UNITED STATES COURT OF APPEALS Tenth Circuit Byron White United States Courthouse

1823 Stout Street Denver, Colorado 80257 (303) 844-3157 Patrick J. Fisher, Jr. Elisabeth A. Shumaker Clerk Chief Deputy Clerk August 2, 2000

TO: ALL RECIPIENTS OF THE ORDER AND JUDGMENT
RE: 99-8046, Call, et al. v. State Industries Filed on July 24, 2000 The order and judgment contains a typographical err or on page two, first sentence of the decision. The reference to “Afton, Colorado” is corrected to read “Afton, Wyoming.” The first sentence should now re ad: On a cold December night in Afton, Wyoming, the Cal ls’ home and virtually everything in it burned to the ground. Please make the correction to your copy of the orde r and judgment. Sincerely, Patrick Fisher, Clerk of Court
By: Keith Nelson Deputy Clerk* This order and judgment is not binding precedent, except under the

doctrines of law of the case, res judicata, and col lateral estoppel. This court generally disfavors the citation of orders and judg ments; nevertheless, an order and judgment may be cited under the terms and condi tions of 10th Cir. R. 36.3. 

## F I L E D United States Court of Appeals Tenth Circuit 

### JUL 24 2000 

### PATRICK FISHER Clerk UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

DEE CALL and DIANE CALL; STATE FARM FIRE AND CASUALTY COMPANY, an Illinois corporation; STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Plaintiffs-Appellees, v. STATE INDUSTRIES, a Tennessee corporation, Defendant-Appellant. No. 99-8046 (D.C. No. 98-CV-120-D) (District of Wyoming)

ORDER AND JUDGMENT *

Before SEYMOUR , KELLY and LUCERO , Circuit Judges.

State Industries appeals from a jury verdict findin g that a hot water heater it had manufactured was defective and caused a fire th at destroyed Dee and Diane Call’s home. Exercising jurisdiction pursuant to 2 8 U.S.C. § 1291, we affirm.1 Plaintiffs also alleged negligence and breach of the warranty of

merchantability but subsequently dropped those clai ms. -2- I On a cold December night in Afton, Wyoming, the Cal ls’ home and virtually everything in it burned to the ground. T he Calls and their insurers, State Farm Fire and Casualty Company and State Farm Mutua l Automobile Insurance Company (collectively “State Farm”), exercising the ir right of subrogation, brought an action in federal court against State In dustries alleging that a design defect in an electric water heater manufactured by the defendant and installed in the Calls’ home caused the fire. 1 Plaintiffs presented evidence that a combination of high temperatures and excessive moisture caused high-resistance heating of the hot water heater’s internal wiring, which in turn i gnited surrounding material in the heater and eventually the structure of the hous e. Additional evidence supported the theory that the high-resistance heati ng was made possible by the use of substandard wiring in the heater. State Industr ies agreed the fire originated in the area of the hot water heater and was electrical , but presented evidence in support of its theory that structural wiring was th e cause. The jury found in favor of plaintiffs and awarded $ 473,000 in damages. The district court denied State Industries’s post-trial motions for judgment as a matter of law, an amended judgment, and a new trial . This appeal followed.-3- II State Industries raises six arguments on appeal: (1 ) the district court improperly failed to instruct the jury on comparati ve fault; (2) plaintiffs’ evidence on damages was inadmissible and insufficient; (3) p laintiffs’ experts were not properly qualified and their opinions were unreliable ; (4) the district court improperly admitted evidence of other incidents of heater defects; (5) the district court improperly admitted evidence of remedial desi gn modifications; and (6) the evidence was insufficient to establish that a defec t in the heater caused the fire.
A In general, we review for abuse of discretion the d istrict court’s decision not to submit a comparative fault instruction to the jury. See United States v. McIntosh , 124 F.3d 1330, 1337 (10th Cir. 1997). “A defendant is entitled to an instruction on his theory of the case if the instru ction is a correct statement of the law and if he has offered sufficient evidence for the jury to find in his favor.” Id. (citing United States v. Swallow , 109 F.3d 656, 658 (10th Cir. 1997)) (further citation omitted). In a diversity case, “we look t o the state law to determine the basic elements of the legal theories asserted, and then to the evidence to see if it supports the granting of the instruction.” Perlmutter v. United States Gypsum2 In light of our well-established standard of revi ew, there is no merit to

