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East TN Natural Gas v. 7.74 Acres in Wythe County, 06-1716 (2007)

Court: Court of Appeals for the Fourth Circuit Number: 06-1716 Visitors: 5
Filed: May 22, 2007
Latest Update: Feb. 12, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 06-1716 EAST TENNESSEE NATURAL GAS COMPANY, Plaintiff - Appellant, versus 7.74 ACRES IN WYTHE COUNTY, VIRGINIA; HAROLD HART; LARRY S. BALL, Defendants - Appellees, and MARY CASEL, Commissioner of Revenue; JOHN DOE; UNKNOWN OWNERS, Defendants. Appeal from the United States District Court for the Western District of Virginia, at Danville. Jackson L. Kiser, Senior District Judge. (4:02-cv-00104-jlk) Argued: March 15, 2007 Decided
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                            UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT


                            No. 06-1716



EAST TENNESSEE NATURAL GAS COMPANY,

                                             Plaintiff - Appellant,

          versus


7.74 ACRES IN WYTHE COUNTY, VIRGINIA; HAROLD
HART; LARRY S. BALL,

                                            Defendants - Appellees,

          and


MARY CASEL, Commissioner of Revenue; JOHN
DOE; UNKNOWN OWNERS,

                                                        Defendants.


Appeal from the United States District Court for the Western
District of Virginia, at Danville.   Jackson L. Kiser, Senior
District Judge. (4:02-cv-00104-jlk)


Argued:   March 15, 2007                    Decided:   May 22, 2007


Before TRAXLER, KING, and GREGORY, Circuit Judges.


Affirmed by unpublished opinion. Judge Gregory wrote the opinion,
in which Judge Traxler and Judge King joined.


Lela Merrell Hollabaugh, WALLER, LANSDEN, DORTCH & DAVIS,
Nashville, Tennessee, for Appellant.    Henry Evans Howell, III,
WALDO & LYLE, Norfolk, Virginia, for Appellees.
Unpublished opinions are not binding precedent in this circuit.




                               -2-
GREGORY, Circuit Judge:

       A   jury   in   Roanoke,    Virginia,      awarded       approximately $1.8

million to Appellees Harold Hart and Larry S. Ball (“Appellees”) as

just    compensation     for    the   easements     taken    by    Appellant    East

Tennessee Natural Gas Company (“East Tennessee”).                    The district

court denied East Tennessee’s motion for a new trial or, in the

alternative, remittitur, a decision East Tennessee now appeals.

Finding no abuse of discretion by the district court, we affirm.



                                          I.

       In 2003, the court below granted East Tennessee a fifty-foot

wide permanent easement across 7.74 acres of Appellees’ land and a

temporary easement across 10.31 acres of Appellees’ land so that

East    Tennessee      could   install     a    natural   gas    pipeline.      That

decision, which this Court affirmed, is not before us.                    See East

Tenn. Natural Gas Co. v. Sage, 
361 F.3d 808
(4th Cir. 2004); see

also 
id. at 818 (explaining
that the Natural Gas Act, 15 U.S.C. §

717f(h) (2000), grants gas companies the power to acquire property

by eminent domain).            The taking has affected approximately 378

acres      of   Appellees’     700-acre    real    estate.       Those   378   acres

(“Appellees’ property”) are comprised of a 364-acre parcel and a

14-acre parcel beside State Route 629 and at the intersection of

Interstate Routes 77 and 81 in Wythe County, Virginia.




                                          -3-
       In March 2006, the district court impaneled a six-person jury

to determine the amount of just compensation owed to Appellees as

a result of the taking.             Before trial began, East Tennessee filed

motions in limine to exclude the appraisal testimony of Appellees’

two expert witnesses, Frank Porter and Dennis Gruelle. The motions

argued that Porter and Gruelle’s testimony about the value of

Appellees’ property before and after the taking was not based upon

sufficient facts and was not the product of reliable methods as

required by Federal Rule of Evidence 702.                   After a hearing on the

motions, the court denied them.

