Christopher S. Smith
James M. Brown
Hoyer, Hoyer, Smith & Miesner Brown & Levicoff, P.L.L.C.
Charleston, West Virginia Beckley, West Virginia
Attorney for the Appellants Attorney for the Appellees,
Robert Rufus and
Rufus & Rufus Accounting Corp.
John H. Shott
Shott, Gurganus & Williamson
Bluefield, West Virginia
Attorney for the Appellee,
Danny R. Lester
JUSTICE DAVIS delivered the Opinion of the Court.
1. 'Although the ruling of a trial court in granting or denying a motion for
a new trial is entitled to great respect and weight, the trial court's ruling will be reversed on
appeal when it is clear that the trial court has acted under some misapprehension of the law
or the evidence.' Syl. pt. 4, Sanders v. Georgia-Pacific Corp., 159 W. Va. 621, 225 S.E.2d
218 (1976). Syllabus point 1, Andrews v. Reynolds Memorial Hospital., Inc., 201 W. Va.
624, 499 S.E.2d 846 (1997).
2. An appellate court is more disposed to affirm the action of a trial court
in setting aside a verdict and granting a new trial than when such action results in a final
judgment denying a new trial. Syllabus point 4, Young v. Duffield, 152 W. Va. 283, 162
S.E.2d 285 (1968), overruled on other grounds by Tennant v. Marion Health Care
Foundation, Inc., 194 W. Va. 97, 459 S.E.2d 374 (1995).
3. The proper measure of damages for the destruction of an established
business is the difference between the fair market value of the business before and after its
4. 'The West Virginia Rules of Evidence . . . allocate significant
discretion to the trial court in making evidentiary . . . rulings. Thus, rulings on the admission
of evidence . . . are committed to the discretion of the trial court. Absent a few exceptions,
this Court will review evidentiary . . . rulings of the circuit court under an abuse of discretion
standard.' Syl. Pt. 1, in part, McDougal v. McCammon, 193 W. Va. 229, 455 S.E.2d 788
(1995). Syllabus point 9, Tudor v. Charleston Area Med. Ctr., Inc., 203 W. Va. 111, 506
S.E.2d 554 (1997).
5. As a general rule, a trial court has considerable discretion in
determining whether to give special verdicts and interrogatories to a jury unless it is
mandated to do so by statute. Syllabus point 8, Barefoot v. Sundale Nursing Home, 193
W. Va. 475, 457 S.E.2d 152 (1995).
6. Where not required by statute, special interrogatories in aid of a general
verdict should be used cautiously and only to clarify rather than to obfuscate the issues
involved. Syllabus point 16, Carper v. Kanawha Banking & Trust Co., 157 W. Va. 477,
207 S.E.2d 897 (1974).
7. Generally, the verdict form used in a typical, nonbifurcated, civil trial should ask the jury to decide issues related to liability prior to deciding the issues relating to damages.
In an action alleging various counts of wrongdoing that resulted in the ultimate destruction of a business in which they held an ownership interest, Walter Alan Lively and Leslie Lively appeal from an order of the circuit court of Raleigh County denying their motion for a new trial. On appeal, the Livelys argue that the circuit court erred by limiting their damages to the equity value of the destroyed business, by utilizing a verdict form that allowed the jury to resolve the case by answering only a single interrogatory relating to damages, and by refusing to admit evidence of a settlement agreement for a purpose other than to prove the defendants' liability or the validity or amount of the Livelys claim. We conclude that the proper measure of damages for the destruction of an established business is the difference between the fair market value of the business before and after its destruction. In addition, we find that, generally, the verdict form used in a typical, nonbifurcated, civil trial should ask the jury to decide issues related to liability prior to determining issues of damages. Because the verdict form in the instant case permitted the jury to answer only a single interrogatory that was confusing and contrary to the law and the jury instructions given, the circuit court committed reversible error. Finally, we conclude that the circuit court did not err in refusing to admit into evidence the settlement agreement document offered by the Livelys. For these reasons, the instant case is affirmed in part, reversed in part and remanded for a new trial.
