HARDESTY (JOSEPH L.), ET AL. VS. SCOT-BILT HOMES, INC. , ET AL.
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RENDERED: MARCH 5, 2010; 10:00 A.M.
NOT TO BE PUBLISHED
OPINION OF OCTOBER 23, 2009, WITHDRAWN
Commonwealth of Kentucky
Court of Appeals
NO. 2008-CA-000564-MR
JOSEPH L. AND JULIE L. HARDESTY
APPELLANTS
v.
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE JUDITH E. MCDONALD-BURKMAN, JUDGE
ACTION NO. 05-CI-006517
SCOT-BILT HOMES, INC. AND
KENNETH S. BURNS
APPELLEES
OPINION
REVERSING AND REMANDING
** ** ** ** **
BEFORE: COMBS, CHIEF JUDGE; CAPERTON AND CLAYTON, JUDGES.
COMBS, CHIEF JUDGE: Joseph and Julie Hardesty (the Hardestys) appeal a jury
verdict in favor of residential homebuilder, Scot-Bilt Homes, Inc., and its owner,
Kenneth Burns (collectively “Burns”), and the denial of their motions for a
directed verdict and a judgment notwithstanding the verdict by the Jefferson
Circuit Court. After our review of the record, we reverse the judgment of the
Jefferson Circuit Court.
In 1996, the Hardestys undertook construction of a house on a lot that
they owned in Jefferson County. They contacted Kenneth Burns, owner of ScotBilt Homes, Inc. The Hardestys provided Burns with a floor plan sketch along
with a picture of a house from the magazine Southern Living. It was only a rough
sketch showing a suggested floor plan but providing no construction details.
Burns told the Hardestys that he knew a draftsman, Joe Dowdle,
whom Burns had used to prepare and to formalize other plans. Burns explained
that Dowdle could prepare the plans and that he could then submit a bid based on
Dowdle’s specs. Although Dowdle had worked Burns two to six times per year as
a draftsman, he was not licensed as an architect or engineer.
Dowdle prepared the site plan and billed Burns for his work.
However, the Hardestys contracted directly with Dowdle to prepare plans and
specifications for the house. Burns then submitted a bid, and the Hardestys entered
into a contract with him in 1997 for construction of the house. The contract
provided that Burns would construct the house in accordance with the local
building code, which provides as follows at § 6.03:
Builder shall furnish the labor and materials required for
the erection of a new residence building on the abovedescribed property in accordance with the signed plans,
specifications, and local building codes.
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Burns signed the building permit on behalf of Scot-Built Homes. That permit
required him to comply with the “1995 CABO1 Code.”
Construction lasted eight months and was completed in July 1998.
After the Hardestys moved into the house, they began to notice construction
defects. At trial, the Hardestys brought numerous defects to the attention of the
jury: structural defects, such as structural cracks in the brick and drywall; humps
in the floors; raised floors which prevented doors from swinging; a crown which
developed in the floor in the first-floor hallway; separation of hardwood flooring;
and a large crack which developed in the basement floor.
Many other problems became manifest. The Hardestys alleged that
the floor joists were inadequate to support the weight of the house in violation of
the building code. They noted movement of the foundation by approximately two
inches as evidenced by structural cracking in the walls and brick veneer as well as
the large crack in the basement floor. There was a chimney leak in the master
bedroom and a second roof leak in the rear of the house. The porch, railing, and
balusters began rotting within one year and had completely rotted away within four
years of construction. The rear deck had sunk approximately three inches. They
discovered a break in the main water line entering the house due placement of a
large rock over the water line. They also experienced HVAC (heating, ventilating
1
CABO: Council of American Building Officials. This organization is an internationally
recognized source providing administrative guidance and technical standards for all aspects and
phases of residential construction.
-3-
and air conditioning) problems, which they attributed to Burns’s installation of
defective coils.
The Hardestys brought some of these problems to the attention of
Burns within the first few years after construction. Although Burns told them that
the house was undergoing normal settling, he did install precautionary structural
support. Every expert who testified at trial agreed that the floor joists were
insufficient and that they violated the building code as to weight-bearing capacity.
