Town of Nags Head v. Richardson
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Opinions
INMAN, Judge.
*326This appeal, following a jury verdict for property owners and entry of judgment notwithstanding *878the verdict ("JNOV"), presents an issue of first impression: whether a municipality that takes an easement in privately owned oceanfront property to replenish the beach can avoid compensating the private property owner by asserting public trust rights vested in the State. On the record before us, we hold that the property owner is entitled to compensation as provided by the eminent domain statute.
We also hold that the jury's verdict was supported by a scintilla of evidence and reverse the trial court's entry of JNOV. But because expert testimony supporting the verdict was admitted in error, we remand for a new trial.
Defendants William W. Richardson and Martha W. Richardson (the "Richardsons") appeal the entry of JNOV that set aside a jury verdict of $60,000.00 compensating them for an easement taken by the Town of Nags Head (the "Town") through eminent domain. The Town took the easement across a portion of the Richardsons' property to complete a beach nourishment project. In entering the JNOV, the trial court concluded that the Richardsons were entitled to no compensation, reasoning that: (1) the land subject to the easement was encumbered by public trust rights, so the easement was already implied in favor of the Town to protect and preserve those public trust rights; and (2) in the event the easement was not already implied and thus constituted a compensable taking, the Richardsons failed to introduce evidence supporting the *327jury's verdict based on the fair market value of the temporary easement. The Town cross-appeals the denial of its motions in limine seeking to exclude testimony by the Richardsons' expert witnesses. We reverse both entry of JNOV and denial of the motions in limine and remand for new trial.
I. FACTUAL AND PROCEDURAL HISTORY
In early 2011, the Town undertook a beach nourishment project along ten miles of its coastline to combat erosion and improve flood and hurricane protections. The Town mailed a notice of condemnation to owners of oceanfront property along the affected coastline, including the Richardsons. In the notice, the Town informed private property owners of the purposes of the project and asked them to grant the Town an easement across the sand beach portion of their properties. Specifically, the Town requested the following:
The property on which the Town will need to work lies waterward of the following locations, whichever is most waterward: the Vegetation Line; the toe of the Frontal Dune or Primary Dune; or the Erosion Escarpment of the Frontal Dune or Primary Dune.
...
Please be aware that this is not a perpetual easement; the Town only requests that it have the easement rights through April 1, 2021.
You will not lose land or access rights if you sign the easement. We are simply asking for your approval to deposit sand and work on a specific section of your property on one or perhaps more occasions, during a ten year period. Except for the brief periods when construction or repairs are ongoing, you will still be able to access the beach from your property and construct a dune walkover ....
At the outset of the nourishment project, a survey will be conducted to establish the existing mean high water line, which is currently your littoral property line and will remain your property line after the project. ... As set forth on the enclosed Notice, the Town may need to enter the beach in front of your property.
The notice also included this rendering, which identifies the portion of beach subject to the requested easement and the Town's understanding of related rights and interests:
Finally, the notice stated that the Town would bring a condemnation action to take, by eminent domain, the easement rights requested in the notice if no voluntary grant of the easement was executed.
The Richardsons did not grant the Town the easement rights requested in the notice and, on 28 March 2011, the Town filed a condemnation action. The Town sought the following easement rights (the "Easement Rights") in the Richardsons' dry-sand beach property lying between the toe of the dune and the mean high water mark (the "Easement Area;" together with the Easement Rights as the "Easement"):
The Town, its agents, successors and assigns may use the Easement Area to evaluate, survey, inspect, construct, preserve, patrol, protect, operate, maintain, repair, rehabilitate, and replace a public beach, a dune system, and other erosion control and storm damage reduction measures together with appurtenances thereof, including the right to perform the following on the property taken:
• deposit sand together with the right of public use and access over such deposited sand;
• accomplish any alterations of contours on said land;
• construct berms and dunes;
• nourish and renourish periodically;
• perform any other work necessary and incident to the construction, periodic Renourishment and maintenance of the Town's Beach Nourishment Project ....
*329Consistent with the Town's earlier notice, the Easement terminates on 1 April 2021.
The Richardsons filed an answer and motion to dismiss in response to the complaint. On 20 July 2011, the trial court entered a consent order denying the Richardsons' motion to dismiss, vesting title to the Easement in the Town as of the date the complaint was filed pursuant to Section 40A-42 of our General Statutes, and continuing all other hearings authorized by statute until after the Town deposited sand on the beach and Easement Area as part of the nourishment project. The action was then designated an exceptional case and assigned for all purposes to a single superior court judge.
