Houston Unlimited, Inc. Metal Processing v. Mel Acres Ranch

IN THE SUPREME COURT OF TEXAS
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NO. 13-0084
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HOUSTON UNLIMITED, INC. METAL PROCESSING, PETITIONER,
v.
MEL ACRES RANCH, RESPONDENT
════════════════════════════════════════════════════
ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE FOURTEENTH DISTRICT OF TEXAS
════════════════════════════════════════════════════
Argued December 5, 2013
JUSTICE BOYD delivered the opinion of the Court.
JUSTICE BROWN did not participate in the decision.
In this case, the owner of land that was contaminated by a neighbor seeks to recover for
loss of the land’s market value based on “stigma” that remained after the contamination subsided.
Although some federal and other states’ courts have recognized a legal right to recover stigma
damages, we have never addressed the issue. We decline to do so here, however, because even if
we recognized such a right, the landowner’s evidence of lost market value in this case is not legally
sufficient to support the trial court’s judgment. We must therefore reverse and render a take-
nothing judgment in the defendant’s favor.
I.
Background
Mel Acres Ranch owns a 155-acre tract of undeveloped ranchland off Highway 290 in
Chappell Hill, Texas. Across the highway, Houston Unlimited, Inc. operates a metal processing
facility. Rainwater flows from the area around the metal processing facility through a culvert under
the highway and into a large stock tank on the ranch. In late 2007, a rancher who was leasing the
ranch complained that his calves had experienced a number of birth defects and deaths. The
rancher’s associate reported that he had seen a Houston Unlimited employee “dumping” contents
of a large drum into the culvert and that pipes were discharging materials from Houston
Unlimited’s facility. Mel Acres hired an environmental consultant to test the area for contaminants.
These tests revealed the presence of arsenic, chromium, copper, nickel, and zinc exceeding “state
action levels”1 in water in the culvert, and the presence of copper exceeding state action levels in
the water in the stock tank.
In light of these results, Mel Acres filed a complaint with the Texas Commission on
Environmental Quality. Commission inspectors soon made an unannounced visit to Houston
Unlimited’s facility and took their own soil and water samples. In the area near the culvert behind
the facility, water samples revealed the presence of chromium, copper, lead, nickel, and zinc
exceeding state action levels and a “corrosive and hazardous” pH level, and soil samples revealed
the presence of aluminum and chromium exceeding state action levels. From the culvert between
Houston Unlimited’s property and Highway 290, water samples revealed chromium, copper,
aluminum, and zinc in excess of state action levels, and soil samples revealed aluminum in excess
of state action levels. Water samples from the stock tank on Mel Acre’s ranch revealed the presence
of copper in excess of state action levels.
1
The parties use the term “state action level” to refer to the level of the presence of a contaminant above
which the state, through the Texas Commission on Environmental Quality, will require an owner or operator of a
facility to take “corrective action.” See, e.g., E-Z Mart Stores, Inc. v. Ronald Holland’s A-Plus Transmission &
Automotive, Inc., 358 S.W.3d 665, 669 (Tex. App.—San Antonio 2011, pet. denied). The Commission’s regulations
define this as the level that, “in the opinion of the agency,” is “harmful to human health and safety or the environment.”
30 TEX. ADM. CODE § 334.504(b). These levels are “determined by the agency,” which “may issue additional
directives should the corrective action activities prove to not be effective in reducing the contaminant levels at a
sufficient rate.” Id. § 334.504(c), (d).
2
The Commission’s inspectors discovered during their visit that Houston Unlimited was in
violation of several regulations governing its discharge of hazardous waste2 and concluded that it
had committed an unauthorized discharge of industrial hazardous waste that had affected Mel
Acres’ property. Houston Unlimited’s general manager admitted to the inspectors that Houston
Unlimited had dumped barrels of spent blast media (a substance used to clean metal and prepare
it for further treatment) on the ground behind its facility for twenty-five years. The Commission
formally cited Houston Unlimited for failing to prevent the discharge of industrial hazardous waste
into or adjacent to waters of the state, ordered it to cease all discharge activity and initiate clean-
up activities, and ordered it to perform an Affected Property Assessment Report regarding Mel
Acres’ ranch. The Commission also pursued an enforcement action in which it later assessed a fine
against Houston Unlimited.
After the inspectors’ visit, Houston Unlimited stopped dumping spent materials behind the
facility, constructed a berm to prevent contaminated water from flowing onto the ranch, and took
other steps to bring its facility into compliance. In the process, it discovered two pipe leaks in its
processing system, which it admits could have caused contaminated water to flow into the ranch’s
stock tank. It replaced the two pipes and installed a secondary containment mechanism to protect
against future leaks. It also hired a consulting company to perform the required Affected Property
Assessment Report. This consultant found no constituents exceeding state action levels in the
2
Houston Unlimited was registered with the Commission and permitted to generate certain levels of
hazardous waste, but environmental regulations placed requirements and restrictions on the handling and disposal of
the waste. The Commission determined that Houston Unlimited was in violation because it failed to (1) have a storm
water permit; (2) implement a Storm Water Prevention Pollution Plan to regulate materials that might emanate from
the facility via rainwater; (3) maintain updated registration information; (4) implement a Source Reduction and Waste
Minimization Plan; and (5) maintain the required employee-training program for disposal of hazardous wastes. The
Commission also noted that the property was lacking a required berm or other structure to prevent water containing
various processing materials from flowing off-site.
3
water sample from the stock tank but did find chromium and nickel exceeding state action levels
in sediment samples.3 The consultant concluded that there was no evidence that Houston
Unlimited’s activities had any ongoing adverse impact on water quality in the stock tank. Using
these test results, Houston Unlimited submitted an Affected Property Assessment Report to the
Commission, followed by an Ecological Risk Assessment. The Commission approved the
Ecological Risk Assessment but had not approved the Affected Property Assessment Report as of
the date of trial.
Mel Acres hired its own environmental consultant, who took water and sediment samples
and found that the water in the stock tank contained pH, aluminum, and iron exceeding state action
levels, and detected the presence of other constituents not exceeding state action levels. The parties
and their consultants disputed whether Houston Unlimited was responsible for the presence of the
constituents found in excess of state action levels and what, if any, ongoing ecological impact they
had and will have on the ranch. Mel Acres’ consultant concluded in its report, and reiterated at
trial, that the stock tank remained “adversely affected,” that the ranch has been “devastated” as a
“functioning property,” and that Houston Unlimited’s conduct has limited the ranch’s future use.