Although the Hardesty’s continued to report a myriad of construction
problems, Burns finally told them to quit calling him. He ceased making repairs.
Roughly seven years after the construction of their house, the Hardestys brought a
breach of contract claim against Burns for defective construction based on the
numerous defects, the violations of building code, and the breach of the implied
warranty of habitability.
At trial, the Hardestys testified and presented testimony from Ralph
Wirth, their home inspector and an expert in building code; James Carter, a
structural engineer; and Steve Thompson, a contractor who testified about the cost
of repair necessary to correct the alleged defects. Burns presented his own
testimony -- both as a fact witness and as a homebuilder -- together with that of his
experts: James Roggenkamp, a structural engineer; Louis Kaufman; an expert in
foundation stabilization; Dr. Joseph Hagerty, a licensed geotechnical engineer; and
John Sillman, a masonry expert.
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As to structural defects, Burns testified that he repeatedly told the
Hardestys that the settling of the house was normal. As noted above, testimony was
presented that Burns eventually told the Hardestys not to call him any more about
the defects and that he refused to perform any structural repairs. However, Burns
testified that after meeting with the Hardestys’ licensed structural engineer a few
years after construction was completed, he installed precautionary structural
supports.
As to whether the floor joists were inadequate to support the load
imposed by the house, all three experts (including Burns’s own expert, James
Roggenkamp) agreed that the installation of floor joists in the house violated the
building code because they were insufficient to support the load imposed by the
house. They were either the wrong size or they were not positioned properly to
support the floors of the house – specific violations of the building code.
The first witness to testify for the Hardestys, Ralph Wirth, was a home
inspector who was an expert in the building code. Wirth testified that the joists
were inadequate and that this defect caused uneven floors, high spots, and
undulations in the floors throughout the house. Next, James Carter, a structural
engineer for the Hardestys, testified that there was excessive stress in the joists
between the first and second floors. Carter stated that this defect violated section
3.01 of the building code providing that “buildings and structures, and all parts,
thereof, shall be constructed to support safely all loads, including dead loads.”
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Last, James Roggenkamp, a structural engineer for Burns, agreed with
Wirth and Carter that the first-floor joist violated the building code but disagreed
that the second-floor joists were inadequate. However, the Hardestys brought out
on cross-examination that Roggenkamp’s opinion was based on a certain number
of floor joists and that the number which served as a basis for his opinion was
incorrect.
Burns testified that the floor joists had been designed by Dowdle
except for the second-floor joists, which were designed by Burns’s subcontractor,
K&I Lumber. Burns testified that during the installation of the joists, he modified
the plans submitted by Dowdle and narrowed the distance between the first-floor
joists to strengthen the floor. Roggenkamp testified that the narrowing of the floor
joists lessened any structural concerns that may have been hidden in the design
plans.
With respect to the third issue concerning the foundation of the house,
testimony showed that the downhill side of the house had moved relative to the
uphill side of the house, resulting in structural damage. This movement was
revealed by structural cracking in the walls and brick veneer and a large crack in
the basement floor. However, the cause of the movement was disputed. Both of
the Hardestys’ experts, Carter and Wirth, and Burns’s foundation stabilization
expert, Louis Kaufman, testified that the house needed foundation stabilization.
Wirth testified that the house continued to move as evidenced by re-opening of
patches in the bricks veneer. His calculation was that the house had moved two
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inches in the southwest corner, resulting in violations of sections 3.01 and 4.01 of
the building code and requiring Burns to place the house on adequate soil rather
than on expansive, compressive, or shifting soil. In addition, Carter testified that
the movement was likely due to compression of the soils on the downhill side of
the house, which was a bearing-capacity failure. Wirth and Carter recommended
foundation piers be installed to stabilize the house.
Burns presented two foundation experts, Louis Kaufman and Dr.
Joseph Hagerty. Kaufman, the expert in foundation stabilization, agreed that the
house needed to have stabilizing piers installed. Dr. Hagerty agreed that the house
had moved a couple of inches but disagreed that stabilization piers were now
necessary. He testified that the settling had ended and that stabilization piers were
no longer necessary. In commenting on Burns’s testimony that he had enlarged the
foundation footers on the downhill side of the home, Dr. Hagerty testified that this
action would minimize potential settling and would not cause additional settling.
