T o b e p rec i se, R ho ne - P o ulen c, Inc

. l ea sed t he b uil d i ng t o L aw E ng i ne ering & E nv i ro nm en t al S erv i ce s, 1 M a c te c ’s c o rp o ra te p re d e c e sso r. T h e d e fen d a n t w a s re fer re d to a s L a w thr o u g h o u t the tria l sta g e s o f t h is a c tio n , b u t i s ref erred t o as M act ec o n ap p eal

. T he d i f f erence i s no t m at eri al t o t hi s ap p eal , and we wi l l ref er t o t he d ef

end ant

- ap p el l ant as M act ec. M r . Li cht ef el d purc has ed t he bui l di ng f r om Rhone- P oul enc i n 1995 an d as s umed t he l eas e a t t hat t i me. NO T R EC OM M EN DE D F OR F UL L- TEX T P UB LIC AT ION F ile Nam e: 07a0207n.06 F iled: Marc h 21, 2007 Case No. 05- 5884 UN ITED STA TES C OU RT OF AP P EA LS F OR THE SI XT H C IR CU IT
P AUL A. LICHTEFELD, P laintif f-App ellee,

v. MACT EC EN GINE ER IN G & CONSULTING, INC., Defendan t-Appellant.

_______________________________________ ) ) ) ) ) ) ) ) ) ) ) ) ON AP P EA L F RO M THE UNITED STAT ES DIS TRICT COURT F OR THE WE STE RN DI S TR IC T O F K

EN TU CKY

BEF ORE: BA TC HELD ER , G IBBO NS, and C OOK, C ir c uitJudg e s. ALICE M. BATCHEL DER, Circ uit Jud ge. T h e ap p el l an t , M ac t ec E n gi n ee ri n g & Consulti ng , I nc. appe als a jury v er d i ct of $175,000 in favor of its former

landlord, appe llee Paul L ic hte fe ld. F or

the re a so ns tha

t f oll ow , w e a ff

ir m in pa rt , r e ve rs e in p art , and

re mand thi s c a se to the district court for

further proce eding s consistent with this opi nion.

I. Th is c a se ari se s in

div e rs ity , und e r K e ntu c ky law. Mr . L ic hte fe ld, a

Ke ntucky

re a l e state de ve lop e r, le a se d a

bu ild ingin L ou isv ill e , K e ntu c ky , to Ma c te c , a Ge or g ia c or po ratio n. Duri ngits 1 tenanc y , Macte c allowe d or caused the building to fall into disrepair, whic h Mr. L ichtefe ld alleg edW he n aske d ab o ut t he rep air t ha t E aster S ea l s d i d t o t he b uil d i ng , t he E ase r S ea l s C E O t esti f i ed at t rial : “W e 2 d i d not gut i t

. I t i s ess ent i al l y as - - as i t was when we f o und i t wi t h very f

ew m o d i f

i cat i o ns. T he si gn if

i cant m o d i f i cat i o ns real l y were t aki ng out a wall o r t wo here and t here and jus t repa i ri ng and b ri ngi ng t he b ui l d i ng ba ck up t o a reas o nab l e b ui l d i ng. In f act , it loo ks f

rom a n int eri o r p ers p ect i ve p ret t y m uch l i ke i t w as, I wo ul d suspect, be f o re t he pri or t ena nt [ M act ec] was t her e. T he f l oo r i ng i s s t i l l t he s ame f l oo r i ng f or t he mo s t par t , t he woo d, but i t ha d had a lo t o f p ro b le m s. W e p u t in es se n tially the sa m e c e ili n g til e . T h e re is n o thin g e x tra v a g a n t a t all in the b u ild ing . W e had t o go t hrough and ki nd of redis co ver t he l i t t l e co urt y ards, whi ch are ni ce l i t t l e f eat ures , but t hey had be co m e ki nd o f a j u n g le . A n d the a m o u n t w e sp e n t b rin g ing it u p to u sa b le sta n d a rd s, so m e thin g tha t a ll o f us w o u ld fee l co m fo rta b le in, e x c lud ing a n y e x te rio r stu ff , w h ic h inc lud e d - - t h a t m e a n s w e a d d e d a c a n o p y a n d d id so m e p a v ing , ex c lud ing tha t, ju st w h a t we sp e n t o n the insid e b rin g ing it up to sn u ff w a s a b o u t $ 1 8 4 ,0 0 0 m o re d o llar s.” 2 wa s in br e a c h o f t

he le a se . T he le a se c on ta ine d th e fo llo wi ngre le va nt p ro vis ion s: 15 . Re pa ir s. (a ) T e na nt s ha ll m ake , at it s so le c os t and e xpe ns e , all re pa ir s nec e ssa ry to m a int a in any heating , plumbing, air

conditioning a

nd elec trical sy stems located on the Premises. . . . . (b ) T e na nt s ha ll m ake , at it s so le c os t and e xpe ns e , a ll r e pa ir s n e c e ssa ry to m a int a in the Premises including but not lim ited to windows, doors, lights, fixtures, etc., and shall keep the Premises and the f ix tures ther ein in neat a

nd order ly

condition. . . . . 24. Surrende r of Pre mises: Holding Ove r. (a) This L ease shall terminate and Tena nt sha ll de liver up and surr ender possession of the Premises . . . . in the same c ondition in which Tenant has a g ree d to keep the same durin g the continuanc e of this L ease in acc ordanc e with the ter ms hereof

