Kimberley Ann Gunnarson, Individually and as Co-Trustee of the Trusts Created Pursuant to the Terms of the Last Will and Testament of Ivar Leonard Gunnarson, and Gunnarson Outdoor Advertising, Inc. v. State

• Court: Court of Appeals of Texas
• Decided: February 26, 2020
• Docket: 03-18-00738-CV
• Status: Published

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-18-00738-CV

Kimberley Ann Gunnarson, Individually and as Co-Trustee of the Trusts Created Pursuant to the Terms of the Last Will and Testament of Ivar Leonard Gunnarson, Deceased, and Gunnarson Outdoor Advertising, Inc., Appellants

v.

The State of Texas, Appellee

FROM THE COUNTY COURT AT LAW NO. 2 OF HAYS COUNTY NO. 15-0261-C, THE HONORABLE DAVID GLICKLER, JUDGE PRESIDING

MEMORANDUM OPINION

This is an appeal from an award of compensation for real estate and fixtures the

State condemned pursuant to Chapter 21 of the Texas Property Code, which requires a

commission of laymen to determine the value of condemned property but allows an aggrieved

party to seek judicial review of the resulting award. See Tex. Prop. Code §§ 21.001–.103

(“Eminent Doman”). Appellants Gunnarson Outdoor Advertising, Inc., and Kimberly Ann

Gunnarson1 contend the trial court misconstrued the holdings of State v. Clear Channel Outdoor,

Inc., 463 S.W.3d 488 (Tex. 2015), and State v. Central Expressway Sign Assocs., 302 S.W.3d 866

(Tex. 2009), when it sustained the State’s objections to certain evidence and then reduced the

1 For clarity, we will refer to Kimberly Ann Gunnarson as Ms. Gunnarson, the corporation as Gunnarson Outdoor, and the two collectively as Gunnarson. commission’s award of compensation from $745,000 to $245,010. We will affirm in part and

reverse and remand in part.

BACKGROUND

As relevant to this appeal, Ms. Gunnarson owned a .413-acre tract of land along

State Highway Loop 82 (also known as Aquarena Springs Drive) in San Marcos, Texas. This

narrow tract of land—just 50 feet wide and 408 feet long and located between a railway and an

access road—is situated near the football stadium at Texas State University, making the tract

particularly desirable for outdoor advertising. For more than a decade, the tract had supported

two double-sided billboards. Ms. Gunnarson would lease the improved tract to Gunnarson

Outdoor, an advertising corporation she owns and operates.2 Gunnarson Outdoor would then

rent the four billboard faces to various advertising clients. On June 23, 2015, the State filed suit

in a Hays County court at law, seeking to condemn the tract of land and remove the billboards to

allow room to improve Loop 82.

EMINENT DOMAIN

Our state constitution provides, “No person’s property shall be taken, damaged or

destroyed for or applied to public use without adequate compensation being made, unless by the

consent of such person.” Tex. Const. art. I, § 17. “If an entity with eminent domain authority

wants to acquire real property for public use but is unable to agree with the owner of the property

on the amount of damages, the entity may begin a condemnation proceeding by filing a petition

in the proper court.” See Tex. Prop. Code § 21.012. “The judge of a court in which a

2 Ms. Gunnarson is the majority shareholder of the corporation. Family members apparently own a small percentage of shares but are not named as individual defendants. 2 condemnation petition is filed or to which an eminent domain case is assigned shall appoint three

disinterested real property owners who reside in the county as special commissioners to assess

the damages of the owner of the property being condemned.” See id. § 21.014(a). Those

commissioners must “swear to assess damages fairly, impartially, and according to the law.”

Id. § 21.014(b).

Compensation is constitutionally “adequate” if it reflects market value, defined as

“the amount a willing buyer would pay a willing seller for the property.” See Central

Expressway, 302 S.W.3d at 871. “Texas recognizes three approaches to determining the market

value of condemned property: the comparable sales method, the cost method, and the income

method.” Id. (citing City of Harlingen v. Estate of Sharboneau, 48 S.W.3d 177, 182 (Tex.

