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2004-UP-282 - New v. Max G Crosby Construction

THIS OPINION HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals


Mark New and Karen New,        Respondents,

v.

Max G. Crosby Construction Co., Inc.,        Appellant.


Appeal From Dorchester County
Diane Schafer Goodstein, Circuit Court Judge


Unpublished Opinion No. 2004-UP-282
Heard January 13, 2004 – Filed April 27, 2004


AFFIRMED IN PART, REVERSED IN PART,
AND REMANDED


Stephen L. Brown, of Charleston, for Appellant.

Steven L. Smith, Esquire and Wm. Mark Koontz, both of Charleston, for Respondents.

PER CURIAM:  Purchasers of a home sued the property development company that sold them the home and the construction company that built the home for the structural damages resulting from construction.  The construction company, Crosby Construction Company (“Crosby Construction”), appeals the jury verdict in favor of the purchasers.  We affirm in part, reverse in part, and remand.

FACTS

Crosby Construction was a charter member of the Southern Living Builder Program and agreed to build homes according to Southern Living plans and specifications.  However, Max Crosby, owner of Crosby Construction, testified that Crosby Construction was allowed to alter the Southern Living plans.  Crosby Construction contracted with Greenwood Development Corporation (“Greenwood”) to build five model homes in Coosaw Creek Country Club in North Charleston, South Carolina.   One of the five homes built by Crosby Construction for Greenwood was the home eventually purchased by Mark and Karen New.

Crosby Construction and Greenwood agreed to numerous modifications of the Southern Living plans with regards to the house in question.  Specifically, the basement was eliminated, a finished media room was provided, and the master bedroom and kitchen were made larger.  Additionally, rather than utilizing steel beams, as the original Southern Living plans specified, Crosby Construction changed the design to utilize wooden beams, which Max Crosby believed were appropriate. 

Crosby Construction completed the home for Greenwood in June of 1998.  Greenwood used it as a model home, advertised the home as a Southern Living home, and sold the home to the News on October 21, 1998.   Crosby Construction had no hand in the sale of the house from Greenwood to the News, and the News’ contract with Greenwood made no mention of Crosby Construction.   Mark New testified that he and Karen understood they were purchasing a “Southern Living” home.

The News discovered several problems with their home.  Most significantly, the News at some point discovered a hump and sag in their second story floor.  Investigation revealed the wood beams Crosby Construction had substituted for the specified steel beams proved inadequate to support the load placed on them.  Crosby Construction sent a subcontractor in to fix the beam causing the sag, however, it was inadequate.   Other problems discovered by the News included a leaking roof, inadequate foundation, an incorrectly sloped yard that did not drain, a bowed exterior wall, cupped and warped floors, a poorly built retention wall, and poor flashing.

The News brought suit against Greenwood and Crosby Construction, alleging the breach of several implied warranties, negligence, and unfair trade practices.  The News sought actual and punitive damages against Crosby Construction and Greenwood.  Crosby Construction and Greenwood filed answers denying the material allegations and asserting various affirmative defenses.  The News subsequently dismissed the action against Greenwood and chose instead to proceed exclusively against Crosby Construction.

After directing a verdict against the News on their claim for unfair trade practices, the trial court denied Crosby Construction’s directed verdict motions and objections to the charges presented to the jury.  At the conclusion of the four-day trial, the jury returned a verdict against Crosby Construction for $285,942 in actual damages.  Crosby Construction then filed post-trial motions for a JNOV, a new trial absolute, and a new trial nisi remittitur.   These motions were denied.  This appeal follows.

LAW/ANALYSIS

I. STIGMA DAMAGES

Crosby Construction contends the circuit court erred in refusing to grant its motion for directed verdict as to the News’ claim of diminution in property value, or “stigma” damages.  Crosby Construction also contends the circuit court erred in failing to grant a new trial absolute where there was no evidence to support the jury’s award.  We agree.

A. Directed Verdict

At trial, Crosby Construction moved for a directed verdict on the News’ claim for stigma damages, arguing there was no testimony regarding the value of the home after repairs and to award both the cost of repairs and stigma damages would amount to double recovery.  The circuit court disagreed, finding Dr. New had testified to the value of the home after all the repairs had been made, amounting to diminution in value.  Crosby Construction contends the circuit court erred in allowing the question of stigma damages to go to the jury. 