Houston Unlimited’s consultant, by contrast, concluded and testified that water draining from the
processing facility did not cause the elevated levels of pH, iron, and aluminum found in the stock
tank.
Mel Acres sued Houston Unlimited for nuisance, trespass, and negligence. As damages, it
did not seek to recover any remediation costs, but instead sought only a loss of the fair market
value of the entire 155-acre ranch. The trial court’s charge asked the jury to determine whether
3
Houston Unlimited’s consultants tested for the constituents Houston Unlimited identified as used in their
processing and the constituents that the Commission had found in its samples.
4
Houston Unlimited had created a “permanent nuisance,” and whether Houston Unlimited had
committed a trespass causing “permanent injury.” The negligence and damages questions made
no reference to any “permanent” conduct, occurrence, injury, or damages. The jury found that
Houston Unlimited did not commit trespass causing permanent injury or create a permanent
nuisance on the property, but it found Houston Unlimited was negligent and that negligence caused
the ranch to lose $349,312.50 of its market value. The trial court entered judgment on the verdict,
and the court of appeals affirmed. We granted review.
II.
“Stigma” Damages
To establish its damages in this case, Mel Acres relied on an expert witness who testified
that, in her opinion, the ranch had suffered a loss of market value due to stigma resulting from fear,
risk, and negative public perceptions. In her opinion, although the contamination from Houston
Unlimited’s facility had subsided, it had “permanently impacted this market value” and
“stigmatized the entire tract,” because Mel Acres would have to disclose the history of the
contamination in any future sale, and the disclosure would have “a negative effect on the property
value, produced by the market’s perception of an increased environmental risk due to the
contamination.” As she put it, when it comes to market value, “[p]erception is everything.”
“Stigma damages” essentially constitute “damage to the reputation of the realty.” Smith v.
Carbide & Chems. Corp., 226 S.W.3d 52, 55 (Ky. 2007). They “represent[] the market’s
perception of the decrease in property value caused by the injury to the property.” Jennifer L.
Young, Stigma Damages: Defining the Appropriate Balance Between Full Compensation and
Reasonable Certainty, 52 S.C. L. REV. 409, 424 (2001). Mel Acres argues that stigma damages
continue to exist even after the property has been fully repaired or remediated.
For many years, American courts and commentators have struggled with the issue of
5
whether and when to allow recovery of stigma damages:
The variety of claims, along with the often uncertain nature of stigma damage, has
led to diverse and often confusing jurisprudence. Struggling with the desire to make
the plaintiff whole while awarding only those damages that are proven with
reasonable certainty, different jurisdictions have fashioned a variety of rules on
which to base the award of stigma damages. While most jurisdictions agree that
plaintiffs must experience some physical injury to their property before they may
recover stigma damages, jurisdictions are divided on whether the injury must be
temporary or permanent.
Id. at 409–10 (citations omitted). In addressing these issues, courts have sought to balance the need
to acknowledge the actual loss for which the landowner should be compensated against the reality
that the loss is based primarily on public perceptions, which can change quickly or, at least, over
time. Id. at 410.
This Court has never directly addressed the recoverability of stigma damages. Houston
Unlimited contends that we should not allow for stigma damages, and if we do we should at least
require that the property sustain a permanent and physical injury. See, e.g., Bradley v. Armstrong
Rubber Co., 130 F.3d 168, 176 (5th Cir. 1977) (“The requirements of permanent and physical
injury to property ensure that this remedy does not open the floodgates of litigation by every
property owner who believes that a neighbor’s use will injure his property.”). Several amici curiae
have submitted briefs supporting these arguments.4
4
The Texas Association of Business, joined by the Texas Chemical Council, for example, argues that
allowing for the recovery of lost market value in this case “would have a direct negative impact on various public
Brownfield programs that are designed to encourage voluntary remediation and development of parcels,” and “many
impacted properties [will] otherwise lay abandoned and remain of no value to the public, as well as a continuing threat
to human health and the environment.” The Texas Pipeline Association argues that we should not allow stigma
damages in cases involving environmental contamination because allowing recovery in this case will “subject [the
industry] to the whim of any landowner able to secure inherently speculative testimony about the future economic
effects of temporary conditions that even a regulatory watchdog agrees are abated.” The Texas Oil and Gas
Association argues that allowing recovery of lost market value in this case would give “injured landowners the best
of both worlds: they can pursue lost market value damages that include both past and future harm while arguing for
6
Generally, we have permitted landowners to recover either the lost value of their land if
the injury to the land is permanent or the cost to repair or remediate the land if the injury is
temporary.5 On at least two occasions, we stated that these two remedies are “mutually exclusive,”
so a landowner can recover lost fair market or the cost to repair or restore and loss of use, but not
both. See Schneider Nat’l Carriers, Inc. v. Bates, 147 S.W.3d 264, 276 (Tex. 2004) (“Because the
one claim is included in the other, the two claims are mutually exclusive; a landowner cannot
recover both in the same action.”); Kraft v. Langford, 565 S.W.2d 223, 227 (Tex. 1978) (“The
concepts of temporary and permanent injuries are mutually exclusive and damages for both may
not be recovered in the same action.”).
But we have also acknowledged that, “[i]n Texas, courts have held that an aggrieved
consumer may be able to plead, prove and obtain favorable jury findings establishing both costs
to repair and permanent reduction in market value notwithstanding such repairs, as cumulative
the right to bring future lawsuits . . . .”
5
See, e.g., Natural Gas Pipeline Co v. Justiss, 397 S.W.3d 150, 155 (Tex. 2012) (holding in a nuisance case
that, “[i]f a nuisance is permanent, a landowner may recover the property’s lost market value”); Bayouth v. Lion Oil
Co., 671 S.W.2d 867, 868 (Tex. 1984) (holding in suit for injury to land caused by salt water migration from oil leases
that “[p]ermanent injuries to land give rise to a cause of action for permanent damages, which are normally measured
as the difference in the value of the property before and after the injury” while “[t]emporary injuries give rise to
temporary damages, which are the amount of damages that accrued during the continuance of the injury covered by
the period for which the action is brought.”); Hou. & T.C. R. Co. v. Ellis, 224 S.W. 471, 471 (Tex. 1920) (holding in
suit for fire damage to land that “[t]he measure of damages was the difference in the value of the land because of the
injury”); Trinity & S. Ry. Co. v. Schofield, 10 S.W. 575, 576–77 (Tex. 1889) (holding in negligence case that “[i]f land
is permanently injured by the negligence or wrongful act of another, but the value is not totally destroyed, the owner
would be entitled to recover the difference between the actual cash value at the time immediately preceding the injury
and the actual cash value immediately after the injury, with legal interest thereon to the time of the trial” but “[i]f land
is temporarily but not permanently injured by the negligence or wrongful act of another, the owner would be entitled
to recover the amount necessary to repair the injury, and put the land in the condition it was at the time immediately
preceding the injury, with interest thereon to the time of the trial.”); Galveston, H & S. A. Ry. Co. v. Horne, 9 S.W.
