UTAH DEPARTMENT OF TRANSPORTATION, Appellant and Cross-Appellee, v. BOGGESS-DRAPER COMPANY, LLC Appellee and Cross-Appellant.
No. 20180262
SUPREME COURT OF THE STATE OF UTAH
Filed June 11, 2020
2020 UT 35
Heard January 15, 2020. On Direct Appeal. Third District, Salt Lake. The Honorable Barry G. Lawrence. No. 090921179.
Attorneys:
Sean D. Reyes, Att‘y Gen., James L. Warlaumont, Barbara H. Ochoa, Asst. Att‘y Gens., Salt Lake City, for appellant and cross-appellee
Robert E. Mansfield, Megan E. Garrett, Salt Lake City, for appellee and cross-appellant
ASSOCIATE CHIEF JUSTICE LEE authored the opinion of the Court, in which CHIEF JUSTICE DURRANT, JUSTICE HIMONAS, JUSTICE PEARCE, and JUSTICE PETERSEN
ASSOCIATE CHIEF JUSTICE LEE, opinion of the Court:
¶1 This is an eminent domain action involving a parcel of property owned by the Boggess-Draper Company, LLC (Boggess). In 2009 a portion of that parcel, situated along the I-15 corridor, was taken by the Utah Department of Transportation (UDOT) in connection with a project at 11400 South in Draper. In the litigation that followed, the parties disagreed on the quantum of damages for the condemned property and on the amount of severance damages to Boggess‘s remaining property. As the litigation proceeded, Boggess eventually sold the remaining property, which was developed into two car dealerships. Evidence of this subsequent development was excluded by the district court on a pretrial motion in limine on the ground that it was categorically irrelevant to
¶2 We reverse. We reinforce the settled proposition that damages for a taking are to be assessed as of the date of the taking. And we uphold the general principle that the measure of damages in a case like this one is market value—what a willing buyer and a willing seller would consider in a voluntary transaction. But we hold that there is no categorical rule foreclosing the relevance of evidence of a subsequent transaction involving the property in question. And we reverse and remand for a new trial in accordance with the relevance standard we describe in greater detail below.
¶3 We also reject Boggess‘s position on cross-appeal—its assertion of a right to an attorney fee award as a constitutionally required element of its “just compensation” under
I
¶4 This is an eminent domain action filed by UDOT in 2009. The case involves a portion of a parcel of property owned by Boggess and taken by UDOT in connection with its widening and reconstruction of 11400 South in Draper. Boggess sought compensation for the value of the taken property and severance damages for harm to its remaining property.
¶5 The case did not go to trial until 2018. By that point Boggess‘s remaining property had been sold and developed into two car dealerships—in a sale that took place in 2016.
¶6 Before trial Boggess filed a motion in limine asking the district court to exclude evidence of the 2016 sale, price, and subsequent development of its remaining property. The district court granted Boggess‘s motion. It noted that the date of valuation of Boggess‘s remaining property was December 17, 2009—the date the eminent domain action was filed. See
¶7 The district court cited
¶8 In the course of the trial both parties put on experts to opine on the value of the taken property and on the severance damage to the remaining property. At various points Boggess‘s counsel and experts made statements relating to the remaining property‘s development potential and value1—comments that prompted claims by UDOT that
¶9 At the close of trial the court issued an instruction telling the jury to disregard “any reference in the evidence to the property‘s value at some later point in time or any reference to any subsequent sale or development of the property.” The instruction also warned that “[f]ailing to do so might produce a verdict which is not based on the evidence in this case.” Under this and other instructions, the jury entered a verdict awarding Boggess over $1.7 million—an amount encompassing its determinations of the fair market value of the taken property and severance damages to the remaining property.
¶10 Boggess later filed a motion requesting an award of its costs, expenses, and attorney fees incurred in the proceedings—based on
¶11 UDOT filed this appeal, asserting that the district court abused its discretion in refusing to admit evidence of the 2016 sale and subsequent development of the property. Boggess filed a cross-appeal, contending that the district court erred in denying its motion for an award of costs and attorney fees under the Takings Clause of the Utah Constitution.
