Reid Road Municipal Utility District No. 2 v. Speedy Stop Food Stores, Ltd.Reid Road Municipal Utility District No. 2 v. Speedy Stop Food Stores, Ltd.
Lead Opinion
delivered the opinion of the Court.
In this case we address two evidentiary questions. The first is whether an employee of the corporate general partner of
Under the record before us, we answer the first question “No,” the second question “Yes,” and affirm the judgment of the court of appeals.
I. Background
Speedy Stop Food Stores, Ltd. is a Texas limited partnership that owns and operates convenience stores in Texas. Reid Road Municipal Utility District sought to acquire a waterline easement across land in Harris County owned by Speedy Stop (the Property).
Speedy Stop timely objected to the commissioners’ award, transforming the matter from an administrative proceeding to a civil suit. See
In response to the District’s motion, Speedy Stop filed the affidavit of Carlton LaBeff. LaBeff is the vice president of C.L. Thomas, Inc., the corporate general partner of Speedy Stop. Speedy Stop timely identified LaBeff as a person with knowledge of relevant facts but did not designate him as an expert. In his affidavit LaBeff averred, among other matters, that he (1) had been involved with the acquisition and sale of all Speedy Stop convenience stores since 1982; (2) “for several years” had been in charge of all real estate acquisitions and sales for Speedy Stop; (3) was responsible for dealing with easement issues at all Speedy Stop convenience stores and fast food restaurants; (4) maintained familiarity with realty values in Harris County through various means in order to fulfill his job duties; (5) was aware of how a utility easement can affect the value of commercial property such as the tract at issue; and (6) was “making this affidavit on behalf of the owner, as the owner’s representative and as the owner.” In the affidavit, LaBeff did not set out facts showing that he had personal knowledge of the Property, nor did he say that he had personal knowledge of or familiarity with it. LaBeff did not give an opinion of the Property’s value before or after the easement was taken. Instead, he set out his conclusion that the easement reduced the fair market value of the Property by $62,000.
The trial court sustained the District’s objections to both LaBeffs affidavit and Ambrose’s testimony and appraisal. It then granted the District’s motion for summary judgment and entered judgment awarding Speedy Stop damages of one dollar. See State v. Jackson,
-The court of appeals reversed, holding that the Property Owner Rule-applies to corporate entities.
We agree with Speedy Stop in part as to the Property Owner Rule, and in whole as to its contention that Am-brose’s testimony and appraisal constitute an admission by the District. As to La-Beffs damages opinion, we believe the better rule is to treat organizations the same as natural persons for purposes of the Property Owner Rule, with certain restrictions on whose testimony can be considered as that of the property owner. We hold that the Property Owner Rule is limited to those witnesses who are officers of the entity in managerial positions with duties related to the property, or employees of the entity with substantially equivalent positions and duties. Further, the Property Owner Rule falls within the ambit of Texas Rule of Evidence 701 and therefore does not relieve the owner of the requirement that a witness must be personally familiar with the property and its fair market value, but the Property Owner Rule creates a presumption as to both.
LaBeff, however, was not an employee or officer of Speedy Stop. Nor did his affidavit set out facts showing he was personally familiar with the Property and its value and that his opinion was not substantively an expert opinion based on specialized knowledge, skill, experience, training, or education. Thus, the trial court did not abuse its discretion by excluding his opinion as to the Property’s diminution in value. On the other hand, the District’s actions before the special commissioners
II. Analysis
A. LaBeffs Affidavit
The District asserts that the trial court properly excluded LaBeffs affidavit and the court of appeals erred by holding that it was admissible under the Property Owner Rule. The District urges that corporate employees cannot be treated as “owners” for purposes of testifying about the value of corporate property, and even if they can be, LaBeff was not an employee of the Property’s owner. The District also argues that allowing everyone familiar with property to testify to its value under Texas Rule of Evidence 701 will negate the protections provided by rules and procedures requiring timely disclosure of experts and then
Speedy Stop first argues that regardless of the Property Owner Rule, LaBeffs affidavit was improperly excluded because Rule 701 allows admission of his testimony. It next argues that the court of appeals was correct: LaBeffs affidavit was improperly excluded because he was designated as an agent for the owner of the Property and his affidavit was admissible because of the Property Owner Rule.