440, 442 (Tex. 1888) (holding in negligence suit for fire damage to land that “when the damage to the land is
permanent . . . the difference in its value before and that after the fire is to be calculated”); Fort Worth & D.C. Ry. Co.
v. Hogsett, 4 S.W. 365, 366 (Tex. 1887) (stating that it was “well settled” that “the true measure of damages in case
of permanent injury to the soil is the difference between the value of the land immediately before the injury and its
value immediately after.”).
7
rather than mutually exclusive measures of damage.” Ludt v. McCollum, 762 S.W.2d 576, 576
(Tex. 1988). To recover “an award of diminished value . . . in addition to the costs of repair,” we
explained that the “permanent reduction in value” must “refer[] to that reduction occurring even
after repairs are made.” Id. (citing Terminix Int’l v. Lucci, 670 S.W.2d 657, 661 (Tex. App.—San
Antonio 1984, writ ref’d n.r.e.)). We held that the claimant in Ludt, however, could not recover
for diminution in market value because he “failed to submit and obtain a jury finding sufficient to
establish the permanent reduction in market value after repairs.” Id. (emphasis added). We
acknowledged this rule again in Parkway Co. v. Woodruff, in which we explained that “[d]amages
for diminution in value and damages for costs of repairs are not always duplicative. Diminution in
value does not duplicate the cost of repairs if the diminution is based on a comparison of the
original value of the property and the value after repairs are made.” 901 S.W.2d 434, 441 (Tex.
1995) (citing Ludt, 762 S.W.2d at 576).
Relying on our holdings in Ludt and Parkway, Texas courts of appeals have also recognized
a claimant’s right to recover both repair costs and the diminution of value remaining after the
repairs were completed. See, e.g., Contreras v. Bennett, 361 S.W.3d 174, 181 (Tex. App.—El Paso
2011, no pet.); Blackstock v. Dudley, 12 S.W.3d 131, 135 (Tex. App.—Amarillo 1999, no pet.).6
6
See also Pjetrovic v. Home Depot, 411 S.W.3d 639, 648 n.13 (Tex. App.—Texarkana 2013) (holding that
homeowner suing for deceptive trade practices, fraud, negligence, and breach of contract after allegedly defective
dishwasher flooded home “may elect to seek damages for the cost of repair, the diminution of value, or even both
provided both would not result in double recovery”) (citing Parkway, 901 S.W.2d at 441); Royce Homes, L.P. v.
Humphrey, 244 S.W.3d 570, 582 (Tex. App.—Beaumont 2008, pet. denied) (holding homeowner suing for flooding
caused by builder of neighbor’s house may, “under certain circumstances, . . . recover for both diminution in value
and cost of repairs”) (citing Ludt, 762 S.W.2d at 576); Perry Homes v. Alwattari, 33 S.W.3d 376, 386 (Tex. App.—
Fort Worth 2000, pet. denied) (holding that “actual damages” recoverable by homeowner suing for deceptive trade
practices related to defective foundation “include diminution in market value occurring after repairs”) (citing Ludt,
762 S.W.2d at 576). Courts of appeals have also acknowledged this rule in cases involving injury to personal property.
E.g., Noteboom v. Farmers Tex. County Mut. Ins. Co., 406 S.W.3d 381, 385 (Tex. App.—Fort Worth 2013, no pet.)
(citing Parkway, 901 S.W.2d at 441); Gunn Infiniti, Inc. v. O’Byrne, 963 S.W.2d 787, 796 (Tex. App.—San Antonio
1998) (quoting Parkway, 901 S.W.2d at 441), rev’d on other grounds, 996 S.W.2d 854 (Tex. 1999).
8
We acknowledged the rationale underlying this rule in American Manufacturers Mutual Ins. Co.
v. Schaefer, in which we explained that a “repaired vehicle may command a smaller sum in the
market than a like vehicle that has never been damaged, and that awarding [the owner] diminished
value in addition to repair would go further to make him whole.” 124 S.W.3d 154, 162 (Tex. 2003).
We cannot resolve this apparent conflict in this case, however, nor can we decide whether
a loss of market value that remains after restoration of a temporary injury may be based solely on
stigma damages. The struggle over whether to even allow recovery of stigma damages arises
primarily from the “conflicting goals of fully compensating the plaintiff for her injury while only
awarding those damages that can be proven with reasonable certainty.” Young, Stigma Damages:
Defining the Appropriate Balance, 52 S.C. L. REV. at 410–11. Even when it is legally possible to
recover stigma damages, it is often legally impossible to prove them. Evidence based on
“conjecture, guess or speculation” is inadequate to prove stigma damages, not only as to the
amount of the lost value but also as to the portion of that amount caused by the defendant’s
conduct. Gray v. Southern Facilities, Inc., 183 S.E.2d 438, 444 (S.C. 1971). In this case, even if
Texas law permits recovery of stigma damages, Mel Acres’ evidence was legally insufficient to
prove them.
III.
Expert Testimony
Mel Acres attempted to establish its stigma damages through the testimony of its expert
witness, Kathy McKinney. McKinney is a licensed real estate appraiser with twenty years’
experience in appraising property in Washington County, where the ranch is located. The parties
9
do not dispute her qualifications to offer expert testimony in this case. The sole dispute is whether
her testimony is legally competent to support the jury’s damages finding.7
McKinney testified that she used the “sales-comparison” approach to appraise the ranch’s
value. She explained that, under this approach, she would look for properties that had the same
“highest and best use”8 as the appraised property and were similar to the appraised property in
location, date of sale, and physical attributes. She would then make adjustments to account for
differences between the appraised property and the comparable property, such as their size or
location. Using this approach, McKinney determined that the ranch’s “unimpaired” value (i.e., its
value before the Commission’s contamination report) was $2,329,000, based on a comparison of
six recent property sales and three property listings in the area. Houston Unlimited does not contest
McKinney’s methodology or conclusion as to the ranch’s unimpaired market value.
