Port of Seattle v. Equitable Capital Group, Inc.

• Citation: 127 Wn.2d 202,898 P.2d 275
• Decision Date: 13 July 1995
• Docket Number: No. 60397-9,60397-9
• Court: United States State Supreme Court of Washington
• Parties: PORT OF SEATTLE, Respondent, v. EQUITABLE CAPITAL GROUP, INC., Appellants.

Page 202

127 Wn.2d 202

898 P.2d 275

PORT OF SEATTLE, Respondent, v. EQUITABLE CAPITAL GROUP, INC., Appellants.

No. 60397-9.

Supreme Court of Washington En Banc.

July 13, 1995.

Reconsideration Denied Sept. 7, 1995.

Stoel, Rives, Boley, Jones & Grey, Stephen O. Kenyon, Deborah Elvins, Seattle, for appellant.

Tousley & Brain, Deborah Knapp, Kim D. Stephens, Stephan Fjelstad, William H. Block, Seattle, for respondent.

SMITH, Justice.

Appellant Equitable Capital Group, Inc. seeks direct review of a King County Superior Court judgment based upon a jury verdict which determined the fair market value of Appellant's property acquired by the Port of Seattle to be $12 million under an agreement between the parties to decide the value in an eminent domain proceeding. We granted review. We affirm.

QUESTIONS PRESENTED

This case presents four principal questions: (1) whether the trial court erred in excluding the testimony of Dr. William E. Whitelaw and Thomas Danzler, expert witnesses for Equitable, concerning their opinions on the fair market value of the property; (2) whether the trial court abused its discretion in denying Equitable's motion for continuance; (3) whether the trial court erred in setting March 13, 1992, the date the Port of Seattle obtained legal title to the property, as the date of valuation, instead of the date of trial, February 17, 1993; and (4) whether the trial court erred in refusing to bilaterally apply the attorney fees clause of the purchase and sale agreement.

STATEMENT OF FACTS

Appellant Equitable Capital Group, Inc. is a Washington corporation serving as managing general partner of Equitable Capital Group, Ltd. I Limited Partnership, a Washington limited partnership.

On March 3, 1992, Respondent Port of Seattle (Port) and Appellant Equitable Capital Group, Inc. (Equitable) entered into a purchase and sale agreement. ¹ Under its terms, Equitable agreed to sell to the Port of Seattle all of its interest in certain real property situated in the city of SeaTac, King County, Washington. The property consisted of three parcels: parcel one was 9.067 acres, ² parcel two was 20.51 acres, ³ and parcel three was less than one acre. The purchase and sale agreement provided that the Port would "acquire this property at fair market value" ⁴ and also provided:

The parties each agree to obtain an appraisal for the Parcels from an MAI accredited appraiser and to exchange appraisal information concurrent with execution of this Agreement. Following exchange of appraisals, the parties shall negotiate in good faith to reach a mutually acceptable determination of fair market value for the Parcels. ⁵

In the event the parties were unable to reach agreement on the fair market value of the property, under the purchase and sale agreement they were to "arrange for a binding arbitration proceeding upon mutually acceptable terms and conditions." ⁶ And "[i]n the event the parties [we]re unable to agree upon the terms and conditions of arbitration on or before April 16, 1992," ⁷ the Port was "to promptly institute eminent domain proceedings." ⁸

The agreement provided that the Port would pay one-half the amount of its appraised fair market value, as determined by the Port's appraiser, on or before March 6, 1992, the date specified as the closing date. ⁹ In the event the parties reached agreement on the fair market value on or before April 2, 1992, the contract required the Port to pay the balance of the purchase price in two equal installments, the first on June 1, 1992, and the second on September 1, 1992. ¹⁰ The Port had the "option of prepaying either or both installments or any portion thereof at any prior time without penalty." ¹¹

In the event it became necessary for the Port to initiate a condemnation action, the Port was still required by the agreement to pay its appraisal value on the June and September dates. After entry of judgment in the condemnation proceeding, the Port would then be required to pay any difference between the judgment award and the amounts it had already paid. ¹²

Under terms of the purchase and sale agreement, the Port of Seattle agreed to pay Equitable the amount of the highest of its three appraisals, $12,075,000. ¹³ The Port paid that sum in two installments, the first on March 13, 1992 and the second on June 1, 1992. ¹⁴

On March 13, 1992, the Port acquired legal title to the three parcels, which were removed from the tax rolls for property tax purposes. ¹⁵ The Port assumed all financial risks and burdens of ownership for them. ¹⁶

