Burton Utley and Mary Utley v. LCRA Transmission Services Corporation, Successor-in-Interest to Central Power and Light Company--Appeal from 81st Judicial District Court of Karnes County

MEMORANDUM OPINION

No. 04-05-00023-CV

Burton and Mary UTLEY,

Appellants

v.

LCRA TRANSMISSION SERVICES CORPORATION,

Successor-In-Interest to Central Power and Light Company ,

Appellee

From the 81st Judicial District Court, Karnes County, Texas

Trial Court No. 02-01-00013-CVK

Honorable Fred Shannon , Judge Presiding (1)

Opinion by: Karen Angelini , Justice

Sitting: Catherine Stone , Justice

Karen Angelini , Justice

Rebecca Simmons , Justice

Delivered and Filed: October 25, 2006

AFFIRMED

This is a condemnation suit in which Burton and Mary Utley assert they were inadequately compensated for an easement, approximately seven acres wide, that was obtained across their land by the LCRA Transmission Services Corporation. (2) A special commissioners' panel initially heard the matter and awarded the Utleys $38,791; however, the Utleys objected to this amount, and the case proceeded to trial on the sole issue of damages, whereupon a jury awarded the Utleys $16,606.25. We affirm.

Factual and Procedural Background

Appellants, Burton and Mary Utley, owned a 417 acre tract of land in Uvalde, Texas that contained the following improvements: a main house, measuring approximately 3,000 square feet; a guest house; a foreman's house; five grain silos; a grain slurry store; and some feeder barns. On January 24, 2002, Central Power & Light Company filed an Original Petition in Condemnation, seeking to obtain "an easement and right-of-way to construct and place in operation a 345kV double circuit transmission line identified as the Coleto Creek to Pawnee 345kV Transmission Line in Karnes County, Texas, together with structures and all needful and proper appurtenances thereto . . . for the purpose of transmitting and distributing electricity." A special commissioners' panel heard the matter and awarded the Utleys $38,791 as the condemnation value of their property. The Utleys filed their objections to this amount, along with a Second Amended Answer and Second Amended Counterclaim, arguing that the amount awarded was "grossly inadequate in that it failed to fully and adequately compensate the Utleys for the reasonable value of the property taken by LCRA."

The matter proceeded to trial, and a jury awarded the Utleys $16,606.25, "representing the just and adequate compensation due to [the Utleys] attributable to Plaintiff LCRA Transmission Services Corporation's taking of the 7.08 acre 160-foot wide permit power line transmission easement . . ." The court further ordered that all costs be assessed against the Utleys in view of the fact that the jury's verdict was less than the commissioners' award. The Utleys filed a Motion for Judgment non Obstante Veredicto and Motion for New Trial, which were denied. They now bring this appeal.

The Utleys appeal primarily on two grounds and assert that: (1) the trial court erred in admitting the testimony of LCRA Transmission Services Corporation's expert witness; and (2) the evidence was legally insufficient to support the jury's finding. We disagree.

Standard of Review

Evidentiary rulings, including rulings on expert testimony, are reviewed for an abuse of discretion. See City of Brownsville v. Alvarado, 897 S.W.2d 750, 753 (Tex. 1995); Missouri Pac. R.R. Co. v. Navarro, 90 S.W.3d 747, 750 (Tex. App.--San Antonio 2002, no pet.). The admission of evidence is left to the sound discretion of the trial court, see Lohmann v. Lohmann, 62 S.W.3d 875, 881 (Tex. App.--El Paso 2001, no pet.), and should not be reversed unless the whole case turns on the particular evidence excluded. See Doncaster v. Hernaiz, 161 S.W.3d 594, 601 (Tex. App.--San Antonio 2005, no pet.). A trial court abuses its discretion when its ruling is arbitrary, unreasonable or without reference to any guiding rules or legal principles. E.I. du Pont de Nemours & Co. v. Robinson, 923 S.W.2d 549, 558 (Tex. 1995).

Expert Testimony

Initially, the Utleys argue that the trial court erred in admitting the testimony of LCRA Transmission Services Corporation's expert, Bierschwale, because he 1) failed to assess a value to the improvements notwithstanding his opinion that they constituted the "highest and best use" of the property; 2) improperly compared unimproved property to improved property; 3) testified, in part, to matters not previously disclosed in his report; and 4) assessed the market value as of March 4, 2002, rather than the date of the taking, March 11, 2002.

