United States District Court, D. Nebraska
DALE HELMS and DEBRA J. HELMS, Plaintiffs,
OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY, Defendant.
MEMORANDUM AND ORDER
M. Gerrard United States District Judge
litigation arises out of a title insurance policy issued by
the defendant, Old Republic Insurance Company, relating to
240 acres of land. Pursuant to the policy, the defendant
agreed to indemnify the plaintiffs for losses sustained from
discoverable defects in title. The plaintiffs submitted a
claim under the policy when they discovered that 21.81 acres
of their land were actually owned by the United States
government. The defendant denied the claim. The plaintiffs
then sued the defendant for breach of contract.
matter is before the Court on the defendant's motion to
exclude testimony of Alan Svoboda (filing 47). For the
reasons discussed below, the defendant's motion will be
Court's prior Memorandum and Order (filing 47) set forth
the background of this case in detail. For purposes of this
motion, the relevant facts are as follows. In 2011, the
plaintiffs, Dale and Debra Helms, began negotiating for the
purchase of 240 acres of land in Furnas County, Nebraska.
Filing 46-3 at 34; filing 53-1 at 2. And by August 2012, the
plaintiffs had signed a sales contract and were proceeding to
closing. Filing 46-3 at 36. Around this time, the plaintiffs
sought to obtain title insurance for the property from the
defendant. Filing 53-1 at 2. On September 11, the defendant
issued a commitment for title insurance with policy limits of
$513, 520.00. Filing 53-1 at 10-12. This commitment, in
essence, guaranteed that the defendant would issue a title
insurance policy insuring against unmarketable title and
other encumbrances following closing. Filing 53-1 at 10-12.
weeks later, on September 24, 2012, the plaintiffs closed on
the property and exchanged $513, 520.00 for fee simple title.
Filing 46-3 at 39-40; filing 46-1 at 3. And the title
insurance policy became effective on October 15. Filing 46-1
at 1-2. But on May 23, 2013, the plaintiffs learned that
21.81 acres of their property were actually owned by the
government following a 1940s condemnation proceeding. Filing
53-1 at 1. Because the government's interest in 21.81
acres of their property was not discovered, or disclosed, by
the defendant, the plaintiffs filed a claim with the
defendant under the policy. Filing 7 at 4. The defendant
denied coverage. And the plaintiffs filed this lawsuit,
arguing that the defendant breached its contractual
obligations by refusing to pay benefits under the policy.
Filing 7 at 4.
the course of litigation, the plaintiffs retained real estate
expert Alan Svoboda, who opined as to the property's
diminution in value following the discovery of the
encumbrance. See generally filing 31. Svoboda is a
Certified General Appraiser who specializes in the appraisal
of agricultural real estate, easement valuation, and
appraisal review in rural Nebraska. See filing 31 at
Svoboda's appraisal analyzed the market value of the
property under two scenarios: the "before"
valuation, and the "after" valuation. See
filing 31 at 4. In the "before" valuation, Svoboda
assumed the plaintiffs owned all 240 acres of the property in
fee simple. Filing 31 at 7-22. That is, Svoboda valued the
land at its highest and best use assuming there was no
government encumbrance. Seefiling 31 at 8. In the
"after" valuation, Svoboda excluded the 21 acres
actually owned by the government,  and valued the property at
its highest and best use under those circumstances. Filing 31
at 23-37. In Svoboda's opinion, the "before"
valuation was $1, 100, 000. Filing 31 at 21. And the
"after" valuation was $550, 000. Filing 31 at 36.
Thus, Svoboda concluded, that the diminution in value was
$550, 000.00. Filing 31 at 49. The defendant seeks to exclude
(filing 47) Svoboda's appraisal and testimony.
speaking, the defendant argues that Svoboda's appraisal
must be precluded pursuant to Fed.R.Evid. 702 and Daubert
v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993) because
his opinion is "speculative" and
"unreliable." Filing 60 at 1. Specifically, the
defendant takes issue with three aspects of the appraisal:
(1) the classification of the land in the "before"
valuation as pivot irrigable farmland; (2) the failure to
consider the plaintiffs' special use permit in the
"after" valuation; and (3) the assumption that none
of the plaintiffs' land is pivot irrigable in the
"after" valuation. Filing 48 at 11-20.
objective of the Daubert inquiry is to make certain
that an expert, whether basing testimony upon professional
studies or personal experience, employs in the courtroom the
same level of intellectual rigor that characterizes the
practice of an expert in the relevant field. Am. Auto.
Ins. Co. v. Omega Flex, Inc., 783 F.3d 720, 722 (8th
Cir. 2015). And in order to be admissible, expert testimony
must be both relevant to a material issue and reliable.
Id.. at 591; see also Margolies v.
McCleary, Inc., 447 F.3d 1115, 1120 (8th Cir. 2006);
see Fed. R. Evid. 702.
established a non-exclusive checklist for trial courts to use
in assessing the reliability of expert testimony, including
whether the theory or technique can and has been tested,
whether it has been subjected to peer review, whether there
is a high known or potential rate of error, and whether the
theory or technique enjoys general acceptance within a
relevant scientific community. See U.S. v. Holmes,
751 F.3d 846, 850 (8th Cir. 2014) (citing Daubert,
509 U.S. at 592-94). And for the purposes of evaluating the
relevance of expert testimony, the Court must determine
whether the expert's reasoning or methodology was applied
properly to the facts at issue. Daubert, 509 U.S. at
580. To that end, expert testimony that is speculative,
unsupported by sufficient facts, or contrary to the facts of
the case, is inadmissible. Marmo v. Tyson Fresh Meats,
Inc., 457 F.3d 748, 757 (8th Cir. 2006).
defendant has provided the Court with no argument, much less
evidence, to suggest that Svoboda's methodology is
unreliable. Rather, the defendant's motion asks this
Court to exclude Svoboda's testimony because, as the
defendant claims, Svoboda's classification, and
determination, of the property's highest and best use--in
both the "before" and the "after"
valuations--rests on "inaccurate"
facts. Filing 48 at 11-14; filing 48 at 19.
factual basis of an expert opinion goes to the credibility of
the testimony, not its admissibility. Bonner v. ISP
Tech., Inc., 259 F.3d 924, 929-30 (8th Cir. 2001). Only
when an expert's opinion "is so fundamentally
unsupported that it can offer no assistance to the jury must
such testimony be excluded." Id. As the
plaintiffs correctly point out, however, Svoboda's
opinion is supported by three well-established
appraisal methods: the cost approach, sales comparison
approach, and the income approach. See U.S. v. 47.14
Acres of Land, 674 F.2d 722, 726 (8th Cir. 1982);
U.S. v. 341.45 Acres of Land, 633 F.2d 108, 113 (8th
Cir. 1980); see also U.S. v. 2.28 Acres of Land, No.
8:14-CV-85, 2015 WL 6473590, at *6 (D. Neb. Oct. 27, 2015).
And in utilizing those methods, Svoboda relied on the review
of soil assessments, water allocation records, zoning
ordinances, market surveys, ownership history, and his own
inspection of the property. Seefiling 49-1 at 15,
filing 49-1 at 20-25, filing ...