Durant v. Surety Homes Corp.

• Decision Date: 08 August 1978
• Docket Number: No. 77-2045,77-2045
• Citation: 582 F.2d 1081
• Parties: 3 Fed. R. Evid. Serv. 591 Wentworth T. DURANT, Jr., and Susan B. Durant, Plaintiffs-Appellees, v. SURETY HOMES CORPORATION, an Illinois Corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1081

582 F.2d 1081

3 Fed. R. Evid. Serv. 591

Wentworth T. DURANT, Jr., and Susan B. Durant, Plaintiffs-Appellees, v. SURETY HOMES CORPORATION, an Illinois Corporation,

Defendant-Appellant.

No. 77-2045.

United States Court of Appeals, Seventh Circuit.

Argued April 14, 1978.

Decided Aug. 8, 1978.

Robert Marks, Chicago, Ill., for defendant-appellant.

Robert W. Patterson, Chicago, Ill., for plaintiffs-appellees.

Before PELL, TONE and WOOD, Circuit Judges.

PELL, Circuit Judge.

In this diversity case, plaintiffs Wentworth T. Durant, Jr., and Susan B. Durant sued Surety Homes Corporation (Surety), claiming material defects in a new house sold to them by Surety and asserting liability on grounds of fraud, breach of express and implied warranties, and negligence in construction. ¹ At the trial of the cause, the jury returned a verdict finding liability of Surety for $70,000 actual damages and $30,000 punitive damages. In response to timely post-trial motions, the district court decided that it had erred in submitting to the jury the question of compensatory damages for emotional distress suffered by the Durants. The court's denial of Surety's new trial motion was therefore conditioned on the Durants' filing of a remittitur reducing the compensatory award to $22,225, which represented the court's view of the portion of the award attributable to proper compensatory damages. A remittitur being timely filed by the Durants, final judgment in the amount of $52,225 was entered, being the $30,000 punitive damages plus the allowed compensatory damages. This appeal followed.

The facts are as follows. The house in question was originally built by Surety for one Sonetz, an electrician. Surety poured the building foundations into frozen ground in January or February of 1973, and by March, when the ground had thawed, a center foundation wall had settled significantly and cracks in two exterior walls had developed. Sonetz, understandably upset, complained to his Surety salesman, Vance Modersohn, who reported the problem to Milton Kaufman, Marketing Vice President of Surety. ² Sonetz sought cancellation of his sales contract, which was granted. Kaufman referred the matter to Surety's construction department, which made undisputedly inadequate repairs. The house was subsequently completed, but was kept off the market for over a year, until the Durants entered the picture.

Mr. Durant, having received an attractive offer of employment with a Chicago firm, came to Chicago with his wife from Texas, their residence state, in April 1974 to locate a home. They looked at Surety's Ivanhoe subdivision, and found the Nottingham model home to their liking. Modersohn told them that no Nottingham homes were then available and that it would take 90 days to build one. When the Durants said they could not wait that long, Modersohn called Kaufman, who authorized the offering of the Sonetz house, a Nottingham model, which could be readied for occupancy in two or three weeks. Modersohn told the Durants Sonetz had run out of money to buy the house, and had left extra quality electrical work therein for which no additional charge would be made. Kaufman directed no disclosures about the foundation problems, and Modersohn made none. Both men testified that they believed the defects to have been remedied. A contract of sale was soon made. Just prior to closing the sale, Mr. Durant was taken on a final inspection of the house, in the course of which he asked the Surety representative to open the hatch into the crawlspace (from which the defects were visible), but the representative said he had no screwdriver at the time.

About a week after the closing, Mr. Durant was advised by a neighbor that there had been foundation cracks previously. Durant inspected the crawlspace, found the defects, and thereafter complained to Surety and to building officials of the Village of Bolingbrook. The Building Commissioner inspected the house, and issued a "red tag" indicating that it was unsafe for occupancy. Mr. Durant was given permission to live alone in the house with minimal lightweight furniture, to protect his home from fire and vandalism. His wife, needless to say, was unable to move to Chicago to join him. At the end of January 1975, necessary repairs still not having been made, ³ Durant resigned from his position in Chicago and returned to Texas.

I.

