Exxon Pipeline Co. v. Zwahr
| Decision Date | 30 January 2001 |
| Citation | 35 S.W.3d 705 |
| Parties | <!--35 S.W.3d 705 (Tex.App.-Houston 2000) EXXON PIPELINE COMPANY, Appellant v. DANIEL R. ZWAHR, SANDRA K. ZWAHR, and UNION STATE BANK, EAST BERNARD, Appellees NO. 01-99-00283-CV In The Court of Appeals For The First District of Texas |
| Court | Texas Court of Appeals |
On Appeal from the County Court at Law No. 1 Fort Bend County, Texas Trial Court Cause No. 13,533
[Copyrighted Material Omitted] Panel consists of Justices Cohen, Taft, and Smith*.
This is a condemnation case. Exxon Pipeline Company (Exxon) appeals from a judgment that awarded $40,000 to appellees, Daniel and Sandra Zwahr (Zwahrs), representing the fair market value of a 1.01-acre pipeline easement taken by Exxon and the right to assign the easement. The Zwahrs' suit challenged the decision of the special commissioners, appointed by the trial court, which awarded the Zwahrs $2,264.90 for Exxon's taking. See Tex. Prop. Code Ann. § 21.018 (Vernon 1984).
In five issues, Exxon contends that the trial court committed reversible error by (1) admitting the testimony of the Zwahrs' expert witness on the value of the land, (2) charging the jury with a question requiring two separate damage findings instead of submitting one broad-form question, (3) improperly instructing the jury on the correct measure of damages, and (4) denying Exxon's post-verdict challenges to the legal and factual sufficiency of the evidence, and excessiveness of the damages.
The Zwahrs purchased a 49-acre tract of land in Fort Bend County in 1989. At that time, the northeast corner of the property was encumbered by a 50-foot wide pipeline easement that contained an underground, 30-inch diameter natural gas pipeline owned by Koch Gateway Pipeline Company (Koch). Although the easement was in place when the Zwahrs purchased the property, they were permitted to grow cotton on the surface of the property.
In 1995, Exxon petitioned the Fort Bend County Court At Law to condemn a 50-foot-wide strip on the Zwahrs' property for an ethane pipeline. The land Exxon condemned has a total surface acreage of 1.01 acre, and overlaps the Koch easement by approximately 82%. The court appointed three special commissioners to hear the case. After the commissioners awarded the Zwahrs $2,264.90, Exxon deposited the full amount in the registry of the court, and took possession of the easement on October 6, 1995. The Zwahrs filed for a de novo trial with the court.
Prior to the de novo trial, Exxon laid its pipeline four feet below the surface parallel to, and approximately 25 feet from, the preexisting Koch pipeline. The Zwahrs were again permitted to plant cotton on the surface of the easement.
The chief issues in the trial de novo were the highest and best use of the 1.01-acre tract and its valuation. After receiving the jury's verdict and overruling Exxon's objections, the court entered judgment in favor of the Zwahrs for $30,000, as the fair market value of the 1.01-acre easement, and $10,000, as the fair market value of Exxon's right to assign the easement.
In its first two issues, Exxon complains that the trial court erred in admitting the opinion testimony of the Zwahrs' appraisal expert because it was unreliable, in that it was contrary to established legal precedent.
Whether the trial court properly admitted Kangieser's testimony is a matter within the trial court's discretion and will not be disturbed absent an abuse of such discretion. See E.I. du Pont de Nemours and Co. v. Robinson, 923 S.W.2d 549, 558 (Tex. 1995). The test for abuse of discretion is whether the court acted without reference to any guiding rules or principles. Id. Although the trial court's decision to admit the testimony is one committed to its discretion, it is not for the trial court to decide whether the conclusions reached by the expert are correct; rather, it is to determine whether the analysis used to reach those conclusions is correct. Gammill v. Jack Williams Chevrolet, Inc., 972 S.W.2d 713, 727-28 (Tex. 1998).
Unreliable expert testimony is of no evidentiary value. See Merrell Dow Pharmaceuticals, Inc. v. Havner, 953 S.W.2d 706, 712 (Tex. 1997). Texas Rule of Evidence 702 requires that all expert testimony, not just scientific evidence, must be relevant and reliable before it is admitted. Gammill, 972 S.W.2d at 727.
The trial court may exclude the expert testimony if there is too great an analytical gap between the data and the opinion proffered. Id. at 727. It should be noted, however, that the trial court's gatekeeping function does not supplant cross-examination as the "traditional and appropriate means of attacking shaky but admissible evidence." Id. at 728.