, normal we ar a

nd tear excepted. Nea r the e nd of the lea se term, Mr

. L ichtefe ld was neg otiating to sell the building to the Ke ntu c ky Ea ste r S e a ls So c ie ty . H is a sk ingpr ic e wa s $2. 6 milli on , but on ins pe c tio n, Ea ste r S e a ls found t h e b u i lding in poor c ondition. At trial, the Easter Sea ls CEO describe d the damag e: the building was fi l t h y an d the cour ty ards ove rg rown; Mac tec ha d broken c eiling tiles in orde r to run computer lines and had used la rg e, g rea sy

equipment in car

peted a rea s; the wallpape r wa s torn wher e Macte c ha d

g lu e d an d th e nr e mo v e d

s ign s ; M a c te c h a d

a ll o w e d c a u lk to d e te r io r a te in

w indows overlookinga par quet wood floor, which was da mag ed by leaking water

as a r esult. Be cause of the building’s poor condition, E aster Seals made a counter -off er that was $300,000 below th e a s king price , and eve ntually

spent $184,000 to ref

urbish the building’ s interior and $217,000 to re place the 23

HV AC sy ste m. The HV AC sy stem was a pa rticular item of

conce rn. As in s t alled, the sy stem had 51 t h e r m o s t a t s t h a tc o n t r o l l e d

t h e t e mp e r a t u r e o f

th e i n d i v i d

u a l o f f i c e s . D ur i n g M a c t e c ’ s t e n an c y, howeve r, Mac tec had by

passed the thermostats and ins talled a sing le tog g le switch so that the HVA C sy stem produce d either f

ull heat or full air conditioning for the entire building. Acc ording to trial te sti mony by bo th M r. L ic hte fe ld’ s Me c ha nic a l Sy ste ms M a

na g e r a nd an H VA C e xpe rt , th is alteration placed undue stress on the sy stem, which reduc ed its usef ul life

. In addition, the constant flow of c old air through the building’s duc ts during the humid summ er months ca used conde nsation that stained t he ceiling. To se ll the building, Mr. L ichtefe ld ag ree d to place $50,000 in e scrow f or repa ir of the HV AC sy stem. There fore , Easter Seals purcha sed the building for an ef fec tive price of $2.25 million, l eavingMr. L ichtefe ld $350,000 short of his orig inal asking price

. Mr. L ichtefe ld sued Macte c, alleg ing that Mactec had bre ache d i t s o b ligations under the lease . Prior to trial, Mr. L ichtefe ld argued – and the district court ruled – that the proper measure of dama g e s w a s either

the c os t of r e pa ir

or the dim inutio n in

pr op e rt y va lue . A t tr ia l, M r. L ic hte fe ld produce d wi t n es s es to testify to the extent to which the building and HV AC sy stem had bee n pe rm itt e d to fa ll i nto dis re pa ir in vi ol ati on of th e le a se . T he se wi tne sse s in c lud e d M r. L ic hte fe ld himself, the Easter

Seals CEO, the Mec hanica l Sy stems M an ag er, a nd the HVAC e x pert. The fo rm e r Mac te c of

fi c e mana g e r t e sti fi e d f

or the de fe ns e . T o e sta

bli shdama g e s, Mr . L ic hte fe ld pr oduc e d ane xp e rtr e a l e s t a t e a

p p r a i s e r w h o t e s t i f

i e d th a tth e b u i l d i n g w o u l d

h av e b e e nw orth $2.575 milli on at the time of the sa le to Easter Seals, if i t had been i n even aver ag e condition. M r. L ichtefe ld, himself a license d rea ltor, testified that he va lued the building at $2.6 mill ion on either

a re nta l- inc ome or

c os t- pe r- sq

ua re -f oo t ba sis

.Cha mper t y i s de f i n ed as “ 1

. A n a g r ee men t be t we en a n of f i ci ou s i n t er meddl er i n a l aw s u i t a n d a l i t i g an t by 3 w hich t he i nterm ed d l er h elp s p ursu e the li t i ga nt’ s claim as co nsid era t i o n f o r rec eiving p art o f

an y jud gm en t p ro ce ed s; specif

. , an agreem ent t o divi d e l i t i gat i o n pro ceed s b et ween t he o wner of t he l i t i gat ed cl ai m and a pa rt y unrel at ed t o t he la w su it w h o su p p o rts o r h e lp s e n fo rc e the c la im .” B la c k ’s L a w D ic tio n a ry (8 th E d . 2 0 0 4 ), c h a m p e rty. 4 Ultimately , the jury