We agree with the District that the trial court did not abuse its discretion by excluding LaBeffs. affidavit. We first address the issue of whether LaBeffs affidavit was admissible under Rule 701 even though he was not designated as an expert witness.
1. Rules 701 and 702
Rule 702 states:
If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education may testify thereto in the form of an opinion or otherwise.
If the witness is not testifying as an expert, the witness’ testimony in the form of opinions or inferences is limited to those opinions or inferences which are (a) rationally based on the perception of the witness and (b) helpful to a clear understanding of the witness’ testimony or the determination of a fact in issue.
a.
For purposes of
But not all witnesses who are experts necessarily testify as experts. A witness may have special knowledge, skill, experience, training, or education in a particular subject, but testify only to matters based on personal perception and opinions. See generally John F. Sutton, Jr. & Gathleen C. Herasimchuk, Article VII: Opinions
The line between who is a
Accordingly, we do not categorically agree with Speedy Stop’s contention that all persons with personal knowledge of real property can give opinion testimony as to the market value of that property without the testimony being considered and identified as expert testimony. Such a holding would allow circumvention of discovery and disclosure rules that allow parties to prepare for trial and protect themselves from trial by ambush. Instead, we hold that subject to the provisions of
b.
Speedy Stop argues that
LaBeff did not specify in his affidavit that he was familiar with the Property, nor did he state that he was familiar with its value. His affidavit was dedicated to detailing his experience, knowledge, and expertise in real estate and real estate values, including easements, and his general familiarity with Speedy Stop’s business. His valuation opinion, taken from a two-page, single spaced affidavit that set out his experience, education, and general knowledge of real estate values was succinct and clear about the basis of his opinion:
It is my opinion based upon my knowledge, background, education and experience that the difference in the fan* market value of the property in question (which is the subject matter of the lawsuit) immediately before and immediately after the condemnation of this easement, was $62,000. Further, it is my opinion as the owner of the property in question that the difference in value, immediately before and immediately after the condemnation, was $62,000, all because of the condemnation and the easement which resulted from the condemnation (emphasis added).4
LaBeffs affidavit shows that his damages opinion, in substance, was based on his expertise — his “knowledge, background, education and experience” — not his personal familiarity with the Property. As such, and because he was not timely disclosed as an expert, the trial court did not abuse its discretion in excluding his opinion of damages under
We next consider Speedy Stop’s argument that if
2. The Property Owner Rule
a. General Rule
Generally, a property owner is qualified to testify to the value of her
A business organization has the power “to take action necessary or convenient to carry out its business and affairs,” including the power to own and hold property. Tex. Bus. ORGS.Code § 2.101. An organization takes action through its agents. See Bennett v. Reynolds,
In support of its position, the District cites Mobil Oil Corp. v. City of Wichita Falls,
Through their employees, entities are as capable of knowing the market value of their property as are individuals. Many entities may have more knowledge of the fair market value of their property than would an individual because organizations frequently have employees whose duties require that they not only be personally acquainted with the entity’s properties, but also require the employees to obtain and maintain current valuations of the entity’s property for business reasons. LaBeffs affidavit demonstrates such a , situation. Although his affidavit did not show he had personal knowledge of the Property, it showed that his job duties required him to remain aware of general market conditions for real estate and convenience stores, and that he dealt with easement issues relating to Speedy Stop’s property. Thus, we see no good reason to conclude that business organizations are any less familiar with the value of their property than are individual property owners, or to preclude them from coming within the Property Owner Rule and its presumption that a property owner is familiar with its property and the property’s value. See Libhart v. Copeland,
However, we recognize that an entity necessarily testifies through its agents and representatives and that applying the Property Owner Rule and its presumptions to every employee or representative of an entity - could result in abuse of the rule.