Plaintiffs below and appellants herein, Walter Alan Lively (hereinafter Alan
Lively) and his father Leslie W. Lively (hereinafter Les Lively),See footnote 1
were joint shareholders
of a corporation known as Jetah, Inc. (hereinafter Jetah).See footnote 2
Jetah, in turn, owned and
operated two Western Steer Steakhouse restaurants located in Beckley and Princeton, West
One of the defendants below, and an appellee, Robert J. Rufus (hereinafter
Rufus), a certified public accountant, is the sole shareholder of Rufus & Rufus Accounting
Corporation, also a named defendant. Rufus performed various accounting and financial
services for the Livelys and for assorted corporations in which the Livelys held an ownership
interest, including Jetah.
In August, 1992, Alan Lively borrowed $50,000.00 from Geraldine
Steinbrecher, another Rufus client. As a condition of the loan, Alan Lively was required to
place a certain number of shares of Jetah stock in escrow. The escrow agent was Mr. W.
Stanley James, a Huntington, West Virginia, lawyer and also a client of Rufus. On or about
February, 1993, Alan Lively defaulted on the loan from Ms. Steinbrecher. By letter dated
February 22, 1993, Mr. James notified Alan Lively that he was in default and that the stock
would be sold. In June of 1993, the loan remained in default, but the Jetah shares remained
in Mr. James' possession. Ultimately, Mr. James foreclosed and sold the Jetah shares to
Rufus for $51,000.00. Thereafter, a dispute arose between the Livelys and Rufus over
Rufus' ownership of the stock.See footnote 3
Various meetings and discussions were apparently had in an effort to resolve
the conflict between the Livelys and Rufus, and to address financial difficulties Jetah was
then experiencing. During this time, Rufus asked Mr. Danny R. Lester (hereinafter
Lester), an additional defendant below, appellee herein, and another of Rufus' clients, to
independently manage the Beckley restaurant.See footnote 4
Thereafter, Rufus sold his Jetah stock to
Lester for $58,500.00.See footnote 5
In August, 1993, a Settlement and Indemnification Agreement resolving the
dispute surrounding Jetah was signed by the Livelys, Rufus, and Lester. Each signed the
document in their individual capacities and as representatives of the various companies
involved. However, Alan Lively had filed an action for personal bankruptcy. Therefore, the
Settlement and Indemnification Agreement was subject to approval by the bankruptcy
court. The agreement was rejected by the bankruptcy court and never took effect.
Meanwhile, Beckley National Bank (now Bank One)See footnote 6
gave notice of its intent
to foreclose on a 1.5 million dollar mortgage loan to Jetah, which was secured by the two
restaurants and was personally guaranteed by the Livelys. Rufus and Lester then caused
Jetah to file federal bankruptcy reorganization proceedings under Chapter 11.See footnote 7
bankruptcy action was later converted to liquidation proceedings under Chapter 7.See footnote 8
period of time, the bankruptcy court authorized Beckley National to foreclose on Jetah's
restaurant properties. Beckley National sold the Beckley property for $925,000.00, and
received approximately $400,000.00 for the Princeton property. The Livelys assert that,
after the foreclosure, they both remained personally liable for Jetah's debt of approximately
$597,000.00, excluding interest, to Beckley National Bank. In addition, Alan Lively
remained personally liable for Jetah's debt of $594,201.55 to Mrs. Lois Bowie, who held a
second lien on Jetah's assets. Les Lively also remained personally liable for Jetah's debts
to food vendors totaling $ 132,048.34.
In September, 1994, the Livelys' filed a civil action against Rufus, Rufus &
Rufus Accounting Corporation, and Lester, alleging various causes of action arising from the
above-described course of events. A jury trial was had and, after the conclusion of the
evidence, the jury was presented with a verdict form that permitted it to cease deliberations
if it concluded that Jetah's value was zero or less on June 17, 1993, the day that Rufus
acquired the Jetah stock. The jury concluded that Jetah's value was zero on that date and
reported back to the circuit court. The court then entered judgment in favor of the
defendants', and the Livelys' filed a motion for a new trial. By order entered January 7,
1999, the circuit court refused the Livelys' motion. It is from this order that the Livelys now
We have further explained that:
Although the ruling of a trial court in granting or denying a motion for a new trial is entitled to great respect and weight, the trial court's ruling will be reversed on appeal when it is clear that the trial court has acted under some misapprehension of the law or the evidence. Syl. pt. 4, Sanders v. Georgia-Pacific Corp., 159 W. Va. 621, 225 S.E.2d 218 (1976).
