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State v. Vista Ridge 07 A, LLC

Court of Appeals of Texas, Seventh District, Amarillo

April 22, 2019

STATE OF TEXAS, APPELLANT
v.
VISTA RIDGE 07 A, LLC, APPELLEE

          On Appeal from the Probate Court Denton County, Texas Trial Court Nos. PR-2014-00612, Honorable Bonnie J. Robison, Presiding

          Before QUINN, C.J., and PIRTLE and PARKER, JJ.

          MEMORANDUM OPINION

          Brian Quinn Chief Justice.

         The State of Texas appeals from a final judgment awarding Vista Ridge 07 A, LLC the loss it suffered as a result of the State's condemnation efforts. The latter were undertaken as part of a plan to expand an interstate highway adjacent to the affected property. Neither Texas nor Vista agreed to the valuation of the loss derived by three special commissioners. That disagreement resulted in a jury trial wherein the jury found that "the difference between the fair market value of [Vista's] whole property immediately before the State's acquisition on January 16, 2015 and the fair market value of the remaining property immediately after the acquisition" to be $1.6 million. The trial court awarded Vista that sum. The State argues, through two issues, that the jury's decision was improper since it allegedly was influenced by inadmissible evidence admitted by the trial court. We reverse.[1]

         Admission of Expert Evidence Regarding Lost Parking Spaces

         The first issue we address pertains to the valuation of a row of parking that would be lost due to the effects of the State's condemnation. The row lay in front of a Twin Peaks restaurant and behind a landscaping buffer taken by the State. Through its ordinances, the City of Lewisville (City) required a landscaping buffer as of January 16, 2015, or the date of the taking. Abiding by those ordinances would result in the loss of the parking spaces in question, and an expert (Beck) retained by Vista to value the loss factored that circumstance into his opinion. The State, however, believed that so including the effect of the ordinance into the opinion resulted in Beck's testimony becoming irrelevant, unreliable and, therefore, inadmissible. This purportedly was so because the landscaping ordinance was not only subject to amendment but was actually modified after the date of the taking to relieve Vista from maintaining the buffer. The expert's opinion as to the impact of the lost parking ignored this happenstance, according to the State.

         The decision to admit or exclude evidence lays within the trial court's discretion. Morale v. State, 557 S.W.3d 569, 573 (Tex. 2018). This standard obligates an appellate court to uphold the ruling if supported by any legitimate basis appearing in the record. Azle Manor, Inc. v. Patterson, No. 02-15-00111-CV, 2016 Tex.App. LEXIS 13616, at *25 (Tex. App.-Fort Worth Dec. 22, 2016, pet. denied) (mem. op.). And, unless the trial court acted without reference to any guiding rules or principles, its decision must stand. See id. (stating that a trial court abuses its discretion if it acts without reference to any guiding rules or principles, that is, if the act is arbitrary or unreasonable).

         The only issue that the jury was asked to decide concerned the amount of just compensation due Vista for the entire taking by the State. Such compensation is measured by 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. Morale, 557 S.W.3d at 573-74. And the measuring point is the date of taking. Enbridge Pipelines, (E. Tex.) L.P. v. Avinger Timber, LLC, 386 S.W.3d 256, 261 (Tex. 2012). That difference at the time of the taking was what Beck, as an expert appraiser, attempted to calculate for Vista. In assessing whether he legitimately arrived at that end, we must remember that an expert in condemnation cases may assume facts established by legally sufficient evidence and reflect those assumptions in his opinion. Morale, 557 S.W.3d at 575. However, his opinion must have a reliable foundation. Gharda USA, Inc. v. Control Solutions, Inc., 464 S.W.3d 338, 348 (Tex. 2015); Enbridge Pipelines, 386 S.W.3d at 262. If there is too great of an analytical gap between the data the expert relies on and the opinion offered, the opinion is unreliable. Enbridge Pipelines, 386 S.W.3d at 262. The same is true if he uses improper methodology or misapplies established rules and principles in developing his opinion. Id. Moreover, the need for reliability extends to each material component of that opinion. Gharda USA, Inc., 464 S.W.3d at 348-49.

         In testing reliability, we are guided by the application of non-exclusive criteria referred to as the Robinson factors. Id.; see E.I. du Pont de Nemours & Co. v. Robinson, 923 S.W.2d 549, 557 (Tex. 1995). They include 1) the extent to which the theory has been or can be tested, 2) the extent to which the technique relies upon the subjective interpretation of the expert, 3) whether the theory has been subjected to peer review and/or publication, 4) the technique's potential rate of error, 5) whether the underlying theory or technique has been generally accepted as valid by the relevant scientific community, and 6) the non-judicial uses which have been made of the theory or technique. Whirlpool Corp. v. Camacho, 298 S.W.3d 631, 638 n.6 (Tex. 2009); Robinson, 923 S.W.2d at 557. With this said, we begin our analysis.

         That a Lewisville city ordinance required the landscaping buffer as of January 16, 2015 (the date of taking) is clear. That the jury was asked to determine the fair market value of Vista's property as of that date is equally unquestionable. Nor does the State question that the loss of parking at a shopping center and restaurant could affect the value of the remaining property. Instead, it questions whether Beck could legitimately factor into his opinion the likelihood that the existing city ordinance would remain applicable and obligate Vista to maintain the buffer. It argues that he could not because an ordinance had been proposed that would have afforded some zoning relief to those landowners affected by the interstate changes. Because it had been proposed and was awaiting consideration by the city council at the time of taking, Beck had to factor that into his analysis, and he purportedly did not. We overrule this aspect of the State's complaint for several reasons.