2001)). “The comparable sales method is the favored approach, but when comparable sales

figures are not available, courts will accept testimony based on the other two methods.” Id.

(citing Sharboneau, 48 S.W.3d at 182–83). “The cost approach looks to the cost of replacing the

condemned property minus depreciation.” Id. (citing Sharboneau, 48 S.W.3d at 183, and

Religious of the Sacred Heart v. City of Houston, 836 S.W.2d 606, 615–16 (Tex. 1992)). “The

income approach is appropriate when the property would be priced according to the rental

income it generates.” Id. (citing Sharboneau, 48 S.W.3d at 183, and Polk County v. Tenneco,

Inc., 554 S.W.2d 918, 921 (Tex. 1977)).

Where condemned property is subject to multiple interests—for example, those of

an owner, a lessee, and a sublessee—the “undivided-fee rule” provides that “the property is

valued for condemnation purposes as if it were owned by a single party.” See id. at 873 (citing

State v. Ware, 86 S.W.3d 817, 822 (Tex. App.—Austin 2002, no pet.), and Aronoff v. City of

Dallas, 316 S.W.2d 302, 307–08 (Tex. App.—Texarkana 1958, writ ref’d n.r.e.)). “The purpose

3 of the rule is to award full compensation for the land itself, and not for the sum of the different

parts.” Id. (citing Ware, 86 S.W.3d at 824). “While each interest holder is entitled to a share of

the compensation award, the award should be paid for the property itself, then apportioned

between them.” Id. (citing Aronoff, 316 S.W.2d at 307–08) (cleaned up). “When the property is

subject to a lease, the fact-finder first determines the market value of the entire property as

though it belonged to one person, then apportions that value between the lessee and the owner of

the fee.” Id. (citing Urban Renewal Agency v. Trammel, 407 S.W.2d 773, 774 (Tex. 1966), and

Aronoff, 316 S.W.2d at 302)).

When a factfinder must determine the market value of commercial property,

“Texas law allows income from a business operated on the property to be considered in . . . two

situations: (1) when the taking, damaging, or destruction of property causes a material and

substantial interference with access to one’s property, and (2) when only a part of the land has

been taken, so that lost profits may demonstrate the effect on the market value of the remaining

land and improvements.” Id. at 871 (citing City of Austin v. The Avenue Corp., 704 S.W.2d 11,

13 (Tex. 1986), and City of Dallas v. Priolo, 242 S.W.2d 176, 179 (Tex. 1951)). “Absent one of

these two situations, income from a business operated on the property is not recoverable and

should not be included in a condemnation award.” Id. Our state’s highest court has applied this

principle to outdoor advertising. See Clear Channel, 463 S.W.3d at 497 (“Valuing the billboards

separately from the land cannot afford Clear Channel compensation for lost business income.”);

Central Expressway, 302 S.W.3d at 871 (“We are not inclined to create an exception for land on

which a billboard is placed.”).

4 PROCEDURAL HISTORY

After the State filed its petition for condemnation and Gunnarson filed its

response, the trial court appointed three special commissioners to determine the value of the

condemned property and to calculate an award of damages. The commission held a hearing on

June 30, 2015, and heard the following testimony:

• The State’s appraiser, Lory Johnson, estimated the value of the land based on projected rental income and the value of the billboards using replacement cost less depreciation. She did not include Gunnarson Outdoor’s advertising revenue. She recommended compensation of $125,000 for the tract and $120,010 for the two double-sided billboards.

• Gunnarson’s appraiser, David Bolton, received instructions from Gunnarson’s counsel to assume that the “gross advertising revenue from the signs is includable” when appraising the value of the billboards. Relying solely on the gross annual revenue Gunnarson Outdoor received from its advertisers, and after making certain adjustments not at issue here, he estimated the value of the condemned tract and its billboards as $1.28 million.

• Ms. Gunnarson testified as property owner and estimated a value of over $1.6 million for the tract and the two billboards. She based this figure on the net operating income Gunnarson Outdoor receives from its advertisers and what she referred to as a “multiplier of 18.” It is unclear under what authority or theory she chose this multiplier.

