Opinion ID: 1102954
Heading Depth: 1
Heading Rank: 10

Heading: did the trial court err in excluding the davis appraisal by the grant of the motion in limine?

Text: The owners contend that the Davis appraisal should have been admissible as evidence of the market value of the King Edward on October 21, 1989. JRA seeks to have this Court uphold the exclusion on the basis that the appraisal was part of an offer to compromise a disputed claim, which is inadmissible under Rule 408 of the Mississippi Rules of Evidence. Offers to settle or compromise a disputed claim are clearly excluded. State Highway Comm. v. Warren, 530 So.2d 704 (Miss. 1988). Offers or options to purchase property are not competent evidence to establish the fair market value of property. Mississippi State Highway Comm. v. Robertson, 350 So.2d 1348, 1350 (Miss. 1977). Sales of property to agencies with eminent domain powers should not be used as comparable sales in determining the market value of condemned property. State Highway Comm. v. Hyman, 592 So.2d 952 (Miss. 1991). These principles would clearly seem to foreclose any mention of the $865,000 offer by JRA. However, this does not dispose of the question of whether the appraisal on which the offer is based is inadmissible, since Rule 408 further provides that, This rule does not require the exclusion of any evidence otherwise discoverable merely because it is presented in the course of compromise negotiations. JRA cites several federal cases for the proposition that anything prepared during the settlement negotiations is inadmissible under Rule 408. These cases do not apply to this case, however, since this appraisal was made before the petition was filed and any need for negotiations had arisen. Even though the threat of an eminent domain proceeding may have been looming on the horizon, the record reveals more of an armslength bargaining process such as might be entered between private parties. We have an offer, a rejection and then a higher offer, not the type of dispute over a claim contemplated by Rule 408. No claim existed until JRA filed the petition to condemn the property after their offer based on the Davis appraisal was rejected by the owners. The Fifth Circuit Court of Appeals decided almost this exact question in United States v. 320.0 Acres of Land, 605 F.2d 762 (5th Cir.1979). When that case went to trial, the Department of the Interior sought to show a lower valuation than it had given the landowner pursuant to the law. The landowner sought to have the first appraisal admitted into evidence as an admission and to impeach the Department's appraiser, but the trial court ruled each time that the first appraisal was not admissible. The Fifth Circuit ruled that the appraisal and the Department's statement that the appraisal represented the best estimate of just compensation were admissions against interest and were not to be excluded under the federal counterpart to M.R.E. 408, which is virtually identical. The court first noted that, technically, no disputed claim existed in the case until eminent domain proceedings were initiated; thus F.R.E. 408 did not apply by its own language. Id. at 824-25. The Fifth Circuit also distinguished between offers to purchase the property and mere statements of the Department's estimate of fair market value. The court noted that the policy reasons behind Rule 408, encouraging settlement of claims without resort to litigation, did not apply to the statements of fair market value, since the statement was mandated by law and reflected the Department's estimate of what it would have to pay in a condemnation proceeding. Allowing the statements into evidence would not discourage settlement of disputed claims since the statement still had to be made by law. Id. The Fifth Circuit's reasoning is sound and we adopt it in this case. The majority of jurisdictions allow a party in a condemnation case to call as his own witness an appraiser retained, but not called, by the other party. Nichols, The Law of Eminent Domain, § 23.08[4] (Supp. 1990). However, the majority of courts which allow a party to call the other's appraiser do not allow the party to bring out the fact that the appraiser was retained to perform the appraisal for the opposite party. Id. The rule allowing one party to call the other's appraiser is based on the courts' view that an expert's opinion, when formed, and observation, when made, are facts and that every litigant is entitled to present all of the facts in support of his position. Id. at 23-114. The trial court's decision here to grant the motion in limine improperly prevented the owners from entering into evidence or using as impeachment the highly relevant appraisal done by Davis. In combination with the restrictions placed on the owners' prospects for securing other expert testimony through its pre-trial order, this error became even more prejudicial to the owners. Admittedly, in another case, the Fifth Circuit has given F.R.E. 408 a broader ruling. In Ramada Dev. Co. v. Rauch, 644 F.2d 1097 (5th Cir.1981), the Fifth Circuit was faced with a suit against a builder for alleged defects. When the question of the defects first arose between the parties, the builder had one of its architects prepare an analysis of the defects, and at the later trial the plaintiff sought to introduce the written report in his case-in-chief. The Fifth Circuit found that the trial court had properly excluded the report under F.R.E. 408 after answering the dispositive question, whether the statements or conduct were intended to be part of the negotiations toward compromise, in the affirmative. Id. at 1106-07 [citing 2 J. Weinstein & M. Berger, Weinstein's Evidence ¶ 408[03], at 408-20 to 21 (1980)]. The narrower view in United States v. 320.0 Acres of Land is much more applicable to the facts of this case. No disputed claim existed within the meaning of M.R.E. 408, so the rule does not apply and the trial court erred in excluding the use of the appraisal by Morley and Laurence, even though it correctly excluded the actual offer. On remand, the trial court should allow Morley and Laurence to call Davis as a witness to explain his appraisal report. However, in order that the jury not be swayed by prejudice, neither party shall inject that the appraisal was made at the request of JRA. Also, the resolution adopted by JRA stating that it found the fair market value of the property to be $865,000 should have been allowed into evidence as a statement against interest under M.R.E. 804(b)(3).