Syl. pt. 1, Andrews v. Reynolds Mem'l Hosp., Inc., 201 W. Va. 624, 499 S.E.2d 846 (1997). Moreover, [a]n appellate court is more disposed to affirm the action of a trial court in setting aside a verdict and granting a new trial than when such action results in a final judgment denying a new trial. Syl. pt. 4, Young v. Duffield, 152 W. Va. 283, 162 S.E.2d 285 (1968), overruled on other grounds by Tennant v. Marion Health Care Found., Inc., 194 W. Va. 97, 459 S.E.2d 374. With due consideration for these standards, we proceed to review the substantive issues raised by the parties. Additional standards of review directed more specifically to individual assignments of error are discussed in connection with those assignments.
The damages herein addressed are compensatory in nature. We have previously
Primarily, the aim of compensatory damages is to restore a plaintiff to the financial position he/she would presently enjoy but for the defendant's injurious conduct. In this manner, [c]ompensatory damages indemnify the plaintiff for injury to property, loss of time, necessary expenses, and other actual losses. They are proportionate or equal in measure or extent to plaintiff's injuries, or such as measure the actual loss, and are given as amends therefor. 5C Michie's Jur. Damages § 7, at 46-47 (1998) (footnotes omitted). [T]he general rule in awarding damages is to give compensation for pecuniary loss; that is, to put the plaintiff in the same position, so far as money can do it, as he would have been [in] if . . . the tort [had] not [been] committed. 5C Michie's Jur. Damages § 18, at 63 (footnote omitted).
Kessel v. Leavitt, 204 W. Va. 95, 187, 511 S.E.2d 720, 812 (1998), cert. denied, 525 U.S. 1142, 199 S. Ct. 1035, 143 L. Ed. 2d 43 (1999). See also Yates v. Crozer Coal & Coke Co., 76 W. Va. 50, 55, 84 S.E. 626, 628 (1914) ( [C]ompensatory damages [are] . . . damages proportionate or equal in measure or extent to plaintiff's injuries.).
In accordance with this general principle, many courts agree that the measure of damages for the destruction of an established business is the difference between the value of the business prior to the wrongful act and the value following the wrongful act. See Mattingly, Inc. v. Beatrice Foods Co., 835 F.2d 1547, 1559 (10th Cir. 1988) (The proper measure of recovery for the destruction of a business is the 'difference between the . . . market value of the business before and after the injury.' (citations omitted)), vacated on other grounds, 852 F.2d 516 (10th Cir. 1988); Taylor v. B. Heller & Company, 364 F.2d 608, 612 (6th Cir. 1966) (The law of Ohio, which governs in this diversity action, recognizes the action for damages for destruction of a business as measured by the difference between the value of the business before and after the injury or destruction. (citations omitted)); In re Snead, 1 B.R. 551, 556 (1979) ('Where a regular and established business is injured, interrupted, or destroyed, the measure of damages is the diminution in value of the business by reason of the Wrongful Act, with interest; it is the net loss and not diminution in gross income [sales].' (quoting 25 C.J.S. Damages § 90b))); Wagenheim v. Alexander Grant & Co., 19 Ohio App. 3d 7, ___, 482 N.E.2d 955, 967 (1983) (When an established and ongoing business is wrongfully injured or destroyed, the correct rule for determining the recovery should be the difference between the value of the business before and after its injury or destruction. (citation omitted)). Cf. Sawyer v. Fitts, 630 S.W.2d 872, 874-75 (Tex. Ct. App. 1982) (holding, in a case where a business was physically destroyed, that the proper measure of damages for destruction of a business is measured by the difference between the value of the business before and after the injury or destruction.). See generally 22 Am. Jur. 2d Damages § 640, at 703 (1988) ([T]he proper measure of damages for destruction of a business is not lost profits, but the difference between the value of the business before and after the defendant's wrongful acts. (footnote omitted)); 25 C.J.S. Damages § 90b, at 978 (1966) (Where a regular and established business is injured, interrupted, or destroyed, the measure of damages is the diminution in value of the business by reason of the wrongful act, . . . it is the net loss, and not diminution in gross income. (footnotes omitted)); 5C Michie's Jur. Damages § 37, at 105 (1998) (Where a regular and established business is injured, interrupted or destroyed, the measure of damages is the diminution in value of the business by reason of the wrongful act, with interest; it is the net loss and not diminution in gross income sales. (footnote omitted)).
