United States District Court, M.D. Florida, Jacksonville Division
TIMOTHY J. CORRIGAN, UNITED STATES DISTRICT JUDGE.
these condemnation cases, the condemnor seeks to exclude the
landowners' expert witnesses in the compensation phase.
These cases are before the Court on Plaintiff Sabal
Trail's motions to exclude the expert testimony of
Matthew Ray, the defendant-landowners' appraiser, and
Joshua A. Harris, Ph.D., a real estate economist, under
Daubert v. Merrell Dow Pharmaceuticals, Inc., 509
U.S. 579 (1993), and Federal Rules of Evidence 403 and 702.
Also before the Court are the defendants' responses to
the Daubert motions, the parties' notices of
supplemental authority, and the defendants' supplemental
responses. The Court held a non-evidentiary Daubert
hearing on January 24, 2018. (See No.
3:16-cv-267-J-32MCR, Doc. 92). The Court will grant the
motion with respect to Mr. Ray to the extent described below,
but the Court defers a final ruling with respect to Dr.
the Natural Gas Act and a Certificate of Public Convenience
and Necessity, Sabal Trail sought to condemn easements on the
landowners' property to install a natural gas pipeline.
The properties are rural tracts in Hamilton County and
Suwannee County, Florida, which are generally suitable for
rural residential or agricultural use. The Court allowed
Sabal Trail to take possession of the easements. The
proceedings are now at the stage where a jury must determine
how much Sabal Trail owes the defendants for the takings.
preparation for the trials on compensation, the defendants
hired two experts to assist with valuation. The first expert
is Matthew Ray, an appraiser who assessed the value of the
condemned easements and severance damages. The second expert
is Dr. Harris, a real estate economist, who surveyed
approximately 23 real estate agents or brokers regarding
their opinions on the effect a natural gas pipeline would
have on property values (a so-called “contingent
valuation” survey). Dr. Harris also reviewed literature
on the impact that overhead power transmission lines, natural
gas pipelines, and pipeline accidents purportedly have on
buyers' perceptions of property values. The gist of Dr.
Harris's testimony is that public awareness and fear of
pipeline accidents would cause the average buyer to be less
willing to buy land situated over a pipeline. However, Dr.
Harris does not offer any opinion about the compensation owed
for any specific property.
Trail moves to exclude both experts' testimonies under
Daubert and Federal Rule of Evidence 702, arguing
that their testimonies are not the result of reliable methods
or sufficient facts and data. Sabal Trail also argues that
their testimonies are inadmissible under Rule 403 because
they threaten to make the health and safety risks of a
pipeline rupture an improper feature of the trials.
Trail filed similar Daubert motions in Sabal
Trail Transmission, LLC v. 3.921 Acres of Land in Lake
County, Florida, No. 5:16-cv-178-JSM-PRL (M.D. Fla.),
Doc. 50, Doc. 51, in which it sought to exclude the same
experts' testimonies. My colleague, Judge James S. Moody,
Jr., granted both motions for many of the same reasons argued
by Sabal Trail before this Court. Id., Doc. 71
(“Moody Daubert Order”). Likewise, Sabal
Trail filed similar Daubert motions in Sabal
Trail Transmission, LLC v. 0.981 Acres of Land in Levy
County, Florida, No. 1:16cv97-MW/GRJ (N.D. Fla.), Doc.
48, Doc. 49. The Honorable Mark Walker largely denied both
motions, although Judge Walker identified three issues with
Ray's opinion that required correction: (1) Ray could not
use the terms “probable damage radius” or
“probable impact radius” in his testimony, (2)
Ray could not testify about potential future land use
regulations, and (3) Ray's severance damage study
double-counted the value of the easements taken.
Id., Doc. 69 (“Walker Daubert
Order”). Otherwise, Judge Walker admitted the balance
of Dr. Harris's and Mr. Ray's opinions.
Matthew Ray's Testimony
Court does not find Ray's testimony regarding the
“before” value of the properties to be
inadmissible in these cases, nor does it find his opinion
that the easements take 95% of the value of the land covered
by the easements to be inadmissible. As such, Ray can testify
regarding the “before” value of the properties
and the value of the easements themselves. However, for many
of the reasons discussed in Part B.3 of the Discussion
section of Judge Moody's order, the Court finds that
Ray's testimony concerning severance damages is
inadmissible in its current form. (Moody Daubert Order at
one, Ray relies on the concept of a “potential impact
radius” (“PIR”) as a means to determine the
reach of severance damages, but that is not an accepted
appraisal method. See Texas Gas Transmission, LLC v.
18.08 Acres, No. 2:08CV420-B-V, 2012 WL 6057991, at *9
(N.D. Miss. Dec. 6, 2012) (appraiser “admitted that
using a hazard zone … was not an appraisal principle
of any kind, had not been subject to peer review, had not
been taught by any instructor in appraisal techniques, and
was unique to this appraisal.”); Rockies Exp.