McKinney employed a different process, however, to determine the ranch’s “impaired”
market value (i.e., its value after the date of the Commission’s contamination report). She began
by looking for other environmentally contaminated properties, but she could not locate any in
Washington County, so she searched the general area around the county and located two
properties: the Sebastian site and the Sheridan site.9
7
The damages question in the jury charge asked: “What is the difference between the market value of the
real property owned by Mel Acres . . . before the occurrence in question, and the market value of such property after
the occurrence in question?” Accompanying this question was an instruction that “market value” means “the amount
that would be paid in cash by a willing buyer who desires to buy, but is not required to buy, to a willing seller who
desires to sell, but is under no necessity of selling.” The jury answered: $349,312.50.
8
McKinney testified that the highest and best use for Mel Acres’ property is “rural recreational and hold for
future investment.” Houston Unlimited did not dispute this opinion.
9
McKinney testified that, in addition to her comparison of these two properties, she also based her opinion
of the ranch’s “after” value on “the reaction from the people that I talked to, such as the ranchers, the investors, the
property owners. I talked to a lot of people.” But she did not elaborate on these conversations and made no effort to
tie them to her damages calculations.
10
A. The Sebastian Site
The Sebastian site is a 48-acre tract of land in Grimes County that had previously been part
of a larger tract of land owned by International Paper Company. The larger tract of land had been
contaminated “a long time ago” and subsequently remediated, but the Sebastian site was not within
the contaminated part of the tract. International Paper had sold the site to Herman Sebastian, one
of its employees, in 1997. McKinney testified that, although the Sebastian site itself had not been
contaminated, it still suffered from “market stigma” because it had been part of a larger tract that
had suffered contamination elsewhere, and the stigma attached to the whole property.
Houston Unlimited’s damages expert, Rudy Robinson, testified that he had contacted
Sebastian, with whom McKinney had not spoken. Sebastian informed Robinson that International
Paper sold the property to him as a “sweetheart deal” to compensate him for the early termination
of his employment. Sebastian lived on property neighboring the site and had continued to work for
International Paper as a contractor, rather than an employee. Because of the “sweetheart” nature
of the sale, Robinson testified that the sale was not an arm’s-length transaction and thus could not
be the basis of a sales comparison. McKinney, by contrast, contended that a “sweetheart deal”
could still be an arm’s-length transaction.
B. The Sheridan Site
The Sheridan site was part of a 337-acre tract of land in Waller County that had been
declared a federal “Superfund site” because of contamination affecting 33 of the acres. The site
had been “remediated” by building berms around the 33 acres to contain the contamination within
that area. The Sheridan site did not include any of the 33 contaminated acres. McKinney testified
that the owner had listed the Sheridan site for sale at a price of $6,500 per acre, the seller had
11
received a verbal offer for $3,849 per acre, and the site was “currently under contract, and
according to the agent, [wa]s supposed to close any day,” for a price of $2,900 per acre.
C. The Calculation
McKinney employed a three-step process to reach her opinion on the ranch’s lost market
value. First, she compared the price that Sebastian paid for his land in 1997 to the sales prices of
two uncontaminated but otherwise similar pieces of land that also sold that year. She determined
that Sebastian paid “72 to 73 percent less than what other properties were selling for in Grimes
County at that time.” On this basis, she concluded that the Sebastian site had suffered a 72%
diminution in market value, which she attributed to the stigma of the nearby contamination.
Second, McKinney compared the Sheridan site’s original asking price of $6,500 per acre
to the $3,849 per-acre offer. Although McKinney indicated that the owner did not accept this
verbal offer, she did not adjust her damages calculation to use the $2,900 per acre at which the
property was “supposed to close any day.” Because the $3,849 verbal offer was 41% less than the
original asking price, she concluded that the Sheridan site had lost 41% of its market value, which
she attributed to the stigma of the nearby contamination.
Based on these two calculations, McKinney concluded that the ranch had suffered a 60%
($1,397,500) loss in market value due to “market stigma.” She reasoned:
The market reflects a decrease in contaminated property, after remediation,
between seventy two percent (72%) and an anticipated forty one percent (41%). In
the absence of a test well on the appraised site, it is the considered opinion of the
appraiser, appraised property has a diminution in market value of sixty percent
(60%) as a result of contamination.
Subtracting the $1,397,500 loss in market value from the ranch’s unimpaired value of $2,329,000,
McKinney calculated the ranch’s impaired value to be $931,500.
12
IV.
Legal Sufficiency of the Damages Evidence
The parties do not dispute that environmental contamination can create a stigma that
diminishes the market value of land, and Houston Unlimited’s expert admitted as much. The issue
here, however, is whether Mel Acres submitted legally sufficient evidence that the environmental
contamination of the ranch’s stock tank did diminish the ranch’s fair market value and by how
much. McKinney’s testimony is the only evidence on this issue. We must determine whether it is
legally competent to support the jury’s verdict.
Expert appraisal witnesses are subject to the same relevance and reliability standards that
apply to all expert witnesses. Guadalupe-Blanco River Auth. v. Kraft, 77 S.W.3d 805, 807 (Tex.
2002). When an expert opinion is admitted into evidence without objection, “it may be considered
probative evidence even if the basis for the opinion is unreliable.” City of San Antonio v. Pollock,
284 S.W.3d 809, 818 (Tex. 2009). “But if no basis for the opinion is offered, or the basis offered
provides no support, the opinion is merely a conclusory statement and cannot be considered
probative evidence, regardless of whether there is no objection.” Id. This is because the evidentiary
value of expert testimony is derived from its basis, not from the mere fact that the expert has said
it. See, e.g., Natural Gas Pipeline Co. of Am. v. Justiss, 397 S.W.3d 150, 156 (Tex. 2012); Pollock,
284 S.W.3d at 816; Coastal Transport Co., Inc. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227,
232 (Tex. 2004); Burrow v. Arce, 997 S.W.2d 229, 235 (Tex. 1999).
A. The Sales-Comparison Approach
The sales-comparison approach that McKinney referred to in her testimony is an accepted,
and even favored, means for determining the market value of land. See City of Harlingen v. Estate
of Sharboneau, 48 S.W.3d 177, 182 (Tex. 2001). Under this approach, “the appraiser finds data
for sales of similar property” that are “voluntary,” “near in time,” “in the vicinity,” and “involve
13
land with similar characteristics.” Id. The appraiser then uses the prices from the comparison sales,
which establish the market value of the similar properties, to determine the market value of the
subject property, by adjusting the price upward or downward to account for differences between
the properties. Id. The sales-comparison approach has most frequently been used to determine the
value of land in takings cases. See id.10 In such cases, the value of the land frequently constitutes
the amount of the landowner’s damages. In a tort case like this one, however, the amount of the
landowners’ damages depends on other considerations, particularly whether the value of the
property changed and whether that change was caused, in whole or part, by the defendant’s
conduct.
