George Hutsell v. Jeff Kenley D/B/A Trademark Investments
E2013-01837-COA-R3-CV
Tenn. Ct. App.Jun 27, 2014Background
- Hutsell stored building supplies and doors in the basement of a Morristown warehouse leased from Kenley; the Kenleys later quitclaimed the property to Trademark Investments, LLC.
- A tractor-trailer crash damaged the warehouse in January 2010; city officials and engineers advised the building was unsafe and access was restricted, and temporary shoring was done but permanent repairs were not completed.
- Months later a portion of the roof collapsed, water entered the basement, and much of Hutsell’s inventory was ruined by water and mold; Hutsell sought damages for the ruined inventory (loss-of-income claim was dismissed before trial).
- At trial Hutsell’s valuation evidence ranged from about $200,000 to $503,000; Kenley moved for directed verdict at close of proof (arguing Trademark was the proper defendant and damages were not shown), which was denied.
- The jury found Kenley 100% liable and awarded $325,000; post-trial motions (renewed directed verdict, new trial, remittitur) were denied; Kenley appealed.
- The Court of Appeals reversed and vacated the verdict, holding the trial court erred in admitting prejudicial evidence that Kenley filed a $350,000 claim for his own lost contents, and remanded for a new trial; other evidentiary and directed-verdict rulings were affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of evidence that Kenley filed a $350,000 claim for his own lost contents | Relevant to value and motive (showing Kenley might have included Hutsell’s inventory or delayed removal until payment) | Irrelevant and unduly prejudicial; jury was inflamed and focused on Kenley’s claim/payment | Court: Although marginally relevant, probative value was substantially outweighed by unfair prejudice; admission was reversible error (vacated verdict; new trial) |
| Exclusion of evidence that Hutsell’s business was unprofitable | N/A (Hutsell moved to exclude) | Profitability evidence relevant to assessing value/credibility of inventory valuation | Court: Properly excluded because Hutsell abandoned lost-profit claim; business profitability not relevant to fair market value of inventory (ruling affirmed) |
| Directed verdict as to damages (replacement cost vs. fair market value) | Replacement cost evidence can establish fair market value here | Replacement cost is not the correct measure without proof of fair market value | Court: Declined to resolve on appeal because case remanded; noted trial court correctly recognized replacement cost and fair market value can coincide in some circumstances (no reversible error on this ground now) |
| Dismissal of Kenley in individual capacity (proper defendant is Trademark) | N/A (Hutsell argued Kenley remained liable) | Trademark was the owner after quitclaim; Kenley should be dismissed individually | Court: Denial of directed verdict was proper; facts supported that Kenley acted and held himself out to Hutsell so individual liability could be found (ruling affirmed) |
Key Cases Cited
- Johnson v. Tennessee Farmers Mut. Ins. Co., 205 S.W.3d 365 (Tenn. 2006) (standard for reviewing denial of directed verdict)
- White v. Vanderbilt Univ., 21 S.W.3d 215 (Tenn. Ct. App. 1999) (standard for reviewing admissibility of evidence and discretionary rulings)
- In re Estate of Smallman, 398 S.W.3d 134 (Tenn. 2013) (relevancy and trial court discretion on evidence admission)
- Waggoner Motors, Inc. v. Waverly Church of Christ, 159 S.W.3d 42 (Tenn. Ct. App. 2004) (purpose of compensatory damages)
- Tire Shredders, Inc. v. ERM-N. Cent., Inc., 15 S.W.3d 849 (Tenn. Ct. App. 1999) (measure of damages for personal property: repair cost vs. difference in fair market value)
- ICG Link, Inc. v. Steen, 363 S.W.3d 533 (Tenn. Ct. App. 2011) (agent’s disclosure of principal identity and personal liability)
- Mayo v. Shine, 392 S.W.3d 61 (Tenn. Ct. App. 2012) (harmless-error and when admission of evidence requires reversal)