Diers Partnership v. State, Dept. of Roads

767 N.W.2d 113

17 Neb. App. 561

WALTER C. DIERS PARTNERSHIP, a Nebraska partnership, Appellee and Cross-Appellant, v. STATE of Nebraska, DEPARTMENT OF ROADS, Appellant and Cross-Appellee.

No. A-08-274.

Court of Appeals of Nebraska.

May 5, 2009.

Appeal from the District Court for Dodge County: John E. Samson, Judge. Affirmed and remanded with directions.

Jon Bruning, Attorney General, Bradley D. Thornton, South Sioux City, Jennifer A. Huxoll, Lincoln, and Jeffery T. Schroeder, for appellant.

Thomas B. Thomsen, of Sidner, Svoboda, Schilke, Thomsen, Holtorf, Boggy & Nick, Fremont, for appellee.

INBODY, Chief Judge, and SIEVERS and CASSEL, Judges.

CASSEL, Judge.

I. INTRODUCTION

The State of Nebraska, Department of Roads (the State), condemned land in a rapidly evolving commercial development owned by Walter C. Diers Partnership (Diers) at the intersection of U.S. Highways 275 and 30 on the eastern edge of Fremont, Nebraska. In the appeal to district court from the county court's award, the court entered judgment pursuant to jury verdict for $1,043,079, without mentioning interest on the award. We find no abuse of discretion in the court's evidentiary rulings admitting the expert testimony of Diers' appraiser, excluding the State's offer of an earlier appraisal prepared for Diers for another purpose, and admitting the property owner's testimony regarding the sale price of other lots within the development. Because we conclude that Neb.Rev. Stat. § 76-711 (Reissue 2003) mandated that Diers be awarded interest on the judgment, we remand with directions to amend the judgment.

II. BACKGROUND

The State acquired fee simple title to 4.12 acres of Diers' land and a temporary easement to an additional 4.47 acres as of September 28, 2004, for purposes of road construction. Diers appealed to the district court from the assessment by the county court's board of appraisers. The district court conducted a jury trial on December 11 to 14 and 18, 2007, for the sole purpose of assessing the damages that resulted from the taking. At the conclusion of the evidence, the jury awarded Diers $1,043,079. The court entered judgment pursuant to the verdict but did not explicitly award Diers any interest.

1. LAND

The land acquired by the State was originally part of a 195-acre parcel owned exclusively by Diers and lies at the northeast corner of Diers' property. This corner adjoins the intersection of Highways 275 and 30 and is located on the eastern edge of Fremont. In light of the location, the parties do not dispute that the highest and best use of the property acquired was for development purposes.

As of September 28, 2004, Diers had taken significant measures to develop the northern 125 acres of the property, which was separated from the southern 70 acres of the property by a creek. Charles H. Diers (Charles), one of the partners in Diers, began to contemplate developing the northern 125 acres in 1998, when he hired a development coordinator to create site plans. Ultimately, Diers decided to develop the land in stages, in order to avoid the prohibitive costs associated with developing the entire 125 acres at one time. These costs would have included both the cost of improving the land and the cost of paying increased real estate taxes on lots after they had been platted but not yet sold, and a likely loss associated with having created more lots than the market then demanded.

In approximately 2002, Diers had a parkway constructed in roughly the middle of the property, running from the northern edge to the southern boundary of the property. Although the city of Fremont actually constructed the parkway, Diers paid for a large portion of the cost associated with its construction. The parkway has two lanes on each side, a landscaped median, and streetlights. The parkway also contained sewer, water, and gas lines that would be connected to lots as they were later developed.

Diers then platted four lots that were adjacent to the parkway and located at the northern edge of the property. In order to do so, Diers first developed a preliminary plat which showed a development plan for the entire 125 acres. On April 30, 2002, the city council approved Diers' preliminary plat, which contained 27 proposed lots and was entitled "Diers Second Addition." The approval of the preliminary plat remained effective for 2 years. At the same time as the approval of the preliminary plat, Diers received approval of a final plat of the four lots adjacent to the parkway. This plat was also called Diers Second Addition. As a result of the final platting, the four lots were rezoned from agricultural to commercial and became salable.

