JUDGE KEEPS JURY FOR DALLY PENALTY PHASE.

Byline: Don Holland Daily News Staff Writer

The same jury that convicted Michael Dally last week of first-degree murder will remain on the job to consider whether he should pay with his life, a judge ruled Wednesday.

Superior Court Judge Charles Campbell also agreed to allow what could be critical testimony from one of Dally's former lovers, Sallie Lowe. When Dally's penalty trial gets under way next week, Lowe is expected to testify about how Dally allegedly choked her and considered killing her for her savings.

As Campbell ruled on a variety of motions that will shape the penalty phase, the defense walked away almost empty-handed.

The judge rejected defense motions for a new jury and a request to transfer the case out of Ventura and Santa Barbara counties.

Defense attorney James Farley argued that the jury had been improperly influenced when a crowd outside the courtroom cheered Dally's April 6 murder conviction. Campbell said it would be inappropriate to poll jurors about the cheering incident and that it was hardly significant enough to warrant bringing in an entirely new jury.

``I don't know that that brief (outburst) of noise affected them in any way at all,'' the judge said. ``Assuming that they knew what that was . . . they had already rendered their verdicts.''

Dally, a 37-year-old former supermarket worker was convicted of first-degree murder, kidnapping and conspiracy in the 1996 murder of his wife, Sherri. He was also convicted of two special circumstances that make him eligible for the death penalty.

Campbell also turned down another defense request for a new jury because of the prosecution's portrayal of Dally as a cruel and depraved man consumed with his lust for prostitutes and cocaine.

Although admissible in the determining guilt phase, such ``bad character'' evidence, Farley said, would be inadmissible in the penalty phase. But Campbell rejected the request, saying that Dally's use of cocaine and prostitutes are linked to his motivation in plotting the murder of his wife, who grew intolerant of his vices. The jury, in weighing the death penalty, is allowed to consider Dally's motive.

Dally's co-conspirator, Diana Haun, was convicted of the same charges. Haun will not testify in Dally's penalty phase, although prosecutors initially wanted her to do so.

Campbell also set the ground rules for admissible evidence for Dally's penalty trial, set to start Monday. Prosecutors Lela Henke-Dobroth and Michael Frawley outlined a series of family photographs depicting Sherri Dally at her 19th birthday party, at her wedding to Michael Dally and finally a photo of the urn containing her ashes.

``All of this is clearly to invoke sympathy for Sherri Dally, which (prosecutors) have already gotten,'' said defense attorney Robert Schwartz in an unsuccessful bid to exclude the photos.