CORE Electric Cooperative v. Freund Investments

CourtColorado Court of Appeals
DecidedJune 9, 2022
Docket20CA2013
StatusPublished

This text of CORE Electric Cooperative v. Freund Investments (CORE Electric Cooperative v. Freund Investments) is published on Counsel Stack Legal Research, covering Colorado Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
CORE Electric Cooperative v. Freund Investments, (Colo. Ct. App. 2022).

Opinion

The summaries of the Colorado Court of Appeals published opinions constitute no part of the opinion of the division but have been prepared by the division for the convenience of the reader. The summaries may not be cited or relied upon as they are not the official language of the division. Any discrepancy between the language in the summary and in the opinion should be resolved in favor of the language in the opinion.

SUMMARY June 9, 2022

2022COA63

No. 20CA2013, CORE Electric Cooperative v. Freund Investments, LLC — Eminent Domain — Condemnation — Evidence Concerning Value of Property; Evidence — Hearsay Exceptions — Public Records and Reports

In this condemnation case, a division of the court of appeals

determines that comparable sales that are not verified in

compliance with section 38-1-118, C.R.S. 2021, may be admissible

under the subsequently adopted hearsay exceptions under CRE

803. Section 38-1-118 provides for the admission of evidence of

property values in eminent domain proceedings where the witness

“has personally examined the record and communicated directly

and verified the amount of such consideration with either the buyer

or seller.” As a matter of first impression, the division concludes

that nothing in the language of section 38-1-118 directly addresses

the exclusion of evidence of comparable sales. Thus, the hearsay exceptions under CRE 803 are independent and alternative

methods to section 38-1-118 for the admission of hearsay evidence

of the value of comparable sales. COLORADO COURT OF APPEALS 2022COA63

Court of Appeals No. 20CA2013 Arapahoe County District Court No. 18CV32213 Honorable Elizabeth Weishaupl, Judge

CORE Electric Cooperative, a Colorado cooperative electric association and nonprofit corporation, f/k/a Intermountain Rural Electric Association,

Petitioner-Appellee,

v.

Freund Investments, LLC, a Colorado limited liability company,

Respondent-Appellant.

JUDGMENT AFFIRMED

Division V Opinion by JUSTICE MARTINEZ* Fox and Gomez, JJ., concur

Announced June 9, 2022

Alderman Bernstein LLC, Jody Harper Alderman, Carrie S. Bernstein, Amanda A. Bradley, Denver, Colorado, for Petitioner-Appellee

Campbell Killin Brittan & Ray, LLC, Bruce E. Rohde, Margaret R. Pflueger, Denver, Colorado, for Respondent-Appellant

*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art. VI, § 5(3), and § 24-51-1105, C.R.S. 2021. ¶1 In this condemnation case, respondent, Freund Investments,

LLC (Freund), appeals the trial court’s judgment entered on a jury

verdict after a valuation trial. Freund contends that the trial court

erred by (1) finding its appraiser’s valuation based on the

subdivision development method inadmissible; and (2) excluding

evidence of multiple comparable sales pursuant to section 38-1-

118, C.R.S. 2021. We affirm.

I. Background

¶2 Petitioner, CORE Electric Cooperative (CORE), formerly known

as Intermountain Rural Electric Association, filed a petition in

condemnation to acquire a nonexclusive permanent easement over

26.07 acres on the western-most edge of Freund’s 2,722-acre

property (the Property) to construct and operate a 115kV

transmission line and ancillary distribution facilities extending from

CORE’s Kiowa substation to its Brick Center substation. CORE

also petitioned for a temporary construction easement over smaller

portions of the Property. At the time of the petition, the Property

was primarily used for agricultural purposes.

¶3 The parties stipulated to CORE’s immediate possession of the

land subject to the easements and the case proceeded to a

1 valuation determination. On receiving their appraisers’ reports, the

parties agreed that the highest and best use of the Property was to

divide the Property into thirty-five- and forty-acre residential lots for

future sale.

¶4 In determining the fair market value of the condemned

property and any diminution to the fair market value to the residue,

Freund’s appraiser, Gregory Owen, used two methods of valuation

— the sales comparison approach and the subdivision development

method.

¶5 First, using the sales comparison approach, Owen relied on

seven similar properties to arrive at a per-acre value of $2,000.

