R & J Development Company, LLC v. Commonwealth, No. 2006-CA-000480-MR (Ky. App. 6/29/2007)
| Decision Date | 29 June 2007 |
| Docket Number | No. 2006-CA-000480-MR.,No. 2006-CA-000508-MR.,2006-CA-000480-MR.,2006-CA-000508-MR. |
| Parties | R & J Development Company, LLC, Appellant, v. COMMONWEALTH of Kentucky, Transportation Cabinet, Department of Highways Appellee, and FAST LANE DISCOUNT TOBACCO OUTLET, INC. Appellant, v. COMMONWEALTH of Kentucky, Transportation Cabinet, Department of Highways Appellee. |
| Court | Kentucky Court of Appeals |
Appeal from Rowan Circuit Court, Honorable William B. Mains, Judge, Action No. 01-CI-00068, Action No. 01-CI-00068.
John R. McGinnis, Greenup, Kentucky, Briefs and Oral Argument for Appellant R & J Development Company, LLC.
Roger R. Cantrell, Greenup, Kentucky, Briefs and Oral Argument for Appellant Fast Lane Discount Tobacco Outlet, Inc.
Phillip K. Wicker, Jon H. Johnson, Elizabethtown, Kentucky, Combined Brief for Appellee.
Jon H. Johnson, Elizabethtown, Kentucky, Oral Argument for Appellee.
Before: ABRAMSON and Taylor, Judges; Knopf,1 Senior Judge.
R & J Development Company, LLC (R & J) brings Appeal No. 2006-CA-000480-MR and Fast Lane Discount Tobacco Outlet, Inc. (Fast Lane) brings Appeal No. 2006-CA-000508-MR from a January 20, 2006, judgment upon a jury trial adjudicating the fair market value and the fair market lease value of property taken by the Commonwealth through condemnation. We affirm in both appeals.
The Commonwealth instituted a condemnation proceeding by filing a petition in the Rowan Circuit Court for the purposes of acquiring a .837 acre tract of land in fee simple from R & J. The record reveals that a building was situated upon the land where a tobacco outlet store was being operated by Fast Lane. R & J had leased the property to Fast Lane for this purpose.
Commissioners were appointed and eventually fixed the fair market value of the property at $250,000.00. Being dissatisfied with the commissioners' valuation, R & J filed an answer to the condemnation complaint. Therein, R & J specifically "excepted" to the commissioners' valuation and requested a jury trial. R & J also filed a motion to join Fast Lane as an additional real party in interest alleging that Fast Lane held a long-term lease upon the subject property. The court eventually granted the motion to join Fast Lane as a defendant. A trial by jury was held, and the jury returned a verdict finding the fair market value of the property without the lease to be $265,000.00 and the fair market value subject to the lease to be $245,000.00. In accordance with the jury verdict, R & J was awarded $245,000.00 representing the fair market value of its fee simple interest in the land and Fast Lane received $20,000.00 representing the fair market value of the lease. Being dissatisfied with the award, both R & J and Fast Lane have filed appeals, which have been consolidated for our review.
The primary errors asserted in both appeals look to various evidentiary rulings made by the trial court. The proper standard of review of a trial court's evidentiary rulings is abuse of discretion. Goodyear Tire & Rubber Co. v. Thompson, 11 S.W.3d 575 (Ky. 2000). This same standard applies under the Kentucky Rules of Evidence, including the testimony of expert witnesses under Ky. R. Evid. (KRE) 702. Mitchell v. Commonwealth, 908 S.W.2d 100 (Ky. 1995)(overruled on other grounds).
In performing our review, the decision below must be affirmed unless the jury verdict rendered is "palpably or flagrantly against the weight of the evidence so as to indicate it was reached as a result of passion or prejudice." Lewis v. Bledsoe Surface Mining Co., 798 S.W.2d 459, 461 (Ky. 1990). This standard will be applied accordingly to both appeals.
R & J contends that the circuit court committed reversible error by both admitting and excluding certain items of evidence at trial. R & J names three specific contentions of error: (1) the court erred by admitting evidence of the initial purchase price ($175,000.00) paid by R & J when it acquired the property in 1995; (2) the court erred in admitting evidence concerning the tax assessed value of the property; and (3) the court erred in excluding evidence by R & J concerning the cost of improvements upon the property after its purchase in 1995. We shall address these issues seriatim.