In 2014, after the nourishment project was completed, Judge Gary Trawick presided over a hearing pursuant to Section 40A-47 on all issues other than damages. By order entered 17 December 2014 (the "40A-47 Order"), Judge Trawick decreed that: (1) the area affected by the taking of the Easement was the Richardsons' entire lot consisting of 30,395.2 square feet; (2) the property taken, i.e. , the Easement Area, was approximately 7,280.54 square feet of beach lying between the toe of the dune and the mean high water mark at the time of condemnation; and (3) the rights taken were those described in the Town's complaint.1 Judge Trawick denied a *880motion by the Town requesting a ruling that the Easement Area, or any portion of it, was subject to public trust rights.
The damages issue was scheduled for trial before a jury in August 2015.
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INMAN, Judge.
*326This appeal, following a jury verdict for property owners and entry of judgment notwithstanding *878the verdict ("JNOV"), presents an issue of first impression: whether a municipality that takes an easement in privately owned oceanfront property to replenish the beach can avoid compensating the private property owner by asserting public trust rights vested in the State. On the record before us, we hold that the property owner is entitled to compensation as provided by the eminent domain statute.
We also hold that the jury's verdict was supported by a scintilla of evidence and reverse the trial court's entry of JNOV. But because expert testimony supporting the verdict was admitted in error, we remand for a new trial.
Defendants William W. Richardson and Martha W. Richardson (the "Richardsons") appeal the entry of JNOV that set aside a jury verdict of $60,000.00 compensating them for an easement taken by the Town of Nags Head (the "Town") through eminent domain. The Town took the easement across a portion of the Richardsons' property to complete a beach nourishment project. In entering the JNOV, the trial court concluded that the Richardsons were entitled to no compensation, reasoning that: (1) the land subject to the easement was encumbered by public trust rights, so the easement was already implied in favor of the Town to protect and preserve those public trust rights; and (2) in the event the easement was not already implied and thus constituted a compensable taking, the Richardsons failed to introduce evidence supporting the *327jury's verdict based on the fair market value of the temporary easement. The Town cross-appeals the denial of its motions in limine seeking to exclude testimony by the Richardsons' expert witnesses. We reverse both entry of JNOV and denial of the motions in limine and remand for new trial.
I. FACTUAL AND PROCEDURAL HISTORY
In early 2011, the Town undertook a beach nourishment project along ten miles of its coastline to combat erosion and improve flood and hurricane protections. The Town mailed a notice of condemnation to owners of oceanfront property along the affected coastline, including the Richardsons. In the notice, the Town informed private property owners of the purposes of the project and asked them to grant the Town an easement across the sand beach portion of their properties. Specifically, the Town requested the following:
The property on which the Town will need to work lies waterward of the following locations, whichever is most waterward: the Vegetation Line; the toe of the Frontal Dune or Primary Dune; or the Erosion Escarpment of the Frontal Dune or Primary Dune.
...
Please be aware that this is not a perpetual easement; the Town only requests that it have the easement rights through April 1, 2021.
You will not lose land or access rights if you sign the easement. We are simply asking for your approval to deposit sand and work on a specific section of your property on one or perhaps more occasions, during a ten year period. Except for the brief periods when construction or repairs are ongoing, you will still be able to access the beach from your property and construct a dune walkover ....
At the outset of the nourishment project, a survey will be conducted to establish the existing mean high water line, which is currently your littoral property line and will remain your property line after the project. ... As set forth on the enclosed Notice, the Town may need to enter the beach in front of your property.
The notice also included this rendering, which identifies the portion of beach subject to the requested easement and the Town's understanding of related rights and interests:
Finally, the notice stated that the Town would bring a condemnation action to take, by eminent domain, the easement rights requested in the notice if no voluntary grant of the easement was executed.
