CARTER (KATHY), ET AL. VS. COALFIELD LUMBER COMPANY, INC.
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RENDERED: DECEMBER 3, 2010; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2009-CA-000519-MR
KATHY CARTER AND RAY CARTER,
RANDAL AND CAROLYN SWEENEY
v.
APPELLANTS
APPEAL FROM MARTIN CIRCUIT COURT
HONORABLE JOHN DAVID PRESTON, JUDGE
ACTION NO. 06-CI-00015
COALFIELD LUMBER COMPANY, INC.
APPELLEE
OPINION
AFFIRMING IN PART,
REVERSING IN PART, AND REMANDING
** ** ** ** **
BEFORE: CAPERTON, THOMPSON, AND VANMETER, JUDGES.
CAPERTON, JUDGE: Kathy and Ray Carter and Randal and Carolyn Sweeney
appeal from the Martin Circuit Court’s grant of Coalfield Lumber Company, Inc.’s
motion for judgment notwithstanding the verdict (“JNOV”) for failure to properly
prove damages to their real estate. In granting the motion, the trial court
determined that the Appellants should have offered evidence of the repair costs in
addition to the proffered diminution in fair market value evidence. Carter and
Sweeney contend that they sustained their burden of proof and that the trial court
erred in granting Coalfield’s JNOV motion.
After a review of the parties’ arguments, the record, and the applicable law,
we find no error in the trial court’s grant of Coalfield’s motion for JNOV on the
Sweeneys’ claims. However, we agree with the Carters that the court erred in
granting Coalfield’s motion for JNOV on their claims, and accordingly reverse and
remand this matter to the trial court for further proceedings not inconsistent with
this opinion.
The facts in the matter sub judice were presented to a jury on February 10,
2009.1 The Sweeneys are husband and wife who reside in the Beauty area of
Martin County. The Carters are father and daughter whose property is adjacent to
the Sweeneys. Carter and Sweeney each assert that their properties were damaged
as a result of Coalfield’s construction activities on the hillside behind their
properties.
As to the Sweeney’s claims, Caroline Sweeney testified that Coalfield had
been engaged in excavation activities directly behind the properties for
approximately three to four months.2 Caroline testified that as a result of this
1
The Appellants made claims for nuisance, damage to real property, lost rental value, and loss of
personal items.
2
Caroline further testified that the bulldozers were approximately 100 feet from her house and
Coalfield’s name was emblazoned on the bulldozers.
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activity, rocks fell onto their property, their pool was ruined as water went under
her liner and “bowed up” the lining in the pool,3 and that resultant drainage
problems caused damage to their out-building. Caroline further testified as to her
conversation with Robert Maynard, an employee of Coalfield, who took pictures of
the damage and said he would get back to them. Randell Sweeney testified about
his conversations with another employee of Coalfield, a Mr. Jude, who also
promised to get back in touch with the Sweeneys.
As to the Carters’ claims, Ray Carter testified that he owned the property on
which Kathy Carter’s mobile home was located.4 Prior to the excavation, Kathy
had made extensive repairs to the residence, costing somewhere between $15,000
and $20,000. Kathy Carter testified that during the last night she lived in her home
she was awakened by a landslide that pushed her home off its foundation and ten
feet toward the road. She testified to the loss of her personal belongings, including
furniture and electronics.
The Carters and the Sweeneys presented an appraiser, Gary Endicott.
Endicott testified that the value of the Sweeney home had diminished in value by
$25,000 from the damage to the property. Endicott testified that the Carter house
was a complete loss of $10,000, the value of the house prior to the damage, as it
was completely destroyed and that no new house could be placed there without
fixing the slip activity.
3
Caroline testified that the Sweeneys have still not used the ruined pool.
4
Ray testified that he had made a deed to his daughter.
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At the close of the Coalfield’s case-in-chief, Coalfield moved for a directed
verdict. During the bench conference the trial court opined that in terms of
damages to real property the Plaintiffs had to prove both the cost of repair and the
difference in market value. In response, counsel directed the court to the testimony
proved by Endicott. The court denied Coalfield’s motion. Thereafter, Coalfield
presented a representative of the company who testified that he did not believe that
they had caused the damage but did acknowledge talking to Randal Sweeney about
a rock hitting their pool. Thereafter, Coalfield again moved for a directed verdict
which the court denied.
The court submitted the case to the jury and the jury returned a verdict
against Coalfield, awarding the Carters $10,000 and the Sweeneys $15,000.
