The Snow Law Firm is a boutique law firm focusing in eminent domain and condemnation. With our office in San Antonio, Texas, we represent clients throughout Texas.
Our Texas eminent domain lawyers have successfully handled cases for a variety of landowners including individual property owners, business owners. These cases have covered a broad range of properties, ranging from residential, commercial and industrial properties to vacant land to special use properties.
The Snow Law Firm was published in a case ruling in 2013, in which it successfully fought for it’s client. The Snow Law Firm is dedicated to providing clients with the personal one-on-one attention they would receive from a small-firm attorney combined with the experience and resources of a larger firm. While we have and handled notable and precedent setting cases throughout Texas, we understand that every eminent domain cases are of the utmost importance to the individuals whose property is affected. Every client benefits from skilled and knowledgeable legal representation provided by our Texas eminent domain attorneys.
OUR TEXAS EMINENT DOMAIN ATTORNEYS
The attorneys at The Snow Law Office have a combined 80+ years of experience in eminent domain and regulatory takings. Unlike many other law firms where eminent domain is only one of many practice areas, we focus exclusively on this part of the law and have successfully handled many cases across the State of Texas. Our attorneys are routinely asked to educate the community, professional organizations and politicians on eminent domain issues and emerging case law.
Here is a Eminent Domain Case we have handled for a Client
Landowners Win Landmark Case
Against Pipeline; Set Precedent
This Case was successfully represented by the The Law Office of Corbin Snow
By Colleen Schreiber
AUSTIN — The Supreme Court of Texas recently ruled in favor of the landowner when it denied a petition for review in a pipeline easement litigation case.
Already LaSalle Pipeline v. Donnell Lands is being dubbed a landmark, precedent-setting case. That’s because the Supreme Court hasn’t often sided with the landowner in oil and gas-related matters. Perhaps more important, by denying the petition for review, the Supreme Court upheld the lower courts’ rulings with respect to damages for diminution in value to the remainder of the tracts subject to the permanent easement. Rarely, if ever, have damages to the remainder been paid to landowners.
J. Byron “Trace” Burton III, Uhl, Fitzsimons & Jewett PLL, San Antonio, has been closely following the case.
“The Supreme Court of Texas made the right decision by denying LaSalle Pipeline’s petition for review,” said Burton. “There was no conflict in the various lower Texas appellate courts on any of the issues in the case, nor was there any new point of Texas law that warranted the Supreme Court’s attention. As long as the damages awarded are within the range of values in evidence, the Fourth Court of Appeals and the Supreme Court of Texas made it clear that deference will be given to a jury’s decision on damages in a condemnation proceeding.”
Burton went on to say that his landowner clients are not only happy to see the petition denied, but also thankful that the Donnell family decided to take a stand in this matter.
Even before the Supreme Court denied LaSalle’s petition for review, landowners facing condemnation in the Eagle Ford were citing the appellate decision with regard to remainder damages.
Donnell’s expert witness testified that the portion of the Donnell property impacted by the pipeline amounted to 4100 acres of the total 8000-some acres. And the pipeline, he testified, decreased the value of those 4100 acres by 10 percent. He also testified that on the smaller tract, the value of the remainder was decreased by 25 percent.
Not surprisingly, LaSalle’s expert testified that the pipeline had no effect on the value of Donnell’s property. In their petition for review to the Supreme Court, LaSalle argued that, “Under the Fourth Court of Appeals’ reasoning, there can be no certainty or predictability in the budgeting for land costs associated with such projects, because under the Court of Appeals’ opinion, landowners may impermissibly reap substantial remainder damages based solely upon speculation and conjecture.”
That argument apparently carried little weight with the Supreme Court, and it is this issue in particular that has pipeline companies not only in the Eagle Ford but throughout the state rather stirred up.
Just days before the ruling, the case was the featured presentation at an eminent domain conference sponsored by CLE-International. Attorneys representing both parties presented their versions of the case to those in attendance. Thomas Alan Zabel, with Zabel Freeman, Houston, represented LaSalle Pipeline; Nissa Dunn, of Houston Dunn, San Antonio, represented the Donnell family when the case was appealed by LaSalle to the Fourth Court of Appeals in San Antonio.
The case was first tried in McMullen County about three years ago, just as the Eagle Ford play in South Texas was beginning to heat up and long before the play really changed the face of South Texas. In his opening remarks to those attending the eminent domain conference, Zabel opined that the playing field in the Eagle Ford was much different then compared to today.
