Opinion
No. A06-1206.
Filed May 22, 2007.
Appeal from the District Court, Stearns County, File No. C4-05-1065.
Mark McKeon, Willenbring, Dahl, Wocken Zimmermann, P.L.L.C., (for appellant).
Diane B. Bratvold, Briggs Morgan, and Joseph S. Lawder, Lindquist Vennum, (for respondent).
Considered and decided by Dietzen, Presiding Judge; Randall, Judge; and Hudson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2006).
UNPUBLISHED OPINION
Appellant challenges the district court's summary judgment ruling, arguing that (1) the district court abused its discretion by excluding the testimony of his appraiser regarding damages; and (2) fact issues involving the existence and extent of appellant's loss should have precluded summary judgment. Because we conclude that the district court did not abuse its discretion by excluding the testimony of appellant's appraiser and that the district court did not err by granting summary judgment, we affirm.
FACTS
Appellant James Rakhshani purchased a parcel of unimproved land in Stearns County in June 2002. Respondent Chicago Title Insurance Company issued an owner's title insurance policy for $41,376.07 to appellant on June 27, 2002.
In April 2004, appellant entered into a contract for the construction of a 9,400-square-foot building on his property. Prior to the scheduled construction of the building, appellant brought in fill to raise the surface level of the land, and formed and poured footings. Shortly thereafter, the City of Waite Park notified appellant that the footings encroached upon a utility easement and required that the footings be removed. Construction of the building was terminated. On June 10, 2004, appellant notified respondent of the utility easement, which had not been disclosed before purchase, and submitted an insurance claim on June 28, 2004. The relevant portion of the insurance policy reads:
7. DETERMINATION, EXTENT OF LIABILITY AND COINSURANCE
This policy is a contract of indemnity against actual monetary loss or damage sustained or incurred by the insured claimant who has suffered loss or damage by reason of matters insured against by this policy and only to the extent herein described.
(a) The liability of the Company under this policy shall not exceed the least of:
(i) the Amount of Insurance stated in Schedule A; or,
(ii) the difference between the value of the insured estate or interest as insured and the value of the insured estate or interest subject to the defect, lien or encumbrance insured against by the policy.
(b) In the event the Amount of Insurance stated in Schedule A at the Date of Policy is less than 80 percent of the value of the insured estate or interest or the full consideration paid for the land, whichever is less, or if subsequent to the Date of Policy an improvement is erected on the land which increases the value of the insured estate or interest by at least 20 percent over the Amount of Insurance stated in Schedule A, then this Policy is subject to the following:
(i) where no subsequent improvement has been made, as to any partial loss, the Company shall only pay the loss pro rata in the proportion that the amount of insurance at Date of Policy bears to the total value of the insured estate or interest at Date of Policy; or
(ii) where a subsequent improvement has been made, as to any partial loss, the Company shall only pay the loss pro rata in the proportion that 120 percent of the Amount of Insurance stated in Schedule A bears to the sum of the Amount of Insurance stated in Schedule A and the amount expended for the improvement.
The provisions of this paragraph shall not apply to costs, attorney's fees and expenses for which the Company is liable under this policy, and shall only apply to that portion of any loss which exceeds, in the aggregate, 10 percent of the Amount of Insurance stated in Schedule A.
In February 2005, appellant sued respondent, claiming that the easement restricted his ability to develop the property, reduced the market value of the land, and forced him to drastically alter his plans for development of the land. Appellant claimed that respondent failed to pay benefits to which he was entitled under the insurance policy and alleged damages in excess of $50,000. Respondent moved for summary judgment, arguing that the maximum appellant was entitled to under provision 7(b) of the insurance policy was $10,398.81. In September 2005, appellant moved for summary judgment, alleging that respondent was liable for $41,376.07 in damages under section 7(a)(i) of the insurance policy, and, in the alternative, that there was a genuine issue of material fact regarding the "amount expended for the improvement." The parties do not dispute that June 10, 2004, is the "date of discovery" of the easement.
