MEMORANDUM OPINION & ORDER
Acting upon the relation and for the use of the Tennessee Valley Authority (“TVA”), the United States (hereinafter the “Government”) filed these two condemnation actions pursuant to Fed, R. Civ. P. 71.1 and the Tennessee Valley Authority Act of 1933, as amended, 16 U.S.C. § 831-831ee. In connection therewith, the Government has condemned an easement and a right-of-way over adjoining parcels of real property located in Madison County, Alabama. In one case, 5:14-cv-0032-JEO (the “Moores Mill Case”), the parcel is owned by defendant Moores Mill Communities, LLC (“MMC”). In the other case, 5:14-cv-0048 (the “Fanning Case”), the parcel is owned by defendant Fanning School Communities, LLC (“FSC”). The two cases have been consolidated, with the parties reserving the right to seek separate trials (Doc. 34; Fanning Case Doc. 35)
I.
Wayne Bonner, Jeff Enfinger, and Bland Warren are principals of both Defendant entities. In August 2006, Defendant MMC entered into a Development Agreement with the owners of approximately 407 acres of raw land in unincorporated Madison County (the “Moores Mill tract”), with the parties declaring their intent that the land would be developed according to a site plan to be created by MMC. (Doc. 41-5 (“Development Agreement”) ¶ 2). Pursuant to the Development Agreement, MMC paid the sellers $2 million at the closing in January 2007 and promised to pay an additional 20% of the net price of each residential lot as it was
In 2007, Defendant FSC purchased an adjoining 80-acre tract to the northwest of the Moores Mill tract. The two properties together formed an approximately 480-acre rectangle, bounded on the west by a section of Moores Mill Road, a two-lane thoroughfare also designated as County Road 58, running north/south.. Moores Mill 'Road also marked the southern boundary of the Moores Mill tract, after having taken a- 90-degree easterly turn upon meeting with Steger Road. (See Doc. 38-2 at 20, 59; Doc. 38-14 at 9, 25, 28).
In the period leading up to the purchases and in the year or so afterwards, Defendants took a number of preliminary steps under the Development Agreement and otherwise towards developing the properties as a residential subdivision. Such steps included evaluation of a soils map and having certain environmental assessments and surveys performed to map topography and to determine whether any areas were wetlands or in a floodplain. Defendants hired an engineering firm to create a site master plan with over 1,200 residential lots to be developed in several phases, and Defendants created proposed schedules for completing phases and a cash flow analysis for the project, based on projected annual lot sales. They also-conducted a sewer availability analysis, entered into a . sewer service agreement, and commissioned a survey to analyze the property for wetlands and flood plains and map topography.- In late 2007 and early 2008, Defendants also compiled a marketing catalog for the property that included a plan that incorporated a lot reserved for commercial development at the southwest corner of the Moores Mill tract. (See Docs. 41-2, 41-3, 41-4).
In about the spring of 2008, however, the financial crisis hit. Defendants’ plans were put on hold indefinitely as the recession dragged on and the real estate market continued to sag. Nothing material appears to have occurred for several years until, in November 2011, FSC entered into a land swap agreement with the Madison County Board of Education (“BOE”). Under that .agreement, FSC traded about a 25-acre rectangular lot, in the northwest corner of the Fanning tract to the BOE for the purpose of having it build a school there. The BOÉ later did just that, and it opened the Moores Mill Intermediate School on the site in August 2014. Following the swap, FSC was left with an approximately 55-acre tract (the “Fanning tract”) adjoining the Moores Mill tract. According to Defendants, FSC agreed to the'trade for a similarly sized piece of property elsewhere because they believed the. addition of a nearby school would make the planned residential development more attractive to families and add value to the Fanning and Moores Mills tracts on the whole.
In about January 2012, however, TVA notified Defendants that TVA intended to condemn an easement on the subject properties for the purpose of erecting and maintaining electric transmission lines. According to Defendants, TVA revised its plans for the location of the power line easement several times throughout 2012
It is undisputed that Defendants have not sold, improved, or developed any of the land on either the Moores Mill tract or the Fanning tract, either before or since the takings. Instead, the properties have continued to be leased year-to-year as farmland. And since their early efforts in 2007 and early 2008, Defendants have not done anything else towards actually subdividing, improving, or selling any of the land.. In particular, no lots have been staked out, and no subdivision plat has been recorded or submitted for approval by the County Planning Commission. Nor have Defendants installed any sewer, water, or utility hook ups. Defendants claim, however, that they were effectively prevented from developing or selling the land ever since becoming aware in 2012 of TVA’s intention to take an easement because Defendants were uncertain where the easement would be located. And they claim that, even after the location of the easements was fixed by the takings in January 2014, they have still been unable to proceed because, they say, until it is determined how much compensation they will receive in this litigation, they cannot perform the financial analysis required to apply to banks for the financing they will need to develop the land.
II.
A.
Under the Takings Clause of the Fifth Amendment, “private property shall not be taken for public use, without just compensation.” U.S. Const, amend. V. The instant cases revolve around the question of what amount of compensation is “just” for the Government’s condemnation of the respective power line easements taken on the Moores Mill tract and the Fanning tract. “The [Supreme] Court has explained that the underlying principle is that the dispossessed owner ‘is entitled to be put in as good a position pecuniarily as if his property had not been taken. He must be made whole but is not entitled to more.’ ” United States v. 320.0 Acres of Land, More or Less in Monroe Cnty., State of Fla.,
When the property interest taken from a parent tract is a permanent easement, as here, the proper measure of damages is the difference in between the market value of the land free of the easement and the value as encumbered, as of the date of the taking. United States for Use of TVA v. Robertson,
Market value is defined as the price that a willing buyer would pay a willing seller in cash. United States v. 480.00 Acres of Land,
However, “since a hypothetical, ‘reasonable man’ buyer will purchase land with an eye to not only its existing use but to other potential uses as well, fair market value takes into consideration ‘(t)he highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future ... to the full extent that the prospect of demand for such use affects the market value while the property is privately held.’ ” 320.0 Acres of Land,
B.
Defendants have disclosed in discovery that they intend to solicit opinions from three witnesses as it relates to highest and best use of the two tracts and their diminished value. First, Defendants have produced a report pursuant to Fed. R. Civ. P. 26(a)(2)(B) from a retained expert, Scott B. Maddox, a certified real estate appraiser. (Doc. 38-2). Maddox’s initial report is based upon an appraisal dated November 10, 2014, which opined that the just compensation for the taking is $827,000.00. (Id. at 3). In arriving at that figure, Maddox made the following loss-value determinations-and added them together:
(1)$340,000 (rounded from 5.22 acres @ $65,000 per acre) for the inability to develop a proposed “commercial corner”' lot on the southwest corner of the Moores Mill tract, where Moores Mill Road meets Steger Road (see id. at 33);
(2) $426,000 for' the inability to develop 28 proposed residential lots on the western edge of the tracts, along Moores Mill Road where the power lines abe located, based on an assumption that such lots would be sold at an average price of $20,000 each over a period of 2.25 years (id. at 39); and
(3) $61,000 for the inability to develop a 5.1-acre “buffer” area between the power lines and the first line of proposed residential development to the east. (Id, at 40).
On January 2, 2015, Maddox issued a supplemental expert report. (Doc. 38-13). Maddox acknowledged therein that he had made a miscalculation in his original report as it related to the location of the buffer relative to the easement, which resulted in an increase in the size of the buffer on the remainder from 5,1 acres to 12,74 acres. (Id. at 2). That translated to. an increase in Maddox’s opinion on the loss attributed to- the buffer from $61,000 to $153,000; and correspondingly bumped his assessment of just compensation by the same amount, from $827,000 to $919,000. (Id. at 4, 7).
