Piedmont Natural Gas Co. v. Kinlaw

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA17-619
Filed: 20 March 2018
Robeson County, No. 12 SP 161
PIEDMONT NATURAL GAS COMPANY, INC., Petitioner-Appellant,
v.
SAMUEL L. KINLAW, Respondent-Appellee.
Appeal by Petitioner from an order entered on 7 June 2016 by Judge J. Gregory
Bell in Robeson County Superior Court. Heard in the Court of Appeals 10 January
2018.
Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, LPP, by William H.
Moss, for Petitioner-Appellant.
The Odom Firm, PLLC, by David W. Murray, and Williamson, Walton & Scott,
LLP, by C. Martin Scott II, for Respondent-Appellee.
ZACHARY, Judge.
Petitioner-Appellant Piedmont Natural Gas Company, Inc. (“PNG”) appeals
from an order granting the motion for a new trial filed by Respondent-Appellee
Samuel L. Kinlaw (“Mr. Kinlaw”). For the reasons that follow, we affirm.
Factual and Procedural Background
On 12 April 2012, PNG commenced a private condemnation action against Mr.
Kinlaw, seeking a 2.71 acre permanent easement for an underground natural gas
transmission line, together with temporary construction easements totaling 1.31
acres. Both the permanent and temporary easements cross a 60-acre tract of
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Opinion of the Court
farmland owned by Mr. Kinlaw.
On 17 May 2013, the Clerk of Superior Court for Robeson County entered a
consent judgment providing that PNG would receive the easements it sought and
would make a nonrefundable payment to Mr. Kinlaw of $240,000, but that Mr.
Kinlaw would retain the right to appeal the amount of compensation for the taking
of the easements in a jury trial. Mr. Kinlaw filed a notice of appeal the same day.
The issue of the amount of compensation that PNG owed to Mr. Kinlaw for the
taking of the easements was tried beginning on 7 March 2016 before the Honorable
J. Gregory Bell. Prior to trial, the trial court granted Mr. Kinlaw’s motion in limine,
“limit[ing] any reference to any sale or sales price for any property without the Court
first conducting a voir dire of the sale or sales price to determine its relevance,
comparability and admissibility.”
Mr. Kinlaw’s evidence consisted solely of his testimony and exhibits supporting
his opinion of the amount of just compensation to which he was entitled for PNG’s
taking of the easements. On direct examination, Mr. Kinlaw testified that, based
upon his experience and research, the highest and best use of the subject property
immediately prior to the taking on 12 April 2012 was for residential development.
Mr. Kinlaw further testified that, although the highest and best use of most of the
property would remain residential development after the taking, the highest and best
use for some of his property after the taking would be for agricultural use. His opinion
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was that the property had a value of $2,400,000 immediately prior to the taking, but
a value of only $1,670,000 after the easements were granted. Accordingly, Mr. Kinlaw
sought just compensation of $730,000, the difference in value according to his opinion
and calculations.
During cross-examination, Mr. Kinlaw was questioned, over his objection,
about the sale of a nearby property referred to by the parties as the “Snake Road
property.” Although Mr. Kinlaw denied knowing the sales price of the Snake Road
property and denied making handwritten notations on a copy of the deed for the
Snake Road property, PNG was allowed to cross-examine Mr. Kinlaw over objection
about the handwritten notes on a copy of the Snake Road deed indicating a sales price
of $3,638 per acre. Mr. Kinlaw was also cross-examined about the similarity of his
handwriting and the handwritten notes on the Snake Road deed. Aside from Mr.
Kinlaw’s property, the Snake Road property was the only other specific property for
which evidence of a per-acre value or sales price was introduced.
PNG did not offer any evidence. On 10 March 2016, the jury returned a verdict
finding that the sum of $200,000 would be just compensation for the taking of Mr.
Kinlaw’s property by PNG. On 12 May 2016, the trial court entered judgment for Mr.
