U.S. v. L.E. Cooke Co., Inc., 92-5749

• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)
• Writing for the Court: MILBURN
• Citation: 991 F.2d 336
• Parties: 38 Fed. R. Evid. Serv. 817 UNITED STATES of America, Plaintiff-Appellee, v. L.E. COOKE COMPANY, INC., Defendant-Appellant.
• Docket Number: No. 92-5749,92-5749
• Decision Date: 20 April 1993

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991 F.2d 336 38 Fed. R. Evid. Serv. 817 UNITED STATES of America, Plaintiff-Appellee,
v.
L.E. COOKE COMPANY, INC., Defendant-Appellant. No. 92-5749. United States Court of Appeals,
Sixth Circuit. Argued March 23, 1993.
Decided April 20, 1993.

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Karen K. Caldwell, U.S. Atty., Office of the U.S. Atty., Lexington, KY, and Jacques B. Gelin, and Evelyn S. Ying (argued and briefed), U.S. Dept. of Justice, Land & Natural Resources Div., Washington, DC, for plaintiff-appellee.

James H. Moore, III (argued and briefed), Campbell, Woods, Bagley, Emerson, McNeer & Herndon, Ashland, KY, and James R. Bailes, Campbell, Woods, Bagley, Emerson, McNeer & Herndon, Huntington, WV, for defendant-appellant.

Before: KENNEDY, MARTIN and MILBURN, Circuit Judges.

MILBURN, Circuit Judge.

Defendant L.E. Cooke Company, Inc. ("Cooke") appeals the district court's judgment awarding it $65,000 as just compensation for the United States Government's taking of mineral rights to certain tracts of land located in Lawrence County, Kentucky. The issues presented on appeal are (1) whether the district court erred in admitting the expert testimony of Samuel Fish, (2) whether the trial court's denial of the motion to strike Fish's alleged improper and confusing testimony prejudiced the defendant requiring a new trial, and (3) whether the jury's verdict was against the weight of the evidence. For the reasons that follow, we affirm.

I.

A.

The United States brought a consolidated civil action to condemn land through its power of eminent domain in order to acquire title to certain tracts of land located in Lawrence County, Kentucky, and to award just compensation for the taking to the owners and parties-in-interest. The land was to be acquired by the United States at the request of the U.S. Army Corps of Engineers for the purpose of constructing Yatesville Lake on Blaine Creek, Kentucky, in connection with and as part of a comprehensive plan for flood control in the Ohio River Basin. A condemnation proceeding of this type is authorized by 33 U.S.C. §§ 591 and 701 and 40 U.S.C. § 258a.

A hearing was held on November 14, 1990, before a magistrate judge in order to determine ownership of the coal lease interests in the subject tracts. The magistrate judge's report, issued November 26, 1990, recommended that judgment be entered declaring the ownership of the coal leases in defendant Cooke and that all other party defendants be dismissed. After a de novo review, the district court entered judgment

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in accordance with the magistrate judge's report and recommendation on December 12, 1990.

On March 9 and 10, 1992, a jury trial was held with the sole issue being the determination of the total fair market value of the Cooke coal leases as of the date of taking. The date of taking was stipulated as December 6, 1989. Four expert witnesses testified--one for Cooke and three for the United States--and offered opinions of fair market value ranging from $41,518 to $427,000. After deliberation, the jury returned a verdict finding the fair market value of the coal leases on the date of taking to be $65,000. The district court entered judgment pursuant to the jury's verdict and denied Cooke's motion for a new trial. This timely appeal followed.

B.

Because Cooke had the burden of persuasion in this action, its expert witness, John Praskwiecz, testified first. Praskwiecz, a licensed mining engineer, regularly performs reserve studies, mine feasibility studies, and appraisals for his employer, Gaddy Engineering Company. Praskwiecz had nearly 14 years of experience with Gaddy Engineering at the time of trial. The majority of his work has been in southern West Virginia and eastern Kentucky, and he testified that he was familiar with the Lawrence County coal fields. At Cooke's request, Praskwiecz performed a reserve study of all the Cooke-leased tracts that had been condemned for the Yatesville Lake Project.

Praskwiecz testified that reserve evaluations involve a determination of the amount of coal that is mineable and merchantable within a given piece of property and that mine feasibility studies are economic studies to determine the cost of mining coal, such as the selection of equipment and method of mining. The coal industry categorizes reserves according to standards established by the United States Geological Survey. Praskwiecz testified that such reserves are either proven, i.e., one-quarter mile from a known point of coal thickness; probable, i.e., one-quarter to three-quarters of a mile from that point; inferred, i.e., three-quarters of a mile to one and one-half miles from that point; or potential, i.e., over one and one-half miles from the known point of coal.

After explaining the procedures he used and the sources of information he relied upon, Praskwiecz concluded that the tracts at issue contained 47,000 tons of proven coal and 1,066,000 tons of probable coal, for a total of 1,113,000 tons. Praskwiecz concluded that the remaining 487,000 tons of coal reserves had no economic value, and he ignored them. When questioned about the quality of the coal in the four seams present in the Cooke property, Praskwiecz stated, "The quality is a low to middle quality steam coal, which can definitely be sold on the steam coal market, and at a price." J.A., vol. II, p. 27. On cross-examination, Praskwiecz acknowledged that only one of the data points he used in his evaluation was actually located on a Cooke tract and that the quality of the coal seams fluctuated in Lawrence County. Also, he admitted that there were some impurities present in the coal but not, in his opinion, enough to affect the coal's marketability.

Praskwiecz further testified that in his opinion the highest and best use of the Cooke tracts was coal mining. In determining market value, Praskwiecz testified that the preferred approach in the industry is to use comparable sales. However, he identified only two sales which were similar enough to be considered comparable and found that these were insufficient to establish a market trend. Instead, he used a discounted cash flow analysis. When his calculations were completed, Praskwiecz determined that the present net value of the Cooke leases was $427,000 and that this was the fair market value at the time of taking.

Gene Samsel was the first witness for the United States. His background included work for an environmental service firm and performing coal reserve evaluations for a consulting engineering company. He had worked in the coal mine industry in Lawrence County and still owned land there. Samsel concluded that it would not

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be economically feasible to mine the coal located on the Cooke tracts because of the erratic nature of the thickness of the seams and the poor quality of the coal. Samsel admitted on cross-examination, however, that his work with the consulting engineering company was primarily in management and that he had mined 80,000 tons of coal in eight years on his own Lawrence County tract and presently leased the rest at $2 per ton. Samsel did not perform a reserve study himself. Rather, he based his conclusions upon the reports prepared by the three other expert witnesses in the case. He agreed with Praskwiecz regarding the accepted standards for the categories of proven and probable coal, but stated that they were not used in Lawrence County to a great degree because of the erratic nature of the coal there. Samsel further noted that the reports he relied on also showed that the quality of coal on the Cooke tracts was inconsistent.

The government's next witness was Samuel Fish, a mining engineer with more than 17 years of experience who had performed a coal study and appraisal of the Cooke leases involved in the Yatesville Lake Project. With the help of charts...