City of Harligen v. Sharboneau

• Decision Date: 26 August 1999
• Citation: City of Harligen v. Sharboneau, 1 S.W.3d 282 (Tex. App. 1999)
• Parties: (Tex.App.-Corpus Christi 1999) THE CITY OF HARLINGEN, Appellant, v. THE ESTATE OF DAVID J. SHARBONEAU, DECEASED, LOIS SHARBONEAU, INDIVIDUALLY AND AS INDEPENDENT EXECUTRIX OF THE ESTATE OF DAVID J. SHARBONEAU, DECEASED, Appellee. NUMBER 13-97-874-CV
• Court: Texas Court of Appeals

Page 282

1 S.W.3d 282 (Tex.App.-Corpus Christi 1999)

THE CITY OF HARLINGEN, Appellant, v. THE ESTATE OF DAVID J. SHARBONEAU, DECEASED, LOIS SHARBONEAU, INDIVIDUALLY AND AS INDEPENDENT EXECUTRIX OF THE ESTATE OF DAVID J. SHARBONEAU, DECEASED, Appellee.

NUMBER 13-97-874-CV

COURT OF APPEALS THIRTEENTH DISTRICT OF TEXAS CORPUS CHRISTI

August 26,1999.

Rehearing Overruled September 23, 1999.

On appeal from the County Court at Law No. 1 of Cameron County, Texas.

Before Chief Justice Seerden and Justices Hinojosa and Yanez

OPINION ON MOTION FOR REHEARING

Opinion by Chief Justice Seerden

The original opinion of the Court is withdrawn and the following is handed down on rehearing.

Appellant, City of Harlingen, sought to condemn property owned by the Estate of David J. Sharboneau, deceased. After agreeing that there was a public need to acquire the property, the court proceeded to a hearing to determine the fair market value of the property. After this hearing, the court awarded the Estate $232,000 and rendered judgment accordingly. In this appeal, the City contends that: (1) the trial court erred in admitting expert testimony because the expert's testimony was incompetent and his methods were improper; (2) the trial court erred in finding that appellant owed an assessment equal to the value of the land put to its highest and best use; (3) there was legally and factually insufficient evidence to support the judgment; and (4) the trial court erred in admitting testimony related to the purchase prices of the disputed tracts. We affirm.

Factual Summary

Lois Sharboneau, executrix of the Estate of David Sharboneau, began purchasing tracts of land in a particular area of Harlingen in approximately 1972. Between 1972 and 1979, she acquired 9.85 acres in five separate, adjacent parcels. After purchasing the tracts, Sharboneau had the existing homes on the tracts removed, but did not remove other existing improvements.

Prior to a trial to the court, the parties stipulated that the highest and best use of the property was for development as a "single house development." The only issue for the court was the fair market value of the property. Joe Patterson, a real estate appraiser with extensive appraisal experience in the Rio Grande Valley testified for appellee. He stated his opinion that the value of the condemned property, when used for its highest and best purpose, was $296,620. Patterson used what he termed the "subdivision development" method to reach his conclusion. According to his testimony, this approach requires the appraiser to determine the projected sales proceeds for the sale of developed property. The estimated development costs, expenses, and the developer's profit are deducted from the proceeds to achieve a net value, which is regarded as the fair market value of the property when sold for subdivision development.

The City's appraiser, Jesse Watson, used a comparable sales method to determine the fair market value of the property. In reaching his conclusion, Watson compared the prices paid for what he considered three relatively similar tracts located in Harlingen. However, Watson stated that finding exact comparables is often impossible. Thus, he was required to make adjustments for significant differences between the tracts. He concluded that the value of the unimproved, raw land was $98,500.00.

The court's findings of fact state that the highest and best use of the land is for development as a residential subdivision. The testimony adduced at trial shows the land is open land. The appraisal report also notes that utilities and services are connected to the site; public telephone, electrical, and gas services are available to the site; and easements have been granted over the site for road and utility services.

I. Reliability, Admissibility, and Competency of Appraisal Testimony

By its first issue, the City contends that the expert testimony submitted by the estate was unreliable, inadmissible, and incompetent, and thus cannot support the trial court's finding. Primarily, the City asserts that Patterson's testimony was based upon an invalid methodology and incompetent data.

