Filed: Sep. 29, 2008
Latest Update: Mar. 02, 2020
Summary: FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT UNITED STATES OF AMERICA; UNITED STATES ARMY CORPS OF ENGINEERS, Plaintiffs-Appellees, v. No. 07-35310 4.85 ACRES OF LAND, more or less, situated in Lincoln County, State D.C. No. CV-03-00063-RWA of Montana; JERRY CROSKREY; OPINION COUNTY OF LINCOLN; PAMELA FLOWERS; CALEB FLOWERS; 1.00 ACRE OF LAND; ELMER LLOYD, Defendants-Appellants. Appeal from the United States District Court for the District of Montana Richard W. Ande
Summary: FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT UNITED STATES OF AMERICA; UNITED STATES ARMY CORPS OF ENGINEERS, Plaintiffs-Appellees, v. No. 07-35310 4.85 ACRES OF LAND, more or less, situated in Lincoln County, State D.C. No. CV-03-00063-RWA of Montana; JERRY CROSKREY; OPINION COUNTY OF LINCOLN; PAMELA FLOWERS; CALEB FLOWERS; 1.00 ACRE OF LAND; ELMER LLOYD, Defendants-Appellants. Appeal from the United States District Court for the District of Montana Richard W. Ander..
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FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA; UNITED
STATES ARMY CORPS OF ENGINEERS,
Plaintiffs-Appellees,
v. No. 07-35310
4.85 ACRES OF LAND, more or less,
situated in Lincoln County, State D.C. No.
CV-03-00063-RWA
of Montana; JERRY CROSKREY;
OPINION
COUNTY OF LINCOLN; PAMELA
FLOWERS; CALEB FLOWERS; 1.00
ACRE OF LAND; ELMER LLOYD,
Defendants-Appellants.
Appeal from the United States District Court
for the District of Montana
Richard W. Anderson, Magistrate Judge, Presiding
Argued and Submitted
August 7, 2008—Seattle, Washington
Filed September 29, 2008
Before: Harry Pregerson, William C. Canby, Jr., and
Cynthia Holcomb Hall, Circuit Judges.
Opinion by Judge Hall
13883
13886 UNITED STATES v. 4.85 ACRES OF LAND
COUNSEL
Allan M. McGarvey, McGarvey, Heberling, Sullivan &
McGarvey, Kalispell, Montana, for the defendants-appellants.
Kathryn E. Kovacs, United States Department of Justice,
Environment and Natural Resources Division, Washington,
D.C., for the plaintiff-appellee.
OPINION
HALL, Circuit Judge:
This dispute arises from a condemnation action involving
several plots of land in Lincoln County, Montana. The prop-
erty was vacant when condemned, but the landowners were
attempting to develop a portion of it into subdivisions. During
the trial on the issue of just compensation, the landowners
sought to introduce evidence of sales at three nearby subdivi-
sions which took place after the taking. The district court
refused the evidence. The landowners appeal the judgment
entered pursuant to the jury award, arguing that the district
court abused its discretion in making a per se evidentiary rul-
ing excluding all post-taking sales. We agree. Because the
district court’s error prejudiced the landowners, we vacate the
judgment and remand for a new trial.
I. FACTUAL AND PROCEDURAL BACKGROUND
In September 2000, Jerry Croskrey purchased a 21-acre
parcel of land adjoining the Murray Springs fish hatchery in
Libby, Montana from the Lincoln County School Board.
Croskrey paid $65,000 for the land, and also bought an option
to purchase the neighboring 20-acre lot for $55,000, which he
exercised in June 2002. In August 2001, Croskrey’s real
estate agent, Pamela Flowers, purchased Croskrey’s 21-acre
UNITED STATES v. 4.85 ACRES OF LAND 13887
lot for $142,000. In April 2002, Flowers subdivided four one-
acre lots from the 21-acre property and transferred them to
family members. Flowers then began plans to subdivide and
develop part of her property into the Good Hope subdivision.
