The State of Texas v. Sherley Partners, Ltd., a Texas Limited Partnership ( 2023 )

Affirmed and Opinion Filed May 11, 2023
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-21-01160-CV
THE STATE OF TEXAS, Appellant
V.
SHERLEY PARTNERS, LTD.,
A TEXAS LIMITED PARTNERSHIP, Appellee
On Appeal from the County Court at Law No. 4
Collin County, Texas
Trial Court Cause No. 004-01692-2018
MEMORANDUM OPINION
Before Justices Partida-Kipness, Smith, and Breedlove
Opinion by Justice Breedlove
The trial court rendered judgment on a jury’s verdict for appellee Sherley
Partners, Ltd. in this condemnation case. In two issues, the State contends there is
no evidence or insufficient evidence to support the jury’s verdict and that the trial
court erred by denying the State’s motion to exclude evidence. We affirm the trial
court’s judgment.
BACKGROUND
The State filed this statutory condemnation proceeding to acquire a portion of
Sherley Partners, Ltd.’s property for the widening of State Highway (SH) 121 in
Collin County, Texas. The case proceeded to a jury trial to determine the damages
to Sherley resulting from the taking.
As the State argued in closing, the parties agreed on several matters, including
(1) the size of the property to be taken, (2) the value of the 7.9583 acres to be taken,
(3) that the taking will result in a “sizeable” denial of access to the remaining
acreage, and (4) that the taking will result in damages to Sherley. 1 The parties
disagreed, however, on the damages resulting to the remaining acreage.
Sherley proffered the testimony of two expert witnesses to support its
damages claim: Jon David Cross, a civil engineer, and Josh Korman, a real estate
appraiser. Cross opined that after the taking, the entire property lacked adequate
frontage on SH 121 to develop the remaining acreage in accordance with applicable
fire codes and other development standards.
Korman testified that before the taking, the property’s single highest and best
use was “future mixed use,” while after the taking, the property’s single highest and
best use was for “future residential.” Korman performed two appraisals of the
property–one of the entire 168 acre tract and one of the approximately160 acres
remaining after the taking. He agreed with Cross that the 160 acre tract remaining
1
In stipulations read to the jury, the parties agreed: “It is stipulated and agreed by and between the
parties in this matter that in accordance with Section 21.042D of the Texas Property Code, there is a material
impairment of direct access on or off defendant’s remaining property that affects the market value of the
remaining property,” and “the only matter remaining at issue between plaintiff and the defendant in this
case is the amount of compensation due to the defendant for the fair market value of the property condemned
and taken and damages to the remainder of the property not taken.” See TEX. PROP. CODE ANN. § 21.042(d).
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after the taking would lose 1300 feet of access to SH-121, leaving only two small
secondary roads for access to the remaining acres. He, therefore, opined that a
proper calculation of the diminution in value required a consideration of the
diminution in value of the entire remaining tract.
The State offered the testimony of its own engineer, Dawit Abraham, and real
estate appraiser, Mitchell B. Todd. Abraham worked as a design consultant manager
on the SH 121 project for the Texas Department of Transportation. Consistent with
Cross’ conclusion, Abraham acknowledged that the taking would result in a denial
of access from the property to SH 121.
The crux of the parties’ dispute centered around the testimony offered by Todd
and Korman. While Korman agreed with Todd that that the comparable sales
approach was the proper method to calculate the value of the remaining property,
they disagreed on what tract of remaining property should be valued. Rather than
consider the entire 168 acre tract, Todd testified that only approximately 30 acres
was relevant. Todd opined that “the remaining 150 or so acres that the property
owner has outside of the commercial area” did not need to be considered because “I
don’t think it’s going to be damaged.” He testified that he created the 30-acre tract
by relying on a City of Anna future land use plan and market data. However, Todd
admitted that the 30-acre tract lacked its own survey or legal description and had
never been bought or sold in the market. He also acknowledged that the irregular
shape he created for this tract was inferior to the shape of properties he used as
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comparables in his appraisal. It was also undisputed by all experts there was poor
access from SH 121 to both Todd’s 30-acre tract, as well as the remaining acreage
that Todd considered irrelevant.
The jury was charged to make findings regarding the fair market value of the
property taken and the damages to the property remaining. Based on the jury’s
findings, the trial court rendered judgment for Sherley for $3,931,605.00. This
appeal followed.