He described McMullen County as a “very interesting place.” Only about 700 residents reside in the entire county.
“It has a jury pool of about 90 people who come to every jury summons — the same 90 people,” Zabel quipped. “They’re a very tight-knit group; they’ve lived there for generations. There are not a lot of outsiders. Some of them refer to their county as the ‘free-state of McMullen.’”
The Donnell family is a seventh generation ranching family.
“I found that they were liked by everyone in the county without exception, at least on the jury panel, for sure,” commented Zabel.
LaSalle Pipeline, a gas utility with the right of eminent domain, constructed a 52-mile gas pipeline to carry natural gas between the Tilden gas plant and a new plant in Pearsall. The pipeline was to cross two different parcels of the Donnell ranch. One parcel was a roughly 8000-acre tract and another was a 43-acre tract. LaSalle sought about a 17-acre permanent right-of-way and easement, and a 28-acre temporary construction easement across the ranch.
In May 2009 LaSalle filed its petition for condemnation. The two parties could not agree on the dollar amount related to the taking. In Texas when this occurs, the landowner is entitled to a hearing in which three special commissioners, citizens within the county appointed by the court, determine the amount to be awarded to the landowner. The following month the special commissioners awarded Donnell Lands $226,000 for the amount of the taking.
The Donnells appealed the award. Thus the case went to the 36th Judicial District Court in McMullen County, where it was tried before a jury in early October 2009.
The two parties were not that far apart on the dollar amount for the permit of the easement, which amounted to $34,533. Rather, their arguments focused primarily on the value the court awarded for the temporary workspace easement and in particular the remainder damages.
The McMullen County jury found that Donnell Lands was entitled to damages in the amount of $658,689. Of that total, $19,205 was for the temporary workspace easements and $34,533 was for the permanent easement. The majority of the reward, $604,950, was for the diminution in value to the remainder of the tracts. Attorney fees were not included in the figures, as the Donnell family paid its own expenses.
In January 2010, the court denied LaSalle’s motion to disregard the jury’s findings. LaSalle’s motion for a new trial was overruled in March.
From there, the case went to the Fourth District Court of Appeals in San Antonio. On December 15, 2010, the Court of Appeals upheld the trial court’s ruling for $604,950 in remainder damages and $34,533 for the fair market value of the easement itself. However, they reduced the damages awarded for the temporary workspace.
“We conclude the evidence is legally and factually sufficient to support some, but not all, of the jury’s damage award for the temporary workspace easements,” the opinion read. “We conclude the evidence is legally and factually sufficient to support the jury’s damage award for the diminution in value to the remainder. We also conclude the trial court did not err in overruling LaSalle’s challenges for cause. Accordingly, we modify the judgment to reduce the damages awarded for the temporary workspace easements, and affirm the judgment as modified.”
In March 2011, LaSalle filed a petition for review with the Supreme Court of Texas. On February 15, 2013, that petition was subsequently denied.
To support what the property was worth before the take, Donnell Land’s expert witness, Phil McCormick, a real estate appraiser, used four properties in McMullen County. Three of the properties had a pipeline easement; one did not. McCormick estimated the value of the property pre-taking to be $2000 per acre.
On damages, McCormick relied on a paired sale in Webb County, the county adjoining McMullen County, and the three McMullen County sales. McCormick testified that because the pipeline on the larger tract ran only through the northern half of the tract, damage was restricted to this portion of the property. Therefore, he estimated the diminution in value of the larger tract to be 10 percent.
As for the smaller tract, he testified that a pipeline across a smaller tract by its very nature would have a relatively greater impact on the land, and therefore he estimated a 25 percent decrease in the value of the smaller tract.
LaSalle tried to discredit that testimony by arguing it lacked foundation because the sales in Webb County were not comparable and because McCormick had not done an actual pipeline study to see whether in fact there was diminution in value as a result of a pipeline.
In their petition to the Supreme Court, LaSalle also argued that McCormick’s unsupported valuation was based on a flawed methodology and therefore the measure of damages was legally insufficient. In their briefs to the court, LaSalle, along with other parties who submitted amicus briefs, also noted that McCormick testified to the pre-taking value of the entire property and to a diminution in the value of the entire property. However, he did not testify to the pre or post-taking values of the remainder.
They also pointed out that while McCormick’s conclusion was that properties burdened by pipelines were reduced in value by 20 percent, he could not attribute that 20 percent decrease to the pipeline alone. Furthermore, LaSalle contended that McCormick “picked a number out of thin air,” 10 percent for the larger tract and 25 percent for the smaller tract, and failed to provide any support for such determinations.