In ruling on motions for directed verdict, the trial court is required to “view the evidence and the inferences that reasonably can be drawn therefrom in the light most favorable to the party opposing the motion[] and to deny the motion[] where either the evidence yields more than one inference or its inference is in doubt.”  Strange v. S.C. Dep’t of Highways & Pub. Transp., 314 S.C. 427, 429-30, 445 S.E.2d 439, 440 (1994).  We will reverse the trial court only when there is no evidence to support the ruling below.  Id. at 430, 445 S.E.2d at 440. 

Stigma, or diminution in value, damages are generally awarded when there is a permanent injury to real property.  See Gray v. S. Facilities, Inc., 256 S.C. 558, 569, 183 S.E.2d 438, 443 (1971) (holding that “[t]he general rule is that in case of an injury of a permanent nature to real property . . . the proper measure of damages is the diminution of the market value by reason of that injury, or in other words, the difference between the value of the land before the injury and its value after the injury”).  Thus, where there is a permanent injury to land, damages are based on the diminution in value of the property based on its value before the injury and after the injury.  Yadkin Brick Co. v. Materials Recovery Co., 339 S.C. 640, 645, 529 S.E.2d 764, 767 (Ct. App. 2000). 

While proof, with mathematical certainty, of the amount of loss or damage is not required, in order for damages to be recoverable the evidence should be such as to enable the court or jury to determine the amount thereof with reasonable certainty or accuracy.  Neither the existence, causation nor amount of damages can be left to conjecture, guess or speculation.

Gray, 256 S.C. at 570-71, 183 S.E.2d at 444.

The News presented evidence at trial that repairs to their home would cost $129,930.42.  This figure consisted of estimates to repair the foundation, flashing, roof leaks, ridge beam and holes, landscaping problems, as well as cosmetic damages.  Although the News’ experts testified that repairing the problems would not give the News the Southern Living home they expected, they stated the problems could all be repaired.  However, one expert opined that an entire new roof would need to be put in place because there would always be leaks even if the current roof were repaired. 

Dr. Mark New testified at trial that he wanted the jury to give him enough money to repair the house.  He also expressed concern that he would have to disclose the structural damage to the house upon resale.   Dr. New estimated the value of the home if it were in good condition to be $550,000.   When asked to estimate the value of the home “in its present condition,” Dr. New stated it would be $300,000 to $350,000.   Thus, we interpret Dr. New’s testimony to state that the difference in value of the home if it had been built in accordance with Southern Living plans and the value of the home in its then current, unrepaired state to be between $200,000 and $250,000.   

Viewing the evidence in the light most favorable to the News, no evidence was presented as to the diminution in value of the home if all the repairs were performed.  Although Dr. New testified regarding the problems disclosing the prior structural damage would pose in trying to sell the house, he did not place a value on the home after repairs were performed.  His testimony only addressed the value of the home in its unrepaired state and the value of the home had it been constructed according to the Southern Living plans.  As Crosby Construction argued before the circuit court, allowing recovery for both the cost of repairs and the diminution in value of the home prior to repairs would amount to double recovery.  Further, the failure to present evidence of the diminution in value of the repaired home left the jury to speculate as to the amount of stigma damages.  Because there was no testimony regarding the amount of stigma damages, the circuit court erred in failing to direct a verdict on this theory of recovery. [1]   Gray, 256 S.C. at 570-71, 183 S.E.2d at 444; see also Collins Music Co. v. Smith, 332 S.C. 145, 147, 503 S.E.2d 481, 482 (Ct. App. 1998) (noting the general rule that there can be no double recovery for a single injury).  Accordingly, we reverse the circuit court’s denial of the motion for a directed verdict as to stigma damages.

B. New Trial Absolute

Crosby Construction argues the circuit court erred in failing to grant a new trial absolute because there was no evidence to support the jury’s award.  We agree.