Coalfield then moved the court for a JNOV, arguing that the Carters and the
Sweeneys had failed to prove their damages by competent evidence.
In granting Coalfield’s motion for JNOV, the court noted the long-standing
rule that damages for injury to real estate is the lesser of cost of repair or difference
in fair market value. If the injury to property is permanent, the difference in fair
market value is the measure of damages. If the injury to property is temporary, the
measure of damages is the cost of repair. The determination of whether the injury
to the property is permanent or temporary depends on comparing the cost of repair
to the decline in fair market value. The court then noted that both the Plaintiffs and
the Defendant tendered jury instructions which were substantially in accordance
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with the long-standing rule, which the court gave to the jury, even though the
Plaintiffs did not produce evidence of repair costs.
The court then determined that it was certainly possible that the repair costs,
especially in the case of the Sweeneys, would have been substantially less than the
diminution in fair market value that the appraiser testified to. The court also noted
that the Plaintiffs had originally listed Eddie Hatfield of Hatfield Construction as a
witness, who presumably would have offered testimony as to the costs of repair,
but then failed to call him. The court concluded that the Plaintiffs failed in their
burden of proof in proving their damages by competent evidence and granted the
motion for JNOV.5 It is from this that the Carters and Sweeneys now appeal.
On appeal, the Carters and Sweeneys present two arguments. First they
argue that the trial court erred in granting Coalfield’s motion for JNOV. In support
of this argument, the Carters and Sweeneys assert that the law does not require that
plaintiffs prove both costs of repair and diminution in value and that because
Coalfield did not produce any evidence in rebuttal of the testimony of the
appraiser, then the Carters and Sweeneys were not bound by the lesser of the two
figures concerning cost of repair versus diminution in value. Moreover, they argue
that under Ellison v. R & B Contracting, Inc., 32 S.W.3d 66 (Ky. 2000), the factfinder is free to infer the costs of repair from the diminution in value. Secondly,
the Carters and Sweeneys argue that the trial court erred in restricting their claim
5
The court denied the secondary ground for JNOV, that the Plaintiffs failed to meet their burden
of proof on the question of causation. This issue was not appealed by either party and thus shall
not be addressed by this Court.
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for damages; namely, the restriction on compensation for reasonable rental value
of the property and punitive damages. Coalfield counterargues that the trial court
did not err in granting its JNOV motion nor in restricting the Carters’ and
Sweeneys’ claims for damages. After our review of the arguments, we find
dispositive the issue concerning the grant of JNOV.
At the outset, we note that a motion for JNOV shall not be granted unless
“there is a complete absence of proof on a material issue or if no disputed issues of
fact exist upon which reasonable minds could differ.” Bierman v. Klapheke, 967
S.W.2d 16, 18-19 (Ky.1998). We review a decision granting JNOV for clear error.
Moore v. Environmental Const. Corp., 147 S.W.3d 13, 16 (Ky. 2004). We must
review the evidence presented to the jury, drawing all reasonable inferences most
favorable to the verdict returned by the jury and that we must uphold the trial
court's decision if a reasonable person could not have found as the jury did. Id.
Moreover, in our determination we must bear in mind that,
In ruling on either a motion for a directed verdict or a
motion for judgment notwithstanding 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
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).
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In Ellison, our Kentucky Supreme Court addressed the inverse situation
presented by the case sub judice. In Ellison, the Plaintiffs submitted evidence on
the cost to repair their property but no evidence on diminution of value. In holding
that evidence of repair costs created a reasonable inference as to the diminution in
fair market value of the subject property, the Court noted:
Before we address the specific legal issues before
this Court in their current procedural posture, we feel it
would be of benefit to the bench and bar to review the
types of damages available to a claimant for injury to real
estate. In cases such as the one before us, we have upheld
two distinct types of damages: (1) if the injury to the
property is permanent, the amount by which the fair
market value of the property decreased immediately prior
to and after the trespass; but (2) if the injury to the
property is temporary, the cost to return it to its original
state. We have distinguished between “permanent” and
“temporary” injuries on the basis of the cost of
restoration and have held that injuries to real estate are
“permanent” where the cost to restore the property to
substantially its original state exceeds the amount by
which the injury decreased the property's value.
Reasonable restoration costs are an available remedy
only in “temporary” injury cases where the property may
be restored to its original state at a cost less than the
amount by which the market value of the property
decreased as a result of the trespass.