In Mattingly, Inc. v. Beatrice Foods Co., the court further recognized that:
In determining such values before and after destruction of the business, market value should be used. See Restatement (Second) of Torts § 912, illustration 10 (1977). As a general rule, market value is the highest price a purchaser is willing to pay for property, not being under compulsion to buy, and the lowest price a seller is willing to accept, not being under compulsion to sell. United States v. Hatahley, 257 F.2d 920, 923 n.2 (10th Cir. 1958).
835 F.2d 1547, 1559 (additional citations omitted).
Based upon the foregoing, we hold that the proper measure of damages for the
destruction of an established business is the difference between the fair market value of the
business before and after its destruction.
Having established the proper measure of damages for the destruction of a
business, we turn to the Livelys' argument that the circuit court erred in prohibiting them
from presenting, as evidence of their damages, certain debts for which they remained liable
after the liquidation of Jetah. This very issue was addressed by the Court of Appeals of Ohio
in Wagenheim v. Alexander Grant & Co., 19 Ohio App. 3d 7, 482 N.E.2d 955 (1983). In
Wagenheim, the court, while discussing whether a corporate plaintiff had met its burden of
proving its damages, noted that the plaintiff had presented evidence of claims filed by its
creditors as proof of the amount of damages it had sustained. 482 N.E.2d at 968. Explaining
the proper use of such evidence, the court stated that [w]hile these figures might have been
helpful in determining the value of the corporation, they could not by themselves be the basis
of a recovery. The creditors' claims represent debts which [the plaintiff] was already
responsible for, regardless of defendant's actions. Id. See also Mattingly, Inc. v. Beatrice
Foods Co., 835 F.2d 1547, 1560 (While claims by creditors may be helpful in determining
the value of a business, they can not by themselves be the basis of a recovery. (citation
A review of the record in the present case, as well as the Livelys' arguments
on appeal, reveals that they desired to present evidence of the debts of Jetah, for which they
remained liable, as an independent basis for recovery rather than for the purpose of
calculating Jetah's market value. Therefore, the evidence was not admissible for the Livelys'
intended purpose. As we have previously explained,
[t]he West Virginia Rules of Evidence . . . allocate significant discretion to the trial court in making evidentiary . . . rulings. Thus, rulings on the admission of evidence . . . are committed to the discretion of the trial court. Absent a few exceptions, this Court will review evidentiary . . . rulings of the circuit court under an abuse of discretion
standard. Syl. Pt. 1, in part, McDougal v. McCammon, 193
W. Va. 229, 455 S.E.2d 788 (1995).
Syl. pt. 9, Tudor v. Charleston Area Med. Ctr., Inc., 203 W. Va. 111, 506 S.E.2d 554 (1997). For the foregoing reasons, we conclude that the trial court did not abuse its discretion in refusing to admit evidence of Jetah's outstanding debts as an independent element of recovery for the Livelys.
Note: If your answer to Interrogatory No. 1 is zero or
less, you need not answer any further
Interrogatories and report back to the Court.
The jury answered this question with a zero, and reported back to the circuit court without answering any additional questions as to Rufus' or Lester's liability.
The Livelys' argue that the circuit court improperly used a special verdict
question and thereby caused the jury to answer only one interrogatory that was based upon
an erroneous ruling on the measure of damages for the destruction of a business.See footnote 12
Lester respond that the submission of the special verdict form to the jury was within the trial
court's discretion and reflected the proper measure of damages for the petitioners' claims.
