Proving Damages for MMPA Claim–Oitker v. K.C. Waterproofing, Inc.

Missouri authority allows a property owner to testify as to the value of property, in contexts where one might think that the property owner’s testimony would be excluded as being an expert testimony without proof of the ordinary prerequisites to expert testimony. Oitker v. K.C. Waterproofing addresses such an issue. It seems there were problems with the foundation work done by the contractor.

It seems to be the contractor’s position that the client was not entitled to claim that the promised services were worth at least what the contractor charged. Presumably the contractor would not have expressly disagreed at the time the contract was formed.

Let’s see if the contractor’s discussion of the foundation for the damages computation is “all wet”.

More after the break …

Prior Authority Allowing Owner Testimony

Tull v. Housing Authority of the City of Columbia, 691 S.W.2d 940 (Mo. Ct. App., W.D. 1985), states the following as to an owner’s testimony of the value of property leased, in a case alleging breach of the lease arising from damage to the property done by sub-tenants:

CHA complains the trial court relied solely on opinion evidence, but an owner may always testify regarding his property’s value,

Authority Tull cites expresses some caveats that Tull does not reiterate, perhaps because of the nature of the lessor.  That authority, Casada v. Hamby Excavating Co., Inc., 575 S.W.2d 851 (Mo. Ct. App., Springfield Dist., 1978), states, in some detail:

The point of Mayor, etc., of City of Liberty v. Boggess, 321 S.W.2d 677, 681-682(4-6) (Mo.1959); Bridgeforth v. Proffitt, supra, 490 S.W.2d at 425(13-15); Langdon v. Koch, 393 S.W.2d 66, 70 (Mo.App.1965), and like precedents is this: ordinarily an owner may testify as to the reasonable value of an item of personalty which has been damaged or destroyed without further qualification. Carnell v. Dairyman’s Supply Company, 421 S.W.2d 775, 779(9) (Mo.1967); Langdon v. Koch, supra, 393 S.W.2d at 70(6); 3 H. Wigmore, Evidence s 716, p. 56 (Chadbourn Rev. 1970). Further, the owner of a parcel of realty may testify to the value of his land, even though he does not qualify as an expert. Esmar v. Zurich Insurance Co., 485 S.W.2d 417, 423-424(8, 9) (Mo.1972); State ex rel. State Highway Commission v. Northeast Building Company, 421 S.W.2d 297, 301(3) (Mo.1967). The qualification of an owner as a witness to the reasonable value of his property is usually held to rest on the assumption that an owner is familiar with the characteristics of his property, has some acquaintance with its actual and potential uses and some experience in dealing with it. Generally, this competency is assumed whether the property *855 taken or damaged is a parcel of realty, United States v. Sowards, 370 F.2d 87, 92(15) (10th Cir. 1966); Esmar v. Zurich Insurance Co., supra, 485 S.W.2d at 423-424(8, 9); Shelby County R-IV School District v. Herman, 392 S.W.2d 609, 613 (Mo.1965); 3 H. Wigmore, supra, s 714, p. 50, or a chattel. Langdon v. Koch, Supra, 393 S.W.2d at 70(6); Finn v. Indemnity Co. of America, 297 S.W. 175, 176 (Mo.App.1927); Annot., 37 A.L.R.2d 967, 982-984, s 5 (1954).

Nevertheless, the owner’s competence is a quality in the nature of a rebuttable presumption, and if it is shown upon a qualifying voir dire or upon cross-examination that the owner in fact lacks knowledge of the value at issue, or that his opinion is based on an improper standard, then a trial court may exclude or strike out the owner’s opinion, and if the opinion is erroneously received, a court on appeal may reverse for want of substantial evidence of damage. Otherwise put, when the foundation for the owner’s opinion collapses, so does the opinion. See: United States v. Sowards, supra, 370 F.2d at 91 (owner’s valuation of land based on location of coal deposit “reflected only a future hope”); Shelby County R-IV School District v. Herman, supra, 392 S.W.2d at 613 (owner attempted to estimate value of a farm based on capitalization of net profits for one year); Langdon v. Koch, supra, 393 S.W.2d at 70 (only knowledge plaintiff had was that her automobile had been previously involved in a wreck). The principle that an owner’s opinion may in fact be wholly without foundation is vividly illustrated by the record itself in Bridgeforth v. Proffitt, Supra, 490 S.W.2d 424. …

Trial Court’s Judgment in Oitker

The trial court’s judgment in Oitker v. K.C. Waterproofing, Inc., 2013 WL 8336486 (Mo. Cir. Ct., Clinton County, June 11, 2013) , states in part:

In a MMPA claim, the “benefit of the bargain” rule is applied to measure damages. Davis v. Geary Building Corporation, 143 S.W.3d 659 (Mo. Ct. App. W.D. 2004). Benefit of the bargain damages are calculated as the difference between the actual value of the property and what its value would have been if it had been as represented. Id. at 668. The Court finds that Plaintiff suffered $7,620.00 in actual damages, which is the difference in value of Defendant’s foundation services as represented and as received. The Court, upon review, overrules Defendant’s objection to the testimony of the Plaintiff regarding the value of the services as received and admits the testimony as presented in Plaintiffs offer of proof. Further, the Court finds that the testimony of Don Deny not credible.