found for Mr. L ichtefe ld and aw arde d him $175,000 in damag es base d

on diminuti on in value. Mac tec moved the district court for JNOV or a new trial, which the c ourt de nie d. Ma c te c a

pp e a le d, ra isi ngmany

of the same iss ue s f

or re vie w o n a

pp e a l. II. Macte c ra ises s i x i ssues on appe al, five of which we re f

ully and prope rly

resolved by

the dis tr ic t c ourt . B e c a

us e the se fi ve c la ims la c k me ri t, w e a ff ir m th e dis tr ic t c ourt

on e a c h, and

wi ll

a dd re ss t he m in on ly a c ur so ry mann e r. Th e sixth

– th e pr op e r m e a sure of dama g e s – we wi ll addre ss in detail. We review conclusions of law de novo and finding s of fac t f or clea r err or. Mo or e v. Rohm &Haas Co. , 446 F.3d 643, 645 ( 6th Cir. 2006). First, Mac tec a

rgues that the case must be dismiss ed beca use Easte r Seals owne d the building at the end of the lease term, so (1) Mr. L ichtefe ld la cked standing and (2) Mr. L ichtefe ld and Easter Seals enter ed into a cha

mpertous ag ree ment involving this liti g ation. Ho we v er , the district court made a n express finding that “the sale of the building was not closed until af ter the te rmination of the lease ,” and w e do not find this to be clea r er ror. The district cour

t corre ctly deter mined that Mr. L ichtefe ld had standing beca use, ac cordingto his complaint, he suffer ed direc t pe rsonal injury (i.e., los s o f p ro pe rt

y va lue ) du e to M a c te c ’s br e a c h o f t he le a se , f

or wh ic h h e so ug ht c on tr a c t da ma g e s. Be cause Easter

Seals will not share in the proc eeds of this li tigation, t h ere is no champer ty here

. 3 Ev e n if the re we re , th e law w ou ld v oid the c on tr a c t be tw e e n E a ste r S e a ls a nd Mr . L ich tef

eld; it would not void the lease or dismiss the ac tion. See Sk inner v. Morrow , 3 1 8 S

. W

. 2 d 4 1 9 , 4 2 9 ( K y.5

1958) ( citing Aetna Life Ins. Co. v. W eck , 173 S.W . 317 (Ky . 1915)). Second, Macte c argues that its duty to re pa ir was not a duty

to replaceand upgrade, and there fore , under the lease and as a matter of la w, it cannot be he ld liable for f ailing to r eplac e the HVAC sy stem. Prior to trial, Macte c moved for summ ary judgme nt on this issue, and the district court he ld that, “the defenda nt’s duty to repa ir did not require it to replace the entire air c onditioning unit, although the pla intiff insists – and the c ourt ag ree s – that the defend an t ’s duty may have included the oblig ation to replac e compone nt parts of that unit.” Mactec a rgued that it could not

mere ly repla ce c omponent parts beca u s e

– it alleg ed – compone nt parts wer e not ava ilable. The court c onsidered this a g enuine issue of materia l fac t and denied summar y judgme nt. At tr ial, two witnesses testified that Mac tec c ould have obtained ref urbished parts, off- brand parts, or even new parts fr om the manufa cture r throug h April 2000. In rebuttal, Mac tec ’s fo rm er office manag er te sti fi e d th a t a loc a l ser

vic e pr ov ide r ha d told a Ma c te c a dmi nis tr a tiv e a ssi sta nt that c omp on e nt p art s

wer e unava ilable. Mac tec argu es t h at b y p ermitting this claim to g o to the jury , the district court imposed a d

e fac to d u t y

of re place ment. We find no merit to this arg ument. The re cord demonstrates that the jury rea sonably

could have found that component par ts were available and that Macte c could have maintained the sy stem, and we conclude that the district court did not impose a de facto duty

of re pla c e me nt. Third, Mac tec a lleg es that th i s i s re al l y a neg lige nce c ase a

nd that Mr. L ichtefe ld did not pr ov e t h a tM a c t e c c a

u s e d d am a g e t o th e b u i l d i n g . O f c o ur s e , th e d e f

e n d an tc an n o tun i l a t e r a lly

c ha ng e the natur e of

the c a se – th is w a s and

is a br e a c h of con tr act case in whic h M r. L ic hte fe ld complains that Macte c viol ated lease S ections 15 and 24 (quoted above). There is ample evide nce in the rec o r d to s u

p p o rt th e f

in d in g s th a t M a c te c c a

u s e d d ama g e to th e b u il d in g an d th at Mr.6

L ichtefe ld suffer ed dama g e as a result. Macte c was the sole tenant during the lease period, a nd the

rec ord c o n ta in s n o e v id e n c e o f n a tu r a l d is a s te r o r an y o th e r e n ti ty o r an y e v e n t th a t c o u ld ha ve