Based on this per-acre value, he concluded that the permanent

easement’s value was $50,000. He also concluded that the

temporary construction easement’s value was $5,000 based on

similar temporary land leases. Next, to calculate the loss in value

to the Property caused by the condemnation, Owen adjusted the

per-acre value by 5% and arrived at a per-acre value of $1,900 after

condemnation. After subtracting the post-condemnation value from

the pre-condemnation value, he estimated the value of just

2 compensation under the sales comparison approach to be

$330,000.

¶6 Second, using the subdivision development method, Owen first

divided 1,766.27 acres of the Property into forty-four hypothetical

forty-acre lots, each designated as premium or nonpremium lots

based on the appeal and terrain of the lot (i.e., unobstructed views,

creek access, trees), with a surplus of 955.68 acres. Owen relied on

ten similar properties to estimate the retail value of the twenty-eight

premium lots to be $240,000 and the sixteen nonpremium lots to

be $200,000. Before condemnation, he projected that four to six

lots would be sold each year over a ten-year period, with an

increase in value to each lot by 3% annually to account for

inflation, and then added the estimated value of all the lots

together. Next, relying on market data, he deducted the estimated

costs of selling the lots, the estimated development costs, the

estimated developer profit, and the estimated entrepreneurial

incentive/discount rate from the total estimated value of the lots.

After adding the value of the surplus with an estimated value of

$2,000 per acre, Owen arrived at a total pre-condemnation value of

$5,650,000 for the entire property.

3 ¶7 After condemnation, Owen opined that six and one-half

premium lots changed to nonpremium lots because the scenic view

on those lots was obstructed by the transmission lines. Due to the

increase in nonpremium lots, Owen projected that two to six lots

would be sold each year over an eleven-year period. Using the same

method to determine the pre-condemnation value, he arrived at a

post-condemnation value of $5,380,000 for the entire Property. He

then subtracted the post-condemnation value from the

pre-condemnation value to arrive at an estimated just

compensation value under the subdivision method of $270,000.

¶8 Owen’s final estimation for just compensation was $300,000,

the median value of the two valuation methods.

¶9 CORE filed a motion in limine to exclude Owen’s expert

opinion and appraisal report in its entirety, arguing that his

appraisal methodology was inadmissible under Department of

Highways v. Schulhoff, 167 Colo. 72, 445 P.2d 402 (1968), and

Board of County Commissioners v. Vail Associates, Ltd., 171 Colo.

381,

Related

Pruett v. Barry
696 P.2d 789 (Supreme Court of Colorado, 1985)
Denver Urban Renewal Authority v. Berglund-Cherne Co.
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733 P.2d 1171 (Supreme Court of Colorado, 1986)
Denver Urban Renewal Authority v. Hayutin
583 P.2d 296 (Colorado Court of Appeals, 1978)
Department of Highways v. Schulhoff
445 P.2d 402 (Supreme Court of Colorado, 1968)
Uptain v. Huntington Lab, Inc.
723 P.2d 1322 (Supreme Court of Colorado, 1986)
Board of County Commissioners v. Vail Associates, Ltd.
468 P.2d 842 (Supreme Court of Colorado, 1970)
Uptain v. Huntington Lab, Inc.
685 P.2d 218 (Colorado Court of Appeals, 1984)
Montoya v. People
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Bly v. Story
241 P.3d 529 (Supreme Court of Colorado, 2010)
Herring v. Platte River Power Authority
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Margenau v. Bowlin
12 P.3d 1214 (Colorado Court of Appeals, 2000)
City & County of Denver v. Quick
113 P.2d 999 (Supreme Court of Colorado, 1941)
Board of County Commissioners of County of Weld v. DPG Farms, LLC
2017 COA 83 (Colorado Court of Appeals, 2017)
E-470 Public Highway Authority v. 455 Co.
3 P.3d 18 (Supreme Court of Colorado, 2000)
Palizzi v. City of Brighton
228 P.3d 957 (Supreme Court of Colorado, 2010)
Town of Red Cliff v. Reider
851 P.2d 282 (Colorado Court of Appeals, 1993)

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CORE Electric Cooperative v. Freund Investments, Counsel Stack Legal Research, https://law.counselstack.com/opinion/core-electric-cooperative-v-freund-investments-coloctapp-2022.