ISSUES AND STANDARDS OF REVIEW
In two issues, the State contends (1) the trial court erred by denying the State’s
motion to exclude evidence and testimony, and (2) there is no evidence or
insufficient evidence to support the jury’s finding of $3,498,277.00 in damages to
Sherley’s remaining property in response to Question No. 2 of the jury charge.
We review the trial court’s rulings on admission and exclusion of evidence
for abuse of discretion. Caffe Ribs, Inc. v. State, 487 S.W.3d 137, 142 (Tex. 2016);
Collin Cty. v. Hixson Family P’ship, Ltd., 365 S.W.3d 860, 869 (Tex. App.—Dallas
2012, pet. denied) (complaints of error in admission of expert witness testimony in
condemnation case are reviewed for abuse of discretion). We also review a trial
court’s enforcement of a scheduling order for abuse of discretion. Esty v. Beal Bank
S.S.B., 298 S.W.3d 280, 295–96 (Tex. App.—Dallas 2009, no pet.). A trial court
abuses its discretion when it acts without regard for any guiding rules. Caffe Ribs,
Inc., 487 S.W.3d at 142.
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An appellant attacking the legal sufficiency of an adverse finding on which it
did not have the burden of proof must demonstrate that no evidence supports the
finding. State v. Johnson, 444 S.W.3d 62, 82 (Tex. App.—Dallas 2014, pet. denied).
There is “no evidence” when (1) there is a complete absence of evidence of a vital
fact, (2) the court is barred by rules of law or evidence from giving weight to the
only evidence offered to prove a vital fact, (3) the evidence offered to prove a vital
fact is no more than a mere scintilla, or (4) the evidence conclusively establishes the
opposite of the vital fact. Id. “The final test for legal sufficiency must always be
whether the evidence at trial would enable reasonable and fair-minded people to
reach the verdict under review.” Id. (internal quotations omitted). We review the
evidence in the light most favorable to the verdict, crediting favorable evidence if
reasonable jurors could and disregarding contrary evidence unless reasonable jurors
could not. Id.In conducting a factual sufficiency review, we consider and weigh all the
evidence. State v. CC Telge Rd., L.P., 605 S.W.3d 742, 759 (Tex. App.—Houston
[1st Dist.] 2020, pet. denied). When there is a challenge to the factual sufficiency of
evidence supporting an adverse finding on which the appellant did not have the
burden of proof at trial, we set aside the verdict only if the evidence supporting the
finding is so weak as to make the verdict clearly wrong and manifestly unjust. Id.The jury is the sole judge of the credibility of the witnesses and the weight to
be given to their testimony. McKinney Indep. Sch. Dist. v. Carlisle Grace, Ltd., 222
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S.W.3d 878, 882 (Tex. App.—Dallas 2007, pet. denied). We defer to the jury’s
determination of these matters and to its resolution of conflicting evidence. City of
Keller v. Wilson, 168 S.W.3d 802, 819–20 (Tex. 2005).
DISCUSSION
The Texas Constitution requires the State to compensate landowners when it
takes property for public use. TEX. CONST. art. I, § 17. When the State takes only
part of a landowner’s property, the State must make adequate compensation both for
the part taken and for any severance damages to the remainder not taken. Johnson,
444 S.W.3d at 70. Damages to the remainder of the property are generally calculated
by ascertaining the market value of the remainder immediately before and
immediately after the condemnation, considering the nature of any improvements
and the use of the land taken. Id. Here, the State challenges the admissibility and
sufficiency of the evidence to support the jury’s award of damages.
1. Admission of expert valuation testimony
In its first issue the State contends the trial court erred by denying the State’s
motion to exclude appraiser Joshua Korman’s opinions. The State argues that
Korman’s opinions should have been excluded as “unreliable, irrelevant,
speculative, and conclusory.”
Sherley responds that the State waived its objections to Korman’s testimony
by failing to file them by the deadline for doing so in the trial court’s scheduling
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order. Sherley also argues that even if the State’s objections were timely made, the
trial court did not abuse its discretion by allowing Korman to testify.
We conclude the trial court did not err by denying the State’s untimely motion
and that Korman’s opinions were not conclusory.
A. State’s motion to exclude
The trial court’s scheduling order required the parties to file motions to
exclude expert witnesses, “including but not limited to those motions to exclude per
the Robinson/Daubert standards,” by December 16, 2019. The order’s deadlines
applied “unless modified by written agreement by the parties or by further order of
this Court.” The December 16, 2019 deadline was never extended in the parties’ later
agreements to continue the trial date and extend other deadlines.
