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State v. United States Department of Treasury

United States District Court, D. Nevada

June 29, 2017

THE STATE OF NEVADA, on relation of its Department of Transportation, Plaintiff,
v.
UNITED STATES DEPARTMENT OF THE TREASURY - INTERNAL REVENUE SERVICE, et al., Defendants.

          ORDER RE: MOTION TO STRIKE (ECF NO. 105)

          GEORGE FOLEY, JR. United States Magistrate Judge.

         This matter is before the Court on Plaintiff's Motion to Strike Tio DiFederico's Supplemental Report (Second) Regarding the Temporary Construction Easement (ECF No. 105), filed on May 12, 2017. Defendants Jackson, Strawn and Levy filed their Response (ECF No. 108) on May 26, 2017, and Plaintiff filed its Reply (ECF No. 109) on June 2, 2017. The Court conducted a hearing in this matter on June 12, 2017.

         BACKGROUND

         This case involves an action in eminent domain brought by Plaintiff State of Nevada to condemn and determine the value of land owned by Defendants adjacent to Interstate 15 in central Las Vegas, Nevada. The Plaintiff condemned approximately 20 percent of the Defendants' property along its eastern edge. The Plaintiff also acquired a four year temporary construction easement of 1, 728 square feet (0.04 acres) on the property. In his initial expert report dated September 27, 2016, Defendants' appraiser-expert witness, Tio DiFederico, stated that the fair market value of the real property acquired by the Plaintiff is $205, 000. He stated that the value of the four year temporary construction easement obtained by Plaintiff is $10, 000. On February 23, 2017, Defendants served a report by Mr. DiFederico entitled “A Supplemental Analysis” which was “prepared to revisit and analyze the valuation of a temporary construction easement (TCE) acquired for Project Neon on the above referenced property.” Motion (ECF No. 105), Exhibit 4, pg. 991. Mr. DiFederico states that in his original report, he assumed that the property owners would be able to access and use their site, although the Nevada Department of Transportation (NDOT) would have the right to use the area encumbered by the TCE for approximately 48 months. This assumption was based on the lack of any specific uses stated in the documents provided to the land owners, and on Mr. DiFederico's experience that “governmental agencies typically work with the property owner on these TCE's to limit the any (sic) disruption of their remaining property.” Id. at pg. 992. Mr. DiFederico visited the property several times in January and February 2017. He observed that NDOT's use of the the temporary construction easement completely blocked access to Defendants' property. The eastern portion of the TCE, which fronts Martin Luther King Boulevard, was fenced off, except for a temporary driveway for the large trucks being used for the construction of Project Neon. Based on these observations, Mr. DiFederico recalculated the value of the temporary construction easement, for the 48 month period beginning on February 23, 2016, to be $265, 000. Id. at pg. 994.

         Plaintiff denies that it has blocked or will block access to the remainder of Defendants' property during its use of the temporary construction easement. Plaintiff states that the construction work in the vicinity of Plaintiff's property will be completed within the next few months, at which point the Plaintiff will no longer use the temporary construction easement for that purpose. The subject property is vacant land whose highest and best use is to hold for investment. Plaintiff therefore argues that Mr. DiFederico's supplemental report is simply an untimely and invalid attempt to increase the alleged value of Defendants' condemnation award. Plaintiff argues that Mr. DiFederico's April 11, 2017 deposition testimony supports this conclusion. Mr. DiFederico testified as follows:

Q. But your opinion is that they need to be compensated for every day for 48 months, correct?
A. Correct. That's because they have the right to block. They took the right; they have to pay for that right.
Q. Why didn't you say that in September of 2016 when the exact same legal right was already taken?
A. Because I've never seen anybody do this in my 30 years block an entire site for months, and that's what they're doing on this site, and that's what I base my opinion on. This is a unique situation, I guess, and it should be valued uniquely. So I did not expect this to happen because I've never seen it before.
Q. And, again, Tio let's just be very clear, is your opinion of value based upon the fact that the State has the legal right to use the property for 48 months or is it based upon the actual use that's being made of the property? . . .
A. The Witness: It's the right. You took the right to use that strip which gives you the right to block their property, and in my opinion you should pay for that. . . .
Q. Okay. And that legal right is set forth in the TCE, right, correct?
A. Yes.

Motion (ECF No. 105), Exhibit 5.


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