In October 2005, the district court denied both parties' motions for summary judgment. The district court denied respondent's motion for summary judgment because it concluded that "Section 7(b) does not apply to improvements subsequent to the date of discovery of the defect." The court also concluded that appellant was "entitled to damages under Section 7(a)(ii)," but that "[t]he record does not show what the appropriate damage amount is." The only measure of damages before the court at that time was appellant's appraisal, which valued his damages based on the planned improvements to the property, which the district court rejected as meaningless because "damages under Section 7(a) must be calculated without considering the improvements subsequent to . . . the date of discovery." Because the district court determined that an issue of fact remained with respect to the appropriate amount of damages, it denied appellant's motion for summary judgment. Finally, the district court stated that "[u]nless otherwise resolved, the parties will need to establish the difference in value of the property with and without the encumbrance as of June 10, 2004."
On January 18, 2006, appellant's appraiser calculated the value of appellant's loss as of June 10, 2004, at $27,000, which included $17,200 in diminution in the market value of the property and $9,800 in severance damages.
On March 30, 2006, respondent moved to compel the production of documents and moved in limine to exclude the testimony of appellant's appraiser. Respondent argued that appellant had not provided documentation of the costs expended before the June 10, 2004 discovery date (the cost of fill and the footings) and that the appraiser's deposition showed that he based his valuation on future building plans, rather than the method specified in the district court's October 2005 order.
On April 13, 2006, the district court issued an order in limine in which it denied respondent's motion to preclude the appraiser's testimony but granted its motion to preclude the appraiser from "presenting evidence of consequential damages, specifically, a reduction in the size of the building and/or the cost of fill." The district court stated that the appraiser would be permitted to testify "to his opinion of the market value of the subject property with and without the previously undisclosed easement as of June 10, 2004," but that:
The size and value of the building is irrelevant in determining market value. The issue in this case is the market value of the land, not the building. Severance damages and reduced size of a building are irrelevant and if it is shown that the appraiser took such factors into consideration in arriving at his opinion of loss of value of $12,358.00 . . . his opinion will be disallowed. Any other subsequent opinion of [the appraiser] will be disallowed at trial, because any subsequent opinion and the basis for it has not been timely disclosed.
On April 25, 2006, the district court amended its order in limine to correct the value of loss from $12,358 to $10,454.
In pretrial proceedings on April 25, 2006, respondent's counsel renewed its motion in limine seeking to have the testimony of appellant's appraiser ruled inadmissible and moved for judgment as a matter of law or summary judgment. Appellant's attorney opposed the motion, arguing that "an appraisal of the value of a piece of commercial property cannot be made without reference to the building potential of that lot" and that the easement changed the value of the land by reducing the amount of buildable space. After some oral argument, the district court concluded that because the size of the building appellant was planning to build had not changed as a result of the discovery of the easement, and because appellant failed to produce any other admissible evidence of damages, respondents were entitled to summary judgment.
In its memo filed on May 3, 2006, the district court noted that the "appraiser's opinions are all premised upon building plans that he understood did not come to be and did not found them upon the existing condition of the land on June 10, 2004," and that "[s]ince it is undisputed that [appellant] did not reduce the size of the building because of the easement, the foundation for [appellant's] appraiser's testimony is lacking and there is no loss caused by the discovery of the easement." The court also concluded that severance-like damages are unrecoverable "under the standard that does not consider improvements subsequent to the date of the loss." This appeal follows.
DECISION I
Appellant argues that the district court abused its discretion when it excluded the testimony of his appraiser regarding damages resulting from discovery of the easement. Appellant also argues that a "broad evidence rule" should be used to determine the damages and that "[t]here is no logical reason why severance-like damages should not be admissible in this case."
"Evidentiary rulings concerning materiality, foundation, remoteness, relevancy, or the cumulative nature of the evidence are within the [district] court's sound discretion and will only be reversed when that discretion has been clearly abused." Johnson v. Washington County, 518 N.W.2d 594, 601 (Minn. 1994) (quotation omitted). A district court's evidentiary rulings, including a decision to exclude the testimony of an expert witness, will not be reversed absent an abuse of discretion. Benson v. N. Gopher Enters., 455 N.W.2d 444, 445 (Minn. 1990).