c a us e d th e bu ild ingto b e in i ts s tate of dis re pa ir

. Ma c te c ’s fa ilure to ma int a in the bu ild ingpr op e rl y was, of ne cessity , the c au s e o f t he building’ s poor condition. The e vidence also supports a jury ’s f i n d i n g o f d am a g e . P h o t o s an d t e s t i m o n y d e m o n s tr a t e d th a tt h e p r e m i s e s w e r e n o tn e a tan d o r d e r l y, but were in fac t filthy

an d d am age d

. I n unrebutted te stimony , the Easter Seals CEO testified that Ea ste r S e a ls s pe nt $ 18 4, 00 0 to re sto re the bu ild ing ’s int e ri or – to br ingit “ ba c k u

p to a re a so na ble bu ild ing ” – a

nd ano the r $2 17 ,0 00 to re sto re the “ je rr y ri g g e d” HV AC . D ue to t he bu ild ing ’s state of disrepa ir, Easter Seals purcha sed it f or $2.25 milli on; $350,000 less than the $2.6 million asking price , and $325,000 less than the $2.575 million fair mar ket value, a s estimated at trial by the expert

rea l estate a

ppraiser . These f

acts support a

jury finding of ca

usation and dama g es in this case. Four th, Macte c argues t hat lease Section 15(b) r equire d Mr. L ichtefe ld to notify Macte c of its breac h and then make the necessar y repa irs at M acte c’s ex pense, which he did not do. But the plain lang uag e of Sec tion 15(b) re futes this argument, as i t provides that the landlord “ may” make repa irs at the tenant’s expense; it doe s not require him to do so. I n addition, Section 15(b) does not apply to the HVAC sy stem, which wa s Mactec ’s re sponsibili ty under Sec tion 15(a). Fifth, Mactec argues t hat i t cannot be held liable for the HVAC sy stem beca

use it retaine d an indepe ndent contra ctor to maintain the sy stem. Mactec cites to Mi le s Fa rm Su pp ly v . E lli s , 878 S.W. 2d 80 3, 80 4 (K

y . Ap p. 19 94 ), wh ic h ho lds that an e mpl oy e r c ann ot be he ld lia ble fo r t he tor ts of ind e pe nd e nt c on tr a c tor s. Ho we ve r, we fi nd that la w inappli c a

ble to t his c a se , w hic h s ound s in contra ct, not in tort. Mactec was oblig ated unde r the lea se to maintain the HVA C sy stem and cor rec t

any de te ri or a tio n b e y on d n or ma l w e ar a

nd te ar. No thi ng in Ke ntu c ky law r e le a se s Ma c te c fr om i ts7

barg ained- for duty

simply beca use it hired an outside c ontrac tor to do the work. We find no merit to any

of these a ssignments of e rror .

III . Macte c ar g ues that the district cour t erre d by instructing the jury that it could awar d damag es in the amount of either the cost of r epair or the di minution in proper ty value. W e re view the district court’s jury

instructions as a whole to de termine whe ther t h ey wer e misleadingor imparted a n insufficient unde rstandingof the law

. Bowman v. Koch Transfer Co. , 862 F.2d 1257, 1263 (6th Cir. 19 88 ). Af

te r c are fu l r e vie w, we c on c lud e that th is i ns tr uc tio n w a s e rr on e ous; that be c a us e of thi s

err or, the instructions as a whole we re misleadingand imparte d an insuffic ient understandingof a critica l are a of the law; and that a new tria l is therefor e nec essar y to decide the pro p er me asure of dama g e s. Th e pr op e r r e me dy

fo r a br e a c h o f c on tr a c t is c omp e ns a tor y dama g e s b a se d o n a c tua l ha rm . Hogan v. Long , 922 S.W .2d 368, 371 (Ky . 1995). The K entucky Supreme Court held in Ellison v. R & B Co n t r a cti ng , 3 2 S. W. 3 d 6 6 , 6 9 ( K

y . 2 0 0 0 ) , ana c ti o nf

o r tr e s p a s s , th a t wh e r e in

ju r y to r eal estate is cla imed, compensatory damag es may

be mea sured by

either ( 1) cost of r epair or (2) diminuti on in value. Howeve r, the Ke ntucky Supreme Court made clea r in Ellison that these a

re not equally available opti o n s i n all circ umstances; in one se nse, diminution i n value is re ally just an upper limit on cost of repa ir. Id . at 70. The Court e x plained: We reiterate today , [] that cost[s] to repa ir dama ges ar e available only wher e the fac tfinder d et er m i n es that . . . the prope rty may be re stored at a

n expense less than the total amount by

which the injury

decr ease d the prope rty ’s value. Que s ti o n s r e g ar d in g th e c o s t o f r e p a ir in g a p arti c u la r in ju r y to r e a l e s tate and the extent of any

diminuti on in fair mar

ket value of

the re al estate as a r esult of an injury are questions o f fact. Acc ording ly , we hold that in future case s where a cla imant se e ks c omp e ns a tio n in

the fo rm of re pa ir c os ts fo r an inj ur y to l and , tr ia l c ourt s sh a llA di f f er ent an al y s i s appl i es t o cas es i nv ol vi ng per manen t ha r m t o re al proper t y or har m t o u ni que or s peci al 4 p u rp o se p ro p e rtie s. See , e. g. , Tr i ni t y Chur ch i n t he Ci t

