MARCIA S. KRIEGER, Chief District Judge.
For purposes of the instant motion, the Plaintiffs are Marvin and Mildred Bay ("the Bays"). They are the owners of the surface estate in of two parcels of land in Weld County, Colorado, described as the "North Farm" and "South Farm." The Bays use the property primarily for agricultural purposes, although they also have a residence on the property.
The Defendants ("Anadarko") hold the subsurface mineral estate underlying the property. Between 2006 and 2011, Anadarko
Consonant with this Court's instructions, the parties raised objections to certain anticipated expert testimony under Fed. R. Evid. 702 by means of a joint motion
On September 19, 2017, the Court held an evidentiary hearing on the Rule 702 motion. Before receiving evidence, the Court had colloquy with counsel about the issues to be addressed. They indicated that they wished to make argument and have the Court consider caselaw as to the appropriate measure of loss/damages in Colorado. This, the Court understood to raise a question of law — ultimately how the jury would be instructed as to the measure of loss and calculation of a damage award for which the parties had submitted conflicting proposed instructions. The Court reasoned that the legal standard specifying how losses are measured and damages are calculated for trespass could impact whether a proffered opinion is relevant under Rule 702 as well as Rules 401 and 403. Thus, although the 702 Motion, itself, did not address relevance challenges, the Court advised the parties that relevance under Rule 702 as well as Rules 401 and 403 would be considered and the parties presented arguments as to both issues.
On Anadarko's challenge to Mr. Hegarty's opinions, the Bays called Mr. Hegarty to testify, and Anadarko cross-examined him, but neither the Bays nor Anadarko presented any other witness or evidence with regard to the challenges made. As to the Bays' challenge to Mr. Hall, Anadarko presented Mr. Hall's testimony and the Bays' counsel cross-examined him, but again neither side presented any other evidence as to the challenge.
Having now heard the evidence and considered the governing law, the Court rules as follows.
Fed. R. Evid. 702 prescribes four foundational requirements for the admission of expert opinions: that the expert have sufficient qualifications to render the opinion, that the expert employ reliable principles and methodologies to formulate the opinion, that the expert obtain sufficient facts and data, and that the expert reliably apply the methodology to the facts and data. At a Rule 702 hearing, the proponent of expert testimony bears the burden of proving the foundational requirements of Rule 702 by a preponderance of the evidence. See United States v. Nacchio, 555 F.3d 1234 (10th Cir. 2009); Ralston v. Smith & Nephew Richards, Inc., 275 F.3d 965, 970 n.4 (10th Cir. 2001); Daubert v. Merrell Dow Pharma., 509 U.S. 579, 592 n.10 (1993); Fed. R. Evid. 702 advisory committee's note. The proponent of the opinion need not prove that the expert is undisputably correct, only that the conclusion reached by the witness is scientifically sound and that the opinion is based on facts which sufficiently satisfy Rule 702's reliability requirements. Mitchell v. Gencorp Inc., 165 F.3d 778, 781 (10th Cir. 1999). Thus, the Court's focus is generally not on the precise conclusions reached by the expert, but instead upon the expert's qualifications, information relied upon and the methodology employed in reaching those conclusions. See Daubert, 509 U.S. at 595; see also Dodge v. Cotter Corp., 328 F.3d 1212, 1222 (10th Cir. 2003).
Generally speaking, a successful Rule 702 challenge requires the party asserting it — the party opposing the admission of the opinion — to support the challenge with evidence obtained from someone other than the challenged expert. This is because few proffered experts will take the stand and admit, even under the most withering of cross-examination, that their methodologies are unreliable, that they are not qualified to render the opinion offered, that they did not reliably follow the methodology that they endorse, or that they did not consider the sufficient facts and data. Usually, it is necessary for the opponent of the opinion to call its own witness to establish, for example, that the proponent's methodology is not generally recognized in the field, that it has inherent flaws, that it was not properly applied, etc.
Here, neither side called a witness to contradict the other sides' proffered expert's testimony, leaving assertions by the witness offering the opinion unrebutted. Because the party who objected to the foundation of particular opinions offered no evidence, the preponderance of the evidence (indeed the only evidence) is found in the testimony of the witness who offered the opinion. As to all but one of the proffered opinions, the preponderance of the evidence supports a finding of adequate foundation, and consequently the objections are overruled.
Nevertheless, to the extent more detailed factual findings are necessary, the Court finds as follows:
Thus, the Court overrules the Rule 702 challenges, with the exception of Hegarty Opinion 6 which is sustained.
As to opinions for which no foundational challenge is sustained, the opinions are nevertheless subject to relevance challenges. First, Rule 702 requires that opinion testimony must be "sufficiently tied to the facts of the case that it will aid the jury in resolving a factual dispute." U.S. v. Garcia, 635 F.3d 472, 476 (10
Under Colorado law, the goal of a damage award for trespass is to "reimburse that owner for the actual loss suffered" — that is "to put an injured person in a position as nearly as possible equivalent to his position prior to the tort." Board of County Commissioners v. Slovek, 723 P.3d 1309, 1314 (Colo. 1986); Zwick v. Simpson, 572 P.2d 133, 134 (Colo. 1977) ("the goal of the law of compensatory damages is reimbursement of the plaintiff for the actual loss suffered").