Rufus and Lester further assert that if the business had no value, the rest of the issues in the
case were moot.
We ascertain two issues from the parties' arguments. The first issue is whether
part I of the verdict form reflected the proper measure of damages for the destruction of a
business.See footnote 13
The second is whether the form appropriately limited the jury's verdict to one
interrogatory involving the existence of damages. We address each of these questions in
1. Measure of Damages. As we held above, the proper measure of damages
for the destruction of a business is the difference between the fair market value of the
business before and after its destruction. In fact, the circuit court instructed the jury, in part,
The measure of damages for breach of fiduciary duties depends upon the nature of the breach found by you.
If the breach of fiduciary duty was found by you involved destruction of Plaintiffs' business, the measure of damages would be the difference between the value of the business before and after the injury or destruction.
Contrary to the proper measure of damages for the destruction of a business, and the above-quoted instruction given by the trial court, part I of the verdict form merely asked the jury to enter the value of Jetah, Inc. on a particular day, the day Rufus acquired the Jetah stock through a foreclosure sale. This particular question is similar in form to an interrogatory, which is provided for in Rule 49(b) of the West Virginia Rules of Civil Procedure. Regarding this type of verdict, we have previously held that [a]s a general rule, a trial court has considerable discretion in determining whether to give special verdicts and interrogatories to a jury unless it is mandated to do so by statute. Syl. pt. 8, Barefoot v. Sundale Nursing Home, 193 W. Va. 475, 457 S.E.2d 152 (1995). See also, Syl. pt. 15, Carper v. Kanawha Banking & Trust Co., 157 W. Va. 477, 207 S.E.2d 897 (1974) (In absence of statutory requirement, whether a jury shall be compelled to answer special interrogatories before arriving at a general verdict, is a matter resting in the sound discretion of the trial court.).
We have further explained, however, that [w]here not required by statute,
special interrogatories in aid of a general verdict should be used cautiously and only to clarify
rather than to obfuscate the issues involved. Syl. pt. 16, Carper, 157 W. Va. 477, 207
S.E.2d 897. In the case sub judice, the interrogatory on the value of Jetah was apparently
intended to resolve the question of the damages suffered by the Livelys as a result of the
destruction of their business. Not only did this question state an incorrect measure of
damages, it was also contrary to at least one of the jury instructions on the method to be used
by the jury in determining the Livelys' damages, if any, in this case.See footnote 14
Furthermore, we find
the verdict form was fatally flawed in that it utilized the term value when that term was not
defined in the interrogatory itself or in the jury instructions. The term value in the context
of a case such as the one at bar could be intended to refer to the book value of the
corporation, the value of the corporation as a going concern, or the accumulated market value
of its outstanding corporate stock. Therefore, we conclude that the circuit court abused its
discretion in submitting to the jury an interrogatory that was inconsistent with and
contradictory to the law and the jury instructions, and otherwise obtuse.See footnote 15
find this to be a reversible error.See footnote 16
See Ingram v. Earthman, 993 S.W.2d 611, 641 (Tenn. Ct.
App. 1998) (Reversal is required . . . when the special verdict form is confusing or
inconsistent with the trial court's instructions.), cert. denied, ___ U.S. ___, 120 S. Ct. 445,
145 L. Ed. 2d 362 (1999); Janke v. Duluth & Northeastern R.R. Co., 489 N.W. 2d 545, 549
(Minn. Ct. App. 1992) (A trial court commits reversible error by giving inconsistent and
contradictory instructions on a material issue. . . . In this case, the trial court's instructions
on damages and the damages portion of the special verdict form were inconsistent and
confusing. . . . We conclude that because the instructions on damages were inconsistent and
contradictory, a new trial on damages is required. (internal citation omitted)).
