Opinion ID: 1226978
Heading Depth: 1
Heading Rank: 2

Heading: Kelley, Gidley Errors

Text: Kelley, Gidley asserts several errors of a procedural nature. First, it contends that the special verdict form given to the jury pursuant to Rule 49(a) of the West Virginia Rules of Civil Procedure was deficient in two respects (1) by asking the jury to determine whether the real estate broker was acting as plaintiffs' agent in hiring Kelley, Gidley, and (2) by altering the verdict form on the issue of negligence as proximately causing the plaintiffs' damages. Other errors involve the calculation of prejudgment interest, the statute of limitations, and the admissibility of evidence.
Initially, Kelley, Gidley argues that the jury was given a special verdict form under Rule 49(a) [11] and cites from an annotation entitled Submission of Special Interrogatories in Connection with General Verdict Under Federal Rule 49(B), and State Counterparts, 6 A.L.R.3d 438, 440 (1966): A special verdict is one in which the jury finds all the facts and then refers the case to the court for a decision on those facts. It is rendered in lieu of a general verdict and contains findings on all material issues in the case. Special interrogatories, on the other hand, are propounded as to selected issues of fact, and answers to them are always, or at least normally, given in connection with, not in substitution of, a general verdict. (Emphasis added). The scope of the issues that must be submitted to a jury where a Rule 49(a) procedure is used is outlined in C. Wright & A. Miller, Federal Practice and Procedure: Civil § 2506 at 498-500 (1971), as follows: The court has considerable discretion about the nature and scope of the issues to be submitted to the jury under Rule 49(a) so long as they present the case fairly. All material factual issues should be covered by the questions submitted. The court need not and should not, however, submit an issue that can be properly resolved as a matter of law. It is not error to refuse to put an issue that is adequately covered by other questions that have been put. (Footnotes omitted). We believe that the verdict form submitted in this case was not done under Rule 49(a), but was done under Rule 49(b) [12] since the jury was given interrogatories and a general verdict form as to damages. Even if we are mistaken on this rather arcane procedural issue, it is clear that Kelley, Gidley was not entitled to have the jury determine whether Old Colony's broker was an agent of the plaintiffs. Earlier we discussed the agency question as to the real estate broker's relationship with Kelley, Gidley and concluded that there was no agency relationship. What is argued now by Kelley, Gidley is that the broker by hiring Kelley, Gidley was acting as an agent of the plaintiffs. Consequently, it argues that the negligence of the broker in failing to communicate the exact nature of the engineering inspection desired [13] and in failing to communicate to the plaintiffs the entire engineering report prior to the closing should have been charged to the plaintiffs. This argument legally is unsound because Kelley, Gidley was acting as an independent contractor in the performance of its engineering inspection of the property. Neither the plaintiffs nor the real estate broker exercised any control over the manner in which the engineering inspection would be made. Moreover, the critical negligence issue against Kelley, Gidley was its failure to discern the defective condition of the retaining wall and the soil behind it. It is apparent from the engineer's report that this was a part of the inspected area. [14] Kelley, Gidley was not an employee or agent of either the plaintiffs or the broker, such that the doctrine of respondeat superior was applicable. As we stated in Syllabus Point 5 of Paxton v. Crabtree, 184 W.Va. 237, 400 S.E.2d 245 (1990): There are four general factors which bear upon whether a master-servant relationship exists for purposes of the doctrine of respondeat superior: (1) Selection and engagement of the servant; (2) Payment of compensation; (3) Power of dismissal; and (4) Power of control. The first three factors are not essential to the existence of the relationship; the fourth, the power of control, is determinative. Thus, from a legal standpoint, the plaintiffs cannot be charged with any alleged negligent communication by the broker.
