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United States v. 400 Acres of Land

United States District Court, D. Nevada

September 29, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
400 ACRES OF LAND, more or less, situate in Lincoln County, State of Nevada; and JESSIE J. COX, et al., Defendants.

          ORDER ORDER (PL.'S MOTIONS TO EXCLUDE - ECF NOS. 128, 129, 130, 133, 134, 135; DEFS.' MOTION TO PRESERVE ISSUE FOR JURY - ECF NO. 132).

          MIRANDA M. DU UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         In this eminent domain action, the Court has found that the United States' taking of property for the purpose of operating the Nevada Test and Training Range (“NTTR”), a military test and training facility at Nellis Air Force Base, is for a congressionally authorized public use. (ECF No. 111 at 1.) Accordingly, the only issue that remains is just compensation. In response to the United States' request over Defendants Sheahan Landowners' (“Defendants” or “Landowners”) objection, the Court stayed discovery pending resolution of threshold evidentiary motions. (ECF No. 125 at 3.) The United States filed six motions to exclude evidence. (ECF Nos. 128, 129, 130, 133, 134, 135.) Landowners filed a motion asking the Court to “preserve the special purpose finding for the jury and allow the jury to consider any valuation methodology that is just and equitable” (“Defendants' Motion”)[1] (ECF No. 132 at 1.) The Court has reviewed the parties' responses (ECF Nos. 142, 145, 146, 147, 148, 149) and replies (ECF Nos. 170, 171, 172, 173, 174, 175) in connection with these motions.[2] The Court heard argument on three of the United States' motions on September 22, 2017. (ECF No. 237.) Because of the broad scope of Defendants' Motion, the Court finds it logical to address Defendants' Motion first before addressing two of the United States' motions. The remaining motions will be addressed in a separate order.

         II. RELEVANT BACKGROUND

         The United States filed a Complaint and Declaration of Taking on September 10, 2015, to acquire 400 acres of property located within the NTTR consisting of a group of patented and unpatented mining claims known as the Groom Mine (“the Property”). (ECF No. 129; see also ECF No. 1 (Complaint); ECF No. 2 (Declaration of Taking).) The United States deposited the estimated compensation to the Court in the amount of $1, 200, 000.00 (ECF No. 10 at 1), and the funds were released to Landowners on March 9, 2016 (ECF No. 85 at 1-2). On September 16, 2015, the Court granted the United States immediate possession of the Property. (ECF No. 14 at 1.) Landowners filed their Answer on November 6, 2015. (ECF No. 53.) On October 5, 2016, the Court determined that the “taking is for a congressionally authorized public use identified in the United States' Complaint [ECF No. 1-3], and is legally valid.” (ECF No. 111 at 1.) As a result, the amount of just compensation for the United States' condemnation is the sole remaining issue.

         The Property is in the Groom Lake Valley about 7 miles from Area 51. (ECF No. 132 at 5.) The Property is the only privately owned property that has an unobstructed view of Area 51. (Id. at 16.) Landowners' family has owned the Property since about 1885, long before the United States began to use the nearby property. (Id. at 4-5.)

         III. LAWS GOVERNING CONDEMNATION

         “The Fifth Amendment of the Constitution provides that private property shall not be taken for public use without just compensation.” United States v. Miller, 317 U.S. 369, 373 (1943). In the event of a taking, “[t]he owner is to be put in as good position pecuniarily as he would have occupied if his property had not been taken.” Id. As the Supreme Court reiterated in Brown v. Legal Found. of Wash., 538 U.S. 216, 235-36 (2003), the Fifth Amendment's requirement of “'just compensation' . . . is measured by the property owner's loss rather than the government's gain.” “[T]he landowner is entitled to a value based on the use to which the condemned property is being put or may be put in the reasonably near future.” United States v. 100 Acres of Land, 468 F.2d 1261, 1266 (9th Cir. 1972). The issue of the condemned property's highest and best use is for the trier of fact to decide. Id.

