Opinion ID: 1754285
Heading Depth: 1
Heading Rank: 1

Heading: valuation of destroyed nursery stock

Text: The basic position of the respondents in this case, which was permitted by the trial court and accepted by the jury, is that they were entitled to receive the market value of the nursery stock destroyed, not as such stock existed at the time of destruction, but as it would have been at the time the nurseries would have expected to sell it had it not been destroyed. The respondents contend that this approach to valuing property, which can generally be described as a prospective net revenue approach, is appropriate when the property consists of a growing crop and no market exists for the crop on the date of destruction either because it is immature or because the market has been suspended by the Department's quarantine. The respondents generally base their analysis upon the next true market which existed after the quarantine was lifted, which was in April 1985. As summarized by the district court: If the nursery owners' product had not been destroyed in October 1984, it would have continued to grow during the quarantine. Thus, they theorize that the seedlings and liners could have been sold as budded trees between April 1985 and April 1986. Additionally, the nursery growers hypothetically transplanted some of their trees from four-inch containers to six-inch, or three-gallon containers to receive longer shelf life and a higher price. Id. at 1247. The Department contends that the nursery owners are not entitled to measure loss as of the date of the reopened market. At trial, the Department argued that if no market existed at the time of taking, the applicable fair market values for the various types of property are those closest in time without distortion, which in this case were the August 1984 prequarantine prices. The Department also argues that with respect to nursery stock for which there was a market at the time of destruction, the jury must determine a value for that type of stock, rather than hypothetically valuing as if the stock continued to grow during the quarantine period. As to stock for which no market existed on the date of taking or August 1984, the Department contends that the nurseries should receive the fair market value expected on the date of taking for the product into which such unmarketable nursery stock would have grown at the first date it could have been sold. The Department correctly notes that the just and full compensation due to one whose property has been taken is generally the fair market value of the property at the time of the taking. See First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304, 107 S.Ct. 2378, 96 L.Ed.2d 250 (1987). This Court has previously recognized, however, that fair market value, although important, is not an exclusive standard. Rather, it is merely a tool to assist in determining what is full or just compensation. Jacksonville Expressway Auth. v. Henry G. Du Pree Co., 108 So.2d 289 (Fla. 1958). As this Court stated in Dade County v. General Waterworks Corp., 267 So.2d 633, 639 (Fla. 1972), [t]he conclusion to be drawn is simply that the proper valuation method or methods for any given case are inextricably bound up with the particular circumstances of the case. In the present case, we perceive that there are two possible classifications of the destroyed nursery stock for purposes of valuation. The first is nursery stock which is intrinsically unmarketable; in other words, stock that is at a growth stage for which there is no market due to immaturity. The second would encompass all nursery stock not included in the first class. It is presumed that if stock at a particular growth stage does not fall into the first class, it would be at a stage for which there is a market. We first address permissible methods for determining just compensation for nursery stock which was not marketable at the time of taking due to immaturity. In Department of Agriculture & Consumer Services v. Polk, 568 So.2d 35 (Fla. 1990), which also involved the issue of compensation for destroyed citrus nursery stock, we considered the question of what valuation method or methods may properly be considered by the jury in determining full compensation when the property taken is an immature growing crop for which there is no market at the time of destruction. As we noted in Polk: In Lee County v. T & H Associates, 395 So.2d 557 (Fla. 2d DCA 1981), the Second District Court of Appeal held that the trial court did not err in allowing evidence on the prospective net revenue of a watermelon crop located on a parcel of condemned land when the crop was only partially developed at the time of taking so that there was no market. We agree with the court in Lee County that when there is no market at the time of the taking due to the crops' partial state of development, it is necessary to consider other evidence bearing on value. We also conclude that the prospective net revenue which could have been derived from the crop at maturity is a proper measure of valuation. At 42. The stock of the nurseries in the case at bar was grown in greenhouses, whereas Polk Nursery was a field nursery which purchased seedlings from outside sources and planted them in the field where the budwood was grafted onto the liner after approximately five to six months. There was testimony in Polk that there was no market for these types of nursery stock, grown in the field, until the liners matured. Thus, we concluded that the prospective net revenue which could have been derived from the crop at maturity is a proper measure of valuation. In the present case, conflicting testimony was presented with respect to the stages at which nursery stock grown in greenhouses is marketable. Thus, the prospective net revenue which could have been derived from the crop at the earliest hypothetical marketable stage attainable subsequent to the taking is a proper measure of valuation for presentation to the jury. A determination of whether a market does or does not exist for citrus nursery stock at any particular stage of growth is a question of fact to be