State Industries’s argument that the district court ’s refusal to give the comparative fault instruction was equivalent to granting sua sp onte a directed verdict in favor of plaintiffs and therefore should be subject to a less deferential standard of review. -4- Co. , 4 F.3d 864, 872 (10th Cir. 1993). 2 The parties agree that Wyo. Stat. Ann. § 1-1-109 establishes the elements of comparative f ault. That section provides that the court must reduce the award of damages “inproportion to the percentage of fault attributed to the claimant,” Wyo. Stat. An n. § 1-1-109(d), and defines fault to include “acts or omissions, determined to be a proximate cause of death or injury to person or property, that are in any measu re negligent, or that subject an actor to strict tort or strict products liability, and includes breach of warranty, assumption of risk and misuse or alteration of a pr oduct,” Wyo. Stat. Ann. § 1-1- 109(a)(iv). Thus, we analyze whether the district court abused its discretion in concluding that there was insufficient evidence that the Calls were at fault. “There must be more than a mere scintilla of eviden ce to support an instruction. Sufficient competent evidence is required.” Perlmutter , 4 F.3d at 872 (quoting Farrell v. Klein Tools, Inc. , 866 F.2d 1294, 1297 (10th Cir. 1989)). Moreover, “[t]he evidence justifying the instruction must be more than speculation or conjecture.” Id. (citing Brownlow v. Aman , 740 F.2d 1476, 1490 (10th Cir. 1984)). State Industries argues that the following evidence presented to the jury-5-

could support a finding that the Calls were at faul t: They improperly installed the heater, creating the leak that, under the plaintiff s’ theory, compromised the wiring; they failed to have the heater serviced eve n though the thermostat was not working properly, preventing the discovery of the c ompromised wires; and they left a cover off the heater, permitting the fire in the heater to escape and ignite the house. After carefully reviewing the trial transcr ipt, we conclude State Industries fails to meet the high threshold of demonstrating the district court abused its discretion in declining to submit the requested comparative fault instruction.
B On the issue of damages, State Industries appears t o argue both that the evidence concerning damages was improperly admittedand that it was insufficient to support the jury’s award. State In dustries first objected to the damages award in its motion for an amended judgmentor new trial. “While state law governs a party’s substantive entitlement to damages in a diversity case like this, it is well-established that federal law governs the grant or denial of a new-trial motion in diversity cases, and, at least in this Circuit, governs the determination whether evidence is sufficient to sup port a verdict.” Morrison Knudsen Corp. v. Fireman’s Fund Ins. Co. , 175 F.3d 1221, 1259 n.47 (10th Cir. 1999) (citations omitted). Under federal law, we r eview for abuse of discretion the district court’s disposition of a motion for an amended judgment or new trial3 On occasion, this Court has stated that a jury’s damages award must be

affirmed “unless it is clearly erroneous or there i s no evidence to support the award.” Sanjuan v. IBP, Inc. , 160 F.3d 1291, 1299 (10th Cir. 1998) (quoting Brown v. Presbyterian Healthcare Servs. , 101 F.3d 1324, 1330 (10th Cir. 1996)); see also Vining v. Enterprise Fin. Group, Inc. , 148 F.3d 1206, 1216 (10th Cir. 1998) (setting forth both standards). Even if ther e is a substantive difference between that standard of review and the standard se t forth in the body of this opinion, under either standard the outcome in this case would be the same. -6- on the basis of an excessive verdict. See Hynes v. Energy West, Inc. , 211 F.3d 1193, 1206 (10th Cir. 2000). In order to establish an abuse of discretion, State Industries carries the heavy burden of demonstrating that the verdict was clearly, decidedly, or overwhelmingly against the w eight of the evidence. . . . [A]bsent an award so excessive or inadequate as to shock the judicial conscience and to raise an irres istible inference that passion, prejudice, corruption or other improp er cause invaded the trial, the jury’s determination of the fact is considered inviolate. Id. (quoting Campbell v. Bartlett , 975 F.2d 1569, 1577 (10th Cir. 1992) (further citation omitted)). 3 Federal law also governs the admissibility of evide nce in diversity cases in federal court, see Romine v. Parman , 831 F.2d 944, 944 (10th Cir. 1987) (citations omitted), and neither party cites to authority indicating that general rule is inapplicable in the instant case. We review forabuse of discretion the district court’s admission of evidence concerning damages. See Robinson v. Missouri
Pac. R.R. Co. , 16 F.3d 1083, 1086 (10th Cir. 1994).-7-

