Rover Pipeline LLC v. 10.55 Acres, 2018 U.S. Dist. LEXIS 157188 (Sept. 14, 2018)
If more proof is necessary to show that courts across all legal fields dive deep into the details of valuation testimony, a recent damages case that arose in the context of a condemnation proceeding should do the trick.
The plaintiff company had permission from the federal government to construct a pipeline through 700 tracts of land. The plaintiff reached agreements with almost all property owners. However, two landowners who operated a Christmas tree farm on some of the condemned land, decided to try the issue of compensation. They argued that the construction was making it impossible to grow their “highly coveted Fraser fir tree” in the future. Further, the construction had already caused significant loss by forcing the owners to prematurely harvest their Christmas trees.
The landowners hired three experts to determine damages. Essentially, the experts were asked to separate the property from the business and value each component individually. The court excluded all experts under Daubert, finding the resulting "piecemeal" approach did not meet the requirements for the admission of expert testimony. The court also noted the experts disregarded the applicable measure of damages and their analyses resulted in a combined loss value that exceeded the value of the fair market value of the affected property. Moreover, the experts gave inconsistent testimony.
In addition, the court had particularly harsh words for the analysis the business valuation expert offered. Specifically, the expert was unable to support critical elements of her income analysis with authoritative sources. The court observed the income analysis generated a much higher loss figure than did the expert's asset and a market analyses did.
For more on why the court found the expert’s income analysis “disturbing” and unreliable, click here.