Nevada Power Co. v. 3 Kids, L.L.C.

129 Nev., Advance Opinion 117
IN THE SUPREME COURT OF THE STATE OF NEVADA
NEVADA POWER COMPANY, A No. 56881
NEVADA CORPORATION,
Appellant,
vs. FILED
3 KIDS, LLC, A NEVADA LIMITED
LIABILITY COMPANY,
JUL 0 3 Z013
4.?
Respondent.
Appeal from a district court judgment on a jury verdict in an
eminent domain action. Eighth Judicial District Court, Clark County;
Stefany Miley, Judge.
Affirmed.
Ballard Spahr LLP and Stanley W. Parry and Timothy R. Mulliner, Las
Vegas; Reisman Sorokac and Heidi J. Parry Stern, Las Vegas,
for Appellant.
Cotton, Driggs, Walch, Holley, Woloson & Thompson and Stacy D. Harrop
and Gregory J. Walch, Las Vegas,
for Respondent.
BEFORE THE COURT EN BANC.'
OPINION
By the Court, GIBBONS, J.:
In this opinion, we review a jury instruction regarding the
determination of fair market value of condemned property, a portion of
'The Honorable Kristina Pickering, Chief Justice, voluntarily
recused herself from participation in the decision of this matter.
SUPREME COURT
OF
NEVADA
(0) 1947A
-/957
which is located within a government setback, for the purpose of
ascertaining just compensation. Although we conclude that the jury
instruction at issue provided an overbroad reading of our decision in City
of North Las Vegas v. Robinson, 122 Nev. 527, 134 P.3d 705 (2006), we
conclude that no prejudice was established because a separate jury
instruction remedied the error. Additionally, we consider whether the
district court abused its discretion by allowing testimony provided by
respondent 3 Kids, LLC's expert. We conclude that the district court did
not abuse its discretion by allowing the expert to testify regarding her
paired sales analysis. Therefore, we affirm the district court's judgment.
FACTS AND PROCEDURAL HISTORY
3 Kids purchased a 3-acre parcel west of the Las Vegas Strip
(the property) for $8.65 million. The property was zoned for industrial
use, but 3 Kids believed it could be re-zoned for more intensive
development. The northernmost 20 feet of the property is in a county
setback. The only developments a landowner may perform in the setback
relate to landscaping and parking. Nevada Power already had an existing
10-foot-wide utility easement within the setback.
In 2008, appellant Nevada Power Co. informed 3 Kids that it
was going to exercise two easements on the property for installation of
high-voltage transmission lines: one 5-foot-wide easement on the north
side of the property located within the setback (the Harmon easement)
and a 35-foot easement on the east side of the property (the Eastern
easement). Nevada Power offered 3 Kids $750,000 for the easements, but
3 Kids rejected the offer and the issue of just compensation went to trial.
At trial, 3 Kids argued that Nevada Power owed $2,106,000 in just
compensation based on a theory that holding the property for a speculative
rise in market value was its highest and best use. 3 Kids' expert, Tami
SUPREME COURT
OF
NEVADA
2
(0) 1947A
-
Campa, valued the property at $85 per square foot and concluded Nevada
Power was taking 90% of the rights to the land within the easements,
except for the area the pole occupied (which was 100%). Disagreement
ensued over the value of the Harmon easement, since it was within a
setback and 3 Kids' use of the property was limited to landscaping and
parking. Campa did not consider the Harmon easement's location within
the setback because buyers pay an average price per square foot. Campa
used a paired sales analysis to determine that the value of the remainder
of the property was impaired as a result of the installation of the high-
voltage transmission lines. 2
Nevada Power's experts disagreed with Campa and concluded
that the amount of just compensation due was only $556,000, based on an •
industrial development highest and best use. Nevada Power's expert
determined that Nevada Power was taking 10% of the rights to the land
within the Harmon easement since it was within a setback and
determined that Nevada Power was taking 75% of the rights of the land
within the Eastern easement. Nevada Power's expert valued the property
at $65 per square foot and valued the easements at only $45 per square
foot. This reflected the 10% decrease on the Harmon easement and the
75% decrease on the Eastern easement. Nevada Power's expert also
opined that no severance damages existed as a result of the installation of
the high-voltage transmission lines. Severance damages are damages
A paired sales analysis estimates the value of the subject property
2
based on previous sales of comparable properties. A paired sales analysis
can also be used to isolate a particular variable—in this case, power
lines—to determine the impact of that variable on property values.
