Eminent Domain Report

A couple of weeks ago, the California Court of Appeal issued a decision that discussed an attorney malpractice lawsuit known as a settle and sue case, where the client settles whatever litigation in which they are embroiled, then turns around and immediately sues their attorney. (Filbin v. Fitzgerald, 2012 WL 5857331). Incidentally, that malpractice action stemmed from an eminent domain case, and if you're interested in it, there's some good lessons to be learned about the Final Offer/Final Demand procedures. 

But this post isn’t about that case -- or "settle and sue" -- but involves a similar practice which I’m going to call acquiesce and appeal. Last week, a different Court of Appeal issued an unpublished decision regarding a motion in limine. In County of Glenn v. Foley (2012 WL 5899621 (Cal.App.3 Dist.)), the trial court granted the County’s motion in limine which effectively wiped out all valuation testimony the defendant was going to offer in trial. Once the court granted the County’s motion, the owner acquiesced to the County’s valuation opinion and appealed the court’s decision. Hence, acquiesce and appeal. 

Here are the basic facts: The County had been leasing a portion of Foley’s property for a landfill since 1971. In 2008, the County sought to acquire a fee interest in the leased property along with additional acreage totaling 439 acres. The property is located in a rural agricultural area. The owner’s expert, Gregory House, opined that the highest and best use of the property was orchard land, such as olives, and using seven comparable sales, adjusting them for both quantitative and qualitative variances, he valued the property at $1.7 million.

The County’s expert. Ray Howard, opined that the highest and best use was as grazing land because of the gently rolling topography of the subject property. He did not discuss whether a conversion to orchards was feasible. Using nine grazing land comps, he reach a property value of $637,000. 

Before trial, the County filed a motion in limine seeking to exclude House’s opinion arguing that the adjustments he made to his comps amounted to opinion evidence that violated Evidence Code section 822 subd. (a)(4). The County also argued that the comps House used were not sufficiently comparable to the property, violating Evidence Code section 816. The trial court concluded that the comps House used were not comparable to the character of the subject property because it was not cost effective to improve the property for olive orchards. 

Most curiously, in reaching this conclusion, the trial court relied upon the deposition of Howard, the County’s expert, even though the County had not submitted the deposition in support of its motion! In fact, neither party can explain how the deposition came to the trial judge’s attention. The appellate court disregarded any evidence the trial court obtained using the Howard deposition and noted that the evidence actually created a triable issue of fact.

Evidence Code section 822 subd. (a)(4) excludes evidence of opinions regarding the value of comparable property. This is also know as appraising the comp. The appellate court reminds us that merely two score years ago it ruled that purpose of Section 822(a)(4) is limited to exclude a party who produces an expert appraiser from using his opinion of the value of property X as a whole as a prop in proving the value of the subject property. Testimony regarding the adjustments made to comparables is admissible. No two properties are alike, so an appraiser should be able to explain the adjustments he made. House’s testimony should have been allowed. 

The Court dealt with the County’s Section 816 argument swiftly. The key to comparables is whether the comps shed light on the value of the subject property. First, the judge determines whether the comps do indeed shed light on the value of the property and then the jury is left to determine the extent of the light being shed, so to speak. The Court determined the comps used by House were not subject to exclusion. The Court reversed and remanded directing the trial court to deny the County’s motion in limine in its entirety.

One of the most interesting arguments was Foley’s assertion that the motion in denied him the right to a jury trial. In my head, the appellate court laughed while reading this argument. The Court basically says, just because you have a constitutional right to a jury trial does not mean you should be allowed to present inadmissible evidence! In this case, had the trial court not erred in its application of the Evidence Code, it would not have made a difference. You can’t present inadmissible evidence, and if that wipes out your whole case, oh well.

As motions in limine in eminent domain cases become more prevalent and more aggressive in their attempts to exclude evidence, even whole opinions such as in this case, I suspect we are going to see more of them reaching the appellate level for a determination as to the appropriateness of excluding, or allowing, certain evidence.