State Industries attacks the admissibility and suff iciency of the evidence concerning the value of the Calls’ home and the per sonal property in the home. Under the governing substantive law of Wyoming, see Morrison Knudsen Corp. , 175 F.3d at 1259 n.47, the measure of property dama ge generally is “the fair market value of the property or, in the case of goo ds having no ascertainable market value, the actual economic value to the owne r,” Broyles v. Broyles , 711 P.2d 1119, 1124 (Wyo. 1985) (citing Shikany v. SaltCreek Transp. Co. , 45 P.2d 645 (Wyo. 1935)) (further citations omitted). Thus , a plaintiff is not entitled to recover for “sentimental or fanciful value.” Id. (citing Shikany , 45 P.2d at 645). “The burden of proving the value of lost property r ests on the party seeking recovery . . . .” Id. (citing Ely v. Kirk , 707 P.2d 706 (Wyo. 1985); Shikany , 45 P.2d at 645). “Damages must be proven with a reaso nable degree of certainty so that the fact-finder, in turn, can determine the am ount with a measurable degree of certainty. Exact certainty of the amount of dam ages need not be proven, but remote, conjectural or speculative damages are not allowed.” Reposa v. Buhler , 770 P.2d 235, 238 (Wyo. 1989) (citations omitted). Ultimately, “[v]aluation of property is a question of fact, and there is no uni versal standard for such a determination.” O’s Gold Seed Co. v. United Agri-P roducts Fin. Servs., Inc. , 761 P.2d 673, 676 (Wyo. 1988).4 State Industries also contends plaintiffs failed to disclose prior to trial

their computation of fair market value based on the two comparable homes as required by local rule. Because the record on appe al does not contain the pre-trial disclosures, we cannot and will not address that cl aim. See Deines v. Vermeer Mfg. Co. , 969 F.2d 977, 979-80 (10th Cir. 1992). -8- Evidence concerning the fair market value of the Ca lls’ home was brought in through the testimony of Dee Call. He testifiedthat he is involved in the construction business, has built and sold several h omes, stays informed about the real estate market in the Afton area, and has perso nal knowledge of the characteristics and value of two comparable homes o n the market in the Afton area. Without citation to legal authority, State I ndustries contends Dee Call was unqualified to express an opinion as to the market value of his destroyed home and failed to provide an adequate foundation for hi s opinion. We disagree. As the owner of the home and one familiar with the loc al residential real estate market, Dee Call was qualified to testify as to the home’s value. See Malloy v. Monahan , 73 F.3d 1012, 1016 (10th Cir. 1996). Moreover, e vidence concerning the value of two comparable homes provided an adequ ate foundation for his opinion. Cf. United States v. Sowards , 370 F.2d 87, 92 (10th Cir. 1966) (stating that an owner’s opinion as to value “must have a rational foundation” (citations omitted)). We conclude the evidence presented was both properly admitted and sufficient to establish to a reasonable degree of c ertainty the fair market value of the Calls’ home. 45 State Industries does not challenge the values onthe inventory sheet that

