Title: City of Kemmerer v. Wagner

State: wyoming

Issuer: Wyoming Supreme Court

Document:

City of Kemmerer v. Wagner1993 WY 164866 P.2d 1283Case Number: 92-202, 92-203Decided: 12/30/1993Supreme Court of Wyoming
CITY 
OF KEMMERER, a municipal corporation, 

Appellant 
(Plaintiff),

v.

 Thomas S. WAGNER and Patricia M. Wagner, 
husband and wife, 

Appellees 
(Defendants).

Thomas 
S. WAGNER and Patricia M. Wagner, husband and wife, 

Appellants 
(Defendants),

v.

CITY 
OF KEMMERER, a municipal corporation,

 Appellee 
(Plaintiff).

 

V. 
Anthony Vehar and Sharon M. Rose, Vehar, Beppler, Lavery, Rose & Boal, P.C., 
Evanston, for City of Kemmerer.

F.L. 
Thomas, Jr., Kemmerer, for Wagners.

Before 
MACY, C.J., and THOMAS, CARDINE, GOLDEN and TAYLOR, JJ. 

THOMAS, 
Justice.

[¶1]      The primary issue 
posed in this case is whether the trial court correctly ordered a new trial on 
the issue of damages after ruling an exhibit incorporating information about 
damages was received into evidence improperly. Both parties argue a new trial on 
the issue of damages is not appropriate. The City of Kemmerer (Kemmerer) 
contends it was entitled to judgment on the question of liability as a matter of 
law because Thomas S. Wagner and Patricia M. Wagner (Wagners) did not file a 
correct claim since they were involved in a partnership, and the other partner 
did not execute the claim. Consequently, Kemmerer contends no new trial on the 
issue of damages should be permitted. It appends an issue relating to inadequacy 
of the proof of damages. The Wagners, in their separate appeal, request 
reinstatement of the jury verdict, contending the trial court erroneously 
ordered a new trial on the issue of damages because damages were proved in a 
proper way. We hold the trial court correctly ruled the evidence of damages 
found in the claim submitted by the Wagners was received into evidence 
improperly and correctly ordered a retrial on the issue of damages. We affirm 
the trial court in the appeal by Kemmerer, concluding there was no partnership; 
therefore, Kemmerer was not entitled to a directed verdict on the issue of 
damages. We affirm the trial court in the appeal by the Wagners, holding the 
claim should not have been received into evidence, and this error affected the 
determination of damages. The case is remanded for a new trial on the issue of 
damages according to the order of the district court.

[¶2]      Both parties 
appeal the decision from the court below. The statement of the issues set forth 
in Kemmerer's Brief of Appellant is:

A. 
Did the failure of appellees to submit a notice of claim on behalf of the 
partnership, comprised of Appellees and Rosendahl, deprive the trial court of 
jurisdiction over the counterclaim.

B. 
Did the District Court err in failing to direct a verdict on the partnership 
issue.

C. 
Did the District Court err in failing to direct a verdict in Appellant's favor 
due to lack of competent evidence on the issue of damages.

D. 
Did the District Court err when it ordered a new trial on the issue of 
damages.

The 
Appellees' Brief of the Wagners states the issues in this 
way:

I. 
Was there sufficient evidence for the jury to find that on the date Wagners 
filed notice of claim with the city, there was no longer any partnership between 
them and Lester Rosendahl?

II. 
Was there sufficient evidence for the jury to find that the Wagners suffered 
damages in the sum of $80,000.00?

In 
the Appellants' Brief of the Wagners, the issues are articulated in this 
fashion:

I. 
Whether the admission in evidence by the district court of the unedited notice 
of claim was an error?

II. 
Whether the district court erred in finding that the jury based its verdict on 
the figure demanded in the notice of claim?

In 
the Brief of Appellee filed by Kemmerer, it agrees with the statement of the 
issues framed by the Wagners as appellants.

[¶3]      In 1977, the 
Wagners formed a partnership with Lester J. Rosendahl (Rosendahl) to purchase 
and manage Ye Olde Liquor Locker (Liquor Locker) in Kemmerer. No formal 
partnership agreement was prepared or executed. Early in this business venture, 
the Wagners and Rosendahl shared expenses and profits equally; however, 
Rosendahl retired from active participation in the operation of the business 
and, ultimately, his equity, because of losses sustained by the business, was 
reduced to "zero." Subsequently, Rosendahl conveyed his interest in the Liquor 
Locker to the Wagners on May 31, 1987. The Wagners continued to operate the 
Liquor Locker for a few months, but they decided to close the business in July 
of 1987.

