US v. 8.41 ACRES OF LAND, SITUATE IN ORANGE CTY., Civ. A. No. B-78-169-CA-1547-3
| Decision Date | 04 October 1984 |
| Docket Number | B-78-170-CA-1547-3 and B-78-176-CA-1547-3.,Civ. A. No. B-78-169-CA-1547-3 |
| Citation | 595 F. Supp. 731 |
| Parties | UNITED STATES of America v. 8.41 ACRES OF LAND, SITUATE IN ORANGE COUNTY, TEXAS, KWW Associates, et al. UNITED STATES of America v. 5.00 ACRES OF LAND, SITUATE IN ORANGE COUNTY, TEXAS, the Firestone Tire & Rubber Co., et al. UNITED STATES of America v. 6.90 ACRES OF LAND, SITUATE IN ORANGE COUNTY, TEXAS, the Firestone Tire & Rubber Co., et al. |
| Court | U.S. District Court — Eastern District of Texas |
Robert J. Wortham, U.S. Atty., and George Phair, Asst. U.S. Atty., Beaumont, Tex., for plaintiff.
George W. Brown, Beaumont, Tex., for defendants.
CAME ON TO BE HEARD the motion of the Defendants, FIRESTONE TIRE & RUBBER COMPANY and KWW ASSOCIATES, Motion for New Trial, in the above-styled and numbered causes, and the Court, having considered the Motion, set the matter for hearing, whereupon argument of the parties was heard.
The history of these troublesome condemnation cases appears in the reported opinions and need not be recited again. See U.S. v. 5.00 Acres of Land, Etc., 507 F.Supp. 589 (E.D.Tex.1980); 680 F.2d 388 (5th Cir.1982); 576 F.Supp. 685 (E.D.Tex. 1983); 731 F.2d 1207 (5th Cir.1984); 592 F.Supp. 829 (E.D.Tex.1984). After the Court entered the latest final judgment, the landowners timely filed their Motion for New Trial.
The landowners assert they suffered a manifest injustice because the final judgment awards them only a small fraction of the compensation willing buyers in the free market pay for the same property rights.
The district court finds itself in a troubling position: respectfully deferential to the decisions of the Court of Appeals which specified the law of this case, yet convinced that errors committed by the trial court caused a manifest miscarriage of justice.
The initial, and perhaps farthest reaching, error of the trial court was its failure ab initio to remand the case to the condemnation commission for further findings as to both the highest and best use of the land and the after-taking value thereof. The landowners had offered extensive evidence of "comparable sales" of the res taken, i.e., pipeline easements. The commission erroneously found the highest and best use of the land to be as a "pipeline corridor," rather than as industrial plant sites. The commission's erroneous finding that the taken tracts were "effectively severed" from the parent tracts led it and the trial court to further err "in rejecting the `before-and-after' method of valuation of the larger tract." U.S. v. 8.41 Acres, 680 F.2d at 394.
The district court had instructed the commissioners to the effect that: "The best evidence of market value is comparable sales — i.e., sales from a willing seller to a willing buyer of similar property in the vicinity of the taking at or about the same time as the taking." Id., 680 F.2d at 395, citing United States v. Trout, 386 F.2d 216, 222-23 (5th Cir.1967). The commission apparently based its award on the "comparable sales" of pipeline easements.
The commissioners can be excused for incorrectly believing that recent sales of nearby pipeline easements were "comparable sales" which were the best evidence of market value of the property rights condemned. The government did, after all, condemn a pipeline easement. The crucial error, however, was the unjustified finding that the taken tracts were severed. If nothing else, the common sensical, albeit naive, approach of the commissioners points up a problem with the merchanistic application of the before-and-after method of valuation in such situations: that the government pays but a small fraction of the price private buyers pay for the same thing in the marketplace.
Notwithstanding that problem, the Court must properly apply the law to the facts in reaching a determination of just compensation. And that the Court failed to do, resulting in a manifestly unfair result.