were provided by Dee Call. Moreover, although Stat e Industries contends certain amendments made to the inventory by Diane Call were not disclosed until the day of her testimony, it did not object to the admissio n of the inventory sheet on that basis and therefore did not properly preserve the i ssue for appeal. See United States v. Mendoza-Salgado , 964 F.2d 993, 1008 (10th Cir. 1992). -9- With regard to the value of personal property destr oyed in the fire, State Industries’s arguments on appeal, once again made w ithout citation to legal authority, are focused exclusively on an inventory list prepared by Diane Call for
State Farm. 5 State Industries contends the estimated values on the inventory list are based on replacement cost and include sentiment al value. Specifically, it points out some of the values were entered in the “ replacement cost” column and not the “actual cash value” column and singles out the price attached to photograph albums as evidence of sentimental value. Our review of the record, however, reveals that Diane Call testified all her property values represented market value and did not incorporate sentimental va lue. We therefore conclude the district court properly admitted into evidence the inventory list and Diane Call’s testimony concerning the inventory, leaving the ultimate determination of credibility to the jury. See United Int’l Holdings, Inc. v. Wharf (Holdings) Lt d. , 210 F.3d 1207, 1230 (10th Cir. 2000) (“It is within the virtually exclusive purview of the jury to evaluate credibility and fixdamages.” (citation omitted)); cf. Weathers v. State , 652 P.2d 970, 973-74 (Wyo. 1982) (“[A]n owner can-10-

testify as to his opinion of market value without h aving a particular expertise; the weight given to such testimony is left to the jury. ”). Furthermore, based on that evidence a jury could determine to a measurable deg ree of certainty the value of the personal property destroyed in the fire. Finally, the jury award is not grossly excessive, g iven that it was less than the amount of damages supported by the evidence.
C Federal Rule of Evidence 702 imposes on a district court a gatekeeping obligation to “ensure that any and all scientific t estimony or evidence admitted is not only relevant, but reliable.” Daubert v. Merrell Dow Pharmaceuticals, Inc. , 509 U.S. 570, 589 (1993). The Supreme Court has ma de clear that “where [expert] testimony’s factual basis, data, principle s, methods, or their application are called sufficiently into question . . . the tri al judge must determine whether the testimony has ‘a reliable basis in the knowledge an d experience of [the relevant] discipline.’” Kumho Tire Co. v. Carmichael , 526 U.S. 137, 149 (1999) (quoting Daubert , 509 U.S. at 592). The trial judge has broad disc retion “to determine reliability in light of the particular facts and ci rcumstances of the particular case.” Id. at 158; see also United States v. Charley , 189 F.3d 1251, 1266 (10th Cir. 1999), cert. denied , 120 S. Ct. 842 (2000). That broad discretion app lies both in “deciding how to assess an expert’s reliability, in cluding what procedures to6 A third expert, Donald Peak, also testified for plaintiffs. State Industries

does not challenge Peak’s qualifications and only c hallenges the reliability of his opinions to the extent they are based on the opinio ns of Hodge and Nelson. -11- utilize in making that assessment, as well as in making the ultimate determination of reliability.” United States v. Velarde , No. 99-2297, 2000 WL 710494, at *4 (10th Cir. June 2, 2000) (citing Kumho Tire , 526 U.S. at 152) (further citation omitted). After carefully reviewing the record, we conclude t he district court properly exercised its gatekeeping responsibility under Daubert and Kumho Tire , conducting extensive hearings that established the qualifications of plaintiffs’ experts Toby Nelson and George Hodge. The districtcourt likewise properly exercised its gatekeeping function in determining that the opinions of Hodge and Nelson were reliable and relevant. 6 Establishing a precise “rate of error” and demonstrating that the experts’ results were “subje cted to peer review and publication” are not, as State Industries suggests, prerequisites to a finding of reliability in all instances. See Kumho Tire , 526 U.S. at 150 (emphasizing that those and other factors discussed in Daubert“do not constitute a ‘definitive checklist or test’” (quoting Daubert , 509 U.S. 593)); see also Charley , 189 F.3d at 1261 n.11 (“[The district court’s] evidentiary d ecisions do not warrant reversal if it determined, in some apparent manner, that the expert testimony it admitted was reliable.” (citation omitted)). Moreover, any purported shortcomings of-12-