Colorado law recognizes three categories of loss due to trespass for which damages that may be awarded. The primary loss is the diminution of market value of the property that results from the trespass. Slovek, id. In certain cases, where diminution of market value cannot be calculated or it is otherwise not appropriate, courts allow an alternative measure of loss measured by the cost of restoring the property to its original, pre-trespass condition. The choice between these two primary measures is dictated by several factors, such as whether the owners' intended use of the property requires its restoration, and whether the injury to the land is repairable. Id.
Diminution in value or cost of repair are concerned with providing relief based on the state of the property once the trespass has
Finally, a plaintiff can recover for injuries in the form of annoyance and inconvenience that result from the trespass. These injuries include the distress that arises out of physical discomfort, irritation, or inconvenience caused by odors, pests, noise, and the like. Webster v. Boone, 992 P.2d 1183, 1185-86 (Colo. App. 1999). As an example, damages can be awarded for the time and effort spent cleaning up a flooded basement, for the lingering smell, and for the loss of hobby activities that would otherwise have been conducted in that basement, Id. "Pure" emotional distress damages, however, that are not tied to any physical injury or intrusion on the land are not recoverable. Id.
Although the Defendants agree that in this case there can be two compensable losses (diminution in value of the property due to the trespass and loss of use during the trespass), the Bays seek only damages for loss of use of the property during the trespass. Thus the Court focuses on that form of relief.
For trespasses on agricultural lands, the loss of use is often measured by the value of crops that could not be grown during the trespass. See Colorado Pattern Jury Instruction 18:4, comment 9, citing Roberts v. Lehl, 149 P. 851 (Colo. 1915). Here, although the Bays acknowledge that the lands that Anadarko trespassed upon would otherwise have been put to agricultural uses they implicitly contend that there may be other uses from which they have been foreclosed. For example, their damage calculations include what they might have earned if the trespassed property might have been leased to horizontal drillers or used for a pipeline lease. This is akin to the measure endorsed by the Colorado Supreme Court in Slovek. There it explained that the "loss of use" damage measure is "normally conceived of in terms of a loss of the owner's ability to receive rent or the loss of an ability to carry on an economic enterprise on the property, measured in terms of a hypothetical loss of rental value." 723 P.2d at 1317-18. The Bays contend that Fowler Irrevocable Trust v. City of Boulder, 17 P.3d 797, 804 (Colo. 2001), further elucidates the Slovek rule, requiring consideration of "the property's highest and best use during the period" and inquiring "what rental would the property have produced" during that period in a transaction between a willing lessor and willing lessee.
Thus, in instructing the jury, the Court intends to omit any reference to a damage award for diminution in value or cost of restoration. The instruction will concern only loss of use. It will read as follows:
With these principles in mind, the Court then turns to the relevance of Mr. Hegarty's proffered opinions. Mr. Hegarty used three methods he used to calculate the Bays' trespass damages.
First, he attempted to determine "what the compensation would be for a temporary easement" over the property. His methodology entailed determining the fair market value of the Bays' entire property, which he did by locating comparable properties in the area and adjusting the prices of their completed sales to current market rates, using those to determine what a fair market sale of the Bays' property would generate. That calculation yielded a value of $11,000 per acre. He then multiplied the property's per-acre value by a "rental rate" that Mr. Hegarty did not otherwise explain in either his testimony or report. He explained that, in his experience, he typically applies rental rates of between 8% and 10% in eminent domain cases. But here, apparently owing to the fact that Anadarko's trespasses were usually localized around discrete well pads, he applied a rental rate of 5% instead. He then multiplied the .05 rental rate by the $11,000 per acre value of the Bays property to reach an annual easement cost, then multiplied that amount by the
The Court finds that the "temporary easement model" is conceptually inconsistent with the measure of trespass damages under these facts. The parties agree that 2 of the 7 gas wells on the Bays property are permissible; 5 of the 7 wells are allegedly trespass wells and those wells were drilled at different times. In addition, they agree that the Bays land is comprised of two parcels, one of which includes the Bays' home. One permitted well is located on each parcel, which means that each parcel has both permitted and arguably trespassing wells. Mr. Hegarty computes the acreage impacted by the well pads, roads, flow lines and production facilities at approximately 22 acres.
