Opinion
F061227 Super. Ct. No. CV-265717
11-21-2011
SOUTHERN CALIFORNIA EDISON COMPANY, Plaintiff and Respondent, v. JAY K. MINN, as Trustee, etc. et al., Defendants and Appellants.
Michael B. Montgomery for Defendants and Appellants. Avila & Putnam, Joseph S. Avila, Andy K. Cho; Douglas Ditonto and Lisa DeLorme for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
OPINION
APPEAL from a judgment of the Superior Court of Kern County. Sidney P. Chapin, Judge.
Michael B. Montgomery for Defendants and Appellants.
Avila & Putnam, Joseph S. Avila, Andy K. Cho; Douglas Ditonto and Lisa DeLorme for Plaintiff and Respondent.
Plaintiff Southern California Edison Company (Edison) initiated this eminent domain proceeding to condemn an easement for electric transmission lines across the property of a number of landowners. This appeal concerns evidentiary rulings related to a landowner's claim for severance damages—that is, compensation for the diminution caused to the remainder of the property by the taking of a corridor for transmission lines through that property.
The trial court granted Edison's motion in limine to exclude the opinion of the landowner's expert regarding the severance damages, but continued the trial so the landowner could obtain other experts. After the landowner retained other experts and Edison took their depositions, Edison filed additional motions in limine to exclude the expert opinions and appraisals regarding severance damages. The trial court granted the motions and refused to continue the trial a second time. The landowner appeals from the judgment, challenging all of the trial court's orders excluding expert testimony regarding severance damages.
We conclude the landowner has not demonstrated the trial court violated applicable provisions of the Evidence Code or otherwise abused its discretion in excluding the opinion testimony of the landowner's experts. Therefore, the judgment will be affirmed.
FACTS AND PROCEEDINGS
In December 2004, Edison filed an application with the California Public Utilities Commission (PUC) for approval of its Transmission Renewable Energy Project. In March 2007, the PUC issued a certificate of public convenience and necessity approving the project and authorizing Edison to acquire the necessary easements to build and operate the electric transmission line. The transmission line will connect a proposed substation located in Kern County to the Antelope substation located in the City of Lancaster, County of Los Angeles. The easement for the transmission lines is 200 feet wide and runs across land owned by Jay K. Minn and Shaun K. Minn, trustees of the K3 Trust.
For convenience, this opinion refers to the defendant landowner as "the Trust" even though legal title is held by the individuals acting as the trustees.
The Trust owns two adjoining sections of vacant desert land that contain approximately 1,255 acres. The easement will create an interior corridor on this land that encompasses approximately 49.7 acres.
Edison was unable to negotiate the acquisition of an easement with the Trust. Consequently, on November 21, 2008, Edison filed a complaint in eminent domain to acquire an easement for the transmission lines and roads necessary for the construction, maintenance and operation of the lines. Edison deposited the amount of probable compensation for the easement on January 13, 2009. Two months later, the trial court issued an order of possession.
Pursuant to California's Eminent Domain Law (Code Civ. Proc., § 1263.010 et seq.), the date on which this deposit was made is regarded as the "date of valuation." (Code Civ. Proc., § 1263.110, subd. (a).) The date of valuation is a component of the definition of the property's fair market value, which is the highest price on the date of valuation that would be agreed to by a willing buyer and a willing seller, each with full knowledge and being under no particular necessity to complete the transaction. (Code Civ. Proc., §1263.320, subd. (a).)
In November 2009, Edison and the Trust exchanged appraisals. Edison's appraiser, Frances W. Mason, MAI, valued the easement at $172,200 and concluded the remainder of the Trust's land did not experience any severance damages because it would continue to be raw, undeveloped land held for future development. In contrast, the Trust's appraiser, Jack C. Flynn, ASA, based his appraisal on the assumption that the highest and best use of the property was to lease it for a solar energy project. Flynn capitalized the payments under a proposed lease and concluded the Trust's property was worth $17 million. Flynn's appraisal listed the severance damages at approximately $14.7 million.
In January 2010, Edison filed a motion in limine to exclude Flynn's appraisal report on the grounds that the opinion was based on unreliable matters as well as matters prohibited by applicable provisions of the Evidence Code. Edison argued that Flynn's opinion improperly relied upon a proposed lease agreement between the Trust and enXco Development Corporation (enXco), the proposed lessee. However, the lease had not been executed.
