Colonial Pipeline Co. v. Gimbel

• Decision Date: 03 March 1983
• Docket Number: No. 854,854
• Citation: 456 A.2d 946,54 Md.App. 32
• Parties: COLONIAL PIPELINE COMPANY v. Helen GIMBEL and Ethel Posnick, Successor Trustees.
• Court: Court of Special Appeals of Maryland

Page 32

54 Md.App. 32

456 A.2d 946

COLONIAL PIPELINE COMPANY v. Helen GIMBEL and Ethel Posnick, Successor Trustees.

No. 854.

Court of Special Appeals of Maryland.

March 3, 1983.

Paula Peters, Annapolis, with whom were Wayson, Klos & Peters, Annapolis, on the brief, for appellant.

M. Natalie McSherry, Baltimore, with whom were Whiteford, Taylor, Preston, Trimble & Johnston, Baltimore, on the brief, for appellees.

Argued before MORTON, LISS and CHARLES E. ORTH, Jr. (Specially assigned), JJ.

LISS, Judge.

Colonial Pipeline Company (hereinafter "Colonial"), the appellant herein, filed a petition in the Circuit Court for Anne Arundel County, seeking to condemn property owned by the David W. Chertkof Trust. At the time of trial, the surviving trustee of the David W. Chertkof Trust was Jack O. Chertkof, who has since that time passed away. The successor trustees are Helen Gimbel and Ethel Posnick, the appellees herein.

The parties filed a stipulation on May 15, 1981, in which the appellees granted to the appellant the right to enter the property and to set the date of valuation of the property rights acquired by the appellant. The case was heard by a jury on November 19 through 24, 1981. Prior to trial, the appellant filed a motion in limine seeking to exclude the testimony of Carl Heinmuller, a real estate appraiser to be called by the appellees, to exclude any and all references to the consideration paid by Colonial in 1963 for an easement through the same property and to prohibit the testimony of the defendant, Jack O. Chertkof, Trustee, giving his opinion of the value of the easement acquired by Colonial in this case. The motion was denied.

Following evidentiary objections, the appellant moved to strike the testimony of Carl Heinmuller, and to strike any and all references to the price paid by the Colonial in 1963. The court denied those motions. The appellant also sought to strike the opinion testimony of Jack O. Chertkof, whom the court had initially accepted as an expert on the value of real property. The court granted the appellant's motion to strike the qualification of the defendant as an expert but denied the appellant's motion to strike his opinion entirely, permitting his testimony as to value as an owner. The jury returned a verdict in favor of Chertkof in the amount of $177,500 for the property rights acquired by appellant and $22,500 for the damage to the trees on the temporary work space. A motion for a new trial was filed by the appellant on December 7, 1981, and denied. The appellant then noted this appeal, raising the following issues to be determined by this Court: ¹

1. Whether a sale 18 years old is too remote in time to be a comparable sale in a condemnation proceeding?

2. Whether a sale of an easement may be admitted in evidence as a comparable sale when the rights conveyed are substantially different and no adjustment in price is made by the appraiser for the differences?

3. Whether the trial court erred in permitting an expert to testify as to his opinion of value when the expert used the consumer price index to adjust for the expiration of time in a comparable sale made 18 years earlier?

4. May an expert appraiser give opinion testimony concerning corporate purpose in a sale by condemnation?

5. May a trustee give opinion testimony concerning the value of real property owned by the trust?

THE FACTS

The Chertkof property involved in this case is a continuous strip of land, over four miles in length, which extends from a point just east of Hammonds Ferry Road in Anne Arundel County to Pennington Avenue in Baltimore City. The property was originally assembled by the Baltimore Gas & Electric Co. for the purpose of a utility right of way. Much of the parcel is limited to 60 or 100 feet in width.

When Chertkof acquired the property from the Baltimore Gas & Electric Co. in 1945, it was subject to an easement and right-of-way running the length of the property for a pipeline owned by Sinclair Refining Co. In 1963, Colonial, which had since purchased the Sinclair Pipeline right-of-way, purchased an additional pipeline right-of-way from Chertkof for a price of $110,000. The newly acquired pipeline right-of-way was ten feet in width parallel to the existing Sinclair pipeline. In addition, Colonial was granted rights of ingress and egress to the right-of-way through a 25-foot wide strip which included both pipelines. Chertkof retained the right to use or sell that portion of the 25-foot area south of the ten-foot right-of-way for additional pipelines, conduits or utility poles.