In September 2002, the county granted preliminary approval
for four one-acre lots in the subdivision.
Croskrey filed a similar subdivision plan with the county,
seeking to subdivide the southern portion of his 20-acre lot
into six one-acre lots. The county granted preliminary
approval for the subdivision (called the Hidden Meadows sub-
division) in October 2002. However, the Montana Department
of Environmental Quality denied Croskrey’s application in
December of 2002, finding the proposal incomplete.
On April 25, 2003, before either Flowers or Croskrey
received final approval for their planned subdivisions, the
government filed six condemnation actions to acquire land as
a buffer zone around the fish hatchery. The lead action con-
demned 4.85 acres of Croskrey’s 20-acre lot. The second
action condemned a 3.65-acre portion of Flowers’ 21-acre lot.
In the third and fourth actions, the United States condemned
two one-acre lots which had allegedly been transferred from
Flowers to her family members and possibly back to
Croskrey. In the sixth action, the United States condemned a
one-acre lot purportedly owned by Flowers’ father.1
The district court bifurcated the question of the propriety of
the condemnation actions from the determination of just com-
pensation, and entered judgment for the government on the
necessity of the taking in the summer of 2005. Shortly there-
after, Croskrey and Flowers began developing a subdivision
project on their remaining property, which neighbored the
condemned land. The project, which Croskrey and Flowers
called the Murray Island subdivision, consisted of five one-
acre lots, one of which included land that had originally been
1
The fifth action is not the subject of this appeal.
13888 UNITED STATES v. 4.85 ACRES OF LAND
part of the Good Hope subdivision. The county granted pre-
liminary plat approval for the Murray Island subdivision in
October 2006, and the five lots sold for approximately
$75,000 each within the next few weeks. Final plat approval
was granted in December 2006.
The landowners requested that the court allow into evi-
dence sales from the Murray Island subdivision for the trial on
the issue of just compensation. At the final pretrial confer-
ence, the court indicated that it would exclude the evidence.
In chambers the day after the trial began, the landowners once
again attempted to introduce sales from the Murray Island
subdivision as well as sales from two nearby subdivisions —
the Driftwood Cove and Mariners Haven projects.2 After
hearing arguments from both parties, the court refused to
admit into evidence any sales that occurred after the taking,
reasoning that post-taking sales were not relevant to “what
would be in the contemplation of the willing buyer and will-
ing seller on the mandatory date of the taking.”3 The court
expressed concern, however, that excluding the post-take
sales would “deny[ ] the jury . . . some very, very relevant
credible evidence as to what market value really was.”
The jury trial primarily consisted of testimony regarding
the value of the condemned land. Flowers testified, based on
her experience as a real estate agent, her study of the market,
and her sales projections for the Good Hope subdivision, that
her property was worth approximately $33,000 per acre when
the taking occurred. She valued the one-acre lots at approxi-
mately $40,000 each. Based on his experience as a real estate
investor, Croskrey testified that his own lot was worth
$32,823 per acre.
2
The Driftwood Cove and Mariners Haven sales were offered not neces-
sarily as direct evidence of the value of the condemned land but to support
Flowers’ sales projections for the Good Hope subdivision.
3
Though the court excluded evidence of sales of lots at the subdivisions,
it allowed Flowers to testify that she completed the Murray Island subdivi-
sion.
UNITED STATES v. 4.85 ACRES OF LAND 13889
The government’s expert, John McFaddin, reached much
lower values for the condemned properties. McFaddin opined
that the highest and best use of the two larger lots was as sin-
gle family residence sites, rather than as subdivisions, and
therefore based his estimated values for those tracts on four-
teen larger lot sales which predated the taking by between a
few weeks and nearly five years. McFaddin estimated the per
acre value of Flowers’ and Croskrey’s lots to be about $3,000.