The Richardsons did not grant the Town the easement rights requested in the notice and, on 28 March 2011, the Town filed a condemnation action. The Town sought the following easement rights (the "Easement Rights") in the Richardsons' dry-sand beach property lying between the toe of the dune and the mean high water mark (the "Easement Area;" together with the Easement Rights as the "Easement"):
The Town, its agents, successors and assigns may use the Easement Area to evaluate, survey, inspect, construct, preserve, patrol, protect, operate, maintain, repair, rehabilitate, and replace a public beach, a dune system, and other erosion control and storm damage reduction measures together with appurtenances thereof, including the right to perform the following on the property taken:
• deposit sand together with the right of public use and access over such deposited sand;
• accomplish any alterations of contours on said land;
• construct berms and dunes;
• nourish and renourish periodically;
• perform any other work necessary and incident to the construction, periodic Renourishment and maintenance of the Town's Beach Nourishment Project ....
*329Consistent with the Town's earlier notice, the Easement terminates on 1 April 2021.
The Richardsons filed an answer and motion to dismiss in response to the complaint. On 20 July 2011, the trial court entered a consent order denying the Richardsons' motion to dismiss, vesting title to the Easement in the Town as of the date the complaint was filed pursuant to Section 40A-42 of our General Statutes, and continuing all other hearings authorized by statute until after the Town deposited sand on the beach and Easement Area as part of the nourishment project. The action was then designated an exceptional case and assigned for all purposes to a single superior court judge.
In 2014, after the nourishment project was completed, Judge Gary Trawick presided over a hearing pursuant to Section 40A-47 on all issues other than damages. By order entered 17 December 2014 (the "40A-47 Order"), Judge Trawick decreed that: (1) the area affected by the taking of the Easement was the Richardsons' entire lot consisting of 30,395.2 square feet; (2) the property taken, i.e. , the Easement Area, was approximately 7,280.54 square feet of beach lying between the toe of the dune and the mean high water mark at the time of condemnation; and (3) the rights taken were those described in the Town's complaint.1 Judge Trawick denied a *880motion by the Town requesting a ruling that the Easement Area, or any portion of it, was subject to public trust rights.
The damages issue was scheduled for trial before a jury in August 2015. In pre-trial motions, both parties raised the issue of the public trust doctrine. After reviewing the issue further, Judge Trawick continued the trial and entered an order revising the 40A-47 Order (the "Revised 40A-47 Order").
The Revised 40A-47 Order concluded that the entire Easement Area was located within the State's "ocean beaches" as defined in
In advance of the trial on damages, the Town filed motions in limine seeking to exclude testimony by two appraisers hired by the Richardsons, Gregory Bourne ("Mr. Bourne") and Dennis Gruelle ("Mr. Gruelle"). The trial court prohibited all expert witnesses from testifying to opinions not disclosed prior to or at the time of their respective depositions. The trial court otherwise denied the motions.
At trial, Messrs. Bourne and Gruelle provided testimony and portions of their written appraisal reports were published to the jury. Mr. Bourne's report and testimony asserted that the taking had diminished the fair market value of the remainder of the Richardsons' property by $160,000. Mr. Gruelle's report and testimony asserted that the taking had diminished the value of the remainder of the Richardsons' property by $233,000.00.
Mr. Bourne testified that, in valuing only the land constituting the Richardsons' entire lot, he first determined the "[h]ighest and best use[, which] is that use which you can physically and possibly build that is legally permissible, that is financially feasible, and that reflects the maximum value, that will generate the maximum value of the property." After determining the best and highest use of the Richardsons' entire lot to be residential, he employed sales comparison and cost approaches to reach a "before [taking] land value [of] $855,000." After including the improvements to the property and other adjustments, Mr. Bourne arrived at a pre-taking value of the improved lot of $1,040,000.
To determine the impact of the Easement taking on the fair market value of the Richardsons' lot, Mr. Bourne reviewed comparable sales and found an eight percent difference in the value of oceanfront lots that extended all the way to the mean high water mark and beachfront lots that stopped short of the ocean. He made this comparison because, per Section 146-6(f), title to new land seaward of the former mean high water mark created by the nourishment project would vest *331in the State.3 The Town's use of the Easement, therefore, affixed the Richardsons' property line at the former mean high water mark and created a strip of State-owned land between the Richardsons' property line and the ocean. After considering *881damage to the unencumbered portion of the lot, Mr. Bourne testified that the proper measure of damages was "[t]he difference between the before and the after [fair market values of the Richardsons' property] and I came up with $160,000." Applying his calculation to the entire lot's unimproved value of $855,000, Mr. Bourne "came up with an after the taking land value, that is the value of the land now encumbered by this easement for 10 years, of $70,000."