Defendants also disclosed that two of their principals, Enfinger and Warren, may offer opinions on highest and best use and on damages (See Doc. 38-11 at-5). Defendants indicated that such opinions would be
based on their experience and observations as developers;- their familiarity with residential and commercial development markets in > Northern Alabama; their' -familiarity with the process through which such developments are designed, marketed, and sold; their familiarity with the subject property; and their familiarity with the purpose forwhich the subject property was acquired.
(Doc. .38-4 at 4; see also Doc. 38-11 at 5 (supplemental disclosure stating that En-finger and Warren’s opinions were “based on their familiarity with the subject parcels, their experience developing land, and their familiarity with land values.”). In their disclosures, Defendants calculated their combined damages associated with the takings on the Moores Mill tract and the Fanning tract at $1,824,533, comprising the sum of the following:
(1) a $522,000 loss (5.22 acres @ $100,000 per acre) ’ associated with the inability to develop the “commercial corner” of the Moores Mill tract;
(2) a $615,630 loss for the 28 proposed residential lots on the western edge of the tracts, at a projected sale price of $32,500 per lot, with sales spread over 2.25 years; •
(3) a loss of $254,752 as it relates to the development of 26.89 acres that would serve as a buffer area between power lines and proposed residential lots to the east; and
(4) $432,152 for’ “delays caused by the TVA,” specifically including “interest payments that [Defendants] have been required to make pending the TVA’s final decision as to the location of the transmission lines and pending [Defendants’] receipt of compensation for the damages they have suffered” (Doc. 38-11 at 7).
(See also Doc. 38-11 at 13, 15, 17, 21-22).
Enfinger also testified at his deposition about some of these calculations and related opinions about lost market value. He stated, for example, that the loss related to the inability to develop the commercial corner is as set forth above and that, in his estimation, the market value for the 28 lots on the western edge of the property is between $30,000 and $50,000 per lot. With regard to the “buffer” area to the east of the 28 hypothetical residential lots, En-finger estimated that the land was worth about $15,000 per acre. (See Doc. 38-11 at 6; Doc. 38-9, Deposition of Jeffrey Enfinger (“Enfinger Dep.”) at 148-49, 158). He further submitted that the first 200 feet from the transmission lines, comprising about 7.08 acres, have lost 100% of their value, while the next 350 feet, comprising about 19.82 acres, have lost about 50% of their value. (Id. at 159).
Like Defendants, the Government also retained a certified appraiser, Richard D. Pettey, to testify as an expert on its behalf. Pettey, however, takes a different approach than Defendants’ witnesses to calculating diminished value. Pettey produced two separate expert imports, one for the Moores Mill tract and the for the Fanning tract, but only the former appears to be included in the record thus far. (Moores Mill Case Docs. 38-14, 38-15, 38-16, and 38-17). In any event, Pettey initially examined the characteristics of the Moores Mill tract and concluded that, given present market demand, its only financially feasible use for the immediately foreseeable future is agricultural but that a purchaser would still make a bid in consideration of the land having a “long term [h]ightest and [b]est use ... for residential development.” (Doc. 38-16 at 5). Pettey then looked to five sales of area property that he deemed comparable, leading him to conclude that the Moore’s Mill tract was worth $7,500 per acre, or $3,055,950 for all 407.46 acres, before the taking. (See Doc. 38-15 at 11-30, Doc. 38-16 at 1-5). To find the post-taking diminution in value, Pettey first adjusted the value of the entire tract based upon the estimated amount required to construct two short access roads across the easement from Moores Mill Road. Petty explained that a potential purchaser would factor that cost,
III.
As stated previously, the Government has filed substantially identical motions in limine in each case seeking to exclude certain portions of Maddox’s testimony and to preclude Enfinger and Warren from giving any opinions on market value. In support, the Government contends that any opinion testimony.from Enfinger and Warren as non-retained experts is inadmissible because Defendants’ disclosures do not, the Government claims,, sufficiently set forth “a summary of the facts and opinions to which [they] are expected to testify,” as required by Fed. R. Civ. P. 26(a)(2)(C)(ii). The Government also contends that the testimony of Defendants’ experts, both retained and non-retained, is subject to exclusion under Daubert v. Merrell Dow Pharmaceuticals, Inc.,
Defendants have dispute all of the Government’s arguments. (See Doc. 41, Doc. 44). Defendants take the position that Maddox, Enfinger, and Warren are all qualified; that their proposed opinions are adequately disclosed, reliable, and admissible in their entirety; and that any purport
A. Federal Rule op Evidence 702 and Daubert
Defendants make several attacks on the admissibility of the testimony of Maddox, Énfinger’ and Warren based on Fed. R. Evid. 702 and. Daubert. Rule 7Ó2 controls the admission of expert testimony in the federal courts. It provides:
A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if:
(a) the expert’s scientific, technical, or other specialized, knowledge will help . the trier of fact to understand the evidence or to determine a fact in issue;
(b) the testimony is based on sufficient facts or data; .
(c) the testimony is the product of reliable principles and methods; and
(d) the expert has reliably applied the principles and methods to the facts of the case.
In Daubert, the Supreme Court held that' Fed. R. Evid. 702 imposes a “gatek-eeping” obligation upon a trial judge to “ensure that any and all scientific testimony ... is not only relevant, but reliable.”
In determining the admissibility of expert testimony, the court is to “engage in a rigorous three-part inquiry,” considering
whether: . (1) the expert is qualified to testify competently regarding the matters he'intends to address; (2) the methodology by which the expert reaches his conclusions is' sufficiently’ reliable as determined by the sort of inquiry mandated in Daubert-, and (3) the testimony assists the trier of fact, through the application of scientific, technical, or specialized expertise, to understand the evidence or to determine a fact in issue.
Frazier,
As to the first element, the Eleventh Circuit has recognized that “experts may be qualified in various ways. While scientific training or education may provide possible means to qualify, experience in a field may offer another path to expert status.” Frazier,
“[i]f the witness is-relying solely or primarily on experience, then the witness must explain how that experience leads to the conclusion reached, why that experience is a sufficient basis for the opinion, and how that experience is reliably applied to the facts. The trial court’s gatekeeping function requires more than simply ‘taking the expert’s word for it.’ ” If admissibility could be established merely by the ipse dixit of an admittedly qualified expert, the reliability prong.would be, for all practical purposes, subsumed by the qualification prong..
Id. (quoting Fed. R. Evid. 702 Advisory Committee Notes (2000 amends.) (emphasis in Frazier).
Turning to the second requirement, the trial judge must evaluate the reliability of expert opinion by assessing “whether the reasoning or methodology underlying the testimony is scientifically valid and' ,.. whether that reasoning or methodology properly can be applied to the facts in issue.” Id. at 1262 (quoting Daubert,
And finally, on the third requirement, the Eleventh Circuit has stated, that expert testimony must “assist the trier of fact” by shedding light on matters “that are beyond the understanding of the average lay person.” Id. (citing United States v. Rouco,
While undertaking these analyses, however, it must be recalled that “[a] district court’s gatekeeper role under Daubert ‘is not intended to supplant the adversary system or the role of the jury.’ ” Quiet Technology,
B. Applicability of Gatekeeping and Screening Requirements to the Testimony of Enfinger and Warren as Landowners
The Government’s primary argument is that the court should exclude opinions by Maddox, Enfinger, and Warren to the extent that they assign separate values for (1) the lost opportunity to develop 28 residential lots running along the easement, (2) the lost opportunity to develop a 5.22-acre “commercial corner” and (3) lost value of land needed as a “buffer” between the power ‘ lines and the nearest residential development on the remaining property. (Doc. 38 at 14). The Government contends that such opinions are all based on prospective residential and commercial development that is unsupported by market data and is otherwise overly speculative. In effect, the Government takes the position that the only valid valuation method is to determine the difference in price that a willing buyer would pay a willing seller for the entirety of each of the two tracts. Alternatively, the Government contends that, even if it might be appropriate to assume that the tracts might be divided and sold as residential lots and/or with the “commercial corner,” the opinions of Defendants’ witnesses as to the lost value of such lots and for a “buffer” are still due to excluded as overly speculative because they are not based on comparable sales or other market data and are otherwise flawed in their' methodology.