All three witnesses testified that the best and highest use of the tract is for outdoor advertising.

After reviewing the evidence, the special commissioners awarded Gunnarson $745,000 for the

condemned tract of land and the two billboards.

Both sides objected to the $745,000 award and sought de novo review, see Tex.

Prop. Code § 21.063, with each side characterizing the award as inconsistent with recent

precedent. Shortly before the State condemned Ms. Gunnarson’s property, the Supreme Court of

Texas had addressed the calculation of damages resulting from the condemnation of real property

containing outdoor advertising structures. See generally Clear Channel, 463 S.W.3d 488. The

Court explained, “[A] billboard should be reflected in the valuation of the land at its highest and

5 best use,” but that “the loss of the business is not compensable and cannot be used to determine

the value of the billboard structure.” Id. at 490. The Court then held, “‘[E]vidence of valuation

based on advertising income’ is inadmissible, while ‘[g]eneral estimates of what the property

would sell for considering its possible use as a billboard site are acceptable.’” Id. at 497 (quoting

Central Expressway, 302 S.W.3d at 874).

While preparing for trial to the bench, the State obtained another expert—

Matthew Whitney—to estimate the value of the condemned tract and its billboards. To estimate

the value of the tract of land, he relied on the gross rental income received by other owners of

land leased to billboard operators and calculated an appraised value of $114,314. He appraised

the value of the billboards using replacement cost less depreciation, resulting in an estimated

value of $76,500 and a total recommended compensation of $190,814.

The parties raised cross-objections to the evidence regarding market value, with

Gunnarson arguing that Whitney had improperly excluded the “income evidence” deemed

admissible and relevant by the Supreme Court of Texas in Clear Channel, 463 S.W.3d at 497–98.

The State, meanwhile, argued that Gunnarson’s expert witness had improperly relied upon the

“business income generated by the billboards” that the Clear Channel Court expressly held

inadmissible as evidence of property value, see id., and maintained that Ms. Gunnarson herself

could not satisfy the standard governing reliability of an owner’s testimony on property value,

see generally Natural Gas Pipeline Co. of Am. v. Justiss, 397 S.W.3d 150 (Tex. 2012). The

parties also filed cross-motions for summary judgment on the ultimate issue before the court: the

calculation of just compensation for the condemned property.

After a hearing on the cross-objections to the witnesses and the cross-motions for

summary judgment, the trial court sustained the State’s objections to Bolton’s appearance as

6 witness and to his appraisal, which the court described as “prohibited by the Texas Supreme

Court in Clear Channel.” The trial court, in its own words, “further ruled that the defendant, Ms.

Gunnarson, would not be allowed to testify as to her expert opinion on the issue of valuation, due

to her failing to be able [sic] to meet the standard required by Justiss.” The court then overruled

Gunnarson’s objections to Whitney’s methodology.3

Following these rulings from the bench, Gunnarson did not produce alternate

evidence of market value. Instead, Gunnarson successfully sought a continuance of the hearing

to seek mandamus review of the exclusion of Bolton’s appraisal, Bolton’s testimony, and

Ms. Gunnarson’s testimony on market value. This Court and the Supreme Court of Texas denied

mandamus relief. See In re Gunnarson, No. 03-17-00045-CV, 2017 WL 474086, at *1 (Tex.

App.—Austin Feb. 3, 2017, orig. proceeding [mand. denied]).

With this Court and the Supreme Court of Texas having denied Gunnarson’s

petitions for mandamus relief, the trial court issued its order on summary judgment, explaining in

pertinent part:

This Court finds that the only credible evidence of valuation before this Court is the State’s evidence, and the State’s only credible evidence indicates two valuations, one for $190,814.00 and $245,010.00. Though there are two different valuations provided by the State’s witnesses, one in a certified appraisal by an expert witness, and one by an appraiser provided under oath in a contested hearing, the Court finds . . . there are no material facts in dispute under the state of this record in this matter, based on this Court’s prior rulings, and that Summary Judgment for the State is proper, and grants the State’s motion for Summary Judgment.

