An Old Valuation Conundrum Revisited

Check out the latest post on the blog of our colleague Rick Rayl (http://www.californiaeminentdomainreport.com/).

It has to do with how to determine the award where, for one reason or another, the trial judge strikes or excludes one side’s evidence. Must the outcome then be a verdict in the amount contended for by the side whose opinion is left standing, in the amount of that opinion? Or, where the party whose evidence was stricken contends that (a) even if his opinion of value was legally flawed, that does not make his adversary’s opinion of value correct because (b) the [surviving] opinion of value is factually wrong. And so, the party whose opinion was stricken insists on his right to reveal its flaws or falsehoods, if only by cross-examination.  In California case law, as Mr. Rayl correctly points out, goes both ways. His conclusion:

“In my view, either a party with no evidence is stuck with the other party’s value, or they remain entitled to a trial and a shot at cross examination.  I actually see good reason for either rule — but I think that the rule should be applied consistently.  Parties should not have this issue decided based on the mood or proclivities of individual trial judges (or which side’s appraiser gets excluded).”

We agree with the last quoted sentence, but we thought that the right to confront and cross-examine adverse witnesses is a matter of due process. No? Besides, to don the garb of legal realism, since when does judicial consistency have anything to do with decisional law? As the beloved California Supreme Court Justice, the late Otto M. Kaus once put it (improving on a line of Justice Holmes): “The life of the law has not been logic, but expedience.” To say nothing of what is politely called judicial result orientation.

Anyway, to illustrate the problem with California law on this point, allow us to tell a war story from a case in which your faithful servant was involved. It was a partial taking of the front half of a one-acre parcel improved with a modest old house built when the area was out in the boondocks and a favorite of retired old folks (it later became a fashionable, horsy exurban area). The taking was of land only; it did not touch the house. It turned out that because of the change in the character of the area, there were no comparable sales of land anywhere near the subject property, only sales of those little old-folks retirement homes, or of large, horsy, estate-sized homes. But no sales of buildable land. The owner’s appraiser acknowledged that, and offered his general experience in support of his opinion. The condemnor responded with a motion to strike his opinion, which the trial judge granted, thus presenting the jury with only one opinion of value.

When the condemnor’s turn came, its appraiser announced that he found a comparable — a similar parcel improved with a similar house, but the house had burned down, so the sale was effectively treated by the parties as a a sale of land, as confirmed by its buyer, and as such a comparable. The judge admitted that sale.

In rebuttal, the condemnee called the owner of that supposedly burned-down house and — surprise, surprise — he testified that (a) the house had not burned down, that he was living happily in it, and (b) he never saw or spoke with the condemnor’s appraiser. The condemnor took the position that this only gave rise to an issue of fact for the jury. The judge  agreed.

So the owner’s counsel proceeded to argue to the jury that condemnor’s opinion was untrustworthy and should be rejected. Whereupon the judge interrupted the argument and said that he would be instructing the jury that because only one side’s valuation opinion came into evidence, the jury would have to award it, neither more nor less. The lawyer responded: “Is your Honor telling me I can’t argue the witness’ credibility?”  “Use your judgment,” said the judge. So the lawyer proceeded to argue that the condemnor’s appraiser’s opinion was unreliable, and should not be swallowed whole by the jury. When he finished, the judge sent out the jury and held the lawyer in contempt of court, which pissed off the lawyer mightily. So much so, that when the time came for the owner’s rebuttal jury argument, the aforementioned pissed-off lawyer told the jury the story about the trial of John Peter Zanger, and the famous principle established by it in pre-revolutionary times, that where the evidence is disputed, judges may not tell jurors what their verdict should be. So the judge held him in contempt again.

While your faithful servant was busying himself preparing a petition for a writ of mandate in the Court of Appeal, to rescue the aforementioned pissed-off lawyer from the judges’ clutches, the jury came back, and the following ensued: “THE COURT: Have you reached a verdict?” “JURY FOREMAN: We have reached a decision but not a verdict. Our decision is that we can’t arrive at a verdict because you gave us contradictory instructions. You instructed us that we were the sole judges of the credibility of witnesses, but you also instructed us to come back with an award equal to the condemnor’s appraiser’s opinion of value. But we can’t do that because we think he’s a liar.”

So who was right? The judge or the jury foreman?

Recall, if you are a Californian, that our state Constitution requires a trial by jury in condemnation cases, and the judge can’t interfere with that (see Metropolitan Water District v. Campus Crusade for Christ, where our Supreme Court had to explain that principle to a trial court judge). And trial by jury means that the jury — not the judge — is the trier of witness credibility.

So to get back to Mr. Rayl’s conundrum, there ain’t any — conundrum, that is. Where there is reason to doubt the veracity of a witness’ testimony — whether it is or isn’t the only evidence — it’s up to the jury to pass on the appraisers’ credibility — that’s what trials by jury are for. At least out here in la-la land juries are routinely instructed that they are sole judges of witness credibility.

Full disclosure. We were involved in the Campus Crusade for Christ case — it was our swan song as an appellate lawyer, the last case of ours as an appellate lawyer, although Norman Matteoni argued it. It made our exit from practice pretty cool.

Follow-up. Check out Rick Rayl’s follow-up, The Liston Brick Case: A Quick Follow-Up, August 22, 2012, on his blog, http://www.californiaeminentdomainreport.com/.

2 thoughts on “An Old Valuation Conundrum Revisited

  1. Pingback: The Liston Brick Company Case: A Quick Follow-Up : California Eminent Domain Report

  2. Pingback: The Liston Brick Company Case: A Quick Follow-Up | California Eminent Domain Report

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