The Richardsons' other appraiser, Mr. Gruelle, testified that the highest and best use of the Richardsons' lot was residential and, after comparing sales of similar properties, concluded that "the value of the site was [$]880,000.... [$]880,000 is attributable to the value of the land."
Taking the $880,000 value of the entire lot with its highest and best use as residential property, Mr. Gruelle calculated a value of $28.95 per square foot. He then multiplied that number by the total square footage of the Easement Area, 7,280, and arrived at a total value of $210,756 for the Easement Area. Mr. Gruelle estimated that, based on the Easement Rights taken, the Town's use of the Easement Area for ten years exploited 90 percent of its land value; as a result, Mr. Gruelle testified that the value of the Easement taken was approximately $190,000.4 Mr. Gruelle combined the Easement value with other negative impacts on the unencumbered property-including the effect on the view and ease of beach access resulting from the increased height of the dunes-to which he assigned a value of $43,000, and opined that "the total impact of the property is $233,000.... That is the just compensation to leave the property owner whole."
At the close of the Richardsons' evidence, the Town moved for directed verdict. Reasserting the grounds raised in its motions in limine , the Town argued that Messrs. Bourne's and Gruelle's valuations were unreliable and should be stricken; if that evidence were stricken, the Richardsons would have failed to prove damages, and the Town would be entitled to a directed verdict. The trial court denied the motion.
*332Michael Moody, an expert witness for the Town, provided an opinion on two distinct fair market values: (1) the difference in fair market value of the Richardsons' entire lot before the taking and the remainder after the taking under the "before and after method;" and (2) the fair market value of the Easement. Mr. Moody determined the difference in total market value to be zero and determined the fair market value of the Easement to be $330. He arrived at the second number through the "market extraction" method, whereby he found two comparable vacant oceanfront lot sales, one encumbered by a permanent easement for beach nourishment and one unencumbered. Mr. Moody then calculated the difference in those sale prices, which came out to $1,000, and attributed that difference to the presence of the permanent easement. Because the Easement in this case was for a ten-year period rather than perpetual in duration, he reduced the extracted amount by two-thirds and arrived at a fair market value of $330 for the Town's taking.
The Town renewed its earlier motion for directed verdict at the close of its evidence, and the motion was denied. Following instruction by Judge Trawick and deliberations, the jury returned a verdict finding that the fair market value of the Easement was $60,000, and the difference in fair market value of the Richardsons' property pre-taking and the remainder post-taking was zero. The jury awarded the Richardsons $60,000 as the greater value.
The Town timely filed a motion for JNOV, arguing, among other things, that the Richardsons had failed to introduce evidence showing the fair market value of the Easement. Joined in the motion for JNOV was a motion for new trial and a motion for remittitur. Neither motion was ruled on by the trial court.
Eight months later, following a hearing and additional briefing, Judge Trawick entered JNOV in favor of the Town, declaring *882that the Richardsons should recover nothing. Judge Trawick identified two bases for his ruling: (1) there was no compensable taking, as the Town already possessed an easement by implication to protect and preserve the State's ocean beaches by virtue of the State's public trust rights; and (2) in the event there was a compensable taking, there was no evidence from which the jury could find a fair market value of the Easement,5 so the only available calculation of damages was the "before and after" value of the *333unencumbered property. Because the jury found that value to be $0, that was the proper amount of damages.
The Richardsons appealed the JNOV; the Town cross-appealed the 40A-47 Order and Judge Trawick's denial of its motions in limine .
II. DISCUSSION
The Richardsons contend that the trial court erred in entering JNOV on grounds not asserted in the Town's motions for directed verdict and despite relevant evidence, provided by Mr. Gruelle, to support the jury verdict. We agree and reverse the entry of JNOV. However, we also agree with the Town that the trial court abused its discretion in admitting Mr. Gruelle's expert testimony over the Town's motions in limine and objections. As a result, we remand the case for a new trial.
