Champion v. Dodson

• Decision Date: 18 September 2003
• Docket Number: No. A03A1949.,A03A1949.
• Citation: 263 Ga. App. 286,587 S.E.2d 402
• Parties: CHAMPION v. DODSON et al.
• Court: Georgia Court of Appeals

587 S.E.2d 402

263 Ga. App. 286

CHAMPION v. DODSON et al.

No. A03A1949.

Court of Appeals of Georgia.

September 18, 2003.

Drew, Eckl & Farnham, LLP, Paul W. Burke, Atlanta, for appellant.

Horton, Maddox & Anderson, Michael A. Anderson, Chattanooga, TN, for appellees. ELDRIDGE, Judge.

Walter Champion, Jr. appealed the denial of his motion for directed verdict on the issue of furniture, equipment, and inventory damages from total loss by fire, which led to a $77,033.06 verdict for Donna Dodson, individually, and d/b/a Catoosa Industrial Supply. Dodson sued Champion for failure to maintain the warehouse in a safe condition and for failure to have an adequate fire wall, causing the warehouse where she was a co-tenant to be totally burned when Walter Champion Company's employee intentionally set the premises occupied by Dodson and by Walter Champion Company on fire to hide the employee's embezzlement. Dodson sought damages for the destruction of the furniture, equipment, and inventory. Dodson failed to offer any evidence of the value of the furniture and equipment immediately prior to fire; however, she did provide some evidence as to the inventory value. Thus, some categories of damages were not proven, i.e., furniture and equipment, while inventory damages were proven, but the jury returned a lump sum verdict without distinguishing between the categories of damages. Finding error in the failure to grant a partial directed verdict as to damages for the furniture and equipment and being unable to separate the damage verdict, we reverse the damage award for a new trial on the issue of damages only leaving the verdict for liability unappealed.

Champion contends that the trial court erred in denying his motion for directed verdict on damages, because there was no evidence to establish the fair market value of the inventory, furniture, and equipment Dodson claimed to have lost. See Hagin v. Powers, 140 Ga.App. 300, 305(3), 231 S.E.2d 780 (1976). As to equipment and furniture, we agree but find that, as to the other damages, the motion was properly denied.

Where tangible personal property has been damaged or destroyed, the plaintiff has the burden of furnishing evidence sufficient to enable the jury to calculate the amount of damages with reasonable certainty without speculation. Day v. Piedmont Hotel, 96 Ga.App. 215, 217-218(2), 99 S.E.2d 513 (1957) (loss of earnings and commissions). Evidence of the retail purchase price of property alone is not sufficient to establish the fair market value of the property at the time of the loss, because the age and condition of the property, the fair market value at the time of loss, the condition immediately after the loss, and the fair market value immediately after the loss must be proven to establish the damages. See Portland Forest Products v. Garland Lumber Sales, 199 Ga. App. 479, 480(1), 405 S.E.2d 307 (1991) (affirmed grant of directed verdict for damages for lumber which could change in condition, which could affect value between purchase and destruction, and could not have been established as to fair market value from the purchase price);¹Messmore v. Roth, 185 Ga. App. 862(1), 366 S.E.2d 318 (1988) (household goods and furniture, which were not new, fair market value prior to loss shown by the retail purchase price and condition at the time of total loss); Minit Chek Food Stores v. Plaza Capital, 135 Ga.App. 110, 111(3), 217 S.E.2d 415 (1975) (a sign which had become used could not have its fair market value proved by the retail purchase price alone). For a used motor vehicle or other similar mechanical equipment, which depreciates with age, care, condition, and use, the retail purchase price alone is insufficient to prove damages, because the fair market value immediately prior to the loss will differ from the retail purchase price from depreciation alone. See Adams Refrigerated Express v. Ingol, 176 Ga.App. 457, 458(1), 336 S.E.2d 289 (1985) (tractor-trailer used for hire).

An opinion as to value based solely on cost price is inadmissible in evidence as it has no probative value.... Merely listing the damaged items, along with a monetary figure estimating replacement cost based entirely upon the original purchase price ... is not sufficient evidence to establish damages under the law, as the cost of property alone is insufficient proof of market value. If coupled properly with other evidence such as a showing of the condition of the item both at the time of purchase and at the time its value is in issue, the cost price of an item may be admitted as an element upon which an opinion may be formed as to the item's value.