II
¶12 Three questions are presented for decision: (a) whether the district court erred in granting Boggess‘s motion in limine on the basis of a blanket rule barring “post-valuation facts and circumstances to prove severance damages“; (b) whether it erred in rejecting UDOT‘s assertion that Boggess opened the door to the admission of post-valuation-date evidence through the assertions of its counsel and experts at trial; and (c) whether it erred in denying Boggess‘s motion for an award of costs and attorney fees. We reverse on the first point, decline to reach the second, and affirm on the last.
A
¶13 Prior to trial the district court granted the Boggess motion in limine on the basis of a categorical rule prohibiting evidence of any sale or development of property after the date of its taking. And it rooted this rule in both the governing provisions of the Utah Code and controlling case law.
¶14 The district court found in
¶15 We view the matter differently. We agree, of course, that the date of valuation is the time of the taking. But we find nothing in the code or in our case law to support the categorical rule endorsed by the district court. So we reverse its decision granting the motion in limine filed by Boggess.2
¶16 In the paragraphs below we first set forth the basis for our conclusion that the district court‘s categorical rule is contrary to the terms of the Utah Code, as informed by our rules of evidence. Then we establish that our case law is consistent with this view. And we close with the conclusion that the decision granting the Boggess motion in limine was a
1
¶17 The governing statutes provide for just compensation for property taken or damaged based on market value at “the date of the service of summons.”
¶18 The code thus establishes the date for measuring the market value of taken property. See
¶19 Our rules set a low bar for relevance. Evidence is relevant if it has ”any tendency to make a fact” “of consequence in determining the action” “more or less probable than it would be without the evidence.”
¶20 A post-valuation-date sale or development of property may be relevant to the extent it aids the factfinder in checking assumptions about the development potential of the property in question—assumptions made in assessing the value of the property on the valuation date. As a leading treatise puts it, evidence of subsequent development may not be direct evidence of property value on an earlier date, but it may still be “useful” in “confirm[ing]” or undermining “the expectations, as of the date of taking[,] of a willing buyer.” 4A NICHOLS ON EMINENT DOMAIN
§ 14A.04[2][b]. Post-valuation-date evidence, in other words, may establish real-world “[e]xperience” that can “correct [an] uncertain prophecy” that assesses value without the benefit of such after-acquired evidence. Id.
¶21 Evidence of market value on the date of the taking is often based on predictions about subsequent events, including the development potential of the property in question. And where one party is permitted to put on valuation evidence rooted in expectations of development potential, it makes little sense to conclude that the other party‘s evidence of actual property development is categorically irrelevant.5 Where the property is developed post-taking, that may inform a factfinder‘s assessment of development potential, and undermine expressed concerns about a lack of access to the property or other barriers to development.
¶22 The district court itself effectively conceded this point when it acknowledged that
¶23 We are not suggesting that a post-valuation-date sale or development of taken property yields conclusive evidence of
market value on the date of the taking.6 Nor are we holding that post-valuation-date developments are necessarily admissible in evidence. Our holding is limited. We are simply concluding that a post-valuation-date sale or other development is potentially relevant evidence, and not subject to a categorical bar under the code.
¶24 The statutory measure of compensation is market value on the date of the taking—based on reasonable expectations at that time. Post-valuation-date developments may potentially qualify as relevant under our rules of evidence. But such developments may not be conclusive, as where market conditions have changed markedly from those expected at the time of the taking. And such developments may not even be admissible in evidence, as where the trial court decides that the risk of unfair prejudice substantially outweighs any probative value. See
¶25 Neither of these concerns is sufficient to sustain a blanket rule establishing the categorical irrelevance of post-valuation-date developments, however. Concerns about unexpected changes in market conditions can be raised and tested in the crucible of the adversary system—through dueling experts and otherwise.7 And trial courts retain substantial discretion under rule 403 and otherwise to make case-by-case determinations of admissibility.
2
¶26 Our case law is consistent with the above conclusions. We have broadly held that the fair market value assessment considers “all factors . . . that any prudent purchaser would take into account,” “including any potential development” that could “reasonably . . .be expected.” Weber Basin Water Conservancy Dist. v. Ward, 347 P.2d 862, 863 (Utah 1959) (repudiated on other grounds in Redev. Agency v. Grutter, 734 P.2d 434 (Utah 1986)) (emphasis added). And if potential development is relevant, then actual development may have at least some tendency to inform
the reasonableness of any predictions about potential development.
