United States v. 102.38 Acres of Land, More or Less, Situated in Grant County, State of Washington

• Court: District Court, E.D. Washington
• Decided: March 31, 2025
• Docket: 2:22-cv-00111
• Status: Unknown

Opinion

1 Mar 31, 2025 2 3 SEAN F. MCAVOY, CLERK 4 UNITED STATES DISTRICT COURT 5 EASTERN DISTRICT OF WASHINGTON 6 7 UNITED STATES OF AMERICA No. 2:22-CV-00111-SAB 8 Plaintiff, 9 v. 10 102.38 ACRES OF LAND, MORE OR ORDER GRANTING 11 LESS, SITUATED IN GRANT COUNTY, PLAINTIFF’S RULE 71.1 12 STATE OF WASHINGTON; JEFF T. and MOTION AND DENYING 13 LYNN M. DIERINGER, husband and DEFENDANTS’ MOTION FOR 14 wife; MARK J. and CHRISTI SUMMARY JUDGMENT 15 DIERINGER, husband and wife; JOSE G. 16 VILLANUEVA; and EPIFANIA O. 17 MERCADO, 18 Defendants. 19 20 Before the Court are (1) Plaintiff’s Rule 71.1 Motion to Determine the 21 Larger Parcel,1 ECF No. 106; (2) Defendants’ Motion for Summary Judgment on 22 the Issue of Just Compensation, ECF No. 90; (3) Plaintiff’s Motion to Strike 23 Defendants’ Rebuttal Expert Reports, ECF No. 86; (4) Defendants’ Motion to 24 Exclude Testimony and Report of Plaintiff’s Expert Rob Steinke, ECF No. 99; and 25

26 1 While captioned as a request for the Court to determine the larger parcel, 27 Plaintiff’s Motion asks the Court to find that the condemned property was not part 28 of a larger parcel. 1 (5) Defendants’ Motion to Exclude Testimony and Report of Plaintiff’s Expert 2 Dennis Bortz, ECF No. 101. The Court held a hearing on the Rule 71.1 Motion by 3 videoconference on December 30, 2024.2 Plaintiff was represented by Emma 4 Hollowell, Seth Mohney, Derek Taylor, and Joshua Fliegel—Mr. Fliegel presented 5 arguments on behalf of Plaintiff. Defendants were represented by Kevin Bay and 6 Julia Fleming—Mr. Bay presented arguments on behalf of Defendants. 7 At the hearing, the Court took the Rule 71.1 Motion under advisement. 8 Background 9 Defendants operated a dairy in Moses Lake from 1991 to 2022. The dairy 10 operations began when Defendants purchased the “Parlor Site” in 1991. The Parlor 11 Site is a 102-acre parcel that included a milking parlor, barns, and irrigated 12 cropland. Appurtenant to the Parlor Site were three water rights (the “Water 13 Rights”) that were also owned by Defendants and used to support the herd by 14 irrigating the 40 acres of crops located on the Parlor Site. In addition to the Parlor 15 Site, between 1998 and 2019, Defendants acquired seven additional parcels 16 totaling more than 500 acres (the “Croplands”) that were used to support the herd 17 by growing crops, spreading manure, and other farm-related activities. 18 Plaintiff filed this condemnation action on May 13, 2022, pursuant to the 19 Declaration of Taking Act, 40 U.S.C. § 3114. Plaintiff filed its Declaration of 20 Taking (the “Declaration”) that same day. Schedule E of the Declaration states, 21 “The estate taken in the property defined in Schedule C is fee simple, together with 22 all buildings, improvements, and any fixtures attached thereto, excepting any water 23 rights.” 24 On August 18, 2022, Plaintiff deposited $1,900,000 into the Court Registry, 25 thus acquiring title to the Parlor Site—however, the Court specifically ordered 26 Defendants to transfer possession of the Parlor Site to Plaintiff by November 1, 27