The Government concedes in its reply that it is not now contesting that Enfínger and Warren might testify as landowners as to the value of the properties. (See Doc. 44 at 10 n. 5). The Government insists, however, that Defendants are improperly using Enfínger and Warren’s status as landowners to circumvent the requirements of Rule 702 and Daubert. “Despite Defendants protestations to the contrary,” says the Government, “the gate-keeping function of Rule 702 applies to all expert testimony, including landowner testimony.” (Doe. 44 at 4) (emphasis original).
A long line of precedent establishes a general rule in this circuit that “an owner of property is competent to testify regarding its value.” Neff v. Kehoe,
It is fair to say that Defendants are claiming that the opinions of Enfinger and Warren on the value of the land are exempt from the strictures of Rule 702 and Daubert because they are owners of the property. There is no doubt that Rule 702, from’ which Daubert’s gatekeeping function springs, may apply to testimony on property valuation. See Fed. R. Evid. 702, Advisory Committee Note to 1972 Proposed Rule (“[Wjithin the scope of [Rule 702] are not only experts in the strictest sense of the word, e.g., physicians, physicists, and architects, but also the large group sometimes called “skilled” witnesses, such as bankers or landowners testifying to land values” (emphasis added); id. Advisory Committee Note to 2000 Amendments (“Whether the [expert] testimony concerns economic principles, accounting standards, property valuation or other non-scientific subjects, it should be evaluated by reference to 'the ‘knowledge and experience’ of that particular field” (quoting American College of Trial Lawyers, Standards and Procedures for Determining the Admissibility of Expert Testimony after Daubert,
Nonetheless, -contrary to the Government’s assertion, Rule 702 does not always apply to opinion testimony- by a witness as it relates to the value of his own land or property. Although not cited by Defendants, Rule 701 of the Federal Rules of Evidence permits a lay witness, i.e., a witness who is “not testifying as an expert,” also to give opinion testimony, subject to the conditions that the opinion is:
(a) rationally based on the witness’s perception;
(b) helpful to clearly understanding the witness’s testimony or to determining a fact in issue; and
(c) not based on scientific, technical, or other specialized knowledge within the scope of Rule 702.
Fed, R. Evid. -701. Rule- 701 thus authorizes “a lay witness to testify in the form of opinions or inferences drawn from her observations when testimony in that form will be helpful to the trier of fact.” Beech Aircraft Corp. v. Rainey,
Further, it is established that testimony by a witness relating the value of his own
[M]ost courts have permitted the owner or officer of a business to testify to the value or projected profits of the business, without the necessity of qualifying the witness as an accountant, appraiser, or similar expert.' See, e.g., Lightning Lube, Inc. v. Witco Corp.,4 F.3d 1153 (3d Cir.1993). Such opinion testimony is admitted not because of experience, training or specialized knowledge withih the realm of an' expert, but because of the particularized' knowledge that the witness has by virtue of his-or herposition in the business. - The amendment does not purport to change this analysis.
See also Tampa Bay Shipbuilding & Repair Co. v. Cedar Shipping Co., Ltd.,
However, Rule 701 “does not distinguish between expert and lay witnesses, but rather between expert and lay testimony.” Fed. R. Evid. 701, Advisory Committee Note to the 2000 Amendment (emphasis original). Thus, within the testimony of a single witness, one opinion may fall under Rule 701 and another under Rule 702- Id.; see also. Lebron v. Secretary of Fla. Dep’t of Children & Families,
Accordingly, that Rule 701 may authorize a witness to give a lay opinion on the value of his property does not mean that a landowner has carte blanche to espouse any opinion he pleases on the value of his land, free from the constraints of Rule 702 and Daubert. If an owner’s testimony on value is based not upon commonly understood considerations of worth flowing from his perceptions and knowledge of his property but instead upon technical or specialized knowledge more broadly, it crosses into expert testimony for purposes of Rule 702 and cannot be admitted under Rule 701(c). See James River Ins. Co.,
Further, “the owner’s qualification to testify does not change the ‘market value’ concept and permit him to substitute a ‘value to me’ standard for the accepted rule [in condemnation cases], or to establish a value based entirely upon speculation.” United States v. Sowards,
Finally, the court’s obligation in condemnation cases to screen evidence of proposed highest and best uses under 320.0 Acres of Land also may at times dovetail with the court’s gatekeeping responsibilities under Daubert and may call for exclusion of a witness’s opinion on the value of his own land because of its under
C. Disclosures under Fed. R. Civ. P. 26(a)(2)(C)
The Government first makes a procedural argument aimed at excluding any opinion testimony by Enfinger or Warren, based on Fed. R. Civ. P. 26(a)(2)(C). Under that provision, a party must supply a disclosure as it relates to non-retained expert witnesses, stating “the subject matter on which the witness is expected to present evidence under Federal Rule of Evidence 702, 703, or 705” and “a summary of the facts and opinions to which , the witness is expected to testify.” Fed. R. Civ. Pi 26(a)(2)(C). '■ Defendants - have provided disclosures that outline opinions that En-finger and Warren might be expected to give as it relates to highest and best use of the land, lost value, and other claimed damage. (See Doc. -38-4; Doc. 41-6). The Government argues generally that Defendants’ disclosures do not contain the information required by Rule 26(a)(2)(C); precluding Enfinger and Warren from giving any opinion testimony.
However, insofar as Enfinger or Warren’s testimony relative to value might qualify as lay opinion under Fed. R. Evid. 701, -Defendants need not provide a Rule 26(a)(2) expert disclosure at all. See Fisher v. Ciba Specialty Chemicals Corp.,
D. Opinions Ascribing Separate Losses for Discrete Areas of the Land
The Government broadly challenges the valuation methodology used by Enfinger, Warren, and Maddox, characterizing it as “inherently flawed”-because it assigns and aggregates distinct loss values for the 28 “residential lots, the commercial corner, and a buffer area as separate parcels.” (Doc. 38 at 13). The Government contends that this “is not a proper application of methodology” because,' the Government maintains, compensation in a partial takings'case like this one must be based on the difference in value of the entire parcel as a whole, before and after the taking. (Id. at 13-14). Defendants do not dispute that their valuation witnesses have assigned separate loss values for particular parcels within the tract. Defendants respond, however, that the Government’s insistence upon a “before-and-after” approach that examines the entire parcel only as a whole is overly rigid and not mandated by law.
