United States District Court, D. Nebraska
MEMORANDUM AND ORDER
Joseph F. Bataillon Senior United States District Judge
This matter is before the court on a motion in limine filed by the plaintiff, United States of America (hereinafter, "the Government"), Filing No. 57. This is a condemnation action involving 2.28 acres (“the subject property”), encompassing .22 acres upon which a Federal Aviation Administration ("FAA") Radio Communications Link Repeater ("RCLR") tower sits and additional land on which the guy-wires supporting the tower extend, located in Perkins County, Nebraska. The government seeks to exclude the testimony of the defendants’ appraiser as improper and for failure to meet the standards established under Federal Rules of Evidence 104(a) and 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993).
The United States filed a complaint in condemnation, estimating compensation to be $1, 200.00. Filing No. 1. That sum was deposited in the registry of the Court for the use and benefit of the persons entitled thereto. Filing No. 6, Order of Possession. The record shows that the deposit was distributed in the following manner: $600 to Molly Dickinson, $300 to Scott Fjell, and $300 to Julie Fjell. Filing No. 17. Molly Dickinson, Scott Fjell and Julie Fjell (hereinafter, "the landowners") filed an answer demanding a jury trial on the issue of just compensation. Filing No. 9. The parties agree that the sole issue for determination is this case is the just compensation due for the taking of the subject property, measured as the fair market value of the Property on the date of taking, March 17, 2014, and the identity of the parties to whom compensation is due. Filing No. 18, Rule 26(f) report at ECF p. 3.
Both parties have submitted evidence in connection with the motion. As relevant to this motion, the record shows that the FAA has leased the land since before 1975. Filing No. 65-1 at ECF p. 1, Supplemental Affidavit of Amy Crain ("Crain Supp. Aff.") at 1. The landowners purchased the property in 2005. Id. The lease between the landowners and the FAA expired in 2011. Id.; Filing No. 59-5 at ECF p.2, Declaration of Amy Crain at 2; id. at ECF pp. 4-10, Attachment B, Lease. The FAA continued paying $875.00 per month pursuant to the lease until the filing of the condemnation action on March 17, 2014. Filing No. 65-1 at ECF p. 2, Crain Supp. Aff. at 2. The rent for the lease that expired in 2011 was established in reliance on a market survey prepared by Ron Finn. Id.; see Filing No. 64-1 at ECF pp. 4-5, Declaration of Steven Davidson, Ex. A, Results of Market Survey at 1-2. The government contends that market survey was seriously flawed. Filing No. 65-1, Crain Supp. Aff. at 2; Filing No. 66 at ECF 9, Government Reply Brief at 9 (admitting that "The FAA made a costly error in 2006 when it mistakenly agreed to increase the land lease payment for the Tower site from a minimal amount up to $875 per month ($10, 500 per year) based on a defective ‘market analysis’ conducted by a government contractor"). The government's estimated value of the land, as reflected in the complaint for condemnation, was based on an appraiser's opinion that the value of the property was $1, 200.00 "for fee simple acquisition with a highest and best use of agricultural dry land." Filing No. 65-1, Crain Supp. Aff. at 2. The government concedes that at the time of the initiation of the condemnation proceeding, the FAA anticipated a requirement for the RCLR Facility for several years. Filing No. 65-1 at ECF p. 3, Crain Supp. Aff. Recently, it has been determined that the tower will be decommissioned in 2017. Id.
At his deposition, Kubert testified that there was demand for use of the property for a tower. Filing No. 59-1 at ECF 54, 58, Deposition of Wayne W. Kubert at 211-213, 227-31. The government's appraisal expert, Thomas Luhrs stated in his affidavit that two windfarms are located 60 miles from the subject property and 100 miles from the subject property, respectively, and stated that he had been told that one wind farm company had no interest in leasing or conducting wind studies on the subject property. Filing No. 59-3 at ECF 2-3, Luhrs Declaration at 2. He also found demand for communication tower sites in southwest Nebraska was "very limited and sporadic." Id. The 2006 survey on which the government relied in negotiating the lease found "explosive growth in the wireless telecommunications business" and "fierce competition, " and concluded that "the need for towers will continue to grow" for a variety of new technology then taking hold. Filing No. 64-1 at ECF p. 4, Declaration of Steven D. Davidson, Ex. A, 2006 Market Survey at 1 (also noting that "[c]ommunication towers are used to facilitate the transmission of cellular/voice messaging, radio, TV, CATV, emergency medical service (EMS), fire and police radio networks, paging, global positioning satellite (GPS) and other signals such as those employed by FAA").
In connection with this action, the landowners engaged Wayne Kubert to conduct an appraisal of the Land, including the Tower Site. Filing No. 58-2 at ECF p. 2, Declaration of Laurie M. Barrett, Attachment A, Wayne Kubert, MAI Appraisal at 1. Kubert is a MAI certified and licensed appraiser with more than 30 years' experience in Nebraska, including substantial experience with agricultural properties. Id. at ECF p. 84. He is a former President of the Nebraska Chapter of the Appraisal Institute and of the Lincoln Board of Realtors. Id. at ECF p. 86. In his appraisal, Kubert considered the tower to be part of the highest and best use of the land because "the Federal Government wants to continue the lease or take the land by condemnation for the continued use." Filing No. 58-2 at ECF p 43, Kubert Appraisal at 43. He also compared market leases for wind towers and communication towers. Id. at ECF p. 61.