28 2 The remaining Motions were considered without oral argument. 1 2022, and Defendants did not actually vacate the property until that date. In the 2 period between August 18 to October 31, 2022, as well as November 21 to 3 December 21, 2022, Defendants removed agricultural installations and equipment 4 (the “equipment”) from the Parlor Site. On February 14, 2023, the parties filed a 5 Stipulation Regarding Classification of Removed Items (the “Stipulation”). The 6 Stipulation states that the parties agreed that any of the equipment removed by 7 Defendants would be classified as personal property. 8 Thus, the taking included any buildings, improvements, and fixtures on the 9 Parlor Site, but specifically excluded: (1) any of the equipment salvaged by 10 Defendants; (2) the Water Rights; and (3) the Croplands. Following the seizure of 11 the Parlor Site, Defendants acquired a new 360-acre milking parlor and other 12 facilities for $4,400,000 (the “Roylance Dairy”). Defendants subsequently sold the 13 Water Rights to the City of Moses Lake for $705, 626 and are now using the 14 Croplands (and presumably the equipment) to support operations at Roylance 15 Dairy. 16 At issue in this lawsuit is what dollar amount is “just compensation” for the 17 land that was taken by the United States. Plaintiff hired two experts, Dennis Bortz 18 and Rob Steinke, who opined that the fair market value of the Parlor Site was 19 $445,000 and $491,000 respectively. Bortz and Steinke’s opinions were based on 20 the assumptions that the Parlor Site (1) did not have sufficient water rights to 21 support a 500-cow dairy and (2) the Parlor Site lacked sufficient equipment 22 necessary to support a dairy. They concluded that the highest and best use of the 23 Parlor Site was dry grazing land. 24 Defendants hired one expert, Brian O’Connor, who opined the fair market 25 value of the Parlor Site was $3,865,000. O’Connor’s opinion was based on the 26