b. An Entity’s Testimony Under the Property Owner Rule
There must be some limit on who is permitted to testify on an entity’s behalf under the Property Owner Rule. Other
Some jurisdictions extend the Property Owner Rule to corporations, but permit only an officer or director of the corporation to testify on the corporation’s behalf on the theory that the representative of the property owner must be someone who controls and manages the corporation. Weber v. W. Seattle Land & Improvement Co.,
Other jurisdictions allow shareholders to testify to fair market value on behalf of a corporate property owner. See Tokles & Son, Inc. v. Midwestern Indem. Co.,
We believe the better approach is to look both to the position of the witness and to the substance of the witness’s duties instead of looking only at the witness’s title or status. Limiting the class of employees qualified to testify under the Property Owner Rule accommodates the interests of both the entity and parties opposing the entity. The entity can prove the value of its property through certain categories of employees whose positions and duties warrant applying a presumption that they are familiar with the entity’s property and its value, but the adverse party is not disadvantaged by having to depose, investigate and prepare for multiple witnesses whose knowledge and testimony may not be relevant on the value issue.
A reasonable balance as to who may testify under the Property Owner Rule on behalf of an entity is struck by allowing
c. Application to LaBeff
LaBeff was not an employee of Speedy Stop; he was an officer for Speedy Stop’s general partner, C.L. Thomas, Inc. C.L. Thomas was not the owner of Speedy Stop’s property. See Tex. Bus. & Orgs. Code § 152. 101 (“Partnership property is not property of the partners.”); § 153.003(a) (stating that rules governing general partnerships also apply to limited partnerships absent conflict); see also Stanley v. Reef Sec., Inc.,
B. Ambroses’s Appraisal Testimony and Affidavit
Speedy Stop also offered Am-brose’s appraisal and testimony that the District introduced before the special commissioners. Speedy Stop contended that this evidence, although comprising out-of-court statements offered for their truth, was nevertheless admissible as an admission by the District. See
Speedy Stop argues that Ambrose’s opinions before the commissioners are admissions by the District, and as such are admissible as non-hearsay. The court of appeals did not address this issue, but rather than remanding to .the court of appeals for it to do so, we address it in the interest of judicial' economy. See
Ambrose was hired by the District to estimate the amount of compensation due to Speedy Stop and provide a written appraisal of the Property. In the hearing before the special commissioners he was called as a witness by the District and the substance of his testimony was that Speedy Stop’s damages were $9,342 for the taking. The District also referred the commissioners to Ambrose’s written appraisal, which was to the same effect.
Certain out-of-court statements offered for their truth are not hearsay. See
(A) the party’s own statement in either an individual or representative capacity;
*856 (B) a statement of which the party has manifested an adoption .or belief in its truth;
(C) a statement by a person authorized by the party to make a statement concerning the subject;
(D) a statement by the party’s agent or servant concerning a matter within the scope of the agency or employment, made during the existence of the relationship; or
(E) a statement by a co-conspirator of a party during the course and in furtherance of the conspiracy.
The District argues that Ambrose’s testimony is not an admission under the agency prong of
It has long been the rule that “[w]here a party has used a document made by a third party in such way as amounts to an approval of its contents, such statement may be received against him as an admission by adoption.” See Tex. Reciprocal Ins. Ass’n v. Stadler,
Although the court in East Tennessee Natural Gas Co. excluded the appraisal, the court’s reasoning suggests that had the gas company sought to offer the appraisal before the commission, the court would have concluded that the gas company adopted the appraiser’s valuation as true. See id. That is the situation before us in this case. The District presented both Ambrose’s testimony and his appraisal to the commissioners as evidence of Speedy Stop’s damages.
Speedy Stop cites Yarbrough’s Dirt Pit, Inc. v. Turner,
Based on his designation by Yarbrough as an expert witness and the tenor of the deposition questions submitted to him, Nalle was specifically authorized to speak on behalf of Yarbrough about the fault of the parties. We hold that a conclusion of an expert witness hired by an opposing party to speak on the subject matter on behalf of the party opponent is admissible against the party opponent, and the conclusion may be relied on in a motion for summary judgment even if the opposing expert witness does not disclose the bases for the conclusion adverse to the expert’s client.
Id. at 214. The circumstances in Yar-brough’s are different from those before us, and we need' not decide whether the conclusion of an expert hired and designated by a party is always admissible against that party. But we agree with Speedy Stop that in this case the District manifested its belief in and approval of Ambrose’s opinion as to Speedy Stop’s damages: it called him as a witness to testify to the special commissioners regarding that opinion and proffered his written appraisal to them in support of his testimony. See Tex.R. Evid. .801(e)(2)(B). Thus, the appraisal is admissible against the District as an admission by adoption. See
Ambrose’s testimony as to damages and his written appraisal comprised some evidence of damages. The trial court erred by excluding them and thus it erred by granting the District’s motion for summary judgment.