[¶4]      They winterized 
the building in which the Liquor Locker business had been conducted, and placed 
the property for sale. On July 30, 1987, at the request of the Wagners, Kemmerer 
shut off water service at the meter inside the building, but it failed to locate 
and shut off the service in the line outside the building. Damage to the 
building was discovered in February of 1989, when Wagner found he was unable to 
enter the building because of a swell in the concrete floor, which also was 
covered by a build-up of a large sheet of ice preventing the door from opening. 
It was apparent cold weather had frozen the water in the pipes inside the 
building, causing them to burst.

[¶5]      On April 3, 1990, 
counsel for the Wagners prepared a Claim Under the Wyoming Governmental Claims 
Act which was filed with Kemmerer. After the claim was dishonored, the Wagners 
brought this action to recover for damages to the building attributable to the 
negligence of Kemmerer. In resolving the issues, the jury found Kemmerer did 
have a duty to shut off the water service outside the building. It concluded 
Kemmerer had breached that duty, and the breach was the proximate cause of the 
damage to the Wagners' property. The jury then awarded damages in the amount of 
$80,000 to the Wagners payable by Kemmerer for its negligence. This was 
precisely the amount requested for repairs in the claim that the Wagners filed 
with Kemmerer.

[¶6]      We address, 
initially, the issue of the existence of a partnership. Kemmerer's contention is 
that, since a partnership was in existence at the time the claim was filed, the 
issues for a new trial on damages are moot because the Wagners, as individual 
partners, have no right to assert damage to their individual interests in the 
partnership property. Kemmerer asserts that the Wagners failed to comply with 
the Governmental Claims Act (WYO. STAT. §§ 1-39-101 to -120 (1988)) when they 
did not include Rosendahl as a claimant. The Wagners rely upon the proposition 
that the partnership had ceased in 1984 when Rosendahl stopped contributing 
money and services. The Wagners' argument is that, since there was no 
partnership, it was not necessary to include Rosendahl on the 
claim.

[¶7]      Our standard 
remains:

     In reviewing a 
sufficiency-of-the-evidence question, we assume the evidence in favor of the 
successful party to be true, leaving out of consideration entirely the evidence 
in conflict, and assigning every favorable inference to the evidence of the 
successful party that can be reasonably and fairly drawn from it. City of Rock 
Springs v. Police Protection Ass'n, Wyo., 610 P.2d 975 (1980); Brittain v. 
Booth, Wyo., 601 P.2d 532 (1979). In addition, when reviewing a jury verdict, we 
leave to the jury the duty of ascertaining the facts, reconciling conflict 
therein and drawing its own inferences if more than one inference is 
permissible. Neal v. Wailes, Wyo., 346 P.2d 132, 134 (1959). Also, when the 
facts permit the drawing of more than one inference, then it is for the jury to 
choose which one will be utilized and, if supported by substantial evidence, the 
jury's choice will be held by us to be conclusive. Berta v. Ford, Wyo., 469 P.2d 12, 15 (1970); Ford Motor Company v. Arguello, Wyo., 382 P.2d 886 
(1963).

Crown 
Cork & Seal Co. v. Admiral Beverage Corp., 638 P.2d 1272, 1274-75 (Wyo. 
1982).

[¶8]      In this case, the 
verdict of the jury was returned on a special verdict form. In pertinent part, 
it provides:

VERDICT

We, 
the Jury duly empaneled and sworn to try this case, after having heard all the 
evidence and considered the same, do hereby present the following answers to the 
questions submitted by the Court:

* 
* * * * *

IV. 
Without considering the percentages of fault found in question III above, what 
total amount of damages, if any, do you find was sustained 
for:

(a) 
loss of injury to the property                    
$80,000.00 

(b) 
loss profits                                                
$ 0

___________

V. 
Were Thomas Wagner, Patricia Wagner and Lester Rosendahl partners on April 3, 
1990, the date the claim was filed with the City of 
Kemmerer?

Yes 
____                    
No __X___ 

[¶9]      Our examination 
of the record satisfies us substantial evidence was presented at trial to 
justify the jury's determination that the Wagners and Rosendahl were not 
partners on April 3, 1990 because any partnership between those individuals had 
terminated before the cause of action arose. Thomas Wagner testified he had 
operated the Liquor Locker without Rosendahl since 1984. The Wagners had 
borrowed $87,000 from the First Wyoming Bank without Rosendahl's participation, 
and that money was used to pay the balance of the loan for the business made by 
the Small Business Administration. Rosendahl testified the partnership, indeed, 
had terminated in 1986. It is clear that Rosendahl transferred his interest to 
the property in question by a quitclaim deed to the Wagners on May 31, 1987. 
While there may be conflicting evidence, we hold, in this instance, the jury's 
determination of no partnership in existence is supported by substantial 
evidence, and the partnership did not exist in 1989, at the time of the damage 
to the property, nor in 1990, at the time the claim was filed. The Wagners 
properly submitted the claim in their capacities as 
individuals.