Hodge or Nelson’s methods and theories were adequat ely brought out in crossexamination by defense counsel. We discern no abuse of discretion. State Industries also contends that Hodge and Nelso n testified to theories that were not properly disclosed in advance of tria l, in violation of Fed. R. Civ. P. 26(a) and 37(c)(1). “The determination of whether a Rule 26(a) violation is justified or harmless is entrusted to the broad dis cretion of the district court.” Woodworker’s Supply, Inc. v. Principal Mut. Life Ins. Co. , 170 F.3d 985, 993 (10th Cir. 1999) (quoting Mid-America Tablewares, Inc. v. Mogi Trading Co. , 100 F.3d 1353, 1363 (7th Cir.1996)). Appellant’s f ailure to include in the record on appeal relevant portions of the experts’ deposit ions, designations, and reports substantially limits our ability to assess the merits of this claim. See Deines v. Vermeer Mfg. Co. , 969 F.2d 977, 979-80 (10th Cir. 1992) . To the extent the record permits review, the district court did not abuse its discretion in finding that the experts’ opinions were properly disclosed.
D In order to introduce evidence that other individua ls had experienced problems with hot water heaters manufactured by State Industries, plaintiffs were required to show “that the circumstances surroundin g [the other incidents] were substantially similar to those involved in the present case.” Ponder v. Warren Tool Corp. , 834 F.2d 1553, 1560 (10th Cir. 1987) (quoting Karns v. Emerson7State Industries points out that this Court has o n at least one occasion

applied Fed. R. Evid. 407 in a diversity case involving a strict liability claim. See Hull v. Chevron U.S.A., Inc. , 812 F.2d 584 (10th Cir. 1987). Hull , however, also involved negligence claims, and it is unclear to wh ich claim the court was referring when it held the evidence of remedial mea sures was inadmissible under -13- Elec. Co. , 817 F.2d 1452, 1460 (10th Cir. 1987)) (further ci tations omitted). The requisite degree of similarity required varies depe nding on the purpose for which the evidence of the other incidents is used. See id . Both incidents introduced through Peak’s testimony involved the same model he ater with the same thermostat problems as experienced by the Calls, an d one of those incidents also involved a fire in the heater. The testimony of si milar incidents was used in support of Peak’s conclusion that the Calls’ heaterwas capable of causing a fire. We conclude the circumstances of the two incidents were sufficiently similar to the circumstances of the instant case in light of t he purpose for which they were used, and therefore the district court did not abus e its discretion when it admitted that evidence.
E In diversity actions involving a strict products li ability claim, the question of whether to permit evidence of subsequent remedia l measures is governed by state law. See Wheeler v. John Deere Co. , 862 F.2d 1404, 1410 (10th Cir. 1988); see also Moe v. Avions Marcel Dassault-Breguet Aviation , 727 F.2d 917, 932 (10th Cir. 1984). 7Under Wyoming law, evidence of remedial measures isRule 407 to prove “culpable conduct.” Id. at 587. In the instant case, by contrast,

plaintiffs abandoned their negligence claims for th e purpose of avoiding exclusion of evidence of subsequent remedial measures. To the extent Hull can be read to hold that Rule 407 and not state law governs whethe r a federal court should exclude evidence of remedial measures in a strict l iability case, we are bound by the contrary rule announced in the earlier case of Moe , 727 F.2d at 932. See Haynes v. Williams , 88 F.3d 898, 900 n.4 (10th Cir. 1996). -14- admissible in a strict liability action if the plai ntiff also presents “substantial evidence which proved or tended to prove” the chang e was undertaken to cure a defect. Caldwell v. Yamaha Motor Co. , 648 P.2d 519, 525 (Wyo. 1982). Nelson testified that the subsequent design modifications to the hot water heater decreased the amount of moisture that could enter the area of the heater containing the wiring, and therefore significantly reduced the risk of highresistance heating. We conclude, in light of that testimony, that the district court did not err in admitting the evidence of subsequentremedial measures.
F State Industries’s final argument on appeal is thatthe evidence introduced at trial is insufficient to support the jury’s verd ict as to defect and causation. We will not reverse a jury verdict unless, viewing the record in the light most favorable to the prevailing party, “it is clearly, decidedly, or overwhelmingly against the weight of the evidence.” Anaeme v. Dia gnostek, Inc. , 164 F.3d 1275, 1284 (10th Cir. 1999) (internal quotation omitted). In the instant case, the issues of defect and causation were hotly contested, with evidence presented both to-15-

support and refute plaintiffs’ theory of the case. We decline to substitute our judgment for that of the jury in resolving such a f actual dispute, and conclude that the verdict is not against the weight of the e vidence.
III The judgment of the district court is AFFIRMED

. ENTERED FOR THE COURT

Carlos F. Lucero Circuit Judge