Eminent Domain Report

In an unpublished opinion filed this week, the California Court of Appeal confirmed two fundamental evidentiary rules related to eminent domain matters:

1. A witness intending to testify to an opinion of value must exchange a statement of valuation data; and
2. A witness will be precluded from testifying to a comparable sale if it is determined by the court that the comparable is not comparable and would confuse the jury.

Before we delve into the case, here’s a basic reminder of California law as it pertains to these two issues:

With respect to the court’s first finding, California Code of Civil Procedure §1258.250 provides:

A statement of valuation data shall be exchanged for each person the party intends to call as a witness to testify to his opinion as to any of the following matters: (a) The value of the property being taken...

With respect to the court’s second finding, California Evidence Code § 352 provides:

The court in its discretion may exclude evidence if its probative value is substantially outweighed by the probability that its admission will (a) necessitate undue consumption of time or (b) create substantial danger of undue prejudice, of confusing the issues, or of misleading the jury.

Background

In California Department of Transportation v. Francisco Javier Briseno, Caltrans, filed an eminent domain action to acquire 2.75 acres of unimproved land owned by Briseno in the City of Chula Vista.  As required by CCP §1258.250, Briseno exchanged a statement of valuation for his real estate appraiser’s opinion.  Briseno’s appraiser relied on eight sales transactions to conclude to his fair market value conclusion.  At the time of trial, Caltrans filed a motion in limine to exclude one of the sales transactions, Comp 2.  A developer had purchased property adjacent to Comp 2 to develop a 533-unit apartment complex.  As a condition of the development, the developer was subsequently required to purchase Comp 2 and dedicate it to the City for public park use, or pay the City $980,000 in additional development fees.  The developer agreed to purchase Comp 2 for $950,000.  Caltrans argued that Comp 2 was not comparable because the purchase price did not reflect what a buyer would pay for similar property, but rather what this developer was forced to pay in order to be able to proceed with his development.  Caltrans argued that Comp 2 would confuse the jury and should be excluded under Evidence Code §352.

Caltrans also filed a motion in limine to exclude testimony by Briseno himself regarding the value of plants on his property on the basis that a statement of valuation had not been exchanged for Briseno.

Exclusion of Comp 2

As the court often does when deciding whether to preclude evidence, the Court balanced whether the probative value of Comp 2 substantially outweighed the risk of prejudice and confusion to the jury under Evidence Code §352.  With various factors testing the limits of comparability, the Court agreed that the risk of confusion and the undue time necessary to explain the unique factors surrounding Comp 2, (i.e. that it was not a transaction freely entered into by a buyer), outweighed its probative value, and as such excluded Comp 2.

Precluding Opinion of Value

The Court also held in favor of Caltrans on whether Briseno was properly precluded from testifying as to his opinion of value regarding the plants.  The Court pointing to CCP §1258.250 confirmed the trial court’s ruling that since a statement of valuation was not exchanged for Briseno, Briseno would not be allowed to testify as to value.

Conclusion

So to sum it up, be sure your comparables are comparable and are arms-length-transactions which would not unduly prejudice or confuse a jury.  Even more fundamentally, if you intend for a witness to testify at the time of trial and provide a valuation opinion, be sure to exchange a statement of valuation for that witness.

Finally, while the Court in the Briseno case did not get into the discussion of the factors considered to determine the comparability of a comparable, here is a reminder of what California Evidence Code §816 states:

When relevant to the determination of the value of property, a witness may take into account as a basis for his opinion the price and other terms and circumstances of any sale or contract to sell and purchase comparable property if the sale or contract was freely made in good faith within a reasonable time before or after the date of valuation. In order to be considered comparable, the sale or contract must have been made sufficiently near in time to the date of valuation, and the property sold must be located sufficiently near the property being valued, and must be sufficiently alike in respect to character, size, situation, usability, and improvements, to make it clear that the property sold and the property being valued are comparable in value and that the price realized for the property sold may fairly be considered as shedding light on the value of the property being valued. (Emphasis added).