       On   the     first    day    of    trial,    the   jury    visited    Appellees’

property.          When the jury returned, Appellees called Robert Cellell

Dalton, Wythe County Administrator and a civil engineer by trade.

Dalton indicated that commercial development was the highest and

best use for Appellees’ property before the taking.                         In 2002, he

recalled, a large sporting goods retailer approached Appellees

about    commercial         use    of    their   property    because    of    its   high

visibility from two interstates.                   The county’s marketing efforts

resulted in the retailer’s narrowing its choice for a location on

which to build to Appellees’ property and a site in West Virginia

that    the    retailer      ultimately      chose    for   tax    reasons.      Dalton

admitted that the negotiations did not progress beyond a general

stage, that there would be costs (albeit costs the county was

willing       to    undertake)      associated       with   developing       Appellees’


                                            -4-
property for commercial use, and that no one was looking at the

property when the pipeline was announced. Dalton further testified

that if the pipeline had not been built, the county would have

continued to show the property to commercial and industrial buyers

interested in interstate visibility.                Now the county does not.

      Appellees next called John Fowler, an engineering consultant

who   testified    that    before         the    taking,      it    would    have    been

practically and economically feasible to build interstate on/off

ramps on Appellees’ property, thereby increasing its suitability

for commercial and industrial development.                         Now, he testified,

Appellees’ property is unsuitable for such development because an

access road cannot be built over the pipeline.                       Fowler relied on

his visit to the site, maps supplied by East Tennessee and the U.S.

Geological    Survey,     and   a    video       shown   at   trial     to   reach    his

conclusions.

      Appellees called appraisers Porter and Gruelle to establish a

fair market value for the property before and after the taking.

Porter testified that the highest and best use of Appellees’

property before the taking was “to hold it for an industrial/

commercial type of use.”              J.A. 560.          Porter relied on three

industrial sales in the Virginia counties of Rockingham, Warren,

and   Wythe   to   determine        the    before-take        value    of    Appellees’

property.     He reduced the values of those three properties by 52%,

66%, and 75%, respectively, to make them comparable to Appellees’


                                           -5-
property, a “unique property” for appraisal purposes. J.A. 560-61.

In assessing the value of Appellees’ property, Porter assumed that

interstate ramps which currently do not exist would be constructed.

Porter concluded that the placement of the pipeline in the middle

of Appellees’ property now limited the property to agricultural or

residential use.     Accordingly, he relied on agricultural and

residential sales from Wythe County to calculate the value of

Appellees’ property after the taking.

     Like Porter, Gruelle testified that the highest and best use

of Appellees’ property before the taking was commercial development

and that the property’s location made it unique for appraisal

purposes.    Gruelle used five sales of property for commercial or

industrial use to establish the before-take value of Appellees’

property.    The first sale was the same Rockingham County sale used

by Porter.   The second, third, and fourth sales involved property

between 16.69 and 20 acres in size, a contrast to Appellees’ 378

acres.    The fifth sale was the same Wythe County sale used by

Porter.   In addition, two of the five sales Gruelle used were sales

of property for the construction of convenience stores or truck

stops; Gruelle admitted that Appellees’ property is not suited to

such use.    Gruelle reduced the values of the five properties by

55%, 85%, 55%, 35%, and 60%, respectively, in order to establish a

value for Appellees’ property before the taking. Gruelle concluded

that the property’s diminished utility after the installation of


                                 -6-
the    pipeline     made    its    highest      and    best   use    residential       and

agricultural        use.    Like    Porter,       Gruelle     used    three    sales    of

agricultural and residential property in Wythe County to calculate

the value of Appellees’ property after the taking.

