Fali Holdings, Inc. v. State of Texas

• Court: Court of Appeals of Texas
• Decided: April 24, 2025
• Docket: 02-25-00106-CV
• Status: Published

Opinion

In the Court of Appeals Second Appellate District of Texas at Fort Worth ___________________________ No. 02-25-00106-CV ___________________________

FALI HOLDINGS, INC., Appellant

V.

STATE OF TEXAS, Appellee

On Appeal from Probate Court No. 1 Denton County, Texas Trial Court No. PR-2020-0287

Before Birdwell, Womack, and Walker, JJ. Memorandum Opinion by Justice Walker MEMORANDUM OPINION

This petition for permissive appeal arises out of a partial condemnation

brought in connection with I-35E’s Denton County expansion regarding a 0.499-acre

tract along the west side of State Highway 121, improved with a 2,013-square foot

former Taco Bell held by Appellant Fali Holdings, Inc. and leased by TitleMax

since 2011.

The State deposited the $34,385 awarded by the special commissioners into the

trial court’s registry on November 6, 2020, see Tex. Prop. Code Ann. § 21.021, making

that date the “time of the taking” from which the land’s market value would be

measured. See City of Fort Worth v. Corbin, 504 S.W.2d 828, 830 (Tex. 1974) (explaining

that the time of the taking is the date upon which the condemnor lawfully takes actual

possession or takes the property constructively by a deposit of the special

commissioners’ award and that the compensation for land taken by eminent domain is

measured by the land’s market value at the time of the taking).

On the State’s motion and after a hearing, on February 10, 2025, the trial court

excluded the testimony of Steven Tyler Flook—the vice president of real estate for A-

MAX Auto Insurance, Inc., of which Fali Holdings, Inc. is a subsidiary real-estate

holding company—deeming inadmissible his testimony “related to the value of

compensation due to the landowner as a result of the State’s condemnation in this

case” because of Flook’s methodology of assessing the damages resulting from the

taking.

2 In response to Fali Holdings, Inc.’s motion to reconsider with alternative

request for permissive appeal, the State (1) attached Flook’s deposition transcript to

show that Flook’s opinion testimony1 would not be helpful to a jury; (2) complained

that under Rule of Evidence 701, Flook had to provide market data to support his

opinion but had failed to do so; and (3) asserted that “[a]t the eleventh hour,

51 months after the date of value, Fali [Holdings], in a desperate gambit for a fourth

bite at the apple while still lacking teeth, demanded to testify as to ‘market value’ of

the subject property but provided no market data.”

The trial court denied Fali Holdings, Inc.’s motion to reconsider but granted

permissive appeal on the following issue:

[W]hether the Court improperly excluded Mr. Flook’s opinion testimony as to market value pursuant to the Texas “Property Owner’s Rule,” due to his methodology of assessing market value, and what criteria a court should use to assess the admissibility (in contrast to weight or credibility) of Flook’s testimony.

In its order, in addition to identifying the above issue as the controlling question of

law, the trial court stated that an immediate appeal “would materially advance the

ultimate termination of the litigation as it would be a waste of judicial resources to try

1 During his deposition, Flook estimated over $2 million as the partial taking’s effect on the property’s remainder, using a methodology outside those identified by the supreme court and relying, in part, on his own “guesstimate.” Cf. State v. Cent. Expressway Sign Associates, 302 S.W.3d 866, 871 (Tex. 2009) (op. on reh’g) (“Texas recognizes three approaches to determining the market value of condemned property: the comparable sales method, the cost method, and the income method.”).

3 this issue to a jury without Mr. Flook’s testimony, only to have to retry the matter to

the jury if the Court’s ruling excluding Mr. Flook’s testimony is reversed.”

In its petition to this court, Fali Holdings, Inc. argues that the admissibility of

Flook’s testimony is a question of law. However, the record provided to this court by

Fali Holdings, Inc. reflects that the State was correct in asserting that most of Flook’s

testimony was speculative or inapplicable, and that the trial court accordingly did not

abuse its discretion by excluding it. That is, while courts should admit as market-value

evidence such matters as suitability, adaptability, surroundings, conditions before and

after, and all circumstances that tend to increase or diminish a remainder’s market

value, evidence relating to remote, speculative, and conjectural uses and injuries not

reflected in the property’s present market value is not admissible and should be

excluded. State v. Stockton Bend 100 Joint Venture, No. 02-14-00307-CV, 2016 WL

3198960, at *9 (Tex. App.—Fort Worth June 9, 2016, pet. denied) (mem. op.); see also

State v. Luby’s Fuddruckers Rests., LLC, 531 S.W.3d 810, 816 n.2 (Tex. App.—Corpus

Christi–Edinburg 2017, no pet.) (citing Polk Cnty. v. Tenneco, Inc., 554 S.W.2d 918, 921

(Tex. 1977), for the proposition that “Texas courts have defined the capitalization rate

as the rate of return that investors would require before they would invest in the

income-producing property, taking into account all the risks involved in that particular

enterprise” (emphasis added)).

Further, the law is well settled regarding testimony under the Property Owner’s

Rule, see Nat. Gas Pipeline Co. of Am. v. Justiss, 397 S.W.3d 150, 155–159 (Tex. 2012),

4 and the methodology of assessing the damages in a partial takings case, see State v.

Petropoulos, 346 S.W.3d 525, 530 (Tex. 2011); Cent. Expressway Sign Assocs., 302 S.W.3d

at 871 (citing City of Harlingen v. Estate of Sharboneau, 48 S.W.3d 177, 182–83

(Tex. 2001)).

Thus, Fali Holdings, Inc. has failed to meet the statutory requirements for a

permissive appeal under Civil Practice and Remedies Code Section 51.014(d), which

requires that the order to be appealed involve “a controlling question of law as to

which there is a substantial ground for difference of opinion” and that “an immediate

appeal from the order” materially advance the litigation’s ultimate termination. Tex.

Civ. Prac. & Rem. Code Ann. § 51.014(d); see Indus. Specialists, LLC v. Blanchard Ref.

Co., 652 S.W.3d 11, 16 (Tex. 2022) (“The courts have no discretion to permit or

accept an appeal [under Section 51.014(d)] if the two requirements are not satisfied.”).

Because Fali Holdings, Inc. has failed to meet Section 51.014(d)’s requirements,

we deny its petition for permissive appeal.

Brian Walker Justice

Delivered: April 24, 2025