The letterhead of enXco states it is an EDF EN Company. The December 14, 2007, letter from enXco to the Trust described enXco as "part of EDF EN, a global energy provider with worldwide holdings in wind, solar, and thermal energy facilities. To date, enXco has developed, maintains and operates 47 wind and solar projects throughout the United States."
On February 8 and 9, 2010, the trial court heard arguments on the motion to exclude Flynn's appraisal evidence. The trial court granted the motion and excluded the appraisal on the ground that there was no agreement upon which the appraiser could reasonably rely in forming an opinion regarding the present worth of the lease payments.
The Trust requested a continuance of the trial to obtain a replacement appraisal, which the trial court granted. The trial court's order required the Trust to furnish the appraisal of its newly designated expert to Edison no later than May 18, 2010 and to make that expert available for deposition no later than June 18, 2010.
In accordance with the trial court's order, the Trust served Edison with a copy of an appraisal report prepared by Steven R. Norris, MAI, CRE, and Edison took Norris's deposition in early June 2010.
In August 2010, Edison filed a motion in limine to exclude the testimony and opinions of Norris regarding severance damages. Edison also filed a motion in limine to exclude the opinion testimony of John W. Sibert, Ph.D.
After hearing arguments on the motions in limine at a management conference, the trial court issued a tentative ruling to grant both motions. After additional oral argument on August 23, 2010, the trial court confirmed its tentative ruling as to the testimony of Sibert and Norris. Based on this ruling and its decision not to grant a further continuance, the court stated that the Trust would not be permitted to present severance damage evidence at trial.
Later in August, a jury trial was held on the issue of just compensation for the easement. The jury awarded the Trust $434,875.
In October 2010, the Trust filed a notice of appeal to challenge the rulings that resulted in the exclusion of its claim for severance damages.
DISCUSSION
I. Overview of Severance Damages in Eminent Domain
California's law of eminent domain provides that where the property condemned is part of a larger parcel, "compensation shall be awarded for the injury, if any, to the remainder." (Code Civ. Proc., § 1263.410, subd. (a).) Compensation for the diminution in value of the landowner's remaining parcel is known as "severance damage[s]." (11 Miller & Starr, Cal. Real Estate (3d ed. 2011) Eminent Domain, § 30A:36.) The formula for severance damages adopted by our Supreme Court is the difference in the fair market value of the owner's property in its "before" condition and the fair market value of the remaining portion of the property after the construction of the improvement on the portion taken. (Metropolitan Water Dist. of Southern California v. Campus Crusade for Christ, Inc. (2007) 41 Cal.4th 954, 971.) Severance damages can be based on any factor resulting from the project that causes a decline in the fair market value of the remaining property. (Ibid.) If the project benefits the remaining parcel by adding value to the parcel, any such benefit will be offset against the severance damage. (Code Civ. Proc., § 1263.410, subd. (b); Metropolitan Water Dist. of Southern California v. Campus Crusade for Christ, Inc., supra, 41 Cal.4th at p. 965.)
Under these rules, if the taking of an easement over a portion of the property causes a diminution of the value of the landowner's remaining property, the owner can recover that diminution in value. (See 11 Miller & Starr, Cal. Real Estate, supra, Eminent Domain, § 30A:29 [valuation of property taken by easement].)
II. Standard of Review for Exclusion of Experts in Condemnation Proceeding
As a general rule, an order that limits the evidence that can be offered to prove a claim is reviewed for an abuse of discretion. (Dillingham-Ray Wilson v. City of Los Angeles (2010) 182 Cal.App.4th 1396, 1403 [breach of contract case]; see Aas v. Superior Court (2000) 24 Cal.4th 627, 634 [ruling excluding evidence is reviewed for abuse of discretion on appeal in a tort case involving construction defects].) Courts have recognized an exception to this general rule when the order excludes all evidence on a particular claim and, as a result, operates as a motion for judgment on the pleadings or as a motion for nonsuit. (Dillingham-Ray Wilson v. City of Los Angeles, supra, 182 Cal.App.4th at p. 1402.) When the evidentiary ruling effectively eliminates the claim so that this exception applies, the appellate court subjects the ruling to independent review, examines the record in the light most favorable to the party offering the evidence, and determines whether the evidence and inferences were sufficient to support a judgment in favor of that party. (Id. at p. 1403.)