The cracks that Dr. Hagerty observed indicated that the downhill end of the house
had moved relative to the uphill end. He did not agree that the movement resulted
from the soil because it was not expansive, compressive, or shifting -- but from
differential settlement of the house resting on top of the soil. Dr. Hagerty
explained that the home shifted because of the location of the house on the site and
the corresponding pre-construction loading of the soil, known as differential
settlement.
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As to the chimney leak in the master bedroom, testimony established
that Burns had attempted to repair the leak by replacing the roof flashing around
the exterior of the chimney. However, flashing did not stop the leak. Wirth
testified that any entry of water into a habitable living area of the house is a
building code violation. Wirth testified that the water was entering through the
brick veneer of the chimney itself and not through the seam where Burns had
reapplied the flashing. Wirth testified that Burns had not properly constructed the
chimney and that his attempted repairs did not address or correct the problem.
Instead, according to Wirth, wall flashing should have been installed behind the
brick to direct water to “weep” holes so that the water would exit the wall cavity
above the roof level. The chimney leak violated sections 703.12 and 703.73of the
building code. Thompson also testified that the chimney was not properly flashed.
Burns testified that he had attempted to repair the roof and that he was
unaware that the roof was still leaking. Burns also presented testimony of John
Sillman, an expert in masonry. Sillman testified that upon his inspection of the
leak, he saw water stains on the attic floor in the area of the chimney and that the
leak needed to be fixed.
With respect to the second roof leak in the rear of the house,
testimony was presented that the leak occurred within the first four years of
construction. However, Burns presented evidence in the form of a roof repair
2
Section 703.1 requires that exterior walls to be installed to provide a barrier against weather.
3
Section 703.7 requires flashing behind the brick and weep holes to allow water to exit the brick.
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invoice that the repair to the roof occurred eight years after the home was built.
Burns also testified that he was unaware of any continuing issues with the roof.
As to the rotted porch, railing, and balusters, the Hardestys testified
that the porch railing and balusters around the top and the bottom porch had begun
to rot within the first year after construction was completed. The Hardestys
testified that they were painted in the spring and fall. Wirth testified that Burns
used the wrong materials for the balusters and railing as demonstrated by the fact
that the materials rotted within the first three to four years after construction.
Burns testified that the porch rotted “way prematurely” and attributed this
deterioration to a lack of maintenance. He also testified that he had warned the
Hardestys that their selected porch materials were not ideal materials for porch
construction and that they would require above-average maintenance.
As to claim that the rear deck sank about three inches, Wirth testified
that the sinking was to Burn’s failure to provide an adequate foundation for the
steps. Burns testified that the deck was nine years of age and that this type of
settlement is normal. Further, Burns testified that he was not made aware of the
problem and that he had not provided the lot on which the house was built.
Next, the Hardestys testified that they discovered that a large rock was
placed over the water line entering the house, causing the water line to break. The
Hardestys presumed that the rock was placed there when Burns back-filled around
the house. Wirth testified that large rocks should not be placed in fill near the main
water line. Burns testified that this damage occurred eight years after the house
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was built, that the line was broken from rock settlement, and that Burns was not
notified of the issue.
As to the Hardestys’ final issue, the HVAC problems, the Hardestys
presented evidence that Burns installed defective coils in the HVAC system.
Burns presented evidence in the form of an invoice that the coils were replaced
after eight years due to “very dirty condenser coils.”
At the close of each party’s case in chief, the Hardestys moved for a
directed verdict, which the trial court denied. After hearing all the testimony, the
jury returned a unanimous verdict in favor of Burns. The Hardestys then moved
the court for a judgment notwithstanding the verdict (JNOV) based on the
Hardestys’ claims that Burns violated the Kentucky building code with respect to
the floor joists and chimney leak and that there was insufficient evidence to sustain
a verdict for Burns.
In denying the motion, the trial court stated that while the jury heard
evidence regarding the code violations and the design of the house, Burns did not
design the house -- nor did he hire and pay the designer. (However, according to
plaintiff’s exhibit 19 and as noted earlier in this opinion, Dowdle had prepared the
site plan drawings for the house and submitted his invoice for payment to Burns.)
