Davenport, Karl Bernard v. The State of Texas--Appeal from 177th District Court of Harris County

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Laws-info.com » Cases » Texas » 14th District Court of Appeals » 2002 » Davenport, Karl Bernard v. The State of Texas--Appeal from 177th District Court of Harris County

State: Texas

Court: Texas Northern District Court

Docket No: 14-02-01185-CR

Case Date: 12/05/2002

Plaintiff: Davenport, Karl Bernard

Defendant: The State of Texas--Appeal from 177th District Court of Harris County

Preview:Southwestern Bell Telephone Company v. Radler Pavilion Limited Partnership, A Limited Texas Partnership--Appeal from Co Civil Ct at Law No 4 of Harris County
In The Court of Appeals For The First District of Texas ____________

NO. 01-00-00008-CV ____________

SOUTHWESTERN BELL TELEPHONE COMPANY, Appellant

V.

RADLER PAVILION LIMITED PARTNERSHIP, Appellee

On Appeal from the County Civil Court No. 4 Harris County, Texas Trial Court Cause No. 670,013

OPINION This appeal challenges an eminent domain award for property condemned for communication services. Southwestern Bell's offer and the award from the special commissioners were $37,642. The trial court awarded $538,234.38. We reverse and remand.

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Background On October 9, 1996, appellant, Southwestern Bell Telephone Company (Southwestern Bell), acquired two easements located on a property owned by appellee, Radler Pavilion Limited Partnership (Radler). The property is improved with a 270,000 square-foot multi-tenant retail shopping center known as the Pavilion on Post Oak Boulevard (Property). One easement consists of a 24-foot by 52-foot site, encompassing 1,248 square feet, in the northwest corner of the property. Appellant constructed a remote terminal facility to be used for telephone, telegraph, and communication services on this easement. The second easement consists of access to the facility which allows personnel to cross the property to and from the remote terminal site. The main issue at trial was the market value of the easements. After hearing experts from both sides, the trial court found in favor of Radler and awarded $318,234.38 for easement rights and $220,000 for damages to the remainder of the property. In its findings of facts, the trial court found: (1) The market value of the Tract 1 easement as of the date of taking was $46,800.

(2) The market value of the Tract 2 easement as of the date of taking was $271,434.38.

(3) The diminution in value to Radler's remaining property, caused by the taking of the Tract 1 easement and the Tract 2 easement, as of the date of taking, was $220,000. In its conclusions of law, the trial court stated that: (1) Southwestern Bell is indebted to Radler for the sum of $500,592.38 for the taking of the two easements and the diminution in value of the remainder, being the difference between the $538,234.38 in compensation due as of the date of taking and the $37,642 award of the special commissioners previously deposited in the registry of the court.

(2) Southwestern Bell is indebted to Radler for prejudgment interest on the $500,592.38 difference between the compensation due and the deposited award of the special commissioners, at the rate of 10% per annum simple from October 9, 1996, until the date of judgment in this case.

(3) The indebtedness of Southwestern Bell to Radler, being the balance of $500,592.38 in compensation still due, plus prejudgment interest on that sum, shall bear interest at the rate of 10% per annum, compounded annually, from the date of judgment until paid, for which Southwestern Bell is also indebted to Plaintiff.

In its additional findings of fact, the trial court found: (22) As of the date of taking, the highest and best use of the Property was a mixed-use development, consisting of a hotel, office building, expanded retail complex and parking garage.

(23) The leases in existence as of the date of taking did not preclude the property from being developed to is [sic] highest and best use.

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(24) As of the date of taking, it was reasonably foreseeable that the Property would be developed to its highest and best use.

(30) The acquisition of the Tract 1 and Tract 2 easements by Southwestern Bell hinders the development of the Property to its highest and best use.

(31) The acquisition of the Tract 1 and Tract 2 easements by Southwestern Bell displaced 64,080 square feet in the proposed parking garage.

(32) The cost to cure the displaced parking in the proposed parking garage includes $60,075 for additional sitework, $96,120 for premium structural costs of the garage, $56,760 for construction costs of an additional level of parking, and $7,045 for profit and overhead, resulting in total damages to the remainder of the Property of $220,000.

In its additional conclusions of law, the trial court stated that: (2) As of the date of taking, plans for a mixed-use development of the Property, consisting of a hotel, office building, expanded retail complex and parking garage, were not speculative.