We note the foregoing general rule and exception as background for discussing the particular rule that applies to evidentiary rulings that exclude an expert's opinion of value in a condemnation proceeding. In a condemnation or eminent domain lawsuit, the trial court is vested with considerable judicial discretion in admitting or excluding evidence of value, including the opinions of experts. (City of San Diego v. Barratt American, Inc. (2005) 128 Cal.App.4th 917, 936.) For example, if the opinion testimony lacks the necessary foundation, the trial court acts within its discretion in excluding the testimony. (Ibid.) Similarly, whether a witness is qualified to testify as to the value of land is subject to the trial court's discretion. (Sooy v. Kunde (1947) 80 Cal.App.2d 347, 355.) Also, when a valuation expert uses an unsanctioned methodology, the opinion may be excluded in part or in whole in the discretion of the trial court. (City of Stockton v. Albert Brocchini Farms, Inc. (2001) 92 Cal.App.4th 193, 198.) Therefore, we will apply the abuse of discretion standard of review in this case.
Notwithstanding the applicability of the abuse of discretion standard of appellate review in this case, when the trial court's order involves the interpretation and application of a statute, questions of law are raised and those questions of law are subject to de novo (i.e., independent) review on appeal. (E.g., In re Alexander A. (2011) 192 Cal.App.4th 847, 852 [abuse of discretion standard ordinarily applies to restitution order; when order involves an interpretation of statute, a question of law is raised, which is subject to de novo review]; Robertson v. Health Net of California, Inc. (2005) 132 Cal.App.4th 1419, 1425 [denial of petition to compel arbitration reviewed for abuse of discretion; where denial presents a pure question of law, review is de novo].) In other words, it is an abuse of discretion for a trial court to misinterpret or misapply the law. (City of Sacramento v. Drew (1989) 207 Cal.App.3d 1287, 1297-1298.)
Furthermore, when questions of fact are raised, it is an abuse of discretion for a trial court to make findings that are not supported by substantial evidence. (See People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1143 [under abuse of discretion standard of review, appellate courts accept trial court's findings of fact supported by substantial evidence].)
III. Exclusion of Flynn's Appraisal
Evidence Code section 822 restricts the matters upon which an expert may rely in forming an opinion regarding the value of the property. This appeal concerns the restriction in Evidence Code section 822, subdivision (a) regarding the price set forth in an offer or option to purchase or lease the property:
"In an eminent domain or inverse condemnation proceeding, notwithstanding the provisions of Sections 814 to 821, inclusive, the following matter is inadmissible as evidence and shall not be taken into
account as a basis for an opinion as to the value of property: [¶]...[¶] (2) The price at which an offer or option to purchase or lease the property or property interest being valued ... was made, ... except that an option, offer, or listing may be introduced by a party as an admission of another party to the proceeding; but nothing in this subdivision permits an admission to be used as direct evidence upon any matter that may be shown only by opinion evidence under Section 813."
The trial court excluded Flynn's appraisal because it was based on the assumption that the Trust and enXco had entered into an option agreement and a lease. The court concluded that there was no agreement and, therefore, the underlying premise upon which the appraisal was based (an enforceable lease) did not exist.
A. Offer Versus Enforceable Lease Agreement.
On appeal, the Trust raises the issue "whether the contract was in fact, as between the parties, considered entered into." In the Trust's view, the lease was an agreed fact. Furthermore, the Trust contends that the issue of contract formation is subject to de novo review by this court, citing Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 866 (where there is no conflict in the extrinsic evidence, the reviewing court must independently determine the meaning of the contract).
1. Standard of review for contract formation.
We reject the Trust's argument that we should conduct a de novo review of the question whether the Trust and enXco formed an enforceable agreement.
Our first step in applying the abuse of discretion standard of review discussed in part II, ante, is to determine whether the trial court decided a question of law or a question of fact when it decided the proposed lease was only an offer and not an enforceable agreement. If the trial court decided a question of law, de novo review of that question is warranted. (Robertson v. Health Net of California, Inc., supra, 132 Cal.App.4th at p. 1425.) If the trial court decided a question of fact, the trial court's finding of fact will be upheld only if it is supported by substantial evidence. (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc., supra, 20 Cal.4th at p. 1143.)