The trial court concluded that the jury heard sufficient evidence on these issues.
Further, the trial court determined that: (1) Burns had offered proof sufficient to
support the jury verdict, thus rebutting the allegation of a code violation arising
from the foundation’s being placed on inadequate soil; and (2) the Hardestys’
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claim that Burns failed to rebut liability for problems with the roof, porch, deck,
HVAC, and water line did not merit a directed verdict as Burns presented evidence
(albeit not the best evidence or the most evidence) sufficient to sustain the jury’s
verdict. Therefore, the court concluded that the Hardestys were not entitled to a
JNOV.
It is from the denial of the Hardestys’ directed verdict motions and
motion for JNOV that they now appeal.
The Hardestys present eight arguments on appeal in support of their
contention that the trial court erred in denying their motion for a directed verdict
and their subsequent motion for JNOV. At the outset, the Hardestys argue that
courts recognize special protection for homeowners in the construction of a house
through the implied warranty of habitability with respect to the structural integrity
of home construction.
Based upon Kentucky’s implied warranty of habitability, the
Hardestys contend that they were entitled to a directed verdict on their structural
claims. Second, they assert that the undisputed building code violations entitled
them to judgment as a matter of law. Third, they argue that Burns cannot avoid
liability for his building code violations and other construction defects by blaming
an unlicensed draftsman whom he recommended and paid. Fourth, the Hardestys
claim that the fact that the plans were approved by the building code office does
not relieve Burns of his responsibility for failure to comply with the building code
resulting in violations. Fifth, the Hardestys assert that the evidence was
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insufficient to sustain a verdict for Burns with respect to the foundation claim.
Sixth, the Hardestys state that there was insufficient evidence to sustain a verdict in
favor of Burns on the Hardestys’ chimney leak, porch, roof leak, deck, water line
leak, and HVAC claims. Seventh, the Hardestys argue that the jury ignored the
court’s instructions. Finally, the Hardestys assert that the court erroneously
admitted evidence prejudicial to the Hardestys concerning Mr. Hardesty’s position
as a construction attorney at a large firm.
Burns disagrees and disputes at length each of the Hardestys’ claimed
errors. After a review of the arguments presented by the parties, the voluminous
record and applicable law, we reverse the trial court. Although there was evidence
presented to support Burns, it was simply inadequate substantively to support the
verdict of the jury in this case. We are persuaded that the Hardestys were entitled
to a JNOV.
Our role as an appellate court is to determine whether a trial court
erred in declining to grant a motion for a directed verdict or a JNOV. Lewis v.
Bledsoe Surface Min. Co., 798 S.W.2d 459 (Ky.1990) and Commonwealth Dept.
of Highways v. Enoch, 23 S.W.2d 633 (Ky. 1975). In our analysis, we must bear in
mind that:
In ruling on either a motion for a directed verdict or a
motion for judgment not withstanding the verdict, a trial
court is under a duty to consider the evidence in the
strongest possible light in favor of the party opposing the
motion. Furthermore, it is required to give the opposing
party the advantage of every fair and reasonable
inference which can be drawn from the evidence. And, it
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is precluded from entering either a directed verdict or
judgment n.o.v. unless there is a complete absence of
proof on a material issue in the action, or if no disputed
issue of fact exists upon which reasonable men could
differ.
Taylor v. Kennedy, 700 S.W.2d 415, 416 (Ky.App.1985)
This Court is not at liberty to make credibility determinations or
determine the weight which should be given to the evidence as these are the
functions of the trier of fact. Lewis at 462. “Where there is conflicting evidence, it
is the responsibility of the jury to determine and resolve such conflicts.” Gibbs v.
Wickersham, 133 S.W.3d 494, 495-96 (Ky.App.2004). The denial of a motion for
a JNOV should only be reversed on appeal when it is shown that the verdict was so
palpably or flagrantly against the evidence as to indicate that the jury reached the
verdict as a result of passion or prejudice. Bierman v. Klapheke, 967 S.W.2d 16,
18-19 (Ky. 1998).