In four issues on appeal, Southwestern Bell argues that the trial court erred: (1) by admitting expert testimony that was premised on a hypothetical use of the property when the use of the property could not be initiated in the reasonable future; and (2) in calculating prejudgment interest. Standard of Review Southwestern Bell argues that the trial court admitted inadmissible expert testimony during the trial. The admission and exclusion of evidence is committed to the trial court's sound discretion. City of Brownsville v. Alvarado, 897 S.W.2d 750, 753 (Tex. 1995). A person seeking to reverse a judgment based on evidentiary error need not prove that but for the error a different judgment would necessarily have been rendered, but only that the error probably resulted in an improper judgment. Id. We determine whether the case turns on the evidence admitted by reviewing the entire record. See id. at 754. Expert Testimony In its first point of error, Southwestern Bell argues that the trial court erred in admitting Radler's expert valuation testimony. Specifically, Southwestern Bell contends that the expert's testimony was inadmissible because it was based on a speculative redevelopment plan for the Property. Patrick O'Connor, President of a real estate firm, served as Radler's sole valuation expert at trial. Radler hired O'Connor in 1998 to analyze the feasibility of retail and office at the property as of 1996. His opinion as to the highest and best use consisted of building a "high-density multi-use property, which probably would include retail office, hotel and perhaps some high-end condominium use with structured parking, with parking toward the back of the property, likely." In arriving at his opinion of highest and best use, among other things, O'Connor relied on a feasibility study from another witness, John Keeling. By using the comparable sales method, O'Connor estimated that the value of the Property was $43 per square foot. He calculated that the value of the Tract 1 easement was $53,664, assuming a 100% valuation. (1) As for the Tract 2 easement, part A, his valuation assessment assumed that a parking garage would be
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built in the rear of the property. (2) He estimated that the easement would have to be 30-feet wide, instead of 15-feet, (3) so that the parking garage could be even with the property line. At 180-feet long, the part A easement would equal 5,400 square feet. O'Connor again used a 100% valuation which totaled $232,000. As for part B of Tract 2, he assumed it was 817-feet by 15-feet wide, equaling 12,255 square feet. For this part of the Tract 2 easement, O'Connor used a 50% valuation which had a value of $263,483. O'Connor then assumed that, because the easements would interfere with a proposed parking garage, some parking spaces would be lost. He testified that Southwestern Bell's easements would cause remainder damages of $2,034,000. He testified that this amount was attributed to lost parking spaces, among other things. However, instead of Southwestern Bell paying $2,034,000 attributable to lost spaces, O'Connor testified to the cost to cure. By adding another floor to the proposed parking garage, the remainder damages could be reduced to $250,000. This amount was based in part from testimony given by Radler's construction expert, Michael Towns. Analysis Market value is "the price the property will bring when offered for sale by one who desires to sell, but is not obliged to sell, and is bought by one who desires to buy, but is under no necessity of buying. City of Harlingen v. Estate of Sharboneau, 48 S.W.3d 177, 182 (Tex. 2001). The market value of property condemned is determined as of the date of taking. Johnson v. State, 474 S.W.2d 327, 329 (Tex. Civ. App.--Austin 1971, writ ref'd n.r.e.). The three traditional approaches to determining market value are the comparable sales method, the cost method, and the income method. Id. In the willing seller-willing buyer test of market value, it is frequently said that all factors should be considered which would reasonably be given weight in negotiations between a seller and a buyer. City of Austin v. Cannizzo, 267 S.W.2d 808, 814 (Tex. 1954). This analysis would exclude consideration of purely speculative uses to which the property might be adaptable but which are wholly unavailable; it would, however, permit consideration of all uses to which the property was reasonably adaptable and for which it was, or in reasonable probability would become, available within a reasonable time. Id. To warrant admission of testimony as to the value of land for purposes other than that to which it is being put at the time of the taking, it must first be shown: 1) That the property is adaptable to the other use. 2) That the other use is reasonably probable within the immediate future, or a reasonable time. 3) That the market value of the land has been enhanced thereby. Id.

