Kerns v. Pro-Foam of South Alabama, Inc.

• Decision Date: 07 August 2007
• Docket Number: Civil Action No. 06-0431-WS-B.
• Citation: 572 F.Supp.2d 1303
• Parties: Melvin KERNS, et al., Plaintiffs, v. PRO-FOAM OF SOUTH ALABAMA, INC., Defendant.
• Court: U.S. District Court — Southern District of Alabama

572 F.Supp.2d 1303

Melvin KERNS, et al., Plaintiffs, v. PRO-FOAM OF SOUTH ALABAMA, INC., Defendant.

Civil Action No. 06-0431-WS-B.

United States District Court, S.D. Alabama, Southern Division.

August 7, 2007.

Thomas A. McKnight, Jr., Larry S. Logsdon, Wallace, Jordan, Ratliff & Brandt, L.L.C., Birmingham, AL, John Chas. Pierce, Michael A. Montgomery, Butler Pappas Weihmuller Katz Craig, LLP, Mobile, AL, for Plaintiffs.

Lori Schultz Grayson, Weyman W. McCranie, Jr., Wright, Green, P.C., Mobile, AL, for Defendant.

ORDER

WILLIAM H. STEELE, United States District Judge.

This action comes before the Court on Defendant's Motion in Limine to Restrict Plaintiffs to their Deposition Testimony Concerning the Alleged Pre-Fire and Alleged Post-Fire Value of the Subject Property (doc. 77) and Defendant's Motion in Limine to Prevent Plaintiffs from Calling Defense Expert Larry Creel to Testify (doc. 78). Both Motions have been briefed and are ripe for disposition at this time.

I. Relevant Background.

This action arises from a fire on November 8, 2005 that caused substantial damage to a partially constructed house in Gulf Shores, Alabama, belonging to plaintiffs, Melvin and Pauline Kerns. Plaintiffs maintain that defendant, Pro-Foam of South Alabama, Inc., caused the fire through the negligent or wanton acts of its agents/owners in applying spray-on polyurethane foam insulation to that house. This action is set for jury trial on August 8, 2007.

The home was approximately 50% complete at the time of the fire; however, the fire caused extensive damage. Demolition and removal of damaged areas of the structure began shortly before Christmas 2005, and plaintiffs' evidence is that it took six months to restore the house to its condition preceding the fire. In that regard, plaintiffs claim as damages in this action "out-of-pocket expenses incurred to remove the fire-damaged construction components and replace the framing, roof decking, roof shingles, rough-in electrical wiring, rough-in plumbing and drywall." (Joint Pretrial Document (doc. 71), at 23.) According to plaintiffs, these expenses total $188,899. To those amounts, plaintiffs would add $2,720 in claimed damages for materials price increases, furniture storage and materials replacement. (Id.) No other damages are sought. (Id.) Plaintiffs have offered no expert testimony as to the fair market value of the partially constructed home prior to the fire, nor have they furnished any direct evidence of the diminution in such value caused by the fire.

Both sides offered expert testimony concerning the causes of the fire. Defendant's expert, Larry Creel, opined that Pro-Foam applied the foam insulation to plaintiffs' house in accordance with industry standards, that such application did not cause the fire, that Pro-Foam's attempts to locate a hot spot when the attic became smoky were consistent with industry standards, that the application of foam can be ruled out as a cause of the fire, and that the fire was caused by manufacturing defects in the particular batch of foam. In an Order (doc. 62) dated July 6, 2007, the Court ruled on plaintiffs' Daubert motion pertaining to Creel by excluding his opinions that the foam applied to plaintiffs' residence had a manufacturing defect with respect to core temperature, such opinions being unreliable and unhelpful to the trier of fact; however, the July 6 Order in no way forbade or limited Creel from testifying as to other opinions identified in his expert report or deposition. By contrast, plaintiffs' proposed expert, Gordon Damant, offered opinions that the fire was caused by spontaneous combustion of polyurethane foam insulation resulting from improper application by Pro-Foam. However, the July 6 Order found that Damant's opinions failed a Rule 702 analysis because he was not qualified to give them and because his methodology of ruling out alternative causes based on assumed facts contrary to those in the record would not be of assistance to the jury. Following this exclusion of their primary expert on Daubert grounds, plaintiffs designated Creel (defendant's expert) as a witness whom they intend to call at trial in their case-in-chief. (Joint Pretrial Document (doc. 71), at 20-21.)

Both of these issues (i.e., plaintiffs' reliance on out-of-pocket expenses for repairing the house to prove damages, and plaintiffs' intent to call defendant's expert as a witness for plaintiffs) are the subject of defendant's present Motions in Limine.