decided by the jury after presentation of evidence directed to the issue by the parties. In contrast to Polk, the case at bar presents the additional circumstance of absence of a market on the date of taking due to the existence of the quarantine. The respondents contend that because they could not actually sell any of their stock on the date of taking due to the quarantine, postquarantine values should be awarded on the basis that the nursery stock hypothetically continued to grow through the entire term of the quarantine so that all of the destroyed nursery stock, regardless of marketability absent the quarantine, would be valued as mature budded trees. We reject the respondents' argument that the existence of the quarantine permits this approach to valuation. The prospective net revenue approach to valuing growing crops, set forth in Lee County v. T & H Associates, 395 So.2d 557 (Fla. 2d DCA 1981), and adopted by this Court in Polk, was determined to be a proper measure of compensation when there is no market for the growing crop on the date of taking due to the fact that the crop is immature. Although there may be conditions other than immaturity which would render such a method of valuation applicable, we conclude that the existence of the quarantine in the case at bar is not such a condition. As noted by the Third Circuit Court of Appeals: The basis of compensation is the value of the unmatured crop at the time it is destroyed. But since it is not customary to buy or sell growing crops as such, no effective market value, in this sense, ordinarily exists. The formula adopted has been to take evidence on the probable yield and value of the crop when harvested at maturity and the cost of further care and cultivation, harvesting and marketing the crop, in order to determine the actual realizable value of the crop when destroyed; or what the crop when harvested would have brought, less the prospective cost of cultivation, harvesting and marketing. In allowing such evidence, many decisions state that the market value of the yield to be considered is the market value when, at the time or at maturity or harvesting and gathering of the crop. This limitation is a reasonable one, for, it must be remembered, the general rule is that the measure of damages is the value of the crops at the time of injury or destruction. Since as a practical matter that value cannot be actually determined, the nearest time thereafter when a market value can be placed upon the crops is considered. United States v. 576.734 Acres of Land, 143 F.2d 408, 409-10 (3d Cir.) (footnotes omitted; emphasis added), cert. denied, 323 U.S. 716, 65 S.Ct. 43, 89 L.Ed. 576 (1944). Because the goal is to value the immature stock at the time it was destroyed, the earliest point subsequent to destruction at which the stock would have been marketable is a reasonable limitation. It is unnecessary to hypothetically grow the stock throughout the entirety of the quarantine to full maturity when a particular crop or type of stock has more than one marketable stage. [1] The effect of the quarantine upon valuation of the nursery stock is minimal. If the quarantine were still in effect at the point in time at which the destroyed immature stock would have first reached a marketable stage of growth, then postquarantine values for nursery stock at the hypothetical marketable stage of growth may be introduced. Prequarantine values may also be introduced. It was error to permit introduction of evidence by respondents as to the hypothetical stages of growth the destroyed nursery stock would have attained upon termination of the quarantine, based solely upon the existence of the quarantine. The error was compounded in the present case by allowing respondents to contend that many of the plants would be retained even past the lifting of the quarantine and transferred into larger pots in order to obtain a longer shelf life and a higher price. [2] As to nursery stock which was at a marketable stage of growth on the date of destruction, the only factor hindering valuation was the existence of the quarantine on that date. Because nursery stock could generally not be sold in Florida on the date of the taking at issue, there were no market prices on that date for presentation to the jury. The effect of the quarantine is to entitle a party to argue, and the jury to accept if it so chooses, that the proper value to place on the marketable stock destroyed is the price at which similar stock sells when the quarantine is lifted. The other party or parties will likewise remain free to argue that prequarantine prices reflect the proper value. [3] Accordingly, in answer to the first certified question, we hold that if there is no market on the date of taking for the type or stage of stock destroyed due to immaturity, the nursery owner may introduce evidence of the prospective net revenue to be derived from that stock at the point closest in time to the taking when the stock would have reached a stage of maturity. If the quarantine is still in effect at this point in time, postquarantine values of nursery stock at the hypothetically reached marketable stage may be introduced. As to nursery stock which was marketable on the date of destruction but for the quarantine, values as of the date of the reopened market are admissible to value such stock at its particular stage of growth at the time of destruction. The Department asserts that if the prospective net revenue approach of determining full compensation is used, all expenses which would have been necessary to continue the cultivation and marketing of the crop after its destruction must be deducted to determine what the probable net yield would have been. The Department contends that the respondents' expert did not subtract all appropriate costs. As summarized by the district court below: The grove owners wish to deduct only those expenses which were actually saved following the taking. The Department argues that the unavoidable fixed expenses such as mortgage payments, taxes, and essential labor, should also be deducted. Mid-Florida Growers, 541 So.2d at 1250. We