Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_07-cv-02312/USCOURTS-azd-2_07-cv-02312-0/pdf.json

Nature of Suit Code: 210
Nature of Suit: Land Condemnation
Cause of Action: 15:717 Natural Gas Act

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1

Also referred to as Trusts 3435 and 3436.

UNITED STATES DISTRICT COURT

DISTRICT OF ARIZONA

TRANSWESTERN PIPELINE )

COMPANY, LLC, )

)

Plaintiff, ) 2:07-cv-02312 JWS

)

vs. ) ORDER AND OPINION

)

46.78 ACRES, MORE OR LESS, OF ) [Re: Motions at Docket 149, 150, 151]

PERMANENT EASEMENT LOCATED )

IN MARICOPA COUNTRY, et al., )

)

Defendants. )

)

I. MOTIONS PRESENTED

At docket 149, plaintiff Transwestern Pipeline Company, LLC (“Transwestern”)

requests an order precluding the expert opinion and report of Ian R. Dowdy. At

docket 157, defendants First American Title Insurance Company, as Trustee under

Trusts 8435 and 8436,1

 and WVSV Holdings, LLC (“defendants”) oppose the motion. 

Transwestern replies, and defendants sur-reply at dockets 166 and 176, respectively. 

Case 2:07-cv-02312-JWS Document 180 Filed 04/26/10 Page 1 of 14
2

Doc. 65.

3

Doc. 161-1 at p. 5.

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At docket 150, Transwestern requests an order precluding Douglas Wolf’s expert

opinion. At docket 159, defendants oppose the motion. Transwestern replies, and

defendants sur-reply at dockets 167 and 177, respectively.

At docket 151, Transwestern requests an order precluding James Chalmers from

testifying or offering his report regarding severance damages based upon an 800-feet

safety zone and a 10 % reduction in value to the remainder of the subject property. At

docket 160, defendants oppose the motion. Transwestern replies, and defendants surreply at dockets 168 and 176, respectively. Oral argument was requested on all three

motions, but it would not assist the court. 

II. BACKGROUND

This action involves Transwestern’s condemnation of property for an easement

transecting a parcel of defendants’ property located in the Town of Buckeye, Arizona,

for the purpose of constructing the approximately 260-mile expansion of Transwestern’s

existing interstate natural gas pipeline in accordance with a Certificate of Public

Convenience and Necessity issued by the Federal Energy Regulatory Commission

(“FERC”) on November 15, 2007.2

 The parties refer to the subject property as the Sun

Valley property or Parcel MA 169. WVSV Holdings, LLC is the beneficial owner of the

subject property, while First American Title Insurance Company, as Trustee under

Trusts 8435 and 8436, holds the title to the majority of the property.3

Case 2:07-cv-02312-JWS Document 180 Filed 04/26/10 Page 2 of 14
4

Doc. 152 at p. 2.

5

Doc. 157 at p. 15.

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By order dated June 19, 2008, the court granted the parties’ stipulation allowing

Transwestern’s immediate entry and possession of a 50-foot-wide permanent

easement, temporary workspace, and temporary access roadway transecting the

subject property. The remaining issues in this condemnation action involve determining

the fair market value of the 50-foot-wide easement, and the existence and amount of

severance damages to the remaining property. In its briefing, Transwestern defined

“severance damages” as “any decrease in market value to the unencumbered portion of

the parcel located outside of the permanent easement taken by Transwestern, arising

from the taking of the easement.”4

Defendants proffered the expert testimony and report of Ian R. Dowdy, an urban

planner who worked as an assistant planner/interim senior planner for the Town of

Buckeye for two years and as a senior planner for Jacobs Engineering for 19 months,

during which time he worked on the Sun Valley Community Master Plan (“CMP”). 

Defendants indicate that Dowdy’s expert testimony “involves the market perceptions of

a potential purchaser of the Sun Valley project in the summer of 2008 concerning

whether the Town of Buckeye would require a setback of residential development from

a gas transmission pipeline and how, depending on the size of any setback, such a

setback would affect the land planning of the Sun Valley project.”5

 In his expert report,

Dowdy concludes,

The Transwestern pipeline, although buried below the ground and

relatively unobtrusive to the daily lives of community residents, presents a

Case 2:07-cv-02312-JWS Document 180 Filed 04/26/10 Page 3 of 14
6

Doc. 149-5 at p. 17.