“Where the property interest permanently taken is an easement, the ‘conventional’ method of valuation is the ‘before-and-after’ method, ie., ‘the difference between the value of the property before and after the Government’s easement was imposed.’ ” Otay Mesa Prop., L.P. v. United States,
It is true that Maddox, Enfinger, and Warren have assigned and aggregated individual loss values based on the premise that the takings prevent or hinder Defendants from developing or selling particular portions of the land that are on or adjacent to the TVA’s easements. The Government laments that this approach “leads to inflated values for the ‘damaged’ portion of the land and deflated values for the portion of the land unaffected by the taking.” (Doc. 44 at 8). However, provided that the aggregation of lost value for separate areas accurately reflects the diminution in value to all of the condemnee’s tract, it is unclear how such an approach is inherently unreliable or unfair. The Government cites no authority for its suggestion that a partial taking is assumed to affect the entirety of a condemnee’s tract on a uniform basis. To the contrary, such a notion seems artificial, particularly where, as here, the land taken is relatively small in area and fronts on a roadway while the remainder is sufficiently large that portions might have different characteristics relative to value and the taking might be expected to have less impact on more distant areas. Cf. United States v. 478.34 Acres of Land, Tract No. 400,
[A]U parts of an entire tract of property do not necessarily have equal value. The fair market value of property which, before the taking, was part of a larger parcel should thus be determined by considering both the value of the entire tract and the relationship of the part taken to the whole. Under some circumstances, the severed part may have a value for its highest and best use which is independent from that of the entire parcel. In other situations, the part taken may be so related to and may so contribute to the value of the entire property that its value for its highest and best use is dependent upon the value of the entire tract.... [P]arties [should be] free to present competentevidence in support of their respective theories of independent or dependent . value from a market perspective, so that the property owner may be compensation [sic] for the part taken at not less than the fair market value shown by the approach which the trier of fact deems most,persuasive.
Model Eminent Domain Code § 1105, Comment to 2002 Main Volume. ■
And for all of the Government’s arguments that Defendants’ witnesses are calculating lost value for separate parts of the land- and adding them together, the Government’s expert has functionally done the same thing. That' is, Pettey would determine just compensation for the Moores Mill tract by assigning (1) a diminution in value to the entire tract based on an estimated $60,500 cost to construct two-short access roads across the easement
D. “Lot Method” Opinions Based on Assumed Residential Subdivision
The Government contends that the opinions of Maddox, Enfinger, and Warren are inadmissible to the extent that they use the “lot method,” by which an undivided tract of land is valued based upon how it might be subdivided and sold in the future as smaller parcels, or “lots.”
At the outset, to the extent that Defendants assert that Enfinger and Warren are entitled in their capacity as landowners to give opinions based on the lot method without regard to Rule 702 or Daubert, the ■ court disagrees. Enfinger and Warren’s opinions calculating a loss for the 28 residential lots are materially indistinguishable, methodologically speaking, from those of Defendants’ retained expert appraiser, Maddox. That is, they all rely upon relatively sophisticated discounted cash flow formulas that incorporate assumptions about lot size and price, the rate of -future sales given' projected market demand, .the type and amount of cpsts associated with maintaining and selling the lots, and discounting the net amount to present value. (Compare, Doc. 38-2 at 34-3,9 with Doc. 38-11 at 13, 15). These are not matters familiar to laymen when it-comes to valuing an undeveloped piece of land.- To the- contrary,- just as Maddox relies upon his expertise as an appraiser in making these calculations, En-finger and Warren .lean upon specialized knowledge ■ obtained through their education and experience as real estate developers. In fact, Defendants urge that En-finger and Warren are “independently qualified” as experts based on just that “vast experience” as developers to give the identical opinions they would give as landowners. (Doc. 44 at 15; see also id. at 18-19). The court thus concludes that En-finger and Warren’s testimony based on their lot method calculations are, like Maddox’s, expert opinions under Rule 702. Therefore, these opinions cannot be admitted under Rule 701 and are subject to Daubert. See James River Ins. Co.,
As the Government emphasizes, “[c]ourts have consistently recog
“Perhaps no warning,” however, “has been more repeated than that the determination of value cannot be reduced to inexorable rules.” United States v. Toronto, Hamilton & Buffalo Nav. Co.,
[a]rtificial rules of" evidence which exclude from the consideration of the jurors matters which men consider in their everyday affairs hinder rather than help them at arriving at a just result. In no branch of the law is it more important to remember this, than in cases involving the valuation of property, where ‘at best, evidence of value is largely a matter of opinion’.
68.94 Acres of Land,
While, neither the Supreme Court nor our court of appeals appears to have directly addressed the use of the lot method to value land, courts generally acknowledge that it may be appropriate in some cases. See United States v. 100 Acres of Land, More or Less, in Marin Cnty., State of Cal.,
However, federal courts have often been reluctant to allow the lot method to be used to establish market value where the land has not actually been subdivided, and there has been little or no material preparation or development, rendering projections on subdivision and future sales more speculative, and sufficient sales of comparable undeveloped land exist. See 99.66 Acres of Land,
Determining the market value presents little problem where the land has actually been subdivided. In that case, there being little speculation as to use, the lots may be valued individually. Where the land is pure raw land, with no improvements at all having been made, but there was a showing of adaptability for subdivision purposes, valuation will generally be on a whole subdivision basis. The real problem arises where the condition of the land is in neither of these two extreme states. When the land is at some mid point between raw land with no action toward subdivision taken, and a realized or nearly realized subdivision, the cases are in conflict and no clear rules emerge. The cases are decided on their particular facts, giving weight to the surrounding circumstances involved in the particular case.
4 Nichols on Eminent Domain § 12B.14[1], at 12B-159 (quoted in Algonquin Gas Trans. Co.,
While Defendants maintain that their valuation witnesses are not required to use comparable sales, Defendants notably do not claim that comparable sales do not exist. To the contrary, the experts on both sides have identified ostensibly comparable sales for purposes of estimating the per-acre value of the land immediately before the takings. The Government’s expert, Pettey, identified five sales as comparable, noting that those properties, like the subject, were currently being used for agriculture but would be viewed by a purchaser as having long-term potential for residential development. See Doc. 38-15 at 11-30, Doc. 38-16 at 1-5). From those sales, Pettey opines that the Moores Mill property had a value of $7,500 per acre before the taking. {Id.) Likewise, Defendants’ expert, Maddox, points in his report to one of Pettey’s cited sales and seven others
Also counseling against allowing the lot method is that fact that the assumptions underlying the witnesses’ lot method calculations'are largely speculative given that Defendants have not actually subdivided, improved, or sold any of the land, including areas of the remainders that Defendants do not specifically claim have been materially damaged by the takings. When Defendants acquired the properties in 2007 they certainly had in mind transforming it into a comprehensive residential subdivision, and -with a recently-booming real estate market, the prospects for such development appeared bright. In the next year or so, Defendants proceeded with some preliminary planning that resulted in a number of proposed layouts, analyses, and projections, and they entered into a sewer service agreement. Unfortunately for Defendants, the-recession and.the burst .of the housing bubble in 2008 brought their plans to.a screeching halt. No lots were ever staked out. No subdivision plat was ever recorded in the probate court or submitted to the County Planning Commission for approval, as would be required to sell any lots. No sewer, water, or electricity connections or other improvements ■ exist. No payments were ever made under the sewer service agreement, and the provider has since gone out of business. Enfinger also recounts having discussions in 2011 and 2012 with three different homebuilding companies about possibly purchasing multiple residential lots, but those talks admittedly went nowhere. (Enfinger Dep. at 104-08). “Even when the landowner faced with condemnation of his property had taken action aimed at subdividing the- condemned land, such as mapping the planned subdivision or contracting to install utilities, where such action has fallen short of altering the physical face of the land, most of the' cases collected have held that evidence of a proposed or possible subdivision was inadmissible when offered to establish the number or value of each of the hypothetical lots.” J.D. Perovich, Annotation, Admissibility of Evidence of Proposed or Possible Subdivision or Platting of Condemned Land on Issue of Value in Eminent Domain Proceedings,
Pointing to the land swap with the BOE in late 2011 that facilitated the construction of a grammar school next to the Fanning tract, Defendants emphasize that they continued throughout .the recession to plan to develop or sell the properties as lots in a residential subdivision prior to the takings. Defendants maintain that, given those plans, and that their witnesses have factored costs into their calculations, the lot method is permissible to value the property. However, use of the lot method
Defendants next maintain that the lot method is appropriate because, in addition to their plans, the evidence also supports that the highest and best use of the tracts includes future potential as a residential subdivision. The court assumes that the evidence does lend itself to that inference. Indeed, while the while the Government seems to argue that the prospects for residential development in the near future are too remote to support that such is actually a highest and best use, the record shows that the contrary proposition is all but undisputed. Highest and best use is generally defined as the use that is (1) physically possible, (2) legally permissible, (3) financially feasible, and (4) results in the maximum profit. See Lost Tree Vill. Corp.,
But perhaps more to the point, to say that a given use is a highest and best one simply connotes that a reasonable purchaser on the date of the taking would have considered that use sufficiently available and likely in the future as to be a material consideration in deciding how much to pay for the land. See Whitehouse Hotel Ltd. P’ship v. CIR,
Nonetheless, a “distinction is to be observed between what land may be worth in the future and what it is now worth in view of the future.” Slattery Co.,
E. Evidence and Opinions Related to the “Commercial Corner”
Defendants erriphasize that the easement on the Moores Mill tract runs directly over‘a proposed 5.22-acre “commercial corner” lot by the intersection of Moores Mill Road and Steger Road. Maddox, En-finger, and Warren maintain that the taking of the easement has prevented the development or sale of a lot for that purpose and has thereby diminished the value of the Moores Mill tract by the amount that Defendants say they would have received in a sale of the individual lot. Maddox opines that such a transaction would have yielded $65,000 per acre, or about $340,000, while the Enfinger arid Warren claim it would have fetched $100,000 per acre, or $522,000. The Government moves to exclude these opinions, contending thát they are founded upon unsupported assumptions regarding both highest and best use and speculation that an individual 5.22-acre lot would be subdivided and sold at a certain price.
