FERRELL (RICKY), ET AL. VS. PAUL DAVIS RESTORATION, INC.
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RENDERED: SEPTEMBER 3, 2010; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2009-CA-001869-MR
RICKY FERRELL and
TEREASA FERRELL
v.
APPELLANTS
APPEAL FROM WARREN CIRCUIT COURT
HONORABLE JOHN R. GRISE, JUDGE
ACTION NO. 05-CI-01265
PAUL DAVIS RESTORATION, INC., d/b/a
PAUL DAVIS RESTORATION OF
BOWLING GREEN, INC.
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE: MOORE AND WINE, JUDGES; HARRIS,1 SENIOR JUDGE.
WINE, JUDGE: Ricky and Tereasa Ferrell (“the Ferrells”) appeal from an adverse
jury verdict rejecting their claims against Paul Davis Restoration, Inc., d/b/a Paul
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Senior Judge William R. Harris sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and KRS 21.580.
Davis Restoration of Bowling Green Inc. (“PDR”). The Ferrells contend that they
were entitled to judgment as a matter of law based upon deposition statements by
PDR’s expert witness. They further contend that they were unfairly prejudiced by
the expert’s change in testimony at trial, that the jury’s verdict was contrary to the
evidence, and that the trial court abused its discretion in its evidentiary rulings.
Finally, the Ferrells assert that the trial court was biased in favor of PDR. Finding
no merit to any of these arguments, we affirm.
The underlying facts of this case are not in dispute. On August 31,
2004, the Ferrell’s home in Oakland, Kentucky, was extensively damaged in a fire.
At the time of the loss, the Ferrells had homeowners’ insurance through Motorists
Mutual Insurance Company (“Motorists Mutual”). Motorists Mutual referred the
Ferrells to the PDR franchise in Bowling Green to provide restoration services.
On September 1, 2004, the Ferrells entered into an agreement with
PDR to clean and repair their home and its contents. Under the terms of the
contract, PDR would be paid in three draws primarily from the proceeds of the
Ferrell’s homeowner’s policy. During the bidding, estimating, and repair process,
PDR used the Xactimate2 software program to calculate the cost of the repairs.
The Xactimate program gives a line-by-line cost estimate for each portion of the
2
Xactimate® is published by Xactware Solutions, Inc. and is a registered trademark of that
company. http://www.xactware.com/ (accessed July 29, 2010).
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repair work. In calculating these costs, the program factors in location, profit, and
overhead, among other things.3
After PDR commenced the remediation work, a dispute arose between
the parties concerning the amount to be paid to PDR. The Ferrells assert that PDR
padded the costs of the repair work as set out in its estimates. The Ferrells also
claim that PDR failed to return some of their personal property removed during the
course of the repairs. In response, PDR states that the Ferrells and Motorists
Mutual failed to make timely payments, and that the Ferrells repeatedly requested
that PDR perform additional work which was not covered by the contract. The
relationship broke down entirely on March 22, 2005, when the Ferrells fired PDR.
The Ferrells hired another contractor to complete the remediation work.
In August of 2005, the Ferrells brought this action against Motorists
Mutual and PDR, alleging breach of contract. The Ferrells subsequently settled
their claims against Motorists Mutual and amended their complaint against PDR to
allege violation of the Kentucky Consumer Protection Act, fraud, and bailment
claims. Following extensive discovery, the matter proceeded to a jury trial in April
of 2008. However, that trial ended in a mistrial because the Ferrells failed to
provide timely disclosure on the amount of their claims. The matter was scheduled
for a second trial in October of 2008.
3
Xactimate has been utilized by other insurance companies and is accepted by various courts
throughout the country. Wickman v. State Farm Fire & Cas. Co., 616 F.Supp.2d 909 (Wis.,
2009); Louisiana ex rel. Caldwell v. Allstate Ins. Co., 536 F.3d 418 (5th Cir., 2008).