Prior to the condemnation, Diers sold and fully developed three of the four lots in the final plat of the second addition. A chain restaurant purchased one lot for $300,000, or $4.47 per square foot. Charles testified that he purposefully gave the restaurant a significant discount because he wanted to "jumpstart" development. A local bank acquired two lots for a total of $1,269,773, or $10.16 per square foot. To accomplish these sales and the development of these properties, Diers had an additional road constructed which ran parallel to Highway 30 and along the southern edge of these lots.

In 2002, Diers also established the "Deer Pointe" commercial association and created restrictive covenants for the commercial development which Diers had planned. Prior to the condemnation, Diers had also obtained a topographical map of the entire area and had a boundary survey conducted. By the time the taking occurred, Diers had spent a total of approximately $2.6 million to develop the northern 125 acres.

At trial, Diers adduced evidence that but for the taking, the area of the taking would have already been developed, platted, and sold. Diers had created and circulated a pricelist to market the lots that were proposed but not yet developed as of the date of condemnation. Douglas Halvorson, the site's development coordinator, and Charles testified that they had originally planned to next develop the lots on the corner of Highways 275 and 30 but discontinued these plans once they became aware of the taking. Numerous witnesses testified to the desirability of the location where the taking occurred. Primarily, the appeal of this particular location was that it was in a high-traffic area, was highly visible, and would have been easily accessible.

Diers also adduced evidence regarding the detrimental effects of the taking on the remainder of the property. The taking included the removal of an access which would have allowed convenient entrance to the land remaining in the northeast corner of the property. Richard See—Diers' certified real estate appraiser—testified that this land would now have to be accessed via the parkway, which was 2,000 feet from the proposed lots, whereas the access taken by the State would have been 300 feet from the lots. Diers offered the testimony of Halvorson and two others who had worked on developing the property, all of whom testified that the taking of this access made the property in this area less valuable to potential buyers.

2. VALUATION TESTIMONY

Diers offered See's expert testimony regarding the damages resulting from the taking. See concluded that the damages totaled $2,158,158. See calculated the damages resulting from the loss of land based on the assumption that but for the taking, the northeast corner of Diers' property would have otherwise been sold as individual commercial lots as depicted in the preliminary plat of Diers Second Addition. See used already-developed lots as comparables to arrive at the condemned property's value by factoring in the costs associated with developing the condemned property. See then calculated damages to the remainder of the land on the premise that removing the access would transform corner lots—which have a higher value due to easy access—into interior lots—which are less valuable because access is more difficult.

Charles testified regarding the sale price of the lots on the portions of the property which were sold both before and after the taking and which had been commercially developed.

The State offered the testimony of Gary Hassebrook, a general certified appraiser, and that of another appraiser regarding the land's value. At the request of Diers' accountant, Hassebrook appraised the property for tax purposes and valued the land at $25,000 per acre as of January 16, 2003. The district court sustained Diers' objection to the relevance of the testimony, excluding the appraisal both because it was "too remote in time" and because the court "didn't hear anything linking [Hassebrook's] appraisal from January of '03 to September 28, 2004," the date of the taking.

Although no error is assigned regarding the amount of the jury verdict or the admissibility of the State's evidence, for the sake of completeness, we note that the State presented valuation testimony of its expert, George Tesar, Jr., a general certified appraiser, who testified that the value of the property taken by the State was $137,066 total.

The State timely appeals, and Diers cross-appeals.

III. ASSIGNMENTS OF ERROR

The State alleges, as restated, that the district court erred (1) in allowing valuation testimony from See which valued the subject parcel using a "lot" or "subdivision" method of valuation, including a hypothetical assumption that the property acquired was fully developed as of the valuation date; (2) in excluding Hassebrook's expert testimony regarding his January 16, 2003, appraisal of Diers' property; and (3) in overruling the State's objection to Charles' testimony regarding the sale of developed lots on the subject property.

On cross-appeal, Diers alleges that the district court erred in failing to award interest pursuant to § 76-711 on the judgment.

IV. STANDARD OF REVIEW

The admission of expert testimony is ordinarily within the trial court's discretion, and its...