The second procedural error is that the judge after the jury had been deliberating for some period altered the verdict form by changing the nature of the inquiry to the jury. The original inquiry asked the jury whether it found that the defendant, Kelley, Gidley, was negligent and that such negligence proximately caused or contributed to the plaintiffs' damages. The alteration omitted any reference to the plaintiffs' damages, but asked whether Kelley, Gidley was negligent and that such negligence proximately caused or contributed to the Teters[`] buying the ... property. Although Kelley, Gidley objected to this alteration, its argument before us is in the context of a Rule 49(a) procedural flaw that withdrew a legal defense, i.e., whether its negligence caused the plaintiffs' damages. We think the two issues are interrelated where there is a defective condition not observable on the part of the purchaser because of a lack of expertise. The plaintiffs' theory against Kelley, Gidley was that it, as an engineering firm, had a duty to exercise reasonable care to determine if there were defective conditions on the premises from an engineering standpoint. The plaintiffs' expert testified that the retaining wall was defective and collapsed because of the pressure of filled soil behind it. The expert also testified that a civil engineer should have observed this defective condition. [15] Inherent in any suit for damages arising from a buyer's contention that there has been a failure to disclose a material defect unknown to the buyer is the claim that the buyer would not have made the purchase if he had been aware of the defect. Our case law is consistent with this result by requiring that the buyer may be chargeable for a defect that a reasonable inspection would disclose. See Stemple v. Dobson, 184 W.Va. 317, 400 S.E.2d 561 (1990); Thacker v. Tyree, supra . The cause of action may be said to arise when the failure to disclose brought about the purchase of the defective property. However, it is not until the defect is discovered that the damages can be ascertained. Thus, the cause of action matures when the actual damage occurs. We discussed the general law in the context of concealment of termite infestation of a house in Stemple v. Dobson, supra , and concluded in Syllabus Point 3: Where a cause of action is based on tort or on a claim of fraud, the statute of limitations does not begin to run until the injured person knows, or by the exercise of reasonable diligence should know, of the nature of his injury, and determining that point in time is a question of fact to be answered by the jury. In this case, the plaintiffs claimed Kelley, Gidley's negligent inspection concealed material defects surrounding the retaining wall which subsequently gave way causing serious property damage. This cause of action arose when the deficient report, stating the retaining wall was solid, was given to the plaintiffs, and they relied upon it to purchase the property. This same general theory was embodied in Kelley, Gidley's Instruction No. 8. [16] We find no reversible error in the altered verdict form given to the jury simply because Kelley, Gidley's Instruction No. 8 correctly outlined its legal theory of liability. Among its requirements was that the plaintiffs must prove that they would rely upon the services rendered by ... [Kelley, Gidley] ... in connection with their purchase of the Divita property; ... provided or failed to provide material information which was false[.]
Kelley, Gidley also assigns error in the trial court's allowing plaintiffs' expert real estate appraiser, Mr. Barth, to testify with regard to the value of the damaged real estate. He had been appraising real estate, both residential and commercial, for more than forty years, including working for a number of urban renewal and public housing authorities both in Charleston and throughout West Virginia and also Allegheny County, Pennsylvania. Undoubtedly, Mr. Barth would have qualified as an expert under Rule 702 of the West Virginia Rules of Evidence and our cases decided thereunder. [17] The thrust of Kelley, Gidley's objection was that W.Va.Code, 37-14-2 and -3 (1991), which are parts of the Real Estate Appraiser Licensing and Certification Act (Act), preclude appraisal testimony in court unless the appraiser is licensed under the Act. Specific reference is made to W.Va.Code, 37-14-2(c): `Appraisal report' means any communication, written or oral, of an appraisal. An appraisal report may be classified by the nature of the assignment as a `valuation report', `analysis report' or `review report'. For the purposes of this article, the testimony of an appraiser dealing with the appraiser's analyses, conclusions or opinions concerning identified real estate or identified real property is deemed to be an oral appraisal report [.] (Emphasis added). Moreover, W.Va.Code, 37-14-3(a), makes it unlawful for any person, for compensation or valuable consideration, to prepare a valuation appraisal or a valuation appraisal report relating to real estate or real property in this state without first being licensed or certified as provided in this article. [18] It appears that part of the impetus for our Act