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In August of 2008, PDR filed a supplemental pretrial compliance
identifying Stephen Russell “Rusty” Neeper as an expert witness regarding the use
of the Xactimate program. After taking Neeper’s deposition, the Ferrells moved
for summary judgment, alleging that Neeper had admitted that the Xactimate
program was deceptive and misleading. The matter proceeded to a jury trial on
October 1, 2008. The trial court ultimately denied the motion for summary
judgment after the Ferrells closed their proof, conceding their expert’s testimony
created a question of fact for the jury.
At the close of trial on October 3, 2008, the court advised the parties
that the jurors had been excused for the public school fall break during the weeks
of October 6 and October 11. Consequently, the trial resumed on October 23,
2008. PDR completed its proof that day and the matter was submitted to the jury.
The jury returned verdicts in favor of PDR on all of the Ferrell’s claims.
Thereafter, the trial court denied the Ferrell’s motions for a new trial and a
judgment notwithstanding the verdict, and entered a judgment in accord with the
jury’s verdict. The Ferrells now appeal from this judgment.
The Ferrells primarily argue that they were entitled to summary
judgment, directed verdict, or a judgment notwithstanding the verdict based on the
divergence between Neeper’s deposition testimony and his trial testimony. In their
supplemental pretrial compliance, PDR identified Neeper as an expert who would
testify that the Xactimate program is widely used and accepted in the insurance
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industry, and that the methods used by PDR to estimate the costs of repair are
proper in circumstances involving a fire loss.
In his deposition, Neeper testified that the Xactimate program is
commonly used in the insurance industry and that Motorists Mutual required PDR
to use it to estimate the repair costs in this case. He further explained that the
Xactimate program does not reflect PDR’s actual cost of any given item or service,
but the usual and customary cost of the item or service within the particular
geographic area. The program then allows the contractor a 10% profit and 10%
overhead charge on these latter amounts. Neeper stated that the Xactimate
estimate is prepared for the benefit of the insurance company, which is aware of
the nature of the program and how the estimate is calculated.
The Ferrells maintain that the Xactimate program can be misleading
to a homeowner because it incorrectly lends the appearance that the contractor is to
receive 10% profit and 10% overhead above and beyond the actual cost of any
given item or expense. At one point in his deposition, Neeper agreed with the
Ferrells’ counsel that this misleading impression was “deceptive” to the
homeowner. However, he denied that PDR had padded its costs or that it intended
to deceive the homeowner.
At trial, the Ferrells called Neeper to testify. Neeper reiterated his
deposition testimony that the Xactimate program is widely used in the insurance
industry to estimate costs for fire-restoration services. However, he disavowed his
prior testimony to the extent that he had described it as misleading or deceptive to
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a homeowner. Rather, he explained that the output of the Xactimate program is
not intended for the homeowner, who may find it difficult to understand. When
asked about the discrepancy between his deposition and trial testimony, Neeper
stated that he had been confused by the Ferrell’s counsel’s questions and he had
not meant to describe the Xactimate program as deceptive.
The Ferrells argue that Neeper’s deposition testimony amounts to a
binding judicial admission which could not be withdrawn at trial. They also assert
that Neeper perjured himself by changing his testimony at trial, thus rendering the
verdict unfair. Based on their contentions about the binding effect of Neeper’s
deposition testimony, the Ferrells argue that they were entitled to summary
judgment or a directed verdict on their Consumer Protection Act and fraud claims.
We find no support for the Ferrells’ contention that PDR is bound by
Neeper’s deposition testimony. By definition, a judicial admission “is a formal act
by a party in the course of a judicial proceeding which has the effect of waiving or
dispensing with the necessity of producing evidence by the opponent and bars a
party from disputing a proposition in question.” Nolin Production Credit Ass’n v.
Canmer Deposit Bank, 726 S.W.2d 693, 701 (Ky. App. 1986). As a non-party,
Neeper could not make a binding judicial admission on PDR’s behalf. Id.