[¶10]   Having ruled against Kemmerer on 
its claim that the issue relating to a new trial on the amount of damages is 
moot, we next address the arguments of the parties with respect to whether the 
trial court erred in ordering a new trial on the Wagners' damages. The court 
sustained the jury's verdict that determined the issue of liability against 
Kemmerer; stated the evidence was sufficient for the jury to conclude the fair 
market value of the building and improvements was at least $80,000; but the 
trial court ruled the unedited claim was admitted into evidence erroneously. The 
claim was admitted to rebut contentions by Kemmerer of fabrication and deceit, 
but it also set forth reasons and arguments as to why Kemmerer was liable. The 
court concluded that the unedited claim may have been used by the jury in their 
deliberations and, thus, afforded the Wagners an unfair advantage. The claim did 
contain assertions that ultimately were not supported in the 
evidence.

[¶11]   Kemmerer insisted the claim was 
nothing more than a form of pleading, and it was properly objected to on the 
ground of lack of relevance. The Wagners argued the claim properly was admitted 
to show who owned the claim against Kemmerer and who owned the damaged property. 
The trial court ruled the claim, together with another exhibit, was relevant as 
it pertained to an issue of credibility of Mr. Wagner that had arisen during 
trial. We agree with the trial court that the jury well could have afforded 
substantial weight to the unedited claim, particularly in its award of $80,000, 
which was the precise amount of damages asserted in the claim. The trial court 
did err in admitting the unedited claim, and it correctly ruled a new trial 
should be held on the issue of damages.

[¶12]   Kemmerer contends further that, in 
this instance, the Wagners failed to prove their damages. Rule 59, WYO.R.CIV.P., 
articulates the authority of the trial court to grant a new trial when the 
evidence is insufficient, but the rule does not permit the granting of a new 
trial if there is a total failure of proof. Kemmerer argues this is the 
situation here, and there was no authority for the court to grant a new trial. 
The Wagners contend they did, in fact, prove the amount of damages through the 
expert testimony of a real estate broker about market values and through the 
expert testimony of an engineer as to the cost of repairs. The Wagners assert 
the jury determined the damages from that testimony, not the amount of the 
claim, and the jury's award of $80,000 should stand.

[¶13]   In Ely v. Kirk, 707 P.2d 706 (Wyo. 
1985), a case similar to this one with respect to the proof of damages was 
before this court, and we affirmed the decision of the trial court relating to 
liability and to damages to personal property, but we reversed the decision with 
respect to damages to real property, remanding the case for a new trial. In Ely, 
the trial court had found negligence in the violation of a duty imposed upon the 
operators of a sewage disposal company to deliver sewage to the sewage disposal 
plant and, instead, permitted the sewage to enter the basement of a private 
home. Substantial evidence supported the finding of negligence, but no evidence 
was found to support the figure awarded by the trial court as damages. We 
said:

There 
was no evidence to support the figure of $5,700.00 or any other figure 
representing the difference in value between a house in which living is over a 
basement containing sewage on the one hand, and a house without a basement on 
the other hand - other than evidence that the house with a sewage filled 
basement has no value at all; and the trial court's figure of $5,700.00 was 
obviously not an adjustment from the "no value at all" 
testimony.

Ely, 
707 P.2d  at 714.

In 
this case, the $80,000 listed in the claim was simply information alleged in a 
pleading, and it was not proof of damages. If that information is deleted from 
the record, it is not possible to determine with particularity what evidence 
logically supported the jury award of damages to the 
Wagners.

[¶14]   Since the case is to be remanded 
for a new trial on the issue of damages, we deem it appropriate to remind the 
parties of the wisdom of this Court uttered some 65 years 
ago:

Where 
the injury to real property is of a permanent character, or cannot be repaired 
except at great expense, the measure of damages is the difference between the 
value of the property before and after the injury.

Where 
the damage to real property is of a temporary character, or where it can be 
repaired at a small expense, the cost of the repair has often been held to be 
the measure of damages.

Town 
Council of Town of Hudson v. Ladd, 37 Wyo. 419, 425-26, 263 P. 703, 705 
(1928).

This 
language was quoted by this Court as recently as 1984 in Anderson v. Bauer, 681 P.2d 1316, 1324 (Wyo. 1984). The court went on to say:

     Either method of 
determining damages is acceptable. Neither is preferred over the other. These 
kinds of damages cannot be calculated with certainty. 
However,

"* 
* * if there is evidence from which a reasonable estimate of money damages may 
be made, that is sufficient, the primary objective being to determine the amount 
of loss, applying whatever rule is best suited for that purpose. * * *" Douglas 
Reservoirs Water Users Ass'n v. Cross, Wyo., 569 P.2d 1280, 1284 
(1977).

Anderson 
was followed in Deisch v. Jay, 790 P.2d 1273 (Wyo. 1990).