Radler put on extensive evidence that meets prongs 1 and 3 of this test. However, we have not been directed to any evidence to show that Radler's redevelopment was reasonably probable within the immediate future, or in a reasonable time. See id. In City of Harlingen v. Sharboneau, the Texas Supreme Court found that the expert's testimony regarding the subdivision development method was not relevant because it involved a number of "analytical steps, most involving assumptions and estimates, any one of which could seriously affect the appraisal's accuracy." 48 S.W.3d at 184. In reversing the trial court's judgment, the court stated that the valuation testimony "bypassed all of the problems that could appear during an actual development, substituting instead the best possible outcome." Id. at 185. As in Sharboneau, O'Connor's valuation testimony bypassed any problems with redevelopment and instead, assumed that: (1) a redevelopment of the property would occur; (2) a parking garage would be constructed; (3) the parking garage's location would conflict with Southwestern Bell's easements; (4) another floor would be added to the parking garage; and (5) the best possible outcome would occur regarding the redevelopment of the Property. His testimony concerning the value of the Tract 2 easement and the remainder damages was based on the speculative assumption that a redevelopment of the property would occur, necessitating the addition of a multi-level parking garage. This is
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precisely the type of testimony that Sharboneau prohibits. See id. at 184-86. Moreover, the following evidence demonstrates that the conceptual redevelopment was purely speculative and not the type of testimony that is admissible in a condemnation proceeding. John Keeling, a consultant expert to the hotel industry, testified that it would have been feasible to build a five-star hotel in October 1996. He also testified that it is possible that a five-star hotel would be built on the site. When asked if the hotel would be built, he said he did not know. Michael Sheppard, an architect, testified that the property's highest and best use was as a high-density mixed use development. As such, the property would need "structured parking." He then detailed that the parking garage would have to be built in the rear of the property, 30 feet away from the property line. When asked what would actually be built on the property, Sheppard stated that he did not know. Sheppard also could not predict the actual square footage of the retail, office, or hotel space. He further stated that there was no way of knowing whether the redevelopment would ever be built. When asked whether he had actual plans to redevelop the property, Mishael Radom, a limited partner in Radler, answered "No." Texas Rule of Evidence 702 requires that all expert testimony, not just scientific evidence, must be relevant and reliable before it is admitted. Gammill v. Chevrolet, Inc., 972 S.W.2d 713, 727 (Tex. 1998). Unreliable expert testimony is of no evidentiary value. See Merrell Dow Pharm., Inc. v. Havner, 953 S.W.2d 706, 712 (Tex. 1997). Here, Radler presented expert testimony detailing how a redevelopment of the Property could proceed. It is not enough, however, to show that the new use is feasible; rather, it must be shown that the other use is reasonably probable within the immediate future, or within a reasonable time. See City of Austin, 267 S.W.2d at 814. The trial court accepted the assumption that a parking garage would be built and awarded the cost to cure lost parking spaces. Awarding damages for a parking garage that did not exist at the time of taking, and then awarding further damages for non-existent lost parking spaces resulted in a windfall to Radler. Because O'Connor's valuation testimony was based on a speculative redevelopment concept, we conclude that his testimony was not relevant. See Sharboneau, 48 S.W.2d at 186. Accordingly, the trial court abused its discretion in admitting O'Connor's valuation testimony concerning the value of the Tract 2 easement and any remainder damages. We sustain appellant's first point of error. Harmful Error The improper admission of testimony is subject to Rule 44.1(a). Tex. R. App. P. 44.1(a). We must reverse if the error caused the rendition of an improper judgment. See id. The trial court found that the Tract 1 easement had a market value of $46,800. This amount was based on testimony detailing the comparable sales method. The trial court found that the Tract 2 easement had a market value of $271,434.38 and that $220,000 should be awarded to cure the remainder damages to the Property. Both of these amounts were based on valuation testimony given by O'Connor. Because O'Connor's testimony was the only valuation evidence presented by Radler to support the trial court's findings, the improper admission of his testimony caused the rendition of an improper judgment. Conclusion We reverse the judgment of the trial court and remand for further proceedings consistent with this opinion. All outstanding motions are denied.

Adele Hedges Justice Panel consists of Justices Wilson, Hedges, and Jennings.

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Publish. Tex. R. App. P. 47. 1. O'Connor determined a 100% valuation because the easement caused a complete loss of the area to Radler. 2. O'Connor divided the Tract 2 easement into two parts, part A and part B. 3. Southwestern Bell estimated that the easement would be 15 feet wide. Radler's experts testified that the easement would have to be 30 feet wide.

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