y of Bos t on v. John H ancoc k M ut

. Li f e I ns . Co. , 502 N

. E. 2d 532, 5 3 3 (M ass . 19 8 7 ). 8 require the jury

t o fi n d wh et h er the injury may be re paire d at a c ost less than the diminuti on in the value of the pro p er t y , and, if the jury finds otherwise, limit the c l a i m an t ’ s r e c o v e r

y t o t h e d i m i nu t i o ni nth e v a l u e o f th e p r o p e rty. Id . at 70 (f

oo tno te s o mitte d) . T he c a se pr e se ntl y be fo re thi s c ourt

dif fe rs fr om Ellison in two respe cts: first, this action sounds in contract, not in tort, and s ec o n d , Mr. L ichtefe ld did not seek repa ir co s t s i n excess of the diminution in value, but rather , soug ht diminut ion in value without reg ard to re pair c osts. So, t he question – as Mactec asser ts – is whether , in an ac tion for bre ach of

a re al estate lease resulting in non-perma nent injury

to th e re al estate , the Ellison “ le sse r- of ” ru le applies to limit the plaintiff’s damag es to the lesser of the cost of repa ir or the diminuti on in value. 4 I n diversity

case s, when a

state supre me cour

t has not y et addr essed a

n issue, we must predict how that cour

t would decide it. Allstate I ns. Co. v

. Thrif

ty Rent-A- Car Sys., Inc. , 249 F.3d 450, 454 (6th Cir. 2001). Althoug h t h e Ke ntucky Supreme Court has not addr essed the spe cific que stion befor e us here , in Ellison , 32 SW.3 d at 71 , it e nd or se d a

mod e l jury

ins tr uc tio n d ir e c tin g the jur

y to

awa rd the “ le sse r of

” the c os t of r e pa ir

or the dim inutio n in

va lue in t he tor t c on te xt. O f c ours e , th is is not unusual; this is the t raditional approach to such si tuations. See , e.g. , Newsome v. Billips , 671 S.W .2d 252, 255 (Ky . App. 1984) (“ Howeve r, re pair i s unrea sonable whe n its cost ex cee ds the dif fe re nc e in the be fo re and

a ft e r v a lue .” ); Is lan d Cre e k Coa l Co. v . R od ge rs , 644 S.W .2d 339, 345 (K y . App . 1 98 3) (“ Th e c os t of re pa ir is ‘r e a so na ble ’ onl y if it doe s n ot e xce e d th e dif fe re nc e in f

a ir

mark e t va lue be fo re and

a ft e r t he inj ur y .” ); Ed war ds & W e bb Con str . Co ., In c . v . D uff , 554 S.W .2d 90 9, 91 1 ( Ky . App . 1 97 7) ; Burkshire T errace . Inc. v . Schroerluck e , 467 S.W .2d 770, 772 (Ky . 1971) (“I f the c osts of restoration ex cee d the diminuti on in va lue they are presumptively

unrea sonable.” ).W e r ecogn i ze t hat part i es may cont r act f or a s peci f

i c t y pe of r epai r or l eve l of mai nt ena nce , an d under s uch 5 a n a g re e m e n t, e a c h p a rty w o u ld b e e n tit le d to the b e n e fit o f i ts b a rg a in. S im ilar ly, p a rtie s m a y c o n tra c t f o r a sp e c ifi c m ea sure o f

d am ag es o r l i q uid ated d am ag es for the f ail ure t o f

ulf i l l ce rtai n co nd i t i o ns t o t he co ntrac t

. N eit he r o f t he se ci r cu ms t an ce s i s pr es en t i n t h i s ca s e, h owe v er , an d we ar e pr es en t ed wi t h on l y a s i t u at i on i n w h i ch t h e cou r t mu s t a t t empt t o r et u r n t h e pl ai n t i f

f t o h i s r i g h t f

u l pos i t i on , w i t h ou t a n y c on t r ac t u al di r ec t i v e as t o h ow t o do s o.

9 Court s ro u t inely

ref use to eng ag e in ec onomic waste ( i.e., awa rd re pair c osts when the diminuti on in value is something le ss), as in Ellison , a nd sim ila rl y re fu se to award pl aintif fs a windfall (i.e., a

war d diminuti on in value whe n the cost of re pair is something less). F or example, in a ty pical ca se in which the obje ctive is to re s t o re the plaintiff to his rig htful position, and that position i s defined by

the prope rty in its “best condition,” it would be entire ly illogica l to find that the dim inutio n in va lue is g re a te r t ha n th e c os t of

re pa ir . I f s ome thi ngc an b e re pa ir e d to its “ be st condition” for a

cer tai n d o l l ar am ount, then that amount is the max imum dim inution in i ts value. I n the pre sent ca se, the c ontrac tual ag ree ment was that Macte c would maintain the HVAC sy stem and the pr operty