Kinlaw in that amount. On 18 May 2016, Mr. Kinlaw filed a motion for a new trial,
which was heard on 26 May 2016. Thereafter, on 7 June 2016, the trial court entered
an order granting Mr. Kinlaw’s motion. PNG filed its “Motion for Findings of Fact
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and Conclusions of Law, or, in the Alternative, Motion to Reconsider Granting of
Respondent’s Motion for New Trial,” which was denied by the trial court on 11 August
2016. PNG has appealed to this Court from the order granting Mr. Kinlaw a new
trial.
Interlocutory Nature of Appeal
An order “is either interlocutory or the final determination of the rights of the
parties.” N.C. Gen. Stat. § 1A-1, Rule 54(a) (2016). “An interlocutory order is one
made during the pendency of an action, which does not dispose of the case, but leaves
it for further action by the trial court in order to settle and determine the entire
controversy.” Veazey v. Durham, 231 N.C. 354, 362, 57 S.E.2d 377, 381 (1950)
(citation omitted). An order granting a new trial is interlocutory. “Generally, there is
no right of immediate appeal from interlocutory orders and judgments.” Goldston v.
Am. Motors Corp., 326 N.C. 723, 725, 392 S.E.2d 735, 736 (1990). However, pursuant
to N.C. Gen. Stat. § 1-277(a), “[a]n appeal may be taken from every judicial order . . .
[that] grants or refuses a new trial.” N.C. Gen. Stat. § 1-277(a) (2016).
Standard of Review
It is well-established that “an appellate court’s review of a trial judge’s
discretionary ruling either granting or denying a motion to set aside a verdict and
order a new trial is strictly limited to the determination of whether the record
affirmatively demonstrates a manifest abuse of discretion by the judge.” Worthington
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v. Bynum, 305 N.C. 478, 482, 290 S.E.2d 599, 602 (1982) (citation omitted). “A trial
court may be reversed for abuse of discretion only upon a showing that its actions are
manifestly unsupported by reason.” White v. White, 312 N.C. 770, 777, 324 S.E.2d
829, 833 (1985) (internal citations omitted). A trial court’s discretionary order “will
be upset only upon a showing that it was so arbitrary that it could not have been the
result of a reasoned decision.” Id.
Trial Court’s Decision to Grant a New Trial
The order granting Mr. Kinlaw a new trial does not contain findings of fact or
conclusions of law. However, the parties agree that the disputed evidentiary issue at
trial and at the hearing on Mr. Kinlaw’s motion for a new trial was the propriety of
allowing PNG to cross-examine Mr. Kinlaw about the sales price per acre of the Snake
Road property, as indicated in handwritten notes on a copy of the deed for the
property. On appeal, PNG argues that the trial court properly permitted cross-
examination on this subject and that the court abused its discretion when it granted
a new trial. We disagree.
We first consider whether PNG was properly allowed to cross-examine Mr.
Kinlaw at trial about handwritten notes on a copy of the Snake Road property deed
indicating the alleged sales price of the property. We conclude that, on the facts of
this case, it was error to allow this cross-examination.
The parties do not dispute that at a trial on the issue of just compensation for
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a taking, the parties may offer evidence of the price paid at voluntary sales of
comparable properties as evidence of the value of the property that has been subject
to the taking. North Carolina State Highway Commission v. Helderman, 285 N.C.
645, 653-54, 207 S.E.2d 720, 726 (1974). The issue in the present case is under what
circumstances a party may elicit the sales price of property that has not been
determined to be comparable.
The leading case on this issue is Duke Power Company v. Winebarger, 300 N.C.
