CJH, Inc. v. Quadruple S Farms, LLC & Four-S Development, LLC ( 2013 )

STATE OF WEST VIRGINIA
SUPREME COURT OF APPEALS
CJH, Inc., a West Virginia business corporation, FILED
Plaintiff Below, Petitioner June 7, 2013
RORY L. PERRY II, CLERK
SUPREME COURT OF APPEALS
vs) No. 12-0825 (Putnam County 09-C-438) OF WEST VIRGINIA
Quadruple S Farms, LLC, a West Virginia limited
liability company, and Four-S Development,
LLC, a West Virginia limited liability company,
Defendants Below, Respondents
MEMORANDUM DECISION
Petitioner CJH, Inc., by counsel Kenneth E. Webb, Jr., John T. Poffenbarger, J. Mark
Adkins, and Patrick C. Timony, appeals the Circuit Court of Putnam County’s “Order Denying
Plaintiff’s Renewed Motion for Judgment as a Matter of Law, Motion for Judgment
Notwithstanding the Verdict, or Alternatively, Plaintiff’s Motion for New Trial on Damages”
entered on May 24, 2012. Respondents Quadruple S Farms, LLC and Four-S Development, LLC
(collectively “respondents”), by counsel Ann L. Haight, Luci R. Wellburn, and Erin J. Webb,
filed a response. Petitioner filed a reply.
This Court has considered the parties’ briefs and the record on appeal. The facts and legal
arguments are adequately presented, and the decisional process would not be significantly aided
by oral argument. Upon consideration of the standard of review, the briefs, and the record
presented, the Court finds no substantial question of law and no prejudicial error. For these
reasons, a memorandum decision is appropriate under Rule 21 of the Rules of Appellate
Procedure.
Petitioner is a West Virginia corporation that until May of 2010 owned and operated a
Days Inn hotel franchise in Teays Valley, West Virginia. The Days Inn was on property
previously owned and developed by Respondent Four-S Development, LLC, and was adjacent to
property owned by Respondent Quadruple S Farms, LLC.
Petitioner purchased the property at issue in 1991. By way of background, petitioner’s
property was originally owned by Albert Summers individually or through his related companies
(predecessors to respondents herein) in the mid-1980s. Putnam Development, Inc., (a Summers
family company) contracted with M&T Construction to perform excavation work on the
property. Randolph Engineering prepared the cut and fill calculations for the site that would
become the Days Inn property. M&T Construction installed an approximately twelve to fifteen-
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foot-wide “cut bench”1 at the base of the sandstone layer of rock on the hillside adjacent to the
site that would become petitioner’s hotel property.
Albert and Dolores Summers sold the then-vacant property to Cardinal Industries in 1987
for the construction of a Knights Inn. According to respondents, Cardinal Industries developed
the site, built the Knights Inn, and then filed for bankruptcy. In lieu of foreclosure, United Bank
took the property and entered into a franchise agreement with Days Inn. According to
respondents, between 1989 and 1991, United Bank altered the bench and the rock wall by
placing “gabion baskets” (baskets of stone) along the hillside, eliminating the bench along that
portion of the hillside adjacent to the hotel.
In 1991, petitioner purchased the property from United Bank and assumed the Days Inn
franchise agreement. According to respondents, prior to petitioner’s purchase, no independent
inspections were performed; no geotechnical engineer examined the hillside; no structural
engineer inspected the structures; and no surveys were performed.
In 2009, petitioner filed the instant civil action against respondents alleging respondents
negligently developed the property, causing the hillside adjacent to petitioner’s property to
degrade quickly, which increased the water runoff onto petitioner’s property. According to
petitioner, this uncontrolled up-gradient water caused a massive rock fall on December 17, 2008.
Petitioner alleged that the degradation of the hillside led to large boulders, debris, mud, and
greater quantities of surface water to invade petitioner’s property resulting in significant property
damage, mold, and ultimately forced the franchise to cease operations in May of 2010. Petitioner
sought damages in excess of $2.5 million.
The case went to trial for six days, November 28 through December 6, 2011. The jury
found that respondents were negligent in the development and maintenance of their property and
that the negligence was the proximate cause of damages to petitioner. The jury found that
petitioner was entitled to recover $361,640 from respondents. The jury did not award punitive
damages.
According to respondent, the evidence at trial established that when the hotel buildings
were built, proper drainage structures were not installed or were inadequate; the buildings
themselves were installed too close to the hillside to allow for proper ditch line and slope
maintenance; roof drains were tied to undersized drainpipes located in the parking lot that could
not handle the flow of water, which in turn allowed water to backup underneath the buildings;
crawl spaces were located at the end of the buildings closest to the hillside allowing water to run
under the buildings; gabion baskets were installed at the base of the hillside essentially
eliminating any drainage ditch that had existed; and petitioner had not maintained the drainage
structures or catch basins.
