Opinion
No. CX-00-950.
Filed December 12, 2000.
Appeal from the District Court, Ramsey County, File No. C3972622.
David D. Meyer, James E. Dorsey, Allison M. Dibley, (for appellant)
Harold J. Bagley, (for appellant)
Glenn Olander-Quamme, (for respondent)
Considered and decided by Schumacher, Presiding Judge, Klaphake, Judge, and Lansing, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
Northern States Power Company (NSP) appeals a jury award of $360,000 and the denial of its motion for a new trial in an eminent-domain proceeding. NSP contends that the district court abused its discretion by admitting incompetent expert-opinion evidence and that the evidence is insufficient to support the verdict because it fails to show measurable harm. We conclude that the district court properly admitted the opinion evidence under Minn.R.Evid. 702 and the evidence, including the testimony of the court-appointed commissioners, adequately supports the jury's verdict. Accordingly, we affirm.
FACTS
NSP petitioned to condemn 2.5 miles of Burlington Northern and Santa Fe Railway Company's (BNSF) railway-corridor property that extends through downtown White Bear Lake. NSP exercised its eminent-domain rights to obtain a perpetual easement for above-ground and underground wires and other equipment necessary to transmit electricity. The court-appointed appraisal commissioners awarded BNSF $327,000 in damages for the taking. Both NSP and BNSF appealed to the district court. Before the jury trial, the district court denied NSP's motion in limine to exclude the testimony of BNSF's expert witness Michael Bettendorf. NSP and BNSF negotiated mutually acceptable terms to resolve parts of the action, and the only issue at trial was the amount of damages due BNSF, if any.
Bettendorf testified that in valuing the property he used the "before and after" appraisal method, subtracting the property's worth after the easement from the property's worth before the easement to come up with the damage amount. Both parties stipulated that the property's "before" value was $2.9 million and that the highest and best use for the land both before and after the taking was as a corridor.
To estimate the easement's impact on the property's value, Bettendorf compared five different easement transactions to the proposed easement. None of the transactions involved a utility easement on railroad property because Bettendorf was unable to find a directly comparable transaction. To accurately reflect the varying property uses in the areas through which the corridor passes, Bettendorf broke down the corridor into five different sections. He testified that the impact of NSP's easement on four sections of the subject property would reduce the property's value by 35% and in the fifth section, by 50%. Thus, the property's "after" value would be $2.54 million. Subtracting that number from the "before" value of $2.9 million, Bettendorf calculated that BNSF sustained $360,000 in damages. NSP's expert witness, C. E. LaSalle, also estimated the impact of the easement in percentage terms, but calculated the percentage impact at two-and-a-half percent, resulting in an estimated $35,000 in damages.
The jury awarded BNSF $360,000. NSP appeals the jury award and the denial of its motion for a new trial, contending that (1) the expert witness testimony was unreliable according to the standards used by Minnesota courts and (2) the evidence cannot sustain the judgment.
DECISION I
A district court's ruling on whether to admit an expert opinion is within the sound discretion of the district court and will not be reversed unless it is based on an erroneous view of the law or it is an abuse of discretion. Gross v. Victoria Station Farms, Inc., 578 N.W.2d 757, 760 (Minn. 1998). The value of land taken by eminent domain is always a matter of opinion and may be proved by opinion evidence. Housing Redevelopment Auth. v. Kieffer Bros. Inv. and Constr. Co., 284 Minn. 516, 521, 170 N.W.2d 862, 864-65 (1969). The court may consider any competent evidence if it legitimately bears upon the market value. Ramsey County v. Miller, 316 N.W.2d 917, 919 (Minn. 1982).
Minnesota courts have traditionally used three methods to arrive at the fair market value of property taken in a condemnation proceedings: (1) market data, (2) income-capitalization, and (3) the reproduction cost. Id. But courts have accepted variances from these valuation methods when supported by competent and reliable expert testimony. See, e.g., id. at 922 (allowing appraisal evidence of development-cost approach so long as party introducing evidence lays a proper foundation).
Because Bettendorf was unable to find directly comparable sales of power-line easements on railroad property, he compared NSP's proposed easement to five easement purchases he believed were analogous. He testified that his methodology included looking specifically at the easements' impact on the underlying property and then comparing NSP's easement to the range of other easement impacts. According to Bettendorf, some of the property values used for comparison were more affected by the easements than others and thus he determined where NSP's easement fell in the range of easement impacts. He testified that the valuation method he used, in the absence of directly comparable transactions, is the generally accepted appraisal method to estimate the impact of an easement. The three court-appointed commissioners, two of whom were experienced real-estate appraisers, testified that the methodology and the percentage applied were "reasonable." NSP's only witness, a certified general real-property appraiser, stated he used "precisely the same methodology as Bettendorf" except he concluded that the impact was only two and one-half percent of the "before" value.