After adjusting for improvements that the landowners had
made to the properties, McFaddin concluded that Flowers’ lot
was worth $17,712 and Croskrey’s lot was worth $16,456.
McFaddin estimated the four smaller lots to be worth approxi-
mately $14,000 each, based on fifteen sales of lots ranging in
size from less than one acre to more than five acres.
After the close of the trial, the jury began deliberations.
During deliberations, the jury inquired of the court whether
sales at the Murray Island subdivision were barred from evi-
dence or whether there had in fact been no sales at that subdi-
vision to date. The court responded that it had not allowed any
evidence of market activity that occurred after the date of the
taking because post-taking sales would not have been in the
contemplation of the willing buyer and willing seller.
The jury ultimately awarded $18,535 for Croskrey’s parcel,
$19,065 for Flowers’ parcel, and $14,000 for each of the four
small parcels. On March 15, 2007, the court entered judg-
ment. The landowners timely appealed.
II. STANDARD OF REVIEW
A district court’s exclusion of evidence is reviewed for
abuse of discretion. United States v. 42.13 Acres of Land, 73
F.3d 953, 956 (9th Cir. 1996); United States v. 55.22 Acres of
Land,
411 F.2d 432, 434 (9th Cir. 1969). “A district court
abuses its discretion when it makes an error of law, when it
rests its decision on clearly erroneous findings of fact, or
when we are left with ‘a definite and firm conviction that the
13890 UNITED STATES v. 4.85 ACRES OF LAND
district court committed a clear error of judgment.’ ” United
States v. Hinkson,
526 F.3d 1262, 1277 (9th Cir. 2008) (quot-
ing Delay v. Gordon,
475 F.3d 1039, 1043 (9th Cir. 2007)).
To reverse a jury verdict for evidentiary error, we must find
that the trial court abused its discretion in a manner that preju-
diced the appealing party. Tennison v. Circus Circus Enters.,
Inc.,
244 F.3d 684, 688 (9th Cir. 2001). Prejudice exists when
the trial court’s error “more probably than not . . . tainted the
verdict.”
Id.
III. DISCUSSION
Before and during the trial on the issue of just compensa-
tion, the landowners attempted to introduce into evidence sev-
eral comparable sales which took place after the taking. The
district court refused to admit any of these sales into evidence,
and the landowners urge us to find error in this ruling.
[1] When the government condemns a property, it must
provide the landowner with just compensation. U.S. Const.
Amend. V. Just compensation “is usually determined by the
ascertainment of fair market value, or what a willing buyer
would pay in cash to a willing seller.” 55.22
Acres, 411 F.2d
at 434. Comparable sales are generally persuasive evidence of
the market value of a condemned property, whether offered as
direct proof or in support of a witness’ opinion. United States
v. 1,129.75 Acres of Land,
473 F.2d 996, 998 (8th Cir. 1973);
United States v. 320.0 Acres of Land,
605 F.2d 762, 798 (5th
Cir. 1979); 55.22
Acres, 411 F.2d at 434.
[2] The threshold question of admissibility of comparable
sales generally rests in the trial court’s discretion. 55.22
Acres, 411 F.2d at 434; 1,129.75
Acres, 473 F.2d at 998.
However, though the Ninth Circuit has not yet weighed in on
the issue, “[t]he majority of circuit courts have rejected a per
se rule in eminent domain proceedings prohibiting the intro-
duction of evidence of post-taking comparable sales.” United
UNITED STATES v. 4.85 ACRES OF LAND 13891
States v. 68.94 Acres of Land, 918 F.2d 389, 398 (3d Cir.
1990).
[3] For example, in United States v. 63.04 Acres of Land,
the seminal case on the admissibility of post-taking compara-
ble sales, the Second Circuit held that the trial court abused
its discretion in excluding a comparable sale on the ground
that it occurred after the taking because “[t]here is no absolute
rule which precludes consideration of subsequent sales.”