in a nea t and orde rly

condition , n o rm al we ar a nd tear excepted. The re w ere no sp e c if ic re qu ir e me nts a s to how Ma c te c wo uld fu lf ill thi s pro mis e . Th e re fo re , we c an r e a so na bly 5 predic t that the Kentucky Supreme Court would apply the lesser -of r

ule to the pre sent ca se. I n the pre sent ca se, howe ver, the district c ourt ref used to a pply the lesser- of rule a

nd instead, in J ury I nstruction Number 11, g rante d the jury discretion to decide be tween two a lternatives. The jur y , a ft e r f ind ingMa c te c lia

ble to M r. L ic hte fe ld f

or br e a c hin g the le a se , a

wa rd e d M r. L ic hte fe ld $1 75 ,0 00 in d ama g e s. I n s o d oin g , th e jur y a lso c omp le te d th e fo llo wi ngve rd ic t f or m: Wil l the jury

please complete e ither A or B below: A. We, the J ury , find in fa v o r o f t h e plainti ff, Paul L ichtefe ld, and awa rd him the sum of $__[ 175,000 ]__ (n ot to exc e e d $30 0, 00 0) in d ama g e s f or the dif fe re nc e in f

a ir marke t value as de fined in par ag raph 2 of Instruction 11.

- - - - - OR - - - - - B. We the jury

find in favor of

the plaintiff, Paul L ichtefe ld, and awa rd him the fo l l o wi n g:10

Cost of restoringthe pre mises as d ef i n ed in parag raph ( 1)(a ) of Instruction 11 (not to exceed $47,730.00). $ __________ Cost of restoringthe Heating a nd Air Conditioning s y stem, as defined i n para g raph (1)( b) of Instruction 11, (not to exceed $51,005.00). $ __________ Total $ ___________ Fr om this, i t is at least clea r that the jury ’s awa

rd wa s based on a

diminuti on in value. Under Ellison , “trial c ourts shall require the jury to find [1] whether

t h e inj ury

may be repa ired at a cost less than the di m i n u t i o n i n t he value of the prope rty , and, [2] if the jury finds otherwise, limit the claimant’s rec overy to the diminuti on in the value of the proper ty .” Ellison , 32 S.W .3d at 70. Ther efor e, the inst ruction and verdic t form used by the di strict court in this case g ave the jury an incor rec t understandingof the lawand misled the jury into finding one but not the other

measure of dama g es, whe n the cor rec t law nec essitated that the jury find both. So, we must conclude that the district court er red. S e eB o wman , 8 6 2 F.2d at 1263. The qu e sti on that no w p re se nts its e lf

is whe the r w e c an re so lve thi s er ro r on the re c or d b e fo re us , o r i f

we mus t r e mand

thi s c a se to t

he dis tr ic t c ourt

fo r a ne w tri a l on

the me a sure of

dama g e s. On the on e ha

nd , th e jur

y awa rd e d $ 17 5, 00 0 f

or dim inutio n in

va lue , a nd if no t f

or thi s peculiar verdic t form, we might find fr om the evidenc e in the re cord ( e.g ., $184,000 to restore the bu ild ing ’s int e ri or

and $2 17 ,0 00 to r e pla c e the HV AC sy ste m) that th e jur y c ou ld h ave re a so na

bly fo un d th e c os t of

re pa ir to e xce e d th is d imi nutio n in va lue , wh ic h wo uld pr ov ide fo r a pr e sumpt ive ly

corr ect outcome in spite of the incorr ect instruction. SeeFe d. R. Civ. P . 61 (har mless error). Unde r

su c h r e a so nin g , the outc ome wo uld c omp ly wi th the le sse r- of ru le . How e ve r, we c ann ot p re sume the jury found the cost of repa ir to e x cee d $175,000 beca use the verdic t f

orm expli citly

states that the c o s ts o f

r e p a ir ar e n o t t o e xc e e d

$ 4 7 , 7 3 0 an d

$ 5 1 , 0 0 5 ( $ 9 8 , 7 3 5 to ta l)

. T h e r e f o r e , if th e jur y fo llo we d in str

uc tio ns , a s w e mus t pr e su me it di d, the n it c ou ld n ot h ave fo un d a

c os t of re pa ir inA ltho u g h the $ 3 0 0 ,0 0 0 “ n o t-t o -ex c e e d ” a m o u n t fo r d im inu tio n in v a lue is a lso q u e stio n a b le , M r. L ic h te feld ’s 6 at t orn ey conc eded t hi s nu mb er at t r i al an d di d not object , s o we wi l l not addres s i t he r e. 11 excess of $98,735, and the awa rd of $175,000 would not comply with the lesser- of rule. On the oth e r h and , w e mig ht a ssume fr om t he ve rd ic t f

orm that th e a c tua l c os t of re pa ir proven at trial was $98,735 and, ba sed o n that assumption, reduce the ver dict to this amount and there by comply with the lesser- of rule. Howeve r, further revie w of the g enesis of this ve rdict for m demonstrates that such an assumption would be improper . These two ve ry specific “not-to-e x cee d” values on the ve rdict for