Donnell argued before the Court of Appeals and in their brief to the Supreme Court that there is no requirement in Texas that comparable sales be in the same county as long as they meet the test of similarity. Donnell’s attorney also pointed out that the Supreme Court has recognized for many years that determining market value in condemnation cases is something of a hypothetical exercise. Dunn noted as well that the paired sales analysis, the methodology McCormick used, was the same methodology used by LaSalle’s expert.
“The only difference between the methodology applied by the two experts was that LaSalle’s expert actually went out and asked one party to each of his comparable sales whether the existence or absence of a pipeline affected the price that they paid for the property,” Dunn told listeners. “Our argument and position before the Court of Appeals was that even though that might be nice and a good piece of information to know, nothing about Texas law or standard appraisal methodology requires that an appraiser go out and ask either party to a sale his or her subjective opinion about the effect of an easement.
“The Supreme Court has said that the best guide to market value of a property is the price that willing buyers and sellers actually negotiate in the market,” she continued. “And when Mr. McCormick looked at the comparable sales, he found that, on average, properties burdened with pipelines sold for 20 percent less than properties that were not burdened with pipelines.”
She also pointed out that the prices of the comparables that LaSalle’s expert looked at were, in fact, on average, similarly lower per acre for properties that were burdened by pipeline easements. However, LaSalle’s expert disregarded that.
“He said it doesn’t matter, because he went out and talked to one party to each of the sales, and one party to the sale said that it didn’t impact the price paid and that there were other reasons for the change in value, like a surging market and differences in the property.”
Dunn also opined that requiring appraisers to get the opinion from those involved in a sale as to the impact a pipeline might or might not have on the value of the remainder raises another set of challenges, additional uncertainty and subjectivity in an area that’s already fairly subjective.
“What happens if the buyer and the seller disagree about the impact? In this case there was evidence from the same party presented by both sides, but each expert in their testimony cited a different version of what that party said as to the impact of the property.”
Jamie Donnell also testified on behalf of the Donnell family. Donnell testified that the value of the tract before the taking was $2500 per acre, and that in his opinion, damages amounted to somewhere around $900,000.
In the pipeline company’s petition for review to the Supreme Court, LaSalle contended that Donnell’s testimony was speculative and insufficient, and because Donnell was not a real estate appraiser, he lacked sufficient knowledge to value land and damages even though he was raised on the family ranch in McMullen County and had participated in numerous land transactions.
The Texas Pipeline Association submitted an amicus to the Supreme Court on behalf of LaSalle. They acknowledged that while as a landowner Donnell did not have to qualify as an “expert” to testify on his own behalf as to the market value of his property, they argued that the “Property Owner Rule” does not, however, render a landowner’s opinion on damage to his property competent. “To do so he must at very least establish a logical basis for his opinion.” Texas Pipeline Association contended that Donnell did not.
In denying LaSalle’s petition for review, the Supreme Court reaffirmed the Fourth Court of Appeals’ opinion. Specifically with regard to the remainder damages, the Fourth Court in its opinion wrote:
“When, as here, a condemnor takes only a portion of a landowner’s property, the landowner is entitled to compensation in the amount of the market value of the part taken, plus the damage to the remainder caused by the condemnation.”
In their argument, LaSalle cited the Callejo case, which is often referred to as the “before and after” measure of damages. However, in its opinion, the Fourth Court pointed out that there are several approaches for determining market value, but the one long favored is the comparable sales approach.
With respect to Donnell’s use of comparable sales in Webb County, the court in its opinion noted that “comparable sales must be voluntary, and should take place at or near in time to the condemnation, occur in the vicinity of the condemned property, and involve land with similar characteristics. Comparable sales need not be in the immediate vicinity of the subject land, so long as they meet the test of similarity.”
As to the reliability of the testimony offered by Donnell’s expert, Phil McCormick, the court wrote, “We take into consideration the nature of appraisal evidence. As the Texas Supreme Court has recognized, all appraisal opinion is at best something of a speculation, and the question of market value is peculiarly one for the fact-finding body.”
As for LaSalle’s argument that McCormick’s methodology was flawed, the court said this: “First, there is nothing in the record indicating that standard appraisal methodology requires an appraiser to first consider sales within the subject property’s county before considering sales outside the subject property’s county. Second, the record shows McCormick used comparable sales from both McMullen County and Webb County in reaching his conclusions about the effect of a pipeline easement on market value. Finally, the case law indicates there is no requirement that comparable sales be in the same county as the subject property.”
