Opinion
NO. 2016-CA-000406-MR
06-22-2018
KEN JORDAN AND KEN JORDAN CONTRACTORS, LLC APPELLANTS v. GARY HIBBELN APPELLEE
BRIEF FOR APPELLANT: J. Fox Demoisey Jonathan E. Breitenstein Louisville, Kentucky ORAL ARGUMENT FOR APPELLANT: J. Fox Demoisey Louisville, Kentucky BRIEF AND ORAL ARGUMENT FOR APPELLEE: Robert A. Florio Louisville, Kentucky
NOT TO BE PUBLISHED APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE OLU A. STEVENS, JUDGE
ACTION NO. 13-CI-004376 OPINION
VACATING AND REMANDING
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BEFORE: ACREE, JONES, AND KRAMER, JUDGES. ACREE, JUDGE: Ken Jordan and Ken Jordan Contractors, LLC, appeal the February 24, 2016 judgment following a bench trial in Jefferson Circuit Court awarding Gary Hibbeln $45,000 in damages resulting from performance of reconstruction services on Hibbeln's property. After review, we vacate the judgment and remand for proceedings consistent with this opinion.
I. Factual and Procedural Background
The property at issue is a historic residence located at 1308 Highland Avenue, Louisville, Kentucky. Prior to Ken Jordan's involvement, the residence was ordered to be demolished; however, the property was spared. Hibbeln and his partner on the Highland Avenue project, Stayce McCracken, met Jordan who was performing insurance claim work at the property to repair a collapsed chimney. Based on Jordan's work, Hibbeln and McCracken hired Jordan as the general contractor for additional renovations on the residence.
In June 2010, Jordan submitted a proposal to Hibbeln listing several repairs to be made. The cost of the individual repairs was not listed, but the total amount for all repairs was estimated to be $87,290.00. The proposal further provided that payments for the work were to be made on a weekly schedule, in accordance with the proposal. Hibbeln signed the proposal, and payments were made, more or less, according to schedule. Hibbeln paid Ken Jordan Contractors a total of $85,764.00 under the June 2010 proposal.
A second proposal was submitted by Jordan to Hibbeln in October 2010. The proposal listed ten repairs to be completed and a total estimated cost of $5,100.00. Hibbeln paid $4,590.00 under the second proposal. In all, Hibbeln paid $90,354.00 to Ken Jordan Contractors for reconstruction services.
On August 10, 2013, Hibbeln filed a complaint against Jordan claiming breach of contract, conversion, and bad faith. He sought compensatory and consequential damages, attorney fees, and punitive damages.
The matter was set for trial on February 18, 2016. Prior to trial, Jordan's counsel filed a motion pursuant to KRS 26A.015 asking the trial judge to recuse. He based the motion on the court's alleged negative and curt attitude toward counsel in this case as well as other cases counsel was practicing before it. The court denied the motion.
Counsel for Jordan subsequently filed a motion pursuant to KRS 26A.020(1) for the Chief Justice to review and determine whether recusal was necessary. The Supreme Court denied the motion.
At trial, several witnesses testified, including Gary Hibbeln, Stayce McCracken, home renovation expert John Klienholter, architect Mark Bailey, all in addition to Ken Jordan.
The renovation work was initially performed without incident. However, according to Hibbeln and McCracken, progress slowed considerably, and Jordan was no longer coming to the job site to supervise his workers. Mark Bailey was hired as the architect on the project, but he was terminated when Hibbeln and McCracken decided his services were no longer needed. As Jordan's work continued, Hibbeln and McCracken became less satisfied. Nevertheless, payments to Jordan continued based upon the payment schedule called for in the first proposal, without presenting any quality or progress complaints to Jordan. Hibbeln and McCracken further contended they gave Jordan additional projects in the fall of 2010 with hopes to motivate his performance on the residence.
After some attempt to work through the issues with Jordan, Hibbeln and McCracken decided to terminate his services in early 2011. Another contractor was hired to take over the project to fix and complete Jordan's work. Hibbeln testified that he paid $87,239.51 to this other contractor to fix Jordan's work on the residence.