The contractor’s brief notes, “The owner of defendant K.C. Waterproofing was Don Deny ….”

Contractor’s Arguments

Our examination is going to focus on only some of the issues in the case. The contractor’s reply brief, Oitker v. K.C. Waterproofing, Inc., 2014 WL 2879712 (Mo.App. W.D., June 9, 2014), states in part:

First, he[, plaintiff,] argued that a lay witness is entitled to give an opinion as to the dollar amount of damages to his property and the value of his property before and after an injury. While that may be true, that is not what plaintiff did in this case. Plaintiff was asked to give testimony as to the “actual value of the foundation services” that he received from K.C. Waterproofing. (Tr. 136). There was absolutely no evidence to establish that plaintiff was qualified to provide an opinion about the value of K.C. Waterproofing’s foundation services, and therefore the trial court should have sustained defendant’s objections to that testimony. What makes the trial court’s decision on this issue reversible error is that after it allowed the evidence, the trial court then went on to cite plaintiff’s improper opinion testimony specifically in the Judgment as the basis for that portion of the damage award. The Judgment stated:

The Court, upon review, overrules Defendant’s objection to the testimony of the Plaintiff regarding the value of the services as received and admits the testimony as presented in Plaintiffs offer of proof. Further, the Court finds that the testimony of Don Derry not credible.

(LF 151-152).

By relying specifically on the improper opinion testimony of plaintiff the trial court’s decision on this issue was not based on substantial evidence and must be reversed. Short v. Southern Union Co., 372 S.W.3d 520, 529-30 (Mo.App.W.D. 2012), citing Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).

Plaintiff’s next argument is that the Judgment was supported by other competent evidence from plaintiff’s expert Jeremy Pope. The problem with that argument is that Mr. Pope was not a credible witness. He was a disgruntled former employee of the defendant and when he left defendant’s company he threatened the owner with payback. Mr. Pope gave the following testimony:

Q: And you were so mad when you left that you told Don Deny that he didn’t have to pay you, but someday he would pay somebody. Weren’t those your words?
A: Yes.

(Tr. 178).

With regard to Jeremy Pope, plaintiff cited to Central American Health Sciences University, Belize Medical College v. Norouzian, 236 S.W.3d 69 (Mo.App.W.D. 2007) for the proposition that the trial court is vested with the discretion to believe or disbelieve all, part, or none of any witness’ testimony, and that due regard shall be given to the opportunity of the trial court to have judged the credibility of the witnesses. (P. 25 of the Respondent’s Brief). Defendant agrees with that proposition. However, in this case, the trial court’s Judgment with regard to the value of the foundation services was expressly based on the testimony of plaintiff. (LF 151-152). The Judgment does not mention Jeremy Pope whatsoever. By specifically stating that the $7,620.00 award was based on the testimony of plaintiff, it can be inferred that the trial court did not base its decision on the testimony of Jeremy Pope, and that the trial court did not find Jeremy Pope’s testimony to be credible. There is nothing in the Judgment to support plaintiff’s argument that the trial court used its discretion to believe the testimony of Jeremy Pope and plaintiff’s argument fails.

Client’s Opinion Concerning Value

The trial court’s order, as quoted above, formulates damages based on benefit of the bargain, in terms of difference in value from premises as promised and premises after repairs:

difference between the actual value of the property and what its value would have been if it had been as represented

Proffered Evidence. The contractor seeking to reverse the trial court has the burden of demonstrating the error. The contractor’s initial brief, 2014 WL 1394806 (Mar. 18, 2014), recites the following question-and-answer:

Q: Mr. Oitker, as the owner of this property in Cameron, Missouri, what do you believe was the actual value of the foundation services that you received from Kansas City Waterproofing at the time that they performed their work?
MR. KARAIM: I object to the foundation and the qualifications of this witness to answer.
THE COURT: Okay.
Q: (By Mr. Dietrich) Go ahead and answer.
A: Zero.
Q: And what is the basis for that? Why do you feel it’s worthless? MR. KARAIM: Same objections.
A: My basement is in worse shape than it was before I had the work done. I mean, I’ve lost a lot of money on this deal. I spent a lot of money, a lot of time, and – and I got nothing out of it.
Q: . Now, if Kansas City Waterproofing services had been as they represented it to you, what do you believe the value of their services would have been?
A: The full amount.
MR. KARAIM: Same objections.
Q: The full amount of what?
A: Of the contract.
Q: Which was seven thousand six hundred and twenty dollars –
A: Six hundred and twenty dollars, yes.
MR. KARAIM: Can I just have a continuing objection to this offer of proof, Your Honor?
THE COURT: Sure.
Q:… And why do you believe the – – that would have been worth $7,620?
A: I would have got what I was told I would get done and paid for.
(Tr. 136-138).