SUPREME COURT
OF
NEVADA
3
(0) 1947A
awarded to compensate for the difference between the value of the
remainder property before and after the taking.
During the reading of the jury instructions, Nevada Power
objected to Jury Instruction No. 35, which instructed the jury to disregard
the setback in its valuation of the property, on the grounds that 3 Kids'
use of the area within the setback was limited to parking and landscaping.
3 Kids responded that this court's holding in Robinson was broad enough
to encompass the proposed instruction. The district court agreed with 3
Kids and included the instruction.
After deliberation, the jury awarded 3 Kids $1.7 million in just
compensation. The jury found by special verdict that $823,000 of the
award represented compensation for the value of the easements taken and
that $894,000 of the award was for severance damages. Nevada Power
now appeals.
DISCUSSION
Jury Instruction No. 35 incorrectly stated the holding of Robinson, but this
error did not affect Nevada Power's substantive rights
We review a district court's approval of a jury instruction for
abuse of discretion or judicial error. FGA, Inc. v. Giglio, 128 Nev. „
278 P.3d 490, 496 (2012). We review de novo whether an instruction is a
correct statement of the law. Cook v. Sunrise Hosp. & Med. Ctr., L.L. C.,
124 Nev. 997, 1003, 194 P.3d 1214, 1217 (2008). Even if a jury instruction
misstates the law, it only warrants reversal if it causes prejudice
substantially affecting the party's rights, and "but for the error, a different
result might have been reached." Id. at 1005-06, 194 P.3d at 1219.
Jury Instruction No. 35 read:
In determining the fair market value of the land
in which the easement is sought, you are required
to value the property as a whole, and not put a
SUPREME COURT
OF
NEVADA
4
(0) 1947A
lesser value on the portion of the property to be
condemned based upon any governmental
restrictions that apply solely to that portion.
Nevada Power argues that this instruction runs afoul of this court's
holding in City of North Las Vegas v. Robinson, 122 Nev. 527, 134 P.3d
705 (2006). We agree.
In Robinson, the City of North Las Vegas sought to condemn a
portion of a larger parcel. Id. at 529, 134 P.3d at 706. Absent a taking,
that portion was subject to a dedication requirement to the City if the land
was commercially developed. Id. Both parties agreed that the highest and
best use of the property was commercial, but the City's expert valued the
property based on uses that would not trigger a dedication (open space,
fencing, directional signage, and the right to remove trespassers), given
the fact that a commercial valuation would have rendered the condemned
portion valueless by triggering the dedication requirement. Id. at 530, 134
P.3d at 707. The district court gave an instruction that directed the jury
to "determine the value of the condemned parcel in the before condition
based upon only those uses to which the property can be put without
obtaining government approvals that would trigger the dedication." Id. at
529, 134 P.3d at 706. This court held that the instruction was inconsistent
with just compensation requirements in Nevada because it "caused the
jury to ignore the highest and best use of the entire parcel and to
improperly sever the condemned portion from the whole parcel." Id. at
531, 134 P.3d at 707; see Cnty. of Clark v. Alper, 100 Nev. 382, 386-87, 685
P.2d 943, 946 (1984) ("Just compensation' requires that the market value
of the property should be determined by reference to the highest and best
use for which the land is available and for which it is plainly adaptable.").
SUPREME COURT
OF
NEVADA
(0) 1947A
Here, the first portion of Jury Instruction No. 35, which
instructed the jury to value the property as a whole, is consistent with our
holding in Robinson. But the second part, which instructed the jury not to
"put a lesser value on the portion of the property to be condemned based
upon any governmental restrictions that apply solely to that portion," is
inconsistent with our language in Robinson. In Robinson, we stated that
the trier of fact is permitted to consider "evidence of land-use restrictions
that would influence a prudent purchaser when purchasing the
condemned property." Id. at 532, 134 P.3d at 708. In certain situations,
evidence of land-use restrictions may not be considered, such as where it
causes the jury to disregard the highest and best use of the whole parcel.
