ENBRIDGE PIPELINES (EAST TEXAS) L.P. v. AVINGER TIMBER, LLC

SUPREME COURT CASES

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State: Texas

Court: Supreme Court

Docket No: 10-0950

Case Date: 08/31/2012

Plaintiff: ENBRIDGE PIPELINES (EAST TEXAS) L.P.

Defendant: AVINGER TIMBER, LLC

Preview:IN THE SUPREME COURT OF TEXAS
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NO . 10-0950
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ENBRIDGE PIPELINES (EAST TEXAS) L.P., PETITIONER,
v.

AVINGER TIMBER, LLC, RESPONDENT
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ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE SIXTH DISTRICT OF TEXAS
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Argued February 27, 2012

JUSTICE JOHNSON , joined by JUSTICE GREEN and JUSTICE WILLETT , dissenting.

The Court, focusing on a report by Avinger's appraisal expert David Bolton that was not introduced into evidence at trial, concludes "[i]t is apparent that Bolton was not valuing the 23.79 acres improved by the pipeline infrastructure that Avinger lost, but rather the gas processing facility that Enbridge Pipelines gained," and his testimony "impermissibly focused on the benefit to Enbridge Pipelines in avoiding the cost of removing the plant." ___ S.W.3d at ___. I disagree that Bolton's testimony supports the Court's statement. I also disagree that the trial court abused its discretion by admitting the portion of Bolton's testimony related to Enbridge's contractual obligation to remove its plant. Bolton testified that the Uniform Standards of Professional Appraisal Practice (USPAP) and Texas law required him to consider the effect of the lease provision requiring Enbridge

to remove its plant within six months after the lease expired, and he did. However, in his trial testimony, which is the issue here, he did not assign any value to that obligation. Rather, he valued only Avinger's land without Enbridge's plant on it, and clearly based his opinion of market value on accepted income and comparable sales methodologies. I respectfully dissent. I. Background Beginning in 1973, predecessors in interest of Enbridge Pipelines (East Texas) L.P. (Enbridge) leased 23.79 acres of East Texas land (the property or the leased property) from the predecessors in interest of Avinger Timber, LLC (Avinger). In 2001 Enbridge Processing, an affiliate of Enbridge, acquired the lessee's interest in the Avinger lease, which had been renewed in 1998 and expired on April 2, 2004. During the 31 years the lease was in effect, a "mid-stream" gas processing plant was built on the property and environmentally permitted for processing operations, and infrastructure supporting operation of the plant was put in place. There is no dispute that (1) the Avinger lease expired on April 2, 2004; (2) the date of taking was April 7, 2004; (3) millions of cubic feet of raw natural gas flowed through fifteen or sixteen pipelines into Enbridge's plant for processing on a daily basis; (4) high voltage electrical lines had been built through surrounding raw timberland to supply electricity to the plant; (5) environmental permits were in place for operation of the gas processing plant; (6) the property is in one of the most prolific gas-producing counties in Texas and the field was predicted to produce until at least "the end of the century;" and (7) Enbridge was contractually required to remove its plant no later than six months from the date the lease term expired.

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II. Standards A landowner whose property is taken by condemnation is entitled to compensation in the amount of its market value, which is the value to a willing buyer under no compunction to buy and to a willing seller under no compunction to sell. City of Harlingen v. Estate of Sharboneau, 48 S.W.3d 177, 182 (Tex. 2001).1 But the amount of compensation is determined by what is taken from the landowner, not what the property's special value might be to the taker. See City of Dallas v. Rash, 375 S.W.2d 502, 505 (Tex. Civ. App.--Dallas 1964, writ ref'd n.r.e.) (citing United States v. Milner, 317 U.S. 369 (1943)). Bolton testified, and the parties do not dispute, that appraisers must consider every factor affecting a property's value when they appraise condemned property to determine its market value. That stands to reason because fact finders are to consider all factors that affect the property's value to willing buyers and sellers when they determine the market value of property taken through condemnation proceedings. City of Ft. Worth v. Corbin, 504 S.W.2d 828, 830 (Tex. 1974). Furthermore, Bolton testified that the USPAP requires appraisers to consider the effect on a property's value of lease or contractual agreements to which the property is subject and that Texas law requires appraisers to abide by those standards in making appraisals. See TEX . OCC. CODE

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