John Klienholter testified as Hibbeln's expert witness. He had twenty-five years' experience as a contractor. He went to the residence and performed an inspection. He examined photographs provided by Hibbeln of Jordan's work. Klienholter provided estimates for the costs of various line items contained in Jordan's first proposal for a home similar to the subject of this litigation.
At the conclusion of Hibbeln's case, Jordan moved to dismiss his claim for conversion, punitive damages, and attorney fees. The court granted Jordan's motion. Jordan followed with his proof, the trial concluded, and the case was submitted.
The Jefferson Circuit Court found the following:
The Court finds the parties had an agreement and that a written contract signed by both parties is unnecessary under the circumstances. The Court determines that the Defendant was paid in accordance with the schedule of payments, regardless of whether the work was actually performed. There is a conflict in testimony, but the Court further determines that the Defendant did not complete the work as contemplated by the parties' agreement. The testimony established that the following work was completed: Pull building back and straighten building, remove existing footer, pour new footer/foundation wall, removal of existing footer along left side and a portion of the sheathing installation. The Court finds that the remaining work was not completed or was completed in an unsatisfactory manner. Neither party was able to testify as to the specific amount charged for each task listed on Plaintiff's exhibits one and two, but Plaintiff's expert, John Klienholter, testified as to the costs for each item listed on Plaintiff's exhibit one (1). He acknowledged those figures were "ballpark" estimates. In all, Plaintiff claims he paid Defendant about $66,000 for work that was not completed or completed in an unsatisfactory manner. Based on the testimony, the Court determines approximately 50% of the total contemplated repairs were either not completed or not completed in a satisfactory manner. Accordingly, judgment shall be entered for the Plaintiff in the amount of $45,000 plus court costs. Post-judgment interest shall accrue at 12% per annum.
Jordan subsequently filed a motion to alter, amend or vacate the judgment. Jordan requested the court to identify what repairs were either not completed or were completed in an unsatisfactory manner, how the court arrived at the $45,000 damage figure, and how the court determined what work was completed. Additionally, Jordan asked the court to modify the 12% post-judgment interest and for a hearing on the issue pursuant to KRS 360.040.
Jordan filed another motion to alter, amend or vacate the judgment. In the motion, he renewed his motion for the trial judge to recuse based upon the court's demeanor and conduct during the trial. Jordan asserted that the judgment was a product of bias because there was no evidence to support it. Jordan argued there was no way to tell what part of the work was either not completed or completed in an unsatisfactory manner as well as the cost of any replacement or repair work.
Both of Jordan's post-judgment motions were denied. This appeal followed.
Standard of Review
Our review of a circuit court's findings of fact following a bench trial is to determine whether those findings are clearly erroneous. Kentucky Rules of Civil Procedure (CR) 52.01. Factual findings are clearly erroneous if unsupported by substantial evidence. Moore v. Asente, 110 S.W.3d 336, 354 (Ky. 2003). Substantial evidence is "some evidence of substance and relevant consequence, having fitness to induce conviction in the minds of reasonable people." Whittaker v. Rowland, 998 S.W.2d 479, 481 (Ky. 1999). Reviewing courts are prohibited from disturbing the circuit court's factual findings that are supported by substantial evidence, despite whether a contrary conclusion might have been reached. Moore, 110 S.W.3d at 354.
Notwithstanding the deference due the circuit court's factual findings, its conclusions of law, reached after making its findings, are reviewed de novo. Hoskins v. Beatty, 343 S.W.3d 639, 641 (Ky. App. 2011).
Analysis
We first address Jordan's argument that the judgment in this case is the product of judicial bias. He bases his claim on three examples, including the division of time at trial, the threat of contempt against counsel at trial for making faces at the court, and witness intimidation. We are not persuaded that the trial judge was biased or, if biased, that such bias had any effect on the outcome.
A party seeking to disqualify a judge in this Commonwealth may do so by filing a motion with the presiding judge pursuant to KRS 26A.015 or by filing an affidavit with the clerk of the court pursuant to KRS 26A.020. Here, Jordan pursued both options.
Under KRS 26A.020(1), "[i]f either party files with the circuit clerk his affidavit that the judge will not afford him a fair and impartial trial, . . . the circuit clerk shall at once certify the facts to the Chief Justice who shall immediately review the facts and determine whether to designate a regular or retired justice or judge of the Court of Justice as special judge." After review, the Chief Justice denied Jordan's KRS 26A.020(1) motion.