[¶15]   The measure of damages to real 
property has been discussed in several other cases. We summarize those cases in 
order to define the current state of the law. We have said, with respect to the 
proof of damages to real property:

This 
court has indicated that the measure of damages for injury to real property is 
the difference between the value of the property before and after the injury, 
Town Council of Town of Hudson v. Ladd, 37 Wyo. 419, 263 P. 703; however, no 
hard and fast rule can be laid down for all cases. The primary object is to 
determine the amount of the loss and whatever rule is best suited to the purpose 
should be adopted. Slane v. Curtis, 41 Wyo. 402, 286 P. 372, 288 P. 12, 69 
A.L.R. 906.

North 
Central Gas Co. v. Bloem, 376 P.2d 382, 385 (Wyo. 1962).

Later 
in Wheatland Irrigation Dist. v. McGuire, 562 P.2d 287 (Wyo. 1977), we said 
damages were to be measured by depreciation in market value, that is, the price 
a willing buyer would pay to a willing seller. In Atlas Constr. Co. v. Slater, 
746 P.2d 352, 359 (Wyo. 1987), we relied upon Bloem, and added the proposition 
that "[i]n tort cases, the measure of damages is the amount which will 
compensate a claimant for all the detriment proximately caused by the 
tort-feasor's breach of duty."

In 
Ely, 707 P.2d  at 715, we stated: We have already noted that the before and after 
rule is applicable only when the damage is partial. If the real property was 
reduced to no value at all, it should be valued by ascertaining the market value 
as of the time immediately before the destruction. This is not probable inasmuch 
as the land should have some value even if the house is not usable. The house 
itself should have some salvage value.

Finally, 
we said in Energy Transp. Sys., Inc. v. Mackey, 650 P.2d 1152 (Wyo. 1982), 
appeal after remand, 674 P.2d 744 (Wyo. 1984), that proof of before and after 
values must be by competent and permissible evidence.

[¶16]   A fair summary of the state of our 
damage rules is that, if the damage to the real property is so extensive as to 
substantially amount to a taking of the property, the measure of damages will be 
the difference in the market value before and after the damage is inflicted. If 
the damage is not so extensive as to substantially amount to a taking, the cost 
of repairs to the property will measure the damages, with incidental damages 
recoverable in some instances. In any case, the lower of the two figures, cost 
of repairs as compared to the difference in value before and after, will 
demonstrate the damage ceiling. In some instances, the finder of fact may have 
to resolve the issue as to whether the damage was so extensive as to 
substantially amount to a taking.

[¶17]   In this case, the unedited claim 
was neither competent nor admissible evidence. The testimony by the expert 
witness for the Wagners, a real estate broker, also did not meet this test. He 
testified the listing price of $75,000 with his agency was determined by adding 
the amount owed to the bank for this property to the amount of broker fees and 
an approximate $5,000 for profit. His figure was comprised of values for the 
land, the building, and the contents of the building including glasses, bottles 
of liquor, and inventory. This witness also testified market value is the value 
used to compare property with other like properties sold in the area within a 
recent time period. He continued with his testimony, however, to the effect no 
comparable properties existed because of the depressed real estate market. He 
added by way of conclusion that all commercial property sold was sold at a 
"ridiculously low price."

[¶18]   The Wagners presented another 
expert witness to testify as to the cost of repair. Again, repair value is not 
evidence of market value, and using this approach presents a danger of placing 
the Wagners in a better position than they enjoyed prior to the damage to their 
property. The cost of repairs might well exceed the value of commercial property 
in a depressed market.

[¶19]   It is clear that, at the retrial, 
the Wagners will have a very demanding task when they are charged with 
establishing the damages to their property because of Kemmerer's negligence. The 
amount awarded should place the Wagners in the position they enjoyed prior to 
the damage to their property. The market value should account for the salable 
land, any salvageable proceeds for the building, and the undamaged contents of 
the building, all of which should be extricable from the testimony and exhibits 
in the record. The primary responsibility of the Wagners is to meet the 
objective of determining the amount of their loss using whatever rule is best 
suited to provide the jury with adequate information to determine the damage. If 
there are no comparable sales, there are alternative methods that may be used to 
establish the value of the property. That value with the appropriate deductions 
should not exceed the cost of repairs in any award made to the 
Wagners.

[¶20]   We affirm the ruling by the trial 
court that liability was correctly and properly determined by the jury. We agree 
with its ruling that it erred when it admitted the unedited "notice of claim" 
into evidence. We recognize, as did the trial court, that, quite possibly, the 
jury arrived at the amount of damages by looking at the amount demanded in the 
claim, and there was no expert testimony to meet the tests adopted in Wyoming 
for establishing the damage to real property. We affirm the granting of a new 
trial on damages by the trial court. The rulings by the trial court are 
affirmed.