245
F.2d 140, 144 (2d Cir. 1957). In 1,129.75 Acres of Land, the
Eighth Circuit followed the Second Circuit’s approach, hold-
ing that “[t]he question of admissibility of subsequent compa-
rable sales is one to be decided on the facts of each case, and
not by reference to a rigid exclusionary rule which has no
rational
foundation.” 473 F.2d at 999; see also United States
v. 312.50 Acres of Land,
812 F.2d 156, 157 n.3 (4th Cir.
1987) (citing 1,129.75
Acres, 473 F.2d at 996). The Third Cir-
cuit has also recognized the necessity of a case-by-case
approach, ruling in 68.94 Acres that the district court abused
its discretion when it “excluded consideration of post-taking
comparable sales . . . without considering the overall compa-
rability of the offered sales . . .
.” 918 F.2d at 399.
[4] The general rule favoring admission of post-taking sales
is “limited . . . by the consideration that a condemnation itself
may increase prices and the government should not have to
pay for such artificially inflated values.” 63.04
Acres, 245
F.2d at 144; see also 68.94
Acres, 918 F.2d at 398-99;
1,129.75
Acres, 473 F.2d at 998. However, even when subse-
quent sales may reflect artificially enhanced values, courts
have been reluctant to endorse blanket exclusions. In 320.0
Acres, the Fifth Circuit, faced with the possibility that the
condemnation had inflated the values of post-taking sales,
held that “in many cases the preferable course and the only
just course would be to adopt a liberal policy of admission,
permit the possibly tainted [i.e. artificially inflated] sales to go
to the fact-finder under proper instructions, and leave it to the
13892 UNITED STATES v. 4.85 ACRES OF LAND
fact-finder to weigh them . . .
.”4 605 F.2d at 800; see also
United States v. 691.81 Acres,
443 F.2d 461, 463 (6th Cir.
1971) (possibility of artificial price inflation “[could not] be
determined through use of a general exclusionary rule prior to
trial.”); United States v. 0.161 Acres of Land,
837 F.2d 1036,
1044 (11th Cir. 1988) (given the “preference for allowing the
fact-finder to decide what, if any, weight to attach to evidence
of post-taking sales,” the district court abused its discretion by
adopting per se rule, even though it cited possibility of artifi-
cial inflation); cf. 68.94
Acres, 918 F.2d at 398-99 (suggesting
that a per se exclusionary rule might be justified after the trial
court made the finding that post-taking sales had been artifi-
cially inflated by the condemnation).
[5] We agree with our sister circuits that the admission of
comparable sales in a condemnation action should not be
determined by a per se rule excluding all post-taking sales.
See 68.94
Acres, 918 F.2d at 398-99; 0.161
Acres, 837 F.2d
at 1044; 691.81
Acres, 443 F.2d at 463; 1,129.75
Acres, 473
F.2d at 998; 63.04
Acres, 245 F.2d at 144. Regardless of
whether a sale occurs before or after the taking, a trial court
should “make separate findings of the comparability of each
of the proffered comparable properties to the condemnee’s
property” by comparing them to the condemned property in
terms of their “respective characteristics . . . geographic prox-
imity . . . and the closeness in time of the sales.” 68.94
Acres,
918 F.2d at 399; see also 1,129.75
Acres, 473 F.2d at 998.
Courts should also be cognizant of the possibility that the con-
demnation itself has enhanced the value of the proffered com-
parable sales, as that factor may weigh against admission.
68.94
Acres, 918 F.2d at 399; 320.0
Acres, 605 F.2d at 800;
63.04
Acres, 245 F.2d at 144. However, “except in unusual
instances,” differences in the location, characteristics, and
4
The Fifth Circuit did qualify this holding somewhat, stating that it may
be within a trial court’s discretion to exclude sales that reflect artificial
increases due to the condemnation if “a reasonable number of other ‘most
comparable’ sales remain.”