The decision on a recusal motion pursuant to KRS 26A.015 rests with the presiding judge. Pursuant to KRS 26A.015(2), a judge shall recuse if he or she has a "personal bias or prejudice concerning a party [or] has knowledge of any other circumstances in which his impartiality might reasonably be questioned." Bissell v. Baumgardner, 236 S.W.3d 24, 28 (Ky. App. 2007) (quoting KRS 26A.015(2)(a) and (e)).
To establish that a judge must recuse, the burden of proof for the party seeking recusal "is an onerous one." Id. at 29 (quoting Stopher v. Commonwealth, 57 S.W.3d 787, 794 (Ky. 2001)). To satisfy this burden, Jordan must establish that the facts are "of a character calculated seriously to impair the judge's impartiality and sway his judgment." Id. Further, a "mere belief" that the trial judge will not conduct himself or the trial in a "fair and impartial" way is not sufficient grounds for recusal. Id.
We find no basis for Jordan's allegation that the judge's conduct during the hearing demonstrated bias. First, the parties were agreeable to the division of time provided by the court at the commencement of the trial. The judge did reference the time at several points throughout the trial. Clearly, this was an effort on the part of the circuit court to keep the parties on track and to expedite questioning and the submission of relevant evidence. Jordan was permitted slightly less time to put on his proof because he had used so much of his time during cross-examination of Hibbeln's witnesses. Jordan presented only two witnesses and one hour was sufficient time for their testimony. Further, Jordan made no objection to the time frame imposed by the court nor has he offered any additional evidence that may have been submitted had additional time been allowed.
Next, Jordan contends the trial judge's bias was demonstrated through the threat of contempt made to counsel for making faces at the court. While counsel for Jordan was questioning Stayce McCracken, counsel for Hibbeln objected to several of the questions. Two objections were sustained. Judge's warnings to Jordan's counsel appeared to be in response to counsel's alleged reaction to the objections. Jordan's counsel attempted to tell the judge he was in pain from standing as he was scheduled for a hip replacement in the coming weeks, and he was not making faces at the court or grimacing at the court's rulings. We will not decide the motive behind counsel's grimaces. Suffice it to say that, at the beginning of the trial, Jordan's counsel requested that he be allowed to question witnesses while seated and the judge granted his request. Counsel chose not to do so.
Lastly, Jordan contends the trial judge allowed counsel for Hibbeln to yell at him during his testimony. Counsel for Jordan objected, and the court noted that the questions were being asked forcefully but overruled the objection. The recording of the trial revealed that Jordan appeared to be amused on the stand by the cross-examining counsel's antics, not intimidated.
Based on our review, Jordan has not met his burden to establish that the circuit court judge should have recused himself and, accordingly, no error was committed when the judge denied the recusal motions. Neither the described events nor the judgment demonstrates improper bias by the trial judge.
Jordan also takes issue with the substance of the circuit court's judgment. He argues the judgment fails to comply with CR 52.01, which mandates that a court articulate specific findings of fact and separate conclusions of law in its decision. He contends the judgment does not cite specific facts that would establish either liability or damages. We first will address his argument as it relates to the finding of liability, and then as it relates to the amount of damages.
In this case, our review of the circuit court's finding of liability is hindered but not defeated by a lack of findings or conclusions in the judgment. We can discern from it the basis of the circuit court's finding of liability. Therefore, we do not find a violation of CR 52.01 here.
However, we believe it beneficial to remind the circuit court that it "speaks only through [its] written orders entered upon the official record." Kindred Nursing Centers Ltd. Partnership v. Sloan, 329 S.W.3d 347, 349 (Ky. App. 2010) (citation omitted). When the circuit court fails to fully articulate the basis of its decision-making, it inhibits meaningful appellate review. Deskins v. Estep, 314 S.W.3d 300, 304 (Ky. App. 2010).
