Hodges v. Vara, A04A1644.

• Decision Date: 29 July 2004
• Docket Number: No. A04A1644.,A04A1644.
• Parties: Ralph HODGES v. VARA et al.
• Court: Georgia Court of Appeals

603 S.E.2d 327

268 Ga. App. 815

Ralph HODGES v. VARA et al.

No. A04A1644.

Court of Appeals of Georgia.

July 29, 2004.

Certiorari Denied October 25, 2004.

John Ferrelle, Brunswick, for Appellant.

Gregory Carter, Whelchel Brown Readdick & Bumgartner, Walter Adams, Brunswick, for Appellee.

ELDRIDGE, Judge.

Ralph Hodges d/b/a Industrial Marine Diesel rented the space above his repair shop to John Vara and I. J. Lee, Inc. with an indemnification agreement. The rented room caught fire through the alleged negligent acts of a social guest of Vara's employee, and the sprinkler system allegedly negligently flooded Hodges shop, offices, and his spare-parts storage area, damaging his spare-parts inventory. Vara and his corporation installed and maintained the sprinkler system. Hodges sued Vara and I. J. Lee, Inc. After the jury trial, the trial court directed the verdict against Hodges on damages, because the trial court ruled erroneously that he had not proven his inventory costs. Finding this error, we reverse.

Hodges operated a one-person marine diesel repair shop and had no computer or record keeping system, only paper records and invoices kept on the premises. Hodges' parts inventory was created between 1983 and 2001 and was evidenced by records that were destroyed from water damage in the fire, along with the parts. Hodges was able to salvage $52,000 in parts, which were cleaned and restored to a usable condition and were not part of the damages sought. Hodges had 45 years experience in buying and selling diesel parts made by Caterpillar, Detroit Diesel, General Motors, Isuzu, and Perkins and was familiar with prices in the industry for the sales of parts and the discounts given to dealers.

At the time of the fire on February 23, 2001, Hodges was a parts dealer and distributor for W. W. Williams Detroit Diesel. On February 23, 2001, Ricky Toone, Outside Sales Manager for Williams, inspected the water damaged parts and prepared inventories, which inventories were introduced at trial. Since 1988, Toone called on Hodges monthly to inspect his parts inventory and facility to ensure that Hodges met Williams' dealership standards. Toone had inspected Hodges parts room within one to two months prior to the fire, and testified that the parts in question were new parts, packaged in original boxes, cellophane, and plastic with the original Detroit Diesel logo on each item. For factory warranty purposes and to comply with dealership requirements, Hodges maintained his inventory of parts in new condition and was never in violation of any dealership requirements.

After the fire, Williams terminated Hodges' dealership, because there was a lack of parts sales. Thereafter, Hodges had to pay the over-the-counter price for Williams' parts, because he no longer received the dealer's discount.

Toone testified that the dealer's discount for parts purchased would have ranged between ten percent and a maximum of twenty-five percent of the items listed on the inventory in evidence. Rebuilt parts on the inventory were given a ten percent to fifteen percent discount in value by Toone. Toone testified that some parts could be salvaged while other parts could not be salvaged; therefore, he could not place a value on the damaged but unsalvaged property. Toone did not include sales tax in his estimated fair market value. Toone testified that all of the damaged property on the inventories placed in evidence were either new or had been rebuilt with factory warranties. Toone demonstrated for the jury parts on the inventory, showing the damage and evidence that the parts were new.

Hodges testified that all but three invoices of his records had been destroyed in the fire and that the inventory cost could not be reconstructed from Williams' records, because over the last ten years parts' numbers had been changed six times. Hodges testified as to the salvage value of the parts on the inventories, the fair market value of the lost or damaged parts, and the loss of his records. He verified that all of the parts on Toone's inventories were either new or rebuilt. Hodges testified that there was nothing which would have caused the loss in value of the new parts prior to the fire, because he kept the inventory in a safe condition. The new and rebuilt parts were safely stored on six large shelves approximately eight feet high and fifteen feet long. Hodges testified that the largest dealer's discount that Williams gave him was ten percent off the retail price. Hodges did find three invoices for some parts purchased from Williams with a dealer discount of fifteen percent; all of the rest of the invoices were destroyed in the fire. Hodges gave his opinion that the damaged parts had a fair market value of $111,900, which was arrived at by subtracting the 15 percent dealer discount from the fair market retail value of $131,647.05. Prior to the loss, Hodges could have sold the inventory to other dealers or back to Williams at a discount of 15 percent from the retail price. Of the damaged parts, Hodges gave the opinion that they had a salvage value of $2,500 and that he had been offered such amount.

