U.S. v. 4.0 Acres of Land, No. 98-15144

• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)
• Writing for the Court: FLETCHER; Browning; Browning's
• Citation: 175 F.3d 1133
• Parties: 99 Cal. Daily Op. Serv. 3229, 1999 Daily Journal D.A.R. 4199 UNITED STATES of America, Plaintiff-Appellant, v. 4.0 ACRES OF LAND, more or less, situated in the City of Tucson, Pima County, State of Arizona, Defendant, and Allan J. Norville; Alfena A. Norville, wife, Defendants-Appellees.
• Docket Number: No. 98-15144
• Decision Date: 04 May 1999

Page 1133

175 F.3d 1133 99 Cal. Daily Op. Serv. 3229, 1999 Daily
Journal D.A.R. 4199 UNITED STATES of America, Plaintiff-Appellant,
v.
4.0 ACRES OF LAND, more or less, situated in the City of
Tucson, Pima County, State of Arizona, Defendant,
and
Allan J. Norville; Alfena A. Norville, wife, Defendants-Appellees. No. 98-15144. United States Court of Appeals,
Ninth Circuit. Argued and Submitted Feb. 11, 1999.
Decided May 4, 1999.

Page 1135

Jeffrey C. Dobbins, United States Department of Justice, Washington, D.C., for the plaintiff-appellant.

C. Lawrence Schubart, Stubbs & Schubart, Tucson, Arizona, for the defendants-appellees.

Appeal from the United States District Court for the District of Arizona; Jack D. Shanstrom, ¹ District Judge, Presiding. D.C. Nos. CV 95-00131-JDS, CV 95-00763-JDS (Consolidated).

Before: FLETCHER and TASHIMA, Circuit Judges, and FITZGERALD, ² District Judge.

FLETCHER, Circuit Judge:

Allan J. Norville, a property owner in Tucson, Arizona, sought just compensation for his land that the United States condemned for a new federal courthouse building. After the first jury awarded $2.5 million, the district court granted Norville's motion for a new trial.

Upon retrial, the second jury returned a verdict of $8.4 million. On appeal, the United States asserts that the original jury verdict should not have been set aside and that the court's evidentiary rulings in the second trial deprived the jury of key information necessary to determine just compensation.

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We have jurisdiction pursuant to 28 U.S.C. § 1291. We conclude that the district court erred in granting a new trial; we reinstate the original jury verdict.

FACTUAL and PROCEDURAL BACKGROUND

Developer Allan J. Norville ("Norville") owns 11 acres of land on the west side of downtown Tucson, Arizona. In 1994, the General Services Administration identified the four-acre northwest corner of Norville's 11-acre property for a new federal courthouse. Located at the corner of Congress and Granada Streets, the property is five blocks from the existing courthouse, and is vacant except for a parking lot on one portion and temporary structures that Norville constructed for an annual gem show that he hosts. It has water, electricity, and multiple phone lines that Norville installed. The United States condemned the land in October 1995 and estimated its value at $1,933,000. Norville objected to the valuation and sought a jury trial to determine the appropriate compensation. ³

1. The First Trial

A nine-day jury trial occurred in February, 1997. The parties stipulated that Norville's "larger parcel" consisted of 11.3 acres, rounded to 475,050 square feet and that the land condemned for the courthouse was four acres, or 300,800 square feet. ⁴ The "just compensation" figure in this case is the difference in the value of the 11-acre parcel "before" the taking and the remaining seven-acre parcel "after" the taking. To determine just compensation, the appraisers estimated a price-per-square foot "before" the taking for the larger, 11-acre parcel, and a price-per-square foot "after" the taking for the remaining seven-acre parcel.

The parties differed in their opinions of the highest and best use of the property before and after the taking. Relying on the property's potential for development as a hotel, retail shops, and exhibition hall, Norville claimed that just compensation exceeded $14 million. His appraisers calculated the value of the original eleven acre parcel, projected to be built out with a 500-room hotel and 50,000 square foot exhibition hall, at $38 per square foot before the taking. Because they forecast that the only reasonable use of the seven acres remaining after the condemnation would be for overflow parking or an unidentifiable investment for some unknown future use, they estimated a value of $11.94 per square foot after the taking. These computations resulted in "just compensation" of $14,460,348.

The government's appraiser, William Peterson, estimated just compensation at $3.2 million, using a value of $10.75 per square foot ($5,107,000) before the taking and $6.99 per square foot ($2,105,000) for the remaining property after the taking. He testified that holding the property for future investment was the highest and best use of the property because there was no current demand in Tucson for a high-rise hotel or retail space.

