Town of Paradise Valley v. Laughlin

• Court: Arizona Court of Appeals
• Writing for the Court: GARBARINO; JACOBSON, P.J., and KLEINSCHMIDT
• Citation: Town of Paradise Valley v. Laughlin, 174 Ariz. 484, 851 P.2d 109 (Ariz. App. 1992)
• Decision Date: 10 September 1992
• Docket Number: No. 1,CA-CV,1
• Parties: TOWN OF PARADISE VALLEY, a municipal corporation, Plaintiff-Appellee, v. Donald J. LAUGHLIN, Defendant-Appellant. 90-394.

Page 109

851 P.2d 109

174 Ariz. 484

TOWN OF PARADISE VALLEY, a municipal corporation, Plaintiff-Appellee, v. Donald J. LAUGHLIN, Defendant-Appellant.

No. 1 CA-CV 90-394.

Court of Appeals of Arizona Division 1, Department B.

Sept. 10, 1992.

Review Denied May 19, 1993.

[174 Ariz. 485] Charles G. Ollinger, III, Paradise Valley, for plaintiff-appellee.

Ryley, Carlock & Applewhite, by N. Warner Lee, John C. Lemaster, Phoenix, for defendant-appellant.

OPINION

GARBARINO, Judge.

Donald Laughlin ("Laughlin") appeals from a judgment in a condemnation suit awarding Laughlin damages for a taking of his property by the Town of Paradise Valley ("Town") of a permanent easement for roadway purposes. The easement taken by the Town covered a 2.39-acre parcel which was part of an approximately 16-acre parcel purchased by Laughlin in 1986. The following three issues are on appeal for our review:

(1) whether the trial court abused its discretion in refusing to allow Laughlin to testify as to the value of his property;

(2) whether the trial court abused its discretion in denying Laughlin's motion in limine to exclude evidence of the actual acquisition price of Laughlin's property;

(3) whether the trial court properly ruled that the Town could take a permanent easement rather than a fee simple absolute interest, and therefore whether it was error to deny Laughlin's motion in limine to exclude evidence that the Town was taking an easement.

For the reasons set forth herein, we reverse the judgment entered in the trial court and remand the case for a new trial.

I. Should An Owner Always Be Allowed to Testify as to His Opinion of the Value of His Property?

Laughlin argues that the trial court abused its discretion in excluding his testimony as to his opinion of the value of the property at the time of its acquisition. Over objection by Laughlin's counsel, Laughlin testified that he had purchased the 16-acre parcel which included the 2.39-acre easement for $900,000. His opinion of the property's value at the time of purchase ($2,000,000) was based on information provided to him by his financial advisers and was ruled inadmissible. The court based its ruling on the fact that Laughlin did not personally investigate the value of his property but relied upon the opinions of his financial advisers.

The Arizona Supreme Court held in Board of Regents v. Cannon, 86 Ariz. 176, 178, 342 P.2d 207, 209 (1959), that an owner of property is always competent to testify as to the value of his property. Any explanation of the basis for his opinion of value goes to the weight of the evidence. Id. This court applied the rule that an owner may testify concerning the value of his property even if not qualified as an expert in Santa Fe Pacific Railroad Company v. Cord, 14 Ariz.App. 254, 482 P.2d 503, cert. denied, 404 U.S. 912, 92 S.Ct. 229, 30 L.Ed.2d 185 (1971).

The courts' language in Cannon and Cord is clear. An owner may always testify as to the value of his property. The court in United Cal. Bank v. Prudential Ins. Co., 140 Ariz. 238, 681 P.2d 390 (App.1983), explained that the reason that an owner of property is permitted to testify as to its value even if not an expert is because "[a]n owner of property has, by definition, knowledge of the components of value that are useful in ascertaining value, and an owner, no less than an 'expert,' can base his opinion of value on that knowledge." 140 Ariz. at 304, 681 P.2d at 456.

In this case, at the time Laughlin formulated his opinion, he had not yet purchased the property. He admitted having done no personal investigation as to value of the property before he purchased it. He relied upon the information given to him by his advisers and associates. He delegated the responsibility for investigating the value of the property to others. However, his testimony is still admissible. The fact that he relied upon others for the information necessary for him to formulate his opinion goes to the weight the jury should give his testimony. In Cord, even though the owner's testimony was based upon what others had told him, the court stated:

This, however, does not destroy the admissibility of [the owner's] testimony. It is well established law that an owner of property is always competent to testify as to its value and that any explanation of how he arrived at value merely goes to the weight of his evidence.

