Wednesday, May 27, 2009

Expert witness testimony allowed to offer proof on value of property in eminent domain case

ELLER MEDIA COMPANY v. CITY OF MEMPHIS, ET AL. (Tenn. Ct. App. December 22, 2008).

This appeal concerns the value of property taken by the City of Memphis under its eminent domain power. The condemned land was subject to a leasehold interest held by the Appellant. The Appellant used the land as a site for a billboard, which it rented to advertisers. After taking possession of the land, the City compensated the owner, but not the Appellant. Appellant sought compensation for its property interest, and designated an expert witness to offer proof on its value. The City objected to the expert's methodology, and asked the trial court to exclude his testimony. After an evidentiary hearing, the trial court ruled that the expert's methodology was prohibited by this Court's decision in State ex rel. Comm'r v. Teasley, 913 S.W.2d 175 (Tenn. Ct. App. 1995). Without the expert's testimony, Appellant could not present proof on the value of its property interest and accordingly, the trial court entered a judgment for the City. Finding that the trial court erred when excluding Appellant's expert, we reverse.

Opinion may be found at the TBA website:

"The Court, in Teasley, addressed whether Eagle was entitled to any additional compensation.  First, the court found that Eagle’s billboard was a trade fixture, rather than a fixture.  Id. at 177.  Because a trade fixture is personal property, Eagle’s billboard was not compensable in eminent domain.  Id. at 178.  Accordingly, Eagle was only entitled to compensation for the cost of removing the billboard.  Id. (citing Tenn. Code Ann. § §13-11-101-119.).  Eagle could not receive additional compensation for its leasehold interest because it waived the right to receive such compensation in the lease itself.  Id. at 179.  Accordingly, the court did not address the value of Eagle’s leasehold interest." Id.

"After reviewing Dr. Aguilar’s testimony, we find Teasley inapplicable.  In Tealsey, the lessee owned a billboard structure but waived the right to receive compensation for its leasehold interest in the underlying property.  Id. at 179.  Here, the parties dispute whether Eller, like the lessee in Teasley, waived the right to receive compensation for its leasehold interest.  This dispute may be critical to the resolution of this case, but it does not involve Dr. Aguilar’s testimony.  Teasley applies only when the value of a trade fixture, isolated from the value of any leasehold interest, is in question.  Therefore, the trial court’s application of Teasley to exclude Eller’s expert proof was premature.  By applying Teasley at this early stage, the trial court assumed, without deciding, that Eller waived the right to be compensated for its leasehold interest." Id.