A. Standard of Review
We review the entry of JNOV de novo , substituting our judgment for that of the trial court. Austin v. Bald II, L.L.C. ,
*334B. Public Trust Doctrine
The public trust doctrine, established by the common law of this State, involves two concepts: (1) public trust lands, which are "certain land[s] associated with bodies of water [and] held in trust by the State for the benefit of the public[;]" and (2) public trust rights, which are "those rights held in trust by the State for the use and benefit of the people of the State in common." Fabrikant v. Currituck Cty. ,
Public trust rights "include, but are not limited to, the right to navigate, swim, hunt, fish, and enjoy all recreational activities" offered by public trust lands, as well as "the right to freely use and enjoy the State's ocean and estuarine beaches and public access to the beaches."
It shall be the policy of this State to conserve and protect its lands and waters for the benefit of all its citizenry, and to this end it shall be a proper function of the State of North Carolina and its political subdivisions to acquire and preserve park, recreational, and scenic areas, to control and limit the pollution of our air and water, to control excessive noise, and in every other appropriate way to preserve as a part of the common heritage of this State its forests, wetlands, estuaries, beaches, historical sites, openlands, and places of beauty.
N.C. Const. art. XIV, § 5.
Towns "may, by ordinance, define, prohibit, regulate, or abate acts, omissions, or conditions upon the State's ocean beaches and prevent or *335abate any unreasonable restriction of the public's rights to use the State's ocean beaches." N.C. Gen. Stat. § 160A-205(a) (2017).6 Thus, municipalities may "limit[ ] the public's right to use the public trust dry sand beaches ... through appropriate use of the State's police power[,]" Nies ,
The legislature also has delegated the State's eminent domain powers to municipalities and counties for the purposes of:
[e]ngaging in or participating with other governmental entities in acquiring, constructing, reconstructing, extending, or otherwise building or improving beach erosion control or flood and hurricane protection works, including, but not limited to, the acquisition of any property that may be required as a source for beach renourishment.
N.C. Gen. Stat. § 40A-3(b1)(10) (2017).
C. Application to This Case
We now consider whether public trust rights render the taking here non-compensable and hold, on the procedural facts before us, that they do not.
The trial court concluded in the Revised 40A-47 Order that the Easement Area, though the private property of the Richardsons, was public trust land subject to public trust rights.7 But the Town did not *336argue at *884trial that the public trust doctrine rendered the taking non-compensable. The trial court erred in entering JNOV eight months after the verdict on a basis not argued during the trial.
A motion for JNOV may be granted only "in accordance with [the movant's] motion for a directed verdict." N.C. Gen. Stat. § 1A-1, Rule 50(b)(1) (2017) ; see also Couch v. Private Diagnostic Clinic ,
The Town's motion for directed verdict and motions in limine presented no argument that it already possessed the Easement Rights through the public trust doctrine. Nor did the Town argue that the public trust doctrine rendered the taking non-compensable. The motions sought only to limit expert testimony that would deny the effect of public trust rights on the compensable value of the Richardsons' property and, specifically, the Easement Area.
During the hearing on the motions in limine , when asked by the trial court why the public trust did not eliminate the need for condemnation, the Town expressly argued that the Easement Rights were not public trust rights and the condemnation was still necessary:
[THE TOWN]: ... The public trust rights [are] not about what we took, it's about the value of what we took.
...
THE COURT: Now let me ask you, then why did you have to do a taking?
[THE TOWN]: Because we wanted to put trucks and pipes and wanted to put sand on the property. That is what is in the complaint. ... Those are the rights we took. Public *337trust rights doesn't go to the rights we took . It goes to the value of what we took. It limits the value because some of their rights and their bundle of rights weren't there in the first place. ... [A]ny time [the Richardsons] say it's got something to do with the rights we took, it has nothing to do with the rights we took. It has to do with the rights that were there to take.
...
[W]e don't want a ruling of this Court to preclude people from being able to walk on this beach. And we also don't want their perspective to keep us from showing that the value of this area was reduced by people having the ability to walk on the beach. It may or may not have been reduced by much and that is what we want. We want the ability to be able to say that people can walk on the beach in this easement area.
(emphasis added). The Town's motions for directed verdict at trial were likewise devoid of any argument that the Town already possessed Easement Rights or that the public trust doctrine precluded recovery, as they were simply renewals of the earlier motions in limine regarding expert testimony offered by the Richardsons, and the Town's motion for JNOV conceded that the taking was compensable and expressly requested entry of a judgment in the Richardsons' favor in the amount of $330.