3 Specifically, the county court at law denied Gunnarson’s motion to exclude Whitney’s testimony, sustained the State’s motion to exclude Bolton’s testimony and its motion to exclude Gunnarson’s testimony on valuation, and denied Gunnarson’s motion for summary judgment. Other rulings from this hearing are not at issue on appeal. 7 The trial court then awarded compensation of $245,010.00 based on the State’s highest appraised

value of the condemned property and ordered the return of approximately $500,000.00 of the

monies the State had deposited in the court registry following the hearing before the special

commissioners. The trial court subsequently amended its order granting the State’s cross-motion

for summary judgment to render take-nothing final judgment against Gunnarson. Gunnarson

timely perfected this appeal.

DISCUSSION

Gunnarson raises what it describes as eight points of error. To facilitate this

discussion, we will consolidate and summarize these arguments into three broad issues on

appeal. See Gene Hamon Ford, Inc. v. David McDavid Nissan, Inc., 997 S.W.2d 298, 304 n.9

(Tex. App.—Austin 1999, pet. denied) (consolidating points of error for discussion); Niess

v. State, No. 03-11-00213-CR, 2012 WL 2383300, at *1 (Tex. App.—Austin June 21, 2012, no

pet.) (“Though Niess raises these arguments in thirteen separate points of error, for convenience

we have grouped the points of error into four legal issues on appeal.”). First, Gunnarson alleges

the trial court abused its discretion by sustaining the State’s evidentiary objections and

overruling Gunnarson’s objections to the State’s witnesses. Second, Gunnarson argues the court

erred in its disposition of the cross-motions for summary judgment. And third, Gunnarson

contends that Chapter 21 of the Property Code and other statutes violate the United States and

Texas constitutions.

Evidentiary Objections

In its challenges to the trial court’s evidentiary rulings, Gunnarson complains that

the court erroneously: 1) sustained the State’s objections to Gunnarson’s appraisal expert

8 without allowing Gunnarson to submit a formal bill of exception on the excluded testimony;

2) sustained the State’s objections to Gunnarson’s testimony as the property owner; and

3) overruled Gunnarson’s objections to the State’s appraisal experts. “The qualification of a

witness to testify as to value [of condemned property] is one for a trial court to determine, and

will not be disturbed on appeal unless there is an abuse of discretion.” Huckabee v. State,

431 S.W.2d 927, 932 (Tex. App.—Beaumont 1968, writ ref’d n.r.e.); see also Larson

v. Downing, 197 S.W.3d 303, 304–05 (Tex. 2006); Helena Chem. Co. v. Wilkins, 47 S.W.3d 486,

499 (Tex. 2001). “‘The test for abuse of discretion is whether the trial court acted without

reference to any guiding rules or principles.’” Broders v. Heise, 924 S.W.2d 148, 151 (Tex.

1996) (quoting E.I. du Pont de Nemours & Co. v. Robinson, 923 S.W.2d 549, 558 (Tex. 1995)).

“Moreover, we will not reverse a trial court for an erroneous evidentiary ruling unless the error

probably caused the rendition of an improper judgment.” Owens-Corning Fiberglas Corp.

v. Malone, 972 S.W.2d 35, 43 (Tex. 1998) (citing Tex. R. App. P. 44.1; Gee v. Liberty Mut. Fire

Ins., 765 S.W.2d 394, 396 (Tex. 1989)).

Exclusion of Bolton’s Testimony

Gunnarson complains the trial court abused its discretion by misconstruing

relevant precedent as requiring the exclusion of Bolton’s valuation testimony on Gunnarson

Outdoor’s advertising revenue. It further insists that the trial court compounded that abuse by

denying its request to file a bill of exception. The State disagrees, maintaining that the trial court

correctly interpreted Clear Channel’s distinction between the rental income attributable to the

land itself, which a factfinder may consider as evidence of fair market value, versus the

9 “business income generated by the billboards,” which he may not. See Clear Channel,

463 S.W.3d at 498. We agree with the State.

The admissibility of expert testimony is governed by Rule 702 of the Texas Rules

of Evidence. Rule 702 requires that a witness be qualified to testify on the subject matter and

“also requires the proponent to show that the expert’s testimony is relevant to the issues in the

case and is based on a reliable foundation.” See Robinson, 923 S.W.2d at 556 (citing Tex. R.