III. Conclusion
The trial court did not-abuse its discretion by excluding the damages opinion La-Beff expressed in his affidavit. However, the court erred by excluding Ambrose’s testimony and appraisal as to Speedy Stop’s damages.
We affirm the court of appeals’ judgment reversing the judgment of the trial court and remanding the case for further proceedings.
Notes
. Chevron USA, Inc., was initially named as a party to the proceedings, but was dismissed after it filed a disclaimer of interest in the Property.
. Prior to a 2000 amendment to the Federal Rules of Evidence,
. We do not address the District’s contention that LaBeff would not have qualified as an expert because he was not licensed as an appraiser, except to state that
. The District argues that LaBeff’s testimony was conclusory and he did not properly arrive at his damages estimate. We need not address the argument in light of our determination that the trial court did not abuse its discretion by excluding his affidavit.
. Of course, had an agency relationship been established, Ambrose's affidavit would be admissible under Rule of Evidence 801(e)(2)(D). See, e.g., Tex. Comm'n on Human Rights v. Kinnear,
. Texas Rule of Evidence 801 is almost identical to its Federal counterpart. The federal rule provides that admissions by party-opponents are not hearsay if:
The statement is offered against a party and is
(A) the party’s own statement, in either an individual or a representative capacity, or
(B) a statement of which the party has manifested an adoption or belief in its truth, or
(C) a statement by a person authorized by the party to make a statement concerning the subject, or
(D) a statement by the party’s agent or servant concerning a matter within the*857 scope of the agency or employment, made during the existence of the relationship, or (E) a statement by a coconspirator of a party during the course and in furtherance of the conspiracy.
.
Concurrence Opinion
joined by Justice LEHRMANN, concurring.
The Court addresses application of Texas Rule of Evidence 701 and the Property Owner Rule when a business organization owns the property condemned by the government. It holds that when a business entity owns the property, a natural person can testify as to its value under the Property Owner Rule if the person is “an officer in a management position with duties that at least in some . part relate to the property at issue, or an employee of the entity in a substantially equivalent position.”
Limited partnerships, including real-estate limited partnerships, are popular investment vehicles.
Yet the Court does contemplate application of the Property Owner Rule to a managing officer of the entity owning the property or an employee of the entity in a “substantially equivalent” position. In the case of a limited partnership, I would- hold that a managing officer of the corporate general partner with duties relating to the property may testify as to the value of partnership property without being qualified as a expert witness, provided the officer is familiar with the specific property in issue and its value. Such a rule would provide some parity of treatment of limited partnerships and corporations id condemnation proceedings. I do not think it matters whether this rule is seen as an application of the Propei’ty Owner Rule or
. Id. at'852.
. See 19 Robert W. Hamilton et al„ Business Organizations § 13.2 (Tex. Practice 2004) ("The limited partnership offers certain advantages that may make it an attractive choice of business entity.... [Pjartnership tax treatment for federal income tax purposes may provide significant tax savings when compared with the tax treatment of either a C corporation or an S corporation.").
. Id. § 13.1 ("Limited partners are, at least in the statutory default mode, passive investors whose liability is limited to their capital contributions.”).
. Id. §§ 1.8 ("In practice today, most limited partnerships have only a single general partner and that partner is usually a nominally capitalized limited liability entity such as a corporation or limited liability company.”); 13.2 ("The principal disadvantage of the limited partnership form as compared with a corporation or a limited liability company relates to the liability of the owners. The general partners of a limited partnership are personally liable for partnership obligations. To minimize this disadvantage, limited partnerships are often formed with a corporate or limited liability . company general partner-"); 14.7 ("Corporate or limited liability (“LLC”) general partners are frequently used to avoid exposing individuals or other entities to liability as general partners [of a limited partnership].”).
.Id. § 13.1 (“General partners of a limited partnership, like partners of a general partnership, have managerial rights_”); Tex. Bus. Org.Code §§ 153.102, .152.