In Commonwealth, Department of Highways v. Whitledge, 406 S.W.2d 833 (Ky. 1966), the Court was faced with the question of whether evidence of the purchase price of property paid some five years and two months prior to its condemnation was admissible to measure the fair market value of the property at the time of condemnation. The Court ultimately concluded that the purchase price was admissible. In so concluding, the Court held:
In Nichols' The Law of Eminent Domain (3rd Ed.), Vol. 5, sec. 21.2, pp. 411 through 414, it is pointed out that the price paid for property which is the subject of condemnation is admissible, if these conditions are satisfied: The sale was bona fide; the sale was voluntary, not forced; the sale occurred relatively in point of time; and the sale covered substantially the same property involved in the condemnation proceeding. In the case of Taylor, etc. v. State Roads Commission of Maryland, 224 Md. 92, 167 A.2d 127, the fact that a sale of similar property was made five years, one and one-half months prior to the commencement of the action to condemn did not render evidence of that sale inadmissible in such condemnation proceeding.
Commonwealth v. Whitledge, 406 S.W.2d at 836. Under the holding of Whitledge, the purchase price of condemned property is admissible if (1) the sale is bona fide; (2) the sale is voluntary; (3) the sale occurred relative in time to the condemnation; and (4) the sale involved substantially the same property. Id.
In the case at hand, R & J argues that the sale of the property was neither relative in time because it took place in 1995, some six years prior to condemnation, nor was substantially the same property because of extensive remodeling. We disagree.
In Whitledge, the Court admitted into evidence the purchase price of property some five years and two months before condemnation. Here, we do not believe that the passage of six years rendered the sale too remote in time to be admissible. Moreover, we cannot say that the mere remodeling of property affects whether it is "substantially" the same property under the factors set forth in Whitledge. Most importantly, we are guided by the following statement in Whitledge:
We think it the better policy, where there are any reasonable elements of comparability, to admit testimony as to the sales, and leave the weight of the comparison for the consideration of the jury, along with such distinguishing features as may be brought out on cross-examination or otherwise.
Id. at 836 (citation omitted). Accordingly, we hold that the circuit court did not err by admitting into evidence the purchase price or sale price paid by R & J for the property in 1995.
R & J also contends that it was reversible error to admit into evidence the tax valuation of the property. The Commonwealth introduced into evidence the taxable value of the property as fixed by the Rowan County Property Valuation Administrator. The property's tax assessed value was $175,000.00.
As a general rule, the tax assessed value of property is generally inadmissible in a condemnation proceeding to prove the fair market value of the property. Mengel Properties v. City of Louisville, 400 S.W.2d 690 (Ky. 1966); Milby v. Louisville Gas & Electric Company, 375 S.W.2d 237 (Ky. 1964). However, an exception to this rule is recognized in Commonwealth, Department of Highways v. Rankin, 346 S.W.2d 714 (Ky. 1960). Therein, the Court held that the tax assessed value of land is admissible in a condemnation action where the owner fixed or assented to the valuation. The Court in Rankin stated:
Evidence as to assessed valuation of land when fixed by the owner is competent in a condemnation action for the purpose of acquiring state highway right of way. Commonwealth, by State Highway Comm. v. Combs, 229 Ky. 627, 17 S.W.2d 748; Davidson v. Commonwealth, 249 Ky. 568, 61 S.W.2d 34; Commonwealth v. Salyers, 258 Ky. 837, 81 S.W.2d 859. In determining the value of land taken for highway purposes, such assessed value, though not conclusive, can be considered in connection with other evidence of value of the property. Crittenden County v. Towery, 264 Ky. 606, 95 S.W.2d 233. Such evidence is admissible on the theory that it is an admission against interest when the value shown is fixed by the landowner. Commonwealth v. Gilbert, Ky., 253 S.W.2d 264. When a landowner signs an assessment list of his property which contains an evaluation of such property, as the landowner did here, he will not be heard to say that he has not fixed the value of his property.
Id. at 716-717. As the landowner signed an assessment list that contained a valuation of his property, the Rankin Court held that such tax valuation was properly admissible.
In this case, the Commonwealth notes that R & J signed the consideration certificate contained in the 1995 deed of conveyance.2 Pursuant to this certificate, R & J made a sworn statement that the property was worth $175,000.00 in 1995. The Rowan County PVA placed this value on the property for taxation purposes. Given these facts, we agree with the Commonwealth and believe that the tax assessed value of the property was properly admissible. See Commonwealth, Department of Highways v. Rankin, 346 S.W.2d 714.
R & J's final argument is that the circuit court committed reversible error by excluding evidence outlining the cost of improvements made upon the property after its purchase in 1995. In its reply brief, R & J comments:
The [Commonwealth] states that by not putting the itemized cost into evidence by avowal amounts to a waiver. This confuses the point. The court ruled that the parties were not allowed to place this into evidence before the jury and it...
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