Jordan asserts the circuit court's failure to mention the testimony of Mark Bailey and Ken Jordan in its judgment render its findings deficient. The court generalized some of the evidence by including phrases throughout the judgment such as "there is a conflict in testimony" and "based on the testimony." We do not believe a circuit court must specifically mention each and every piece of evidence or argument to comply with CR 52.01. Here, the circuit court entered a written order wherein it engaged in the required "good faith effort at fact-finding[.]" Keifer v. Keifer, 354 S.W.3d 123, 125 (Ky. 2011).
Additionally, in its capacity as the finder of fact, the circuit court "is entitled to make its own decisions regarding the demeanor and truthfulness of witnesses" and, in its discretion, "may choose to believe or disbelieve any part of" the testimony presented. Bailey v. Bailey, 231 S.W.3d 793, 796 (Ky. App. 2007). Accordingly, we find no error in the judgment as it relates to liability.
Lastly, Jordan asserts that the court's judgment is clearly erroneous because there is no evidence to support the amount of damages awarded to Hibbeln. For the following reasons, we agree.
The underlying cause of action in this case is a breach of contract claim. To prove a breach of contract, the complainant must establish three things: (1) existence of a contract; (2) breach of that contract; and (3) damages flowing from that breach. Barnett v. Mercy Health Partners-Lourdes, Inc., 233 S.W.3d 723, 727 (Ky. App. 2007). In such an action, the measure of damages "is that sum which will put the injured party into the same position he would have been in had the contract been performed." Id. at 727-28 (quoting Perkins Motors, Inc. v. Autotruck Federal Credit Union, 607 S.W.2d 429, 430 (Ky. App. 1980)). It was Hibbeln's burden as the one seeking contract damages to introduce reliable proof to allow the circuit court to calculate appropriate damages. See id. (plaintiff must demonstrate damages resulting from defendant's breach of the contract). This is where Hibbeln's claim for breach of contract falls short.
Contract damages serve to compensate the injured party and must always be proven with reasonable certainty. Ford Contracting, Inc. v. Kentucky Transp. Cabinet, 429 S.W.3d 397, 407 (Ky. App. 2014); Pauline's Chicken Villa, Inc. v. KFC Corp., 701 S.W.2d 399, 401 (Ky. 1985). "[U]ncertain, contingent, and speculative damages" are not recoverable. Spencer v. Woods, 282 S.W.2d 851, 852 (Ky. 1955). The proposals themselves do not contain all the necessary and certain values that would facilitate a simple computation to calculate a reasonable damage award. More importantly, Hibbeln failed to provide the court with sufficient evidence to determine calculable, non-speculative damages. The lack of evidence renders the circuit court's award of $45,000 in damages erroneous.
Hibbeln's complaint stated the following regarding his breach of contract claim:
By failing to perform several of the tasks at all and by performing some tasks in a non-workmanlike manner the Defendant agreed to perform for Plaintiff, Defendant has breached his contractual obligation thus entitling Plaintiff to refund of funds expended, to cover and recover all real and consequential damages including but not limited to extra expenses paid to subsequent contractors, lost rent, lost opportunity and all other equitable damages.(R. 3).
Hibbeln initially included consequential costs as damages, and asserted he had to pay another contractor $87,239.51 to fix the work performed by Jordan. "There is no question that in this state the real measure of damages for defective performance of a construction contract is the cost of remedying the defect, so long as it is reasonable." State Property and Buildings Comm'n of Dep't of Finance v. H. W. Miller Const. Co., 385 S.W.2d 211, 214 (Ky. 1964) (citations omitted). However, he abandoned that claim at trial and stated he was not seeking to recover the amounts paid to the second contractor to redo Jordan's work; he simply sought a refund of monies paid to Jordan for work he failed to perform or inadequately performed under the proposals. Accordingly, any damages would be derivative from the terms and conditions of the agreements between Hibbeln and Jordan only. "Compensatory damages are designed to equal the wrong done by the defendant." Gibson v. Kentucky Farm Mutual Insurance Company, 328 S.W.3d 195, 204 (Ky. App. 2010) (quoting Jackson v. Tullar, 285 S.W.3d 290, 297-98 (Ky. App. 2007)).