During voir dire, the Hardestys’ counsel informed the jury that Mr.
Hardesty was a partner at the “large” law firm of Stites and Harbison and that Mrs.
Hardesty was an attorney with the Jefferson County Attorney’s office. Over the
Hardestys’ objection, the jury also learned that Mr. Hardesty is a member of the
construction group in his firm. The Hardestys believe that the jury was tainted
from the outset to their detriment. Although we agree that this evidence was
wholly inadmissible on relevancy grounds, its erroneous admission would not
suffice alone to warrant a reversal. We shall not speculate on the subjective impact
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of such information. Therefore, our inquiry will focus solely on the substantiality
of the evidence presented and the pertinent law.
The Hardestys argue that courts recognize special protection for
homeowners in construction of a house through the implied warranty of
habitability with respect to the structural integrity of home construction. They rely
on Real Estate Marketing, Inc. v. Franz, 885 S.W.2d 921, 925 (Ky.1994), in which
the Kentucky Supreme Court addressed the construction of a new residence and
held as follows:
[I]n Crawley v. Terhune, [437 S.W.2d 743, 745 (Ky.
1969)] this Court held as a matter of law “that in the sale
of a new dwelling by the builder there is an implied
warranty that in its major structural features the dwelling
was constructed in a workmanlike manner and using
suitable materials.”
In rebuttal, Burns cites U.S. v. Spearin, 248 U.S. 132, 136, 39 S.Ct.
59, 61 (1918), in which the United States Supreme Court held that “if the
contractor is bound to build according to plans and specifications prepared by the
owner, the contractor will not be responsible for the consequences of defects in the
plans and specifications.” There is a major distinction between defects in plans
and specifications versus a clear violation of a building code provision.
In the case before us, Burns argues that he took the plans furnished by
Dowdle, that Dowdle had been hired by the Hardestys, and that he essentially was
absolved from any liability for defects by shifting all accountability to Dowdle.
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However, in signing his contract with the Hardestys, Burns assumed full
responsibility to comply with the building code. In addition to case law, Kentucky
Revised Statute(s) (KRS) 198b.130 directly provides for compensation (including
recovery of attorneys’ fees) for damages occurring as a result of building code
violations.
Three claims were direct violations of the building code. Experts
testified for both sides as to these defects with some degree of contradiction but
with unanimous agreement on one salient point: the building code was clearly
implicated. To recapitulate, those defects were the following:
(1) structural instability caused by improper installation of floor joists
in violation of section 3.01. Burns admitted to altering Dowdle’s plans, not
consulting with any other design professional, and not notifying the Hardestys of
the alteration.
(2) instability of the foundation causing cracking of the walls, the
brick veneer, and the basement floor implicating section 4.01 of the code. While
testimony as to the cause was conflicting, there was no question that a code
violation was involved.
(3) the chimney leak attributable to inadequate flashing implicating
section 703.7 of the code. No one contradicted the testimony of the Hardestys’
expert Ralph Wirth, that “any time water enters a habitable living area of the
house, it is a building code violation.”
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The claim as to the rotting porches was not addressed by an expert
witness. However, the only testimony disputing Burns’s liability was that of Burns
himself, who shifted responsibility to the Hardestys for “improper maintenance.”
The Hardestys offered their counter-testimony, verifying that the balusters and
railings had been pained in the spring and fall. Nonetheless, the rotting began
within the first year following construction with the eventual collapse of the entire
upper porch.
Four more claims were presented. No expert testimony was heard,
and Burns provided no evidence to explain these defects: the second roof leak, the
sinking of the rear deck by three inches, the water line leak, and the defective coils
in the HVAC.
Appellate restraint dictates that we grant great deference to a jury
verdict and the discretion of a trial court. However, we have indeed reversed jury
verdicts when the evidence was lacking in sufficiency to sustain a verdict. Shreve
v. Biggerstaff, 777 S.W.2d 616 (Ky. App. 1989). After our review of the records,
we are persuaded that the evidence was so compelling against Burns that no
reasonable jury could have returned a verdict in his favor. The verdict was truly
puzzling in light of the scant evidence offered to absolve Burns of liability. In an
abundance of caution, the trial court allowed this case to proceed to a jury rather
than entering a directed verdict. However, after the jury failed to return a verdict
in compliance with the evidence, we conclude that the trial court erred in not
granting a JNOV.