Id. at 801-02.
UNITED STATES v. 4.85 ACRES OF LAND 13893
timing of potential comparable sales should “go to the weight
of the evidence rather than . . . to the admissibility.” 691.81
Acres, 443 F.2d at 463; accord 320.0
Acres, 605 F.2d at 800.
The government concedes that no per se exclusionary rule
bars post-taking sales. However, it argues that in this case
there was no error because the district court did not adopt a
per se rule. According to the government, the district court
merely excluded the Murray Island sales because they
occurred too long after the taking in a proper exercise of its
discretion.5
[6] This record does not bear out this argument. In the con-
ference after the first day of trial, the district court refused to
admit any post-taking sales, regardless of how long after the
taking they occurred. The court first rejected the Driftwood
Cove sales, which post-dated the taking by between a year
and three months and a year and a half, finding that they were
“not relevant to what would be in the contemplation of a will-
ing buyer and willing seller on the mandatory date of taking
more than one year prior.” Next, the court excluded the Mari-
ners Haven sales — which occurred between six months and
three years after the taking — ruling that “comparable sales
either for the purposes of regression analysis or simply as
comparable properties, after the date of the take — as far after
as these sales are — are not admissible on the grounds of rele-
vance to the standards that the jury has to apply.” The court
then made the same determination regarding the Murray
Island sales, which occurred approximately three and a half
years after the condemnation, stating “the same thing would
be on the Murray Island sales . . . [i]f the arguments are the
same.”6 In responding to the jury’s question regarding why
5
The government does not explain the district court’s exclusion of the
Driftwood Cove and Mariners Haven sales because it takes the position
that the landowners waived the argument that those sales were improperly
excluded. However, we read the landowners’ brief as appealing the exclu-
sion of all post-taking sales.
6
The district court made all of these determinations notwithstanding that
it had allowed in evidence of comparable sales predating the taking by as
much as 4.8 years.
13894 UNITED STATES v. 4.85 ACRES OF LAND
the Murray Island sales were not offered in evidence, the
court instructed the jury that it had “not allowed anything into
evidence about [ ] market activity [subsequent to the taking]
. . . because the willing buyer, willing seller . . . would not
have known about it.”
[7] The record thus leaves no doubt that the district court
excluded all post-taking sales from consideration. The court
made no findings regarding the comparability of the excluded
sales to the condemned property, nor did it consider the possi-
bility of artificial inflation or otherwise examine the probative
value of the sales.7 Instead, the court simply excluded all post-
taking sales based on “the erroneous premise . . . that evi-
dence of subsequent sales is never proper for consideration in
arriving at fair market value.” 1,129.75 Acres, 473 F.2d at
999. This was an abuse of discretion.
Id. at 998; 68.94
Acres,
443 F.2d at 463; 0.161
Acres, 837 F.2d at 1044; 691.81
Acres,
443 F.2d at 463; 63.04
Acres, 245 F.2d at 144. Moreover, the
error was prejudicial because the jury awards were very close
to the government’s estimates and much lower than the land-
owners’ estimates and the post-take sale values. See
Tennison,
244 F.3d at 688 (prejudice exists if error “more probably than
not . . . tainted the verdict”); cf. 1,129.75
Acres, 473 F.2d at
999 (district court’s per se exclusionary rule was harmless
because the jury’s verdict was about halfway between the
government’s and landowner’s estimates). While it is possi-
ble, as the government suggests, that some of the post-taking
comparable sales would have been inadmissible notwithstand-
ing the district court’s per se rule for various reasons, we
decline to address those issues on appeal as they involve fac-
tual questions that should be decided in the first instance at
the trial level. Accordingly, we vacate the jury awards and
remand for a new trial with directions for the district court to
ascertain the admissibility of each proffered comparable sale.
VACATED and REMANDED.
7
The government does not argue that the condemnation artificially
inflated the values of the post-taking sales in this case.