B. McKinney’s Approach
McKinney testified that she used a sales-comparison approach to determine Mel Acres’
damages. But McKinney’s determination of the ranch’s impaired market value was not actually
based on the sales-comparison approach. Cf. Kraft, 77 S.W.3d at 808 (“While using comparable
sales to find market value in condemnation proceedings is an approved methodology, Gholson’s
‘bald assurance’ that he was using that widely accepted approach was not sufficient to demonstrate
that his opinion was reliable.”). She did not look to the sales prices of the Sebastian and Sheridan
sites and then determine the ranch’s value by adjusting those prices upward or downward to
account for differences between the properties. Cf. Sharboneau, 48 S.W.3d at 182 (describing the
sales-comparison approach). Instead, she first attempted to identify losses in market value that the
10
The sales-comparison approach has also been used to determine the value of other commodities, such as
gas, see Exxon Corp. v. Middleton, 613 S.W.2d 240, 246 (Tex. 1981) (using the approach to determine the value of
gas in a condemnation proceeding), or to value land in other types of cases, see Land v. Palo Pinto Appraisal Dist.,
321 S.W.3d 722, 726 (Tex. App.—Eastland 2010, no pet.) (holding that trial court could rely on sales-comparison
approach to determine value of leasehold estates in tax protest and noting that the Tax Code recognized it as an
appropriate methodology).
14
Sheridan and Sebastian sites suffered, calculated as percentages of the unimpaired value, and then
opined that the ranch had likewise suffered a similar loss in its proportionate value. She calculated
the ranch’s impaired value not by comparing it to the values of other similar properties but by
reducing its unimpaired value by a percentage based on the diminution percentages she had found
for the Sebastian and Sheridan sites.
Although we have found no authorities involving the percentage-reduction approach that
McKinney used here, we do not hold that it could never be used to reach a reliable opinion on
diminution damages. But the manner in which McKinney used the approach here is fatally flawed
for three reasons. First, the data McKinney relied on regarding the Sebastian and Sheridan sites do
not support her opinion that those properties lost market value. Second, McKinney’s ultimate
opinion is cause-dependent—her reasoning can be sound only if the losses she found for the
Sebastian and Sheridan sites were, in fact, attributable to market stigma and no other market
factors. Yet Mel Acres offered no evidence tending to establish the cause of the Sebastian and
Sheridan sites’ diminutions in value. Instead, McKinney merely assumed that the diminution in
market value she found was (wholly) attributable to the nearby contamination. Third, McKinney
failed to account for any differences between the ranch and the Sebastian and Sheridan sites or any
differences between the nature of the contamination of the three properties. We conclude that these
material shortcomings render McKinney’s opinions incompetent to support the judgment.
1. McKinney’s Data
This is not a case in which the expert failed to offer any basis for her opinion. McKinney
identified the factual basis on which she relied to calculate the loss of the ranch’s market value.
But the facts on which she relied to calculate the Sheridan site’s loss of 41% of its market value
do not actually support her opinion. Likewise, the facts she relied on to calculate the Sebastian
15
site’s loss of 72% of its market value do not actually support that opinion. The view that courts
should not look beyond an averment by the expert that the data underlying his or her opinion are
the type of data on which experts reasonably rely has long been rejected by this Court and others.
Merrell Dow Pharm., Inc. v. Havner, 953 S.W.2d 706, 713 (Tex. 1997). “The underlying data
should be independently evaluated in determining if the opinion itself is reliable,” id., and “[i]t is
incumbent on an expert to connect the data relied on and his or her opinion and to show how that
data is valid support for the opinion reached.” Whirlpool Corp. v. Camacho, 298 S.W.3d 631, 642
(Tex. 2009).
a. The Sheridan Site
To find a diminution in the Sheridan site’s value, McKinney relied on: (1) the owner’s
original offer to sell the property for $2,200,000, and (2) a subsequent verbal offer to purchase the
property for $1,300,000. McKinney treated the owner’s list price as the property’s unimpaired
market value and the verbal offer price as the property’s impaired market value, and opined that
the site suffered a $900,000 (41%) diminution in value attributable to the nearby contamination.
These facts do not support McKinney’s opinion for three reasons.
First, the owner’s original asking price does not, alone, tend to establish the property’s
market value at the time of listing. Market value is “what a willing buyer under no compulsion to
buy will pay to a willing seller under no compulsion to sell.” Cf. French v. Occidental Permian
Ltd., — S.W.3d —, — (Tex. June 27, 2014). An original list price is some evidence of what a
willing seller will accept, but it is not evidence of what a willing buyer will pay. Sellers may list
property at a price above the amount they actually expect to receive or may simply overestimate
the property’s true market value. Second, the verbal offer price does not, alone, tend to establish
the property’s market value at the time it was made. A verbal offer is some evidence of what a
16
willing buyer will pay, but it is not, alone, evidence of what a willing seller will accept. Cf. French,
— S.W.3d at —. Buyers may offer less than the amount they are actually willing to pay, in hopes
of acquiring the property for less than it is worth, or they may simply underestimate the value of
the property. As a result, the fact that a verbal offer was made on the Sheridan site for less than the
original asking price does not tend to prove that it suffered a diminution in market value.
Third, the difference between the asking price and the offer price does not tend to establish
a loss attributable to the nearby contamination because both the asking price and the verbal offer
occurred after the land near the Sheridan site was contaminated. McKinney’s own report indicates
that the contamination dates back to at least 1986, while the listing on which McKinney relied for
the site’s “unimpaired” value was in 2006. Thus, even if the difference between the original list
price and the verbal offer did reflect a diminution in value, the data on which this diminution is
based are not temporally connected to the contamination some twenty years earlier. It is possible
that the original list price reflected the property’s pre-contamination price, but there is no evidence
that indicates that was the case. When the facts support several possible conclusions, only some of
which support the expert’s conclusions, the expert must explain to the fact finder why those
conclusions are superior based on verifiable evidence, not simply the expert’s opinion. Jelinek,
328 S.W.3d at 536.
b. The Sebastian Site
McKinney acknowledged that sales of comparable properties are useful only if they result
from an arm’s-length transaction, and she did not dispute that the Sebastian sale was a “sweetheart
deal” intended to compensate Sebastian for early retirement. The evidence on this issue was
uncontroverted. Instead, she argued that the sale could constitute an arm’s length transaction even
17
though it was a sweetheart deal. She testified, “If it was a sweetheart deal on the part of both
parties, it was arm’s length.” We disagree.