Surety conceded its negligence in construction at trial, so liability for the reasonable costs of repairing the defects was not in issue, although the amount of those costs was. The jury was so charged, and was also told, quite properly, that if it should find the house to be uninhabitable, plaintiffs were additionally entitled to recover the reasonable rental value of the house during the period of uninhabitability. The district court also instructed the jury that if and only if it found in the Durants' favor on the issue of fraud, it could consider awarding damages both to compensate the Durants for the mental distress they suffered and to punish Surety. Evidence of the mental distress had been admitted at trial. There can be no doubt that the jury's $70,000 actual damages verdict included an amount for mental distress, as the evidence on repair and rental damages most favorable to the Durants would not have supported a verdict for even half that amount. Because the form of verdict given to the jury invited it to specify its allocation of damages only between those compensatory and those punitive, ⁴ it is impossible to know precisely how the jury divided the damages among the categories of what it had been instructed were proper compensatory damages.

After trial, as we have said, the court decided it had erred in sending the mental distress damages issue to the jury, and proposed a remittitur in an attempt to cure the error. Surety argues that such a cure was impossible here. Before considering whether or not that is so, we address briefly the Durants' suggestion that there was no error in sending the mental distress issue to the jury in the first place. Clearly, a plaintiff who accepts a remittitur may not appeal from the district court order proposing it as an alternative to a new trial. Donovan v. Penn Shipping Co., Inc., 429 U.S. 648, 650, 97 S.Ct. 835, 51 L.Ed.2d 112 (1977). On the other hand, a prevailing party may quite properly defend his judgment on any ground supported by the record. Dandridge v. Williams, 397 U.S. 471, 475, n.6, 90 S.Ct. 1153, 25 L.Ed.2d 491 (1970). For the limited purpose of defending the remitted judgment they have accepted, we believe the Durants are entitled to argue that the district court erred in conditioning the denial of Surety's new trial motion on the acceptance of a remittitur.

The argument itself, however, is without merit. To recover on a mental distress theory in Illinois, a plaintiff must prove that the defendant acted in a way "calculated to cause 'severe emotional distress' to a person of ordinary sensibilities, in the absence of special knowledge or notice." Knierim v. Izzo, 22 Ill.2d 73, 86, 174 N.E.2d 157, 164 (1961). The district court determined that there was simply no evidence of intention to cause such distress here. The Durants counter by articulating the theory that Surety refused to accede to their demands in an attempt to browbeat them into accepting inadequate repairs. This court recognized the sufficiency of complaint allegations which were superficially similar in Eckenrode v. Life of America Insurance Company, 470 F.2d 1 (7th Cir. 1972). But the complaint there alleged that a life insurer refused to pay benefits which it knew full well it was obliged to pay, specifically to harass and browbeat a recently bereaved widow in desperate need of the insurance proceeds to accept less than her due. The court expressly distinguished situations where an insurer merely insists on arguable legal rights. Here, the undisputed evidence was that Surety received expert reports that the defects could be remedied more cheaply than the Durants were demanding, so this situation is clearly, less extreme than in Eckenrode. Moreover, Eckenrode involved the sufficiency of a complaint, the allegations of which were taken as true. This case has been tried, and the Durants make no effort to point out any evidence adduced that would support the inference that Surety knew it was baselessly resisting the Durants' demands and intended to inflict distress on them.

We conclude, therefore, that the district court was correct in deciding that the jury should not have been given the mental distress damages issue. It is understandable, moreover, that the court, having perceived its error, would attempt to salvage the product of the trial if possible. Nonetheless, we believe the court partially erred in so attempting.

As a general proposition, subject to exceptions inapposite here, ⁵ "(i)t is a deprivation of the right to a jury trial for the court to alter the verdict in matters of substance." Myrtle v. Checker Taxi Company, Inc., 279 F.2d 930, 934 (7th Cir. 1960). Where, as here, there are multiple elements of compensatory damages put to the jury, and its verdict thereon is in general form, it is not proper for the court to attempt to segregate out elements which should not have gone to the jury by making its own assessment of the proven damages on the legitimate elements. Jayne v. Loder,149 F. 21, 23 (3d Cir. 1906). The problem, of course, is that the jury may or may not have reached the same conclusions as the court on the proper damage elements. It may in fact have relied wholly or substantially on what the court later decides to have been improper elements. In the context of this case, it is appropriate to add that the improper element, mental distress damages, is inherently capable of great elasticity in the hands of the jury.

The only approach legitimately available to the district court when faced with the problem that developed here was to offer a remittitur...