The City's argument on this point raises a threshold question regarding the extent to which the court may rely upon the determination that the highest and best use of the land is for single-family residential subdivision development. By its argument, the City suggests that, regardless of the potential uses for the land, the determination of value is inextricably related to the current status of that property. This view is unnecessarily limited. Implicit in the notion that a particular parcel of land has a highest and best use, is the notion that a buyer and seller would only consummate a sale of the land for that purpose. In other words, land which is best used as farmland is unlikely to be bought by an individual seeking to build a skyscraping commercial enterprise. Likewise, land which is best used for a skyscraper is unlikely to be sold as farmland. The concept of valuation must consider these realities.

Moreover, the fact that the land in question is not being put to that use in the present should not foreclose consideration of the potential uses to which that land may be put. An individual who holds a parcel, not unlike this one, upon which she decides to grow hay, may be aware that the land can be put to a different use, such as residential subdivision development, but may nevertheless choose, for the time being, to continue to grow hay. Regardless of the reason, so long as the value of the land when put to its highest and best use is reasonably ascertainable, and therefore not the subject of mere speculation, assigning a value according to the reasonable potential use is consistent with the concept of fair market value.

Appellant correctly asserts that the basis for an expert's testimony must be reliable to be admissible. See TEX. R. EVID. 702; Gamill v. Jack Williams Chevrolet 972 S.W.2d 713, 726 (Tex. 1998); E.I. du Pont de Nemours & Co. v. Robinson, 923 S.W.2d 549, 556-57 (Tex. 1995). The trial court has broad discretion in determining admissibility, and we will reverse only if there is an abuse of that discretion. TEX. R. EVID. 104(a); Robinson, 923 S.W.2d at 558; Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985). In Robinson, the court noted six non-exclusive factors which may be considered to determine the admissibility of expert testimony. 923 S.W.2d at 557. However, as the Gamill court recognized, there are situations in which the Robinson reliability factors may be inapplicable. See Gamill, 972 S.W.2d at 720, 726. The court used the beekeeper analogy espoused by the Sixth Circuit to demonstrate the difference.

If one wanted to explain to a jury how a bumblebee is able to fly, an aeronautical engineer might be a helpful witness. Since flight principles have some universality, the expert could apply general principles to the case of the bumblebee. Conceivably, even if he had never seen a bumblebee, he still would be qualified to testify, as long as he was familiar with its component parts.

On the other hand, if one wanted to prove that bumblebees always take off into the wind, a beekeeper with no scientific training at all would be an acceptable expert witness if a proper foundation were laid for his conclusions. The foundation would not relate to his formal training, but to his firsthand observations. In other words, the beekeeper does not know any more about flight principles than the jurors, but he has seen a lot more bumblebees than they have.

Id. at 724-25. As with the other situations discussed in Gamill, here Patterson's testimony is more like the hypothetical beekeeper's than the engineer's. Patterson testified that he had performed many appraisals in the Rio Grande Valley over a period of twenty years. During this time, he had appraised many different types of property, including single-family residences and land developments. Patterson graduated from Baylor University, where he received real estate training. His report indicates that he was licensed by the State of Texas as a General Real Estate Appraiser at the time of this appraisal. Patterson associated himself with several professional groups and had taught real estate appraisal courses at Hill Junior College and Baylor University. He stated that he had used the subdivision development method of appraisal on many other occasions.

Certainly, there are scientific components to real estate appraisal, but Patterson's understanding of the fundamental principles of his practice were presented to the court during the direct examination. His qualifications were placed into evidence as well. We cannot say that the trial court abused its discretion as a "gatekeeper" in accepting Patterson's qualifications and testimony.

According to the Gamill court, beyond the expert's qualifications, his opinion and methods must still be reliable. In his report, which was received into evidence by the court, Patterson, at some length, describes his method and its general utility in the appraisal process.

Patterson's study includes an initial examination of the demographic and economic prospects for the Lower Rio Grande Valley. Patterson then examined the feasibility of subdividing the Sharboneau tract. He measured the property area at approximately 9.852 acres. He concluded the property could be subdivided into forty-four single-family residential lots, averaging about 7,700 square feet each. Patterson described his methodology:

The average lot sizes and total number of lots noted above have been estimated from utilizing existing subdivisions in the market area. For example: Knightwood Estates Subdivision, No. 4 has a total of 11.408 acres with 61 total lots averaging 6,793 square feet each. This calculates to 5.34 lots per acre. Knightwood Estates Subdivision, No. 3 has a total of 17.830 acres with 79 total lots averaging 7,700 square...