Generally, an arm’s-length transaction is one between two unrelated parties with generally
equal bargaining power, each acting in its own interest. See BLACK’S LAW DICTIONARY 103 (10th
ed. 2014) (defining “arm’s-length” as “[o]f, relating to, or involving dealings between two parties
who are not related or not on close terms and who are presumed to have roughly equal bargaining
power; not involving a confidential relationship”); see also TEX. TAX CODE ANN. § 171.1012(m)
(“In this section, ‘arm’s length’ means the standard of conduct under which entities that are not
related parties and that have substantially equal bargaining power, each acting in its own interest,
would negotiate or carry out a particular transaction.”); TEX. OCC. CODE ANN. § 2307.001(1)
(“‘Arm’s length transaction’ means the standard of conduct under which two parties having
substantially equal bargaining power, each acting in its own interest, would negotiate or carry out
a particular transaction.”).
Sebastian and International Paper were not entirely unrelated, as they shared an employer-
employee (and later, independent contractor) relationship. While an employer and its employee
can engage in arm’s-length transactions, there is no evidence that occurred here. To the contrary,
the only evidence here is that the two parties were not acting solely in their own interests, but
instead mutually intended the transaction to be more beneficial to Sebastian. This kind of
“sweetheart deal” is not an arm’s-length transaction. See Cherokee Water Co. v. Gregg Cnty.
Appraisal Dist., 801 S.W.2d 872, 874 (Tex. 1990) (“It is uncontroverted that these are not arm’s-
length transactions and they have been characterized by the district as ‘sweetheart deals.’”); see
also 389 S.W.3d at 604 (Boyce, J., dissenting) (“This testimony demonstrates that McKinney’s
opinion is unreliable because she used a sales price produced by a ‘sweetheart deal’ involving the
18
Sebastian site to bolster her inclusion of the Sheridan Superfund site as a comparable sale.”). Thus,
the Sebastian site’s 1997 sales price did not, alone, constitute evidence of its fair market value at
the time of the sale. As a result, the fact that the Sebastian site sold for 72% less than the price paid
for two comparable properties does not tend to prove that it suffered a diminution in market value.
2. McKinney’s Assumptions
Courts must “rigorously examine the validity of the facts and assumptions on which
[expert] testimony is based[.]”Camacho, 298 S.W.3d at 637. If an expert’s opinion is unreliable
because it is “based on assumed facts that vary from the actual facts,” the opinion “is not probative
evidence.” Id.; see also Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499–500 (Tex. 1995)
(“When an expert’s opinion is based on assumed facts that vary materially from the actual,
undisputed facts, the opinion is without probative value and cannot support a verdict or
judgment.”). This does not mean that an expert’s factual assumptions11 must be uncontested or
established as a matter of law. If the evidence conflicts, it is the province of the jury to determine
which evidence to credit. See Cooper Tire & Rubber Co. v. Mendez, 204 S.W.3d 797, 804 (Tex.
2006). Nor does it mean that parties must prove up every inconsequential assumption on which
their expert relies.
But if the record contains no evidence supporting an expert’s material factual assumptions,
or if such assumptions are contrary to conclusively proven facts, opinion testimony founded on
those assumptions is not competent evidence. See TXI Transp. Co. v. Hughes, 306 S.W.3d 230,
237–40 (Tex. 2010) (distinguishing expert testimony in case from unsupported assumptions relied
11
We reference here “factual assumptions,” meaning assumptions about the facts of the case or the specific
data on which the expert relies to reach an opinion in the case. We do not reference the kinds of scientific,
mathematical, or other technical assumptions or presumptions that may be regularly and reliably employed in an
expert’s area of expertise.
19
on by expert in Volkswagen, 159 S.W.3d at 904–06); Cooper Tire & Rubber, 204 S.W.3d at 804
(“[I]f an expert’s opinion is based on certain assumptions about the facts, we cannot disregard
evidence showing those assumptions were unfounded.”) (quoting City of Keller v. Wilson, 168
S.W.3d 802, 813 (Tex. 2005)); see also Williams v. Ill., 132 S. Ct. 2221, 2241 (2012) (“[I]f the
prosecution cannot muster any independent admissible evidence to prove the foundational facts
that are essential to the relevance of the expert’s testimony, then the expert’s testimony cannot be
given any weight by the trier of fact.”). A contrary approach would allow parties with the burden
of proof on a particular fact (such as causation) to avoid the obligation to put forth evidence by
simply instructing their expert to assume the fact in forming their opinions.
McKinney’s damages opinion rests on several assumptions and leaps of logic. First, she
assumes that the diminutions she found for the Sebastian and Sheridan sites were both 100%
attributable to contamination that occurred and had been remediated on nearby land. She then
reasons that because those two sites suffered diminutions as a result of remediated contamination,
the ranch also suffered a diminution as a result of its remediated contamination and the
proportionate amount of that diminution will be more than that suffered by the Sheridan site and
less than that suffered by the Sebastian site.
Even if we accept that the Sebastian and Sheridan sites suffered diminutions in their market
value, those diminutions are relevant here only if they were attributable to the remediated
contamination. But McKinney did not attempt to establish that the remediated contamination near
the Sebastian and Sheridan sites caused some or all of the diminution in market value she found,
nor did she attempt to rule out other plausible causes. Cf. Wal-Mart Stores, Inc. v. Merrell, 313
S.W.3d 837, 840 (Tex. 2010) (“An expert’s failure to explain or adequately disprove alternative
theories of causation makes his or her own theory speculative and conclusory.”); General Motors
20
Corp. v. Iracheta, 161 S.W.3d 462, 470 (Tex. 2005) (“[The expert] eliminated the obvious
possibility that fuel or vapors from the tank filler neck ignited only by saying so, offering no other
basis for his opinion. Such a bare opinion was not enough.”). Instead, McKinney simply assumed
that 100% of the asserted diminution in value in both sites was attributable to the remediated
contamination. This kind of material assumption, entirely lacking evidentiary support, renders
expert opinion testimony unreliable and incompetent to support a judgment. See TXI Transp., 306
S.W.3d at 239–40 (discussing the Volkswagen expert’s “assumption that the detached wheel
remained pocketed in the wheel well throughout a turbulent and high-speed accident sequence,”
which he failed to “connect his theory to any physical evidence in the case or to any tests or
calculations prepared to substantiate his theory”); see also Sage Street Assocs. v. Northdale Constr.