Evid. 702). In both Central Expressway and Clear Channel, the Supreme Court of Texas

unequivocally held that revenue from outdoor advertising is not a reliable foundation upon which

an expert may base his estimated value of condemned real estate or fixtures.

Central Expressway was a dispute over the market value of a tract of land

encumbered by three property interests: the fee simple, whose holder had already settled with

the State; an easement owned by Central Expressway; and a leasehold owned by Viacom, which

operated billboards it had erected in the easement pursuant to the terms of the lease. See

302 S.W.3d at 869. After the owner of the fee simple settled with the State and Viacom

relocated its billboards, the remaining parties disagreed how to appraise the value of the

easement. See id. Central Expressway and Viacom successfully urged the court to admit

evidence of Viacom’s advertising revenue and to exclude testimony from the State’s expert, who

did not incorporate that revenue into his valuation of the easement. See id. at 869–70. The court

of appeals affirmed the resulting award, see id. at 870, but the Supreme Court deemed the

exclusion of the State’s expert witness an abuse of discretion, see id. The Central Expressway

court reversed the award and remanded the case, clarifying: “On remand, the trial court should

not allow evidence of valuation based on advertising income.” See id.

10 Six years later, Clear Channel reaffirmed Central Expressway’s evidentiary

holding. The case involved a dispute over the compensation due to Clear Channel as lessee of

the condemned tract and owner of two billboards on that tract. See 463 S.W.3d at 490. Whereas

in Central Expressway the owner of the billboard had relocated its advertising fixtures, see

302 S.W.3d at 869, Clear Channel did not move its billboards prior to condemnation, see

463 S.W.3d at 490. After the landowner and Clear Channel accepted a settlement offer of

compensation for the fee simple and the leasehold, Clear Channel insisted on additional

compensation for the two billboard structures destroyed in the condemnation. See id. at 491.

The trial court agreed and allowed Clear Channel to produce its advertising revenue from the two

billboards as evidence of market value, and the court of appeals affirmed the resulting award of

damages. See id. On petition for review, the high court agreed with the lower courts that the

State must compensate Clear Channel for the loss of its fixtures. See id. at 493–96. The Court

cautioned, however, that “valuing the billboards separately from the land cannot afford Clear

Channel compensation for lost business income that could not be recovered in [Central

Expressway],” and emphasizing that “the property its expert valued—the billboard advertising

operations—was not the property taken.” See id. at 497. It then reversed the judgment and

remanded for a new trial.

Gunnarson contends the trial court misconstrued this precedent when it sustained

the State’s objection to Belton’s planned testimony. But Central Expressway and Clear

Channel, taken together, preclude property valuation based on advertising revenue unless an

exception applies.4 Equally clear is the high court’s position that a factfinder must calculate a

4 The factfinder may, however, consider business revenue as some evidence of the best and highest use of the property. See State v. Clear Channel Outdoor, Inc., 463 S.W.3d 488, 498 11 single value for the condemned property, irrespective of how many competing interests

encumber that property. In urging an alternate construction of this precedent, Gunnarson

observes, “This site was income producing property—nothing more,” and then posits the

rhetorical question, “[W]hy is the valuation process for this site different from any other income

producing site?” Yet the import of these two cases is that outdoor advertising is evaluated like

any other income-producing endeavor. See id. at 873 (rejecting business owner’s argument that

billboards are “unique” as location-based income-producing structures). Thus, the trial court

correctly deemed Belton’s planned testimony inadmissible due to his improper reliance on gross

advertising income as evidence of the value of the condemned tract and the fixtures upon it.

