N.C. Dep't of Transp. v. Mission Battleground Park, 361PA16

• Decision Date: 02 March 2018
• Docket Number: No. 361PA16,361PA16
• Citation: 810 S.E.2d 217,370 N.C. 477
• Court: North Carolina Supreme Court
• Parties: NORTH CAROLINA DEPARTMENT OF TRANSPORTATION v. MISSION BATTLEGROUND PARK, DST ; Mission Battleground Park Leaseco, LLC, Lessee; LaSalle Bank National Association, as Trustee for the Registered Holders of CD 2006-CD3 Commercial Mortgage Pass-Through Certificates; and LAT Battleground Park, LLC

370 N.C. 477

810 S.E.2d 217

NORTH CAROLINA DEPARTMENT OF TRANSPORTATION

v.MISSION BATTLEGROUND PARK, DST ; Mission Battleground Park Leaseco, LLC, Lessee; LaSalle Bank National Association, as Trustee for the Registered Holders of CD 2006-CD3 Commercial Mortgage Pass-Through Certificates; and LAT Battleground Park, LLC

No. 361PA16

Supreme Court of North Carolina.

Filed March 2, 2018

Joshua H. Stein, Attorney General, by Hilda Burnett-Baker, Special Deputy Attorney General, and Phyllis A. Turner, Assistant Attorney General, for plaintiff-appellee.

Smith Moore Leatherwood LLP, by Patrick M. Kane, Bruce P. Ashley, Kip D. Nelson, Greensboro, and Matthew Nis Leerberg, Raleigh, for defendant-appellants.

Wilson & Helms LLP, Winston-Salem, by Lorin J. Lapidus and G. Gray Wilson, for Civitas Institute, amicus curiae.

Bass Dunklin McCullough & Smith, PLLC, by Garth K. Dunklin, for James F. Collins, amicus curiae.

MARTIN, Chief Justice.

In March 2013, the North Carolina Department of Transportation (DOT) condemned 2.193 acres of land in Greensboro, North Carolina, for a highway construction project. This land had previously been part of a 240-unit apartment complex that is now called Landmark at Battleground Park. The defendants in this case are the current and former owners, the lessee, and the mortgage holder of the Landmark apartment complex. In its Declaration of Taking and Notice of Deposit, DOT stated that it had deposited $276,000 with the Superior Court of Guilford County and indicated that defendants could seek disbursement of this money as partial or full compensation for the taking. Defendants argued that $276,000 did not amount to just compensation and demanded a trial to determine the correct amount of damages.

At trial, defendants sought to introduce James Collins, a licensed real estate broker, as an expert witness who would testify about the fair market value of the Landmark apartment complex before and after the taking. In his expert report, Mr. Collins compared the fair market value of the entire tract just before the taking with what the fair market value of the remainder of the tract would be after the construction of the highway. After comparing these two values, Mr. Collins opined that the proper amount of just compensation for the taking was $3.734 million.

After DOT moved in limine to exclude Mr. Collins’ expert report and expert testimony, the trial court excluded Mr. Collins’ report and prohibited him from testifying about the fair market value of the property in question based on N.C.G.S. § 93A-83, which governs the practice of providing broker price opinions and comparative market analyses. According to the trial court, Mr. Collins could provide a "broker price opinion or comparative market analysis" using his expertise as a broker, but that opinion or analysis would have to focus on the probable selling price of the property rather than on its fair market value. The trial court based its ruling specifically on the language of section 93A-83 and did not analyze any of Mr. Collins’ proposed fair-market-value testimony under Rule 702 of the North Carolina Rules of Evidence. The trial court noted its discomfort with its conclusion, questioning whether the General Assembly had intended the result that the trial court reached. But the trial court ultimately stated that what it thought was "the plain reading of the statute" controlled.

The trial proceeded with Mr. Collins’ report and fair-market-value testimony excluded. The trial court admitted testimony on fair market value from other experts. Two DOT experts argued that just compensation should be set at $276,050 and $1,271,850, respectively. The trial court allowed defendants to introduce testimony from another expert, who argued for a just compensation figure of $3,169,175. While instructing the jury, the trial court stated that "[f]air market value should not include the diminution in value of the remainder property caused by the acquisition and use of the adjoining lands of others for the same undertaking." The jury ultimately returned a verdict setting just compensation for the taking at $350,000.

Defendants appealed this decision to the Court of Appeals, alleging, among other things, that Mr. Collins’ report and his testimony on fair market value should have been admitted as evidence. Defendants also objected to the special jury instruction that we have just quoted. The Court of Appeals found no error and affirmed the trial court’s decision.