In addition to its own in-house appraiser, the government relied on Gene Dilmore ("Dilmore"), an independent appraiser, as a rebuttal witness. Dilmore had developed a widely used computer program for making density adjustments to the comparable sales that are used to derive accurate valuations for a subject property. Dilmore testified that Norville's appraisers had erred in their density adjustments to comparable sales, resulting in an inflated valuation for Norville's property. ⁵ Using the

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same comparables and other assumptions as those used by Norville's appraisers, but properly corrected for density adjustments, Dilmore testified that their data would yield a just compensation value of $12.46 per square foot, or $1.4 million.

Dilmore emphasized that he was "not attempting to appraise the subject property" but that his analysis established "that the proper application of size adjustments to the proper pricing unit square foot of building built or allowable, whether using [Norville's appraisers'] sales as is, or as modified in the Corbett report, gives results extremely different from those in [Norville's appraisers'] report." The role of Dilmore's testimony has some bearing on whether competent evidence supported the jury's verdict and whether the verdict was outside the range of the evidence.

The government also called Susan Corbett ("Corbett"), another appraiser, as a rebuttal witness. Corbett testified that Norville's appraisers generated inflated valuations because they erred in their choice of comparables. Using the comparables that Corbett recommended, Dilmore derived a value of $8.04 per square foot. Corbett also testified that, although there was no significant change in the market over the last several years, Norville's appraisers had previously appraised the same property in 1990 and 1992, and estimated values of $10.68--$14 per square foot, substantially lower than the $38 value they testified to at trial.

The jurors also heard Norville testify that he did not want to lose any of his land and that he "never wanted the courthouse on my property." To impeach Norville on this point, the United States called the Hon. William D. Browning, a district judge in Tucson, who had been the Chief Judge in 1993, and the judge responsible for overseeing plans for the new courthouse. ⁶ Norville insists that Judge Browning's appearance and testimony were unfair.

Judge Browning testified that Norville contacted him in 1993, before Norville's property was selected for the courthouse, and suggested that the new courthouse should be built on his land. According to Judge Browning, Norville suggested that he would build a hotel next to the courthouse that would share a garage with the courthouse. Norville declined to cross-examine Judge Browning. In addition to Judge Browning's testimony countering Norville's purported desire not to have the courthouse on his property, the government played a videotape showing Norville testifying to the County Council in 1996 about a project on his land that would include the courthouse.

A jury awarded "just compensation" of $2,526,625, ⁷ which reflected a valuation of $6,888,225 ($14.50 per square foot) "before" the taking and $4,361,600 ($14.50 per square foot) for the remaining property "after" the taking. The jury award was lower than the government's appraisal but higher than the $1.4 million estimate that Dilmore derived using Norville's numbers adjusted for density. When the award is parsed on a per square foot basis, the "before" valuation falls between the values offered by the government and Norville, whereas the "after" valuation is higher than either party suggested. The jury apparently disagreed with the appraisers that the remaining seven acres would decline in value after condemnation and, therefore, declined to award "severance" damages. Norville insists that the jury's failure to award severance damages justified a new trial.

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2. Post-Trial Motions

After the jury announced its verdict, a newspaper article appeared in the Arizona Daily Star on March 1, 1997. The article quoted a juror who explained that Judge Browning's testimony convincingly undermined Norville's assertion that he never wanted the courthouse on his property.

Norville, dissatisfied with the jury award, filed a motion for new trial pursuant to Fed.R.Civ.P. 59, alleging that the verdict was (1) against the weight of the evidence because it was outside the range of qualified opinion testimony and failed to award severance damages; (2) the product of prejudice or tainted by the misconduct of counsel; (3) the product of inadmissible and/or overwhelmingly prejudicial testimony by Judge Browning and testimony concerning certain comparable sales; and (4) that the verdict unjustly deprived Norville of "full and fair" just compensation. After hearing, the district court granted Norville's motion for a new trial.

The judge concluded that the verdict was "against the weight of the evidence" because he thought that the verdict was "outside the range of the testimony in evidence is not supported and that the--fact that there was no severance damage given, I think that is overwhelming." The judge also commented that

I am deeply disturbed [about] the effect of Judge Browning's testimony. I feel I was err [sic] in that and it's difficult for me to admit that I was in error but when I heard the way the evidence was used and the testimony was used, the fact that he hadn't been disclosed as a witness in advance ... I feel that that was a err [sic] on the Court in allowing...