was brought about by congressional legislation enacted in 1989 to curb real estate appraisal abuses occurring in federal savings and loan and other federally related financial institutions. See generally 12 U.S.C.A. § 3331, et seq. (1989). [19] Prior to the passage of our Act, we had no specific statute that licensed real estate appraisers. We discern nothing within the context of the federal act that imposes a federal requirement upon appraisal reports dealing with real estate that is not involved with a federally regulated loan. Moreover, we are not cited nor have we found in the federal act or any federal regulations adopted under it language similar to W.Va.Code, 37-14-2(c). There is a certain ambiguity in this subsection as to the extent of its coverage under the phrase the testimony of an appraiser dealing with the appraiser's analyses... is deemed to be an oral appraisal report[.] W.Va.Code, 37-14-2(c). [20] We decline to interpret this section to prevent the operation of the common law rules of evidence which we have codified in our Rules of Evidence. We have traditionally held that statutes in derogation of the common law are to be strictly construed. As we pointed out in Syllabus Point 6 of City of Fairmont v. Retail, Wholesale, and Department Store Union, AFL-CIO, 166 W.Va. 1, 283 S.E.2d 589 (1980): `Statutes in derogation of the common law are allowed effect only to the extent clearly indicated by the terms used. Nothing can be added otherwise than by necessary implication arising from such terms.' Syllabus Point 3, Bank of Weston v. Thomas, 75 W.Va. 321, 83 S.E. 985 (1914). Here, we find the provisions of W.Va.Code, 37-14-2(c), to be ambiguous with regard to the question of whether this statute was designed to foreclose anyone but a licensed real estate appraiser from testifying in court with regard to the value of real estate or damages to real estate. We, therefore, decline to hold that W.Va.Code, 37-14-1, et seq., is designed to prevent an expert otherwise qualified under Rule 702 of the Rules of Evidence from testifying with regard to the value of real property or the damages that may have resulted to it. Moreover, even if the statute was more specific and stated that no person except a licensed appraiser could testify with regard to the value of damaged real estate in any court proceeding, we would find this to be contrary to our Rules of Evidence. In particular, it would be contrary to Rule 402, which states [a]ll relevant evidence is admissible, [21] and, as earlier stated, Rule 702, which relates to expert testimony. We have been granted under Section 3 of Article VIII of the West Virginia Constitution rule-making authority in judicial proceedings as follows: The court shall have power to promulgate rules for all cases and proceedings, civil and criminal, for all of the courts of the State relating to writs, warrants, process practice and procedure, which shall have the force and effect of law. It is pursuant to this authority that we have promulgated not only uniform rules relating to civil and criminal procedure and evidence, but also many other procedural rules found in the Court Rules volume of Michie's West Virginia Code. In Bennett v. Warner, 179 W.Va. 742, 372 S.E.2d 920 (1988), we set out in Syllabus Points 1 and 2 the scope of our rule-making authority: 1. Under article eight, section three of our Constitution, the Supreme Court of Appeals shall have the power to promulgate rules for all of the courts of the State related to process, practice, and procedure, which shall have the force and effect of law. 2. `Under Article VIII, Section 8 [and Section 3] of the Constitution of West Virginia (commonly known as the Judicial Reorganization Amendment), administrative rules promulgated by the Supreme Court of Appeals of West Virginia have the force and effect of statutory law and operate to supersede any law that is in conflict with them.' Syl. Pt. 1, Stern Brothers, Inc. v. McClure, 160 W.Va. 567, 236 S.E.2d 222 (1977). Other jurisdictions have considered the question of whether the legislature may by statute promulgate a rule that is contrary to court evidentiary rules. For example, the Supreme Court of Arizona in State ex rel. Collins v. Seidel, 142 Ariz. 587, 691 P.2d 678 (1984) (en banc), addressed the question of whether a legislative enactment regarding the admissibility of blood alcohol tests in drunk driving cases was contrary to its rules of evidence and began its analysis stating: The constitution of Arizona gives the Supreme Court the power to make rules relative to all procedural matters in any court. Article 6, § 5(5). Pursuant to that authorization, this court promulgated the Rules of Evidence to take effect on September 1, 1977. Rules of evidence have generally been regarded as procedural in nature. Ammerman v. Hubbard Broadcasting, Inc., 89 N.M. 307, 310, 551 P.2d 1354, 1357 (1976); thus, our promulgation of these rules was within the power granted us by the constitution. See also 1 Wigmore on Evidence, § 7, 462-63 n. 1 (Tillers rev. 1983). 