In support of its position, the Government first raises a sub-argument related to the .admissibility of certain testimony that Defendants would use in aid of their commercial corner opinions. The Government contends that Defendants’ witnesses’ “primary reason” for valuing the 5.22 acres based on commercial use “is a single ‘inquiry’ or ‘overture’ received by one of the landowners from an undisclosed retail developer.” (Doc. 38 at 24 (footnote omitted)). In particular, Warren related at his deposition that, sometime after the land swap with the BOE in late 2011, he had several conversations with a certain real estate broker he knew who expressed interest on behalf of a client with regard to purchasing land at the southwest-corner of the Moores Mill tract.' (See Doc. 38-12, Deposition of Bland • Warren (‘Warren Dep.”), at 100-115). Warren stated that the broker said that his client was “very interested and that it would be a neighborhood retail development.” (Id. at 107). Warren admits that the broker never identified who his client might have been, Warren says, however, that based on his “reading between the lines,” considering the “nature of’ the broker’s inquiries, and having “looked [the broker] in the eye,” he suspected that the potential purchaser was a local commercial developer that.the broker had represented on other occasions and who had developed numerous Dollar General discount retail stores. (Id., at 104-06). Warren further admits that the broker never communicated any kind of formal offer (id. at 112), but he -indicated that a price of “a hundred thousand dollars an acre — would not prohibit the transaction from happening.” (Id. at 107); Warren further recounts that when he notified the broker that TVA had advised Defendants of an impending plan to take a power line.easement, discussions with the broker ceased. (Warren Dep. at 108). The Government argues that Warren’s above testimony is akin to evidence of an unaccepted-offér and is inadmissible to show the land’s value or that its highest and best use included commercial retail development. (Doc. 38 at 24-25). As a result, the Government contends, that the opinions offered by Enfinger, Warren, and Maddox on the commercial corner are due to be excluded because they are allegedly based on Warren’s account of the broker’s inquiry. (Id.)
At first blush, “[o]ffers made by buyers to owners would appear to be [competent] to show the value was at least equal to the offers.” Atlantic Coast Line
‘It is, at most, a species of indirect evidence of the opinion of the person making such offer as to the value of the land. He may have so slight a knowledge on the subject as to render his opinion of no value, and inadmissible for that reason. He may have wanted the land for some particular purpose disconnected from its value. Pure speculation may have induced it, a willingness to take chances that some new use of the land might, in the end, prove profitable. There is no opportunity to cross-examine the person making the offer, to show these various facts. Again, it is of a nature • entirely too uncertain, shadowy, and speculative to form any solid foundation for determining the value of the land...
University Computing Co.,
The Government contends that Warren’s testimony about receiving an inquiry from the broker is inadmissible to show value under Sharp and its progeny. Defendants respond by noting that Sharp suggests that an unaccepted offer may be admissible to prove value when it is shown to have been “an honest offer, made by an individual capable of forming a fair and intelligent judgment, really desirous of purchasing, entirely able to do so, and to give the amount of money mentioned in the offer.”
Defendants fall back argument is that Warren’s testimony is admissible because it is not offered to prove value per se but, rather, only to support that demand existed for .part of the land as a future commercial retail space, thereby tending to show that was a highest and best use. The Government- argues that such is a distinction without a difference. Strictly speaking, Warren’s testimony about what the broker told him is hearsay regardless of whether it is offered to establish the bona fides of either the amount of the offer or the interest of the broker or his alleged principal regarding a particular purpose for the land. See Emmco Ins. Co.,
Further, even absent the broker’s inquiry, the court concludes that it may be permissible, for Defendants’ witnesses to testify to opinions that the highest and best use of the comer intersection of the Moores Mill tract included commercial retail development. Enfinger and Warren have experience identifying, buying and selling, and developing commercial real estate in the area, and Maddox has experience appraising such property. They have generally offered that, despite the lack of commercial development in the immediate area beyond a daycare and a gas station, the corner of the Moores Mill tract is an attractive site for future commercial retail development because: (1) there are existing subdivisions and residential developments nearby; (2) intersections tend to be more favorable locations for commercial development; (3) the southwest corner of the Moores Mill property is on a ¿county road at an intersection between the newly-built intermediate school next to the Fanning tract and another nearly elementary school and between those schools and existing residential developments; (4) there has been an increase in traffic at the corner of the Moores Mill tract due to the above conditions, which is the primary driver of demand for commercial development; (5) there are no zoning or other significant legal impediments; and (6) there is substantial potential for residential development of the subject tracts themselves in the reasonably near future, which would further increase local traffic.