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Our Kentucky Supreme Court has recognized the sacrosanct duty of a
home builder to construct a house in workmanlike fashion. It is a duty singled out
from all other commercial transactions and elevated to a special status of
protection to homeowners. In Real Estate Marketing, Inc. v. Franz, 885 S.W.2nd
921 (Ky. 1994), Kentucky adopted an implied warranty of habitability regarding
home building:
There is an implied warrant that in its major structural
features, the dwelling was constructed in a workmanlike
manner and using suitable materials. Crawley elevates
the builder’s failure to so construct the dwelling to the
status of a legally compensable wrong as a matter of
law even though it is not a matter of contract.
Id. at 925 citing Crawley v. Terhune, 437 S.W.2d 743, 745 (Ky.App. 1969).
(Emphasis added.)
In the case before us, law, contract, and the building code all come
together to compel a different outcome in the construction of the Hardestys’ house.
In their petition for rehearing, the Hardestys argue that Culberton v. Ashland
Cement & Construction Co., 144 Ky. 614, 139 S.W. 792 (1911), a ninety-eightyear-old case holding a builder liable for defects only when he provides the plans,
clearly has been superseded by the more expansive rulings in favor of homeowners
clearly set forth in Crawley, supra and Franz, supra. As correctly noted in the
petition for rehearing, Culbertson involved construction of a sidewalk rather than a
habitation and would arguably be distinguishable on that basis alone – separate and
apart from the heightened protection now being afforded to homeowners. Franz
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has expressed this public policy trend so forcefully as to expand the implied
protection beyond a builder and homeowner in privity with one another to
subsequent purchases of a house if the defects involve building code violations.
In the recent case of Miller v. Hutson, 281 S.W.3d 791 (Ky. 2009), the
Supreme Court of Kentucky removed from a homebuilder any protection based on
the doctrine of caveat emptor, announcing that no buyer should have to be wary in
dealing with the person entrusted with the construction of his home:
The purchase of a newly built home is, for almost every
Kentuckian, the most significant financial decision they
will make, and it is the fulfillment of a significant part of
the American dream. For the past forty years, since the
decision of our predecessor Court in Crawley v. Terhune,
437 S.W.2d 743 (Ky. 1969), we have consistently held
that the doctrine of caveat emptor does not protect the
builder of a new residence from the damages suffered as
a result of defective construction by the purchaser of the
new residence.
Id. at 796 (Concurring Opinion of Justices Venters and Scott.)
Accordingly, we reverse the judgment of the Jefferson Circuit Court
and remand this case for a trial on the issue of damages.
CLAYTON, JUDGE, CONCURS.
CAPERTON, JUDGE, DISSENTS AND FILES SEPARATE
OPINION.
CAPERTON, JUDGE, DISSENTING: There is little doubt that the
home of the Hardestys is fraught with problems. However, on appeal, our review
of a trial court’s denial of a JNOV is limited to a determination of whether the
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verdict of the jury was so palpably or flagrantly against the evidence as to indicate
that passion or prejudice influenced the jury.
In the case before our Court, the jury heard the evidence, determined
and resolved the conflicts, and rendered a verdict. A review of the record reveals
no passion or prejudice that could have influenced the jury to render an improper
verdict. Thus, the decision attained by the jury and embodied in the verdict must
necessarily have been based on the evidence presented at trial. Assigning weight
to the evidence is the purpose and function of the jury; thus, I would affirm.
BRIEFS FOR APPELLANTS:
BRIEF FOR APPELLEES:
David B. Ratterman
Angela R. Stephens
Louisville, Kentucky
Gerald L. Stovall
Brian A. Veeneman
Louisville, Kentucky
ORAL ARGUMENT FOR
APPELLANTS:
ORAL ARGUMENT FOR
APPELLEES:
David Ratterman
Louisville, Kentucky
Brian Veeneman
Gerald Stovall
Louisville, Kentucky
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