Admissibility of expert testimony is governed by the Texas Rules of Evidence and theRobinson factors. Tex. R. Evid. 702, 703, 705(c); Robinson, 923 S.W.2d at 556; Martinez v. City of San Antonio, 40 S.W.3d 587, 592 (Tex. App.--San Antonio 2001, pet. denied). Under Robinson, the expert testimony must be both relevant to the issues and based on a reliable foundation. Robinson, 923 S.W.2d at 556; Martinez, 40 S.W.3d at 592. In addition to being relevant and reliable, the rules of evidence require that the probative value of any expert testimony not be outweighed by the danger of unfair prejudice which may result from its admission. Tex. R. Evid. 403, 702; Robinson, 923 S.W.2d at 557; see also Kelly v. State, 824 S.W.2d 568, 572 n.11 (Tex. Crim. App. 1992) (noting that Rule 702 incorporates Rule 402 and 403 analyses). To be considered relevant, expert testimony must bear a relationship to the issue in the case such that the testimony will aid the jury. Gammill v. Jack Williams Chevrolet, Inc., 972 S.W.2d 713, 720 (Tex. 1998). To be reliable, the scientific evidence must be grounded in scientific method and procedure such that it amounts to more than subjective belief or unsupported speculation. Id.

Applicable Condemnation Law

Article I of the Texas Constitution provides that "[n]o person's property shall be taken, damaged or destroyed for or applied to public use without adequate compensation being made . . . ." Tex. Const. art. I, 17. If only part of the landowner's property is condemned, adequate compensation must be made not only for the part taken but also for any resulting damage to the remainder. County of Bexar v. Santikos, 144 S.W.3d 455, 459 (Tex. 2004). In determining the amount of damage to the remainder, the difference between the market value of the remainder property immediately before and after the condemnation is calculated, considering the nature of any improvements and the use of the land taken. Id.; Interstate Northborough P'ship v. State, 66 S.W.3d 213, 218 (Tex. 2001). However, it is well settled that not all damages to remainder property are compensable and that the issue turns on the kind of damage involved. See, e.g., Santikos, 144 S.W.3d at 459; Northborough, 66 S.W.3d at 218; State v. Schmidt, 867 S.W.2d 769, 781 (Tex. 1993). Compensability is a question of law for the court and subject to de novo review. Santikos, 144 S.W.3d at 459.

Further, "market value" has been defined as "the price the property will bring when offered for sale by one who desires to sell, but is not obliged to sell, and is bought by one who desires to buy, but is under no necessity of buying." City of Harlingen v. Estate of Sharboneau, 48 S.W.3d 177, 182 (Tex. 2001) (quoting State v. Carpenter, 126 Tex. 604, 89 S.W.2d 979, 979 (1936)). Generally, three methods of analysis have been applied to determine market value: the comparable sales method; the cost method; and the income method. Id. The most favored method is the comparable sales approach, which involves assessing the sales prices of similar properties and then factoring in upward or downward adjustments for variables in the subject property. Id. While comparable sales need not be identical, they should involve land with similar characteristics and otherwise meet the test of similarity. Id. However, if the comparisons are so attenuated such that valid adjustments can not be made in determining the fair market value, courts

have permitted the cost method, which determines the cost of replacing the condemned property. Id.

Analysis

In the present case, approximately seven acres of the Utleys' 417 acre tract were condemned. The law clearly provides that the Utleys be compensated for this taking. See Tex. Const. art. I, 17;Santikos, 144 S.W.3d at 459. What is less clear, however, and what the jury was asked to resolve, is whether there was resulting damage to the remainder of the Utleys' property.

The Utleys objected to Bierschwale's testimony because although Bierschwale considered the Utleys' improvements, in assessing damages attributable to the taking, he did not factor them into his equation. Bierschwale admitted that he had not rendered an opinion on the value of the Utleys' property as improved either before or after the taking and that he had appraised the entire 417 acres as if vacant; however, Bierschwale testified, based on his twenty-seven years of experience as an appraiser, and after assessing approximately fifty properties as part of his compared sales analysis in this case, that in his opinion, there was no damage to the Utleys' improvements which were located over 4000 feet away from the power line. Further, in his professional opinion, had he factored in the costs of the improvements, the figures would merely have inflated, and the end result would have still been the same. (3)