57, 265 S.E.2d 227 (1980). In Winebarger, our Supreme Court ordered a new trial for
the defendants where improper references were made regarding values and sales
prices of noncomparable properties during cross-examination of the defendants’
expert witnesses. Winebarger, 300 N.C. at 59-61, 265 S.E.2d at 229-30. The Court
held that “[a] witness who expresses an opinion on property value may be cross-
examined with respect to his knowledge of values of nearby properties for the limited
purpose of testing the worthiness of his opinion, or challenging his credibility, even if
those properties are not similar to that involved in the litigation.” Winebarger, 300
N.C. at 61, 265 S.E.2d at 231 (emphasis in original) (citation omitted). Winebarger
drew a sharp distinction between cross-examination on the extent of a witness’s
knowledge of the sales price of property that had not been determined to be
comparable and cross-examination as to the specific prices of property:
[W]hile a witness’ knowledge, or lack of it, of the values and
sales prices of certain noncomparable properties in the
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area may be relevant to his credibility, the specific dollar
amount of those values and prices will rarely if ever be so
relevant. The impeachment purpose of the cross-
examination is satisfied when the witness responds to a
question probing the scope of his knowledge. Any further
inquiry which states or seeks to elicit the specific values of
property dissimilar to the parcel subject to the suit is at
best mere surplusage. At worst it represents an attempt by
the cross-examiner to convey to the jury information which
should be excluded from their consideration.
Winebarger at 64-65, 265 S.E.2d at 231-32 (emphasis in original). Winebarger also
emphasized the limitations of this cross-examination:
Under these limited impeachment circumstances, . . . it is
improper for the cross-examiner to refer to specific values or
prices of noncomparable properties in his questions to the
witness. Moreover, if the witness responds that he does not
know or remember the value or price of the property asked
about, the impeachment purpose of the cross-examination
is satisfied and the inquiry as to that property is
exhausted. If, on the other hand, the witness asserts his
knowledge on cross-examination of a particular value or
sales price of noncomparable property, he may be asked to
state that value or price only when the trial judge
determines in his discretion that the impeachment value of
a specific answer outweighs the possibility of confusing
the jury with collateral issues. In such a rare case,
however, the cross-examiner must be prepared to take the
witness’ answer as given.
Winebarger at 66, 265 S.E.2d at 232-33 (internal citations omitted) (emphasis added).
In the present case, we conclude that it was error for the trial court to allow
PNG to cross-examine Mr. Kinlaw about the sales price of the Snake Road property.
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First, there was no foundation for the use of the sales price of the Snake Road
property. The trial court ruled prior to trial that, before allowing examination on the
value of specific property, the trial court would conduct a voir dire examination to
determine whether the property was comparable to Mr. Kinlaw’s property. Property
is “comparable” if it is “similar in nature, location, and condition to the condemnee’s
land.” State v. Johnson, 282 N.C. 1, 21, 191 S.E.2d 641, 655 (1972). In this case, the
trial court did not determine whether the Snake Road property was comparable to
Mr. Kinlaw’s property. Absent a showing that a particular property is comparable to
the property at issue, “there [is] no foundation for the use of [a] witness’s statement
of its sales price as competent circumstantial evidence of the value of land.” Board of
Trans. v. Chewning, 50 N.C. App. 670, 671-72, 274 S.E.2d 902, 904 (1981). Where no
such showing or determination was made at trial, this Court has viewed the
properties as “noncomparable” in deciding whether the sales price was properly
introduced or referenced. See, e.g., Id.; Winebarger, 300 N.C. 57, 265 S.E.2d 227
(1980); Dep’t of Transp. v. Burnham, 61 N.C. App. 629, 634, 301 S.E.2d 535, 538
(1983) (Where there was no determination or showing of comparability at trial, “[i]t
was an error for the court to permit cross-examination of [the expert witness] as to
the price for which [another property] was sold.”). Thus, the specific sales price for
the Snake Road property was not properly admissible as competent circumstantial
evidence of the value of Mr. Kinlaw’s land.
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In addition, PNG’s questions were not proper impeachment of Mr. Kinlaw
and his knowledge of land values. While Mr. Kinlaw stated that he was aware of the
sale of the Snake Road property, he denied knowing the sales price, stating, “I think
[the buyer] traded some, or bought some from the [sellers], or something. I really don't
know.” Despite this denial, PNG then made a reference to the price of the Snake Road
property in the next question to Mr. Kinlaw, asking, “And you know that Mr. John
Barker bought this property that's right down Snake Road for around $3,500 an acre.