The initial mistake, explained above, was the district court's clearly erroneous finding of effective severance of the taken tracts from the parent tracts. Having made that error, the Court neglected to make a finding that the parent tracts had lower values after the taking. The record, however, was replete with evidence to that effect, and the trial court further erred in not considering that evidence.
The Court of Appeals, in reviewing the initial judgment of the trial court, concluded that "the landowners had an opportunity to prove the market value of the tracts was higher than established by the Government, but failed to meet this burden," U.S. v. 8.41 Acres, 680 F.2d at 395. Of course, the landowners had conceded the before taking value of the parent tracts and the after taking value of the easement areas. U.S. v. 5.0 Acres, 731 F.2d at 1209. The crucial and still contested fact issue, however, was the after taking value of the easement burdened parent tracts, of which the easements' value was but a small part. Unlike the Government, the landowners failed to offer comparable sales of easement burdened tracts to prove a lower after-taking value of the parent tracts. Instead, they offered comparable pipeline easement sales.
The Court of Appeals rejected the landowners' evidence and considered only the Government's comparable sales on appeal. Apparently, the Court of Appeals was unaware that the principal sale of the landowners' was not subject to the Slattery exclusion rule which excludes evidence of sales negotiated by one having power to condemn. See Transwestern Pipeline co. v. O'Brien, 418 F.2d 15, 17-19 (5th Cir. 1969), quoting Slattery Co., Inc. v. United States, 231 F.2d 37 (5th Cir.1956). On remand the trial court erroneously compounded the unintentional oversight of the Court of Appeals by ignoring both the admissible sales of the landowners and their expert witnesses' opinion testimony.
Aware that in Transwestern, the Court of Appeals "explicitly upheld the appropriateness of the before-and-after method for valuing pipeline easements," 418 F.2d at 21, the district court reexamined the record and applied "the proper measure of damages." 8.41 Acres, 680 F.2d at 392. Concerned lest it violate the clear mandate of the Court of Appeals, the district court exclusively relied upon the government's only credible evidence of the market value of the land as burdened with the easements. That evidence consisted of a single comparable sale of an easement-burdened plant site. On appeal, the Court of Appeals reversed the judgment and held the damage award "unsupported by evidence in the record." U.S. v. 5.00 Acres, 731 F.2d at 1208.
The apparent rejection of the trial court's factual finding as clearly erroneous — a finding predicated upon the government's sole comparable sale probative of after-taking value — made the further error of the trial court suddenly significant. That error, committed due to this court's misapprehension that it was compelled by the mandate, was the utter failure to consider the admissible, credible evidence originally offered by the landowners simply because it was presented under the wrong valuation theory. That omission violated the crystal clear rule in this circuit that, although comparable sales are often the most reliable form of evidence in determining market value, "other forms of evidence are also admissible on that issue," even though not based on an accepted method of valuation. United States v. 329.73 Acres, Etc., 666 F.2d 281, 283 (5th Cir.1982); citing United States v. Toronto, Hamilton and Buffalo Navigation Co., 338 U.S. 396, 70 S.Ct. 217, 94 L.Ed. 195 (1949); United States v. Smith, 355 F.2d 807 (5th Cir.1966). Although the pipeline easement sales testified to by the landowners do not directly establish the value of either the parent tracts or the easement strips, that evidence overwhelmingly indicates a reduction in the parent tracts' after-taking value due to the easement burden.
The landowners offered sales of single pipeline easements, including sales to buyers lacking condemnation power. As is the custom in the industry, the sales were negotiated on the basis of...
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U.S. v. 8.41 Acres of Land
...KWW's and Firestone's motion for a new trial on the ground that the interests of justice so required. United States v. 8.41 Acres of Land, 595 F.Supp. 731, 735 (E.D.Tex.1984). The Government petitioned this Court for a writ of mandamus which was granted. A fourth panel of this Court granted......