Caffe Ribs, Incorporated v. State of Texas
487 S.W.3d 137
| Tex. | 2016Background
- Caffe Ribs acquired a contaminated property; prior owners (Revere and Weatherford) had been evaluating/remediating contamination and enrolled the site in TCEQ’s Voluntary Cleanup Program.
- The State announced plans (pre-2005) to convert the site into a stormwater detention pond and then initiated condemnation; the project required removal/relocation of groundwater monitoring wells used for remediation.
- At trial the State’s experts testified an eight-year timeline was necessary to delineate and remediate contamination and the property’s value should be discounted accordingly; the State’s appraiser applied an 18% discount over eight years.
- Caffe proffered testimony from environmental witnesses (Bost and Rorick) that the State’s project and its requirement to remove monitoring wells delayed cleanup and extended the holding period; the trial court excluded that testimony under the project-influence rule.
- The jury valued the property at $4,914,480; Caffe appealed, arguing exclusion of the State-delay evidence was erroneous and harmful; the court of appeals affirmed but the Texas Supreme Court reversed and remanded for a new trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of evidence that the State’s condemnation project delayed remediation | Evidence was relevant to market value because the State’s project caused the extended holding period and thus should be considered by jury | Project-influence rule and Westgate bar evidence that seeks to recover announcement-related diminution or amounts to announcement damages; evidence unreliable | Court held exclusion was an abuse of discretion; evidence of State’s role in delay must be admitted so jury can assess market value |
| Application of the project-influence rule | Rule should not be used to exclude evidence that explains how the government’s project caused value diminution; trial court should admit evidence and instruct jury to remove inappropriate project effects | Trial court applied the project-influence rule to exclude the testimony as project-influence/announcement damage | Court clarified project-influence requires preliminary judicial determinations but does not mandate broad evidentiary exclusion; here exclusion defeated the rule’s purpose and was improper |
| Westgate as bar to the evidence | Not applicable; Caffe is not seeking consequential lost-profits or de facto taking damages but proper market-value determination | Westgate precludes recovery of damages caused by announcement absent use restriction; thus evidence should be excluded | Court distinguished Westgate: it bars noncompensable consequential damages, not admissibility of evidence needed to compute true market value |
| Reliability of expert testimony (Bost/Rorick) | Their opinions were based on facts and not contradicted by undisputed evidence; admissible unless contrary to undisputed facts | Testimony unreliable because Revere/Weatherford controlled remediation and had delayed delineation for years | Court held the proffered testimony was not contradicted by undisputed facts and therefore not categorically unreliable |
Key Cases Cited
- City of Austin v. Cannizzo, 267 S.W.2d 808 (Tex. 1954) (defines constitutional market-value standard)
- Barshop v. City of Houston, 442 S.W.2d 682 (Tex. 1969) (project enhancement/diminishment principles)
- City of Fort Worth v. Corbin, 504 S.W.2d 828 (Tex. 1973) (project-influence rule; exclusion vs. jury instruction and date-of-manifestation issues)
- Westgate Ltd. v. State, 843 S.W.2d 448 (Tex. 1992) (distinguishes de facto taking and bars recovery of consequential/announcement damages)
- United States v. Virginia Elec. Power Co., 365 U.S. 624 (1961) (federal recognition that government should not benefit from depressing property values by project announcement)
- State v. Central Expressway Sign Assocs., 302 S.W.3d 866 (Tex. 2009) (guidance on harmful-error analysis in appeals)