Consequently, the Ferrells were not entitled to a judgment in their favor based on
Neeper’s deposition testimony.
In the alternative, the Ferrells contend that they were deprived of their
right to a fair trial because PDR did not give them advance notice of the change in
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Neeper’s testimony prior to trial. Kentucky Rule(s) of Civil Procedure (“CR”)
26.02(4) provides for disclosure of expert witnesses. The rule allows a party to
discover facts or opinions of experts which the other party intends to call including
“the subject matter on which the expert is expected to testify, and . . . the
substance of the facts and opinions to which the expert is expected to testify and a
summary of the grounds for each opinion.” CR 26.04(4)(a)(i). Here, PDR
disclosed Neeper’s name and the subject and substance of his expert testimony
prior to trial. Furthermore, PDR made Neeper available for a deposition.
Consequently, PDR fully complied with its obligations under CR 26.02(4).
A party may have a duty to supplement its responses concerning its
expert witnesses under CR 26.05. But in this case, although PDR had designated
Neeper as its expert witness, the Ferrells elicited the contradictory testimony from
Neeper on direct examination during their case-in-chief. We find no language in
CR 26.05 which would have required PDR to supplement its disclosures
concerning Neeper’s testimony under these circumstances.
Furthermore, the fact that Neeper changed his opinion between the
deposition and the trial was admissible to impeach his expert testimony. See
Miller ex rel. Monticello Baking Co. v. Marymount Medical Center, 125 S.W.3d
274 (Ky. 2004). The Ferrells extensively cross-examined Neeper on this matter.
In both his deposition and trial testimonies, Neeper discussed the use of the
Xactimate program in calculating fire loss damages for insurance purposes. At
both times, he testified that the program is commonly used in the industry. The
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only significant difference in his testimony concerned his original characterization
of the Xactimate program as potentially misleading or deceptive to the
homeowner. But even in his deposition, Neeper denied that the Xactimate
program was unfair to the homeowner or that PDR had padded its costs underlying
the estimate. As noted above, Neeper clarified this testimony at trial and recanted
his prior characterization of the Xactimate program as deceptive. Under the
circumstances, the inconsistency between his deposition and trial testimony was a
matter involving the weight to be given to the evidence and did not require
exclusion of his trial testimony.
For the same reason, we disagree with the Ferrells that the jury’s
verdict was contrary to the evidence. They contend that the evidence conclusively
shows that PDR inflated its costs when it submitted the estimate to Motorists
Mutual. The Ferrells primarily repeat their prior argument that PDR is bound by
Neeper’s deposition testimony. The Ferrells also point to other evidence as
conclusively showing PDR overbilled them for particular services. However, PDR
presented evidence that the Xactimate program is widely used in the insurance
industry for estimating costs for fire-restoration work and that it billed items out at
the amount allowed by the program. Although the allowed costs may have
exceeded PDR’s actual costs for particular items or services, the trial court
properly allowed the jury to consider the Ferrells’ claim that PDR’s use of the
Xactimate program was deceptive or fraudulent.
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The Ferrells next argue that the trial court erred when it refused to
admonish Bob Snodgrass, the project manager and job superintendent for PDR,
about his Fifth Amendment right against self-incrimination. However, the Ferrells
cite no authority for the proposition that they have standing to assert this claim.4
Indeed, it is well established that the privilege against self-incrimination extends to
the witness, not to other parties to the trial. See Hoffman v. U.S., 341 U.S. 479,
486, 71 S.Ct. 814, 818, 95 L.Ed.2d 1118 (1951). See also Commonwealth v.
Phoenix Hotel Co., 157 Ky. 180, 162 S.W. 823, 826 (1914). Moreover, they make
no claim that they were unfairly prejudiced because the trial court declined to give
an admonition. Therefore, we find no reversible error.
