370 N.C. 477
N.C.2018Background
- In March 2013 the N.C. Department of Transportation condemned 2.193 acres from a 240-unit apartment complex (Landmark at Battleground Park) and deposited $276,000 as compensation.
- Defendants (owners/lessee/mortgagee) demanded a jury trial, arguing the deposit was not just compensation.
- Defendants sought to admit an expert report and testimony by James Collins (licensed real estate broker) valuing just compensation at $3.734 million; the trial court excluded that report/testimony under N.C.G.S. § 93A-83(f).
- The trial court allowed Collins to testify only about probable selling price (a BPO/CMA), not fair market value; other experts testified and the jury awarded $350,000.
- The Court of Appeals affirmed; the Supreme Court granted discretionary review of the statutory exclusion and the jury instruction.
- The Supreme Court held § 93A-83(f) did not bar Collins from preparing an expert report or testifying about fair market value in court (authority under Rule 702), found the exclusion prejudicial, reversed in part, and remanded for a new trial; it affirmed the Court of Appeals on the jury-instruction issue.
Issues
| Issue | Plaintiff's Argument (DOT) | Defendant's Argument (Owners) | Held |
|---|---|---|---|
| Whether N.C.G.S. § 93A-83(f) prohibits a licensed broker from preparing an expert report or testifying about fair market value in court | §93A-83(f) forbids brokers from preparing BPOs/CMAs that estimate value (an appraisal), so Collins cannot lawfully prepare an expert report on fair market value and thus cannot testify | §93A-83(f) limits only the authority to prepare BPOs/CMAs under Article 6; it does not bar a broker from testifying as an expert under Rule 702 or preparing a court expert report | Court: §93A-83(f) does not apply to expert reports/testimony prepared under Rule 702; exclusion on that statutory ground was erroneous |
| Whether exclusion of Collins’ fair-market-value testimony was prejudicial and required a new trial | If excluded properly, no prejudice; or error was harmless given other expert testimony and jury verdict | Exclusion was prejudicial because Collins’ $3.734M estimate was materially higher and likely would have influenced the sole-issue jury decision on amount | Court: Error was prejudicial; reasonable probability the verdict would differ; reversed and remanded for new trial |
| Whether the special jury instruction excluding diminution caused by adjoining takings was improper | Instruction was proper per precedent cited by DOT | Defendants argued the instruction was improper | Court: Affirmed the Court of Appeals; upheld instruction (followed Creasman/Campbell) |
Key Cases Cited
- State v. McGrady, 368 N.C. 880, 787 S.E.2d 1 (2016) (standard for admission of expert testimony under Rule 702)
- In re Foreclosure of Vogler Realty, Inc., 365 N.C. 389, 722 S.E.2d 459 (2012) (questions of statutory interpretation reviewed de novo)
- Dep’t of Transp. v. Adams Outdoor Advert. of Charlotte Ltd. P’ship, 804 S.E.2d 486 (N.C. 2017) (definition of fair market value)
- Currence v. Hardin, 296 N.C. 95, 249 S.E.2d 387 (1978) (offer of proof requirements)
- HAJMM Co. v. House of Raeford Farms, Inc., 328 N.C. 578, 403 S.E.2d 483 (1991) (appellant’s burden to show prejudice from evidentiary error)
- Carolina Power & Light Co. v. Creasman, 262 N.C. 390, 137 S.E.2d 497 (1964) (jury instruction language on diminution from adjoining takings)
- Campbell v. United States, 266 U.S. 368, 45 S. Ct. 115 (1924) (source of the quoted rule on diminution in value)
- Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 113 S. Ct. 2786 (1993) (federal standard for expert admissibility referenced in Rule 702 analysis)