Gunnarson characterizes Clear Channel and Central Expressway as

distinguishable from the present case due to the close relationship between Ms. Gunnarson as the

landowner and Gunnarson Outdoor as the leaseholder. Gunnarson contends, “In this case, the

ownership of the land, the billboards, and the grandfathered permits are integrated so that the

income stream is directly and verifiably tied to the land” and complains that “[t]he State had no

evidence of condemnations of billboard properties with an integrated owner.” It is unclear where

Gunnarson derived its “integrated owner” theory of property valuation, as it offers no supporting

authority from Texas or any other jurisdiction. But regardless of whether Gunnarson considers

this land encumbered by the separate property interests of Ms. Gunnarson and Gunnarson

Outdoor or the single property interest of an “integrated owner,” total compensation for the

property is unchanged: it must reflect “the market value of the entire property as though it

(Tex. 2015) (“The business income may be some indication of the rental value of the land for use as a billboard site, though other market factors are likely to be equally important, such as the availability of similar sites.”). 12 belonged to one person.” Central Expressway, 463 S.W.3d at 497 (citing Urban Renewal

Agency, 407 S.W.2d at 774, and Aronoff, 316 S.W.2d at 302)).

Gunnarson’s other contentions regarding the lower court’s interpretation of

precedent center on the alleged unfairness of excluding evidence of business income given the

disparity between Bolton’s appraised value of $1.28 million and the State’s appraisals of

between $190,814 and $245,010. In its briefing here and below, Gunnarson cites various trade

publications that describe unique aspects of outdoor advertising that render evidence of business

income critical to estimating the fair market value of billboards. But this State’s highest court

has identified only two exceptions to the general rule excluding business income as evidence of

property value, and that court has rejected arguments nearly identical to those Gunnarson raises

here. See In re Farmers Ins. Exch., 143 S.W.3d 354 (Tex. App.—Austin 2004, mand. denied)

(“Absent further guidance from the Texas Supreme Court, we decline Relators’ invitation to

extend CSR, Ltd. v. Link, 925 S.W.2d 591, 596–97 (Tex. 1996), and National Industrial Sand

Ass’n v. Gibson, 897 S.W.2d 769, 771 (Tex. 1995) . . . .”)); Loe v. Murphy, 611 S.W.2d 449, 452

(Tex. App.—Dallas 1980, writ ref’d n.r.e.) (“Defendant is essentially asking us to either extend

one of the exceptions discussed above, or to create a new exception. We decline to do either.”).

Thus, because no exception applies, the trial court acted within its discretion by excluding

Bolton’s testimony based on advertising revenue.

Exclusion of Gunnarson’s Testimony

Gunnarson also complains of the trial court’s ruling sustaining the State’s

objection to Ms. Gunnarson’s planned testimony on market value. Although the court allowed

Ms. Gunnarson to testify on other subjects, it concluded she could not satisfy the governing

13 standard for offering lay testimony on property value. In some contexts, “[a] property owner

may testify to the value of his property.” Justiss, 397 S.W.3d at 155. However, “a property

owner’s testimony must be based on market, rather than intrinsic or some other speculative value

of the property.” See id. (quoting Porras v. Craig, 675 S.W.2d 503, 505 (Tex. 1984)). Here,

Ms. Gunnarson based her planned testimony on the market value of her company’s “face rents”

and net advertising income. As already explained, the Supreme Court of Texas has repeatedly

characterized evidence of business income as too “speculative” to reflect market value.

See, e.g., Clear Channel, 463 S.W.3d at 496; Central Expressway, 302 S.W.3d at 871 (citing

Herndon v. Housing Auth., 261 S.W.2d 221, 223 (Tex. App.—Dallas 1953, writ ref’d)). Thus,

because Gunnarson’s planned testimony was based on speculation rather than market value of

the property, the trial court did not abuse its discretion in sustaining the State’s objection and

limiting Gunnarson’s testimony to other subjects.

Exclusion of Stokes’s Letter

Gunnarson complains that “the trial court erred in striking the Chris Stokes’ [sic]

letter,” which included an advertising executive’s opinion of the approximate value of the tract.