7

Doc. 149-4 at p. 5, doc. 149-5 at pp. 1-2.

8

Doc. 150-4 at p. 2.

9

Doc. 159 at p. 11.

10Doc. 150-5 at p. 3, et seq.

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significant impact to the value of the Sun Valley Community. As of the

date of value in June 2008, I conclude that a reasonable buyer would

likely consider the existence of the pipeline as posing significant impact to

the Sun Valley Community. The buyer would conclude the risk that

mitigation will be required is significant enough to consider the impact of

such methods on the development, including significant design concerns

and a loss of developable land.6

Dowdy specifically opines that as of the date of value in June 2008, a hypothetical buyer

“might conclude that either the Department of Real Estate and/or the Town of Buckeye

would likely require a notification zone,” “would conclude that the Town, given its long

history of unpredictable and stringent hazardous material policies, may impose a

setback requirement,” “would likely consider the setback to be around 800 feet,” and

“would find it necessary to consider the impact of the pipeline to the existing plans.”7

Defendants also proffer the expert testimony and report of Douglas G. Wolf, who

“has over 30 years of multidisciplinary environmental permitting, compliance and

management consulting experience.”8 In their response brief, defendants indicate that

Wolf “discusses the historical, statistical and physical reasons, all discoverable by a

knowledgeable buyer, why a local government such as the Town [of Buckeye] might

impose a setback.”9

 In addition to Wolf’s testimony, defendants proffer Wolf’s expert

opinion report of June 2009, titled “Potential Hazards and Risks Associated with the

Transwestern Natural Gas Transmission Pipeline Maricopa County, Arizona.”10 Wolf’s

Case 2:07-cv-02312-JWS Document 180 Filed 04/26/10 Page 4 of 14
11Doc. 150-5 at p. 7.

12Doc. 150-7 at p. 6.

13Doc. 151-4 at p. 10.

14Id. at p. 5.

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report addresses “potential hazards and high consequences posed by similar pipeline

diameters and pressures to the one operated by Transwestern Natural Gas

Transmission Pipeline.”11 In his report, Wolf concludes, 

There are some limited mitigation efforts that would act to reduce the

probability for high consequence events affecting the surrounding

population. However, if a high consequence event occurs, only an

increase in the right-of-way in order to set back structures and people

would act to reduce injuries and possible fatalities. From the information

reviewed and discussed in this report, events involving large-diameter and

high-pressure pipelines have resulted in significant consequences (severe

burns, property damage, and fatalities) to the immediate surrounding

population.12

Finally, defendants proffer the expert testimony and report of James Chalmers, a

certified general real estate appraiser and principal of Chalmers & Associates, LLC, a

firm which engages in economic and real estate consulting and litigation. Chalmers was

retained by defendants to prepare an appraisal providing “an opinion of Just

Compensation resulting from the taking of 46.78 acres for a permanent easement for

the installation and operation of Transwestern’s pipeline through portions of the Subject

Property, as of June 19, 2008.”13 In his appraisal, Chalmers assumes that the

unencumbered value of the subject property before the installation of the pipeline was

$25,000 per acre and concludes that the just compensation resulting from the taking of

46.78 acres for the pipeline easement is $50,029,900.14 The just compensation of

$50,029,900 is made up of three parts: value of the part taken ($233,900), plus rental of

Case 2:07-cv-02312-JWS Document 180 Filed 04/26/10 Page 5 of 14
15Doc. 151-6 at p. 6.

16Doc. 151-5 at p. 17.

17Id.

18Doc. 151-6 at p. 4.

19Esayed Mukhtar v. California State University, Hayward, 299 F.3d 1053, 1063 (9th Cir.

2002) (quoting Fed. R. Evid. 702).

20Hangarter v. Provident Life and Acc. Ins. Co., 373 F.3d 998, 1015 (9th Cir. 2004

(quoting Fed. R. Evid. 702)).