The essential elements to the formation of a contract under California law are (1) parties capable of contracting, (2) the consent of those parties, (3) a lawful object, and (4) adequate consideration. (Civ. Code, § 1550; see BAJI No. 10.55 [contract defined/elements].) Pursuant to Civil Code section 1565, the consent of the parties to a contract must be (1) free, (2) mutual, and (3) communicated to each other. Generally, whether the parties have mutually consented to a contract is a question of fact. (Alexander v. Codemasters Group Limited (2002) 104 Cal.App.4th 129, 141.) Consequently, when the trial court decided no enforceable lease agreement existed, it decided a question of fact. Therefore, we will apply the substantial evidence standard and, if substantial evidence exists regarding the lack of mutual consent, we will conclude the trial court properly applied Evidence Code section 822, subdivision (a).
The Trust's reliance on Parsons v. Bristol Development Co., supra, 62 Cal.2d 861 is misplaced because that case did not address whether the parties had formed a contract. Instead, that case concerned the interpretation of a written contract under which the plaintiff had performed services; the parties disagreed over whether the contract placed a condition on the plaintiff's right to payment. (Id. at pp. 864-865.) Therefore, that case does not stand for the proposition that appellate courts conduct a de novo review of a trial court's findings regarding the formation of a contract.
2. Substantial evidence supports finding no contract was formed.
In this case, the trial court reviewed the documents and correspondence exchanged by enXco and the Trust and, at the February 9, 2010, hearing, described its analysis of those documents to the parties.
Those documents included enXco's December 20, 2007, letter to the Trust, which the trial court characterized as an initial show of interest by enXco.
On July 15, 2008, enXco sent a revised version of the proposed lease to the Trust. The cover letter referenced the enclosed revision of the lease and stated: "As we discussed earlier this week, our work on our business terms is done, and its [sic] time for your attorney to work with my legal department and iron out the final details on this lease."
On July 28, 2008, enXco sent the Trust another revision of the lease. The last sentence of the cover letter stated: "I look forward to hearing from you and completing our lease."
In a letter dated September 10, 2008, enXco informed the Trust that the utility easement on the Trust's property rendered the property unsuitable for enXco's development. On appeal, the Trust characterizes this letter as cancelling the proposed lease, as though it had been a binding and enforceable agreement.
We conclude the foregoing documents constitute substantial evidence supporting the trial court's finding that enXco and the Trust had not entered an enforceable lease agreement. The correspondence indicates that enXco and the Trust had agreed to many terms, but a final, enforceable agreement had not been reached. In other words, the Trust and enXco had not formed a mutual intention to be bound by the terms of the unsigned documents. The absence of a mutual intent to be bound is demonstrated by enXco's July 28, 2008, letter in which the author looked forward to "completing our lease." This statement indicates that enXco viewed the lease as incomplete and supports the inference that enXco did not intend to be bound by the then current form of the lease. Because this inference is reasonable under the facts presented to the trial court, the applicable standard of review compels us to conclude that the trial court did not abuse its discretion in finding an enforceable agreement had not been formed and concluding that Evidence Code section 822, subdivision (a)(2) precluded Flynn from relying on the proposed lease because it constituted an offer.
B. Offer by an Affiliate as an Admission Regarding Value.
The Trust also argues that the trial court should not have excluded Flynn's opinion because it was reinforced by the offer of Southwest Solar Land Company, LLC (Southwest Solar). The Trust asserts that Southwest Solar is a limited liability company wholly owned by Edison International, which also owns Edison. The Trust contends that an offer by an affiliate of Edison should be treated as an admission and allowed as the basis for an expert opinion under the exception in Evidence Code section 822, subdivision (a)(2) that states "an ... offer ... may be introduced by a party as an admission of another party to the proceeding ...."
The trial court concluded that it would not treat the offer of Southwest Solar as an admission against interest by Edison. The court stated that the only commonality demonstrated was that Edison International was the parent company of both organizations, which was insufficient to establish an alter ego relationship or a strong enough tie between Edison and Southwest Solar to treat a statement by one as the admission of the other.