Here, the district court excluded the testimony of appellant's appraiser because it concluded that the appraiser's determination of appellant's losses was based on a measure of damages that was irrelevant. Appellant cites Brooks Realty, Inc. v. Aetna Ins. Co., 276 Minn. 245, 253, 149 N.W.2d 494, 500 (1967), to support his argument that a "broad evidence rule" should be used to determine the value of a partial loss and that severance damages should be allowed. However, Brooks Realty concerns fire insurance and the determination of the loss in the case of a building partially destroyed by fire. Id. at 246, 149 N.W.2d at 496. Appellant does not cite any legal authority showing that such a rule applies in the circumstances of this case.
In what is apparently an argument by analogy, appellant also argues that severance damages should be allowed in this case because the "discovery" of the easement effectively acted as a constitutional taking, and severance damages would be allowed in the case of an actual constitutional taking. However, appellant cites no legal authority to support this argument and conceded at oral argument that this case does not involve a constitutional taking.
For these reasons, we conclude that appellant has failed to show that the district court abused its discretion when it excluded the testimony of appellant's appraiser.
II
Appellant argues that the district court erred by granting summary judgment in favor of respondent because an issue of material fact remains with respect to the value of his insured loss. Appellant maintains that the deposition and appraisal of his appraiser show that he suffered a loss as a result of the utility easement and argues that his appraiser based his measurement of damages on two methods that did not violate the district court's October 2005 order regarding how such damages should be measured.
"On an appeal from summary judgment, we ask two questions: (1) whether there are any genuine issues of material fact and (2) whether the [district] court[ ] erred in [its] application of the law." State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). "A motion for summary judgment shall be granted when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that either party is entitled to a judgment as a matter of law. On appeal, the reviewing court must view the evidence in the light most favorable to the party against whom judgment was granted." Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993) (citation omitted).
No genuine issue for trial exists "[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party." DLH, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997) (alteration in original) (quotation omitted). "[T]he party resisting summary judgment must do more than rest on mere averments." Id. at 71. "[W]hen the nonmoving party bears the burden of proof on an element essential to the nonmoving party's case, the nonmoving party must make a showing sufficient to establish that essential element." Id.; see also Schroeder v. St. Louis County, 708 N.W.2d 497, 507 (Minn. 2006) (stating that "[a] party need not show substantial evidence to withstand summary judgment. . . . [S]ummary judgment is inappropriate if the nonmoving party has the burden of proof on an issue and presents sufficient evidence to permit reasonable persons to draw different conclusions").
Here, the district court determined that appellant's appraiser's testimony was inadmissible because he lacked foundation for his opinion. Because appellant presented no other evidence of loss or damages, the district court concluded that there were no genuine issues of material fact as to damages and granted summary judgment in favor of respondent. The record supports the district court's determination.
First, the appraiser admitted in his deposition that the damages he attributed to the easement regarding an 18-by-140-foot strip of appellant's property was based on property that was not insured by respondent. After subtracting the amount of loss attributable to the loss in value of the land that was not insured by respondent, the appraiser concluded that the value would be $10,454.
Second, the appraiser also acknowledged that the $10,454 estimate was premised on an assumption that appellant was forced to reduce the size of his proposed building from 10,946 to 9,363 square feet and move the planned placement of the building as a result of the easement. The appraiser later admitted in his deposition that if the building was originally planned to be 9,400 square feet, then there would be no loss due to a reduction in the planned size of the building. Appellant admitted during oral argument that the planned size of the building had not changed as a result of the easement.
Finally, the only remaining evidence of damages, the $9,800 the appraiser attributed to severance damages resulting from the loss of use of the 18-by-60-foot area covered by the easement, was specifically barred by the district court's October 2005 order disallowing any evidence of severance damages.
Appellant argues that the district court made factual findings when it concluded that there was no loss based on the restriction on the placement of the future building and the cost of the footings appellant installed and later removed. However, the record clearly shows that the district court only determined that appellant had not presented any evidence of these losses, not that they did not occur.
Because the record supports the district court's determination that appellant failed to provide any admissible evidence of damages, we conclude that the district court did not err by granting summary judgment in favor of respondent.