m ($47,730 and $51,005) a ppear only in a Marc h 6, 2001, letter fr om Easter Se a ls t o M a c te c , wh ic h wa s c re a te d fr om Ea ste r Se a ls’ ini tia l ins pe c tio n o f t he bu ild ingduri ngits neg otiations with Mr. L ichtefe ld. Although the letter was admitted as an exhibi t at tr ial, it was part of a g ro up of sti pu late d e xhibi ts a

nd wa s n ot a uth e nti c a te d f

or the purp os e of pr ov ingre pa ir c os ts. This letter was introduced as evidenc e that Easter Seals had documented t he damag es t o the building befor e ente ring neg otiations for purcha se. In fac t, neither party ever sug g ested or a dmitted that the $47,730 and $51,005 value s were repr esentative of ac tual repa ir costs. Mr. L ichtefe ld testified that the se va lue s w e re no t r e pr e se ntativ e , a nd the Ea ste r S e a ls C EO dis mis se d the e sti mate s, sa ying“ thi s is k ind of a jok e .” Al tho ug h Mac te c ’s wi tne ss did no t tes tif y a bo ut t his le tte r o r t

he se va lue s at tr ia l, Ma c te c e xcla ims in i ts b ri e f o n a pp e a l th a t “ the se e sti mate s are inh e re ntl y unre lia ble .” Most importantly , in using these numbers on thi s v er d i ct form, the court over ruled Mr. L ichtefe ld’s

re pe a te d o bje c tio ns :

[Court ]: Ho we ver, whe n we g e t to ve rd ic t f or m on e , w e have to t a lk about the amounts which the ver dict cannot e x cee d. The fa ir marke t value mea sure is $ 30 0, 00 0 b y

a g re e me nt. Cor re c t? [L ic hte fe ld]: Ye s. 612 [ C o u rt ] : O k ay. [L ic hte fe ld]: Ma ximum

. [Court ]: Ho we ver, the ma ximumof re sto ri ngthe he a tin g and a ir conditioning sy stem and the maximum of restoring the premises, [L ichtefe ld] argued should be the amounts spent by [] Easter Seals. The Court re jects that, bec ause that happened under

a diffe rent landlord w ith differe nt standards a nd criter ia and that pr oo f o f what E a ste r S e a ls s pe nt a ft e r t he tr ans a c tio n is no t r e le va nt. What is relevant and the amounts the Court will use are the estimates on the a tta c hme nt t o E xh ib it 21 [the Marc h 6 , 2 00 1 le tte r], wh ic h la y out E a ste r S e a ls’ statement t o Paul L ichtefe ld, a total cost of re storing the premises of $47,730, a nd it’s a total cost of r epair ing the HVAC sy stem of $51,005. That’s a summary of t he objections and the Court’s ruling . Are there [] any oth e r o bje c tio ns ? [L ichtefe ld] : Yes. Judge, I strenuously object to using the amount off that document. And he re’ s why : Be cause as y ou said ea rlier, the la

w say s that Plainti ff can r ecove r either

one. I ’m not asking the jury for c ost to repair. [C ourt]: Well, I understand you’re not. But all I want to know - - I ’m g oing to g ive the jury instructions on these various measure s of damag es and le t the jury decide to what extent y o u r client ha s been a ctually damag ed. So we have a lr e a dy pa sse d th a t po int

. My qu e sti on is what pr oo f o the r t

ha n th a t sh e e t th a t’ s atta c he d to the le tte r i n Exhi bit 21 su pp or ts a ny amou nts to p ut i nto the se ‘n ot t o e xce e d’ pa re nth e tic a ls? [ L i ch t ef el d ] : Yo uo v erru l edth e f i rs tar gu m en t

. T h e a n s we r i s n o th i n g. [ C o u rt ] : O k ay. [L ic hte fe ld]: B e c a

us e I ’m no t a sk ingthe jur

y fo r t ho se dama g e s. [C ourt]: Right, y eah. I was just trying to summarize. [L ichtefe ld] : And if the Plaintiff is not asking for something, how could the Court instruct the jury

that they can g ive me something I ’m not askingfor? [C ourt]: Iunderstand your ar g ument. But y ou are asking for a ctual damag es, and I ’ve electe d to define actua l damag es t he way - - the various way s the l aw d e f i n e s t h a t , an d

l e tt h e j u r

y p i c k th e w ay. So the only proof that supports y our cost of r epair approa ch - - or the c ost of re pa ir a pp ro a c h is that sh e e t. [L ichtefe ld] : Your honor, you’re forc ing me to - - [C ourt]: Well, wait. I f y ou have a ny thing ne w to add, we ’ll g o there