       East    Tennessee     called       appraiser     Warren       Klutz,    who    gave

extensive testimony about the improper application of professional

appraising standards by Porter and Gruelle.                   Klutz testified that

Porter and Gruelle did not provide sufficient data or evidence to

support    their     conclusions         that    the   highest      and   best   use    of

Appellees’ property before the taking was commercial or industrial

development.         Klutz opined that the highest and best use before

the taking was agricultural or residential use.                           Klutz did not

appraise Appellees’ property, visit the property, review the files

prepared by Porter and Gruelle (as opposed to reading only their

reports),      or    talk   to     any    of    the    parties      involved     in    the

transactions on which Porter and Gruelle relied.

       East Tennessee also presented the videotaped deposition of

John Harris to establish that Appellees’ property outside of the

easement could still be developed.                Lastly, East Tennessee called

appraiser James Johnston.           Johnston testified that because of poor

access    to   the    property      and     because     of    its    topography,       the

property’s highest and best use was agricultural or residential

use.      Johnston admitted that the property’s proximity to the

interstate was an advantage and that he had not consulted an


                                           -7-
engineer in forming his conclusion that it would be too expensive

to   develop   access   to    Appellees’    property.   Johnston   further

testified that based on market practices, he accounted only for the

loss in value to the 200 feet on each side of the pipeline, not the

loss in value to Appellees’ entire property.

      The jury returned a verdict in favor of Appellees in the

amount of $1,875,986.        East Tennessee then filed a motion for a new

trial or, in the alternative, remittitur, pursuant to Rule 59 of

the Federal Rules of Civil Procedure.              After a hearing, the

district court denied the motion.          In this appeal,   East Tennessee

charges that the district court abused its discretion in denying

its motion for a new trial or, in the alternative, remittitur, and

in admitting the expert testimony of Porter and Gruelle.                We

consider the latter charge first.



                                     II.

      We review a trial court’s decision whether to admit expert

testimony for abuse of discretion.          O’Neill v. Windshire-Copeland

Assocs., 
372 F.3d 281
, 284 (4th Cir. 2004).                  In making its

decision, the trial court “exercises a gate keeping function to

assess whether the proffered evidence is sufficiently reliable and

relevant.”     Westberry v. Gislaved Gummi AB, 
178 F.3d 257
, 261 (4th

Cir. 1999).     East Tennessee argues that the court below abdicated




                                     -8-
its gate-keeping function when it admitted expert testimony that,

for two reasons, was flawed from the start.1

     First, according to East Tennessee, Porter and Gruelle failed

to establish that the highest and best use of Appellees’ property

before the taking was industrial or commercial use.           This Court

presumes the highest and best use of a property to be its current

use——here, agricultural and residential——unless the landowner shows

that a different highest and best use is “reasonably probable”

within the “reasonably foreseeable future,” not merely “within the

realm of possibility.”    United States v. 69.1 Acres of Land, 
942 F.2d 290
, 292 (4th Cir. 1991). East Tennessee contends that Porter

and Gruelle have not met this standard: the last offer for the

property was made in 2002, at a price-per-acre nearly half of that

appraised by Porter and Gruelle, and the property would have

required   extensive   improvements    in   access   and   topography   to

accommodate industry and commerce.




     1
      We reject Appellees’ suggestion that East Tennessee’s failure
to object to the admission of the expert testimony at trial has
ruined the issue for appeal. “Motions in limine preserve issues
that they raise without any need for renewed objections at trial,
just so long as the movant has clearly identified the ruling sought
and the trial court has ruled upon it.”       Rice v. Cmty. Health
Ass’n, 
203 F.3d 283
, 286 (4th Cir. 2000); see also Fed. R. Evid.
103(a) (“Once the court makes a definitive ruling on the record
admitting or excluding evidence, either at or before trial, a party
need not renew an objection or offer of proof to preserve a claim
of error for appeal.”). East Tennessee has met this standard.