In their fourth ground of error, the Ferrells argue that PDR engaged in
improper conduct to influence the jury during trial. On October 17, 2008, during
the recess of the trial, the local newspaper ran an article about PDR. The article
did not refer to the litigation or any of the issues between PDR and the Ferrells.
Rather, the article was a human interest piece involving PDR’s participation in a
project to renovate the house of a local man who had been paralyzed after an
assault.
4
The Ferrells cite Martin v. Commonwealth, 2004 WL 2755854 (Ky. App. 2004), as authority
for the proposition that the trial court should have admonished Snodgrass of his right against
self-incrimination. However, Martin involved a claim by a criminal defendant that his prior
testimony at a domestic violence hearing should have been excluded because he was not advised
of his rights against self-incrimination. This Court agreed. Unlike in Martin, the Ferrells are not
asserting the privilege against self-incrimination on their own behalf, but apparently on
Snodgrass’s behalf.
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The Ferrells first raised the issue in their motion for a new trial. The
trial court allowed the Ferrells to conduct limited discovery to determine the source
of the article. Discovery revealed that the article was prompted by a press release
from PDR and several e-mails from John and Jennifer Simms, the co-owners of
PDR. After reviewing the evidence, the trial court questioned the timing of the
article, suggesting that PDR should have been more circumspect that the case was
pending. However, the court found no evidence that PDR manufactured the article
in an effort to influence or communicate with the jury. Likewise, the court found
no evidence that any juror was improperly influenced by the article.
As an initial matter, it appears that the Ferrells failed to timely raise
this issue. The Ferrells’ counsel admitted that he was aware of the article when the
trial resumed on October 23, but he did not bring it to the court’s attention at that
time. Despite the inadequate preservation, the trial court fully considered this issue
in the post-verdict motion. There is no allegation that PDR or its employees
attempted to directly or indirectly contact any juror during the trial. In cases
involving improper influence over the jury, the objecting party has the burden of
proving that the jury was exposed to extraneous influences and that these
influences created a real and substantial possibility that the jury’s verdict was
affected. Once the party meets this initial burden, the burden shifts to the opposing
party to show that the error was harmless beyond a reasonable doubt. Nevers v.
Killinger, 169 F.3d 352, 368 (6th Cir. 1999), overruled on other grounds in Harris
v. Stovall, 212 F.3d 940 (6th Cir. 2000). The Ferrells have not met their initial
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burden.5 At most, the Simms merely instigated the publication of an article that
publicized PDR in a favorable light. However, the article did not refer to the
litigation or any of the issues between the Ferrells and PDR. Moreover, the
Ferrells did not show that PDR ever sought to improperly influence the jury, or that
the jury was influenced in any way by the article. Consequently, the trial court did
not abuse its discretion by denying the Ferrell’s motion for a new trial on this
ground.
The Ferrells next object to the trial court’s evidentiary rulings limiting
their cross-examination of two of PDR’s witnesses, Dave Raybould and Jennifer
Simms. Neither of these issues was preserved by introduction of avowal
testimony. Consequently, it is not possible to determine whether the Ferrells were
unfairly prejudiced by the rulings.
Furthermore, we find no abuse of discretion in either of the trial
court’s evidentiary rulings. The Ferrells attempted to question Raybould about
comments in Motorist Mutual’s claim file which were critical of his handling of
the Ferrells’ claim. However, this matter tended to interject matters involving the
5
The cases cited by the Ferrells involved direct or indirect contact with jurors, or some other
improper influence on the members of the jury. In Nevers v. Killinger, supra, the jury was
exposed to extraneous media and other influences during the defendant’s trial for the murder of a
police officer. Those outside influences were far more relevant and incendiary than those
alleged in this case. In Budoff v. Holiday Inns, Inc., 732 F.2d 1523 (6th Cir. 1984), an employee
of the plaintiffs’ counsel contacted the son of one of the jurors and discussed the case. Id. at
1525. Even in that case, the Sixth Circuit held that the contact did not automatically require a
new trial, but the plaintiffs bore the burden of showing that the contact was harmless. Id. at
1527. Here, there was no evidence of any deliberate attempt to contact the jury. And finally, in
Sexton v. Lelievrre, 44 Tenn. (4 Cold.) 11 (Tenn. 1867), the defendant in a civil case took the
plaintiff, witnesses, and the jury out to a saloon during a recess in the trial. There was no such
type of contact with the jury in this case.