. Iwa s ju st n owtr

yingto s umm ari ze e ve ry

thi ng . B ut I ’v e a lr e a dy

ru le d o n it

. Any thing e lse?13 . . . [L ic hte fe ld]: Cou ld I

make on e c omm e nt m or e , Jud g e , a bo ut t his ? [Court ]: Ye s. [L ic hte fe ld]: Iwo uld

a sk that y ou - - I mea n, I ’m

no t g oin g to a

rgue thi s pr oo f t o th e jur

y tha t I wa nt t he se dama g e s. I thi nk the y may wo nd e r wh e re did thi s $4 8, 73 5 c ome fr om. [C ourt]: I ’ll tell them; I ’ll tell them. T h at ’s from Ex hibit 21 on that s h ee t , t h at if they

choose to de cide that that is the mea sure of damag es. They

may decide that t h at ’s the fa irest way to measure how y our client ha s actua lly been damag ed. And he put on proof of fair marke t va lue and nothing else. The only other thi ngIhave is this , s o th is s he e t th a t’ s E xhibi t 21 a tta c hme nts

. [L ichtefe ld] : Wit h all due re spect, I object and think its in error

. [Court ]: Iun de rs tand . B ut I have a lr e a dy

ru le d o n th a t. Ba sed on the fore g oing, we cannot rea sonably assume that the actua l cost of re pair prove n at trial wa s $98,735, nor ca n we r educe the ver dict to that amount in order to complywith the lesserof rule. A t least three probl ems are evident in the quoted e x chang e. F irst, the district court mis take nly

c on c lud e d th a t th e amou nt E a ste r S e a ls s pe nt t o r e pa ir the bu il di ng was no t r e le va nt. Howeve r, no matter who spent it, the money spent for those r epair s was the only actua l me asure of the costs to restore t h e building. F or the purpose of provingwhat Mr. L ichtefe ld would have ha d to s pe nd to resto re the bu ild ing , th e Ea ste r S e a ls a mou nt w a s n ot o nly

re le va nt, it w a s th e on ly

numbe r a c tua lly

a tte ste d to be re pr e se ntativ e . T he se c ond pro bl em was that th e c ourt mis take nly conclude d that the values on the Marc h 6, 2001, letter wer e rele vant, even though the letter wa s not i n t r o d u c e d o r u s e d t o e s t a b l i s ht h e c o s to f

r e p a i r s , an d th o s e nu mb e r s w e r e r e f u t e d d ur i n g t e s t i m o n y. Mr. L ichtefe ld did not spend any money on repa irs - - not the money listed in the March 6, 2001, le tte r ($ 98 ,7 35 ) an d not the mon e y sp e nt by Ea ste r Sea ls ($ 40 1, 00 0)

. Th e qu e sti on fo r t he jur y wa s, what would it have c ost him t o restore the building, a nd as betwee n these two piec es of e vidence ,14

one is no more r eliable than the o t h er . These two c onclusions, taken tog ether , are arbitra ry and inexpl icable. Third, the court ruled prior to the trial that the proper measure of damag es was e ither the cost of repa irs or the diminuti on in va lue and, during the colloquy on jury inst ru ct i o n s q u o ted above, acknowle dg ed that it “ele cted to define actua l damag es . . . the various way s the law de fines [t hem], and let the jury

pick the wa

y .” In doing so, the court not only err ed in fa iling to instruct the jury using the rule of Ellison , b ut a lso e nc oura g e d M r. L ic hte fe ld to omi t any pr oo f o f r e pa ir

c os ts and see k to prove only

diminuti on in value. As a re su lt of the se e rr or s, the jur y ha d n e ith e r t

he e vid e nc e ne c e ssa

ry to d e te rm ine the c os ts of re pa ir no r a c or re c t e xplanatio n o f t

he law i t mus t a

pp ly to de te rm ine dama g e s. B a se d o n a fu ll revie w of the r ecor d, it appea rs that Mr. L ichtefe ld could prove at least $184,000 to restore the building’s inter ior and $217,000 to r eplac e the HVAC sy stem (ig noring other contra ct damag es such as incidenta l costs or l ost renta l value)

. This testimony establishing those amounts was unre butted, but just as Mr. L ichtefe ld w as not tr ying to pr ove costs of r epair , Macte c wa s not trying to disprove the m. O ur

re vie w o f t

he re c or d yie lds no bas is for li mit ingthe c os ts o f r e pa ir s to the amou nts specifie d on the ver dict form. B eca use the amount of damag es is not a decision for this cour t, but a dec ision for the jury , we c onclude that unde r these c ircumstance s, a newtrial is required on the issue of dama g es. We there fore rema nd this case to the district cour t for a new trial on this issue, wit h i n s t ru ct i o ns that the “trial c ourt[] shall require the jury to find [1] whether

the injury

may be repa ired at a cost less than the diminution i n t h e v al u e of the prope rty , and, [2] if the jury finds otherwise, limit the claimant’s rec overy to the diminuti on in the value of the prope rty .” See E llison , 32 S.W .3d at 70. IV.15

For the fore g oing r easons, we AF F IRM the judg ment of the district cour t as to the first five issues, including liability , but we RE VE RSE on the m easur e of damag es and REMAND thi s c a se to the district court for

further proce eding s consistent with this opi nion.