Opinion ID: 2038838
Heading Depth: 1
Heading Rank: 12

Heading: Tesar's Testimony

Text: In its sixth assignment of error, L & H argues that the district court also erred in accepting Tesar's appraisal because his testimony indicated that he had not deducted from his appraisal the value of the ground or the depreciation taken by Big River on its federal tax return. Paragraph 9 of the lease agreement provides the formula by which the value of improvements made to the leased property should be calculated. It provides in relevant part: The amount of compensation to be paid for the improvements shall be determined by an appraisal made of the property. From that appraisal shall be deducted the value of the ground and the depreciation of the improvements claimed by the Lessee in its accounting procedure and reported on its federal income tax return for each year. To support its contention that Tesar did not deduct either the value of the land or depreciation in conducting his appraisal, L & H directs us to a portion of L & H's cross-examination of Tesar: [L & H's counsel:] [D]id you, when you did the appraisal of the property, deduct the value of the ground and depreciation of improvements claimed by the lessee in its accounting procedure and reported on its federal income tax return for each year? [Tesar:] Did I depreciate? Q. When you did this appraisal, did you deduct the value of the ground and the depreciation of the improvements claimed by the lessee in its accounting procedure and reported on its federal income tax return for each year? A. No. L & H overlooks another portion of Tesar's testimony. On direct examination, Tesar testified: [Big River's counsel:] All right. When you did your appraisal, did you arrive at a figure, then, with respect to the improvements? [Tesar:] Yes. Q. The value? And at the time you did it, wasdid you separate out the real estate that it was situated on? Is your appraisal based strictly on the value of the improvements, the building that you appraised? .... A. Yes. Q. Okay. And you do have an opinion with respect to the fair market value of that property, do you A. Yes, I do. Q. on March 7, 2002? And what is your opinion of the fair market value of that property on that date? .... A. $30,000. Tesar's testimony on direct examination indicates that the value of the ground was deducted from the appraisal he conducted. Tesar's testimony on cross-examination shows that he did not deduct depreciation, but does not contradict his testimony on direct examination that the value of the ground was deducted. On cross-examination, Tesar was asked whether he deducted both the value of the ground and depreciation from his appraisal. In testifying, Tesar clarified L & H's question, stating [d]id I depreciate? before answering [n]o. Given the phrasing of L & H's question to Tesar on cross-examination, as well as Tesar's attempt at clarification, Tesar's cross-examination testimony is consistent with his direct testimony, and it was proper for the district court to rely on Tesar's appraisal to establish the value of the improvement. In addition, Big River established the depreciation of the improvement through Popelka's testimony: [Big River's counsel:]... Is it true also that your CPA's had depreciated that on your income tax return and had taken $5,520.80 in depreciation? [Popelka:] I believe that's right. Q. Up to that period of time? A. I believe that's right. L & H also offered an asset depreciation form from Big River's tax return listing depreciation on the building at $6,169.82. The lease provided, From [the] appraisal shall be deducted the value of the ground and the depreciation of the improvements.... Tesar's testimony was sufficient to establish that his appraisal was the value of the building alone. The terms of the lease did not preclude establishing depreciation separately from the appraisal of the improvement. Big River offered evidence of an appraisal which excluded the value of the land. Big River and L & H both offered evidence of the depreciation Big River had taken on the improvement. We conclude that the valuation formula of the lease agreement was followed and that the district court did not err in the damages it awarded to Big River. L & H's sixth assignment of error is without merit.