Sherley designated Korman as an expert on July 12, 2019 2 and produced his
expert report on the same day. The State did not file any motions challenging
Korman’s opinions until September 8, 2021, more than a year after the deadline and
less than a week prior to commencement of trial. The State’s motion challenged
Korman’s assignment of a single value per acre and a single future use to the entire
acreage both before and after the State’s taking. The State argued that Korman’s
failure to assign different values that corresponded to specific future uses rendered
his opinions “logically inconsistent.”
2
Although the appellate record does not include the designations, both parties state in their briefs that
they designated their experts on July 12, 2019.
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Sherley filed written objections to the State’s motion later the same day,
complaining that the motion was untimely, highly prejudicial, and lacked good
cause. Sherley filed additional objections on the morning of trial addressing the
substance of the State’s complaints about Korman’s opinions.
The trial court heard the motion to exclude immediately before empaneling
the jury on September 13, 2021, and denied it in a written order that did not specify
the grounds. The State made no further objections to Korman’s testimony.
The State argues that because the trial was postponed to a date more than three
months after the discovery period ended, its objections were timely. The State cites
rule of civil procedure 190.5 in support of its argument. But the plain language of
rule 190.5(b) requires the trial court to allow additional discovery “regarding matters
that have changed materially after the discovery cutoff if trial is set or postponed so
that the trial date is more than three months after the discovery period ends.” TEX.
R. CIV. P. 190.5(b). Korman’s report and opinions were produced to the State more
than two years before trial, and the State does not identify any matter that “changed
materially” after the scheduling order’s deadlines elapsed.
We conclude the State waived its objections to Korman’s testimony by failing
to object by the date set in the court’s scheduling order. See B/K Series Invs., LLC v.
ECOM Series Invs., LLC, No. 05-22-00115-CV, 2023 WL 2821876, at *11 (Tex.
App.—Dallas Apr. 7, 2023, no pet. h.) (mem. op.) (appellant waived objection to
expert testimony by failing to object by date set in scheduling order). Accordingly,
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the trial court did not abuse its discretion by denying the State’s motion. Collin Cty.,
365 S.W.3d at 869; see also Esty, 298 S.W.3d at 296 (no abuse of discretion to strike
expert’s affidavit not filed by deadline in scheduling order).
B. No-evidence challenge to Korman’s testimony
Despite its failure to timely object at trial, the State may challenge Korman’s
testimony as conclusory, making a no-evidence challenge on appeal. Bombardier
Aerospace Corp. v. SPEP Aircraft Holdings, LLC, 572 S.W.3d 213, 223 (Tex. 2019).
Conclusory testimony cannot support a judgment because it is considered no
evidence. Id. at 222. “An expert’s testimony is conclusory when the expert asserts a
conclusion with no basis.” Id. at 223. The court in Bombardier Aerospace Corp.
explained:
If the jury must guess if a vital fact exists, a reviewing court does not
undermine the jury’s role by sustaining a no-evidence challenge. If
reasonable and fair-minded people would differ in their conclusions
based on the trial evidence, then jurors may also. And if the evidence
falls within this zone of reasonable disagreement, a court may not
substitute its judgment for the jury’s. We consider the evidence in the
light most favorable to the verdict, indulging every reasonable
inference in support of the verdict. In determining whether the
testimony [the expert] presented to the jury was conclusory, we
consider the face of the record, which includes his testimony to the jury
and his appraisal report.
Id. (citations omitted).
An expert must connect the data relied on to his opinion and show how that
data is valid support for the opinion reached. Sw. Energy Prod. Co. v. Berry-Helfand,
491 S.W.3d 699, 717 (Tex. 2016). “If there is too great an analytical gap between
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the data relied on and the expert’s opinion, the expert’s testimony is unreliable.” Id.“[A]n expert’s statement or opinion is conclusory when: (1) he asks the jury to take
his word that his opinion is correct but offers no basis for his opinion or the bases
offered do not actually support the opinion; or (2) he offers only his word that the
bases offered to support his opinion actually exist or support his opinion.” Windrum
v. Kareh, 581 S.W.3d 761, 769 (Tex. 2019). “The line determining whether an expert
opinion is conclusory is difficult to draw, and close calls must go to the trial court.”