During the JNOV hearing, Judge Trawick, unprompted by either party, advanced the question of whether the Town already possessed the Easement Rights through the public trust and requested additional briefing on the issue at the hearing on the motion for JNOV. Judge Trawick ultimately granted the JNOV motion based on the conclusion that *885public trust rights precluded an award of compensation to the Richardsons.
But a trial court may only enter a sua sponte order on JNOV within ten days of entry of judgment; the JNOV here was entered months after final judgment. N.C. Gen. Stat. § 1A-1, Rule 50(b)(1) ; see also Jones v. S. Gen. Ins. Co. ,
*338consistent with those arguments raised by the Town in its timely filed motions for directed verdict and JNOV. As a result, we hold that the trial court erred in concluding on JNOV that the Town already possessed the Easement Rights and that the public trust doctrine rendered the taking non-compensable because neither argument was raised at directed verdict or JNOV.
Our holding finds further support in precedent interpreting procedural condemnation statutes and related caselaw. Section 40A-47 of our General Statutes provides that the trial court is required to determine "any and all issues raised by the pleadings other than the issue of compensation, including ... title to the land, interest taken, and area taken." N.C. Gen. Stat. § 40A-47 (2017) (emphasis added). This Court has read virtually identical language in highway condemnation statutes to mean that "at a minimum, a party must argue all issues of which it is aware, or reasonably should be aware, in [such] a hearing." City of Wilson v. The Batten Family, L.L.C. ,
[T]he petitioner is estopped from showing that title is in the public or in itself, by dedication prescription or otherwise, if it has alleged in its petition that the respondent is the owner. ... The institution of the [condemnation] proceeding admits the ownership. The condemnor cannot claim the beneficial ownership of the land and at the same time assert that the condemnee claims all or some part of that interest[.] ... A party cannot proceed to condemn land as the property of another and then in that same proceeding set up a paramount right or title in itself either by prescription, dedication or otherwise.
Here, the Town alleged in its complaint that the Richardsons, and not the Town, possessed the Easement Rights; the Richardsons' answer admits such possession. Assuming arguendo that the Town could still request a determination of the issue by the trial court when no issue as to the Town's pre-existing possession of the rights was "raised by the pleadings," N.C. Gen. Stat. § 40A-47, it was required to assert such an *339argument in the hearing provided by that statute. City of Wilson ,
In the initial hearing to determine all issues other than damages pursuant to Section 40A-47, counsel for the Town stated that "our theory of the taking here, [is] that the Town doesn't have the right to place the sand and do the work for this project without acquiring the easement rights we have condemned in this case." The hearing continued:
[THE TOWN]: We're talking about the rights-clearly they have the right to exclude the contract which-but for our acquisition of the easement rights .
...
THE COURT: ... You can't file a declaration for taking and then ask me to say that you took less than what the declaration says.
[THE TOWN]: I completely agree.
(emphasis added). As recounted supra , the Town maintained that position through the *886hearing on its motions in limine even when alerted to the question by the trial court. Indeed, that was the Town's apparent position through its motions for directed verdict, final judgment, and its motion for JNOV. On appeal from a post-judgment order, the Town's argument comes too late.
Finally, although orders entered following an "all other issues" hearing are interlocutory, errors pertaining to "vital preliminary issues" determining what land is being condemned and "any question[s] as to its title" must be immediately appealed. N.C. State Highway Comm'n v. Nuckles ,
The Town's argument that it already possessed the Easement Rights under the public trust doctrine raises an issue of vital importance concerning a question of title: whether the Richardsons' title included the rights the Town sought to take from them through condemnation. Because the Revised 40A-47 Order decreed that the Easement Rights *340were taken by the Town through condemnation, the Town was required to assert any argument to the contrary by appeal within 30 days of the order's entry pursuant to N.C. R. App. P. 3(c)(1). See Nuckles ,
D. Sufficiency of the Evidence
Having resolved whether the taking in this case was compensable, we consider whether the Richardsons presented evidence sufficient as a matter of law to support a jury verdict of $60,000 for the fair market value of the Easement. We hold that they did.
Section 40A-64(b) provides:
If there is a taking of less than the entire tract, the measure of compensation is the greater of either (i) the amount by which the fair market value of the entire tract immediately before the taking exceeds the fair market value of the remainder immediately after the taking; or (ii) the fair market value of the property taken.
