Opinion ID: 2362129
Heading Depth: 1
Heading Rank: 4

Heading: Calculation Of Lost Rentals

Text: The calculation of lost rentals came from the testimony of two expertsE.L. Dieudonne, Jr., a real estate appraiser, and Thomas Borzilleri, an economist and economic consultant. Dieudonne gave two opinions. One was of the fair market value of the Montauk Avenue property as of June 30, 1989 and June 30, 1990; that opinion related to the value of the renovations made to the home by Antoinette. The other opinion was of the fair rental value of the home from 1976 to 1996. In that determination, Dieudonne relied on what he regarded as a comparable rental of $350/month in 1976, a comparable rental of $1,200/month in 1996-97, a stated rate in 1978 of $450/month, a figure of $650/ month that Antoinette used in her application for the 1985 mortgage loan, rents charged for what he regarded as comparable homes at various times between 1976 and 1996, and the percentage increase in assessed value of the property between 1976 and 1995, which averaged, on a straight-line basis, 9%/year. Though recognizing that actual rentals would rise at different rates and remain at different levels over time, he opined that the most acceptable and most indicative method of determining annual rental values over the 20-year period was to assume a constant, straight-line percentage increase from the $350 in 1976 to the $1,200 in 1996. He determined that constant percentage increase to be 6%/year, which he regarded as conservative. Dr. Borzilleri accepted Mr. Dieudonne's conclusion. From the gross annual rental values thus determined, he deducted payments on the mortgage that was on the property from 1976 through 1983, property taxes, an 8% management fee, and 15% for maintenance and repairs, and listed the net rental value for each year. The aggregate of those net amounts, for the 20-year period, was $83,916. As noted, he then calculated the return that would have been received by Robert on each of the net annual amounts had they been promptly invested, 40% in stocks and 60% in bonds. That is what led to the figure of $312,170. In this part of the opinion, we are concerned with the $83,916. Though cradled in an extensive discussion of Frye v. United States, 293 F. 1013 (D.C.Cir.1923), Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), and Kumho Tire Co. Ltd. v. Carmichael, 526 U.S. 137, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999), none of which are particularly relevant here, Antoinette's complaint is essentially that the calculations by Mr. Dieudonne and Dr. Borzilleri are unsupported, unreliable, and inaccurate. She asserts that the beginning and ending figures of $350 and $1,200 were rents charged for other properties and that the straight-line approach used by the experts did not comport with economic reality. The standard for admissibility of expert testimony in Maryland is set forth in Maryland Rule 5-702. Expert testimony is admissible if the court determines that the testimony will assist the trier of fact to understand the evidence or determine a fact in issue. In making that determination, the court must determine (1) whether the witness is qualified as an expert by knowledge, skill, experience, training or education, (2) the appropriateness of the expert testimony on the particular subject, and (3) whether a sufficient factual basis exists to support the expert testimony. In In re Adoption/Guardianship No. CCJ14746, 360 Md. 634, 647, 759 A.2d 755, 762 (2000), we confirmed that [i]t is within the sound discretion of the trial judge to determine the admissibility of expert testimony and that [t]he trial court's action in the area of admission of expert testimony seldom provides a basis for reversal. We find no such basis in this case. Both experts demonstrated their ample qualifications, by training and experience, to render the opinions as to annual rental value; both described the basis for their assumptions and calculations and agreed that a straight-line approach was an acceptable method of determining annual rental values over such a long period. That kind of opinion testimony could, indeed, be helpful to the trier of fact in determining damages. Through cross-examination, Antoinette was able to bring before the court challenges to some of the assumptions that rentals remained relatively flat for a period of time and then rose sharplybut the court was free, within its discretion, to accept the straight-line approach as an appropriate method of approximating a return that could not be precisely calculated because the house was not, in fact, rented. As we said in Maryland Nat'l Bank v. Cummins, 322 Md. 570, 591, 588 A.2d 1205, 1215 (1991), [a]n equity court may afford a remedy by approximation, particularly where the defendant's conduct makes precision impossible. [4]