Id. at 770 (internal quotation omitted). “[W]hen the evidence falls within the zone
of reasonable disagreement, the court may not substitute its judgment for that of the
fact finder.” Id.
The State complains that Korman’s testimony about the value of the property
both before and after the taking is “logically inconsistent.” The State argues that in
valuing the property before the taking, Korman could not specify exactly when, how,
or where commercial development would occur, yet he applied the same value
throughout the entire tract without accounting for different uses. The State argues
that in valuing the property after the taking, Korman reduced all portions of the
acreage by the same amount despite his acknowledgement that commercial
development would not extend to the rear of the property. The State contends that
developing that portion of the property for residential use would be borne by a
developer, a city, or a county, not Sherley.
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On these issues, however, Korman did not merely offer his word to the jury
without explaining the basis for his opinions. See Windrum, 581 S.W.3d at 777
(expert’s testimony was not conclusory when he provided specific reasons for his
conclusions based on his expertise). The record reflects that Korman provided
detailed testimony about the before and after appraisals he conducted on the
property, the principles he applied in determining the highest and best use of the
property, the data he considered, and the information he obtained from civil engineer
Cross, who also testified at trial.
Korman analyzed a total of thirteen comparable property sales in determining
the property’s value before and after the taking. He testified that in his opinion, the
eight acres acquired by the State would not sell in the marketplace by itself. He also
explained that the eight acres “contributed to the whole” tract by providing access,
and that after the taking, “because of the denial of access, and only being able to
have accessibility of the property from a fairly narrow driveway, 30 feet, you’re
limited to the usage that you can put on the property.” He opined that with “one 30-
foot entrance versus two or three 60-foot entrances,” the property lost 40 percent of
its value. In his opinion, the property had “been moved from a mixed use to just a
residential, and quite frankly something that is a little bit more speculative in nature.”
Civil engineer Cross agreed, testifying that the property had “1,600 linear feet of
frontage on State Highway 121 with no restrictions for access” before the State’s
taking, but after the taking, “[y]ou’ve lost your front door” to SH 121.
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Although Korman could not predict exactly when and how development
would occur, he explained why he concluded that the property had a higher and
better use than its existing use. Korman explained that the property is located in “one
of the fastest growing counties in the entire United States,” describing the growth as
“phenomenal.” He testified that he considered the property’s most likely buyer to be
one “who would buy and hold this land for future mixed use,” an investor with “a
long-term perspective on the market.” “Holding land as an investment is a legitimate
use of land and a theory of market value that a jury may consider.” Crosstex N. Tex.
Pipeline, L.P. v. Gardiner, 505 S.W.3d 580, 611 (Tex. 2016).
Korman concluded that absent the State’s taking, Sherley’s 168 acres would
have had a mix of uses in the future including “some type of residential, and then
you have a commercial aspect to it, so it could be retail, office and potentially some
light industrial.” He opined that the property was not ready for mixed use
development on the dates of his appraisals, because although “development is
coming that way, it’s just not there.” He testified that the residential use would
develop first, and then the commercial, retail, and office uses would follow. The
record reflects that Korman explained his methodology in valuing the property and
how he applied the methodology to reach his conclusions. See Windrum, 581 S.W.3d
at 777. Accordingly, we conclude his opinions were not conclusory. See id.
Todd’s differing opinion about how to apply the same valuation
methodology—by assigning a value to only a small portion of the remaining
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property—did not render Korman’s opinions conclusory. 3 See In re State, 355
S.W.3d 611, 617 (Tex. 2011) (orig. proceeding) (where parties disagreed about
applicable economic unit and highest and best use for condemned property, they
should be permitted to offer evidence to support their contentions at trial).
“[O]pinions are not legally insufficient simply because the opinions contradict one
another. Instead, the opinions raise fact issues which the jury must resolve.”
McKinney Indep. Sch. Dist., 222 S.W.3d at 885.
Considering the evidence in the light most favorable to the jury’s verdict and
indulging every reasonable inference in support of the verdict, we conclude the jury
was not required to “guess if a vital fact exists” in answering the questions about the
property’s value and that reasonable and fair-minded people could differ in their
conclusions based on the trial evidence. See Bombardier Aerospace Corp., 572
S.W.3d at 223. Accordingly, we decide the State’s first issue against it.
