City of Sugar Land v. Home and Hearth

• Decision Date: 18 January 2007
• Docket Number: No. 11-05-00062-CV.,11-05-00062-CV.
• Citation: 215 S.W.3d 503
• Parties: CITY OF SUGAR LAND, Texas, Appellant, v. HOME AND HEARTH SUGARLAND, L.P., Appellee.
• Court: Texas Court of Appeals

215 S.W.3d 503

CITY OF SUGAR LAND, Texas, Appellant, v. HOME AND HEARTH SUGARLAND, L.P., Appellee.

No. 11-05-00062-CV.

Court of Appeals of Texas, Eastland.

January 18, 2007.

J. Mark Breeding, Frederick D. Junkin, C. Charles Dippel, Paul S. Radich, Andrews Kurth, L.L.P., Houston, for appellant.

W. Allyn Hoaglund, Hoaglund Law Firm, Houston, John H. McFarland, Craig T. Enoch, Winstead Sechrest & Minick P.C., Austin, for appellee.

Panel consists of: WRIGHT, C.J., McCALL, J., and STRANGE, J.

OPINION

JIM R. WRIGHT, Chief Justice.

This is an appeal in an eminent domain proceeding. Home and Hearth Sugarland, L.P. (Home and Hearth) owned a tract of land in the City of Sugar Land, Texas.¹ The City instituted condemnation proceedings in which it acquired the entire interest of Home and Hearth as to a portion of the property as well as a drainage easement across another portion of the property. Home and Hearth owned a hotel that was located on the remainder of the property, and the City did not seek any interest in that property. Special Commissioners awarded Home and Hearth $552,651 for the taking.

Home and Hearth appealed the award to the County Court at Law No. 1. The case was tried to a jury, and the trial court entered a judgment in accordance with the verdict. Because Home and Hearth had withdrawn the amount of the Commissioners' award, the trial court credited its judgment for $552,651 and awarded Home and Hearth $1,529,316.50 plus prejudgment interest of $231,322.50. We affirm.

Background Facts

On May 1, 1998, Home and Hearth purchased a 5.9873-acre tract of land located near the intersection of U.S. Highway 90-A and U.S. Highway 59 in Sugar Land, Texas.² On June 19, 1998, Home and Hearth obtained a building permit for the construction of a hotel. Home and Hearth constructed a three-story, extended-stay hotel on approximately 3 acres of the interior portion of the 5.9873-acre tract, leaving a 1.7709-acre tract to the north of the hotel site (fee area) and a 1.056-acre tract to the south of the hotel site. As required by the City, Home and Hearth constructed a detention pond on approximately .7 acres on the eastern portion of the 1.7709-acre tract.

The City filed condemnation proceedings by which it sought to take fee simple title to the 1.7709-acre tract in order to construct a regional detention pond. The construction plan for the regional detention pond incorporated the .7-acre detention facility already built by Home and Hearth. Home and Hearth had built the on-site detention pond in order to meet drainage requirements for obtaining a building permit. One month after Home and Hearth obtained the building permit, the City adopted Ordinance No. 1129 which changed the detention requirements for undeveloped property where Home and Hearth was located. The ordinance provided that a property owner could elect to pay an impact fee of $16,000 per acre instead of providing on-site detention in order to obtain a building permit.

The City also sought a drainage easement across the 1.056-acre tract. The amount awarded for this taking is not involved in this appeal. The City did not seek to condemn any interest in the property upon which the hotel was located. However, Home and Hearth claimed that, in addition to damages for the taking of the 1.7709-acre tract and for the taking of the easement, the City owed it for damages to the hotel property that occurred as a result of that taking.

The Appeal from the Commissioners' Award

After the appeal from the Commissioners' award, the case initially went to trial in November 2001. During the trial, the City moved for a trial amendment that would allow Home and Hearth drainage rights for the hotel property that was not taken. The trial court allowed the City to amend its pleadings in order to grant drainage rights for the hotel portion of the property but refused to allow a trial amendment as to Home and Hearth's other undeveloped tract not taken by the City. Home and Hearth moved for a mistrial, and the trial court granted the motion.

On April 12, 2004, the City filed its "First Amended Petition and Statement in Condemnation." At a later hearing, the City stipulated that Home and Hearth could drain its undeveloped property into the proposed regional detention pond at no cost to Home and Hearth. Together, the amended petition and the stipulation allowed Home and Hearth to drain the entire remainder into the regional detention facility.