                                 -9-
      Second, according to East Tennessee, Porter and Gruelle did

not   use   truly   “comparable”   sales    to   determine    the    value   of

Appellees’    property   before    the   taking,   making    their   opinions

untrustworthy and misleading.       East Tennessee alleges that one of

Porter’s three comparable sales is unreliable because it was not an

arms-length transaction and that his other two sales took place in

counties that he has not established are similar to Wythe County.

East Tennessee finds similar fault with two of Gruelle’s comparable

sales and complains that the remainder of his comparable sales are

of properties too small to be compared to Appellees’ 378 acres.

Both experts’ “drastic” downward adjustments demonstrate, in East

Tennessee’s view, precisely how dissimilar their chosen comparable

sales are to Appellees’ property.

      Where, as here, an expert’s factual basis, data, principles,

methods, or application are called into question, Federal Rule of

Evidence 7022 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509



      2
       Federal Rule of Evidence 702 states in its entirety:

      If scientific, technical or other specialized knowledge
      will assist the trier of fact to understand the evidence
      or to determine a fact in issue, a witness qualified as
      an expert by knowledge, skill, experience, training, or
      education, may testify thereto in the form of an opinion
      or otherwise, if (1) the testimony is based upon
      sufficient facts or data, (2) the testimony is the
      product of reliable principles and methods, and (3) the
      witness has applied the principles and methods reliably
      to the facts of the case.

Fed. R. Evid. 702.

                                    -10-
U.S. 579 (1993), require a trial court to determine whether the

expert’s testimony “has a reliable basis in the knowledge and

experience of [his or her] discipline.”            Kumho Tire Co., Ltd. v.

Carmichael, 
526 U.S. 137
, 149 (1999) (quotation marks omitted). In

making this determination, the court must focus on the “principles

and methodology employed by the expert, not on the conclusions

reached.”     
Westberry, 178 F.3d at 261
(quotation marks omitted).

The   court   “should   be    mindful    that   Rule    702     was   intended    to

liberalize the introduction of relevant expert evidence.”                        
Id. Accordingly, we have
held that:

      the court need not determine that the expert testimony a
      litigant seeks to offer into evidence is irrefutable or
      certainly correct.      As with all other admissible
      evidence, expert testimony is subject to being tested by
      [v]igorous cross-examination, presentation of contrary
      evidence, and careful instruction on the burden of proof.

Id. (quotation marks and
citations omitted).                At the same time,

the   court    should    be    mindful     that,       “given     the   potential

persuasiveness of expert testimony, proffered evidence that has a

greater potential to mislead than to enlighten should be excluded.”

Id. We give “great
deference” to the trial court’s ultimate

decision.     United States v. Barnette, 
211 F.3d 803
, 816 (4th Cir.

2000). It will not be disturbed unless the court acted arbitrarily

or irrationally.     United States v. Jones, 
913 F.2d 174
, 177 (4th

Cir. 1990).

      In denying East Tennessee’s motions in limine, the district

judge remarked that he would need to hear the full expert testimony

                                    -11-
before deciding whether the experts used incorrect methodology to

determine the highest and best use of Appellees’ property.             The

judge also observed that, because he was not the trier of fact, he

“would be on a very slippery slope to start saying what is a proper

comparable and what is not a proper comparable.”          J.A. 298.     He

concluded: “I am not prepared to say that because the comparables

are open to very severe cross-examination, that they’re not proper

comparables.    At this point in time, I think that is an issue for

the jury to determine, not the Court.”        
Id. This ruling was
not an abuse of discretion.              The district

judge was not obligated to determine whether Porter and Gruelle’s

conclusions about highest and best use were “irrefutable” or

whether   the   comparable   sales   Porter   and   Gruelle    chose   were

“certainly correct” measurements.       
Westberry, 178 F.3d at 261
.

Porter and Gruelle’s choices and conclusions were thoroughly tested

on cross-examination, East Tennessee presented its own witnesses to

contradict Porter and Gruelle’s testimony, and the judge instructed

the jury on the burden of proof and the weight to be given expert

testimony.   Cf. 
id. In these circumstances,
we do not find present

the competing consideration in admitting expert testimony: the

potential for the testimony to mislead rather than to enlighten.