N.C. Dep’t of Transp. v. Mission Battleground Park, DST , ––– N.C. App. ––––, ––––, 791 S.E.2d 478, 486 (2016). Defendants sought discretionary review of the statutory exclusion of Mr. Collins’ testimony about fair market value, as well as of the allegedly improper jury instruction. We allowed discretionary review of these issues.

DOT argues that defendants did not properly preserve the exclusion of Mr. Collins’ fair-market-value testimony for appellate review. But this argument is not properly before us, because DOT’s response to defendants’ petition for discretionary review did not state any additional issues that DOT sought to present. See N.C. R. App. P. 15(d). Our scope of review is therefore limited to the issues that defendants have raised.

Even if this issue were properly before us, however, it appears that defendants’ offer of proof regarding Mr. Collins’ testimony was sufficient to preserve the issue, regardless of whether defendants tried to call him to testify about fair market value at trial. "An offer of proof under Rule 43(c) must be specific and must indicate what testimony the excluded witness would give." Currence v. Hardin , 296 N.C. 95, 100, 249 S.E.2d 387, 390 (1978). During the offer of proof, Mr. Collins laid out his credentials in detail, including his thirty-nine years of experience in the apartment complex business, during which he had estimated the fair market values of hundreds of apartment complexes. Mr. Collins also announced his $3.734 million estimate of the damages due to defendants and summarized the calculation that led to that estimate. We do not find any defect in this offer of proof.

We typically review a trial court’s ruling on the admission or exclusion of expert testimony for abuse of discretion. See State v. McGrady , 368 N.C. 880, 893, 787 S.E.2d 1, 11 (2016). In this case, however, the decision to exclude testimony was based specifically on the interpretation of a statute. Because we review questions of statutory interpretation de novo, In re Foreclosure of Vogler Realty, Inc. , 365 N.C. 389, 392, 722 S.E.2d 459, 462 (2012), we likewise review any exclusion of evidence based specifically and only on statutory interpretation de novo.

DOT is arguing, in effect, that an expert witness needs to prepare an expert report on a given issue in order to give expert testimony on that issue. We assume, for the sake of argument, that this is true. But, DOT asserts, Mr. Collins could not lawfully prepare an expert report about fair market value because N.C.G.S. § 93A-83(f) forbids him from doing so. DOT thus concludes that Mr. Collins could not give expert testimony about fair market value. Under DOT’s argument, then, Mr. Collins’ ability to give expert testimony about fair market value depends on his ability to prepare an expert report on fair market value without violating subsection 93A-83(f). We therefore focus on whether he could prepare the expert report on fair market value that he in fact prepared without violating that subsection.

Subsection 93A-83(f) states:

Restrictions. —Notwithstanding any provisions to the contrary, a person licensed [as a real estate broker] pursuant to this Chapter may not knowingly prepare a broker price opinion or comparative market analysis for any purpose in lieu of an appraisal when an appraisal is required by federal or State law. A broker price opinion or comparative market analysis that estimates the value of or worth [of] a parcel of or interest in real estate rather than sales or leasing price shall be deemed to be an appraisal and may not be prepared by a licensed broker under the authority of this Article, but may only be prepared by a duly licensed or certified appraiser, and shall meet the regulations adopted by the North Carolina Appraisal Board. A broker price opinion or comparative market analysis shall not under any circumstances be referred to as a valuation or appraisal.

These restrictions distinguish between licensed brokers—who are allowed to provide estimates of the "probable selling price or leasing price" of real property under N.C.G.S. §§ 93A-82 and 93A-83(a) and (b) —on the one hand, and licensed or certified appraisers —who are allowed to provide estimates of the value of real property—on the other. The question, then, is whether this limitation on licensed brokers applies when a licensed broker prepares an expert report in a civil proceeding.

The second sentence of subsection 93A-83(f) may, at first glance, seem to be an impediment to Mr. Collins’ preparing an expert report in this case. That sentence indicates that a broker price opinion (BPO) or a comparative market analysis (CMA) that estimates the value of property rather than the price of property will "be deemed to be an appraisal," and that a licensed broker cannot prepare that document "under the authority of this Article." N.C.G.S. § 93A-83(f) (2017). That last, quoted phrase is key to our analysis, though, and both the trial court and the Court of Appeals seem to have overlooked it.

That phrase refers to the authority given to licensed brokers in Article 6 of Chapter 93A—more specifically, to the authority given to licensed brokers in subsections 93A-83(a) and (b), which authorize brokers to prepare BPOs and CMAs and to collect fees for doing so. But the authority of a broker (or of anyone else) to testify as an expert in court , and thus to prepare an expert report, does not come from Article 6 of Chapter 93A in the first place. That authority instead...