The Utleys, who conceded they had the burden of proof in this case, combined a compared sales analysis with a cost analysis and determined the entire property, including improvements, had been damaged 25% or $306,050; however, they failed to show the distance of each of the improvements to the power line. Instead, they assessed the entire 417 acres, including improvements, as having been damaged equally, rather than assessing the damage for the seven acres taken and then determining the difference between the market value of the remainder property immediately before and after the condemnation. See Santikos, 144 S.W.3d at 459; see also Northborough, 66 S.W.3d at 218. Moreover, when asked on cross-examination, the Utleys' expert, Bolton, could not state the actual distance of the power lines to the improvements and admitted he had not measured the distance, notwithstanding the fact that, in his report, he relied upon several articles that specifically stated the negative impact of power lines to a property diminishes with increased distance and altogether disappears beyond 500 feet. (4)

In view of Bolton's reliance upon these articles, along with Bierschwale's expert opinion that the improvements were not damaged, and the uncontroverted testimony that the Utleys' improvements were located over 4000 feet from the power lines, the trial court did not abuse its discretion in admitting Bierschwale's testimony regarding his assessment of damages attributable to the taking in this case. See id. (not all damages to remainder property are compensable); see also Robinson, 923 S.W.2d at 558 (trial court abuses its discretion when its ruling is arbitrary, unreasonable or without reference to any guiding rules or legal principles).

The Utleys also argue that the trial court erred in allowing Bierschwale to take the sales of both improved and unimproved lots, adjust them down and then compare them to the Utleys' property as though it were vacant. However, both experts agreed on the value of the land itself (5) and the only dispute was with respect to whether the improvements were damaged as a result of the placement of the power lines. Bierschwale testified the improvements had not been damaged and although Bolton testified they had, he could not state the improvements' proximity to the power lines. Clearly, the entire case did not turn on Bierschwale's assessment of market value but rather on whether the Utleys had shown that there had been a compensable damage to the remaining property. Thus, the trial court did not err in allowing testimony with respect to Bierschwale's method of assessing market value in this case. See Lohmann, 62 S.W.3d at 881; Doncaster, 161 S.W.3d at 601.

The Utleys further assert that the trial court committed reversible error in allowing previously undisclosed testimony or evidence by permitting "LCRA's expert to testify concerning an undisclosed basis for his opinion" and further, in allowing testimony of fair market value prior to the date of the taking rather than as of the date of the taking as required under Texas law.

Specifically the Utleys object to Bierschwale's testimony, with respect to the Goetz/Hancock sale, regarding conversations Bierschwale had with Mr. Hancock. Bierschwale testified that Hancock purchased a tract with no power line and that after the power line was installed, Hancock extensively remodeled his house, as well as other improvements located within 200 feet of the power line. When asked by Bierschwale why he didn't move the improvements to the other side of the property away from the power lines, Hancock replied that the power lines had no effect on his use and enjoyment of the improvements. The Utleys objected because Bierschwale's report allegedly did not divulge this information despite the fact that Bierschwale stated at trial that this information formed part of the basis of his opinion that the Utleys' improvements had not incurred damage.

While the record reflects that the Utleys did, in fact, object to this testimony, Bierschwale's expert report itself does not appear to be part of the record. What is before this court are several exhibits referencing the Goetz/Hancock sale relied upon by Bierschwale in his comparative sales analysis. Given that this testimony might reasonably have assisted the trier of fact, we find the admission of this testimony was within the trial court's discretion. Alvarado, 897 S.W.2d at 753;Lohmann, 62 S.W.3d at 881.

The Utleys also argue that Bierschwale improperly assessed the fair market value as of March 4, 2002, rather than March 11, 2002, the date of the taking. However, the record reflects that on March 4, 2002, the Special Commissioners assessed the damages to the Utleys' property caused by the taking as $38,781. Additionally, the notice of deposit, as well as the necessary surety bonds and related funds were deposited with the Karnes County District Clerk's office on March 7, 2002. In fact, the only indications in the record that the taking did, in fact, occur on March 11, 2002, were Utleys' counsel's statement to that effect and the jury question, which stipulates the date of the taking as March 11, 2002. Nevertheless, at trial, Bierschwale testified that "[a]ny difference [in value attributable to the seven day discrepancy] would be minuscule" in terms of calculating the fair market value of the property. No other testimony was presented to controvert Bierschwale's statement. Given the evidence supporting the jury's finding that there was no damage to the Utleys' improvements, as well as the fact that both experts agreed as to the value of the land itself, and Bierschwale's uncontroverted testimony that this seven day variance would have resulted in a minuscule, if any, difference in market value, we find any error resulting from the admission of this evidence to be harmless. Tex. R. App. P. 44.1 (a).

