Stephen Morale d/b/a Action Collision Repair and Kimberly Morale, Petitioners,
The State of Texas, Respondent
Petition for Review from the Court of Appeals for the Second
District of Texas
issues in this appeal of a condemnation judgment are whether
the trial court erroneously admitted and excluded various
evidence at trial, thereby probably resulting in rendition of
an improper judgment. We hold that the trial court's
evidentiary holdings were not an abuse of discretion. Because
the court of appeals held otherwise, we reverse that
court's judgment and reinstate the judgment of the trial
State of Texas planned to condemn a portion of a 33, 000
square-foot property owned by Stephen and Kimberly Morale in
the Town of Little Elm, Texas (the Town), for purposes of
improving FM 720 in Denton County. The property was improved
with an 8, 831 square-foot building used for the Morales'
vehicle collision repair business. Specifically, the State
planned to take a 3, 200 square-foot strip of land, which
included a metal canopy used by the business that would have
to be demolished as part of the taking.
State's appraiser, Jennifer Ayers, initially determined
that after the taking and the implementation of a "cure
plan" involving removal of certain parts of the
building, the Morales' property could still be used as a
general auto repair shop but not as a collision repair shop.
Based on Ayers's determination that the use of the
property would change as a result of the taking, the State
administratively classified the Morales as
"displaced" in May 2012. See 43 Tex.
Admin. Code § 21.116 ("When a person is required to
relocate as a result of the acquisition of right-of-way for a
highway project, the [Texas Department of Transportation]
will pay the reasonable expenses of relocating the displacee
and his or her business and personal property . . . .").
According to department manuals, the classification denotes
that the partial taking will render the condemnee
"unable to conduct business in the same or similar
manner as prior to the acquisition."
State's land planner, Ronan O'Connor, subsequently
developed a second cure plan for reconfiguring the property
that would enable the Morales to continue operating their
existing business on the site. O'Connor's plan
relocated the metal canopy to another location on the
property, added a door to the office building, and made
adjustments to the parking curbs. In February 2013, Ayers
revised her appraisal to incorporate O'Connor's cure
plan, determining that the Morales' property could still
be used as a collision repair shop. In May 2013, the special
commissioners awarded the Morales $49, 804 in damages for the
taking. The Morales objected to the award and demanded a jury
trial. The State formally revoked the Morales' displacee
status on November 21, 2013.
Morales hired their own appraiser, David Bolton, and land
planner, Bill Carson. Bolton had developed an initial
appraisal in May 2013 based on the assumption that the entire
site would be demolished (following from the assumption of
displacement). Carson developed two cure plans for
reconfiguring the property to continue its use as a collision
repair shop. Bolton used one of these plans to make an
alternative appraisal based on nondisplacement.
Morales' property is zoned light commercial, and a
collision repair shop is not an authorized use in that zoning
classification. The property also had other nonconforming
uses, such as unpaved parking. However, these uses all
existed before the current zoning restrictions were in place,
and, as they were continuous, the uses would be
grandfathered-in and considered legally nonconforming. Once a
nonconforming use ceases, the grandfathered status is lost.
Thus, when Carson developed his cure plans allowing for
continued use as a collision repair shop, he had to alter
other previously grandfathered, nonconforming uses of the
property (e.g., the use of the parking lot), which in turn
required additional modifications to bring the new use
"up to conformity" with applicable Town zoning
trial, the State moved to exclude any evidence relating to
the Morales' revoked displacee status. The trial court
denied the motion. The State presented evidence at trial,
through Ayers's testimony of her appraisal based on
implementation of the O'Connor cure plan, that the
compensation owed the Morales was $122, 953. David Bolton,
the Morales' appraiser, testified to two values. First,
he testified to what he called his "displaced
valuation" of $1, 262, 947, constituting the loss in
fair market value of the property if all improvements were
razed. He alternatively testified that if one of Carson's
cure plans were implemented, such that the Morales could
still use the property to operate a collision repair shop and
thus would not be displaced, the Morales would be entitled to
$1, 064, 335. Kimberly Morale testified that the Morales were
requesting an award of $1, 262, 000 because, based on her
knowledge of the property's highest and best use, they
were being displaced.
parties also disputed the admissibility of evidence regarding
the Town's zoning regulations and the effect they would
have on the property after condemnation. At trial, the State
offered the testimony of city engineer Jason Laumer and city
attorney Robert Brown. By referring to the Town's
previous grants of zoning variances on unrelated properties,
their testimony suggested that the Morales would also be
given a zoning variance, allowing them to continue the
collision repair business in a legally nonconforming way.