Gunnarson asked Stokes to write the letter and had planned to have Bolton and Ms. Gunnarson

incorporate his estimate into their own valuation testimony. Gunnarson contends that Bolton

could properly have offered testimony regarding the letter because “[a]n expert may base an

opinion on facts or data that the expert has been made aware of, reviewed, or personally

observed.” See Tex. R. Evid. 703. But even assuming the letter constitutes “facts or data” that

Bolton had “been made aware of, reviewed, or personally observed,” expert testimony still must

rest on a reliable foundation, see id. R. 702, and Bolton’s appraisal methodology did not provide

14 one. Nor could the Stokes letter provide such a foundation, as no one was able to identify the

basis for Stokes’s valuation of the property. For example, during deposition, counsel asked

Ms. Gunnarson, “Do you know the basis by which [Stokes] came up with the value?” She

responded in the negative. When Bolton was asked if he knew of “any of the analysis that went

on behind the letter” and its estimate, he also answered in the negative. The Stokes letter thus

could not have provided a reliable foundation for Bolton’s testimony.

With respect to Ms. Gunnarson’s anticipated reliance on the Stokes letter, the

district court properly excluded the letter and its estimate. Ms. Gunnarson intended to rely on the

letter as evidence of the property value stated therein, thus rendering the letter hearsay. See id.

R. 801 (defining hearsay as declarant’s statement not made during testimony at current

proceeding but offered to prove truth of matter asserted). Gunnarson has not identified an

exception such that the letter and its valuation might be admissible. See id. R. 802 (prohibiting

admission of hearsay unless statute or rule provides exception). The district court therefore did

not abuse its discretion in excluding the Stokes letter and its estimate of the condemned

property’s value.

Bill of Exception

We find unpersuasive Gunnarson’s contention that the trial court abused its

discretion in declining to allow a bill of exception or offer of proof on the excluded testimony

and evidence. Gunnarson had presented both Ms. Gunnarson’s testimony and Belton’s appraisal

to the special commissioners, and a record of their respective opinions—including the improper

reliance on advertising revenue—was already before the trial court. The record also includes

extensive deposition testimony regarding the Stokes letter, thereby rendering a bill of exception

15 unnecessary. See Tex. R. App. P. 33.2 (requiring bill of exception to preserve issues that “would

not otherwise appear in the record”).

Admission of State’s Evidence

Gunnarson’s challenge to the testimony of the State’s expert is similarly

unavailing. Gunnarson argues that “the Property was uniquely desirable for its highest and best

use, and there was no evidence of a truly comparable property.” Among the apparently desirable

qualities of this tract were its location near the junction of Loop 82 and Interstate 35, its

proximity to the football stadium, and the unusually low vacancy on the four faces of the

billboards. As the trial court described it, “The [condemned property] was unique because: (i) it

was located at a busy intersection, (ii) the billboards were visible from five separate roads, the

Texas State University Bobcat Stadium along with associated parking areas, a baseball field and

a golf course, and (iii) it was near a railroad crossing.” In preparing his appraisal, Whitney

evaluated tracts used for outdoor advertising along I-35 and other heavily traveled corridors in

Hays County. He used those ground leases and the acreage of the condemned tract to estimate

the market value of Ms. Gunnarson’s land. Gunnarson contends Whitney’s appraisal “should

have taken into account the facts that the necessary permits were in place and that the site was

especially suited to that use.” But Whitney used tracts with similar operating permits to appraise

the value of the condemned property, and Gunnarson has not identified any lack of reliability in

Whitney’s methodology. Thus, the trial court did not abuse its discretion in admitting

Whitney’s testimony.

16 Having rejected each of Gunnarson’s evidentiary challenges, we hold that the trial

court acted within its discretion in overruling Gunnarson’s objections to Whitney’s testimony

and in sustaining the State’s objections to the testimony of Bolton and Ms. Gunnarson.

Summary Judgment

In its next issue, Gunnarson contends the trial court erred by granting the State’s

motion for summary judgment and denying Gunnarson’s cross-motion for summary judgment.

Both motions sought summary judgment on the market value of the condemned tract and

billboards. Summary judgment is proper when the evidence before the trial court shows there

are no disputed issues of material fact and the movant is entitled to judgment as a matter of law.