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the temporary construction easement ($103,000), plus severance damages

($49,693,000).15 In his appraisal report, Chalmers states that “Town consultants are

talking about setbacks for all habitable structures of between 800 and 1200 feet, and

the Town has a history of concerns with proximity of development to hazards.”16 Based

on the above, Chalmers’ concludes that “it is reasonable to assume that an informed

prospective buyer would want to carefully investigate the implications of a required

setback of at least the minimum distances discussed, i.e. 800 feet.”17 Chalmer’s

calculation of severance damages is based on his estimate of a resulting 80% reduction

of value in the setback area, and a 10% reduction in value in the subject property

outside of the setback.18 

III. DISCUSSION

“Federal Rule of Evidence 702 allows admission of ‘scientific, technical, or other

specialized knowledge’ by a qualified expert if it will ‘assist the trier of fact to understand

the evidence or to determine a fact in issue.’”19 “Rule 702 requires that a testifying

expert be ‘qualified as an expert by knowledge, skill, experience, training, or

education.’”20 “The Advisory Committee’s Notes to [Rule 702] specifically cite

Case 2:07-cv-02312-JWS Document 180 Filed 04/26/10 Page 6 of 14
21In re Tamen, 22 F.3d 199, 206 (9th Cir. 1994) (citing Fed. R. Evid. 702 advisory

committee’s notes).

22Daubert v. Merrell Dow Phars., Inc., 509 U.S. 579, 589 (1993).

23Mukhtar, 299 F.3d at 1063 (citing Kumho Tire Co. v. Carmichael, 526 U.S. 137, 147-48

(1999)).

24Doc. 157 at p. 13.

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‘landowners testifying to land values’ as ‘within the scope of the rule.’”21 Expert

testimony is admissible under Rule 702 if it is both relevant and reliable.22 “The trial

court must act as a ‘gatekeeper’ to exclude ‘junk science’ that does not meet Rule 702's

reliability standards by making a preliminary determination that the expert’s testimony is

reliable.”23

Ian R. Dowdy’s Expert Opinion and Report

Transwestern argues that Ian Dowdy should be precluded from offering his

opinion relating to a hypothetical 800-foot setback, the Town of Buckeye’s likelihood of

enacting such a setback, and the possible impact of a setback on the subject property’s

development on the grounds that Dowdy is not qualified to offer such opinions, his

methods are unreliable, and his opinions amount to unsupported conjecture. 

Defendants argue that Dowdy’s experience in urban planning qualifies him to provide

opinions as to “whether a market participant in the summer of 2008 could anticipate that

the Town would impose a setback on the Sun Valley project, as well as the likely size of

the setback imposed and the effect of such a setback on development of the project.”24

The court first considers whether Dowdy is qualified as an expert. Defendants

contend that Dowdy is qualified by his experience as an urban planner, and particularly

his two years as a town planner for the Town of Buckeye. While “the text of Rule 702

Case 2:07-cv-02312-JWS Document 180 Filed 04/26/10 Page 7 of 14
25Fed. R. Evid. 702 advisory committee’s note.

26Doc. 157 at p. 15.

27Doc. 149-6 at pp. 37, 38, 42.

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expressly contemplates that an expert may be qualified on the basis of experience,” the

advisory committee notes emphasize that “[i]f the witness is relying solely or primarily

on experience, then the witness must explain how that experience leads to the

conclusion reached, why that experience is a sufficient basis for the opinion, and how

that experience is reliably applied to the facts.”25 Although Dowdy purports to rely on his

experience as an urban planner, Dowdy has failed to explain how that experience

qualifies him to opine as to “the market perceptions of a potential purchaser of the Sun

Valley project in the summer of 2008,”26 why his experience as an urban planner is a

sufficient basis for his opinion, and how his experience is reliably applied to the facts in

this matter. 

Transwestern next argues that Dowdy’s opinion is inadmissible because it is not

reliable. The court concurs. Dowdy opines that a hypothetical buyer in June 2008

would anticipate that Buckeye would impose an 800-foot setback requirement and that

such a setback requirement would affect the development and fair market value of the

Sun Valley project. Dowdy does not provide any basis for his opinion. In his deposition,

Dowdy acknowledges that he has not conducted any market analysis or surveys and

that he talked to only one potential purchaser of property with the Sun Valley

development in forming his opinion on what a hypothetical buyer would think.27 As to

how he determined what a hypothetical buyer would think, Dowdy stated, “Based on my

Case 2:07-cv-02312-JWS Document 180 Filed 04/26/10 Page 8 of 14
28Doc. 149-6 at p. 47.

29Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579, 590 (1993).

30Doc. 150 at p. 9

31Doc. 159 at p. 4.

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experience and dealing with people in similar situations, I concluded that that is

probably what this person would think.”28 The subject of an expert’s testimony must be

specialized knowledge, which connotes “more than subjective belief or unsupported

speculation.”29 Dowdy’s opinion is inadmissible because it amounts to speculation. For

the reasons set out above, Dowdy’s expert report, which is also based on assumptions

which are purely speculative, is also inadmissible. 

Douglas Wolf’s Expert Opinion and Report

Transwestern first argues that Douglas Wolf’s testimony and expert report are

inadmissible because Wolf is not qualified “to provide expert testimony as to the

appropriate setback for a natural gas pipeline for residential development.”30 

Transwestern points out that while Wolf may be an expert in air quality, his is not an

expert concerning the appropriate “safety zone” in the vicinity of a natural gas pipeline. 

Defendants argue that Wolf is not offered for the expert opinion that there should

be a setback requirement from the Transwestern pipeline beyond the 50-foot easement

established by FERC; rather, Wolf details “the publicly-known engineering

considerations” that might lead the Town of Buckeye to impose a setback requirement,

provides “publicly available historical information about prior pipeline failures that

rightfully cause concern in the development community, and provide[s] persuasive

evidence as to the repercussions of pipeline explosions on neighboring properties.”31

Case 2:07-cv-02312-JWS Document 180 Filed 04/26/10 Page 9 of 14
32Doc. 159 at p. 10.

33Doc. 150-4 at p. 2.

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Defendants further argue that Wolf “presents facts and opinions that support the

conclusion that a knowledgeable buyer would lower the price paid for Sun Valley

because of the risk of imposition of setback in the future.”32 

Defendants contend that Wolf is qualified to offer the above opinions based on

his “30 years of multidisciplinary environmental permitting, compliance and

management consulting experience.”33 However, here, as with Ian Dowdy, defendants

have failed to demonstrate how Wolf’s experience as an environmental engineer with an

emphasis on air quality leads to his conclusions about market perceptions or to his

opinions about the risk of a “high consequences event” near a gas pipeline and the

relative effectiveness of mitigation measures. Defendants have also failed to

demonstrate why Wolf’s experience is a sufficient basis for his opinion, and how that

experience is reliably applied to the facts in this case.

To the extent that Wolf’s proffered testimony and expert report purport to

summarize publicly available information about prior pipeline failures and their effects on

surrounding properties, Wolf’s proffered testimony and expert report are inadmissible

because they will not assist the trier of fact in determining the facts at issue here,

namely the fair market value of the 50-foot-wide easement, and the existence and

amount of severance damages to the remaining property. Wolf’s expert report fails to

make any connection between two prior pipeline failures and their alleged impact on the

fair market value for the easement or any severance damages for the remainder of the

Case 2:07-cv-02312-JWS Document 180 Filed 04/26/10 Page 10 of 14
34Doc. 168 at p. 1.

35Doc. 160 at p. 3.

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subject property. Accordingly, Wolf’s expert opinion testimony and report will be

excluded.

James Chalmer’s Expert Opinion and Report

Transwestern next requests the court to exclude James Chalmers’ testimony “on

the issues of severance damages based upon (1) an 800' safety zone, and (2) a 10%

reduction in value to the remainder of the parcel.”34 Transwestern argues that Chalmers

is not qualified to opine as to safety setbacks and that his estimate of severance

damages assuming an 800-foot setback is not based on sufficient facts or data. 

Transwestern further argues that Chalmers’ opinion on severance damages is

unreliable because it is based on events that are conjecture and are not reasonably

probable to occur in the reasonably near future. 