Id. at 532-33, 134 P.3d at 708-09 (citing Alper, 100 Nev. at 389-90, 685
P.2d at 947-49). As a restriction on land use, an existing setback is
generally a proper matter for the jury to consider. See Alper, 100 Nev. at
387, 685 P.2d at 946 ("As a restriction on land use, an existing zoning
ordinance is generally regarded as a proper matter for the jury's
consideration."). This appeal does not present a situation like that in
Robinson where the restriction caused the jury to disregard the highest
and best use of the whole parcel by valuing the property at a lower use in
order to avoid triggering the setback. Despite this fact, Jury Instruction
No. 35 instructs the trier of fact to disregard the setback in a situation
that did not cause them to disregard the highest and best use of the whole
parcel. Therefore, we conclude that this portion of the instruction was
erroneous.
This error only warrants reversal if it caused prejudice that
substantially affected Nevada Power's rights. See Cook, 124 Nev. at 1005-
06, 194 P.3d at 1219 (holding that reversal of a district court's judgment is
SUPREME COURT
OF
NEVADA
6
(0) 1947A
warranted only where an error in the statement of law in a jury
instruction is prejudicial). Jury Instruction No. 19, which was also read to
the jury, stated, in pertinent part:
If the land subject to the easement will still have
some market value after the taking of the
easement and the construction and improvement
in the manner proposed, Nevada Power is required
to pay on the decrease in market value that
results from the easement.
Thus, in determining the compensation to be
awarded for taking the easement, you must first
determine the fair market value of the land in
which the easement is sought and then determine
the value of the same land as it will be subject to
the easement and the construction of the proposed
improvement. The difference between these
amounts will be the value of the easement.
Because Jury Instruction 19 correctly applies this court's reasoning in
Robinson, the instruction alleviated any prejudice to Nevada Power
caused by the erroneous language in Jury Instruction No. 35. Id.Additionally, the jury's verdict was supported by substantial
evidence, and "[t]his court will not overturn a jury's verdict if the verdict is
supported by substantial evidence unless, [considering] all the
evidence . . . , the verdict was clearly wrong." Clark Cnty. Sch. Dist. v.
Virtual Educ. Software, Inc., 125 Nev. 374, 384, 213 P.3d 496, 503 (2009)
(internal quotation omitted). The jury's conclusion that the easement was
worth $823,290 was nearly $400,000 lower than 3 Kids' calculation, but
about $267,000 more than Nevada Power's valuation, indicating that the
jury did not completely disregard the setback. The jury also valued the
property as a whole between 3 Kids' estimate of $85 per square foot and
Nevada Power's estimate of $65 per square foot, both for purposes of the
calculation of damages based on Nevada Power's taking of the easement
SUPREME COURT
OF
NEVADA
(0) I947A
7
5;44444:4,,N 3
and for determining the proper severance damages. Given that these
numbers were within the range provided by the experts, we cannot say
that the verdict was clearly wrong. We thus conclude that substantial
evidence supports the jury's verdict. Clark Cnty. Sch. Dist., 125 Nev. at
384, 213 P.3d at 503.
We suggest the following instruction, or something similar, in
cases where a jury is tasked with determining just compensation for a
piece of property burdened by a land-use restriction where the jury does
not need to disregard the highest and best use of the land:
In determining the fair market value of the land
in which the easement is sought, you are required
to value the land as a whole based on its highest
and best use and look to the most probable price
which the property would bring in an open market
under the conditions of a fair sale. To determine
the most probable price, you must not focus solely
on the condemned portion, but you may consider
evidence of land-use restrictions that would
influence a prudent purchaser when purchasing
the condemned property.
The district court did not abuse its discretion by allowing 3 Kids' expert's
testimony
Nevada Power also argues that the district court abused its
discretion by allowing 3 Kids' expert, Tami Campa, to testify about her
paired sales analysis when she did not disclose certain backup data from
five property sales used to support her calculation of the proper price per
square foot for 3 Kids' parcel. Nevada Power also asserts that the district
court should have allowed it to present maps and reports to rebut Campa's
testimony. We disagree.
