MOUNTAIN WATER DISTRICT VS. SMITH (IRVIN), ET AL.
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RENDERED: MAY 21, 2010; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2008-CA-002369-MR
MOUNTAIN WATER DISTRICT
v.
APPELLANT
APPEAL FROM PIKE CIRCUIT COURT
HONORABLE EDDY COLEMAN, JUDGE
ACTION NO. 06-CI-01428
IRVIN SMITH; AND
HAZEL SMITH
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: VANMETER, ACTING CHIEF JUDGE; KELLER, JUDGE; WHITE,1
SENIOR JUDGE.
VANMETER, ACTING CHIEF JUDGE: Mountain Water District appeals from a
judgment entered by the Pike Circuit Court after a jury rendered a verdict in favor
1
Senior Judge Edwin White sitting as Special Judge by assignment of the Chief Justice pursuant
to Section 110(5)(b) of the Kentucky Constitution and Kentucky Revised Statutes (KRS) 21.580.
of Irvin and Hazel Smith regarding a dispute over the cause and extent of property
damage suffered by the Smiths. For the reasons stated hereafter, we affirm.
The Smiths own a residence located at 20 Radio Hill in Buskirk,
Kentucky. In 2002 and 2003, Mountain Water installed a new sewer system,
which was constructed above an existing sewer system and was located uphill from
the Smiths’ residence. During the construction, a pipe from the previous system
that ran down the hill towards the Smiths’ residence was broken. Subsequently,
sewage arose from the ground and saturated the Smiths’ property.
The Smiths discovered a tank buried underneath their property that
was connected to the old sewer system. The Smiths believed debris from the
broken pipe had caused the sewage to back up within this tank, eventually causing
the sewage to permeate their property. County officials advised the Smiths to have
the tank filled with concrete to prevent the sewage backup. After the Smiths did
so, sewage reappeared on the Smiths’ property. The Smiths suspected, and
presented evidence to suggest, repair would need to be done on neighboring
property not owned by the Smiths.
The Smiths hired an appraiser who rendered two estimates evaluating
the diminution in value of the Smiths’ property. The first, in 2006, estimated a
diminution in value of $15,000. The second, in 2008, estimated a diminution in
value of $50,000. Mountain Water provided expert testimony that the diminution
in value was $5,500.
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Prior to trial, Mountain Water filed a motion in limine to suppress any
evidence concerning the cost of repair from being introduced at trial, since the
Smiths provided no such evidence during discovery. The motion was sustained
and the Smiths proffered no such evidence at trial.
At the close of the Smiths’ evidence, and again at the close of all the
evidence, Mountain Water moved for a directed verdict claiming the Smiths failed
to prove damages to the property by not offering evidence of the cost of repair.
Both motions were overruled by the trial court.
Mountain Water proposed a set of jury instructions requiring, for the
purpose of calculating damages, the jury to find the lesser amount between the cost
of repair and the diminution in value. This instruction was rejected by the trial
court, and the damages instruction which was ultimately submitted to the jury read
as follows:
If you have answered Yes to Instruction No. 2 [finding
liability], you will determine from the evidence the
difference in the Fair Market Value immediately before
and after the property was damaged not to exceed
$50,000.00 dollars. “Fair Market Value” is the price that
a person who is willing but not compelled to buy would
pay and a seller who is willing but not forced to sell
would accept for the property in question.
The jury found in favor of the Smiths and awarded $30,000.00 in
damages. This appeal followed.
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First, Mountain Water contends the trial court erred by denying its
motion for a directed verdict since the Smiths did not provide evidence of the cost
of repair, and thus failed to prove their measure of damages. We disagree.
Upon consideration of a motion for a directed verdict, “the trial court
must ‘draw all fair and rational inferences from the evidence in favor of the party
opposing the motion, and a verdict should not be directed unless the evidence is
insufficient to sustain the verdict.’” Kroger Co. v. Willgruber, 920 S.W.2d 61, 64
(Ky. 1996) (quoting Spivey v. Sheeler, 514 S.W.2d 667, 673 (Ky. 1974)). Upon
review by an appellate court, “the test of a directed verdict is, if under the evidence
as a whole, it would be clearly unreasonable for a jury to find guilt [or liability],
only then the defendant is entitled to a directed verdict[.]” Commonwealth v.
Benham, 816 S.W.2d 186, 187 (Ky. 1991) (citations omitted).
Mountain Water relies on Ellison v. R & B Contracting, Inc., 32
S.W.3d 66 (Ky. 2000), to argue the Smiths are required to present evidence of both
the cost of repair and the diminution in value. However, in Ellison, the claimant
sought cost of repair damages, whereas here, the Smiths sought damages for the
diminution in value in their property. The court stated:
As a practical matter, therefore, the amount by which the
injury to the property diminishes its total value operates
as an upper limit on any damage recovery. Claimants
may receive restoration cost damages in injury-toproperty cases only when compensation in the form of
restoration costs is the least expensive way to make those
claimants whole.