Legal insufficiency

According to the Utleys, the trial court erred in entering judgment based on the jury's answer to Question No.1 because "[a]s a matter of law, Bierschwale's testimony was no evidence of the value of the property taken by LCRA, and thus, there is no evidence to support the jury's answer to Question No. 1."

In the present case, this suit for condemnation went to trial on the sole issue of damages and the Utleys conceded they had the burden of proof. The only question presented to the jury was the following:

Jury Question No. 1:

On March 11, 2002, what was the difference between (a) the fair market value of Utleys' entire property immediately before the taking of a 7.084 acre 160-foot wide permanent power line transmission easement, and (b) the fair market value of the remainder of the Utleys' property after the taking of the easement, giving consideration to the uses for which the easement will be used? (6)

In answering $16, 606.25, the jury clearly believed that there was no damage to the Utleys' improvements. Moreover, this conclusion is supported by the evidence cited to earlier, to wit: that the Utleys' own expert relied upon articles that stated that the negative impact of an easement diminishes after 150 feet and disappears completely after 500 feet; that the Utleys failed to provide any evidence of the proximity of the improvements to the power lines or otherwise show the power lines resulted in a compensable damage to their improvements; that the Utleys did not dispute the testimony by LCRA that the distance from the power lines to the Utleys' improvements exceeded 4000 feet; and that Mr. Utley himself stated he had not experienced any disruptions to his ranching business since the towers were constructed.

In view of our prior conclusion that the trial court did not err in admitting Bierschwale's expert testimony with respect to the market value of the Utleys' property, as well as the evidence cited to above in support of the jury's finding, we overrule the Utleys' final point of error.

Conclusion

Accordingly, we overrule Utleys' issues on appeal and affirm the trial court's judgment.

Karen Angelini , Justice

1. Pursuant to Chapter 74, Tex. Gov't Code, the Honorable David Peeples, as the presiding judge of the 4th Administrative Judicial Region of Texas, assigned Judge Fred Shannon, former Judge of the 131st Judicial District Court of Bexar County, Texas to the 81st Judicial District Court of Karnes County, Texas to preside in Cause No. 02-01-0013-CVK by specific assignment.

2. Although suit was initially commenced by Central Power and Light Company, on July 13, 2004, LCRA Transmission Services Corporation, filed as successor-in-interest to Central Power and Light Company; accordingly, all references to Plaintiff /Appellee are to LCRA Transmission Services Corporation.

3. Bierschwale also testified that the Utleys had not been deprived of the full use of the easement itself and could still travel across the easement, as well as use the land for agricultural purposes, hunting, and grazing livestock.

4. One of these articles, authored by Delany and Timmons, stated that "the negative impact due to [high voltage overhead electrical transmission lines] declines with distance from the power lines." Another article, authored by Rosiers, stated that "[A]s with other market segments, the maximum negative impact ( -7.6%) is reached between 50 m[eters] and 100 m[eters] (165 - 325 ft.) and lessens thereafter to disappear beyond 150 m[eters] (500 ft.)." Both articles, as well as several others, were introduced at trial and were used to impeach the Utleys' expert.

5. Bolton testified that the entire 417 acres was valued at $800 per acre for a sum total of $333,848. Bierschwale likewise testified that the Utleys' land was valued at $800 per acre.

6. In addition to the standard definition for "Preponderance of the Evidence," "Fair Market Value" and "Highest and Best Use" were defined in the charge as follows:

"FAIR MARKET VALUE" means the price which the property would bring when it is offered for sale by one who desires, but is not obliged to sell, and is bought by one who is under no necessity of buying it, taking into consideration all of the uses to which it is reasonably adapted and for which it either is or in all reasonable probability will become available within the reasonable future. In making your determination of FAIR MARKET VALUE, you will consider the HIGHEST AND BEST USE of the land involved.

"HIGHEST AND BEST USE" means that legal use to which the property could have been adapted on the date of the evaluation, or within the reasonably foreseeable future thereafter, and which would have provided the owner with the greatest net return.