3
On appeal, the State also contends Korman’s “qualitative” analysis of comparable properties was
inferior to Todd’s “quantitative” analysis. Todd testified that he made percentage adjustments to account
for the differences between Sherley’s property and the comparable properties used in his analysis, rather
than noting only whether a comparable property was superior, inferior, or equal to Sherley’s. Sherley
responds that Korman “did explain the bases for his adjustments,” testifying without objection about “land
sales adjustment grids” he created for considering differences in “property rights conveyed, financing terms,
conditions of sale, market conditions, et cetera” in the properties. Sherley argues the State did not object to
Korman’s testimony on this basis or otherwise challenge the adjustments Korman made. Todd himself
testified that his use of a quantitative analysis was “just my preference” “to get a little more precise,” but
that “[o]ther appraisers do it qualitatively.” As we have explained, the State has waived complaints about
Korman’s testimony other than a no-evidence challenge. See Bombardier Aerospace Corp., 572 S.W.3d at
223. To the extent the State contends Korman’s use of a qualitative analysis renders his opinions
impermissibly conclusory and unsupported by any evidence, the record does not support this argument.
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2. Sufficiency of the evidence
In its second issue the State contends there is no evidence or insufficient
evidence to support the jury’s verdict. The State argues that the jury’s findings were
influenced by the erroneous admission of Korman’s testimony, resulting in the
rendition of an improper judgment. Because we have concluded that the trial court
did not err by admitting Korman’s testimony, however, the jury could consider it in
making its findings. See CC Telge Road, L.P., 605 S.W.3d at 759–60 (holding
“ample evidence” supported jury’s verdict after rejecting State’s admissibility
arguments).
Sherley argues that the jury “acted well within its discretion” when it accepted
the testimony of Sherley’s experts. In Question No. 2, the only finding at issue in
this appeal,4 the jury was asked to determine “the damages to Sherley Partners’
Remaining Property as of July 30, 2018.” The jury answered $3,498,277.00, the
amount Sherley requested in closing argument based on Korman’s testimony that
the value of the remaining acres was $3,486,447.00, plus $11,830.00 as the “cost to
cure” damage to the remainder. See Mian Dev’t Corp. v. State, No. 05-17-01385-CV,
2019 WL 6486282, at *7 (Tex. App.—Dallas Dec. 3, 2019, pet. denied) (mem. op.)
4
The jury charge consisted of two questions. In Question No. 1, the jury was asked to determine “the
Fair Market Value due to Sherley Partners for the State’s Taking as of July 30, 2018.” The jury answered
$433,328.00, the amount Sherley requested for the 7.9583 acres taken by the State. Korman testified to his
calculations supporting Sherley’s request for this amount. As the State argued for the jury to find a higher
number in response to Question No. 1, the State does not now challenge the sufficiency of the evidence to
support the jury’s answer.
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(“When only a part of a tract is taken, as here, the landowner is entitled to (1) the
fair market value of the part taken and (2) any damage to the remainder as a result
of the taking.” [internal quotation omitted]).
As we have discussed, the parties’ experts offered conflicting opinions about
how to value Sherley’s property. These opinions raised fact issues for the jury’s
resolution. McKinney Indep. Sch. Dist., 222 S.W.3d at 885. The jury’s answer to
Question No. 2 was supported by the evidence Sherley offered at trial. Concluding
that the evidence was legally and factually sufficient to support the jury’s verdict,
we decide the State’s second issue against it. See id.; Johnson, 444 S.W.3d at 82(legal sufficiency standard); CC Telge Rd., L.P., 605 S.W.3d at 759 (factual
sufficiency standard).
CONCLUSION
The trial court’s judgment is affirmed.
/Maricela Breedlove//
211160f.p05 MARICELA BREEDLOVE
JUSTICE
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Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
THE STATE OF TEXAS, Appellant On Appeal from the County Court at
Law No. 4, Collin County, Texas
No. 05-21-01160-CV V. Trial Court Cause No. 004-01692-
2018.
SHERLEY PARTNERS, LTD., A Opinion delivered by Justice
TEXAS LIMITED PARTNERSHIP, Breedlove. Justices Partida-Kipness
Appellee and Smith participating.
In accordance with this Court’s opinion of this date, the judgment of the trial
court is AFFIRMED.
It is ORDERED that appellee Sherley Partners, Ltd., a Texas Limited
Partnership recover its costs of this appeal from appellant the State of Texas.
Judgment entered this 11th day of May, 2023.
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