27 3 Defendants filed a motion to extend the deadline to transfer possession, which the 28 Court denied. 1 assumptions that (1) the Parlor Site had sufficient water rights and equipment to 2 operate a dairy and (2) the Parlor Site was integrated with the Crop Lands and the 3 Water Rights, creating an integrated parcel. Based on these assumptions, O’Connor 4 concluded that the highest and best use of the integrated parcel was a dairy. He 5 then conducted a “before and after analysis” wherein he subtracted the present 6 value of the integrated parcel from its value on August 18, 2022 ($11,600,000- 7 $7,735,000). 8 Legal Framework 9 The Fifth Amendment of the United States Constitution provides that the 10 government may not condemn private property for public use without providing 11 the owner with “just compensation.” United States v. Miller, 317 U.S. 369, 373 12 (1943). The Supreme Court “has never attempted to prescribe a rigid rule for 13 determining what is ‘just compensation’ under all circumstances and in all cases.” 14 United States v. Commodities Trading Corp., 339 U.S. 121, 123 (1950). Normally, 15 however, just compensation is calculated as the marketplace value of the parcel on 16 the date of the taking; in other words, just compensation is “what a willing buyer 17 would pay in cash to a willing seller” on the date of taking. Miller, 317 U.S. at 374. 18 To determine market value, courts must consider all the facts and circumstances 19 related to a purchase and sale. United States v. 429.59 Acres of Land, 612 F.2d 20 459, 462 (9th Cir. 1980). The landowner bears the burden of establishing the value 21 of the condemned property. Id. 22 Determining just compensation is an objective analysis of market value and 23 does not consider any special use of the property for the landowner or the 24 government. United States v. Petty Motor Co., 327 U.S. 372, 377 (1946). The 25 Ninth Circuit has specifically held that “losses to a business are not for 26 consideration.” United States v. Honolulu Plantation Co., 182 F.2d 172, 176 (9th 27 Cir. 1950). Furthermore, evidence of loss of profits, damage to good will, the 28 expense of relocation and other such consequential losses do not factor in the 1 determination of just compensation n federal condemnation proceedings. Petty 2 Motor Co., 327 U.S.at 377–78. 3 I. Plaintiff’s Rule 71.1 Motion to Determine the Larger Parcel 4 Fed. R. Civ. P. 71.1 governs the procedure to be followed in all cases of the 5 condemnation of property under the power of eminent domain. Rule 71.1(h)(1) 6 provides that the district court shall decide all issues including just compensation. 7 Pursuant to this provision, Plaintiff asks the Court to find that the Parlor Site was 8 not part of a larger parcel and to ignore evidence regarding the value of any 9 property not taken (i.e., the Water Rights and the Croplands). In response, 10 Defendants ask the Court to find that the Parlor Site was part of a larger parcel that 11 also included the Water Rights and the Croplands. 12 In addition to the value of the condemned property itself, the owner of a 13 condemned parcel of land may also be entitled to compensation for the loss in 14 market value to another owned parcel or parcels. Honolulu Plantation Co., 182 15 F.2d at 179. This type of condemnation is sometimes referred to as a “partial 16 taking.” United States v. 4.0 Acres of Land, 175 F.3d 1133, 1139 (9th Cir. 1999). 17 The value of compensable diminution to the remainder parcel in a partial taking is 18 often referred to as “severance damages.” United States v. 760.807 Acres of Land, 19 More or Less, Situate in City & Cnty. of Honolulu, State of Hawaii, 731 F.2d 1443, 20 1447 (9th Cir. 1984). A landowner is only entitled to severance damages if the 21 partial taking results in a direct loss to the marketplace value of the remainder, and 22 the landowner bears the burden of demonstrating this loss. Id. at 1448. 23 To determine whether a condemned parcel is part of a larger parcel, courts 24 consider three elements: (1) unity of ownership, (2) physical unity, and (3) unity of 25 use. United States v. 8.41 Acres of Land, More or Less, Situated in Orange Cnty., 26 State of Tex., 680 F.2d 388, 393 (5th Cir. 1982). Severance damages cannot be 27 recovered where there is no unity of ownership or use. United States v. 57.09 Acres 28 of Land, More or Less, Situate in Skamania County, State of Wash, 706 F.2d 280, 1 281 (9th Cir. 1983). Unity of ownership is satisfied so long as all of the parcels are 2 held by the same entities in the same manner. 429.59 Acres of Land, 612 F.2d at 3 463–64. Furthermore, physical unity is satisfied even if the parcels are not 4 contiguous, so long as they share an “actual and permanent use.” Honolulu 5 Plantation Co., 182 F.2d at 178–79. Therefore, the key inquiry is whether the 6 parcels satisfy the unity of use (i.e., whether they have been used and treated as a 7 single entity). See 429.59 Acres of Land, 612 F.2d at 463–64. When determining 8 unity of use, courts must consider the availability of replacement property. See 9 Int’l Paper Co. v. United States, 227 F.2d 201, 207 (5th Cir. 1955). 10 Severance damages, as well as the value of the condemned property itself, 11 are calculated using what is known as the “before and after method.” 4.0 Acres of 12 Land, 175 F.3d at 1139. (“Where the taking is a partial taking, ‘just compensation’ 13 is the difference between the fair market value of the whole parcel immediately 14 before the taking and the remainder after the taking.”) 15 Here, the Court finds that even assuming the unity of ownership is satisfied, 16 the Parlor Site was not part of a larger parcel because the key element of unity of 17 use has not been satisfied. The Water Rights and the Croplands may have been 18 used to support Defendants’ dairy operations on the Parlor Site at one time. But the 19 sale of the Water Rights to the city of Moses Lake and the use of the Croplands to 20 support the Roylance Dairy demonstrates that the parcels do not share a permanent 21 use because they cannot be used as a single entity in the foreseeable future. 22 Moreover, Defendants’ replacement of the Parlor Site with the Roylance Dairy 23 forecloses any unity of use argument. See Int’l Paper Co. 227 F.2d at 207. Because 24 the Parlor Site was not part of a larger parcel, the motion is granted.4 25