The decision to grant or deny a motion for a new trial absolute is within the trial court’s discretion and will not be reversed unless the court’s decision is “wholly unsupported by the evidence or the conclusions reached are controlled by error of law.”  Vinson v. Hartley, 324 S.C. 389, 405, 477 S.E.2d 715, 723 (Ct. App. 1996).  In determining whether the trial court erred in denying a motion for a new trial, we must look at the testimony and inferences raised therefrom in favor of the nonmoving party.  Id.; Welch v. Epstein, 342 S.C. 279, 302-03, 536 S.E.2d 408, 420 (Ct. App. 2000). 

The circuit court may grant a new trial absolute in two instances.  The court must grant a motion for a new trial absolute when the verdict is “‘so grossly excessive that it shocks the conscience of the court and clearly indicates the verdict was the result of caprice, passion, prejudice, partiality, corruption, or other improper motive.’”  Duncan v. Hampton Co. Sch. Dist. No. 2, 335 S.C. 535, 547, 517 S.E.2d 449, 455 (Ct. App. 1999) (quoting Knoke v. South Carolina Dep’t of Parks, Recreation & Tourism, 324 S.C. 136, 141, 478 S.E.2d 256, 258 (1996)).  “Alternatively, the trial court may grant a new trial absolute when, sitting as the thirteenth juror, it concludes the jury’s verdict is not supported by the evidence.”  Duncan, 335 S.C. at 547, 517 S.E.2d at 455 (emphasis in original).  However, substantial deference should be given to a jury’s determination of damages.  Knoke, 324 S.C. at 141, 478 S.E.2d at 258. 

The jury rendered a general verdict in favor of the News in the amount of $285,942.  The evidence presented at trial showed that it would cost $129,930.42 to make the repairs to the home.  Dr. New opined that his home was worth between $200,000 and $250,000 less in its unrepaired state than it would be worth had the home been built to Southern Living specifications.  As discussed above, this estimate does not indicate the depreciation to the home after repairs are made and cannot be considered in isolation.  Giving substantial deference to the jury’s verdict, there is not any evidence in the record to support a verdict $155,000 greater than the estimate of damages.  Because there was no evidence to support the amount of the jury’s verdict, the circuit court erred by failing to grant Crosby Construction’s motion for a new trial absolute.  Accordingly, we reverse the circuit court’s denial of the motion and remand the case for a new trial absolute. 

II. Insurance Testimony

Crosby Construction asserts the circuit court erred in admitting into evidence information regarding the insurance related work of one of its experts.  We disagree. 

Generally, the fact that a defendant is protected by insurance from liability in an action for damages shall not be made known to the jury.  Dunn v. Charleston Coca-Cola Bottling Co., 311 S.C. 43, 45, 426 S.E.2d 756, 757 (1993).  The rule protects against unfair prejudice in the verdict that might result from the jury’s knowledge that the defendant will not have to pay the award amount.  Dunn, 311 S.C. at 45, 426 S.E.2d at 757-58.  However, this general rule does not require evidence of insurance to be kept from the jury where it is offered for some other purpose.  Rule 411, SCRE provides:

Evidence that a person was or was not insured against liability is not admissible upon the issue whether the person acted negligently or otherwise wrongfully.  This rule does not require the exclusion of evidence of insurance against liability when offered for another purpose, such as proof of agency, ownership, or control, or bias or prejudice of a witness.

Rule 411, SCRE. 

Our Supreme Court has adopted a “substantial connection” analysis to determine whether an expert’s connection to a defendant insurer is sufficiently probative of witness bias to outweigh the prejudice to the defendant resulting from the knowledge that the defendant carries liability insurance.  Yoho v. Thompson, 345 S.C. 361, 366, 548 S.E.2d 584, 586 (2001).  In Yoho, the defendant in a car wreck case was represented by the underinsured motorist carrier, Nationwide Insurance Company.  One of the defendant’s experts, Dr. Brannon, did a fair amount of consulting work for Nationwide and between ten to twenty percent of his practice included consulting for insurance companies.  Our state Supreme Court reversed the circuit court’s refusal to allow Yoho to question Dr. Brannon regarding his potential bias due to his work with insurance companies.  The Court determined the connection between Brannon and Nationwide was substantial enough to permit Yoho to question him about the relationship and potential bias.  Yoho, 345 S.C. at 366, 548 S.E.2d at 586.  The Court went on to note that showing the connection to the insurance company was qualitatively different from showing the expert worked for the defense and was much more indicative of possible bias in favor of the defendant.  Id.