¶27 In Weber Basin, we explained that transactions removed in time from the valuation date may be probative of the market value on that date. 347 P.2d at 864. Our Weber Basin opinion considered a sales price from six and a half years before the valuation date8 because it was “not so remote as to eliminate the probative value of the price as some evidence to consider in placing a fair value upon [the] land.” Id. We conceded that “[t]he more remote the time” of the sale “the less probative value it may have.” Id. But we held that that goes “to the weight of the evidence and not its competency or its relevance.” Id. (emphasis added). We also noted that it is “universally recognized that sales of the same property at any reasonable time in the past [or future] is relevant evidence on the issue of present value.” Id. And we pointed out that “[s]uch sales, when made under normal and fair conditions, are necessarily a better test of the market value than speculative opinions of witnesses; for, truly, here is where ‘money talks‘” Id. (emphasis added) (citation omitted).
a provision that deals with improvements by a property owner “subsequent to the date of service of summons,” and states expressly that such improvements “may not be included in the assessment of compensation or damages.” Any “general rule” stated in Mitsui thus goes only to compensation for improvements made “subsequent to the date of service of summons,” and not to the effect of post-valuation-date evidence generally.
¶29 Boggess cites Utah Department of Transportation v. Jones, 694 P.2d 1031 (Utah 1984), in support of the district court‘s order. But Jones is not on point. In that case we upheld a district court‘s decision to admit post-valuation-date evidence under a different statute—what is now
¶30 For all these reasons we conclude that there is no “general rule that a party may not rely on post-valuation-date facts and circumstances to prove severance damages.” And we thus find error in the district court‘s ruling on Boggess‘s motion in limine.
3
¶31 This leaves the question whether the district court‘s error was harmful—whether “our confidence in the verdict is undermined” by it. State v. Powell, 2007 UT 9, ¶ 21, 154 P.3d 788. We conclude that UDOT was in fact harmed by the district court‘s error in categorically excluding evidence of the 2016 sale and subsequent development of the remaining property. And we find that the error is accordingly reversible. See State v. Hamilton, 827 P.2d 232, 240 (Utah 1992) (An erroneous decision to admit or exclude evidence “cannot result in reversible error unless the error is harmful.“).
¶32 The district court‘s decision to exclude evidence of the 2016 sale and subsequent property development substantially affected UDOT‘s strategy and presentation at trial. Boggess‘s claim for severance damages was premised on the idea that UDOT‘s taking diminished access to the remaining property and increased commuter traffic, undermining its potential for future development. Its experts went so far as to say that as a result of the taking access to the property was “basically unusable” because it was “too steep to drive down” without a “four-wheel drive truck” and that increased traffic made the property “a place where it‘s much, much, more difficult to . . . travel in and out of.”
¶33 The ruling on the motion in limine hamstrung UDOT in its attempt to rebut this evidence. So we have no trouble concluding that our confidence in the verdict is undermined by the district court‘s decision.
¶34 In so stating we are not prejudging the admissibility of any or all elements of the 2016 sale and development of the Boggess property.11 That question will be up to the
B
¶35 Despite its decision granting the Boggess motion in limine, the district court held open the possibility that Boggess might open the door to the admissibility of post-valuation-date evidence during the course of trial. And at various points during trial the Boggess counsel and experts made reference to the effects of the UDOT condemnation on access to the remainder of the Boggess property, and on its potential for future development. For example, Boggess‘s experts testified, as noted above, that the property‘s “highest and best use” had been “degraded” by reduced access and increased traffic; that a pre-development
photo showed the property “just all what it looks now“; and that Boggess “had to sell the property for less than what it was before.”
¶36 At these and other similar points UDOT asserted that Boggess had opened the door to evidence of the 2016 sale and development of the Boggess property. The district court disagreed. It rejected UDOT‘s various attempts to introduce the 2016 evidence, concluding that any probative value of the evidence was substantially outweighed by the fact that it would be “unbelievably prejudicial” under
¶37 UDOT challenges these decisions on this appeal. It asks us to reverse the several decisions made at trial on the admissibility of the 2016 sale and development of the Boggess property. But we see no basis for wading into the weeds of these decisions. We have reversed and remanded for a new trial. And in so doing we have undermined a central premise of the district court‘s rule 403 balancing—the side of the equation dealing with probative value.
