Opinion ID: 2567729
Heading Depth: 4
Heading Rank: 1

Heading: The Cost of Repair May Be Relevant in Analyzing the Diminution in Value

Text: {13} The trial court excluded Respondents' evidence on the cost to repair because Respondents had characterized their injury as permanent and the trial court read Carter Farms as prohibiting all evidence of the cost to repair in analyzing the diminution in value of real property. See id., 103 N.M. at 120-21, 703 P.2d at 897-98. However, the Court of Appeals held, and we agree, that the cost of repair may be relevant, and thus may be considered, in analyzing the diminution in value of real property in a negligence claim against a mineral lessee. McNeill, 2007-NMCA-024, ¶ 29, 141 N.M. 212, 153 P.3d 46. {14} The issue is one of relevancy. `Relevant evidence' means evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence. Rule 11-401 NMRA. [W]hatever naturally and logically tends to establish a fact in issue is relevant. Wright v. Brem, 81 N.M. 410, 413, 467 P.2d 736, 739 (Ct.App. 1970) (quoted authority omitted). With some qualifications, [a]ll relevant evidence is admissible. Rule 11-402 NMRA. {15} In a negligence claim against a mineral lessee by a surface estate owner, evidence of the cost to repair a property may have a tendency to make more or less probable an expert's testimony with regard to the market value of the land after the injury. See Rule 11-401. Where an expert has testified that the land was rendered valueless, for example, a defendant's contrary evidence that the cost of repair would be minimal would be quite relevant in that it would make the expert's estimation of value less probable. On the other hand, a plaintiff's evidence that the cost of repair would indeed be sizable or even comparable to the original value of the property would buttress the expert's testimony that the land was valueless after the injury. {16} Likewise, evidence of the cost of repair is relevant in those cases where it would be natural for a surface estate owner to use it as a proxy or a means to gauge the diminution in value of the property. In many cases, the cost of repair bears on the diminution in value because it informs the diminution in value. See 22 Am.Jur.2d Damages § 256 (2008) (The diminution in market value of a piece of real estate is often measured by the cost of repairing the injury . . . or the depreciation of market value may be indicated by the cost of repair.). The cost of repair and the diminution in value of real property are closely related concepts. For example, when a potential homebuyer discovers that the prospective purchase needs a repair at a cost of five thousand dollars, the homebuyer will likely perceive the value of the property to be reduced by the cost of repair and offer the seller only the diminished value. {17} Here, Respondents attempted to use evidence that the cost of repair was $1.2 million in order to buttress their claim that, because its pre-injury value was $1.4 million, the land was rendered essentially valueless by the lessee's damage. Respondents thus attempted to use evidence of the cost to repair to substantiate, or make more probable, their claims about the degree of diminution in value. See Rule 11-401. We agree with the Court of Appeals and Respondents that the evidence of the cost to repair was relevant insofar as it had a tendency to make more probable the Respondents' claim that their land was rendered valueless by the lessee's damage, a fact of consequence to the determination of the action. Id.; see McNeill, 2007-NMCA-024, ¶ 29, 141 N.M. 212, 153 P.3d 46. Carter Farms adopted a framework for measuring damages; it is not authority for what evidence is relevant in assessing those damages. We conclude that evidence of the cost to repair may be relevant in analyzing the diminution in value and we affirm the Court of Appeals in so holding. {18} Petitioner argues that the Court of Appeals' decision restricts the gatekeeper function of the trial court when it comes to admitting evidence. Our decision to uphold the Court of Appeals does nothing to impinge on the discretion of the trial court: holding that evidence of the cost to repair may be relevant to a diminution in value theory does not tie the hands of the trial court. We reject any reading of the Court of Appeals' opinion or of our opinion today that would mandate any brightline rule with regard to relevancy of evidence. Rather, questions of evidence are to be decided on a case-by-case basis. Ohlson v. Kent Nowlin Constr. Co., 99 N.M. 539, 542, 660 P.2d 1021, 1024 (Ct.App.1983). We merely hold that the cost of repair shall not be excluded when relevant simply by virtue of the Carter Farms framework. {19} Neither does our decision implicate any of our case law governing the reliability of expert testimony. See, e.g., Lee v. Martinez, 2004-NMSC-027, ¶ 18, 136 N.M. 166, 96 P.3d 291 ([U]nder the Rules the trial judge must ensure that any and all scientific testimony or evidence admitted is not only relevant, but reliable. (alternation in original) (quoted authority omitted)). Both Petitioner and Amicus, the New Mexico Oil and Gas Association, contend that the Court of Appeals' opinion relaxes the standards for scientific and technical expertise required for expert testimony. But Petitioner and Amicus err in their interpretation of the Court of Appeals' opinion. Neither the Court of Appeals nor this Court express any opinion with regard to the qualification of the particular experts proffered by Respondents; that issue is not before us. In holding that testimony regarding the cost of repair may be relevant in a diminution analysis, we simply do not touch issues of expert qualification.