Court Opinion

ID: 9761214
Source: CourtListenerOpinion
Date Created: 2023-08-29 01:34:34.908356+00
Date Added: 2024-06-11T07:29:21.056401
License: Public Domain

Justice EID,
concurring in part and dissenting in part.
I agree with the majority that the district court properly denied Condemnees' motion to dismiss and therefore join Part IL.A. of its opinion. I disagree, however, with its conclusion that the trial court did not abuse its discretion in keeping cost of construction evidence from the jury. Maj. op. at 588. In this case, the district court permitted the jury to consider only the comparable sales method of valuation even though "no expert here could find comparable sales of driveway easements...." Story v. Bly, 217 P.3d 872, 881 (Colo.App.2008). We long ago rejected the district court's "single method" approach. See Denver Urban Renewal Auth. v. Berglund-Cherne Co., 193 Colo. 562, 565, 568 P.2d 478, 480 (1977) ("No purpose is served by limiting testimony to one [valuation] approach"). Where comparable sales evidence is limited, as in this case, it is an abuse of discretion to preclude the jury from considering methods of valuation other than the comparable sales method. Accordingly, I dissent from Part ILB. of the majority's opinion.
In this case, Condemnor sought to condemn a driveway easement, and the task of the jury was to place a value on that easement. As the majority points out, we have recognized three methods that may be useful in the valuation of condemned property: the income method, the comparable sales method, and the cost of construction method. Berglund-Cherne, 193 Colo. at 565, 568 P.2d at 480. Because there is no evidence that the driveway had been used as rental property or had generated any income, neither party suggests that the income method is particularly useful in this case. See maj. op. at 582 n. 8. The comparable sales method is not a perfect fit either, in that, as the court of appeals observed, "no expert here could find comparable sales of driveway easements." Story, 217 P.3d at 881. Given the lack of sales data regarding driveway easements, experts for both sides looked to sales of entire parcels of property comparable to the Condemnees' property-both with and without driveway access. Id. at 882; see also maj. op. at 582 n. 8.
But Condemnees also sought to introduce expert testimony regarding what it would cost to construct a driveway, under the theory that such evidence would be relevant to determining the value of a driveway casement. In my view, the district court abused its discretion in excluding the proffered cost of construction evidence and limiting the jury's consideration of evidence to comparable parcel sales.
First, over thirty years ago we expressly rejected the district court's "single method" approach to valuation:
No purpose is served by limiting testimony to one approach or to the most appropriate method of attaining an opinion as to value. Recognition should be given to all relevant factors which tend to provide a means for arriving at a fair evaluation. The trier of *539fact has the duty to weigh the opinion and judge the credibility of an expert witness on value to determine which of the three approaches is most indicative of the actual market value of the property to be condemned. ‘
Berglund-Cherne, 193 Colo. at 566-67, 568 P.2d at 481 (emphasis added). Cf. Paliszi v. City of Brighton, 228 P.8d 957, 962 (Colo.2010) ("The admissibility of evidence for property valuation is expansive, rather than restrictive."). In addition, the utility of the particular "single method" adopted by the district court (that is, the comparable sales approach) was limited in this case due to the fact that there were no comparable sales for what was actually being valued (that is, the driveway easement). In such an instance, "when a lack of market [data] limits the usefulness of the sales comparison approach," "[the cost approach is particularly important." Appraisal Institute, The Appraisal of Real Estate 382 (13th ed. 2008). See also id. ("[the cost approach may be used to develop an opinion of market value . and is frequently applied to ... properties that are not frequently exchanged in the market...."); ASARCO, Inc. v. Bd. of County Commissioners of Lake County, 916 P.2d 550, 553 (Colo.App.1995) (the cost method should be employed when "the market and income approaches to valuation are inapplicable or do not produce" meaningful results).
The majority acknowledges that the "trial court should have admitted the cost of construction valuation evidence." Maj. op. at 537. But it then goes on to find that there was no abuse of discretion because "[wle cannot say with fair assurance that the trial court's error substantially influenced the jury's determination of easement value or impaired the basic fairness of the trial." Maj. op. at 588. The majority's reasoning seems to be that, while the trial court erred, its error was harmless because there is only a "tenuous link between the cost of constructing an improvement and the market value of a non-exclusive easement to use that existing improvement." Maj. op. at 537.
Significantly, the majority provides no explanation for its conclusion that the "link" between the cost of construction and the market value is "tenuous" in this case. Indeed, its conclusion is contrary to our longstanding recognition of the cost of construe tion valuation method, which establishes that there is such a connection. To put it simply, any market, the value of a [structure] can be related to its cost." The Appraisal of Real Estate at 882. Here, it was for the jury to determine the relationship between cost and value in valuing the driveway easement.1
The majority also states that when "the improvement is decades old, the cost of construction approach should only be used 'given adequate data to measure depreciation." Id. at 587 (citing The Appraisal of Real Estate at 382). While the driveway may be "decades old," there is no reason that depreciation could not have been factored into the cost of construction. The majority points out that Condemnees' expert did not consider depreciation in arriving at a value, maj. op. at 537 but that is an issue for Condemnor (and Condemnor's expert) to raise, not a justification for total exclusion of the cost of construction evidence.
Ultimately, the determination of value is a question best left to the jury. Here, the jury was permitted to consider only the comparable sales method when comparable sales data was unavailable, and was prevented from hearing cost of construction evidence that would have given a more complete picture of value. In my view, it is by no means clear that the jury would have arrived at the same value had it been allowed to hear the cost of construction evidence.
*540Finally, I note that the majority's opinion has implications beyond the valuation of a single driveway easement in an isolated mountain property. Every day appraisers are asked to set values for property interests that are infrequently bought and sold on the market. Consequently, market data to use in the evaluation process is lacking. It is precisely in these sorts of cases that the construction evidence is most useful. Because the jury in this case was precluded from considering such evidence, I respectfully dissent from Part ILB. of the majority's opinion.
I am authorized to say that Justice RICE joins in this opinion concurring in part and dissenting in part.

. The district court excluded the cost of construction evidence due to its concern that the cost of an improvement does not necessarily translate into value. See Transcript at 213 ("I don't get how you think the improvement of the road ... is something that would go into the value.... I can redo my whole kitchen and it would only increase a certain amount according to what the other houses in the areas were sold for"). It is not necessary, however, for there to be a one-to-one correlation between cost and value before the cost of construction method may be used. Instead, it is the jury's task (with the assistance of expert testimony) to determine what the relationship between cost and value might be in any particular case.