The Government contends that such reasoning is unduly speculative because Enfinger has suggested that residential development in an area tends to precede commercial development (see En-finger Dep. at 194-95) and, the Government maintains, even “a market for residential development does not [yet] exist, [so] Defendants should not be compensated for a use that will not come to fruition without it.” (Doc. 38 at 26). However, Enfinger’s testimony on the conditions for and progression of different types of development does not purport, to be nearly so definitive as the Government would imply. Further, as discussed previously, even the Government’s expert acknowledges that a hypothetical purchaser at the time of the takings would have priced the Moores Mill and Fanning tracts in light of their potential for future residential development. The Government also complains that Defendants’ witnesses have not conducted any traffic study or relied on county traffic count records. However, such alleged in
With all of that being said, the court agrees with the Government that the specific opinions of Defendants’ witnesses that would award just compensation based on a discrete loss for the commercial corner are not admissible. Again, Maddox proposes that Defendants are entitled to damages in the amount of approximately $340,000 based on an assumption that a 5.22-acre commercial lot would have sold for that sum if priced at $65,000 per acre. Enfinger and Warren use the identical methodology, but they claim a sale would have yielded $522,000, based on their opinion that the property is worth $100,000 per acre for a commercial use. At a fundamental level, these opinions are unreliable and inadmissible for the same reasons cited for the exclusion of the opinions that would value the property just to 'the north on the easement as if it were subdivided and' sold as 28 individual residential lots. Indeed, the approach taken by these witnesses in assigning damages for the commercial corner is but a variation on the lot method, whereby they assume that a 5.22-acre, “29th lot” earmarked for commercial development would have been subdivided and sold. Again, it is one thing to consider the value of .the land taken as if it were part of a larger tract that is adaptable to be subdivided in the future into residential and commercial lots, it is another thing to value the land as if that has already occurred. Here, the property is raw, unimproved land that has not been subdivided, and there is insufficient evidence to support that a 5.22-acre commercial lot was going to be subdivided or sold at the time of the takings. Because specific valuation opinions of these witnesses as to damages for the commercial corner are too speculative, they due to be excluded.
F. Opinions on Damages for a “Buffer”
■ The1 Government also contests the admissibility of opinion testimony by Maddox, Enfinger, and Warren as it relates to lost value to the property for a “buffer area” between the power lines on the easement and any prospective residential development to the bast. In particular,' Maddox maintains that “there is some stigma associated with power-lines”' and that “it is widely believed that the presence of power-lines will reduce the value of residential lots that are encumbered, or even bordered by, when they are in view.” (Doc. 38-13 at 6-7). To cure this, Maddox proposes that “providing a buffer between the power-lines-and the'rear of any potential residential lots of about 225 feet would significantly reduce the diminution of value
Enfinger and Warren would likewise offer opinions on a buffer and corresponding loss values. (See Doc. 38-11 at 6-8, 13, 17). Similar to Maddox, they claim that the land for the first 200 feet to the east of the power line easement has lost all pre-taking value, though they assert such to have been $15,000 per acre. However, to prevent double counting for the loss for the area they earmarked for the 28 hypothetical residential lots, Enfinger and Warren would calculate the loss for this buffer based on an assumption that it is 125 feet wide, rather than 200 feet, and 2,466 feet long. As such, it would comprise an area of 7.08 acres and diminish the value of the land, these witnesses contend, in the amount of $106,147. Enfinger and Warren further claim, however, that the next 350 feet to the east of that “first” buffer comprise a “second” buffer covering 19.81 acres that has also lost 50% of its value, causing a loss of another $148,605. Thus, Enfinger and Warren would opine that the two buffers stemming from the power lines would result in a combined loss to the value of the land in the sum of $254,752.
It is well established that a landowner may recover severance damages for a diminution in market value of the remaining parcel stemming from the taking of an easement to construct electric power transmission lines and supports. See United States ex rel. TVA v. Robertson,
The Government does not appear to dispute these broader legal propositions. Rather, the Government’s argument is that the opinions of Maddox, Enfinger, and Warren as they relate to the need for a buffer area, the size thereof, and any purported diminution of value are due to be excluded because they are not based on any market data and are otherwise too speculative and unreliable.
The court first, addresses Maddox’s testimony. -He posits that “it is common knowledge” and “widely believed” in the real estate business that the presence
Maddox’s opinions constitute expert testimony, so they are subject to Fed. R. Evid. 702 and Daubert. Maddox’s cited general observations about the market and his discussions with developers are not an overwhelming foundation for his assertion that power lines reduce the market value of property suitable for residential development. Nonetheless, in light of the fact that courts have for decades acknowledged the seemingly intuitive premise that power lines may diminish the value of residential land in more rural areas, the court will allow Maddox to testify to the existence of such a stigma and that it negatively impacts market values on some general level.
There is a distinction, however, between evidence that a stigma affects market value generally and evidence that seeks to quantify that diminution, especially in a particular case. See Bradley v. Armstrong Rubber Co.,
Turning to Enfínger and Warren, their opinions on diminished value for a buffer are similar in many respects to those of Maddox. As material here, the opinions of the former two differ in substance from those of the latter only in that Maddox claims that all land within 225 feet of the eastern boundary of the easement has no market value while Enfínger and Warren say that is true for land up to 200 feet, but they further claim that the market value for the next 350 feet is also diminished by one-half.
First, the only basis that Enfinger expounds for his buffer opinions is his experience as a developer, specifically as it relates to McMullen Cove, a large, gated community located about 10 miles east of downtown Huntsville. (See Enfinger Dep. at 157-59, 211-12, 229-256). When Enfmger’s group purchased the land for McMullen Cove, it was subject to a 195-foot-wide TVA transmission line easement running through the middle of it
By contrast, though, nothing Enfinger recounts from his experience reasonably supports his opinions that residential land within 200 feet of a transmission line has no market value or that the land for the next 350 feet has lost half its market value. For example, Enfinger now claims that the first 200 feet from a power line easement “can’t be used for anything but ... an extra.big back yard” (Enfinger Dep. at 158) or perhaps “green space” that “you’re not going to sell ... to anybody.” (Id. at
Nonetheless, Enfinger insists that his “experience [at McMullen Cove] solidifies, not. contradicts, [Defendants’] position at Moores Mill [and Fanning].” (Enfinger Dep. at 254). In trying to make that case, Enfinger again claims that the lots on the easement at McMullen Cove sold slower and for less than did lots, not on the easement. He further adds that although his group may have sold some lots on the easement and others not on the easement to builders for .about the same prices, some builders who purchased lots on the easement later had difficulty selling them at retail, to the point that two builders En-finger knew “went broke.” (Id. at 241, 251), As a result, he contends that the initial sales tp builders are not necessarily “a completely accurate reflection of the market.” (Id. at 251). Ultimately, he says that the slower absorption for lots on the easement at McMullen Cove demonstrates that their buffering efforts there were “insufficient.” (Id. at 256). In hindsight, Enfinger maintains, they “would have planned even more puffers than [they] did,” including, he suggests, one of at least 200 feet, like Defendants now propose for the subject properties. (Id. at 254-56).
None of these arguments, however, reasonably «support E.nfingers opinions related to the existence of the 200-foot or 550-foot buffers or the diminished market value he associates with each. It must be kept in mind that the issue as framed is whether and to what extent the market value of the
But even assuming his claims about slower absorption are credited, they still fail on their face to support that power lines render land within 200 feet of no market value or land on the next 350 feet diminished by half, either at McMullen Cove or as it might relate to the subject properties. That is, there is no dispute that lots adjacent to the easement at McMullen Cove were within 200 feet of its boundary, with the area of nearly the entirety of each lot in some subdivisions being within that proximity. There is also not question that the lots on the easement admittedly all eventually sold for substantial sums in transactions that are not suggested to have been anything other than voluntary and arms-length. And whether or not those sales of lots on the easement might have been “slower” and/or for some unspecified amount “less” they flatly contradict that the land within 200 feet of the easement at McMullen Cove had no material market value. Likewise, Enfinger’s vague assertions that an unspecified number of lots bordering on the easement at McMullen Cove took some unstated period of extra time to sell and/or sold for some unidentified amount less plainly does not reasonably support that.the land between 200 feet and 550 feet of the easement was diminished in value by half.