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-to-property cases only when compensation in the
form of restoration costs is the least expensive way to
make those claimants whole. This Court's most recent
opinions addressing the issue of the damages available in
injury-to-property cases have sidestepped the
“permanent” versus “temporary” distinction and focused
on the way in which the amount by which the decrease in
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property value operates as a practical limit on the amount
of recovery. We reiterate today, however, that cost to
repair damages are available only where the factfinder
determines that the injury to the property may properly
be characterized as “temporary” by finding that the
property may be restored at an expense less than the total
amount by which the injury decreased the property's
value.
Questions regarding the cost of repairing a
particular injury to real estate and the extent of any
diminution in fair market value of the real estate as a
result of an injury are questions of fact. Accordingly, we
hold that in future cases where 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.
Ellison at 69-70 (internal citations omitted).
In the case sub judice, the Sweeneys offered evidence solely on diminution
of value through the testimony of Endicott. Endicott testified that the value of the
Sweeney home had diminished in value $25,000 as a result of the damage to the
property. Under Ellison, the Sweeneys did not sustain their burden of proof
concerning their claim for damages as they failed to provide evidence of the cost of
repair to their property. See Ellison at 77. Thus, the trial court did not err in
granting the motion for JNOV as to the Sweeneys’ claim. However, a different
factual situation was presented by the Carters.
Endicott testified that the Carter house was “completely destroyed” at a loss
of $10,000, the value of the house prior to the damage. Coalfield offered no
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evidence rebutting this testimony. It is properly inferable that the property is not
repairable from Endicott’s testimony that the house was completely destroyed and
leaves no room for speculation on the reparability of the property absent rebuttal
evidence. In light of Endicott’s testimony, it would be disingenuous for the Carters
to bring forth evidence of repair cost when their evidence was that the property had
already been determined to be a complete loss by their expert.
Our Supreme Court in Ellison distinguished between permanent and
temporary losses and found that damages for cost of repair were available only
where the fact-finder determined that the injury to the property may properly be
characterized as temporary. We find little similarity between the terms
“temporary” and “completely destroyed” and, in light of no evidence that the
property could be repaired, opine that the jury could not have found damages for
repair.
Accordingly, we hold that in instances where property can only be
determined to be a complete loss; i.e., where it cannot be repaired but instead must
be replaced, that evidence of diminution in value alone is sufficient to overcome a
motion for directed verdict as well as a motion for JNOV.
We now turn to the second argument presented by the Carters and
Sweeneys; namely, that the trial court erred in restricting their claim for damages
by restricting compensation for reasonable rental value of the property and for
punitive damages. We agree with Coalfield that the trial court did not err in
declining to issue jury instructions for the Carters’ and Sweeneys’ claims for
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damages for the reasonable rental value of the property. In Brumley v. Mary Gail
Coal Co., 246 S.W.2d 148, 151 (Ky. 1952), the court held:
[Brumley] elected to treat the alleged nuisance as being
one permanent in character and sought damages in the
sum of $20,000 for diminution in the market value of his
property. He testified that this loss of value was $25,000
and his reason for recovery is based upon this theory. He
cannot recover for both diminution in market value and
rental value and, therefore, the testimony concerning the
loss of rental value was properly rejected.
Id.
Moreover, the Carters and Sweeneys failed to provide evidence of the rental value
of the property; thus, the trial court properly rejected the jury instructions. See
also Adams Const. Co. v. Bentley, 335 S.W.2d 912, 913- 14 (Ky. 1960).
We likewise agree with Coalfield that the trial court did not err in declining
to issue jury instructions for the Carters’ and Sweeneys’ claim for punitive
damages, as “punitive damages are not justified just because the injury was
intentional . . . . Punitive damages may be awarded for conduct that is outrageous,
because of the defendant's evil motive or his reckless indifference to the rights of
others.” Horton v. Union Light, Heat & Power Co., 690 S.W.2d 382, 389 (Ky.
1985)(emphasis original). The Carters and Sweeneys failed to provide evidence of
Coalfield’s “evil motive.” Thus, the trial court did not err in declining to issue jury
instructions for the Carters’ and Sweeneys’ claims for punitive damages.
In light of the foregoing, we affirm the grant of JNOV on the Sweeneys’
claims, and we reverse the trial court’s grant of JNOV on the Carters’ claims.
Further, we affirm the denial of the trial court to include jury instructions for the
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Carters’ and Sweeneys’ claims of damages for the reasonable rental value of the
property and for punitive damages and remand to the trial court for further
proceedings not inconsistent with this opinion.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Ned Pillersdorf
Prestonsburg, Kentucky
Elbert Alvin Fletcher
Lowmansville, Kentucky
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