Colorado law allows only damages attributed to the loss of use caused by the trespass — that means the 5 trespass wells, and then only from the times that they were drilled. Mr. Hegarty's "temporary easement model" grossly exceeds the type of damages awardable. It calculates a per-acre value for the entire Bay property,
The second method Mr. Hegarty described is based on the practice of oil and gas developers to offer to compensate the landowner with a one-time payment in exchange for all of the property damage and inconvenience that will result from the creation and maintenance of the well over its lifetime. Mr. Hegarty testified that developers typically drill multiple directional or horizontal wells from a single pad, and that the rate of compensation they offer landowners is currently about $25,000 per well,
This evidence is potentially relevant. Here, Mr. Hegarty appears to be assuming that if an operator is willing to pay similarly-situated landowners a certain amount for the right to drill and maintain numerous horizontal wells, the value that the Bays may have lost is similar. There is a logical congruency to this reasoning,
Mr. Hegarty's third method compared Anadarko's use of the property to a pipeline easement that the Bays granted to an entity called Saddlehorn Pipeline Company in 2016. The easement granted Saddlehorn the right to run a pipeline across a portion of the South Farm, in exchange for a one-time payment to the Bays of roughly $202,000. Mr. Hegarty believed that the Saddlehorn transaction was a particularly cogent indicator of the value of the Bays' loss of use of the trespassed land because it included compensation for a permanent easement similar to that created by the Anadarko trespass, it included compensation for crop damages and damage to soil of the same type that the Anadarko trespass caused, that it was negotiated by the Bays themselves, and so on. To equate the Saddlehorn easement to the Anadarko trespass, Mr. Hegarty divided the easement price by the number of acres affected by the Saddlehorn easement to determine a per-acre cost for the easement of roughly $23,000. He then multiplied that per-acre cost by the number of acres (approximately 22) he believed comprised the area trespassed on by Anadarko, yielding a total damage estimate of $605,000.
Mr. Hegarty's damage model based on the Saddlehorn pipeline is potentially relevant. The crux of this damage calculation seems to be "if Saddlehorn was willing to pay some $23,000 per acre to disrupt the surface with a pipeline, a hypothetical mineral operator [like Anadarko] might be willing to pay the same amount per acre for the right to construct well pads and appurtenances." This model has some probative value, but only if supplemented by additional evidence from a competent witness attesting that the land on which the Saddlehorn pipeline is constructed has the same geographic and economic characteristics as the land related to the 5 trespassing wells. Put differently, it may be that the Saddlehorn pipeline crossed over particularly valuable lands (say especially scenic, particularly fertile, or unusually convenient), such that the Bays were able to command a premium for that land's use. Or it may be that the lands Anadarko trespassed upon are particularly worthless (e.g. rocky, inconvenient, remote, etc.), such that treating them equivalently to the Saddlehorn land significantly overstates their value. Thus, while the Court finds that Mr. Hegarty's model based on the Saddlehorn lease has the potential to be relevant, that relevance is conditioned upon testimony (that Mr. Hegarty did not give, but that some other witness might be able to provide) that demonstrates that the Saddlehorn lands and the trespassed lands are sufficiently similar as to warrant equivalent valuations.
Accordingly, the Court excludes as irrelevant Hegarty Opinions 1 & 2 (that are components of the excluded "temporary easement" model). As noted earlier, Hegarty Opinion 6 (arbitrarily aggregating the three models) is excluded under Rule 702 as lacking a reliable methodology. The remaining opinions are potentially relevant, subject to the Bays adducing additional evidence at trial sufficient to establish the predicate facts, discussed above, and evidence that Mr. Hegarty tacitly relied upon in formulating those models.
Mr. Hall proffers 3 opinions, the first of which was withdrawn. His second opinion is:
Mr. Hall's third opinion is that the maximum damages that the Bays can prove on their trespass claim is $44,550. According to his report, he reached this calculation by noting the acreage of the Bays' property that was occupied by the contested Anadarko wells and compared it to the acreage that would have been occupied if, as the Bays suggest, Anadarko had drilled several horizontal wells from a single well pad instead. This calculation yielded an acreage difference that varied from year to year (Mr. Hall explained that well pads "shrink" over time as drilling operations are completed and excess land is able to be reclaimed), but ranged from slightly over 5 acres to less than a single acre. He then examined various surface use agreements the Bays had entered into with other entities to determine how much money those agreements allocated paid per acre for the loss of crop land. He found that figure to be approximately $1,750 per acre per year. He multiplied that amount by the number of excess acres occasioned by Anadarko's vertical drilling, yielding a total calculation of $44,550 in crops lost to Anadarko's trespass over the period in question.
This opinion is relevant, insofar as it attempts to determine the Bays' loss of use damages using a measure recognized in the law — loss of value of crops that could have been planted on the trespassed land — and does so in a manner that has a plausible rationale. Accordingly, the Court excludes Mr. Hall's Opinions 1 and 2 as irrelevant, and allows Mr. Hall's Opinion 3 to be offered.
For the foregoing reasons, the Court
Extending that analogy to the question of how an opponent might challenge the opinion, assume that the baker has testified that he made his cake by pouring a fruit filling onto a pastry crust and baking it. The opponent of that opinion vigorously cross-examines the baker about to establish that such technique produces a pie, rather than a cake. Questions of counsel are not evidence. See e.g. U.S. v. Dixon, 38 Fed.Appx. 543, 549 (10th Cir. 2002). If the baker adheres to his position that he produced a cake, absent evidence to the contrary, the opponent cannot shift the preponderance of evidence to result in a determination that the baker baked a pie. Instead, the opponent must call its own baker who testifies that what was produced was a pie, not a cake.