Isn't that correct?”. It is clearly improper to refer to specific sales prices of
noncomparable properties in questions to a witness on cross-examination. See
Winebarger, 300 N.C. at 66, 265 S.E.2d at 232-33. Furthermore, as our Supreme
Court held in Winebarger, “if the witness responds that he does not know or remember
the value or price of the property asked about, the impeachment purpose of the cross-
examination is satisfied and the inquiry as to that property is exhausted.” Id. Here,
the impeachment of Mr. Kinlaw as to his knowledge, or lack thereof, of the sales price
of the Snake Road property should have ended when he stated that he did not know
the sales price, and PNG’s questions exceeded the bounds of relevancy.
Moreover, the underlying basis of PNG’s cross-examination did not constitute
competent evidence of the sales price of the Snake Road property. PNG’s cross-
examination on this issue was based solely upon handwritten notations of a sales
price on a copy of a deed that had been produced during discovery. No evidence was
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adduced as to the accuracy of these notes or whether they reflected the actual sales
price of the Snake Road property.
The only allowable purpose for which PNG might have cross-examined Mr.
Kinlaw about the handwritten notes was to impeach Mr. Kinlaw’s testimony that he
did not know the sales price of the Snake Road property. However, because Mr.
Kinlaw denied that he had made the notes on the deed, PNG could not properly cross-
examine Mr. Kinlaw on the collateral issue of the similarity of the notes to other
examples of Mr. Kinlaw’s handwriting. As our Supreme Court held in Carver v. Lykes,
262 N.C. 345, 137 S.E.2d 139 (1964):
The “utmost freedom of cross-examination” to test a
witness’ knowledge of values . . . does not mean that
counsel may ask the witness if he doesn’t know that a
certain individual sold his property for a stated sum with
no proof of the actual sales price other than the implication
in his question. Where such information is material it is
easy enough to establish by the witness himself, whether a
certain property has been sold to his knowledge and, if so,
whether he knows the price. If he says he does not know,
his lack of knowledge is thus established by his own
testimony and doubt is cast on the value of his opinion. If
he asserts his knowledge of the sale and, in response to the
cross-examiner’s question, states a totally erroneous sales
price, is the adverse party bound by the answer or may he
call witnesses to establish the true purchase price? Unless
per chance the purchase price of the particular property was
competent as substantive evidence of the value of the
property involved in the action, it would seem that the party
asking the question should be bound by the answer. To hold
otherwise would open a Pandora's box of collateral issues.
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Carver, 262 N.C. at 356-57, 137 S.E.2d at 148 (1964) (quoting Barnes v. Highway
Commission, 250 N.C. 378, 395, 109 S.E.2d 219, 233 (1959)) (emphasis added). In
urging us to reach a contrary result, PNG argues that this case is distinguishable
from Winebarger because Mr. Kinlaw “asserted his knowledge” of the sales price of
the Snake Road property by producing the deed in discovery. However, Mr. Kinlaw
denied making the handwritten notes on the deed or knowing the sales price. As
discussed above, even where a witness “asserts his knowledge on cross-examination
of a particular value or sales price of noncomparable property, [the witness] may be
asked to state that value or price only when the trial judge determines in his
discretion that the impeachment value of a specific answer outweighs the possibility
of confusing the jury with collateral issues.” Winebarger, 300 N.C. at 66, 265 S.E.2d
at 232-33 (citing Carver, 262 N.C. at 356-57, 137 S.E.2d at 148 (1964)). However, in
such a case, “the cross-examiner must be prepared to take the witness’ answer as
given.” Id.
For the reasons discussed above, we conclude that Mr. Kinlaw could properly
be asked whether he was familiar with the sales price of other properties in the
vicinity of his property, including the Snake Road property. However, it was error to
allow cross-examination on the purported sales price, given that (1) there was no
determination that the Snake Road property was a comparable property; (2) Mr.