2. Limiting Verdict Form to Damages. The verdict form in this case asked
the jury to first answer an interrogatory related to damages and instructed the jury that if its
answer to that question was zero or less, then it was to cease its deliberations and report
to the circuit court. In essence, the jury form was configured such that the jury was to
determine an issue related to damages prior to issues related to liability, and, depending upon
the jury's determination on damages, to the exclusion of the issue of liability. We deem this
configuration to be ill-advised for many reasons.See footnote 17
First, asking a jury to determine damages before liability is inconsistent with
the general principle that liability should be determined prior to damages. See, e.g., 9 Charles
Alan Wright & Arthur R. Miller, Federal Practice and Procedure: Civil 2d § 2390 (1995)
(Logically, the existence of liability must be resolved before damages are considered.);
Kinnel v. Mid-Atlantic Mausoleums, Inc., 850 F.2d 958, 967-68 n.12 (3d Cir. 1988) (quoting
Wright & Miller).
Determining damages prior to, and to the exclusion of, liability in a typical civil trial also is inefficient and costly. Normally, the plaintiff in a tort action is required to prove both the defendant's liability and the damages he or she has suffered as a result of the defendant's wrongdoing. Burk v. Huntington Dev. & Gas Co., 133 W. Va. 817, 831, 58 S.E.2d 574, 582 (1950) ('Where a liability is asserted on the ground of tort, the plaintiff bears the burden of proof of the fact on which the liability rests . . . .' (citation omitted));
Syl. pt. 8, in part, Miller v. United Fuel Gas Co., 88 W. Va. 82, 106 S.E. 419 (1921) (In an
action for tort, the plaintiff bears the burden of proof . . . .). See also Pasquale v. Ohio
Power Co., 187 W. Va. 292, 310, 418 S.E.2d 738, 756 (1992). ([T]he burden of proving the
elements of damages rests on the plaintiff, and absent proof of any element, it may not be
considered.). Thus, the jury in a civil case customarily is compelled to hear all of the
evidence, on liability as well as on damages. If the jury is then prohibited from rendering a
decision on the issue of liability, as was the case in the trial of the instant matter, the time and
effort spent on liability issues during trial is lost.See footnote 18
In addition to being costly, allowing a jury
to decide a full trial on the sole issue of damages unnecessarily encumbers the circuit court's
already overburdened docket. See, e.g., Syl. pt. 10, in part, Toler v. Hager, 205 W. Va. 468,
519 S.E.2d 166 (1999) (In the interest of judicial economy, circuit courts should make every
effort to correct defective or faulty verdicts and, thereby, avoid costly and time consuming
retrials. . . .).
Moreover, the ramifications of requesting a jury to determine damages prior
to, and possibly to the exclusion of, liability are not limited just to trial court proceedings.
If the case is subsequently appealed and, as in the present proceeding, reversed on damages,
the entire case must be tried anew. Thus, the parties and the circuit court must then bear the
further expenses of re-litigation. This Court's docket would also be burdened by such a
process, as we would be deprived of addressing, in the first instance, all of the issues that
may have arisen in the trial. After a retrial, we could then be asked to consider the case for
a second time on appeal and to decide issues related to liability that could have been resolved
in the first appeal of the case.
Finally, we believe there are still other risks to asking a jury to determine
damages before liability in the ordinary civil trial. Placing the jury's initial focus on the
amount of damages may impact on their sympathy toward the plaintiff. Where damages are
substantial, the jury may be persuaded by the mere size of the damages to assign a higher
percentage of fault to the defendant(s) than they might have otherwise. There is also a risk
that after a lengthy and complex trial where questions of liability are difficult, a jury may be
inclined to assign no damages in order to avoid a protracted deliberation on liability issues.
For these several reasons, we hold that, generally, the verdict form used in a
typical, nonbifurcated, civil trial should ask the jury to decide issues related to liability prior
to deciding the issues relating to damages.See footnote 19
Because the verdict form used in the case sub
judice permitted the jury to resolve the issue of damages without addressing questions of
liability, we find that the circuit court erred in submitting it to the jury over the Livelys'
C. Admission of the Settlement and Indemnification Agreement
The Livelys' assert various reasons the Settlement and Indemnification Agreement, which had been negotiated by the parties to the underlying law suit and then rejected by the bankruptcy court, should have been admitted into evidence pursuant to the provision of Rule 408 of the West Virginia Rules of Evidence allowing the admission of a compromise agreement for a purpose other than to prove liability for or invalidity of the claim or its amount.See footnote 20 20 Following a brief review of the appropriate standard for our review of this issue, we will address the Livelys' substantive arguments.
