Opinion ID: 3048175
Heading Depth: 2
Heading Rank: 3

Heading: valuation method and rate of interest

Text: [7] The district court erred by applying a valuation method to which no one testified and which lacks a basis in the record. However, the compensation awarded on the district court’s theory was higher than it would have been if the district court had accepted Martinek’s approach. The error was harmless. Cf. United States v. Block, 160 F.2d 604, 607 (9th Cir. 1947) (no error in admitting valuation from later date where no prejudice to appellants); see also FED. R. CIV. P. 61 (instructing courts to “disregard any error or defect in the proceedings which does not affect the substantial rights of the parties”). interests were at issue. See, e.g., United States v. 45.50 Acres of Land, 634 F.2d 405, 407 (8th Cir. 1980). Here, the property interests at issue in the direct condemnation and inverse condemnation actions are identical; only the process for obtaining relief distinguishes the actions. UNITED STATES v. MARTINEK 3867 [8] Martinek’s expert determined what the value of the claims would be if the court’s preliminary, core findings of fact (which with few exceptions became its final findings) were applied in the discounted cash flow calculation. Even allowing for the few changes in the factual findings between the district court’s preliminary and final decisions, the discounted cash flow method applied to the court’s undisputed fact findings would yield a value slightly lower than that calculated by the court using the royalty rate. The error in choosing a valuation methodology is therefore harmless. The error does not become harmful on account of the fact that the court cited to general reference materials and treatises in its order. Cf. Verizon Commc’ns, Inc. v. FCC, 535 U.S. 467, 476, 484-87 (2002) (citing telecommunications treatises); Quinn v. Robinson, 783 F.2d 776, 792-96 (9th Cir. 1986) (citing literature and treatises on the political offense exception to extradition). Nor does it offend Federal Rule of Evidence 605 to do so. The district court did not rely on facts outside the record, in contrast to cases to which Martinek points. Cf. United States v. Bonas, 344 F.3d 945, 948-49 (9th Cir. 2003); Lillie v. United States, 953 F.2d 1188, 1190-92 (10th Cir. 1992); United States v. Lewis, 833 F.2d 1380, 1385-86 (9th Cir. 1987). Martinek fails to identify the evidence he contends that the district court improperly admitted under the scope of the project rule, and he does not demonstrate any harm from the admission of such evidence.2 As Martinek acknowledges, a highest and best use determination is subject to pre-existing restrictions on land use on the date of valuation. See Palazzolo v. Rhode Island, 533 U.S. 606, 625 (2001). 2 In his reply brief, Martinek identifies for the first time specific evidence that he contends was improperly admitted and relied upon by the government and the district court in reaching their valuation conclusions. We decline to consider these arguments. See Bazuaye v. I.N.S., 79 F.3d 118, 120 (1996) (“Issues raised for the first time in the reply brief are waived.”). 3868 UNITED STATES v. MARTINEK [9] Selection of the statutory rate of interest is a factual issue and we will not disturb it in the absence of clear error. See United States v. 429.59 Acres of Land, 612 F.2d 459, 464 (9th Cir. 1980). The district court’s selection, after it considered alternative investments and rejected one as too risky, accords with Ninth Circuit precedent, id. at 465, and the prudent investor standard as established by the Third Restatement of Trusts. See RESTATEMENT (THIRD) OF TRUSTS § 227 (1992). The district court did not commit clear error.