In the present case, Crosby Construction presented Robert Lanier as an expert in general contracting.   Although the News’ expert testified that most of the repairs to the home could be accomplished for $84,580, Lanier testified he could perform the same repairs for $41,901.15.   Outside the presence of the jury, the News stated they wanted to question Lanier regarding his estimates for insurance companies which comprised between seventy-five and eighty percent of his work.   Over Crosby Construction’s objections, the circuit court allowed the News to question Lanier about his insurance work.  Lanier testified to the jury that most of his work came from making repairs for insurance companies on claims on homeowner’s insurance policies.  He also stated he was willing to change his estimates upon the request of insurance companies.   The parties did not know whether Lanier had ever performed work for Zurich, Crosby Construction’s liability insurer, and no testimony was elicited identifying specific insurance companies Lanier worked with.

The present case is distinquishable from Yoho.  Whereas the expert in Yoho actually performed work for the insurance carrier representing the defendant, nothing in this case indicates Lanier ever worked for Zurich.  Lanier worked with insurance companies under homeowner’s policies, not liability policies.  Despite the fact that up to eighty percent of Lanier’s work came from insurance companies, the “substantial connection” to the specific carrier that existed in Yoho is simply not present here. 

Even though there is no substantial connection in the present case, we believe the admission of evidence regarding Lanier’s connection to insurance carriers was permissible.  “A witness may be cross-examined on any matter relevant to any issue in the case, including credibility.”  Rule 611(b), SCRE.  “Considerable latitude is allowed in cross-examination to test a witness’s bias, prejudice, or credibility.”  Yoho, 345 S.C. at 364-65, 548 S.E.2d at 585.  The trial court’s ruling regarding scope of cross-examination to show bias or test credibility will not be overturned on appeal absent an abuse of discretion.  Id.  

Lanier testified that he worked for insurance companies on homeowner’s claims.  He did not implicate liability insurance in violation of Rule 411, SCRE.  Further, the testimony elicited at trial did not indicate whether Crosby Construction was insured.  However, Lanier’s dependence upon insurance companies in general for up to eighty percent of his income was evidence that impacted Lanier’s credibility or could show potential bias.  As the evidence did not impermissibly inform the jury regarding Crosby Construction’s insurance status and it was used to test Lanier’s bias, we find no abuse of discretion in the present case. [2]  

CONCLUSION

The circuit court erred in failing to grant Crosby Construction’s motion for a directed verdict on the claim for stigma damages where there was no evidence to support the amount of stigma damages and allowing the jury to consider stigma damages amounted to double recovery.  The circuit court also erred in failing to grant Crosby Construction’s motion for a new trial absolute because there was no evidence to support the amount of the jury’s award.  Finally, we find the circuit court did not abuse its discretion in allowing evidence that Crosby Construction’s expert was connected to insurance companies.  Accordingly, the trial court is AFFIRMED IN PART, REVERSED IN PART, and REMANDED for a new trial absolute. 

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

GOOLSBY and ANDERSON, JJ., and CURETON, AJ., concur.


[1] In further support of its claim that the circuit court erred in failing to grant a directed verdict, Crosby Construction argues there was no evidence to support a claim for stigma damages because the problems with the property were not permanent and could be repaired.   Testimony from the experts indicated the problems with the home could be repaired, thus the damages were not necessarily “permanent” in nature.  However, Crosby Construction did not make this argument before the circuit court in support of its motion for directed verdict.  Accordingly, this argument is not preserved for appellate review.  Staubes v. City of Folly Beach, 339 S.C. 406, 412, 529 S.E.2d 543, 546 (2000).

[2] Because we reverse and remand on the issues of the trial judge’s failure to grant Crosby Construction’s motions for directed verdict and a new trial absolute, we need not address Crosby Construction’s remaining issues on appeal.  However, we have chosen to address the issue regarding Lanier’s connection to insurance companies because it is an issue that is likely to repeat itself upon retrial of this case.