Hibbeln submitted to the court the two proposals outlining the work to be done on the residence as well as checks serving as proof of the amount paid to Jordan for the work. It was established at trial that Hibbeln paid Jordan $90,354.00, and payments were made in accordance with an agreed upon and specific schedule, as opposed to when or whether the work was performed. It was further established that neither party was able to provide the court with specific costs for each task listed on the two proposals. Hibbeln's expert, Klienholter, only testified to the estimated costs of most of the work listed on the first proposal. The estimated sums attested to by Klienholter were $60,000.00 in repairs. Klienholter assigned no specific values for any specific repair. He gave no estimates for certain tasks listed on the first proposal, including reframing the walls in the rear of the house and repairing the soffits as necessary; he did not testify to any of the tasks contained in the second proposal. The court's judgment acknowledged that the figures provided by Klienholter were mere "ballpark" estimates. Unfortunately, it is not enough to be merely in the ballpark when it comes to damages.
There was additional evidence contained in a letter from Hibbeln to Jordan's counsel indicating: Jordan's work on the foundation would not be redone; Hibbeln was generally satisfied with the roof, but it required some additional attention; a portion of Jordan's sheathing work throughout the residence would be kept in place; and Hibbeln was 100% satisfied with the straightening of the building. The letter highlighted only some of the issues with Jordan's work on the residence and reiterated that there was not a cost breakdown for the work performed.
Additionally, Hibbeln argued during his closing that the only labor performed by Jordan with which he was satisfied was pulling back and straightening the house and the work performed on the roof. This was generally consistent with Hibbeln's testimony at trial. Hibbeln further stated in closing that these two tasks were estimated to cost a total of $22,000.00. The remaining tasks, amounting to approximately $66,000.00 according to Hibbeln in his closing argument, were either not completed or completed unsatisfactorily. This was the least amount he asked the court to award in damages.
The court found the following work was completed in its judgment: pulling building back and straightening the building; remove existing footer, pour new foot/foundation wall; removal of existing footer along the left side; and a portion of the sheathing installation. Based upon this determination and the testimony presented at trial, the court further estimated that approximately 50% of the total contemplated repairs were either not completed or not completed in a satisfactory manner, and awarded Hibbeln $45,000, approximately half of the amount he paid to Jordan under the two proposals.
The damage award is not supported by substantial evidence and is, therefore, erroneous. Our review of the record indicates that the court's two determinations - the number of repair items completed and, subsequently, the value of incomplete or unsatisfactory work - are inconsistent and neither is supported by evidence in the record. The cost of completing half the number of tasks listed on the proposals may or may not equate to half the amount of money paid, and there was no testimony whether it did or did not. The resulting award is not derived by assigning a value or cost to any specific tasks deemed compensable because they were not completed or were unsatisfactorily completed. Nor are such values readily determinable from evidence presented at trial. There were roughly twenty tasks contained in the first proposal and ten included in the second. Without an itemization of the costs of the tasks listed in the proposals, and even further, a classification of what work was completed in full, completed in part, completed but not satisfactorily, or not completed at all, damages are speculative at best. All damages must be proved to a reasonable degree of certainty. Ford Contracting, 429 S.W.3d at 407. There remain too many undetermined variables; they are undeterminable on review; and that prevents this Court from affirming a damage award.
We must vacate the judgment and remand this case for a determination by the circuit court either: (1) that Hibbeln failed to carry his burden of presenting non-speculative proof of his damages, or (2) that Hibbeln did carry his burden of presenting non-speculative damages, but that the judgment failed to articulate that proof in a way that would facilitate rather than frustrate appellate review. If the circuit court finds the former to be the case, it shall enter a new judgment finding liability but finding Hibbeln failed to meet his burden of establishing proof of damages. If the circuit court finds the latter to be the case, the circuit court shall prepare and enter a new judgment enumerating the damages in a way that enables appellate review.
Our ruling renders moot Jordan's argument regarding the post-judgment interest rate.
For the foregoing reasons, the February 14, 2016 judgment of the Jefferson Circuit Court is vacated and remanded for further proceedings consistent with our instructions.
ALL CONCUR. BRIEF FOR APPELLANT: J. Fox Demoisey
Jonathan E. Breitenstein
Louisville, Kentucky ORAL ARGUMENT FOR
APPELLANT: J. Fox Demoisey
Louisville, Kentucky BRIEF AND ORAL ARGUMENT
FOR APPELLEE: Robert A. Florio
Louisville, Kentucky