         First, evidence indicates that in initially calculating what to pay Vista for the taking, the State itself factored into its equation the need to comply with the existing landscape ordinance.[2] Having itself done that, Beck was free to do the same in developing his opinion. And, we find authority for that in Morale. There, the State initially determined that the landowner's business would be classified as displaced. Though it later changed the classification, the landowner's expert utilized the initial one to support his opinion regarding the damages recoverable due to the taking. The Morale court deemed that appropriate. As it said, "Bolton's assumption that the Morales could not continue the property's existing use is grounded in evidence such as Kimberly Morale's testimony and the initial displacement classification Morale, 557 S.W.3d at 575 (emphasis added). Much like the old saying about "what is good for the goose is good for the gander," what the State considers in developing its valuation opinion entitles the landowner to consider the same if beneficial.

         Second, as said by the Fort Worth Court of Appeals in State v. Little Elm Plaza, Ltd., No. 02-11-00037-CV, 2012 Tex.App. LEXIS 8880 (Tex. App.-Fort Worth Oct. 25, 2012, pet. dism'd by agr.) (mem. op.), "an expert may testify about how an uncertainty with regard to a governmental action may have affected the market value (in other words, how potential buyers and sellers would weigh the risks related to the property) on the date of the taking." Id. at *33. It continued with: "an expert may not opine about how that uncertainty will actually be resolved . . . after the taking when that opinion is speculative or conjectural." Id. In saying this, the court was addressing an issue like that before us. Commercial realty of Little Elm was also being affected by the conjunction of State efforts to expand a highway and compliance by the property owners with a local town's zoning ordinance. Due to this conjunction, Little Elm's expert opined that his client would have to demolish its buildings. The reviewing court was asked to decide if his opinion was speculative and, therefore, inadmissible. The court held it was because the expert ignored, in developing his opinion, evidence of 1) the town's willingness to accommodate property owners, 2) its willingness to craft solutions to address nonconforming uses, 3) the town's delay in both applying and in deciding whether to apply the ordinance that would purportedly result in the demolition of Little Elm's buildings, 4) the town's director of planning and development having told the expert that the town would not require Little Elm to be in full compliance with the ordinance, 5) the "reasonable foreseeab[ility]," on the date of condemnation, that the town would pass another ordinance allowing property owners to seek variances, and 6) the absence of evidence that Little Elm could not seek or would not obtain such a variance. Id. at *37-38 (emphasis added). The State here believes that these words from Little Elm also require us to hold Beck's opinion speculative for like reason. It wants us to conclude that Beck's opinion was based on the "certainty" that Lewisville would enforce its ordinance requiring a ten-foot landscaping buffer.

         It is true that the record contains evidence of Lewisville's eventual decision to forgo application of the landscaping ordinance to Vista's property. That evidence appears in the form of emails written about ten months after the date of condemnation or taking. A governmental decision ten months after the taking is hardly evidence suggesting that it was reasonably foreseeable at the time of taking that neither Vista nor a willing buyer would have to maintain a landscaping buffer.

         "There's many a slip between the cup and the lip." Experience makes that especially true in matters pertaining to governmental decisions. Simply because legislation on a national, state, or local level is proposed does not make its passage a relative certainty. Simply because it is passed does not mean its benefits will be given to those to whom it was designed to help, especially when governmental authorities retain discretion in meting out those benefits. So, the presence of other evidence indicating that a new ordinance which may provide relief to Vista and others was being proposed at the time of the taking does not make its passage a certainty; a witness at trial said as much. Moreover, the proposed (and eventually enacted) ordinance still mandated that "[a]ll Impacted Sites must comply with the Lewisville City Code and be brought into compliance as required." So too did it establish a procedure for them to follow, which procedure involved the submission of an I-35 modified site plan. If that plan required "variances to bring the Impacted Site into compliance, such variances may be approved by the City Council or the Board of Adjustment, depending on the type of variance sought." (Emphasis added). It also granted authority to the "City Manager, or her designee" to "approve . . . minor changes . . . without further City Council approval." Those minor changes included a "reduction of required landscaping" in certain situations. Yet, the ordinance did not mandate that those affected by the construction must be relieved from complying with applicable ordinances. Beck factored this into his analysis. He conceded that notice of the proposed ordinance "was posted for a long time" before its adoption in March of 2016. When asked if "a market participant would have known about its posting and would have factored that in before the date of value . . . in their analysis," he responded with both "[absolutely" and "[y]es, sir."

         Yet, uncertainty remained, and it would be factored into a willing buyer's decision, according to Beck. So, it was a factor considered in developing his opinion about values after the taking. He testified that he did not know whether parking would actually be lost. If it were assumed that parking was not lost, then he "imagine[d] that there wouldn't be" damages. But "[t]hat's the whole point . . . there's a lot of uncertainty revolving around it." "If it were a guarantee that the parking would not be affected, then I believe that a buyer would purchase it with that knowledge and not penalize it for losing parking if it were guaranteed that they weren't going to," he said. However, he "appraised [the loss] with all the uncertainty that was there on the date the State took the property." And, when asked if he appraised it "as if a willing buyer would never have known that they could go to the City and try to get a variance," he replied no.

         We have been cited to no evidence of a city official with authority to bind the city calling Vista or its representatives before the taking and informing them that they would not have to maintain a landscaping buffer. Something like that may have ...


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