As we explained earlier in this opinion, a trial court's rulings regarding the
admission of evidence are reviewed for an abuse of discretion. Syl. pt. 9, Tudor v.
Charleston Area Med. Ctr., Inc., 203 W. Va. 111, 506 S.E.2d 554. See also, Syl. pt. 4, State
v. Rodoussakis, 204 W. Va. 58, 511 S.E.2d 469 (1998) (A trial court's evidentiary rulings,
as well as its application of the Rules of Evidence, are subject to review under an abuse of
discretion standard.). Thus, the decision of whether to admit evidence of compromise offers
for a purpose other than to prove liability for or invalidity of the claim or its amount,
W. Va. R. Evid. 408, is within the sound discretion of the circuit court. See 1 Franklin D.
Cleckley, Handbook on Evidence for West Virginia Lawyers § 4-8(F), at 402 (3d ed. 1994)
(If [evidence of settlement negotiations] is offered for another purpose, the court has
discretion to admit it. (citing Bituminous Constr., Inc. v. Rucker Enters, Inc., 816 F.2d 965,
968-69 (4th Cir. 1987). See also Belton v. Fibreboard Corp., 724 F.2d 500, 505 (5th Cir.
1984) ('Whether to admit evidence for another purpose is within the discretion of the trial
court; the court's decision will not be reversed in the absence of an abuse of discretion
amounting to 'manifest error.' (citation omitted)).
1. Admissibility of settlement agreement as part of basis for expert
opinion. Prior to trial, defendants Rufus and Lester each filed a motion in limine to exclude
the Settlement and Indemnification Agreement from evidence based upon Rule 408 of the
West Virginia Rules of Evidence. The Livelys resisted the motions and argued to the circuit
court that the document should be admitted as Mr. Ross Dionne, an expert witness testifying
on behalf defendant Rufus, relied upon the document in reaching his opinion in this matter.
Counsel for Rufus replied that Mr. Dionne would not refer to the settlement agreement in
offering his expert opinion testimony. Consequently, the circuit court concluded that, so long
as Rufus did not open the door by offering evidence that his expert relied on the settlement
agreement to conclude that defendant Rufus had properly discharged his professional duty,
then the Livelys would not be permitted to cross examine the expert regarding the settlement
The Livelys argue in this Court that they should have been permitted to
question Mr. Dionne regarding the settlement agreement as he indicated in his pre-trial
deposition testimony that the settlement agreement had been part of the basis for his expert
opinion that Mr. Rufus had properly fulfilled his professional duty to the Livelys. They
contend that such a use of the evidence is permissible under Rule 408, as the evidence was
offered for a purpose other than proving liability or the amount of their claim.
Under Rule 705 of the West Virginia Rules of Evidence, the Livelys are
entitled to require Mr. Dionne to disclose the facts or data underlying his opinion: The
expert may testify in terms of opinion or inference and give reasons therefor without first
testifying to the underlying facts or data, unless the court requires otherwise. The expert may
in any event be required to disclose the underlying facts or data on cross-examination.
(Emphasis added). In the present case, the issue of whether the settlement agreement was
relied upon by Mr. Dionne in reaching his opinion was thoroughly argued to the circuit court
in connection with the defendants' motion in limine for the exclusion of that document. The
Livelys argued to the court that Mr. Dionne's deposition testimony revealed that he did, in
fact, use the settlement agreement in reaching his opinion. On the contrary, the court
concluded that Mr. Dionne's deposition testimony did not indicate that his opinion was based
upon the settlement agreement and, therefore, the agreement was not admissible under Rule
We have reviewed the portion of Mr. Dionne's deposition testimony asserted
by the Livelys in support of their argument, and we cannot say that the circuit court abused
its discretion in declining to admit into evidence the settlement agreement.