         Fed. R. Civ. P. 71.1 governs eminent domain proceedings. “In an action involving eminent domain under federal law, the court tries all issues, including compensation, except when compensation must be determined . . . by a jury when a party demands one.” Fed.R.Civ.P. 71.1(h)(1). Defendants have timely demanded a jury to resolve the issue of just compensation. (See, e.g., ECF No. 29 at 1-2.)

         IV. DEFENDANTS' MOTION (ECF NO. 132)

         Defendants' Motion asserts that because the Property is a “special purpose” property, the Court should not apply a strict valuation methodology but should “preserve the special purpose finding for the jury and allow the jury to consider any valuation methodology that is just and equitable.” (ECF No. 132 at 27-28.) The United States asks the Court to deny Defendants' Motion on several grounds, including that the requested relief is vague and overbroad, that the question of whether a proposed valuation methodology can be considered under Rule 71.1(h) is an issue for the Court, and that a ruling that the issue of whether the Property is a special purpose property is meaningless without a determination by the Court that normal market value evidence is justified.[3] (ECF No. 150 at 1-2.) In response, Landowners dispute the United States' contention that they are asking for a “blanket” ruling. (ECF No. 168 at 9 n.24.)

         The Court agrees with the United States that the requested relief is overbroad and does not reflect the role of the Court in serving its gatekeeping functions. Landowners explain that they are asking the Court to permit the jury to decide “a valuation approach that is ‘just and equitable' and arrives at just compensation.” (Id.) To the extent Landowners ask the Court to allow the jury to decide which valuation formula is reliable, this request ignores the Court's role in screening expert opinions under Fed.R.Evid. 702. Any expert opinions as to the proper valuation methodology must persuade the Court that the methodology is reliable, regardless of whether the methodology is an accepted fair value method or even a method based on a finding that the Property is a “special purpose” property. See Kumho Tire Co. v. Carmichael, 526 U.S. 137, 149 (1999) (“[T]he trial judge must determine whether the testimony has a ‘reliable basis in the knowledge and experience of [the relevant] discipline'”) (quoting Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 592 (1993)). Even accepting that, as Landowners argue, “the valuation experts may have to bend these valuation methodologies or use a different valuation methodology” (ECF No. 168 at 10), any modified valuation methodologies would nevertheless have to be evaluated by the Court for reliability. For example, the Court would have to evaluate whether the expert opinion is based on reliable methods and whether evidence supporting such methodology is too speculative and should be excluded. See, e.g., United States v. 99.66 Acres of Land, 970 F.2d 651, 655-58 (9th Cir. 1992) (affirming the district court's decision to exclude evidence of individual lot sales and evidence of fair market value premised on the lost sale method where the district court found that the development of the tract as a subdivision had not progressed “to the stage where there was a realistic market for lot sales”).

         Landowners may have valid reasons for presenting valuation methods that are not based solely on fair market value, and the United States may object. But the relief requested-that the Court “preserve the special purpose finding for the jury and allow the jury to consider any valuation methodology that is just and equitable” (ECF No. 132 at 27-28)-is sweeping. Landowners essentially ask the Court to abdicate its responsibility of ensuring whether a proposed valuation method is reliable and not speculative. For these reasons, Defendants' Motion is denied.

         V. MOTION TO EXCLUDE EVIDENCE RELATING TO THE CAUSE OF THE MILL FIRE (ECF No. 128)

         The United States argues that the report and testimony of Landowners' proffered expert Richard A. Ortiz as to the cause of a fire that destroyed the Groom Mine mill building in 1954 is irrelevant and should be excluded. (ECF No. 128 at 1-2.) Ortiz opined that the mill building “was struck outside to inside by some large and heavy airborne object.” (ECF No. 128-1 at 36.) The United States contends that Ortiz's suggestion that the United States caused the fire is not relevant to the only issue in this case-just compensation-and would serve no purpose other than to prejudice the United States. (ECF No. 128 at 2-3.) Landowners counter that because the United States readily admitted that it will seek to admit “evidence regarding the lack of any commercial mining activity at the ...


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