¶38 At retrial on remand, the district court may be called upon to make a new set of judgments about the probative and prejudicial effects of any proffered evidence of the 2016 sale and development of the Boggess land. But those judgments will turn on the facts and circumstances of the trial as it unfolds on remand. And they will be informed by the standard set forth in this opinion. Nothing more that we could say here will be of any particular use on retrial. So we leave the matter there.
C
¶39 After trial the district court denied Boggess‘s motion for costs and attorney fees. Boggess rooted its motion in the takings clause of the Utah Constitution. Citing
¶40 Boggess challenges the denial of its motion on cross-appeal. It asserts that it has a constitutional right to recover its costs and fees in addition to its damages for the market value of its property. And it accordingly urges us to overrule our decision in the Ferrebee case.
¶41 UDOT resists this argument on its merits. And it also asks us to affirm on an alternative basis—the existence of a written stipulation signed by Boggess, in which Boggess allegedly agreed to pay its own costs and fees incurred in this action.
¶43 Instead we affirm on the merits. The district court‘s decision was correct under our decision in Ferrebee, which held that “just compensation” under
¶44 Our case law identifies a range of factors that we consider in deciding whether to overrule one of our precedents. See Eldridge v. Johndrow, 2015 UT 21, 345 P.3d 553. But the threshold consideration under our doctrine of stare decisis is “the persuasiveness of the authority and the reasoning on which the precedent was originally based.” Id. ¶ 22. If we have no basis for questioning the “reasoning on which the precedent was originally based,” id., we have no need to consider other factors of relevance to our stare decisis inquiry.
¶45 Here, the threshold consideration is dispositive—we see no basis for questioning our decision in Ferrebee. Boggess‘s challenge to this decision centers on policy concerns—not the originalist analysis required under our Utah case law.14 Boggess asserts that a party who is denied recovery for litigation costs and attorney fees is not ultimately receiving the fair market value of its taken property because such costs and fees are effectively an uncompensated transaction cost of a forced sale. This might be persuasive if we were interpreting “just compensation” in light of contemporary economics. But that is not the question presented. The question presented concerns the original, historical understanding of “just compensation.” And Boggess has not shown that “just compensation” historically was understood to extend beyond compensation for the value of property to encompass indirect costs incurred by the property owner.15 Our own originalist research, moreover, has identified material that is, if anything, consistent with Ferrebee.16
¶46 The Ferrebee court endorsed the “logic” embraced by the U.S. Supreme Court in interpreting the Takings Clause of the United States Constitution.17 See Ferrebee, 844 P.2d at 313–14. That logic, set forth in United States v. Bodcaw Co., 440 U.S. 202 (1979), is that the historical understanding of “just compensation” contemplates “compensation . . . for the property, and not to the owner,” and that litigation costs are “indirect costs to the property owner” that are “not part of” the “just compensation” for taken property required under the United States Constitution. Id. at 203 (quoting Monongahela Navigation Co. v. United States, 148 U.S. 312, 326 (1893) (emphasis added)). The Bodcaw opinion acknowledged that it might be “fair or efficient to compensate a landowner for all the costs he incurs as a result of a condemnation action.” Id. at 204. But it held that compensation for such costs “is a matter of legislative grace rather than constitutional command.” Id.
¶47 This was the basis for the Ferrebee court‘s construction of the Utah just compensation clause. And we see no originalist basis for concluding that this was error. So we affirm the denial of Boggess‘s motion for fees and costs.
¶48 Boggess‘s policy concerns may be grounds for it to seek a legislative amendment to the Utah Code to establish a broader
(continued . . .)
exclusively on the value of property taken or damaged with no mention of costs spent litigating the taking).
right to costs and fees in takings cases.18 But they are not enough to persuade us to set aside our decision in Ferrebee.
III
¶49 There is no categorical rule deeming post-valuation-date evidence irrelevant to the determination of fair market value under