In addition, respondent contends that the evidence showed that after the rock fall in
December of 2008, nothing more was done to divert water, clean out ditch lines or drains, or to
remove the fallen rocks. Petitioner asserts that the evidence showed that it regularly inspected for
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The purpose of the “cut bench” was to catch any rocks that may fall from the high wall.
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leaks, had diligent maintenance practices, and installed sump pumps to remove respondents’
excess water from underneath the hotel facilities.
On May 3, 2012, the circuit court heard arguments on petitioner’s post-trial motions. On
May 24, 2012, the circuit court entered its “Order Denying Plaintiff’s Renewed Motion for
Judgment as a Matter of Law, Motion for Judgment Notwithstanding the Verdict, or
Alternatively, Plaintiff’s Motion for New Trial on Damages.” The court ruled, inter alia, that: (1)
the jury was properly instructed on the issue of mitigation of damages; (2) the court was
“completely disappointed” with plaintiff’s expert witness in the area of mold abatement, and that
defendants’ expert had the proper qualifications and basis to testify; (3) the court believed it was
better to have the case tried and resolved on the merits rather than on exclusion of experts or
upon the issue of punitive damages; (4) the defendants did not present improper “empty chair”
evidence because it was the plaintiff who introduced evidence of the installation of gabion
baskets by third parties, and also, the jury found the defendants to be negligent and to have
caused damages to plaintiff, thereby negating the jury’s improper consideration of the existence
of an “empty chair;” (5) the valuation of the alleged “loss of use” and alleged “loss of profits”
was a question of fact for the jury to decide whether these alleged losses were caused by the
negligence of defendants or whether they were the result of plaintiff’s decision to close the hotel;
(6) the valuation of the hotel, the fair market value of the hotel, and the valuation of the property
on which the hotel is located were proper questions for the jury; and (7) whether the jury
believed the defendants’ actions proximately caused all, any, or some portion of the damages
claimed by plaintiff was a factual question for the jury, and the jury form used by the jury was
prepared by plaintiff and did not require the jury to articulate how it arrived at the amount of
damages.
Petitioner now appeals to this Court and raises six assignments of error. First, petitioner
argues that the circuit court abused its discretion by instructing the jury on petitioner’s alleged
failure to mitigate its damages. Petitioner contends that respondents (1) failed to demonstrate any
acts or omissions by petitioner that increased its damages, and (2) failed to establish the specific
amount of money by which these acts or omissions increased petitioner’s damages.
We disagree that the circuit court abused its discretion in giving the instruction. Initially,
we note that our law does not currently require the party asserting the defense to demonstrate an
exact amount by which the plaintiff increased its own damages by failing to mitigate. Turning to
the instruction itself, we have held that “[t]he formulation of jury instructions is within the broad
discretion of a circuit court, and a circuit court’s giving of an instruction is reviewed under an
abuse of discretion standard.” Syl. Pt. 6, Tennant v. Marion Health Care Fund, Inc., 194 W.Va.
97, 459 S.E.2d 375 (1995). Petitioner does not challenge the language of the court’s instruction,
but disputes the basis for giving it.
As to the basis for giving the instruction, we have held that “the defense of mitigation of
damages is an affirmative defense, the burden of which lies entirely upon the party asserting it.”
Voorhees v. Guyan Mach., 191 W.Va 450, 456, 446 S.E.2d 672, 678 (1994). “[A] person whose
property is endangered or injured [must] use reasonable care to mitigate damages; but such
person is only required to protect himself from the injurious consequence of the wrongful act by
the exercise of ordinary effort and care and moderate expense.” Hardman Trucking, Inc. v.
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Poling Trucking Co., 176 W.Va. 575, 579, 346 S.E.2d 551, 555 (1986), citing Oresta v. Romano
Bros., Inc., 137 W.Va. 633, 650-51, 73 S.E.2d 622, 632 (1952).
In this case, we find that there was sufficient evidence introduced to warrant the
instruction. Petitioner’s president and sole shareholder testified that while he had spent about
$400,000 in 2004 to remodel and make some repairs to the property, he took no action to protect
his hotel after the rock fall in December of 2008. Petitioner neither removed the fallen rocks nor
even sought an estimate to do so. Testimony at trial revealed that removal of the rocks would
cost approximately $50,000.2 We find no error by the circuit court in giving the failure to
mitigate instruction.
In its second assignment of error, petitioner argues the circuit court erred by failing to
award petitioner its claimed damages as a matter of law because there is no reasonably certain
evidence to contradict the amount of its damages. We note that respondents were found liable for
negligence that caused damages to petitioner. However, we find that through their cross-
examination and their case-in-chief, respondents effectively disputed the amount of damages to
which petitioner was entitled.