14 Ariz.App. at 265, 482 P.2d at 514.

However, Laughlin was the individual who ultimately paid the purchase price. Based upon the advice of others, he formed an opinion and on the strength of that opinion, he paid over $900,000 for the property. It is safe to assume that his opinion was that the property was worth at least what he was paying for it or he would not have purchased it. We conclude that the trial court abused its discretion by not allowing him to testify as to his opinion of value.

Having determined that the court erred, we must next determine if it is reversible error. A trial court's ruling on the exclusion of evidence is not reversible error unless there is a clear abuse of discretion and the complaining party has been prejudiced. See, Catchings v. City of Glendale, 154 Ariz. 420, 426, 743 P.2d 400, 406 (App.1987). Laughlin argues that he was prejudiced by the trial court's refusal to allow him to testify as to his opinion of the property's value because "the court in effect told the jury that Laughlin was incompetent to testify, and that he was an indifferent, affluent, absentee owner without personal knowledge about or interest in his property," and this influenced the jury's verdict with respect to fair market value and severance damages.

Prejudice will not be presumed but must be evident from the record. United Cal. Bank v. Prudential Ins. Co., 140 Ariz. at 295, 681 P.2d at 447. In addition, an error is harmless if there is no reasonable probability the verdict might have been different. Id. We can only speculate what impact Laughlin's testimony would have had upon the jury had he been allowed to testify as to his opinion of the value of his property. We cannot find that his failure to testify, by itself, affected the jury's verdict. The fact that the trial court excluded the testimony because Laughlin relied on his advisers would not realistically have led the jury to believe he was "indifferent", "affluent," and an "absentee owner" so as to affect the jury's determination of market value or severance damages. The determination of value should not be affected by the owner's sentimental feelings towards the property nor upon whatever personality traits the jury might attribute to the owner. We therefore conclude that the trial court's failure to allow the owner to testify, where there was other evidence on the point from witnesses produced by Laughlin, would not by itself constitute reversible error.

II. Should Evidence of the Acquisition Price be Admitted in Evidence?

Laughlin argues that the trial court abused its discretion by denying his motion in limine to exclude evidence of the price he paid for the property. He claims that the purchase price was irrelevant and therefore inadmissable. Ariz.R.Evid. 402. Even if the price were relevant, Laughlin contends that such evidence was unduly prejudicial because it permitted the jury to speculate about the profit he may realize. Ariz.R.Evid. 403.

Evidence of the price a condemnee paid for land is admissible in eminent domain proceedings if the sale was recent and voluntary and no change in conditions or marked fluctuations in values has occurred since the sale. Parker v. State, 89 Ariz. 124, 126, 359 P.2d 63, 65 (1961); State ex rel. Herman v. Transamerica Title Ins. Co., 17 Ariz.App. 411, 412, 498 P.2d 485, 486 (1972). "The determination of comparability in Arizona is a matter of law and the trial judge may exercise wide discretion in determining which sales may be mentioned in the presence of the jury." Id. at 412, 498 P.2d at 486.

Laughlin argues that the trial court abused its discretion by not excluding testimony of the acquisition price because the purchase was not recent, not voluntary and changes in condition or marked fluctuations had occurred between the time of the purchase and the taking. The record does not support this argument. There were less than two and one-half years between the purchase and the taking. Although the Town's appraiser did not use the purchase price as a comparable, he testified that it was valid in appraising property such as Laughlin's to use sales two to three years previous to the date of value. Arizona courts have approved the use of acquisition prices as comparable sales when they were much older than two and one-half years. See, e.g., Altschul v. Salt River Project Ag. Imp. & P. Dist., 14 Ariz.App. 306, 483 P.2d 47 (1971) (seven years).

Laughlin states in his brief that the seller testified that he sold the property under economic duress. However, the seller's testimony is not part of the record on appeal. What is included in the record is a statement by Laughlin's counsel in closing argument that the seller found himself in need of cash. This alone did not make the sale involuntary. Herman, 17 Ariz.App. at 412, 498 P.2d at 486.

Finally, Laughlin has presented no evidence that a substantial change in condition occurred between the purchase date and the date of the taking. The only evidence regarding this issue is the trial testimony of the Town's appraiser that the market had been stable for residential properties for two to three years prior to the taking.

We also reject Laughlin's argument that evidence of the purchase price, even if probative, was unduly prejudicial. Laughlin claims that, because of the admission of evidence of the purchase price, the jury likely confused the difference between a distressed purchase price and the valuation asserted at trial by Laughlin as an attempt to gain a windfall profit. Laughlin argues that the prejudicial effect of the admission of...