Opinion ID: 2831421
Heading Depth: 3
Heading Rank: 3

Heading: McKinney’s Analytical Gaps

Text: Even assuming that the Sebastian site suffered a 72% diminution in value and the Sheridan site suffered a 41% diminution in value, and that the remediated contamination of nearby property caused those losses, McKinney did not show how that data offers valid support for her conclusion that Mel Acres’ ranch lost 60% ($1,397,500) of its value or that stigma resulting from Houston Unlimited’s conduct caused that loss. Expert testimony is unreliable if “there is simply too great an analytical gap between the data [relied upon] and the opinion proffered.” Gammill v. Jack Williams Chevrolet, Inc., 972 S.W.2d 713, 726 (Tex. 1998) (quoting Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997)). An expert must “connect the data relied on and his or her opinion” and “show how that data is valid support for the opinion reached.” Camacho, 298 S.W.3d at 642 (citing Pollock, 284 S.W.3d at 819–20; Volkswagen, 159 S.W.3d at 906; Gammill, 972 S.W.2d at 726). “We are not required . . . to ignore fatal gaps in an expert’s analysis or assertions that are simply incorrect.” Volkswagen, 159 S.W.3d at 912; Cooper Tire & Rubber, 204 S.W.3d at 800–01. “A flaw in the expert’s reasoning from the data may render reliance on a study unreasonable and render the inferences drawn therefrom dubious. Under that circumstance, the expert’s scientific testimony is unreliable and, legally, no evidence.” Havner, 953 S.W.2d at 714. The foundation of the sales-comparison approach is that the appraised property is compared to comparable properties, which justifies an assumption of comparable values, and then adjusted for differences between the properties. See Sharboneau, 48 S.W.3d at 182–83. McKinney’s approach lacks this foundation. McKinney did not testify that the Sheridan or Sebastian sites were comparable to Mel Acres’ property in any aspect other than environmental 23 contamination of some kind that had been remediated.12 To the contrary, she testified that the properties did not need to be comparable under her approach because she calculated the lost value as a percentage. When Mel Acres’ attorney asked McKinney if there are “any similarities between Grimes County,” where the Sebastian site is located, “and Washington County,” where the ranch is located, that “make this a good comp,” McKinney responded, “What makes this a good comp is the fact that it is a contamination. There are differences in land value between Washington County and Grimes County, and that’s why we want to take percentages.” Later, Houston Unlimited’s attorney followed up: Q. [O]bviously, to make your analysis accurate, you want both your impaired and your unimpaired properties to be as comparable as possible to the property that’s the subject of your appraisal, right? A. It doesn’t necessarily — the unimpaired do — the impaired and the unimpaired do not — they have to have a similar highest and best use. Q. Right. A. But what you’re looking for is a percentage. So no, they don’t have to be. Q. They don’t have to be comparable? A. No. We have explained, however, that “[t]he comparable sales method fails when the comparison is made to sales that are not, in fact, comparable to the land condemned.” Kraft, 77 S.W.3d at 808. Nor did McKinney make adjustments for differences between the ranch and the Sebastian and Sheridan sites. McKinney did not explain whether or why the ranch and the contamination of the stock tank were similar to, or different from, the Sebastian or Sheridan properties and their 12 As noted below, there was some dispute over whether the Sheridan site had been fully remediated. 24 contamination in any way that would make it likely to suffer a greater or lesser diminution than either of the other two properties. She did not identify plausible causes for variations in the diminutions and explain how those causes did or did not impact her calculation for the ranch. Although she chose a percentage of loss that was less than the Sheridan site’s percentage and more than the Sebastian site’s, she did not in any way tie that number to differences between the properties. To the contrary, the record contains no analysis of how McKinney reached the 60% loss for the ranch. The record reveals only that 60% falls somewhere between 41% and 72%, a little above the average of the two (56.5%). McKinney’s failure to account for significant differences between the kind and degree of contamination that the three properties sustained or the nature of the remediation is also significant in the context of this record. The Sheridan site had been part of a federal Superfund site that required extensive remediation. Houston Unlimited presented evidence that the federal government monitored the Sheridan site and placed it on a “national priority list.” Robinson explained that the Sheridan site was monitored for thirty years at a cost of $16–17 million, and some constituents at that site were “off the Richter scale when compared to regulatory limits.” 389 S.W.3d 583, 599. There was also evidence that the Sheridan site had not been fully remediated and “still contains over 44,000 cubic yards of sludge and contaminated soil.”13 The metal compounds found at the ranch, by comparison, did not greatly exceed state action levels, and the only remediation the parties have identified are the measures Houston 13 In her deposition, McKinney agreed that the market would react “in varying degrees” to properties contaminated by different chemicals, depending on the nature of the chemicals, if the contamination had not been remediated. 25 Unlimited took on its own property to prevent constituents from continuing to migrate onto the ranch. The metal compounds appear to have naturally dissipated after the migration ceased. Finally, McKinney did not account for contamination that was not attributable to Houston Unlimited’s conduct. For example, Mel Acres’ own evidence showed iron in excess of state action levels on the ranch, yet there was no evidence linking iron contamination to Houston Unlimited. To the contrary, there was some evidence that other ponds on the ranch, which were beyond the reach of any discharge from Houston Unlimited’s facility, also tested positive for excessive iron levels. McKinney testified that she did not attempt to attribute any portion of the diminution in value she had calculated to any actions of Houston Unlimited and made no attempt to calculate the amount of the diminution in value that resulted from activities not related to Houston Unlimited. Nor did any other evidence address this issue. McKinney’s failure to account for differences between the three properties at issue, differences between the nature of the contamination and remediation of the properties, and contamination not attributable to Houston Unlimited, leaves analytical gaps in her reasoning. At least once Houston Unlimited raised these gaps in questioning her, it was necessary for McKinney to provide some logically valid explanation for why she did not need to consider these factors that, facially, appear relevant to her opinion. The only explanation she provided was that differences between the three properties did not matter because she found a “very similar decrease in market value” for the Sebastian and Sheridan sites. But 72% and 41% are not “very similar decrease[s] in market value.”14 14 McKinney’s calculation of the ranch’s decrease in market value was based on the Sebastian and Sheridan sites’ decreases, so any similarity between Mel Acres’ decrease and the other two is a necessary product of her approach, not independent evidence of any facts. 26