Brown and Laumer conceded, however, that they could not
testify as to what the Little Elm Town Council would or would
not ultimately do. Dusty McAfee, who heads the Town's
planning department, testified as a witness for the Morales.
Like Brown and Laumer, McAfee could not speak to what the
Town would do. But his testimony suggested that a prospective
buyer would not believe it was reasonably probable that the
Town would grant a zoning variance to make the O'Connor
cure plan viable-or at least the buyer would not believe it
was as probable as Brown and Laumer painted it. This was a
key disagreement because the Morales' ability to continue
using the property as a collision repair shop under the
O'Connor cure plan (which was the basis for revoking the
displacement classification) depended on obtaining a zoning
trial court admitted the testimony of Bolton and Kimberly
Morale, including their discussion of displacement. It
excluded Brown's and Laumer's testimony as
irrelevant. The jury was asked to determine the difference
between the market value of the whole property before the
taking and the market value of the remaining property after
the taking, considering the effects of the condemnation on
the remainder. The jury awarded $1, 064, 335, Bolton's
compensation figure associated with the Morales not being
displaced, and the trial court essentially rendered judgment
on the verdict. The court of appeals reversed and remanded
for a new trial. __S.W.3d__, __(Tex. App.-Fort Worth 2016)
(mem. op.). It held that the admitted evidence of
displacement was both irrelevant to the only issue at
trial-"the compensation owed to the Morales for the part
taken and for any damages to the Morales' remainder
property"-and harmful. Id. at__. The court also
held Bolton's displacement appraisal was "based on a
land use that was speculative and unsubstantiated," and
that "the displacement market value testimony was
irrelevant and therefore inadmissible." Id.
at__. Finally, the court of appeals held that the trial court
erred in excluding Brown's and Laumer's testimony.
Id. at__. The Morales petitioned for our review.
to admit or exclude evidence is within the trial court's
sound discretion. See Owens-Corning Fiberglas Corp. v.
Malone, 972 S.W.2d 35, 43 (Tex. 1998). Irrelevant
evidence is not admissible. Tex. R. Evid. 402. Evidence is
relevant if "it has any tendency to make a fact more or
less probable than it would be without the evidence" and
"the fact is of consequence in determining the
action." Tex. R. Evid. 401.
only issue the jury was asked to decide in this case was the
amount of just compensation due to the Morales for the
partial taking, calculated as the difference between the
market value of the entire property before the taking and the
market value of the remainder property after the taking,
considering the effects of the condemnation. State v.
Petropoulos, 346 S.W.3d 525, 530 (Tex. 2011). "The
factfinder may consider the highest and best use of the
condemned land," which is presumed to be "the
existing use of the land." Enbridge Pipelines (E.
Tex.) L.P. v. Avinger Timber, LLC, 386 S.W.3d 256, 261
(Tex. 2012). A disagreement between experts as to the value
of land after condemnation is part and parcel of trial.
See, e.g., State v. Dawmar Partners, Ltd.,
267 S.W.3d 875, 877 (Tex. 2008) ("[T]here was
considerable conflicting evidence regarding the highest and
best use of the property before and after the taking.");
State v. Windham, 837 S.W.2d 73, 77 (Tex. 1992).
the collision repair shop was the existing use of the land at
the time of the taking and thus was also the presumed highest
and best use. The State's initial displacement
classification, though later revoked, reflected the risk that
the taking would cause the loss of that use. The court of
appeals held that "the fact that the Morales were
considered displaced . . . does not make it more probable
that the State at one time believed that the taking itself
caused a change in the property's use" because the
classification "was based on a combination of the effect
of the taking and Ayers's proposed cure plan."
__S.W.3d at__. We disagree with this faulty premise.
Ayers's cure plan merely reflected her conclusion that,
at best, the property's highest and best use after the
taking would still change. Certainly the State was entitled
to, and did, present evidence explaining to the jury why the
initial displacement classification was incorrect and why the
taking ultimately did not prevent the Morales from continuing
to use the property as a collision repair shop. ...