Similarly, in its third assignment of error, petitioner contends that the circuit court should
have alternatively awarded a new trial on damages because the jury conclusively established
liability but awarded inadequate damages. The Court will not overturn a jury’s verdict based on
“[inadequacy] unless it is a sum so low that under the facts of the case reasonable men cannot
differ about its inadequacy.” Syl. Pt. 2, Fullmer v. Swift Energy Co., Inc., 185 W.Va. 45, 404
S.E.2d 534 (1991).
Petitioner’s argument in its second and third assignments of error ignores the fact that
liability and damages are separate issues requiring separate proof. While the jury found that
respondents were negligent, petitioner failed to prove that respondents’ negligence injured
petitioner in the amount sought by petitioner and/or whether the entire amount of damages
claimed was attributable to respondents’ conduct. While petitioner contends that its claimed
damages amounts were not rebutted, the jury was able to weigh the evidence and make a
determination of the amount petitioner was entitled to recover though respondent’s cross-
examinations. “In an appeal from an allegedly inadequate damage award, the evidence
concerning damages is to be viewed most strongly in favor of the defendant.” Syl. Pt. 3, Big Lots
Stores, Inc. v. Arbogast, 228 W.Va. 616, 723 S.E.2d 846, 2012 WL 426758 (2012)(citations
omitted). Under the facts of this case, the circuit court did not error in denying a new trial on
damages.
Fourth, petitioner argues that the circuit court allowed respondents to inject “empty
chair” argument through counsel’s closing argument. In closing argument, respondents’ counsel
stated:
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It most likely resonated with the jury that while petitioner was claiming millions of
dollars in damages from fallen rocks, he would not even spend a small fraction of that amount to
have to have the rocks removed.
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The question you have to decide is whether my client is responsible for [the
damages]. Are we liable for it? Cardinal Industry I guess you could say basically
put together the perfect storm. They bought the site, they crowded the site, they
didn’t have sufficient drainage for the site, all the things that Cardinal Industries
did, and then what did they do? They went bankrupt.
“Empty chair” evidence is prohibited in West Virginia. See Doe v. Wal-Mart Stores, Inc.,
210 W.Va. 664, 558 S.E.2d 663 (2001). The record in this case reveals that petitioner argued at
trial that respondents were responsible for the site development and drainage structures.
However, petitioner in its case-in-chief offered evidence that Cardinal Industries was the entity
that developed the hotel site. In response to petitioner placing the initial site design and drainage
structures into controversy, respondents presented evidence to support its defense. Therefore, we
find that any error committed by the circuit court in allowing “empty chair” evidence was invited
by petitioner, and therefore, not subject to appeal. See Roberts v. Consolidation Coal Co., 208
W.Va. 218, 539 S.E.2d 478 (2000)
Fifth, petitioner argues that the circuit court allowed respondents’ experts to espouse
opinions without the proper factual basis as required by the Rule 703 of the West Virginia Rules
of Evidence, which provides:
The facts or data in the particular case upon which an expert bases an opinion or
inference may be those perceived by or made known to the expert at or before the
hearing. If of a type reasonably relied upon by experts in the particular field in
forming opinions or inferences upon the subject, the facts or data need not be
admissible into evidence.
Petitioner contends that respondents’ experts were permitted to testify that petitioner’s
excess water problems stemmed from inadequate onsite drainage controls and deferred
maintenance, however, these experts never physically inspected the drainage pipes and failed to
conduct any water calculations. Rule 703 does not limit admissibility of expert opinions to those
opinions formed solely on the basis of first-hand experience. See Capper v. Gates, 193 W.Va. 9,
454 W.Va. 54 (1994). The record shows that respondents’ experts based their opinions on
photographs, measurements, trial and deposition testimony of other fact witnesses, maintenance
logs, site layout plans, and diagrams. Accordingly, we see no error in allowing respondents’
experts to offer their opinions as there was a proper factual basis therefor.
Petitioner’s final assignment of error is that the circuit court permitted respondents to
present unauthenticated business records to the jury. Specifically, petitioner objects to the
admission of Days Inn Worldwide “Quality Assurance Reports” that were used by respondent to
show that petitioner’s franchise was failing prior to the rock fall. Respondents’ witness on this
issue was the Days Inn Worldwide records custodian, who did not author the reports, but
properly testified that the reports were what they were claimed to be, which is the essence of
authentication under Rule 901 of the West Virginia Rules of Evidence. Additionally, we find that
the reports were admissible as “business records” under Rule 803(6) of the West Virginia Rules
of Evidence. Therefore, we see no error in the circuit court allowing these reports to be admitted.
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For the foregoing reasons, we affirm.
Affirmed.
ISSUED: June 7, 2013
CONCURRED IN BY:
Justice Robin Jean Davis
Justice Menis E. Ketchum
Justice Allen H. Loughry II
DISSENTING:
Chief Justice Brent D. Benjamin
Justice Margaret L. Workman
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