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Id. at 69-70. The effect of Ellison is to prevent a claimant from seeking cost of
repair damages that exceed the diminution in fair market value. This rule,
therefore, assumes the claimant has repaired, or has the ability to repair, the
property damage because the claimant is seeking those repair costs as damages. In
this case, the Smiths are seeking diminution in value damages, in part, because
they claim they were unable to repair the damage, and presented evidence to that
effect in the form of an appraisal.
This court does not read Ellison to require a claimant to present
evidence of diminution in value and cost of repair when a claimant puts on
evidence demonstrating they were unable to repair the damage and do not seek cost
of repair damages. Furthermore, Mountain Water cites no Kentucky authority
which states the burden of proving damages in an injury-to-property case requires
the claimant to demonstrate both cost of repair damages and diminution in value
damages when the claimant only seeks diminution in value damages. Drawing “all
fair and rational inferences from the evidence in favor of the party opposing the
motion,” i.e., in favor of the Smiths, the evidence presented to the jury was not
“insufficient to sustain the verdict.” See Kroger Co., 920 S.W.2d at 64.
Accordingly, the trial court did not err by denying Mountain Water’s motion for a
directed verdict.
Next, Mountain Water contends the trial court erred by not instructing
the jury regarding cost of repair damages. We disagree.
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An alleged error in a jury instruction is considered a question of law
and is reviewed on appeal under a de novo standard of review. Peters v. Wooten,
297 S.W.3d 55, 64 (Ky.App. 2009) (quoting Hamilton v. CSX Transp., Inc., 208
S.W.3d 272, 275 (Ky.App. 2006)).
Mountain Water argues the jury should have been instructed to
calculate damages as the lesser of the cost of repair or the diminution in value, in
accordance with Ellison. In Ellison the court stated:
[W]here a claimant seeks compensation in the form of
repair costs for an injury to land, trial courts shall require
the jury to find whether the injury may be repaired at a
cost less than the diminution in the value of the property,
and, if the jury finds otherwise, limit the claimant’s
recovery to the diminution in the value of the property.
Id. at 70 (emphasis added). Thus, Ellison requires a jury to be instructed to find
the lesser amount between cost of repair and diminution in value only when a
claimant seeks cost of repair damages. This court, as noted above, does not read
Ellison to require the “lesser amount” instruction when the claimant only seeks
diminution in value damages.
Mountain Water directs us to Lichtefeld v. Mactac Eng’g and
Consulting, Inc., 239 Fed. Appx. 97 (6th Cir. 2007) (applying Kentucky law), as an
example of a federal court applying the “lesser amount” instruction in Ellison
when the claimant seeks damages for diminution in value without regard to repair
costs. Id. at 102. However, in Lichtefeld, the claimant was able to make repairs to
the property and assign a dollar amount to those repairs. The lower court
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instructed the jury to calculate damages as either the cost of repair or the
diminution in value, rather than instructing the jury to find the lesser of the two
amounts. An appellate review held that the jury instructions should have reflected
the “lesser amount” rule set forth in Ellison, rather than instructing the jury that the
proper measure of damages was either the cost of repairs or the diminution in
value. Id. at 106.
In the present case, the record suggests the Smiths were unable to
repair the property damage themselves. Furthermore, no evidence was presented
by either party to establish the cost of repair, and none was required. A “lesser
amount” instruction was neither required, nor supported by the evidence, and thus
the trial court did not err by deciding against giving the instruction offered by
Mountain Water.
Finally, Mountain Water asserts the trial court erred by denying its
motion for a judgment notwithstanding the verdict. We disagree.
Under CR2 50.02,
[n]ot later than 10 days after entry of judgment, a party
who has moved for a directed verdict at the close of the
all the evidence may move to have the verdict and any
judgment entered thereon set aside and to have judgment
entered in accordance with his motion for a directed
verdict[.]
In reviewing a trial court’s decision to deny a motion for a judgment
notwithstanding the verdict, “we apply the same standard of review that we use
when reviewing a lower court’s decision to deny a motion for a directed verdict.”
2
Kentucky Rules of Civil Procedure.
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Radioshack Corp. v. ComSmart, Inc., 222 S.W.3d 256, 261 (Ky.App. 2007)
(quoting Prichard v. Bank Josephine, 723 S.W.2d 883, 885 (Ky.App. 1987)).
Here, Mountain Water moved for a judgment notwithstanding the
verdict on the basis that the Smiths failed to prove their measure of damages as
required by Ellison. However, given our conclusion that the Smiths were not
required to present evidence of cost of repair damages, it follows that Mountain
Water was not entitled to a judgment notwithstanding the verdict on this ground.
The judgment of the Pike Circuit Court is affirmed.
ALL CONCUR.
BRIEFS FOR APPELLANT:
BRIEF FOR APPELLEE:
Daniel P. Stratton
Pikeville, Kentucky
Lawrence R. Webster
Pikeville, Kentucky
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