     We further note that, in their written motions and at the

hearing on the motions, East Tennessee produced no evidence that

would have weighed in favor of excluding Porter and Gruelle’s


                                 -12-
testimony as unreliable. East Tennessee presented no evidence that

Porter and Gruelle’s starting point for a before value or their

rationale in determining highest and best use has not been tested,

has not been subject to peer review, has not been accepted by the

appraisal community, or has a known rate of error.               See generally

id. at 261 n.1
(listing “tools” that are valuable in assessing the

reliability of an expert’s opinion); accord TFWS, Inc. v. Schaefer,

325 F.3d 234
, 240 (4th Cir. 2003) (upholding the decision to admit

testimony where the plaintiff “[did] not argue that [the expert’s]

methods have not been tested, have not withstood peer review and

publication, have excessive rates of error, have no standards for

their application, or have not been accepted in their field”).

      East Tennessee admits that it has never questioned Porter’s

and Gruelle’s qualifications or their method of determining just

compensation by calculating the difference between before and after

values. Rather, East Tennessee maintains, it is merely questioning

the     basis    for   Porter’s   and         Gruelle’s   just   compensation

calculations.      Upon closer examination, however, it is apparent

that East Tennessee is really challenging the proper weight to be

given    the    evidence   presented    at     trial.     Excerpts   from   East

Tennessee’s briefs are telling:

      Contrary to the speculative opinions of Mr. Porter and
      Mr. Gruelle, the clear weight of the evidence at trial
      established that the highest and best use of the property
      was for agricultural or residential use.

Appellant’s Br. 29; and

                                       -13-
     As stated in East Tennessee’s opening brief, the evidence
     presented     at    trial   arguably     suggests    that
     commercial/industrial use may occur at some point in the
     future. However, the evidence failed to establish that
     it was reasonably probable in the reasonably near future.

Appellant’s Reply Br. 1.       In other words, East Tennessee “does not

mount a true Daubert challenge.”         
TFWS, 325 F.3d at 240
; see 
id. (upholding decision to
admit testimony where the plaintiff mounted

“a challenge to the proper weight to be given to [the expert’s]

evidence, not to its admissibility”).           Accordingly, the district

court    did   not   abuse   its   discretion   in   admitting   Porter   and

Gruelle’s testimony.



                                     III.

     We review the decision to deny a motion for a new trial for

abuse of discretion and “will not reverse absent exceptional

circumstances.”      Dennis v. Columbia Colleton Med. Ctr., Inc., 
290 F.3d 639
, 650 (4th Cir. 2002).3        A court should grant a new trial

only if the verdict (1) “is against the clear weight of the

evidence, or (2) is based on evidence which is false, or (3) will



     3
      We reject Appellees’ contention that our standard of review
is actually even more forgiving because East Tennessee failed to
move for a directed verdict at trial pursuant to Federal Rule of
Civil Procedure 50(a). East Tennessee was not required to make a
Rule 50(a) motion because East Tennessee does not challenge whether
there is an issue for the jury——that is, whether Appellees have the
right to just compensation. East Tennessee concedes the right to
just compensation; instead, it challenges the sufficiency of the
evidence supporting the amount of compensation determined by the
jury. Thus, this Court’s standard of review is unchanged.

                                     -14-
result in a miscarriage of justice, even though there may be

substantial    evidence   which   would   prevent     the   direction    of   a

verdict.”     Knussman v. Maryland, 
272 F.3d 625
, 639 (4th Cir.

2001).East Tennessee draws our attention to the first and third

prongs of this standard.