26 4 Even assuming the Parlor Site was part of a larger parcel, Defendants would not 27 be entitled to severance damages because they conceded during the hearing that 28 there was no diminution in value to the Croplands or the Water Rights. See 1 II. Defendants’ Motion to Exclude Plaintiff’s Experts’ 2 Defendants ask the Court to exclude the reports of Plaintiff’s experts Bortz 3 and Steinke, contending that they used the wrong date of taking and applied the 4 wrong appraisal method. 5 Federal Rule of Evidence 702 provides:

6 A witness who is qualified as an expert by knowledge, skill, experience, 7 training, or education may testify in the form of an opinion or otherwise if the proponent demonstrates to the court that it is more likely than not that: 8 (a) the expert’s scientific, technical, or other specialized knowledge 9 will help the trier of fact to understand the evidence or to determine a fact in issue; 10 (b) the testimony is based on sufficient facts or data; 11 (c) the testimony is the product of reliable principles and methods; and 12 (d) the expert's opinion reflects a reliable application of the principles 13 and methods to the facts of the case.

14 15 “Expert opinion testimony is relevant if the knowledge underlying it has a 16 valid connection to the pertinent inquiry. And it is reliable if the knowledge 17 underlying it has a reliable basis in the knowledge and experience of the relevant 18 discipline.” Primiano v. Cook, 598 F.3d 558, 565 (9th Cir. 2010) (citation and 19 quotation marks omitted). “Shaky but admissible evidence is to be attacked by 20 cross examination, contrary evidence, and attention to the burden of proof, not 21 exclusion.” Id. at 564. The test of reliability is flexible. City of Pomona v. SQM N. 22 Am. Corp., 750 F.3d 1036, 1044 (9th Cir. 2014). The district court has discretion to 23 decide how to test an expert’s reliability, as well as the testimony’s reliability, 24 based on the particular circumstances of the case. Primiano, 598 F.3d at 564. 25 26