The government moves to exclude Kubert's expert report. It argues that the tower site should be excluded as part of the highest and best use of the subject property because the landowners have not established a private demand for the tower site. Further, it urges the court to give no weight to the 2006 ‘Market Analysis’ and argues the government’s improvements should be excluded in estimating market value.
Federal Rule of Evidence 702 governs the admissibility of expert testimony and requires that: “(1) the evidence must be based on scientific, technical or other specialized knowledge that is useful to the finder of fact in deciding the ultimate issue of fact; (2) the witness must have sufficient expertise to assist the trier of fact; and (3) the evidence must be reliable or trustworthy.” Kudabeck v. Kroger Co., 338 F.3d 856, 859 (8th Cir. 2003). Expert testimony assists the trier of fact when it provides information beyond the common knowledge of the trier of fact. Id. at 860. When faced with a proffer of expert testimony, trial judges are charged with the “gatekeeping” responsibility of ensuring that all expert evidence admitted is both relevant and reliable. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 147 (1999); Daubert v. Merrell Dow Pharms., 509 U.S. 579, 589 (1993); United States v. Wintermute, 443 F.3d 993, 1000 (8th Cir. 2006). A trial court is given wide latitude in determining whether an expert's testimony is reliable. See Kumho Tire, 526 U.S. at 152.
Proposed expert testimony must meet three prerequisites in order to be admitted under Rule 702: first, evidence based on scientific, technical, or other specialized knowledge must be useful to the finder of fact in deciding the ultimate issue of fact; second, the proposed witness must be qualified to assist the finder of fact; and third, the proposed evidence must be reliable or trustworthy in an evidentiary sense. Lauzon v. Senco Prods., Inc., 270 F.3d 681, 686 (8th Cir. 2001) (noting district court's gatekeeper role when screening expert testimony for relevance and reliability). Expert testimony assists the trier of fact when it provides information beyond the common knowledge of the trier of fact. Kudabeck, 338 F.3d at 860. The district court's gatekeeper function applies to all expert testimony, not just testimony based in science. Id.
Under Daubert, district courts apply a number of nonexclusive factors in performing this role. Lauzon, 270 F.3d at 686-87. These are: whether the theory or technique can be and has been tested; whether the theory or technique has been subjected to peer review and publication; the known or potential rate of error; whether the theory has been generally accepted; whether the expertise was developed for litigation or naturally flowed from the expert's research; whether the proposed expert ruled out other alternative explanations; and whether the proposed expert sufficiently connected the proposed testimony with the facts of the case. Id. at 686-87. "This evidentiary inquiry is meant to be flexible and fact specific, and a court should use, adapt, or reject Daubert factors as the particular case demands." Unrein v. Timesavers, Inc., 394 F.3d 1008, 1011 (8th Cir. 2005).
The proponent of expert testimony bears the burden of providing admissibility beyond a preponderance of the evidence. Lauzon, 270 F.3d at 686. When the application of a scientific methodology is challenged as unreliable under Daubert and the methodology itself is otherwise sufficiently reliable, outright exclusion of the evidence is "warranted only if the methodology was so altered by a deficient application as to skew the methodology itself." United States v. Gipson, 383 F.3d 689, 697 (8th Cir. 2004) (brackets omitted) (quoting United States v. Martinez, 3 F.3d 1191, 1198 (8th Cir. 1993)).
In the Eighth Circuit, "cases are legion that, correctly under Daubert, call for the liberal admission of expert testimony." Johnson v. Mead Johnson & Co., LLC, 754 F.3d 557 (8th Cir. 2014). District courts are admonished "not to weigh or assess the correctness of competing expert opinions." Id. Rather, expert testimony should generally "be tested by the adversary process with competing expert testimony and cross-examination, rather than excluded by the court at the outset." Id. "Any doubts regarding expert testimony 'should generally be resolved in favor of admissibility.'" United States v. Finch, 630 F.3d 1057, 1062 (8th Cir. 2011) (quoting Sphere Drake Ins. PLC v. Trisko, 226 F.3d 951, 954 (8th Cir. 2000)). A "jury, not the trial court should be the one 'to decide among the conflicting views of different reports." Johnson, 754 F.3d at 564. In condemnation cases, "[a]s a general rule, questions relating to the bases and sources of an expert's opinion affect the weight to be assigned that opinion rather than its admissibility and should be left for the jury's consideration." United States v. 14.38 Acres of Land, 80 F.3d 1074, 1077 (5th Cir. 1996) (quoting Viterbo v. Dow Chemical Co., 826 F.2d 420, 422 (5th Cir. 1987)).
The Fifth Amendment guarantees a landowner's right to just compensation for the Government's taking of private property for public use. Id. The Supreme Court has interpreted the just compensation clause to require that condemnees receive the value of the highest and best use for which the property is adaptable in the reasonably near future from the vantage point of the date of taking. Olson v. United States, 292 U.S. 246, 255 (1934). The Supreme Court "has repeatedly held that just compensation normally is to be measured by 'the market value of the property at the time of the taking.'" United States v. 50 Acres of Land, 469 U.S. 24, 29 (1984) (quoting Olson v. United States, 292 U.S. 246, 255 (1934)). A property's fair market value is determined through identification of the property's highest and best use. Olson, 292 U.S. at 257. Under that standard, "the owner is entitled to receive ...