DEDEAUX UTILITY CO. v. City of Gulfport
63 So. 3d 514
Miss.2011Background
- Gulfport sought to condemn Dedeaux’s privately owned water/sewer utility in 1996; Dedeaux continued operations for eight years before a physical taking occurred in 2004.
- Initial jury awarded Dedeaux $3,634,757; after remand for new trial, the second jury awarded $5,131,676.
- This Court previously reversed in Dedeaux I (2006) and remanded for a new trial on several evidentiary issues.
- At retrial (2008), disputes centered on expert valuation methodology for tangible and intangible assets, including CIAC and future cash flow.
- Dedeaux challenged the admissibility of expert testimony, sought declaratory relief on inverse condemnation, and pursued related proceedings in chancery; the cases were consolidated on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility and reliability of expert valuation | Dedeaux contends Stokes/Alexander testimony is unreliable or improperly qualified. | Gulfport argues expert methodologies are proper cost/valuation approaches and admissible. | Admissibility upheld for tangible assets; issues remain for certain intangible valuations on remand. |
| Declaratory judgment on inverse condemnation | Dedeaux seeks declaration that CIAC and related assets after 1996 are recoverable as inverse condemnation. | Gulfport argues procedural bars and improper scope; asserts limited inverse-condemnation issues. | Trial court affirmed; inverse-condemnation denial upheld on consolidated appeal; issue addressed on remand. |
| Highest and best use and its impact on valuation | Dedeaux contends the court misapplied use of unregulated vs regulated status in valuation. | Gulfport argues the distinction is immaterial since valuations would be the same. | Court instructed to avoid highest-and-best-use instruction as to unregulated use on remand. |
| Cross-examination of Stokes and prior opinions | Dedeaux should be able to impeach Stokes with prior unreliability findings. | Gulfport contends such impeachment risks confusion and prejudice. | Trial court did not abuse discretion; impeachment limited to avoid prejudice; law-of-the-case limits applied. |
| Evidence on alternatives/substitutes and closing arguments | Evidence about alternatives and investment return should be excluded as improper valuation. | Elliott's discussion of alternatives/substitutes is admissible and cross-examined. | Admission upheld, but closing-argument references to investment return deemed improper and cured by instructions. |
Key Cases Cited
- Bear Creek Water Ass'n v. Town of Madison, 416 So.2d 399 (Miss. 1982) (recognizes going-concern value and Bear Creek’s approach to utility valuation)
- City of Phoenix v. Consol. Water Co., 101 Ariz. 43, 415 P.2d 866 (Ariz. 1966) (cost-overcoming-constraints consideration in value of a utility)
- Potters II v. Miss. State Highway Comm'n, 608 So.2d 1227 (Miss. 1992) (recognizes multiple approaches to value and future profitability as a factor)
- Rebelwood, Ltd. v. Hinds County, 544 So.2d 1356 (Miss. 1989) (outlines cost, income, and market approaches in valuation)
- McLemore v. Mississippi, 863 So.2d 31 (Miss. 2003) (gatekeeper role for expert testimony and reliability under Rule 702)
- Watts v. Radiator Specialty Co., 990 So.2d 143 (Miss. 2008) (admissibility gatekeeping and Daubert framework in Mississippi)
- Bear Creek v. Town of Madison, 416 So.2d 399 (Miss. 1982) (establishes going-concern value and components of utility valuation)
- Dedeaux Utility Co., Inc. v. City of Gulfport, 938 So.2d 838 (Miss. 2006) (initial eminent-domain decision and basis for remand)
- Bear Creek, Ill. Cities Water Co. (Illinois), 144 N.E.2d 731 (Ill. 1957) (illustrates exceptional valuation where post-filing extensions occur)