     East Tennessee first argues that the jury verdict is against

the weight of the evidence because every appraiser who testified at

trial stated that there were agricultural or residential properties

in Wythe County that sold for approximately $1,800 per acre.             Yet,

East Tennessee argues, Porter and Gruelle suggested a before-take

value for Appellees’ property of $10,000 and $11,500 per acre,

respectively,    based    on   incomparable   sales    of   industrial    and

commercial property in other counties.          Second, East Tennessee

argues that the verdict will result in a miscarriage of justice

because in the six trials and multiple land commission proceedings

convened to date to determine the compensation owed to landowners

affected by East Tennessee’s pipeline, no landowner——regardless of

the size of his or her property——has been awarded more than

$135,800.     Given this, East Tennessee argues, fairness requires

setting aside or reducing Appellees’ award.

     These arguments fail.        As the district court noted in its

order denying the motion, there was evidence at trial, contrary to

East Tennessee’s assertions, demonstrating that the highest and

best use of Appellees’ property before the taking was industrial


                                   -15-
and commercial use.     In addition to Porter and Gruelle, Dalton and

Fowler testified as much. Although East Tennessee called witnesses

to contradict the conclusions drawn by these four individuals, it

was, as the district court noted, the jury’s decision to weigh the

credibility of the witnesses presented by both sides.           Cf. United

States v. Smoot Sand & Gravel Corp., 
248 F.2d 822
, 829 (4th Cir.

1957) (upholding a verdict “not consistent with either party’s

theory of valuation” where, among other things, the “jury heard the

experts presented by the parties and could accept or reject any

part of their testimony”).         As for East Tennessee’s fairness

argument,   we   find   nothing   irrational   or   arbitrary   about   the

district court’s conclusion that fairness must be put into context

when each just compensation case involves different parcels of

land, different owners, different witnesses, and so on.          The mere

fact that the jury’s verdict in this case exceeds any previous

verdict does not mean that there has been a miscarriage of justice.

Furthermore, even if the previous awards represent a fraction of

the award here, East Tennessee has provided no evidence about the

characteristics of the other properties affected by the pipeline or

the testimony, expert and otherwise, that the other juries and land

commissioners heard.     East Tennessee’s motion was properly denied.




                                   -16-
                                           IV.

       Whether the jury’s award is excessive is a question of law

that we review de novo.            Conner v. Schrader-Bridgeport Intern.,

Inc., 
227 F.3d 179
, 202 (4th Cir. 2000).                 Appellees’ appraiser-

witnesses, Porter and Gruelle, estimated that just compensation for

Appellees’ 364-, 14-, and 40-acre parcels4 would exceed $3 million.

Of East Tennessee’s appraiser-witnesses, Klutz could not offer a

figure because he did not appraise the property; Johnston testified

that Appellees were owed a total of $82,652 for the three parcels.

Given this testimony, which the jury was free to accept or reject

as it pleased, an award of $1.8 million is entirely reasonable and

is not excessive compensation for the diminution in Appellees’

property which the jury could reasonably determine, based on the

evidence presented at trial, the pipeline caused.                 Cf. 
Conner, 227 F.3d at 202
; see also Klein v. Sears Roebuck & Co., 
773 F.2d 1421
,

1428       (4th   Cir.   1985)   (noting    that   a   district   court   “in   its

discretion may set aside a verdict and grant a new trial if the

verdict is so excessive that it cannot be justified by anything in

the record or of which the [c]ourt can take judicial notice”

(quotation marks omitted)); Smoot 
Sand, 248 F.2d at 829
(refusing

to grant a new trial where the jury’s verdict was within the range

of the credited testimony, “which should not be reweighed on



       4
      Just compensation for the 40-acre parcel is not at issue in
this appeal.

                                       -17-
appeal”).   The district court properly denied East Tennessee’s

request for remittitur.



                                V.

     For the foregoing reasons, we conclude that the district court

did not abuse its discretion in denying East Tennessee’s motions in

limine and motion for a new trial.       We therefore affirm the

decision below.

                                                          AFFIRMED




                               -18-

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