Pipeline, LLC v. 4.895 Acres of Land, No. 2:08-CV-554,
2011 WL 1043493, at *2 (S.D. Ohio Mar. 16, 2011) (rejecting
the PIR as an acceptable appraisal method in calculating
severance damages). There is no indication that the PIR
appraisal method has been subjected to peer-review or
achieved acceptance in the appraisal community.
“[S]ubmission to the scrutiny of the scientific
community is a component of ‘good science, ' in
part because it increases the likelihood that substantive
flaws in methodology will be detected.”
Daubert, 509 U.S. at 593 (citation omitted). The
lack of peer review of the PIR method, while not dispositive,
weighs against finding it to be reliable. See id. at
594. Likewise, the lack of widespread acceptance of the PIR
method is an “important factor” in ruling it
inadmissible, because “‘a known technique which
has been able to attract only minimal support within the
community, ' Downing, 753 F.2d, at
1238, may properly be viewed with
skepticism.” Daubert, 509 U.S. at 594. As
such, the Court does not find Ray's use of the PIR in his
appraisals to be a reliable methodology.
Ray's reports “bastardiz[e]” the term
“potential impact radius” by transforming it into
such ominous phrases as “probable impact radius”
and “probable damage radius, ” which implies
(without supporting evidence) that a pipeline explosion is
likely. (Moody Daubert Order at 15-17). Such terminology is
unduly prejudicial because it threatens to confuse the issues
by making the trial about the potential health and safety
risks of a pipeline accident, not compensation for the
property taken. See Florida Power & Light Co. v.
Jennings, 518 So.2d 895, 897-98 (Fla. 1987) (allowing
scientific testimony about the possible health hazards of
power transmission lines, “albeit under the guise of
explaining why the presence of transmission lines depreciates
the value of adjacent property, is irrelevant to the issue of
full compensation. Not only does allowing such scientific
testimony … confuse the true issue, it also presents
the unacceptable risk that the jury will feel obliged
… to fashion an award that encompasses possible future
injuries to persons.”).
Ray misapplies the paired sales analysis when calculating
severance damages. Ray failed to account for the extent to
which the loss of easement areas themselves reduced
the value of the encumbered properties in each paired sale.
Thus, when Ray applies the percentages derived from the
paired sales analysis to calculate the pipeline's impact
on the remainder, he double-counts the value of the lost
easement. This is an objective error, which causes Ray to
over-calculate damages to the property. See No.
3:16-cv-276-J-32JRK, Doc. 70 at 21.
Court does not find that Ray's opinion about the
pipeline's percentage impact on the remainder (which in
these cases he opines ranges from -55% to -65%) to be
inadmissible. Cf. Moody Daubert Order at 19. This is
a matter for cross-examination. The Court also does not find
the level of comparability of the paired sales (or alleged
lack thereof) to be a basis for excluding Ray's opinion.
When the sales of other properties are used as the basis for
an expert's testimony, the requirement of showing
similarity between the properties is less rigorous than when
non-expert evidence of property sales is offered as
substantive proof of value. See United States v. 0.161
Acres of Land, 837 F.2d 1036, 1040 (11th Cir. 1988)
(citing United States v. 429.59 Acres of Land, 612
F.2d 459, 462 (9th Cir. 1980)). Moreover, the degree of
comparability of sales goes to the weight of the evidence,
not its admissibility. Columbia Gas Transmission, LLC v.
76 Acres, 701 Fed.Appx. 221, 229-30 (4th Cir. 2017);
E. Tenn. Nat. Gas Co. v. 7.74 Acres, 228 Fed.Appx.
323, 327-29 (4th Cir. 2007).
Ray opines in two of the cases that Sabal Trail is liable for
additional damages for such things as lost camping rental
revenue and escaped livestock. In No. 3:16-cv-276-J-32JRK,
Ray opines that Sabal Trail owes the owners, Carolyn and
Richard McCulley, $60, 000 for lost camping rental income. In
No. 3:16-cv-318-J-32JRK, Ray opines that Sabal Trail owes the
owners, Teddy Rucker, Jr., and Sherry Rucker, an additional
$105, 300 for escaped livestock, the cost of repairing a
neighbor's feed cans, the cost of replacing damaged
fencing, the cost of hay to replace lost grazing area, and
the value of lost mature trees.
landowners may well have a cause of action against Sabal
Trail for these injuries, but they did not plead them by way
of counterclaim or otherwise, and not all can be remedied
under the rubric of “full compensation.”
“[T]he ‘full compensation' mandated by
article X, section 6 of the Florida Constitution is
restricted to (1) the value of the condemned land, (2) the
value of associated appurtenances and improvements, and (3)
damages to the remaining land (i.e., severance
damages).” System Components Corp. v. Fla.
Dep't of Transp., 14 So.3d 967, 976 (Fla. 2009)
(citations and footnotes omitted). “The payment of
compensation for intangible losses and incidental or
consequential damages, however, is not required by the
constitution, but is granted or withheld simply as a matter
of legislative grace.” Tampa-Hillsborough Cnty.
Expressway Auth. v. K.E. Morris Alignment Serv., Inc.,
444 So.2d 926, 928 (Fla. 1983). Nor does “full