On appeal, the Trust contends that "[a]s an affiliate company, controlled by a single Board, the admission provision should apply." The Trust supports this contention by citing our opinion in Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, which states that control is the key characteristic for determining whether to treat a subsidiary corporation as an agent of the parent corporation. (Id. at pp. 541-542.) In that case, we reviewed the trial court's application of the alter ego doctrine under the substantial evidence test. (Id. at p. 535.) Similarly, in this case we will determine whether the trial court abused its discretion in concluding Southwest Solar was not an alter ego of Edison by examining whether substantial evidence supports the finding that an alter ego relationship did not exist.
Here, conflicting inferences can be drawn for the fact that both Edison and Southwest Solar are owned by the same parent company and both are involved in the electricity business. The Trust's assertion of fact that Edison International keeps "a firm hand on its operatives" is not supported by a citation to evidence in the record. In view of the rule regarding conflicting inferences set forth in Tudor Ranches, Inc. v. State Comp. Ins. Fund (1998) 65 Cal.App.4th 1422, 1431, we must uphold the trial court's findings regarding the alter ego doctrine rather than overturning those findings based on inferences from the evidence and offers of proof that were rejected by the trial court.
In summary, the trial court correctly applied the provisions of Evidence Code section 822, subdivision (a)(2) when it excluded Flynn's appraisal.
IV. Edison's Motion for Sanctions
On May 17, 2011, Edison filed a motion for sanctions that requested the dismissal of the appeal insofar as it concerns the February 9, 2010, order excluding the appraisal of Flynn and the offer of Southwest Solar. The motion is based on two grounds—the failure to seek timely review and waiver of the right to appeal.
On June 8, 2011, this court filed on order stating that consideration of Edison's motion would be deferred pending consideration of the appeal on the merits.
We will deny the motion for sanctions as moot because we have upheld the trial court's February 9, 2010, order excluding the appraisal of Flynn and the offer of Southwest Solar on substantive grounds. Thus, we do not decide the timeliness of the Trust's challenge to the February 9, 2010, order or whether the Trust waived its right to challenge that order on appeal from the judgment. Because Edison's motion for sanctions requested only dismissal of the appeal regarding the exclusion of the Flynn appraisal and the offer of Southwest Solar and did not request monetary sanctions, there are no issues raised by that motion that require further attention.
V. Norris's Valuation Opinion
A. Contents of the Appraisal.
Norris's written market value appraisal placed (1) the value of the easement across the Trust's property at $447,048 and (2) the amount of severance damages at $1,627,301. Page 81 of the appraisal addressed severance damage and stated:
"We have reviewed two sources of information supporting the concept of severance damages. The first source represents input from a solar energy expert familiar with both utility-grade solar power development and design, as well as the specific characteristics of the subject property. The second source is based on studies conducted on the impact of easement takings on the market value of the property remainder."
The appraisal identified Sibert as the first source of information. It stated that Norris had interviewed Sibert to ascertain the effect of imposition of the easement on the remainder of the property—specifically, the effect of the easement on the remainder of the property and the loss associated with its potential solar generating capability. The appraisal indicated that Sibert "stated that there would be a loss in solar generating capacity, and an equal loss to the value of the land of from 15% to 20% to the remainder portion of the property."
As to the second source, the appraisal indicated a number of market participants (brokers, buyers and sellers of land) were interviewed regarding the effect of the easement on the market value of the remainder and then stated:
"The research revealed a perceived loss in market value to the remainder portion of the subject property, as a direct result of the imposition of the easement on the larger parcel. The opinions of loss in value ranged from 5% to 25% of the total fee value of the remainder of the subject site."
Relying on these two sources—the opinion of Sibert and the opinions of the market participants—the appraisal estimated the severance damages at $1,627,301 based on "the unit rate of 15% of the value of the remainder portion of the property."
In his deposition, Norris indicated that besides the information from Sibert and the market participants there was no other information that he researched to support his conclusion regarding the severance damage to the Trust's property.
B. Trial Court's Ruling.
In its tentative ruling, the trial court stated that Norris was qualified as an expert, but that his opinions were inadmissible because they were based on the unsupported opinions of Sibert and unsupported statements of undisclosed market participants. The court also referenced the lack of any independent investigation to substantiate the information allegedly received from the undisclosed market participants and the lack of an independent evaluation of severance damage using any admissible methodology. At the August 23, 2010, hearing, the trial court confirmed its tentative ruling regarding the opinion of Norris and summarized the ruling by stating that Norris's opinion was "without foundation in terms of any material upon which he may reasonably rely for purposes of stating a sever[ance] damage valuation."