See Tex. R. Civ. P. 166a(c). When multiple parties move for summary judgment on overlapping

issues, we undertake de novo review of all evidence and issues presented, and, if the trial court

erred, render the judgment the trial court should have rendered. Valence Operating Co.

v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005); see also Tex. R. App. P. 43.2(c).

Gunnarson argues:

In this case the trial court erred because the State’s own evidence (as well as [Gunnarson’s]) created a fact issue as to the fair market value of the Property. [Ms.] Gunnarson established through her testimony as the property owner a value of $1,600,000.00 because of its highly desirable location for a billboard. The State also introduced into evidence Lory Johnson’s report and testimony. . . . With three valuations, Johnson’s testimony creates a material fact question even before the trial court considered Whitney or Appellants’ experts.

We agree. Even after the exclusion of Gunnarson’s evidence of market value, the State’s

evidence alone created a genuine question of fact on the issue. It offered into evidence two

appraisals of the real estate and fixtures: one of approximately $245,000 and one of

approximately $190,000. These competing appraisals create a material question of fact

17 regarding the fair market value of the condemned property. See Read Rd. Mun. Util. Dist.

v. Speed Shop Food Stores, Ltd, 337 S.W.3d 846, 855–56 (Tex. 2011) (holding that appraisal

originally offered at hearing before special commissioners remained relevant evidence of value

of condemned property). And although the trial court resolved this dispute in Gunnarson’s favor

by awarding the higher of the appraised values, the two valuations together create a fact issue

that precludes summary judgment. Thus, because the State did not meet its burden to establish

fair market value as a matter of law, the trial court erred by granting its motion for summary

judgment. We therefore sustain Gunnarson’s point of error and reverse the entry of summary

judgment and the award of damages.

Constitutional Challenges

In its final issue on appeal, Gunnarson challenges the constitutionality of Chapter

21 of the Property Code, Section 402.31 of the Government Code, and various related rules and

regulations. Gunnarson argues:

A review of the Texas Property Code reveals that the Texas statute only requires the State to make a bona fide offer to the property owner. There is no obligation to pay the property owner fair market value or just compensation. . . . This deficiency is further compounded in Texas Property Code Section 21.042(b), which directs special commissioners to calculate the property owner’s damages as “local market value.” There is no definition of local market value and nowhere does the legislature indicate that the damages of the condemnee must be “just compensation” or “fair market value” as that term [sic] is understood.

Gunnarson further complains that “[i]n this case, the State engaged in the most serious form of

invasion of [Gunnarson’s] rights and refused to justly compensate them” before alleging that

“the statutes upon which the State relies to justify its actions are unconstitutional.” Yet while

Gunnarson argued below that the State’s proposed compensation and the compensation awarded

18 by the special commission are constitutionally inadequate, Gunnarson never pleaded or argued a

constitutional challenge to the statutes or regulations themselves. “A constitutional challenge not

raised properly in the trial court is waived on appeal.” Johnson v. Lynaugh, 800 S.W.2d 936,

939 (Tex. App.—Houston [14th Dist.] 1990, writ denied) (citing Walker v. Employees

Retirement Sys., 753 S.W.2d 796, 798 (Tex. App.—Austin 1988, writ denied)); see also Mercer

v. Phillips Nat. Gas Co., 746 S.W.2d 933, 936 (Tex. App.—Austin 1988, writ denied) (“Taking

part in a proceeding which fixes liability without challenging the constitutionality of the law

which gives rise to the cause of action may constitute a waiver of the right to question that law

subsequently.” (citing Humbird v. Avery, 195 U.S. 480, 502–03 (1904), and 16 C.J.S.

Constitutional Law §§ 78–84 (1984))). We therefore do not address Gunnarson’s argument.

CONCLUSION

Because the county court at law erred by granting the State’s cross-motion for

summary judgment, we reverse its Modified Order disposing of that motion to the extent it

awarded Gunnarson $245,010 in compensation for the condemned real estate and fixtures. We

affirm the order in all other respects and remand for further proceedings consistent with

this opinion.

___________________________________ Edward Smith, Justice

Before Chief Justice Rose, Justices Triana and Smith

Affirmed in Part; Reversed and Remanded in Part

Filed: February 26, 2020