2. Admissibility of Settlement Agreement to Demonstrate Rufus' motive,
and to refute negative evidence regarding the Livelys' conduct. During trial, the Livelys
asked the circuit court to reconsider its earlier ruling that the Settlement and Indemnification
Agreement was not admissible. The Livelys' argued to the court that the document was
admissible under Rule 408 because it demonstrated Rufus' motive in wanting to own the
Jetah stock, and because it would have controverted Rufus' assertion that the Livelys had
refused any reasonable offer and had caused undue delay.See footnote 21
The circuit court considered the Livelys' arguments, and concluded that the
danger of unfair prejudice from the admission of the document itself, with all its details,
substantially outweighed its probative value.See footnote 22
First, the circuit court concluded that the
agreement was not sufficiently probative of Rufus' motive as it was too far removed in time
from Rufus' assertion that he did not wish to own the stock. Furthermore, the court observed
that during the period between Rufus' comments that he did not wish to own the stock and
the negotiation of the settlement agreement, the situation facing Rufus had changed.
Second, as to the Livelys' ability to rebut Rufus' assertion that they had refused
any reasonable offer and had caused undue delay, the circuit court ruled that as an alternative
to admitting the document itself, the Livelys would be permitted to explain their conduct to
the jury by questioning witnesses regarding the fact that there had been settlement
negotiations. In addition, the circuit court read to the jury a stipulation, which was agreed
to by the parties, that explained that the Livelys took no legal action during the period of time
that negotiations to resolve the parties' disputes were ongoing.
After a thorough consideration of the parties' arguments and the relevant
portions of the record before us, we again cannot conclude that the circuit court abused its
discretion in determining that the probative value of the settlement agreement was out
weighed by its prejudicial value, and in crafting an alternate method of allowing the Livelys
to respond to evidence that was negative to their claims. Only rarely--and in extraordinarily
compelling circumstances--will we, from the vista of a cold appellate record, reverse a trial
court's on-the-spot judgment concerning the relative weighing of probative value and unfair
effect. Reed v. Wimmer, 195 W. Va. 199, 206, n.8, 465 S.E.2d 199, 206 n.8 (1995). See
also, State v. Guthrie, 194 W. Va. 657, 683, 461 S.E.2d 163, 189 (1995) (In applying Rule
403, it is pertinent whether a litigant has some alternative way to deal with the evidence that
it claims the need to rebut that would involve a lesser risk of prejudice and confusion).See footnote 23
Consequently, we find that the circuit court did not err by excluding the Settlement and
1995). Because the record presented on appeal is inadequate for us to determine the propriety of any rulings made by the circuit court on the issue of standing, and because this issue has been inadequately briefed by the parties, our opinion is strictly limited to those legal issues expressly raised by the parties hereto and reflected in the designated record. See State v. Honaker, 193 W. Va. 51, 56, 454 S.E.2d 96, 101 (1994) (In a long line of unbroken precedent, this Court has held that the responsibility and burden of designating the record is on the parties and that appellate review must be limited to those issues which appear in the record presented to this Court. (footnotes omitted) (citation omitted)). See also Albright v. White, 202 W. Va. 292, 298 n.9, 503 S.E.2d 860, 866 n.9 (1998) (declining to address an issue that was inadequately briefed); Bowers v. Wurzburg, 202 W. Va. 43, 53 n.18, 501 S.E.2d 479, 489 n.18 (1998) (same); Ohio Cellular RSA Ltd. Partnership v. Board of Pub. Works of W. Va., 198 W. Va. 416, 424 n.11, 481 S.E.2d 722, 730 n.11 (1996) (same).
Evidence of (1) furnishing or offering or promising to
furnish, or (2) accepting or offering or promising to accept a
valuable consideration in compromising or attempting to
compromise a claim which was disputed as to either validity or
amount is not admissible to prove liability for or invalidity of the
claim or its amount. Evidence of conduct or statements made in
compromise negotiations is likewise not admissible. This rule
does not require the exclusion of any evidence otherwise
discoverable merely because it is presented in the course of
compromise negotiations. This rule also does not require
exclusion when the evidence is offered for another purpose, such
as proving bias or prejudice of a witness, negativing a
contention of undue delay, or proving an effort to obstruct a
criminal investigation or prosecution.