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Ferrells’ claims against Motorists Mutual, which had been settled before trial.
Given the potential for jury confusion and the limited relevance of the entries, the
trial court was within its discretion to limit the cross-examination.
With respect to the questioning of Jennifer Simms, the trial court
allowed the Ferrells’ counsel to ask her why the Ferrells had received property
belonging to another PDR customer. Counsel also asked Simms how this apparent
mistake reflected on her prior assertions regarding the accuracy of PDR’s recordkeeping. The trial court questioned whether the underlying inventory list would be
admissible because it had not been disclosed prior to trial. However, the court
never ruled on this issue because the Ferrells did not seek to introduce it as an
exhibit. Thus, the Ferrells do not present any valid claim of abuse of discretion.
Finally, the Ferrells contend that the trial court displayed bias in favor
of PDR throughout the trial in its evidentiary rulings. However, the trial court's
adverse rulings, even if erroneous, do not provide a basis for finding bias. Bissell
v. Baumgardner, 236 S.W.3d 24, 29 (Ky. App. 2007). Furthermore, the Ferrells
did not raise any claim of alleged bias in their motion for a new trial, thus leaving
the issue unpreserved.
Moreover, we find no evidence in the record of any conduct indicating
an improper bias by the trial court. As noted above, the trial court’s evidentiary
rulings were well within its discretion. The Ferrells only identify one other
example of the alleged bias, occurring at the end of their cross-examination of
Jennifer Simms. The Ferrells’ counsel questioned Simms about Bob Snodgrass’s
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encoding of estimates in the Xactimate program. Simms testified that she was not
familiar with the Xactimate program and had no involvement with Snodgrass’s
work in estimate process. The trial court cut off the questioning, stating that it was
going beyond the scope of cross-examination.
The Ferrells’ counsel did not object or state that he had any additional
questions for Simms. In addition to the lack of preservation, the Ferrells make no
showing that they were unfairly prejudiced by the trial court’s handling of this
matter. And lastly, the trial court retains the right to set limitations on the scope
and subject of cross-examination. Davenport v. Commonwealth, 177 S.W.3d 763,
767-68 (Ky. 2005). Jennifer Simms was testifying about her record-keeping and
PDR’s handling of the Ferrells’ property in the bailment claim. Since she had no
knowledge about PDR’s use of the Xactimate program, the trial court properly
limited any further questioning of her on that subject. The trial court’s actions did
not cross the line into becoming an advocate for PDR.
In conclusion, we find that PDR was not bound by Neeper’s
testimony, and that the trial court properly submitted the Ferrells’ Consumer
Protection Act, fraud, and bailment claims to the jury. Although the evidence was
conflicting, there was substantial evidence to support the jury’s verdict in favor of
PDR. The Ferrells lack standing to complain that the trial court refused to
admonish Bob Snodgrass of his right against self-incrimination. The Ferrells have
also failed to show that PDR engaged in improper conduct to influence the jury.
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Finally, the trial court’s evidentiary rulings and handling of this case did not
amount to an abuse of discretion or indicate a bias in favor of PDR.
Accordingly, the judgment of the Warren Circuit Court is affirmed.
ALL CONCUR.
BRIEFS FOR APPELLANT:
BRIEF FOR APPELLEE:
Matthew J. Baker
Bowling Green, Kentucky
Frank Hampton Moore, Jr.
Matthew P. Cook
Bowling Green, Kentucky
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