Co., 863 S.W.2d 438, 449 (Tex. 1993) (observing that an expert’s assumptions do not constitute
evidence).
McKinney seems to have operated under the assumption that all remediated property will
suffer market stigma. While the parties agreed that environmental contamination can result in a
diminution in property value that remains even after the contamination is remediated, the parties
did not agree, and there was no evidence indicating, that this is always the case. Absent such
evidence, we cannot assume, without evidence, that any (much less all) of the diminution
McKinney found for the Sebastian and Sheridan sites was attributable to market stigma. And even
if there were such evidence or evidence that contaminated properties always retain some
diminution in market value even after remediation, Mel Acres offered no evidence tending to show
that all of the Sebastian and Sheridan sites’ alleged diminutions in value were attributable to stigma
or to apportion such diminution among stigma and other possible causes.
21
The evidence here, in fact, indicates other potential causes of the “diminution” McKinney
found. With respect to the Sheridan site, the difference between the original list price and the verbal
offer price may reflect the difference between what the seller hoped to get and what a buyer hoped
to pay rather than any actual change in the property’s market value. And if there was a change in
the property’s market value, because both the original listing (the “unimpaired” market value) and
the verbal offer (the “impaired” market value”) occurred after the contamination and its
remediation, the impairment of the property’s market value cannot, without more, be attributed to
the contamination. With respect to the Sebastian site, the only evidence indicates that the difference
between its sale price and two other comparable sales prices simply reflected the “sweetheart”
nature of the deal.
The record does not conclusively establish any of these alternative plausible causes as the
actual cause. But Mel Acres offered no evidence tending to establish that the asserted diminutions
were attributable, in whole or in part, to the contamination near the Sheridan and Sebastian
properties. Absent any evidentiary basis, McKinney’s material assumptions that the diminutions
she found were caused by contamination-related stigma that remained after remediation of the
property are unsupported and render her opinion incompetent and no evidence. Cf. Wal-Mart
Stores, 313 S.W.3d at 839–40 (holding that expert’s causation opinion lacked evidentiary value
when factual basis for opinion was equally consistent with alternative cause); Volkswagen of Am.,
Inc. v. Ramirez, 159 S.W.3d 897, 911 (Tex. 2004) (noting that expert’s causation opinion was
based on facts that were “just as consistent with” the expert’s opinion of what happened as they
were with an alternative course of events).
22
3. McKinney’s Analytical Gaps
Even assuming that the Sebastian site suffered a 72% diminution in value and the Sheridan
site suffered a 41% diminution in value, and that the remediated contamination of nearby property
caused those losses, McKinney did not show how that data offers valid support for her conclusion
that Mel Acres’ ranch lost 60% ($1,397,500) of its value or that stigma resulting from Houston
Unlimited’s conduct caused that loss.
Expert testimony is unreliable if “there is simply too great an analytical gap between the
data [relied upon] and the opinion proffered.” Gammill v. Jack Williams Chevrolet, Inc., 972
S.W.2d 713, 726 (Tex. 1998) (quoting Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997)). An
expert must “connect the data relied on and his or her opinion” and “show how that data is valid
support for the opinion reached.” Camacho, 298 S.W.3d at 642 (citing Pollock, 284 S.W.3d at
819–20; Volkswagen, 159 S.W.3d at 906; Gammill, 972 S.W.2d at 726). “We are not required . . .
to ignore fatal gaps in an expert’s analysis or assertions that are simply incorrect.” Volkswagen,
159 S.W.3d at 912; Cooper Tire & Rubber, 204 S.W.3d at 800–01. “A flaw in the expert’s
reasoning from the data may render reliance on a study unreasonable and render the inferences
drawn therefrom dubious. Under that circumstance, the expert’s scientific testimony is unreliable
and, legally, no evidence.” Havner, 953 S.W.2d at 714.
The foundation of the sales-comparison approach is that the appraised property is
compared to comparable properties, which justifies an assumption of comparable values, and then
adjusted for differences between the properties. See Sharboneau, 48 S.W.3d at 182–83.
McKinney’s approach lacks this foundation. McKinney did not testify that the Sheridan or
Sebastian sites were comparable to Mel Acres’ property in any aspect other than environmental
23
contamination of some kind that had been remediated.12 To the contrary, she testified that the
properties did not need to be comparable under her approach because she calculated the lost value
as a percentage.
When Mel Acres’ attorney asked McKinney if there are “any similarities between Grimes
County,” where the Sebastian site is located, “and Washington County,” where the ranch is
located, that “make this a good comp,” McKinney responded, “What makes this a good comp is
the fact that it is a contamination. There are differences in land value between Washington County
and Grimes County, and that’s why we want to take percentages.” Later, Houston Unlimited’s
attorney followed up:
Q. [O]bviously, to make your analysis accurate, you want both your impaired and your
unimpaired properties to be as comparable as possible to the property that’s the
subject of your appraisal, right?
A. It doesn’t necessarily — the unimpaired do — the impaired and the unimpaired do
not — they have to have a similar highest and best use.
Q. Right.
A. But what you’re looking for is a percentage. So no, they don’t have to be.
Q. They don’t have to be comparable?
A. No.
We have explained, however, that “[t]he comparable sales method fails when the comparison is
made to sales that are not, in fact, comparable to the land condemned.” Kraft, 77 S.W.3d at 808.
Nor did McKinney make adjustments for differences between the ranch and the Sebastian
and Sheridan sites. McKinney did not explain whether or why the ranch and the contamination of
the stock tank were similar to, or different from, the Sebastian or Sheridan properties and their
12
As noted below, there was some dispute over whether the Sheridan site had been fully remediated.
24
contamination in any way that would make it likely to suffer a greater or lesser diminution than
either of the other two properties. She did not identify plausible causes for variations in the
diminutions and explain how those causes did or did not impact her calculation for the ranch.
Although she chose a percentage of loss that was less than the Sheridan site’s percentage and more
than the Sebastian site’s, she did not in any way tie that number to differences between the
properties. To the contrary, the record contains no analysis of how McKinney reached the 60%
loss for the ranch. The record reveals only that 60% falls somewhere between 41% and 72%, a
little above the average of the two (56.5%).