C. Contentions of the Parties.
The Trust asserts that Norris may rely upon facts received from inquiries made of others and an expert's opinion may be based on hearsay if that hearsay "is of a type that reasonably may be relied upon by an expert in forming an opinion as to the value of property." The Trust also asserts that Norris testified at his deposition that he had talked to property owners, but would need to refer to his notes to say how many and Edison's attorney never asked to see Norris's notes. Based on these assertions, the Trust contends that Norris properly relied upon an independent study of local market participants, including brokers and owners familiar with Antelope Valley lands.
Evidence Code section 814. This section addresses matters upon which opinions as to value must be based and provides in full: "The opinion of a witness as to the value of property is limited to such an opinion as is based on matter perceived by or personally known to the witness or made known to the witness at or before the hearing, whether or not admissible, that is of a type that reasonably may be relied upon by an expert in forming an opinion as to the value of property, including but not limited to the matters listed in Sections 815 to 821, inclusive, unless a witness is precluded by law from using such matter as a basis for an opinion." (Italics added.)
The factual assertion that the attorney deposing Norris never asked to see his notes is not supported by a citation to the record. (See Brewer v. Murphy (2008) 161 Cal.App.4th 928, 936, fn. 4 [factual assertions in an appellate brief should be supported by specific citations to the record]; Cal. Rules of Court, rule 8.204(a)(1)(C).)
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Edison's respondent's brief raises a number of points regarding the admissibility of Norris's opinion regarding severance damages, including the contention that Norris failed to authenticate, confirm or verify the market participant's hearsay evidence on severance damage and, therefore, that hearsay was unreliable and inadmissible.
The Trust replies that an expert may rely on hearsay. It also contends that appraisers are not required to document all of their information because such a requirement would create an unreasonable burden. In addition, the Trust contends that Norris's use of the phrase "perceived loss" is the equivalent of "decrease in market value." The Trust's contention implies disputes regarding semantics should be left for the jury to consider when weighing the expert's opinion.
D. Analysis of Statements by Market Participants.
The issue before us is whether Norris's valuation opinion regarding severance damages was based on matters "of a type that reasonably may be relied upon by an expert in forming an opinion as to the value of property" as required by Evidence Code section 814. The particular matters involved are the opinions of loss of value expressed by market participants in interviews with Norris.
Initially, we note that valuation experts are not forbidden from relying on hearsay. As stated by the court in City of Los Angeles v. Lowensohn (1976) 54 Cal.App.3d 625, "an expert witness in a valuation trial can base his opinion on hearsay as provided for by section 814 of the Evidence Code ...." (Id. at p. 638, fn. omitted.)
The trial court characterized the hearsay opinions of market participants relied upon by Norris as unsupported statements by undisclosed participants. The court's exclusion of Norris's opinion on severance damages necessarily implies that the court determined the hearsay statements of the market participants regarding their opinions as to the loss in value were not of the type reasonably relied upon by a valuation expert and, as a result, fell outside the scope of Evidence Code section 814.
The Trust's difficulty in showing the trial court erred in deciding the reasonable reliance question is that the appellate record contains very little information about the hearsay statements made to Norris by the market participants. The Trust was given the opportunity to provide information about the hearsay statements of market participants in its written opposition to Edison's motion in limine that sought to exclude Norris's opinion regarding severance damages. The Trust's written opposition asserted that "Norris will have his notes and records available at trial should [counsel for Edison] now wish to inquire [about Norris's study of market participants]. Mr. Norris' opinion would only be suspect if he disregarded local input, i.e., what then would he use as information?" Consequently, instead of providing information about the market participants whom Norris interviewed, the Trust seemed to think it enough that Norris had identified those individuals as market participants.
The excerpts from Norris's deposition in the appellate record indicate that all of the information Norris obtained from market participants was obtained in telephone interviews. None of the individuals provided Norris with written information to support their opinions. Furthermore, Norris did not investigate the information the market participants provided to him. Norris explained the lack of an investigation by stating that "we were asking for their experience in their opinions in light of their experience." Just what that experience was cannot be discerned from the appellate record.