In determining reliability, the trial court is not to determine the truth or falsity of the expert's opinion, but is to determine whether the expert's opinion is relevant, and whether the methods and research underlying the opinion are reliable. Robinson, 923 S.W.2d at 557. If the foundational data underlying opinion testimony is unreliable, an opinion drawn from that data is likewise unreliable. Havner, 953 S.W.2d at 714. Even when the underlying data is sound, an expert's testimony is unreliable if the expert draws conclusions from that data based on flawed methodology. Id. A flaw in the expert's reasoning from sound data may render reliance on a study unreasonable and render the inferences drawn therefrom dubious. Id. Therefore, rather than focus on the expert's conclusions, the trial court should focus on the reliability of the principles, research, and methods underlying them, as well as on the expert's reasoning and methodology. Robinson, 923 S.W.2d at 557.
The Zwahrs and Exxon each presented evidence regarding the "economic unit" of which the condemned property was part, and the highest and best use for that property. See McAshan v. Delhi Gas Pipeline Corp., 739 S.W.2d 130, 131 (Tex. App.-San Antonio 1987, no writ) ("In taking that value, the fact finder should consider the highest and best use to which the land is adaptable."). Exxon's experts opined that the property taken retained its character as farmland or rural residential land, and was not a separate economic unit. They estimated the market value of the 1.01-acre tract based on a per acre cost of either $1,900 or $1,414, with the total amount due the Zwahrs at either $1,727 or $707.1 Exxon's experts did not provide a separate value to the right to assign the easement because they were of the opinion that such right was included in the fair market value of the easement and thus could not be separately valued.
The Zwahrs' expert, Brad Kangieser, opined that the 1.01-acre tract, which comprised Exxon's pipeline easement, was a self-contained, separate economic unit, independent from the remainder of the Zwahrs' property. See City of Tyler v. Brogan, 437 S.W.2d 609, 613 (Tex. Civ. App.-Tyler 1969, no writ). ("[W]here the tract taken is a self-sufficient economic unit, independent of the remainder of the parent tract, the value thereof should be ascertained by considering such portion alone, and not as a part of the entire tract.").
Kangieser further opined that the highest and best use for the 1.01-acre tract was as a pipeline easement. In support of his opinion, Kangieser testified that such use was (1) physically possible, (2) legally permissible, (3) financially feasible, and (4) maximally productive. See State v. Tigner, 827 S.W.2d 611, 613 (Tex. App.-Austin 1992, writ denied) (). During voir dire examination, Kangieser stated that the basis for his opinion on highest and best use was the existing Koch pipeline.
Case law dictates that a presumption exists in favor of the existing use of the land. See McAshan, 739 S.W.2d at 131. Here, the existing use for 82% of the 1.01-acre tract at issue was already the Koch pipeline easement.
Once Kangieser determined that the highest and best use for the property was pipeline easements, he explained that he then went to the marketplace to find comparable sales. Based on comparable sales of pipeline easements, Kangieser estimated the value of the 1.01-acre easement as follows: $26,398 for the easement, and $9,679 for the right to assign the easement, for a total of $36,077.
Exxon contends that (1) the trial court abused its discretion in admitting Kangieser's testimony that the highest and best use for the subject property was a pipeline easement because it ignored controlling case law; (2) Kangieser's opinion as to highest and best use was speculative; and (3) Kangieser impermissibly relied on project enhancement, i.e., Exxon's pipeline project, to compute the value of the 1.01-acre easement.
In support of its position, Exxon contends that, United States v. 8.41 Acres of Land, 680 F.2d 388 (5th Cir. 1982), and Bauer v. Lavaca-Navidad River Authority, 704 S.W.2d 107 (Tex. App.-Corpus Christi 1985, writ ref'd n.r.e.), proscribe the methodology employed by Kangieser under the facts of this case. We disagree.
Unlike the easement in 8.41 Acres of Land, which the court found could not be severed from the parent tract for purposes of valuation, the condemned land at issue in this case is not an adjacent field, but overlaps 82% of the existing Koch pipeline easement. Moreover, Exxon's pipeline is buried entirely within the existing easement. Unlike the landowner in 8.41 Acres of Land, it was not necessary for the Zwahrs to take steps to sever the land from the remainder of the property because the land had already been effectively severed by the Koch easement and pipeline. Lastly,...
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