(Citations and punctuation omitted; emphasis in original.) Cunningham v. Hodges, 150 Ga.App. 827(1), 258 S.E.2d 631 (1979) (directed verdict proper as to damages to furniture and household goods destroyed in a fire), disapproved, Braner v. Southern Trust Ins. Co., 255 Ga. 117, 121(3), 335 S.E.2d 547 (1985) ("We find this rule to be too stringent [where a homeowner or homeowner's spouse testifies as to either the purchase price or replacement cost of household furnishings] and others similar to it for several practical reasons.").

An owner of property may not testify as to his opinion of the value of the property in a single or gross amount without "giving his reasons therefor" or else showing that he has had "an opportunity for forming a correct opinion."

Hoard v. Wiley, 113 Ga.App. 328, 329, hn. 1(b), 334(3), 147 S.E.2d 782 (1966) (fair market value of beer and wine cannot be determined from purchase price alone but may be an element when coupled with other evidence such as condition at the time of purchase and loss), disapproved, Braner v. Southern Trust Ins. Co., supra at 121, 335 S.E.2d 547; see also Hagin v. Powers, supra at 304, 231 S.E.2d 780 (household property destroyed by fire showing purchase price, some acquisition dates, some salvage values, and before and after value in a gross amount).

Where evidence shows that the tangible personal property held for resale did not change in condition between the time of wholesale purchase and the loss, the jury may infer that the fair market wholesale value immediately prior to the loss and the wholesale purchase price were the same, because a rebuttable presumption arises of continuing condition.² See generally Atlanta Commercial Builders v. Polinsky, 148 Ga. App. 181, 182-183, 250 S.E.2d 781 (1978) (the inventory of a western-wear store destroyed in a fire was proven by the owner's testimony only from inventory records and wholesale costs without a specific showing of the fair market value immediately prior to the fire). While such inventory in an unchanged condition could appreciate between purchase and the loss, such appreciation over the wholesale purchase price must be established by competent evidence if more than the wholesale purchase price is to be recovered. Id.³ If any of the inventory depreciated in value prior to the loss, then the defendant has the burden of proof as to such diminished value from the purchase price. Id. at 181, 250 S.E.2d 781. Since inventory was held for resale in the same condition as it was at the time of wholesale purchase, then the jury may infer that the retail fair market value will exceed the wholesale purchase price and that the fair market value at wholesale remains the same as the wholesale cost, because inventory continues in the same condition and has a markup for overhead and profit; in some extraordinary circumstances, the inventory may be sold at a loss.⁴ Absent evidence of an established business over sufficient time to show revenue and overhead operating costs with reasonable certainty establishing historic profits, the fair market retail price of inventory cannot be recovered, because profits are generally too speculative. Id. See also Empire Shoe Co. v. NICO Indus., Inc., 197 Ga.App. 411, 413-414(2), 398 S.E.2d 440 (1990). However, in this case, the retailer did not seek lost profits but only for the loss of inventory.

The items involved in this case were of a relatively common nature, so that the jury was not limited to consideration of expert opinion testimony in forming its own opinion of the property's market value. Accordingly, even though the appellees did not offer any opinion evidence as to market value as such, the jury was authorized to make its own assessment from the evidence of both its cost and its retail value.

(Citations omitted.) Atlanta Commercial Builders v. Polinsky, supra at 182(1), 250 S.E.2d 781. Thus, the wholesale fair market value of the inventory was the recoverable damages.

The evidence as to value was sufficient to support the verdict. The appellees presented a detailed, itemized statement describing each item of the damaged property and showing its wholesale cost, the total cost being $23,113. Appellee ... testified that he had five years of experience buying and selling such items for the retail trade and that his normal retail markup on the items would have been 40 percent for everything except the feed, on which the markup would have been 15 to 20 percent. He stated that this markup was 5 to 15 percent below that normally charged by his competitors. He further stated that he had received approximately $600 from the sale of those goods which he had been able to salvage from the fire. The jury's verdict of $28,000 fell between the wholesale cost and the retail price as established by the evidence.

Id. at 182, 250 S.E.2d 781.

Thus, "[t]he items involved in this case were of a relatively common nature, so that the jury was not limited to consideration of expert opinion testimony in forming its own opinion of the property's market value." Atlanta Commercial Builders v. Polinsky, supra at 182, 250 S.E.2d 781. See also Braner v. Southern Trust Ins. Co., supra at 120-121(3), 335 S.E.2d 547 (fire insurance loss of household items supported by purchase price and evidence of condition...