142 Ariz. at 590, 691 P.2d at 681. [22] The court in Collins went on to analyze the legislative enactment and concluded that it did not infringe on its rules of evidence. It further made this general statement: That we possess the rule-making power does not imply that we will never recognize a statutory rule. We will recognize `statutory arrangements which seem reasonable and workable' and which supplement the rules we have promulgated. Alexander v. Delgado, 84 N.M. 717, 718, 507 P.2d 778, 779 (1973). However, when a conflict arises, or a statutory rule tends to engulf a general rule of admissibility, we must draw the line. The legislature cannot repeal the Rules of Evidence or the Rules of Civil Procedure made pursuant to the power provided us in article 6, § 5. Ammerman v. Hubbard Broadcasting, Inc., [89 N.M. 307, 551 P.2d 1354 (1976)]; cf. State v. Herrera, 92 N.M. 7, 582 P.2d 384 (1978). 142 Ariz. at 591, 691 P.2d at 682. See also State ex rel. Woods v. Filler, 169 Ariz. 224, 818 P.2d 209 (1991). The Michigan court reached the same result on a breathalyzer test statutory provision utilizing its constitutional rule-making authority in People v. McDonald, 201 Mich.App. 270, 505 N.W.2d 903 (1993). The Arizona Supreme Court in Collins cited the New Mexico Supreme Court case of Ammerman v. Hubbard Broadcasting, Inc. 89 N.M. 307, 551 P.2d 1354 (1976), which dealt with the validity of a legislative act giving a privilege of nondisclosure to journalists. Initially, the court determined that its rules of evidence were procedural rules. It then quoted this language from its earlier case of State ex rel. Anaya v. McBride, 88 N.M. 244, 246, 539 P.2d 1006, 1008 (1975): `Our constitutional power under N.M. Const. art[.] III, § 1 and art. VI, § 3 of superintending control over all inferior courts carries with it the inherent power to regulate all pleading, practice and procedure affecting the judicial branch of government.... Under the Constitution, the legislature lacks the power to prescribe by statute rules of practice and procedure, although it has in the past attempted to do so. Certainly statutes purporting to regulate practice and procedure in the courts cannot be made binding, for this constitutional power is vested exclusively in this court.' 89 N.M. at 311, 551 P.2d at 1358. (Citations omitted). See also State ex rel. Reynolds v. Holguin, 95 N.M. 15, 618 P.2d 359 (1980). Several courts even without explicit constitutional authority have determined that legislation inconsistent with court-promulgated rules of evidence is invalid. They generally refer to language in their rules of evidence that is similar to Rule 101 of our Rules of Evidence. [23] See, e.g., State v. Zimmerman, 121 Idaho 971, 829 P.2d 861 (1992). Finally, we note that the Minnesota Supreme Court in State v. Lanam, 459 N.W.2d 656, 658 (Minn.1990), grounded its right to enact evidentiary rules on its constitutional separation of powers doctrine, stating: Although we have the primary responsibility under the separation of powers doctrine for the regulation of evidentiary matters, we have enforced reasonable statutory rules of evidence as a matter of comity if the rules are not in conflict with the Minnesota Rules of Evidence. (Citations omitted). Based on this authority, it is clear that a legislative enactment which is substantially contrary to provisions in our Rules of Evidence would be invalid.
Finally, we agree with the Kelley, Gidley, that error was committed in giving prejudgment interest from 1985 which was the date the house was purchased by the plaintiffs. The actual damages to the property did not occur until March of 1990. We have earlier discussed in Part II(B), supra, that it was not until this date that the cause of action accrued in this case. We utilized this approach in Board of Education v. Zando, Martin & Milstead, Inc., 182 W.Va. 597, 390 S.E.2d 796 (1990), where damages were sought for the defective construction of a school. Over several years, there was a gradual developing damage pattern beginning with the cracking of the walls, the loss of a steel support beam, and finally the collapse of a wall in the gymnasium. We concluded that the major damage had occurred at least by 1983 and awarded prejudgment interest from that date forward. 182 W.Va. at 611, 390 S.E.2d at 810. The plaintiff is entitled to interest on the full amount of the jury verdict after deducting the plaintiffs' comparative negligence, [24] because Kelley, Gidley did not ask for a special interrogatory to separate the liquidated damages from the general damages. We apply Syllabus Point 2 of Beard v. Lim, 185 W.Va. 749, 408 S.E.2d 772 (1991): We will not, in every case, refrain from sorting out errors involving prejudgment interest, but when the defendant fails to submit a special jury interrogatory asking the jury to set forth special or liquidated damages this Court's attention to such errors is entirely a matter of grace and if the subject is deliberately obfuscated by counsel or error is invited, this Court will summarily dismiss the assignment.' Syl. Pt. 7, Miller v. Monongahela Power Co., 184 W.Va. 663, 403 S.E.2d 406 (1991). Thus, on remand, the trial court should recalculate the interest from the spring of 1990 when ground slippage occurred and then enter an appropriate judgment in favor of the plaintiffs and against the defendant Kelley, Gidley.