We review a district court's decision to admit expert testimony
for a clear abuse of discretion. In re Mosley, 120 Nev. 908, 921, 102 P.3d
555, 564 (2004). NRCP 16.1(a)(2)(B) requires an expert's report to
"contain a complete statement of all opinions to be expressed and the basis
and reasons therefor; the data and other information considered by the
witness in forming the opinions." While Campa's analysis of the five sales
in question was less thorough than other areas of her 160-page report, we
conclude that these weaknesses went to the weight of the evidence and not
its admissibility. See Williams v. Eighth Judicial Dist. Court, 127 Nev.
„ 262 P.3d 360, 368 (2011) (noting that concerns about the
reliability of expert testimony went to weight, not admissibility). These
weaknesses were appropriate topics for cross-examination. Nevada Power
had a wide range of unused tools available to address any issues with the
report before trial, including motions to compel production of documents,
motions in limine, development of a competing paired sales analysis, and
vigorous cross examination. See Daubert v. Merrell Dow Pharm., Inc., 509
U.S. 579, 596 (1993) ("Vigorous cross-examination, presentation of
contrary evidence, and careful instruction on the burden of proof are the
traditional and appropriate means of attacking shaky but admissible
evidence."). Therefore, we conclude the district court did not abuse its
discretion in permitting Campa's testimony. Mosley, 120 Nev. at 921, 102
P.3d at 564.
Nevada Power raises additional issues relating to Campa's
testimony. First, Nevada Power argues that the district court should have
allowed it to present maps and reports during rebuttal based on the APN
numbers Campa provided during 3 Kids' case-in-chief. Due to Campa's
imprecise identification of the parcels she used in her paired sales
analysis, Nevada Power guessed which sales she used when developing
their own expert report. However, once the APNs were disclosed at trial,
SUPREME COURT
OF
NEVADA
9
(0) 1947A
Nevada Power realized some of its assumptions were incorrect and
attempted to provide rebuttal information based on the actual parcels that
Campa used. We conclude that the district court acted within its
discretion by refusing to allow Nevada Power to introduce information in
rebuttal that was not disclosed prior to trial. NRCP 16.1(a)(3); M.C.
Multi-Family Dev., L.L.C. v. Crestdale Assocs., Ltd., 124 Nev. 901, 913,
193 P.3d 536, 544 (2008) (stating that this court "review [s] a district
court's decision to admit or exclude evidence for abuse of discretion,
and. . . will not interfere with the district court's exercise of its discretion
absent a showing of palpable abuse"); Sheehan & Sheehan v. Nelson
Malley & Co., 121 Nev. 481, 492, 117 P.3d 219, 226 (2005) (holding that
the trial court has broad discretion to determine the admissibility of
evidence). NRCP 16.1(a)(3) requires that rebuttal evidence be provided to
other parties at least 30 days before trial, and Nevada Power first
produced the maps and report at issue during trial.
Nevada Power also argues that Campa's testimony violated
NRS 50.285 because her paired sales analysis lacked verifiable and
reliable data relating to the five property sales. NRS 50.285 does not
define the type of documentation or data on which experts may rely,
however, and does not support Nevada Power's argument. We further
conclude that the district court properly denied Nevada Power's request to
play a portion of Campa's video deposition at trial as Nevada Power's
counsel agreed that he could examine the witness live instead. See Clark
Cnty. v. State, 65 Nev. 490, 506, 199 P.2d 137, 144 (1948) ("[A] party on
appeal cannot assume an attitude. . . inconsistent with. . . that taken at
the hearing below.").
10
CONCLUSION
We conclude that the district court erred by giving Jury
Instruction No. 35, but this error did not prejudice Nevada Power in light
of Jury Instruction No. 19. We also conclude that the district court did not
abuse its discretion by allowing 3 Kids' expert's testimony and by
excluding Nevada Power's rebuttal evidence. We have considered the
parties' remaining arguments and conclude that they are without merit.
Accordingly, we affirm the district coi.w.,t's
J.
Gibbons
We concur:
J.
Hardesty
p 0.4.)t
Parraguirre
J.
Saitta
11