The Port and Equitable could not agree on fair market value for the parcels nor on the terms of arbitration. On April 21, 1992, under the purchase and sale agreement, the Port initiated condemnation proceedings against Equitable in the King County Superior Court. ¹⁷

On August 26, 1992, this matter was initially assigned to the Honorable Donald D. Haley, King County Superior Court, but reassigned to the Honorable Mary W. Brucker. ¹⁸ The case was later reassigned to the Honorable Ann Schindler, who, on January 3, 1993 denied the Port's motion to exclude testimony of Equitable's experts, but entered an order requiring Equitable to file supplemental answers to expert witness interrogatories by January 11, 1993. The trial court later granted motions in limine excluding testimony of two of Equitable's three expert witnesses offering opinions on fair market value; and excluding a portion of the testimony of the third witness for foundation reasons.

On January 29, 1993, Judge Schindler denied Respondent Port's motion for reconsideration under former King County Local Rule 7(b)(2)(H). ¹⁹ On March 2, 1993, the court denied Equitable's motion for reconsideration of the ruling to exclude the testimony of its expert witness, Dr. William E. Whitelaw, relating to his application of the "Peiser Model" in reaching an opinion on fair market value. The trial then proceeded. ²⁰

On March 5, 1993, the 12-person jury was faced only with determining the fair market value of the approximately 31 acres of land which was the subject of the eminent domain proceeding. ²¹ The jury returned its verdict determining the fair market value of the property to be $12 million. On April 23, 1993, Judge Schindler signed a judgment and order providing: ²²

1. The jury's determination of the fair market value of the subject property was $12,000,000;

2. The Port of Seattle is entitled to a judgment in the amount of $20,025 for (1) the Port's reasonable attorneys' fees, experts' fees and costs incurred in connection with responding to Allen Safer's (Equitable's expert) revised opinion of value pursuant to the Court's Order Excluding Speculative Evidence of Proposed Uses and Market Value ($19,790); and (2) statutory taxable costs and attorney fees ($235.00);

3. Pursuant to the Purchase and Sale Agreement the property legally described on Exhibit 1 (the "Property") was transferred to the Port of Seattle by Respondent subject to a deed of trust in favor of Respondent. All right, title and interest in the property is hereby fully vested in the Port of Seattle free and clear of all claims of title, liens, deeds of trusts, or other interests of Respondent, Equitable Capital Group, Inc., a Washington corporation, as managing general partner of Equitable Capital Group, Ltd. I Limited Partnership, a Washington limited partnership, and of all other persons and entities claiming any interest in the Property.

Appellant Equitable now seeks review of the trial court's decision based upon that jury verdict. On July 27, 1994, this court denied Respondent Port of Seattle's motion to dismiss and retained the matter for direct review under RAP 4.2.

DISCUSSION

Exclusion of Expert Testimony

We address exclusion of Appellant's expert testimony, particularly the testimony of Dr. William E. Whitelaw. ²³

The trial court noted that, even assuming reliability of the analytic method used by Dr. Whitelaw to appraise the fair market value of vacant commercial property in a metropolitan area, his supplemental answers filed by Equitable just 7 days before trial had been revised and significantly changed by him from earlier answers to interrogatories. The court observed that, despite a January 8, 1993 order requiring all experts to clearly state their opinions based upon the facts provided by January 11, 1993, Dr. Whitelaw "significantly changed the database to include new categories of properties and new properties, changing the comparables from 88 to 237, based, primarily, on the database that he's been using all along. The factors in the coefficients in this model have changed significantly, as has its value." ²⁴ The court granted the Port's motion to exclude the expert testimony of Dr. Whitelaw.

In excluding the testimony, the trial court noted that Appellant's expert obtained two widely disparate conclusions on fair market value. Prior to the deadline of January 11, 1993, the expert determined a fair market value of $4.3 million based upon 88 comparables. After the deadline, the expert determined a fair market value of $65 to $70 million based upon 237 comparables.

By not complying with the pre-trial order of January 8, 1993 and the complete change of his database with expansion of his comparables from 88 to 237 after January 11, 1993, Dr. Whitelaw effectively deprived the Port of the opportunity to investigate his comparables. The trial court properly rejected his testimony which would have resulted in prejudice to the Port.

Equitable also argues that the trial court erred in excluding the expert testimony of Thomas Dantzler, ²⁵ who would have testified concerning the fair market value ²⁶ of the property. ²⁷ Mr. Dantzler's determination of fair market value ostensibly was based upon his ownership interest in the property, ²⁸ his extensive knowledge about property values and their determinants in the vicinity of the Seattle-Tacoma International Airport, and his knowledge of the prices of property...