In 1978, Colonial (with other oil pipeline corporations) was granted the power of eminent domain to acquire property for additional pipelines adjacent to and within 50 feet of existing rights-of-way, pursuant to Maryland Code (1957, 1973 Repl.Vol.) Article 23, § 341A(b).

In early 1981, Colonial sought still another pipeline right-of-way from Chertkof. The additional right-of-way sought was also 10 feet in width adjacent to the 10-foot right-of-way acquired in 1963. In this instance, however, the right-of-way to be acquired stopped at the Baltimore City/Anne Arundel County line.

Both Colonial and Chertkof presented testimony at trial from expert real estate appraisers as to the fair market value of the right-of-way acquired. The jury determined the fair market value to be $177,500.

At issue before the jury was the present day fair market value of the easement and right-of-way rights acquired by Colonial in the Chertkof property. Colonial's appraiser, qualified as an expert by the court, testified that in his opinion the value of the rights acquired by Colonial was $18,600. Chertkof's appraiser testified that the fair market value was $322,806, and Chertkof himself, as the owner of the property, testified that the fair market value was $500,000. Chertkof's appraiser used only one comparable sale, the sale to Colonial 18 years prior to the date of this acquisition, in arriving at his opinion of the value of the rights acquired by Colonial. The appraiser testified that the highest and best use of the property was as a pipeline right-of-way. The expert then adjusted the price paid in 1963 by the percentage increase in the consumer price index over those 18 years. Colonial's appraiser testified that the consumer price index was not a method accepted within the trade to adjust the value of land for the expiration of time.

In rebuttal, Colonial offered a retired Colonial Pipeline employee who had been involved in the negotiations in 1963, and who testified that Chertkof's property was at the point of termination of the 1963 pipeline and that to have gone around the property at that time would have resulted in substantially greater construction costs as well as ongoing production costs, in that more miles of pipeline would have been required.

Appellant argues that:

The 1963 sale should not have been admitted as a comparable sale both because it was too remote in time and because the rights acquired were too dissimilar to be of probative value.

* * *

* * * Immediately prior to the acquisition in this proceeding (as a result of the 1963 acquisition), Colonial had rights in 25 feet of the Chertkof property. The acquisition in this proceeding involves no new land of the defendant. This involves an additional right within the existing easement. Therefore, the issue in this case is the fair market value of burdening an existing easement with an additional servitude. The additional servitude involves no new surface uses of the land. It involves only the right to lay an additional pipeline.

The 1963 agreement, on the other hand, involved surface as well as underground uses and involved land previously unburdened with easements. The consideration recited in the deed in 1963 was not allocated between the property rights acquired and the use of temporary workspace, between the value of the easement and damages to the remainder of the property of the defendant or between the value of the property rights acquired and damage to the trees and vegetation.

Appellant contends that the trial court erred in permitting Chertkof's appraiser to testify concerning his opinion as to the fair market value of the rights acquired. It argues that the circumstances of the 1963 acquisition were substantially dissimilar to the acquisition in the present proceedings in that the present proceedings involve only one sub-surface right in 10 feet of land while the 1963 agreement involved surface and underground rights in 25 feet of land. Moreover, appellant contends Chertkof's appraiser failed to adjust the value of what the appellees owned on the date of valuation, burdened with the pre-existing easement. Appellant concludes that for these reasons the 1963 acquisition of Colonial represents the special value of the property to Colonial prior to its acquisition of the right of eminent domain and not the fair market value.

Appellant concedes that imposing an additional burden on an easement gives a right to damages to the landowner. Moale v. City of Baltimore, 5 Md. 314, 61 Am.Dec. 276 (1854). If a deed contains a restriction on commercial uses, that restriction must be considered in valuing the land taken. Rogers v. State Roads Commission, 227 Md. 560, 177 A.2d 850 (1962). If land is subjected to an existing servitude to lay an oil pipeline, in a subsequent proceeding to condemn for an additional line, the land must be valued with the existing servitude. United Fuel Gas Company v. Mauk, 272 S.W.2d 810 (Ky.1964). Moreover, when part of the land is taken, the measure of damages to the property owner is the difference in fair market value of the property immediately before the taking and immediately after the taking. Maryland Code (1974, 1981 Repl.Vol.) § 12-104(b) of the Real Property Article; Big Pool Holstein Farms, Inc. v. State Roads Commission, 245 Md. 108, 225 A.2d 283 (1967); State Roads Commission v. Hance, 242 Md. 137, 218 A.2d...