Based on the arguments presented and the record on appeal, we conclude that the Trust has not demonstrated that the trial court abused its discretion when it determined that it was not reasonable for Norris to rely on the hearsay statements of market participants. In short, more information about the market participants was needed to show Norris's reliance was reasonable.
E. Norris's Reliance on Sibert's Opinion.
Because we have concluded that the trial court did not abuse its discretion in deciding Norris's opinion regarding valuation could not reasonably rely on the statements obtained from market participants, the next question is whether Norris's opinion still should have been deemed admissible because it was based in part upon the opinion of Sibert. (See Golden Gate Bridge etc. Dist. v. Muzzi (1978) 83 Cal.App.3d 707, 714, fn. 2 [appraisal's reference to matters deemed inadmissible by trial court did not require exclusion where appraisal also relied on independent, admissible matters].) This question raises the specific issue whether Norris could reasonably rely on the opinion of Sibert.
VI. Admissibility of Sibert's Opinion as a Foundation for Norris's Opinion
A. Sibert's Opinion and Related Motion in Limine.
During his deposition, Sibert was asked to explain how he arrived at 15 to 20 percent impact from the proposed easement. Sibert replied, "I cannot give you a formula that, would say this is 15 to 20 percent." Sibert explained that he considered what kind of financial incentive it would take to have a buyer looking at two nearly identical parcels to choose the parcel with the easement. He stated, "It would take an incentive—financial incentive, to put it on a site that already had this kind of impact. And my guess was 15 to 20 percent. But I cannot give you a formula."
Edison's motion in limine to exclude the testimony of Sibert regarding severance damages addressed Sibert's opinion that the subject property would suffer severance damages between 15 and 20 percent of its market value.
The trial court granted the motion in limine. The court determined that Sibert's opinion of a depreciated value of the remainder by 15 to 20 percent was a valuation opinion and excluded that opinion on the grounds that (1) Sibert was not qualified to render a valuation opinion and (2) the opinion was based on speculation and matters upon which an expert could not reasonably rely to conclude severance damages existed in the amount stated.
B. Contentions on Appeal and Issues Addressed.
On appeal, the Trust contends that Sibert was not an appraisal witness, but gave his opinion that the subject property was suitable for solar energy use. The Trust contends this opinion regarding use was admissible because the suitability of the land for solar energy was a triable issue of fact. The Trust takes the position that "Sibert testified to impact of 'use', not as to 'value'."
Based on the Trust's argument and the trial court's ruling, the first point of disagreement concerns whether Sibert's opinion concerned a reduction in value or, as the Trust asserts, concerned the impact of the easement on the use of the property.
C. Analysis.
We conclude that the trial court correctly characterized Sibert's opinion as a valuation opinion insofar as the opinion was relied upon by Norris in his appraisal. This conclusion is readily apparent from the way Norris's written appraisal described Sibert's opinion. The appraisal indicated Sibert stated that the easement would cause a loss in solar generating capacity "and an equal loss to the value of the land of from 15% to 20% to the remainder portion of the property." This statement about value and the fact that Norris chose a 15 percent loss in market value as the amount of severance damages adequately supports the conclusion that Norris relied on Sibert's opinion as an opinion concerning the diminution of the property's value. Therefore, we disagree with the Trust's argument that Sibert's opinion should have been treated solely as an opinion regarding the impairment of use of the remainder of the property.
Because the Trust has conceded that Sibert did not qualify as an expert regarding the value of the severance damages and we have concluded that the trial court correctly treated his opinion as an opinion regarding value, it follows that Norris could not reasonably rely on Sibert's opinion in rendering his appraisal.
Furthermore, the fact that Sibert could have testified that the property was suitable for solar power development and the easement impaired that development does not establish that the trial court erred when it excluded evidence regarding severance damages. Without Norris's appraisal, Sibert's opinion on these matters would not have provided a sufficient basis for a jury to determine the diminution in value and award severance damages.
Accordingly, we conclude that the trial court did not abuse its discretion in granting the motion in limine regarding Sibert's testimony.
DISPOSITION
The judgment is affirmed. Respondent shall recover its costs on appeal. Respondent's May 17, 2011, motion for sanctions is denied as moot.
LEVY, Acting P.J.
WE CONCUR:
CORNELL, J.
FRANSON, J.