Referring specifically to LaSalle’s argument that McCormick did not get an opinion from involved parties of a sale as to whether or not a pipeline impacted the value of the property, the court wrote: “LaSalle cites no legal authority to support its contention that an appraisal expert must determine if the parties to comparable sales subjectively believed the existence or absence of a pipeline easement affected the sales price. We conclude McCormick’s testimony was based on a sufficiently reliable foundation to have been considered by the jury.”
With regard to LaSalle’s lack of foundation charge with respect to the percentage applied for figuring remainder damages, the court said: “According to LaSalle, McCormick’s failure to explain the percentages he applied amounted to an impermissible analytical gap between the data and his opinion. We disagree. Expert testimony is unreliable if there is too great an analytical gap between the data and the opinion proffered. Here, however, we are not convinced there is too great an analytical gap between the data and the opinion proffered.”
The opinion went on, “Moreover, even if there was a ‘gap’ in McCormick’s estimate of the damage to the remainder of tract two, we fail to see how it was harmful in this case. McCormick’s total estimate of the damage to the remainder was $843,490.00, of which only $23,490.00 was attributed to tract two. The jury’s finding of $604,905.00 in diminution in value to the remainder was substantially below McCormick’s total damage estimate.
“We conclude that any ‘gap’ between the comparable sales data and the conclusions drawn from it goes to the weight of McCormick’s testimony, rather than its reliability.”
Specific to the jury’s damages award, the court said, “Generally, the jury has broad discretion to award damages within the range of evidence presented at trial.”
Furthermore, the opinion said, “The jury’s findings may not be set aside because its reasoning in arriving at the amount of damages is unclear. When the trial evidence supports a range of damages awards, rather than two distinct options, an award within the range is an appropriate exercise of the jury’s discretion, and the reviewing court is not permitted to speculate how the jury actually arrived at its award.”
As for LaSalle’s argument that the jury had only two options in awarding damages — either the jury could have awarded the damages estimated by McCormick, which was $843,490, or it could have awarded the damages estimated by LaSalle’s expert, which was zero, the court also disagreed.
“The jury was entitled to set the value of the remainder at any amount between the lowest and highest values the expert witnesses put in evidence.”
The opinion went on to say, “The jury’s finding of $604,950.00, falls within the range of the evidence presented at trial and is supported by the evidence. In addition, here the evidence included not only expert testimony, but also comparable sales data from both McMullen and Webb counties. The record before us shows there was ample evidence on which a rational jury could have based its finding.”
LaSalle also argued that the jury made “an impermissible leap” outside of the evidence admitted at trial, and in so doing cited the Callejo case.
In Callejo, separate findings as to the land’s pre-taking and post-taking were made. It was a complicated case, but in the end the Supreme Court ruled that essentially the jurors are not bound to accept the parties’ expert testimony …” However, the Supreme Court also admonished that future condemnation cases should be submitted broadly in terms of the difference in market value of the land before and after the taking.
Thus, also citing Callejo, the Fourth Court in its opinion pointed out that in the LaSalle case, the issue of damages to the remainder was submitted broadly by Donnell’s expert.
“This is not a situation in which the record shows the jury impermissibly blended evidence of pre-taking and post-taking values. LaSalle’s evidence indicated the diminution in value to the remainder was zero; Donnell Land’s evidence indicated the diminution in value to the remainder was $843,490.00. Although the jury’s finding was below McCormick’s estimate, there is nothing in this record showing the jury arrived at this finding by impermissibly blending evidence or leaping outside of the evidence presented at trial.”
Finally, to the meat of the matter, the Fourth Court of Appeals wrote, “LaSalle argues it conclusively established through Bethel’s testimony that there was no diminution in value to the remainder. We disagree. In making this argument, LaSalle contends the only competent evidence on diminution in value to the remainder was provided by Bethel. The jury, however, was free to disbelieve Bethel’s testimony.”
In addition, as previously discussed, “McCormick provided competent evidence of the diminution in value to the remainder.
“Crediting all favorable evidence that reasonable jurors could believe and disregarding all contrary evidence except that which the jury could not ignore, we conclude the evidence is legally sufficient to support the jury’s finding that the diminution in value to the remainder was $604,950.00. Moreover, after reviewing all of the evidence, we cannot say that the evidence is so weak that the jury’s finding is clearly wrong and unjust. We, therefore, conclude the evidence is factually sufficient to support the jury’s finding that the diminution in value to the remainder was $604,950.00.”