In July 2004, the case was presented to a jury, and the jury returned its verdict that on the date of the taking, January 13, 2000:(1) the market value of the 1.7709-acre fee area (77,142-square feet) taken by the City was $14.75 per square foot; (2) the difference in the market value of the 0.0169 acres (736-square feet across the 1.056-acre tract) immediately before and immediately after the taking was $1,472; and (3) the difference in the market value of the remainder immediately before and immediately after the taking was $390,000.³

The trial court denied the City's motion for judgment notwithstanding the verdict, and it entered a final judgment on the jury verdict. Subsequently, the trial court denied the City's motion to modify and its motion for new trial.

The Issues

The primary issues in this case relate to the fair market value of the 1.7709-acre fee area and to the amount awarded for damages to the remainder as a result of the taking of the fee area. In this appeal, the City attacks the admissibility of the testimony of Home and Hearth's two expert witnesses, Vernon Henry and Matthew C. Deal. The City also contends that the trial court reversibly erred when it denied the City's request for a judgment notwithstanding the verdict because, without Henry's testimony and without Deal's testimony, the evidence was legally insufficient to support the jury's finding on the market value of the fee area taken as well as its finding regarding damages to the remainder resulting from the taking. The City also complains that the trial court abused its discretion when it denied the City's requested jury instructions.

Admissibility of Expert Testimony Generally

Under TEX.R. EVID. 702, in order for an expert's testimony to be admissible, the expert must be qualified, and the expert's opinion must be relevant to the issues in the case and must be based upon a reliable foundation. Guadalupe-Blanco River Auth. v. Kraft, 77 S.W.3d 805, 807 (Tex.2002) (applying the relevancy and reliability requirements of Rule 702 to testimony of expert appraisal witnesses in condemnation actions); Gammill v. Jack Williams Chevrolet, Inc., 972 S.W.2d 713, 719 (Tex.1998). The trial court acts as an evidentiary gatekeeper to screen irrelevant and unreliable expert evidence. Exxon Pipeline Co. v. Zwahr, 88 S.W.3d 623, 629 (Tex.2002). A trial court has broad discretion to determine the admissibility of evidence, and the appellate court will reverse only if that discretion has been abused. A trial court abuses its discretion if it acts without reference to any guiding principles. E.I. du Pont de Nemours & Co. v. Robinson, 923 S.W.2d 549, 556 (Tex.1995).

The reliability requirement under Rule 702 focuses on the basis of the expert's opinion—"the principles, research, and methodology underlying an expert's conclusions." Zwahr, 88 S.W.3d at 629 (citing Robinson, 923 S.W.2d at 557). Expert testimony is unreliable if it is no more than "subjective belief or unsupported speculation." Id. (citing Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 590, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993)). Expert testimony is also unreliable if the court concludes that "there is simply too great an analytical gap between the data and the opinion proffered." Gammill, 972 S.W.2d at 726 (quoting Gen. Elec. Co. v. Joiner, 522 U.S. 136, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997)).

In reviewing the reliability of expert testimony, the trial court is not to determine whether the expert's conclusions are correct; rather, the court should determine only whether the analysis used to reach those conclusions is reliable. Zwahr, 88 S.W.3d at 629 (citing Gammill, 972 S.W.2d at 728). Moreover, reliability is an issue of admissibility for the trial court, not a weight-of-the-evidence issue for the fact-finder. See Gen. Motors Corp. v. Sanchez, 997 S.W.2d 584, 590 (Tex.1999).

Fee Area

The Testimony of Matthew C. Deal

The City asserts that the trial court erred in admitting the testimony of Home and Hearth's expert witness, Deal, on the issue of the fair market value of the fee area. We will discuss Deal's testimony on other issues later in this opinion. The City argues that Deal's testimony was unreliable because his determination of the highest and best use for the fee area was flawed.⁴

Compensation for land taken by eminent domain is measured by the fair-market value of the land at the time of taking. Zwahr, 88 S.W.3d at 627; City of Harlingen v. Estate of Sharboneau, 48 S.W.3d 177, 182 (Tex.2001). Market value is defined as the price the property would bring when offered for sale by one who desires to sell but is not obliged to do so and bought by one who desires to buy but is under no necessity to do so. Sharboneau, 48 S.W.3d at 182, 189 (citing State v. Carpenter, 126 Tex. 604, 89 S.W.2d 979, 979 (1936); State v. Windham, 837 S.W.2d 73, 77 (Tex.1992)). In determining market value, the jury may consider all uses for which the property is reasonably adaptable and for which it is (or in all reasonable probability will become) available within the foreseeable future. Id.

The highest and best use is defined as "[t]he reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value." APPRAISAL INSTITUTE, THE APPRAISAL OF REAL ESTATE 269 (9th ed.1987). The four factors to be used in determining the highest and best use are legal permissibility, physical possibility, financial...