That brief further notes:

The total amount of the contract was $7,620.00. (Tr. 33). Plaintiff made a down payment and then paid the balance when the job was completed. (Tr. 33, 36).

So, the nature of the proffered evidence is that the homeowner believed that having the promised work completed would increase the value of the premises by the amount the contractor charged the homeowner. The contractor’s argument is unpersuasive. When a property owner seeks to prove damages for breach of contract relating to property value by providing his testimony, that necessarily involves some inferences being made as to what the property value would have been had there not been a breach (valuation of a hypothetical circumstance) and comparison to the perceived value after the breach.

That is the nature of the evidence offered in this case, with the exception that the owner indicates the the work provided had no value, i.e., it did not achieve the necessary results and did not mitigate the problems existing before the contract was formed. So, less exercise of judgment is necessary in forming the claimed damages than in other cases where this evidence is proffered.

MMPA Remedies. The MMPA allows a prevailing party asserting a claim covered by the act to “recover actual damages”. Mo. Rev. Stat. 407.025.1. Hess v. Chase Manhattan Bank, 220 S.W.3d 758, 770 (Mo. Banc. 2007) states:

Restitution is merely a form of actual damage, however, and the MPA itself defines both restitution and actual damages in terms of “ascertainable losses.” Compare sec. 407.025.1 (allowing actual damages where plaintiff “suffers an ascertainable loss of money or property”), with sec. 407.100.4 (allowing restitution to “restore to any person who has suffered any ascertainable loss”).

In the taxonomy of measures of recovery against a breaching promisor, recovery of amounts paid the promisor who does not render services could be recovered in restitution or in reliance. The MMPA allows a prevailing party asserting a claim covered by the act to “recover actual damages”. Mo. Rev. Stat. 407.025.1. Hess v. Chase Manhattan Bank, 220 S.W.3d 758, 770 (Mo. Banc. 2007) states:

Restitution is merely a form of actual damage, however, and the MPA itself defines both restitution and actual damages in terms of “ascertainable losses.” Compare sec. 407.025.1 (allowing actual damages where plaintiff “suffers an ascertainable loss of money or property”), with sec. 407.100.4 (allowing restitution to “restore to any person who has suffered any ascertainable loss”).

So, to be entitled to this amount, the homeowner only need prove that the property was not improved (so that its value did not increase) by virtue of the services provided. That is the basis of the computation in the Q&A proffered by the customer. And it would represent “actual damages” recoverable pursuant to the MMPA, as Hess explains. So, the contractor’s position depends on reversing the trial court’s determination merely because the trial court framed the computation as being based on the “benefit of the bargain” (expectation), as opposed to restitution.

Of course, in claims for breach of promise, the promisee ordinarily is entitled to prove damage in claims on-contract by introducing reliance, with the breaching promisor required to prove the benefit of the bargain is less. Missing from contractor’s discussion is persuasive reasoning why that should not apply in MMPA claims as well.

Basis for Computation–Other Expert

The homeowner also proffered expert evidence in the form of a former employee of the contractor. It seems the plaintiff is not the only person to have problems with how that contractor does business.

The contractor seeks to diminish the alternative supporting testimony, identifying the former employee as “disgruntled”. All that only goes to matters of credibility, as to which deference to the persons who heard the testimony is the norm.

Understanding that, the contractor needs to formulate a reason why the trial court cannot be said to have relied on that testimony in reaching its conclusion. The contractor’s reply brief claims:

By specifically stating that the $7,620.00 award was based on the testimony of plaintiff, it can be inferred that the trial court did not base its decision on the testimony of Jeremy Pope, and that the trial court did not find Jeremy Pope’s testimony to be credible.

Try again. Here’s what the judgment states in pertinent part:

The Court finds that Plaintiff suffered $7,620.00 in actual damages, which is the difference in value of Defendant’s foundation services as represented and as received. The Court, upon review, overrules Defendant’s objection to the testimony of the Plaintiff regarding the value of the services as received and admits the testimony as presented in Plaintiffs offer of proof. Further, the Court finds that the testimony of Don Deny not credible.

As noted above, the contractor’s brief notes, “The owner of defendant K.C. Waterproofing was Don Deny ….”

One cannot infer that the trial court did not base its decision on the former employee’s testimony. The trial court has merely indicated its admission of the client’s testimony. It is elementary that admission of evidence is not the same as finding it the basis for deciding the case. Nothing in the judgment indicates, as the contractor needs to be the case, this part of the judgment was not based on the expert’s testimony.