Enfinger also ‘avers that there were “compensating factors” at McMullen Cove that allowed them to ameliorate the adverse effects of that easement, including that when the lots were marketed prior to the collapse of the real estate' market, financing was freely available and there was, he says, a strong demand for the attractive “amenities” of an upscale community. (See 100, 229, 250-251). He also hints that such conditions would not be present or as favorable at Moores Mill and Fanning. But even if that is so, all it could logically imply at best is that the lot sales showing value on land adjacent to the easement at McMullen Cove do not necessarily undercut Enfinger’s opinion that the land within 200 feet of the easement at Moores Mill and Fanning has no material market value or that the next 350 feet lost half their value; it still would not affirmatively support either proposition. In the end, Enfinger still has not pointed to even a single instance or example from his experience in which the market value of land appears to have been impacted by its proximity to a transmission line easement in anything like the way he now opines. As a result, the court concludes that Enfinger’s opinions on the 200-foot and 550-foot buffers lack sufficient foundation, are unreliable, and are due to be excluded.
• Finally, Warren’s opinions are the same in substance as Enfinger’s and they rest on similar footing. Warren acknowledges that he also has not looked at any sales
A. The TVA power lines will certainly be visible up to 350 feet and really beyond 350 feet. This is 350 feet that, as Mr. Enfinger described it and I will do my best here as well, is that is — basically takes in what — where—not saying that you couldn’t develop it, but it would be impacted.
And so when you create that 350 foot buffer, it’s either going to take more— you may get the same price, but it will take a lot longer. So if you have a longer holding period, your value is diminished on land because you’re going to make less, okay. Or you’re going to get a lesser price, okay. Those are the two components.
But if you had that 350 and it is developed, when you have homes and other things, that does provide, in addition to just the 350 feet, that buffer is— that helps diminish the impact of the TVA line beyond that. And that’s what we feel is the area that would be impacted.
Q. Have you done any market analysis to see the impact on values of subdivision lots that have sold within 550 feet of a TVA transmission [line]?
A. No, we have not. And that’s not our we approach it. We approach it by it has a visional impact and our buyers are going to go out there and see it. So it’s tangible and we know that they’re going to have an adverse reaction to it. And so 350 feet gives us — that is basically the width that you can put another street in and put lots on that. So we know for sure they’re going to be impacted by it. They’re going to see it. It’s going to impact those lots.
(Warren Dep. at 179-81).
And while Warren is ostensibly relying upon his experience as a real estate developer for such assertions, he does not offer any specifics or examples from his experience to support them. To the contrary, like Enfinger, when Warren was asked at his deposition about his involvement in developing property by power lines, his testimony tended, if anything, to undercut his opinions that land within 200 feet of the easement has no value or that the half of the value of the next 350 feet has also been lost. First, Warren admits that he has sold property within 200 feet of power lines for commercial development out of his land in Madison. (Warren Dep. at 168-69). As to his experience with resi
When such facts were pointed out to Warren, he did not specifically dispute them but instead sought to dismiss their significance as it .relates to Defendants’ buffer analysis for the Moores Mill and Fanning properties. First, Warren asserted that, Up to the time he divested his interest in Legacy Preserve in about 2010, the project had not been profitable, which he believed was “in large part due to the TVA easement.” (Warren Dep. at 170). In support, he stated that some of the slowest sales at Legacy Preserve were for lots on the easement. (Id. at 175-76). Second, he claimed that the power lines are generally less visible at Legacy Preserve than' they would be at Moores Mill and Fanning because they have “no vegetation” and “very mild elevation changes,” while Legacy Preserve was “heavily, heavily wooded” and “very rolling to hilly to some steep grade in parts of it.” (Id. at 177-78).
While Warren’s ' observations from his experience at Legacy Preserve can support his opinion that power lines have some negative impact on the market value of nearby residential property generally, they do not support his opinions on the 200-foot and 550-foot buffers at Moores Mill and Fanning. For one thing, Warren’s claim that the power lines were the cause of a lack of profitability more broadly at Legacy Preserve is questionable. He admits that the lots there first became available in July 2006, not long before the recession hit and the real estate continued to list for at íeast the next several years. (Warren Dep. at 173-75). He also recognizes that at least 10 of the lots there, although not within even 550 feet of the easement, have continued to be tough to sell because they were on a steep slope. (Id. at 175-76). And with respect to Warren’s .assertion that lots on the easement sold more slowly, data in Pettey’s expert report suggests that’ those lots sold at about the same pace and price as similar
Based on the foregoing, the court concludes that the Government’s motions in limine are due to be denied to the extent they seek to preclude Maddox, Enfinger, and Warren from giving testimony that a stigma associated with electric transmission lines negatively affects market value of nearby land on some level. At the same time, the Government’s motions are due to be granted as it relates to the more specific opinions of these witnesses to the effect that the land within either 200 or 225 feet of the easement has lost all of its pre-taking market value or that the land between 200 and 550 feet has lost half of its pre-taking market value.
G. Loan Interest Payments
The final issue for consideration posed by the Goverment’s motions in limine concerns proposed testimony by Enfinger and Warren to the effect that Defendants are entitled to recover damages “for interest payments that they have been required to make pending the TVA’s final decision as to the location of the transmission lines and pending [Defendants’] receipt of compensation for the damages they have suffered.” (Doc. -38 — 11 at 7; see also Enfinger Dep. at 160-63; Warren Dep. at 215-16). Defendants’ disclosures peg those interest payments at $432,152 (id. at 13), an amount that has presumably increased as this litigation has continued. The Government argues that such an item of damage is not recoverable in a condemnation action, so neither Enfinger, Warren, nor any other defense witness should be permitted to testify about it. (Doc. 38 at 30-31). The court agrees with- the Government.
Defendants fail to cite any authority to support their, argument that they might recover for additional interest payments on their loans. (See Doc. 41 at 57). Defendants .claim that they “are not seeking -to recover those payments as a development expense” but rather “because they were directly caused by the TVA’s actions.” (Id.) This argument, however, is a non-sequitur. In an eminent domain action, the landowner is entitled to compensation for the reduced market value of his land, as reflected by what a willing buyer would pay in cash to a willing seller. “Considerations that may not reasonably
Defendants fail to explain how their additional interest payments amount to anything; other than consequential damages that'are not recoverable in an eminent domain action. As one district court has explained,
costs ... such as ... interest and closing expenses on the landowner’s loan to acquire the property, do not appear to have any connection to a willing buyer’s estimate of the price he would -pay for the property. The contribution by these costs to the property’s value is speculative. To the extent the inclusion of such costs in the valuation is an attempt , to collect - reimbursement for Defendant’s prior investment in the property, the costs are impermissible, as the Fifth Amendment does not guarantee the landowner ■ a -return on his investment. [United States ex rel. & for Use of TVA v. Powelson,319 U.S. 266 , 285,63 S.Ct. 1047 ,87 L.Ed. 1390 (1943)].
United States v. 15,478 Square Feet of Land, more or less, situate in the City of Norfolk, VA,
IV.