agree with the district court's analysis. Since both nursery owners actually incur the fixed expenses, the Department's theory effectively deducts fixed expenses twice from [the respondents'] gross revenues. ... . The Department was free to question the grove owners' analysis in the lower court. Whether the grove owners deducted each and every avoidable expense in their analysis is subject to dispute. That dispute, however, goes to the weight of the evidence and the credibility of the plaintiffs' expert. It was a matter properly resolved by the jury. Id. We also reject the Department's argument that if the future market is relevant, either through the prospective net revenue approach or through introducing postquarantine values for destroyed marketable stock, it is relevant only as it was expected to be at the time of taking. Because of freezes which occurred in December 1983 and January 1985, demand for young trees had increased. Due to this increased demand, trees in four-inch containers which would have sold for $3.50 in August 1984, sold for approximately $4.50 in April 1985. We agree with the district court that postquarantine values are admissible in the present case. As recognized by the Second District Court of Appeal in Lee County: Theoretically, the value of the property at the time of the taking ought to reflect both the promise and the risk inherent in the growing of the crops based upon past experience rather than events which have not yet occurred. But the recitation of what actually happened in the market and of the weather conditions which actually prevailed is in this instance the best possible evidence available. It removes from doubt any speculation over what the market might be, and it takes into consideration whether the crop would have survived the balance of the winter. If a devastating freeze had occurred shortly after the taking, the county ought to have been permitted to demonstrate that the crop would have been wiped out anyway. By the same token why shouldn't Biggar and Kelly be allowed to show that, in fact, their crop would have survived? Court disputes should be decided upon the most reliable evidence available. Therefore, it was proper to permit evidence of the economic and weather conditions which actually prevailed subsequent to the taking. 395 So.2d at 561. In the case at bar, we conclude that the postquarantine prices, which reflect an increased price due to freeze or other subsequently occurring conditions, are admissible. In this respect, we are in accord with the analysis of the district court below: A jury would need to engage in greater speculation to determine an October price based upon evidence of postquarantine market prices than to simply award compensation based upon postquarantine values. The Department of course remains free to introduce evidence which may well convince the jury that the value of the destroyed stock was lower than the prevailing postquarantine prices which reflected the effects of the freeze. Finally, the Department raises a challenge to the jury instructions in conjunction with the above issues. The trial court instructed the jury, in relevant part, as follows: You should determine full compensation of the Plaintiffs' destroyed nursery stock as of October 7, 1984, which is considered the date of taking. However, as further explained below, you need not determine market value as of this specific date if you find that the market for such nursery stock was non-existent or if the Plaintiffs would normally be expected to market their stock at a later time, in which events you may determine the market price at the time they reasonably planned to market or would have been able to market their stock. ... . In determining the value of Plaintiffs' immature citrus nursery stock intended to be sold or used for commercial purposes, you may consider the value of such stock assuming it were brought to maturity and then sold. That is, you may consider the market value which Plaintiffs' immature seedlings and liners or young budded trees would have had as mature budded trees if they had not been destroyed. Alternatively, if you find that in spite of the destruction any of the immature stock referred to in this case had a market value at the time of destruction, then you may consider that value in determining full compensation. We agree with the Department that the portion of the trial court's charge which stated that if the respondents would normally be expected to market their stock at a later time, the jury could determine the market price at the time they reasonably planned to market their stock, is erroneous. At trial, in response to the Department's evidence that a market did exist for greenhouse seedlings, respondents testified that although a market for greenhouse seedlings did exist, they personally did not engage in such market and the seedlings destroyed should therefore not be valued as seedlings, but as mature budded trees. This testimony should not have been admitted. In a condemnation proceeding, the subjective plans or intentions of the person whose property is taken are irrelevant; it is, in effect, a forced sale. Valuation is generally based upon fair market value of the property taken, which is commonly defined as what a willing buyer would pay a willing seller, on the date of taking. If the property taken had consisted of real property, respondents would not have been able to contend and receive compensation on the basis that they had not intended to sell the property until a later date when its value was expected to increase. If the property taken had consisted of a personal residence, the owner would not have been permitted to argue and receive compensation on the basis that he had not intended to sell until he had renovated and made additions. That respondents did not generally market their product at any stage of growth other than mature budded trees, even though a market may exist for nursery stock at earlier stages of growth, is irrelevant. The person whose property is condemned may very well not be in the business of selling the type of property which was condemned.