N.C. Gen. Stat. § 40A-64(b) (2017). Valuation under the first subpart, Section 40A-64(b)(i), is commonly referred to as the "before and after method[,]" Town of Midland v. Wayne ,
Because the jury calculated the "before and after" measure of value to be zero and the Richardsons request reinstatement of the final *341judgment on the jury verdict, our review concerns only the jury's calculation of the market value of the Easement itself. *887While the statute does not define "fair market value," our Supreme Court has described it as follows:
[T]he well established rule is that in determining fair market value the essential inquiry is "what is the property worth in the market, viewed not merely with reference to the uses to which it is plainly adapted-that is to say, what is it worth from its availability for all valuable uses?"
State v. Johnson ,
Evidence of fair market value may be introduced through, among other means, the expert opinions of appraisers or the lay testimony of the landowner. Dep't of Transp. v. M.M. Fowler, Inc. ,
Here, the jury heard evidence concerning the "before and after method" valuation by the Richardsons' appraisers, who employed the sales comparison and cost approaches. The jury ultimately found this value to be zero. By contrast, it found the fair market value of the Easement taken to be $60,000 and awarded the Richardsons that amount as the greater of the found values. The Town contends that verdict is unsupported by legally sufficient evidence. We disagree.
Mr. Bourne, an expert witness for the Richardsons, estimated the Easement's value to be $70,000 by calculating the difference in value between properties that were oceanfront, in other words, those with property lines extending to the mean high water mark, and those that were merely beachfront, in other words, those with property lines abutting the beach but stopping short of the mean high water mark. This calculation, however, is derived solely from the beach nourishment project's impacts and is outside the statutory scope of a taking's compensable fair market value.
"The value of the property taken ... does not include an increase or decrease in value before the date of valuation that is caused by (i) the proposed improvement or project for which the property is taken[.]" N.C. Gen. Stat. § 40A-65 (2017). The fair market value of the Easement, as a discrete value under Section 40A-64(b)(ii), cannot be derived from factors resulting from the Town's beach nourishment project under Section 40A-65.9 Mr. Bourne's $70,000 valuation, statutorily excluded from the fair market value of the Easement, is therefore neither relevant to nor probative of the issue, so this evidence does not support the jury's award on this question. See, e.g. , Asfar ,
Our holding in this context accords with statutory and caselaw governing condemnations *888by the North Carolina Department of Transportation. Compensation for a partial taking for highway condemnations is measured through application of the "before and after method."
In applying Section 136-112, this Court has held that "[t]he market value of the condemned property is to be determined on the basis of the conditions existing at the time of the taking ." Dep't of Transp. v. Mahaffey ,
We next consider Mr. Gruelle's testimony and hold that, without regard to its admissibility, it is sufficient as a matter of law to support the jury's verdict.
"[T]he measure of damages for a temporary taking is the 'rental value of the land actually occupied' by the condemnor." Combs ,
The value compensable under the Fifth Amendment, therefore, is only that value which is capable of transfer from owner to owner and thus of exchange for some equivalent. Its measure is the amount of that equivalent. ... But when the property is of a kind seldom exchanged, it *344has no 'market price,' and then recourse must be had to other means of ascertaining value, including even value to the owner as indicative of value to other potential owners enjoying the same rights. These considerations have special relevance where 'property' is 'taken' not in fee but for an indeterminate period.
...
[D]etermination of the value of temporary occupancy can be approached only on the supposition that free bargaining between petitioner and a hypothetical lessee of that temporary interest would have taken place in the usual framework of such negotiations. ... [T]he proper measure of compensation is the rental that probably could have been obtained ....