For a few new parts, Hodges could identify the approximate purchase price from memory. He paid $6,000 each for three planetary assemblies, totaling $18,000. Toone testified that the fair market value of each of these planetary assemblies at the time of trial was then $9,000. Hodges paid Williams $3,200 each for seven blowers totaling $22,400.

For ten years Toone had worked as a diesel mechanic and shop foreman. Toone worked for five years as service manager for Williams. As an expert witness, Toone testified that the fair market value for the damaged parts was $131,647.05.

Since the parts had been purchased over an eighteen-year period, the parts' numbers, prices, and dealer's discounts had changed frequently; in ten years, there had been as many as six changes in such figures. The Williams' parts book contained over 30,000 items; therefore, Hodges could not tell from memory most prices. Hodges could not identify most purchase dates, prices, or dealer discounts.

At the close of all of the evidence, the trial court erroneously directed the verdict on the issue of damages. The trial court ruled that Hodges could not produce sufficient evidence of his original cost for the damaged parts, his exact dealer discount, and the fair market value of the parts as of the trial date and that had Hodges proven the loss of his business records, preventing proof of the original purchase price, the case would have gone to the jury.

1. Hodges contends that the trial court erred in directing a verdict on the issue of damages. We agree.

(a) A motion for directed verdict should not be granted where there exists even slight material issues of fact, because the trial court is substituting its judgment for the jury's; only when there is an absence of evidence or when no evidence supports an essential element of the case should a directed verdict be granted, because the trial judge takes the determination of the facts from the jury. OCGA § 9-11-50; Johnson v. Curenton, 127 Ga.App. 687, 688, 195 S.E.2d 279 (1972). The appellate review of directed verdicts is based upon the "any evidence" rule to support the case of the nonmoving party; when there is "any evidence," a directed verdict must be reversed. Armech Svc. Co. v. Rose Elec. Co., 192 Ga.App. 829, 831(2), 386 S.E.2d 709 (1989). "The direction of a verdict is proper only where there is no conflict in the evidence as to any material issue[,] and the evidence introduced, with all reasonable deductions therefrom, shall demand a particular verdict." (Citation omitted.) Piedmont Engineering & Constr. Corp. v. Amps Elec. Co., 162 Ga.App. 564, 568(5), 292 S.E.2d 411 (1982). When there is opinion evidence, circumstantial evidence, presumptions of fact, or evidence subject to more than one reasonable construction, the appellate courts shall carefully scrutinize the grant of a directed verdict, because such evidence may be construed as providing the "any evidence" creating a jury question. Adamson Co. v. Owens-Illinois Dev. Corp., 168 Ga.App. 654, 658, 309 S.E.2d 913 (1983) (issue of value for trier of facts); Lingo v. Kirby, 142 Ga.App. 278, 279, 236 S.E.2d 26 (1977) (directed verdict on damages).

(b) "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." (Citation omitted.) Champion v. Dodson, 263 Ga.App. 286, 287, 587 S.E.2d 402 (2003) (loss of hardware inventory unchanged from purchase). We held in Champion v. Dodson that proof of the inventory cost and of nothing to change such value from the date of purchase is another of many ways to prove the fair market value of the property damaged or lost at the time immediately prior to loss. Id. The measure of damages for loss of tangible personal property is the difference between the fair market value of the property immediately prior to the damage and immediately after the damage. Portland Forest Products v. Garland Lumber Sales, 199 Ga.App. 479, 405 S.E.2d 307 (1991) (directed verdict proper where lumber could deteriorate in condition, changing its value after purchase); Atlanta Furniture Co. v. Walker, 51 Ga.App. 781(2), 181 S.E. 498 (1935) (damage to a vehicle); Douglas v. Prescott, 31 Ga.App. 684( 1), 121 S.E. 689 (1924) (same). In determining fair market value of personal property as inventory for resale, a number of factors must be considered when accompanied by the testimony of retailers experienced in sale of such goods: the condition of the property immediately prior to damage; condition following the damage; itemized inventory of lost or damaged property; retail fair market value at the time of damage; the wholesale fair market value at the time of the loss or alternatively, the...