McKinney’s failure to account for significant differences between the kind and degree of
contamination that the three properties sustained or the nature of the remediation is also significant
in the context of this record. The Sheridan site had been part of a federal Superfund site that
required extensive remediation. Houston Unlimited presented evidence that the federal
government monitored the Sheridan site and placed it on a “national priority list.” Robinson
explained that the Sheridan site was monitored for thirty years at a cost of $16–17 million, and
some constituents at that site were “off the Richter scale when compared to regulatory limits.” 389
S.W.3d 583, 599. There was also evidence that the Sheridan site had not been fully remediated
and “still contains over 44,000 cubic yards of sludge and contaminated soil.”13
The metal compounds found at the ranch, by comparison, did not greatly exceed state
action levels, and the only remediation the parties have identified are the measures Houston
13
In her deposition, McKinney agreed that the market would react “in varying degrees” to properties
contaminated by different chemicals, depending on the nature of the chemicals, if the contamination had not been
remediated.
25
Unlimited took on its own property to prevent constituents from continuing to migrate onto the
ranch. The metal compounds appear to have naturally dissipated after the migration ceased.
Finally, McKinney did not account for contamination that was not attributable to Houston
Unlimited’s conduct. For example, Mel Acres’ own evidence showed iron in excess of state action
levels on the ranch, yet there was no evidence linking iron contamination to Houston Unlimited.
To the contrary, there was some evidence that other ponds on the ranch, which were beyond the
reach of any discharge from Houston Unlimited’s facility, also tested positive for excessive iron
levels. McKinney testified that she did not attempt to attribute any portion of the diminution in
value she had calculated to any actions of Houston Unlimited and made no attempt to calculate the
amount of the diminution in value that resulted from activities not related to Houston Unlimited.
Nor did any other evidence address this issue.
McKinney’s failure to account for differences between the three properties at issue,
differences between the nature of the contamination and remediation of the properties, and
contamination not attributable to Houston Unlimited, leaves analytical gaps in her reasoning. At
least once Houston Unlimited raised these gaps in questioning her, it was necessary for McKinney
to provide some logically valid explanation for why she did not need to consider these factors that,
facially, appear relevant to her opinion. The only explanation she provided was that differences
between the three properties did not matter because she found a “very similar decrease in market
value” for the Sebastian and Sheridan sites. But 72% and 41% are not “very similar decrease[s] in
market value.”14
14
McKinney’s calculation of the ranch’s decrease in market value was based on the Sebastian and Sheridan
sites’ decreases, so any similarity between Mel Acres’ decrease and the other two is a necessary product of her
approach, not independent evidence of any facts.
26
C. Summary
As we have noted, the parties do not dispute that McKinney is well-qualified to testify as
an expert on market value, and we do not doubt that she had difficulty finding other contaminated
properties in the general area to compare to Mel Acres’ ranch. We recognize that there may be
instances in which sufficiently similar properties are not available for comparison, and we have
held that comparable sales need not always be in the immediate vicinity of the subject land, so
long as they are sufficiently similar to permit a reliable comparison. Kraft, 77 S.W.3d at 808 (citing
City of Austin v. Cannizzo, 153 Tex. 324, 267 S.W.2d 808, 815 (1954)). We have also held that
similar does not mean the same, and that differences between the subject property and the
comparison properties are acceptable so long as the appraiser is able to adequately account for the
differences through price adjustments. See Sharboneau, 48 S.W.3d at 182–83. “But if the
comparison is so attenuated that the appraiser and the fact-finder cannot make valid adjustments
for these differences, a court should refuse to admit the sale as comparable.” Id. at 182.
We do not hold here that the dissimilarities between the ranch and the Sebastian and
Sheridan sites are so great that they could not be accounted for through valid adjustments.
McKinney simply did not make or explain any such adjustments. Nor did she otherwise adhere to
the sales-comparison approach. As noted above, the sales-comparison analysis has two
fundamental considerations: the comparison and accounting for differences. See id. at 182–83.
McKinney did neither in her reliance on the Sebastian and Sheridan sites. Without that or some
other reliable foundation, her opinions cannot constitute evidence sufficient to support the award
of damages in this case. See Justiss, 397 S.W.3d at 161 (holding that landowner’s opinion
testimony was conclusory and no evidence even though he demonstrated that he was familiar with
market values in the area because he failed to explain the factual basis behind his determination of
27
the diminution in property value to which he opined); Mack Trucks, Inc. v. Tamez, 206 S.W.3d
572, 581 (Tex. 2006) (noting that expert “did no more than set out ‘factors’ and ‘facts’ which were
consistent with his opinions,” then state his conclusion, but the reliability inquiry “does not ask
whether the expert’s conclusions appear to be correct; it asks whether the methodology and
analysis used to reach those conclusions is reliable.”); Gammill, 972 S.W.2d at 727 (observing that
the analytical gap in the expert’s analysis “was his failure to show how his observations, assuming
they were valid, supported his conclusions that [the passenger] was wearing her seat belt or that it
was defective.”).
Finally, we acknowledge that the jury in this case apparently found McKinney’s testimony
to be sufficient, and we do not lightly reject their judgment. Juries are vital to our legal system, in
part because they enter the courtroom with valuable real-world experience. Outside of courtrooms,
it is not unreasonable to accept an expert’s opinions even when the expert offers no facts to support
those opinions. But the law requires experts to substantiate their opinions, and for good reasons.
Experts who testify on behalf of parties to a lawsuit are subject to biases and potential abuses that
are not always present outside the courtroom, and the courtroom itself may afford experts a veneer
of credibility not present in other contexts. Legal sufficiency review requires courts to ensure that
a jury that relies on an expert’s opinion has heard factual evidence that demonstrates that the
opinion is not conclusory on its face. See Volkswagen, 159 S.W.3d at 912 (“While juries are
important to our legal system, they cannot credit as some evidence expert opinions that are not
reliable or are conclusory on their face. These principles are consistent with a legal sufficiency
review.”). Here, McKinney’s reliance on insufficient data and unsupported assumptions and the
analytical gaps in her analysis render her opinion conclusory and without evidentiary value. See
McIntyre v. Ramirez, 109 S.W.3d 741, 749–50 (Tex. 2003) (observing that conclusory expert
28
testimony “is insufficient to create a question of fact”). Because Mel Acres offered no other
evidence of the ranch’s lost market value or its cause, we must conclude that the evidence is legally
insufficient to support the damages awarded in this case.
III.
Conclusion
We hold that Mel Acres failed to present legally sufficient evidence to support its damages.
We therefore reverse the court of appeals’ judgment and render a take-nothing judgment in favor
of Houston Unlimited.
_____________________
Jeffrey S. Boyd
Justice
Opinion delivered: August 22, 2014
29