Kimball Laundry Co. v. United States ,
*889As recounted supra , Mr. Gruelle testified that the Easement was valued at $190,000. He reached this value by determining the best and highest use of the entire lot, calculating a value per square foot based on that use, and applying that value to the square footage of the Easement Area. He then reduced that total value by ten percent, reasoning that the Town's use of the Easement Area "represented 90 percent of the value of the easement area." Mr. Gruelle explained that this valuation "look[s] at [the Easement] as the land rental because that's what it is[,]" and testified that his number was "consistent with the way the market looks at ground lease or renting, use of the land for a period of time." In seeking to arrive at the fair rental value of the Easement, Mr. Gruelle provided a scintilla of evidence relevant to that issue. "A scintilla of evidence is defined as very slight evidence," Everhart v. O'Charley's Inc.,
The Town argues in support of its cross-appeal that Mr. Gruelle's testimony is incompetent. It further contends that such an argument is *345properly asserted under our Rules of Appellate Procedure as "an alternative basis in law for supporting the [JNOV.]" N.C. R. App. P. 28(c). This is not so; in appellate review of JNOV, "[a]ll relevant evidence admitted by the trial court, whether competent or not, must be accorded its full probative force in determining the correctness of its ruling ...." Bishop v. Roanoke Chowan Hosp., Inc. ,
E. The Town's Cross-Appeal
Beyond its appellee brief, the Town also cross-appeals the denial of its motions in limine on the grounds that Mr. Gruelle's testimony is incompetent. The Richardsons contend that the Town is without standing to appeal, as it is not a "party aggrieved" within the meaning of
The Town argues that Mr. Gruelle's testimony was inadmissible because it failed to meet the criteria of *346Rule 702(a) of the North Carolina Rules of Evidence.11 A trial *890court's ruling on the admissibility of expert opinion is subject to review only for an abuse of discretion. State v. McGrady ,
The Town directs us to this Court's pre- McGrady decision in City of Charlotte v. Combs ,
Rather than attempting to compare the Easement to actual temporary construction *891easements and ground leases, and even after recognizing that "there are many indicators based on the value of the property" in calculating the value of such property rights, Mr. Gruelle assumed that the "typical" temporary construction easement and ground lease is valued at "a ten percent return to the land for the duration[.]" That formulation, applied to the ten-year duration of the Easement, resulted in a complete taking of 100 percent of the Easement Area's value. After conceding that his calculation was equivalent to a total taking in fee of the Easement Area, Mr. Gruelle decided to depart from that result as he did not "think it would exceed the value of the fee[,]" and instead asserted that 90 percent was the correct value because "it would come close to *348the fee value ... because it was total ... utilization of that property for 10 years."13
Mr. Bourne, who was retained by the Richardsons in part to review and support Mr. Gruelle's appraisal, testified at deposition that Mr. Gruelle's assumption that the typical ground lease or temporary construction easement was valued at a ten-percent-per-year return was unfounded. Specifically, Mr. Bourne stated that: (1) ground leases and temporary construction easements are different; (2) "[t]hey all have different terms, so it's difficult to generalize[;]" (3) he would not assume a return of ten percent per year, but instead "would look at some doc-yes, some information[;]" and (4) there was no "rule of thumb" that ground leases are valued at a ten-percent-per-year return.
As in Haywood , Mr. Gruelle did not articulate a method for reaching his opinion that the easement was valued at $190,000. Haywood , 360 N.C. at 352, 626 S.E.2d at 647 ; see also Combs ,
To the extent that Mr. Gruelle attempted to verify his 90 percent opinion by treating the Easement as a "typical" ground lease or temporary construction easement, his testimony "seemed to deny the sufficiency of his own ... methodology[,]" Kumho ,
III. CONCLUSION
The Town is not entitled to JNOV on the ground that it already possessed the Easement Rights through the public trust doctrine, nor on the ground that the doctrine otherwise precludes all recovery, because these arguments were not raised until months after final judgment. Further, the Town is estopped from asserting that no condemnation occurred and that it already possessed these rights because: (1) it admitted it did not possess them in its complaint; (2) it did not raise the issue at the "all other issues" hearing under Section 40A-47 ; (3) it expressly disavowed reliance on the public trust doctrine at that hearing and at its hearing on its motions in limine ; and (4) it did not raise the issue at trial, in its motions for directed verdict, or in its motion for JNOV. Further, the Richardsons introduced evidence sufficient to support the jury verdict. We therefore reverse the entry of JNOV. We nonetheless remand for a new trial on the Town's cross-appeal, as we hold that the trial court abused its discretion in admitting Mr. Gruelle's expert testimony. At the new trial the parties may introduce additional new evidence on the issue of damages in conformity with this opinion.
REVERSED AND REMANDED FOR NEW TRIAL.
Judge HUNTER concurs.
Judge DILLON concurs in part and dissents in part in a separate opinion.
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Cite This Page — Counsel Stack
817 S.E.2d 874, 260 N.C. App. 325, Counsel Stack Legal Research, https://law.counselstack.com/opinion/town-of-nags-head-v-richardson-ncctapp-2018.