II. Motion in Limine Concerning Measure of Damages.

Defendant's first Motion seeks to restrict plaintiffs from presenting evidence concerning repair or replacement costs incurred after the fire, on the grounds that the proper measure of damages is the difference in fair market value of the property before and after the fire.¹ Plaintiffs counter that those out-of-pocket repair costs are properly submitted to the jury as evidence of the diminution in value of the property occasioned by defendant's allegedly negligent and wanton conduct in causing the fire.

Alabama law concerning the measure of damages in a case such as this is quite clear. As the Alabama Supreme Court has written, "The proper measure of damages, in a tort action, for the destruction of a building or buildings is the difference between the fair market value of the property immediately before and after the destruction or damage." Dooley v. Ard Oil Company, 444 So.2d 847, 848 (Ala. 1983); see also IMAC Energy, Inc. v. Tittle, 590 So.2d 163, 168 (Ala.1991) ("The proper measure of compensatory damages in a tort action based on damage to real property is the difference between the fair market value of the property immediately before the damage and the fair market value immediately after the damage."); S.S. Steele & Co. v. Pugh, 473 So.2d 978, 982 (Ala.1985) ("In general, the proper measure of damages for injury to property is the difference in market value before and after the injury."); Illinois Cent. R. Co. v. Elliott, 17 Ala.App. 134, 82 So. 582 (1919) (where defendant allegedly caused plaintiffs storehouse to fall down, the measure of damages is the difference between the value of the property immediately prior to, and immediately subsequent to, the injury).² As one Alabama commentator has observed, "`Market value' is defined as the price at which a willing seller would sell and a willing buyer would buy, neither being compelled to sell or to buy. This measure is left largely to the discretion of the jury." J. Marsh and C. Gamble, Alabama Law of Damages (5th ed.2004), at § 33:1; see also Crump v. Geer Bros., Inc., 336 So.2d 1091, 1096-97 (Ala.1976) (similar). These black-letter principles are not controversial and cannot reasonably be disputed by either party.

The critical issue for purposes of the Motion in Limine is whether a jury can consider out-of-pocket repair costs as evidence of that difference in fair market value. Numerous Alabama authorities have answered this question affirmatively. See IMAC Energy, 590 So.2d at 168 (affirming damages award in property damage case as being based on sufficient evidence where plaintiffs made no direct showing of difference in fair market value before and after defendant's blasting conduct, but did submit evidence of amount paid for property and repair estimate for same); Southern Ry. Co. v. Slade, 192 Ala. 568, 68 So. 867, 870 (1915) ("While the reasonable cost of the burned building, or of similar new buildings, is not the criterion of value, yet evidence thereof is relevant in support of opinion evidence as to actual value...."); Alabama G.S.R. Co. v. Johnston, 128 Ala. 283, 29 So. 771, 775 (1901) ("Though the cost of building new houses of the kind burned was not the criterion by which to measure the damage caused by their destruction, evidence of such cost was relevant, as tending to throw light on their value ...."); see generally Arrick v. Fanning, 35 Ala.App. 409, 47 So.2d 708, 712 (1950) (in case involving damage to personal property, "evidence of the amount required to make necessary repairs is an evidential factor which the jury is authorized to consider in arriving at the true measure of damages"); Alabama Pattern Jury Instructions—Civil (2nd ed.), § 11.24 (similar).

Anticipating plaintiffs' assertion that evidence of repair costs is admissible to show the difference in fair market value before and after the fire, defendant insists that the Alabama Supreme Court's recent decision in Poffenbarger v. Merit Energy Co., 972 So.2d 792 (Ala.2007), "forecloses that option for them." (Motion, at 4.) Poffenbarger does nothing of the sort. In that case, the Alabama Supreme Court held "that the appropriate measure of direct, compensatory damages to real property generally is the diminution in the value of that property, even when the cost to remediate the property exceeds the diminution in the value thereof." Poffenbarger, 972 So.2d at 800-01. Although the last clause of that holding was a matter of first impression in Alabama, Poffenbarger's statement of the measure of damages to real property was nothing new. More importantly, nothing in that decision purported to abrogate, overrule or criticize the well-established notion that repair costs are admissible as evidence of the diminution in value to real property. In fact, Poffenbarger cited with approval a nineteenth-century treatise for the proposition that "[s]trictly speaking ..., the cost of repairs is not the measure of damages, but only evidence of the amount of damages." 972 So.2d at 795-96 (citation omitted) (emphasis added). Nowhere in Poffenbarger did the Alabama Supreme Court purport to be rolling back this well-settled principle. Thus, in the wake of Poffenbarger, evidence of repair costs remains admissible to show diminution in value for injury to real estate, but diminution in value remains the measure of damages even when remediation costs exceed that diminution in value. Nothing in this holding would forbid plaintif...