Kinlaw denied any knowledge of the sales price; (3) no competent evidence was
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introduced that the notes accurately stated the sales price; and (4) Mr. Kinlaw denied
making the handwritten notes on the Snake Road deed.
The sole basis of PNG’s argument that the trial court abused its discretion by
awarding Mr. Kinlaw a new trial is that the trial court ruled correctly that the cross-
examination was admissible. Given that we have concluded that the trial court erred
by allowing this cross-examination, we reject this argument. In addition, N.C. Gen.
Stat. § 8C-1, Rule 403 (2016) provides that “[a]lthough relevant, evidence may be
excluded if its probative value is substantially outweighed by the danger of unfair
prejudice, confusion of the issues, or misleading the jury, or by considerations of
undue delay, waste of time, or needless presentation of cumulative evidence.” As a
result, even if the challenged cross-examination were admissible, it would be within
the trial court’s authority to determine that the evidence should have been excluded
and that its admission warranted a new trial.
Effect of Curative Instruction
PNG argues that even if the trial court erred by allowing cross-examination on
the sales price of the Snake Road property, the error was cured by the limiting
instruction given to the jury. Generally, there is a “presumption that the jury followed
the letter and intent of the judge’s instructions.” Winebarger, 300 N.C. at 67, 265
S.E.2d at 233. However, our Supreme Court has also stated:
Whether an instruction to disregard or give limited
consideration to evidence cures an error potential in its
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admission must always depend upon the nature of the
evidence admitted and the circumstances of the case. If the
evidence admitted is obviously prejudicial, and especially
if it is emphasized by repetition or by allowing it to remain
before the jury for an undue length of time, it may be too
late to cure the error by withdrawal or cautionary
instructions.
Id. (citation and quotation marks omitted). In this case, the alleged sales price of the
Snake Road property was stated four times in PNG’s cross-examination of the sole
witness at trial, and was the only sales price heard by the jury. Moreover, that
evidence was allowed to remain before the jury without a limiting instruction until
immediately prior to closing arguments, which took place the afternoon following Mr.
Kinlaw’s cross-examination. This was sufficient to allow the trial judge to determine
that, in his discretion, a new trial was warranted. The trial court did not abuse its
discretion by failing to conclude that its error was cured by the limiting instruction.
Prejudice
Finally, PNG argues that the trial court’s order granting a new trial must be
reversed on the grounds that Mr. Kinlaw failed to show that, in the absence of the
cross-examination on the sales price of the Snake Road property, the result of the
trial would have been different. We disagree.
PNG correctly notes that in order to “obtain relief on appeal, an appellant must
not only show error, but . . . must also show that the error was material and
prejudicial, amounting to denial of a substantial right that will likely affect the
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outcome of an action.” Bogovich v. Embassy Club of Sedgefield, Inc., 211 N.C. App. 1,
14, 712 S.E.2d 257, 266 (2011) (quoting Starco, Inc. v. AMG Bonding and Ins.
Services, 124 N.C. App. 332, 335, 477 S.E.2d 211, 214 (1996)) (quotation marks
omitted). As the appellant, it is PNG’s burden to establish that the trial court’s ruling
was an abuse of discretion. The trial court granted Mr. Kinlaw’s motion for a new
trial, and therefore Mr. Kinlaw does not have the burden of proof on appeal. PNG
must show that the trial court’s ruling was “manifestly unsupported by reason” and
“so arbitrary that it could not have been the result of a reasoned decision.” White, 312
N.C. at 777, 324 S.E.2d at 833. PNG has failed to demonstrate that the trial court,
which presided over this trial and was in the best position to determine whether Mr.
Kinlaw was prejudiced by the evidentiary ruling, abused its discretion in granting
Mr. Kinlaw a new trial.
Conclusion
For the reasons discussed above, we conclude that the trial court did not abuse
its discretion by granting Mr. Kinlaw a new trial and that its order should be
affirmed.
AFFIRMED.
Judges CALABRIA and ARROWOOD concur.
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