Defendants contend that they have offered expert witness Chalmers for “his

opinion that a potential purchaser of the Sun Valley project in June 2008 would

anticipate and take into account the likelihood that the local government, the Town of

Buckeye [], would impose a setback on development in the Sun Valley project from the

Transwestern natural gas transmission pipeline under the circumstances of this case.”35

Defendants further contend that Chalmers’ estimate of an 80% reduction of value in the

800-foot setback area and a 10% reduction in value to the area outside of the setback

area is admissible because it is based on Chalmers’ professional experience dealing

with easements and his experience as a real estate appraiser.

Case 2:07-cv-02312-JWS Document 180 Filed 04/26/10 Page 11 of 14
36Doc. 160 at p. 10.

37Doc. 168-2 at pp. 13-16.

38Doc. 168-2 at p. 18.

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Because defendants concede that Chalmers’ testimony and report are not

offered on the issues of whether a setback is needed, and if so, the appropriate

distance of a setback, the court considers whether Chalmers’ opinion regarding the

perceptions of a knowledgeable buyer and his severance damage estimates based on

an 800-foot setback are admissible. Chalmers opines that a “knowledgeable and

prudent buyer of the property would take into account the risk that the Town might

impose a setback of the minimum amount of 800 feet.”36 However, in his deposition,

Chalmers acknowledged that he had not talked with any developers concerning their

perceptions of a decrease in value of the Sun Valley property due to the Transwestern

pipeline extension, spoken to anyone who has purchased property around a natural gas

pipeline, or studied the purchase and sales of properties that already have existing

natural gas pipelines on the properties.37 Chalmers further acknowledged that the risk

of whether a setback will be imposed and the amount of any setback are two unknown

variables.38 Here, because the eventual imposition of a setback requirement is purely

speculative and Chalmers has not provided any factual basis for his opinion that a

hypothetical buyer in June 2008 would take into account the risk that the Town of

Buckeye might impose an 800-foot setback, Chalmers’ proffered opinion testimony is

not reliable, and will be excluded.

Case 2:07-cv-02312-JWS Document 180 Filed 04/26/10 Page 12 of 14
39Doc. 168-2 at p. 22.

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Similarly, Chalmers’ estimate of severance damages is not reliable because it

assumes the imposition of a purely speculative 800-foot setback. Moreover, Chalmers

does not provide any relevant facts or data to support his opinion that an 800-foot

setback would result in an 80% reduction in the value of the property within the 800-foot

setback, and a 10% reduction in the value of the remaining property. In his deposition,

Chalmers states that there is no empirical data which supports his estimate of an 80 %

reduction of value for property within the hypothetical 800-foot setback, nor a 10 %

reduction in value of the remaining property. Rather, Chalmers bases his estimates on

his professional experience dealing with easements, his experience as an appraiser,

and his “understanding of the market strength and the relative strength of the parties.”39

However, Chalmers fails to demonstrate how his experience with utility easements or

his experience as an appraiser leads to his opinion about the reduction in value, why his

experience is a sufficient basis for his opinion, and how that experience is reliably

applied to the facts in this case. Accordingly, Chalmers’ estimate of severance

damages based upon an 80 % reduction in value in a speculative 800-foot setback zone

and 10 % reduction in value for the remaining property is not reliable and will be

excluded. Defendants do not contest the admissibility of Chalmers’ opinion concerning

the fair market value of the easement taken or the rental of the temporary construction

easement, so they are admissible.

Case 2:07-cv-02312-JWS Document 180 Filed 04/26/10 Page 13 of 14
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IV. CONCLUSION

For the reasons set out above, plaintiff’s motion at docket 149 to exclude the

expert report and opinion of Ian R. Dowdy is GRANTED, plaintiff’s motion at docket 150

to exclude the expert opinion and report of Douglas Wolf is GRANTED, and plaintiff’s

motion at docket 151 to exclude the expert opinion and report of James Chalmers

regarding severance damages based on an 800-foot safety zone and any resulting

reduction in the value of the subject property is GRANTED. 

DATED this 26th day of April 2010.

/s/ JOHN W. SEDWICK

UNITED STATES DISTRICT JUDGE

Case 2:07-cv-02312-JWS Document 180 Filed 04/26/10 Page 14 of 14