NSP argues that the admission of BNSF's expert-witness testimony is reversible error because the court did not determine whether the expert's methodology was scientifically valid and whether the methodology could be properly applied to the facts in this case. NSP bases this argument on three federal cases, Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 119 S.Ct. 1167 (1999), Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 113 S.Ct. 2786 (1993), and Frye v. United States, 293 F. 1013 (D.C. Cir. 1923). We reject this argument for three reasons.
First, Minnesota has determined that the applicable test in determining admissibility of novel scientific evidence is the Frye-Mack standard. Goeb v. Tharaldson, 615 N.W.2d 800, 810 (Minn. 2000). Under this standard, the court determines whether the scientific evidence in question is accepted in the relevant scientific community and whether the particular evidence derived from that test has a foundation that is scientifically reliable. Id. Thus, the federal standard is not directly applicable to Minnesota evidentiary issues.
Second, Minnesota, unlike the federal courts, has applied the heightened evidentiary standard only to novel scientific evidence, rather than all expert testimony. See id. at 812, 814. In Goeb, the court noted Kumho's clarification that Daubert extends to technical and other specialized knowledge under rule 702. Id. at 812. The court further noted Kumho's explanation that the Daubert factors are designed to be helpful rather than definitive and will not apply in every circumstance. Id.
Third, even if the Frye-Mack standards were extended to all expert testimony under rule 702, the record demonstrates an adequate basis for the admissibility of Bettendorf's testimony. Bettendorf testified that the valuation method he used is the generally accepted appraisal method when direct comparisons are unavailable. Two experienced real-estate appraisers who served as court-appointed commissioners confirmed that the method was reasonable, and the only other expert who testified used the same methodology. Whether Bettendorf's percentage had a foundation that was "scientifically" reliable depends on the degree of similarity in the comparable easement sales. Bettendorf provided foundation for each of the easements he used as a comparable sale. The district court considered objections to the comparability of each, excluded one, and permitted five into evidence. The record demonstrates the reliability and relevancy of this expert evidence, and the district court did not abuse its discretion or make an error of law in admitting Bettendorf's testimony.
II
NSP also argues that the evidence cannot sustain the jury's verdict because BNSF failed to offer any evidence of measurable harm. NSP asserts that BNSF did not sustain any tangible harm from the taking and should therefore receive only nominal damages. But an interference with a property right as well as physical occupation of property constitutes a compensable taking. Beer v. Minnesota Power Light Co., 400 N.W.2d 732, 734 (Minn. 1987). Interference with a property right is measured in the diminution of the market value of the property. Id. at 735. The same damage measure, difference in market value of the entire tract before and after the taking, applies when a portion of the land is taken. State v. Casey, 263 Minn. 47, 51, 115 N.W.2d 749, 752 (1962). The market-value measure is the sum that a purchaser willing but not required to buy the property would pay to an owner willing but not required to sell the property, taking into consideration the property's highest and best use. Miller, 316 N.W.2d at 919.
As a result of the easement, BNSF must work around any electric lines, poles, and other equipment that NSP places on the property. Although BNSF may still continue to use the corridor property as a railroad corridor, its property rights are subject to the easement, and any future corridor use must be consistent with NSP's use.
It is within the province of the jury to determine damages in an appeal from the commissioners' award. State by Lord v. Pearson, 260 Minn. 477, 493, 110 N.W.2d 206, 217 (1961). While expert opinions are not to be blindly followed by juries, the opinions are to be weighed by the jury and judged in view of all the testimony in the case and the jury's own knowledge. Kieffer Bros., 284 Minn. at 521, 170 N.W.2d at 865. An appellate court must accept a jury verdict in an eminent domain case if the verdict is reasonably supported by evidence. State by Humphrey v. Briggs, 488 N.W.2d 811, 814 (Minn.App. 1992), review denied (Minn. Sept. 15, 1992).
NSP's estimate of $35,000 in damages varied significantly from BNSF's estimate of $360,000 — the amount the jury awarded. Bettendorf testified that in his opinion, NSP's easement resulted in $360,000 damages. He testified that his damage estimate was $10,000 higher than at the commissioner's hearing because of a correction in the square footage of the easement area. The testimony of each of the court-appointed commissioners supported this estimate. See Pearson, 260 Minn. at 484, 110 N.W.2d at 212 (court-appointed commissioners are competent witnesses who may be called by either side). The jury chose BNSF's damages estimate over NSP's estimate.
When opinion evidence is conflicting, its weight is for the jury's determination. Independent Sch. Dist. No. 13 v. Minneapolis Elec. Steel Castings, 298 Minn. 534, 536, 214 N.W.2d 469, 470 (1974). "The law does not permit a court, appellate or otherwise, to substitute its own judgment for that of the jury although the verdict may be considerably more (or less) than in the judgment of the court it ought to have been." Northern States Power Co. v. Barnard, 187 Minn. 353, 355, 245 N.W. 609, 609 (1932). The record, particularly the testimony of Bettendorf and the court-appointed commissioners, provides sufficient evidence of harm from the condemnation to support the jury verdict.