27 Honolulu Plantation Co., 182 F.2d at 179 (“strict proof of the loss in market value 28 to the remaining parcel is obligatory”). 1 The party proposing the expert witness has the burden of establishing the 2 expert’s admissibility by a preponderance of the evidence. Cooper v. Brown, 510 3 F.3d 870, 942 (9th Cir. 2007). In bench trials, a district court may make its 4 reliability determination during the trial itself, as opposed to pretrial. United States 5 v. Flores, 901 F.3d 1150, 1165 (9th Cir. 2018) (noting that gatekeeping function is 6 less needed where a court is only keeping the gate for itself). 7 Here, Defendants are not challenging Bortz’ and Steinke’s qualifications. 8 Nor do they challenge their methodologies; rather they assert that the 9 methodologies were incorrectly applied to incorrect facts. Defendants’ arguments 10 go to the weight to give, Bortz and Steinke’s reports, which is properly attacked by 11 cross-examination or contrary evidence, not by exclusion. As such, the motions are 12 denied. See Primiano, 598 F.3d at 564. 13 III. Defendants’ Motion for Summary Judgment 14 Defendants argue that summary judgment is appropriate because Plaintiff 15 has no admissible evidence to rebut Defendants’ expert’s valuation. This is based 16 on Defendants’ position that Plaintiff’s expert reports should be excluded. 17 However, because the Court denied their motion to exclude Plaintiff’s experts 18 report, Defendants’ motion is denied. 19 IV. Plaintiff’s Motion to Exclude Defendants’ Rebuttal Expert Reports 20 Previously, the Court ordered the parties to submit initial expert disclosures 21 by January 30, 2024, and rebuttal expert disclosures by February 29, 2024. Based 22 on a stipulated motions by the parties, the Court extended the rebuttal disclosure 23 deadline first to May 3, 2024, and finally to May 10, 2024. Two days before the 24 extended deadline, Defendants disclosed reports created by Dr. Michael Hutjens 25 and Jessica Kuchan, ostensibly to rebut the reports of Bortz and Steinke. 26 Plaintiff asks the Court to exclude the reports or, in the alternative, provide 27 Plaintiff 30 days to respond to the reports because it believes the reports are not 28 proper rebuttal 1 An expert witness may not provide an opinion as to a legal conclusion (i.e., 2 the expert cannot give an opinion on an ultimate issue of law). Nationwide Transp. 3 Fin. v. Cass Info. Sys., Inc., 523 F.3d 1051, 1058 (9th Cir. 2008). An expert’s 4 report must be initially disclosed in accordance with a court’s scheduling order; 5 however, if the report is “intended solely to contradict or rebut evidence on the 6 same subject matter identified by another party,” then it must be disclosed within 7 30 days of the disclosure it is intended to rebut. Fed. R. Civ. P. 26(a)(2)(D). 8 Plaintiff argues the reports should be excluded because Kuchan’s report 9 contains legal conclusions, and both experts’ reports constitute evidence of 10 Defendants’ case-in-chief, as opposed to rebuttal evidence. On the other hand, 11 Defendants asserts Kuchan’s report does not reach legal conclusions on the 12 ultimate issue and both reports should be admitted because they rebut Plaintiff’s 13 experts: Dr. Hutjens’s report contradicts Plaintiff’s experts’ conclusions that the 14 Parlor Site did not share an integrated use with the Croplands, while Kuchan’s 15 report contradicts Plaintiff’s experts’ conclusions that the Parlor Site lacked water 16 rights. 17 Kuchan’s report includes citations to legal sources and makes several notes 18 opining on the law underlying the Water Rights but does not actually make any 19 determinative conclusions as to the value of just compensation for the Parlor 20 Site—the ultimate legal issue here (e.g. the report opines that the Parlor Site 21 included water rights). Thus, while there are legal conclusions contained within 22 Kuchan’s report, they ultimately do not intrude upon this Court’s function as the 23 ultimate decider of questions of law. 24 Neither Kuchan’s nor Dr. Hutjens’s reports make any reference to Bortz’s or 25 Steinke’s reports, and while some of the findings in their reports contradict the 26 findings of Bortz and Steinke, it is not clear that the reports were “intended solely 27 to contradict or rebut evidence on the same subject matter identified by” Bortz and 28 Steinke. Furthermore, the reports bolster O’Connor’s report, indicating they should 1|| have been disclosed by the initial expert disclosure deadline. Therefore, the motion is granted in part and denied in part. The reports shall be admitted, but Plaintiff shall have additional time to rebut them. Accordingly, IT IS HEREBY ORDERED: 5 1. Plaintiff's Rule 71.1 Motion to Determine the Larger Parcel, ECF No. 106, is GRANTED. The Court finds as a matter of law that the Parlor Site is not part of a larger parcel. 8 2. Defendants’ Motion for Summary Judgment on the Issue of Just Compensation, ECF No. 90, is DENIED. 10 3, Plaintiff's Motion to Strike Defendants’ Rebuttal Expert Reports, ECF No. 86, is GRANTED IN PART AND DENIED IN PART. Plaintiff shall submit any rebuttal to the Kuchan and Hutjens reports on or before April 30, 2025. 13 4. Defendants’ Motions to Exclude Testimony and Report of Plaintiff's 14)| Expert Rob Steinke, ECF No. 99, and Dennis Bortz, ECF No. 101, are DENIED. 15 IT IS SO ORDERED. The District Court Clerk is hereby directed to enter 16|| this Order and provide copies to counsel. 17 DATED this 31st day of March 2025. 18 19 20 21 hl Seta 33 Stanley A. Bastian Chief United States District Judge 24 25 26 27 28 ORDER GRANTING PLAINTIFF’S RULE 71.1 MOTION AND DENYING