The Government’s motions in limine (Doc. 37; Fanning Case Doc. -41) are GRANTED IN PART AND DENIED IN PART as set forth above. To summarize, the Government’s motions in limine are GRANTED as it relates to the exclusion of the following:
(1) opinions by Maddox, Enfinger, and Warren that use the “lot method” to calculate lost value, including that value the land on and adjacent to the easement as if it has been subdivided and sold as 28 individual residential lots;
(2) an opinion by Maddox that would calculate lost value for the commercial corner based on an . approach assumingthat a 5.22-acre lot would have been subdivided and sold for approximately $340,000;
(3) opinions by Enfínger and Warren that would similarly calculate lost value for the commercial corner based on an assumption that 5.22-acre a lot would have been subdivided and sold for approximately $522,000;
(4) testimony by Warren to the effect that a broker representing an anonymous principal, that Warren suspected to be a developer that frequently worked with Dollar General discount stores, had indicated a willingness to pay $100,000 an acre for some amount of property at the southwest corner of the Moores Mill tract;
(5) opinions by Maddox that, because of the presence of the power lines, the land within 225 feet of the easement has no market value;
(6) opinions by Enfínger and Warren that the land within 200 feet of the easement has no market value and that land between 200 feet and 550 feet has lost half of its market value; and
(7) opinions or evidence related to interest payments that Defendants have made on their loans to acquire the subject properties, on the theory that Defendants might recover such payments as an element of just compensation.
The Government’s motions are DENIED in all other respects, including as it relates specifically to the following arguments:
(1) that all opinions by Enfínger and Warren are inadmissible based on an alleged violation of Fed. R. Civ. P. 26(a)(2)(B);
(2) that valuation opinions by Maddox, Enfínger, and Warren are inadmissible because they consider damage to separate sections or areas of the tracts;
(3) that opinions by Maddox, Enfínger, and Warren that the highest and best use of the subject properties includes residential subdivision are inadmissible;
(4) that opinions by Maddox, Enfínger, and Warren that the highest and best use of the southwest corner of the Moores Mill tract includes retail commercial development are inadmissible;
(5) that opinions by Maddox, Enfínger, and Warren that the presence of electric transmission lines negatively impact the market value of the subject tracts generally are inadmissible; and
(5) that evidence related to the Development Agreement, including opinions considering it in determining fair market value, are inadmissible.
It is so ORDERED, this 21st day of October, 2015.
Notes
. Citations to "Doc(s) —” are to the document numbers of the pleadings, motions, and other materials in the designated court file in the Moores Mill Case, as compiled and numbered by the Clerk on the docket sheet in the court’s Case Management/Electronic Case Files (CM/ECF) system!' Citations to “Fanning Case Doc(s) —” are to the document numbers of. the materials in the Fanning Case. Pinpoint citations to deposition testimony is the page of the transcript. Unless otherwise noted, pinpoint citations for all other documents are to the page of the electronically filed document, which may not correspond to the pagination on the original "hard copy.”
. Because the Government’s motions in li-mine in these consolidated case are identical or substantially so, the court’s citations to the parties’ motions and the associated briefs and evidence will be only to the relevant document in the Moores Mill Casé, with the understanding that corresponding material has also been filed in the Fanning Case.
. The decisions of the United States Court of Appeals for the Fifth Circuit handed down before October 1, 1981 are binding in the Eleventh Circuit. Bonner v. City of Prichard,
. The term “uneconomic remnant" generally means property that remains after a taking that is of such shape or size as to be of no practical value to its owner. See 2A Nichols on Eminent Domain § 7.25(1); 49 C.F.R. § 24.2(27).
. Pettey adjusted for the cost to build these two access points by reducing the per-acre value of the entire Moores Mill tract by 2%, from from $7,500 to $7,350. (Doc. 38-16 at 12, 19-20). However, such calculation seems simply to have been a means by which to spread the $60,500 cost over the 400-or-so acres of the tract. That'is, it appears' that, for Pettey, what mattered was the amount of the cost item and that his subsequent per-acre adjustment was driven simply by the size of the tract. Accordingly, for example, if the Moores Mill tract were about 200 acres in size instead of about 400, Pettey still would have factored in the same cost and would have thus deemed each acre to have been worth $300 less rather than $150 less.
. Pettey’s analysis of whether power lines on the easement might diminish the remainder also recognized that any such damage would be incurred disproportionately on the land nearest the easement. While Pettey ultimately rejected that power lines devalue the remainder, his analysis clearly presumed that if any damage would be felt, it would be principally, if not exclusively, on land that might be .used for future residential lots that would back up .to the eastern, border of easement. (See Doc. 38-16 at 22-29, Doc. 38-17 at 1-21).
. The lot method is also known by a host of other names, including the “subdivision approach,” the “development approach,” the "cost of the development method,” the "developer’s residual approach,” the."anticipated , use method”, and the "developer’s absorption method.” See 99.66 Acres of Land,
. Maddox’s report actually identifies nine properties for purposes of comparison. (Doc. 38-2 at 32). However, the price for one of those was merely an offered listing, not a sale. (Maddox Dep. at 138).
. Maddox also prepared a separate appraisal on the Moores Mill property in 2012 (see Docs. 38-5, 38-6, 38-7), in which he also used seven property sales as comparables. (Doc. 38-6 at 13-22; Doc. 38-7 at 1-12).
. The Government has moved to exclude opinions by Maddox, Warren, and Enfinger to the effect that the Development Agreement increases the value of the properties or informs their highest and best use. (Doc. 38 at 31-33). The Government emphasizes that the Development Agreement is merely a purchase contract between MMC and third parties who previously owned the Moore’s Mill tract and that, as such, it is “legally irrelevant to the just compensation determination.” (Id. at 32). The court agrees that a purchaser from Defendants would not be bound by the Development Agreement and that MMC’s contract rights therein are not compensable under the Takings Clause. See United States v. 1.604 Acres of Land, More or Less, Situate in City of Norfolk, Va.,
. That the land’s highest and best use includes the potential for residential development also underlies Pettey’s opinion about lost value to the Moores Mill tract as it relates to the cost of constructing two access points across the easement, which Pettey believes a purchaser would view as necessary for future residential development. (Doc. 38-16 at 12, 19-20). Likewise, a presumption of a highest and best residential use also underlies Pettey’s analysis of the potential diminution in value as it would relate to future residential lots backing up to power lines on the easement. (Doc. 38-16 at 22-29, Doc. 38-17 at 1-21).
. Further, even assuming the viability of the lot method and its application, to the com- . mercial corner, another problem exists with these opinions. Unlike with the sales of the 28 hypothetical residential lots, the opinions of Defendants’ witnesses on the commercial corner calculate lost value based upon a projected gross sale price of the lot, without deducting projected costs, such as for dividing, surveying or other preparation of the raw land, marketing, or-closing commissions and fees. As a consequence, these opinions, as stated, would not be reliable because they do not reflect the purported net loss attributable to an inability to sell the commercial corner. See 47.3096 Acres,
. The court notes that the buffer-related opinions of Maddox on the one hand and those of Enfínger and Warren on the other also differ in that Maddox estimates the pre-taking value of the land to the east of the easements to be $12,000 per acre while En-finger and Maddox lay that figure at $15,000 per acre. However, the Government's arguments aimed at excluding the opinions on a buffer are not based on any ostensible unreliability of estimates of pre-taking value.
. The easement at McMullen Cove was thus almost twice as wide as the 100-foot easements on the Moores Mill and Fanning tracts. The transmission line support structures at McMullen Cove also appear somewhat larger than those on the subject properties. (See Enfinger Dep. at 238; Doc. 38-2 at 26-27; Doc. 38-17 at 19-20).
. The easement at Legacy Preserve would appear to be at least as wide as, if not substantially wider than, both the 195-foot ease-, ment at McMullen Cove and the 100-foot easements on the Moores Mill and Fanning tracts. (See Doc. 38-16; Doc. 38-17 at 3). ; The easement at Legacy Preserve also has two parallel sets of- transmission lines supported by two sets of towers adjacent to each other (see Doc. 38-17 at 3, 16, 17), while the easement at McMullen Cove has only one set of lines and towers (see Doc. 38-17 at 8, 13, 19, 20).