs, and (3) other losses, which may have resulted during such time (i.e. business interruption or other consequential losses).