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United States v. Additional Rights With Respect to A Preexisting Easement and Right-of-Way Over Land In Montgomery County

United States District Court, M.D. Tennessee, Nashville Division

November 12, 2019

UNITED STATES OF AMERICA upon the relation and for the use of the TENNESSEE VALLEY AUTHORITY, Plaintiff,
v.
ADDITIONAL RIGHTS WITH RESPECT TO A PREEXISTING EASEMENT AND RIGHT-OF-WAY OVER LAND IN MONTGOMERY COUNTY, TENNESSEE, and LORRAINE M. NEARY, LORRAINE E. NEARY, ALTRA FEDERAL CREDIT UNION, JIM EDWARDS, Trustee, Defendants.

          MEMORANDUM AND ORDER

          ALETA A. TRAUGER UNITED STATES DISTRICT JUDGE.

         Before the court is the Motion to Exclude Opinion Testimony of Defendants' Retained Expert Russell E. Parrish (Doc. No. 35), filed by the plaintiff, the United States of America upon the relation and for the use of the Tennessee Valley Authority (“TVA”). For the reasons stated below, the motion will be granted.

         I. BACKGROUND

         TVA initiated this action on October 19, 2018, for the purposes of asserting additional rights over an already existing easement and determining just compensation for the property to be taken, in accordance with Rule 71.1(h) of the Federal Rules of Civil Procedure. (Complaint, Doc. No. 1.)

         TVA acquired a 100-foot-wide permanent easement and right-of-way over farmland in Montgomery County in 1941 (the “1941 Easement”), that bestowed upon TVA the “perpetual right to enter and to erect, maintain, repair, rebuild, operate, and patrol one electric power transmission line, including the right to erect such poles and other transmission line structures, wires, cables, and any necessary appurtances.” (1941 Easement, Doc. No. 36-1.) According to TVA, it subsequently built a 69-kV high voltage transmission line within the right-of-way established by the 1941 Easement. In 1966, the farmland encumbered by the easement was subdivided into residential lots. (Doc. No. 36, at 2-3.) One of the lots (the “Subject Property”), identified by the Assessor of Property for Montgomery County, Tennessee as Montgomery County Tax Map 065I, Parcel A 010.00, is the subject of this condemnation action. (Am. Stips., Doc. No. 24 ¶ 2.) The Subject Property contains 3.03 acres, of which a 0.36-acre portion is encumbered by the 1941 Easement. (Id. ¶ 1, 3.) The 0.36-acre easement area on the Subject Property is identified in TVA land records as SPC-92F (hereinafter, the “SPC-92F right-of-way”). (Id. ¶ 3.)

         A single-family home was built on the Subject Property in 1987. (Doc. No. 36, at 3.) An aerial view of the Subject Property shows that the area has become a residential neighborhood, with other houses on similarly large lots adjacent to and across from the Subject Property. (See Doc. No. 34-6, at 6.) The Stipulated Survey of the Subject Property shows that the southwest corner of the house is within ten feet of TVA's right-of-way and less than seventy-five feet from an existing transmission structure built within the right-of-way. (Doc. No. 29-2.) Lorraine M. Neary and Lorraine E. Neary (the “defendants” or “the Nearys”) purchased the Subject Property, subject to the SPC-92F right-of-way, in 2013. (Doc. No. 34-6, at 12 (citing Deed Volume 1523, Page 508, Register's Office for Montgomery County, Tennessee, July 22, 2013).)

         According to TVA's theory of the case set forth in the Initial Case Management Order, TVA announced a plan to make improvements to its existing transmission system in Montgomery County, Tennessee, by upgrading seven miles of the existing 100-foot right-of-way and the existing 69-kV transmission line built within that right-of-way by: (1) retiring and replacing outdated existing transmission line structures; (2) retiring the existing 69-kV transmission line and replacing it with a new, upgraded 69-kV line; (3) building a new 161-kV transmission line; and (4) building new communications circuits. (See Doc. No. 21, at 2.) The SPC-92F right-of-way over the Subject Property is within the area subject to these upgrades.[1]

         TVA filed this action on October 19, 2018 (the “date of taking”) to acquire additional property rights within the existing right-of-way (the “2018 Taking”). It describes the additional rights taken as follows:

A permanent easement and right-of-way, consisting of the perpetual right to enter at any time and from time to time the present right-of-way and to erect, maintain, repair, rebuild, operate, and patrol lines of transmission line structures with wires and cables for electric power circuits and communication circuits, and all necessary appurtenances, including guy wires, in, on, over, and across said right-of-way, together with the perpetual right to clear said right-of-way and keep the same clear of structures (including but not limited to flagpoles, solar panels, buildings, signboards, billboards), trees, brush, stored personal property, and fire hazards, to destroy or otherwise dispose of such trees and brush; to prevent the drilling or sinking of wells within the right-of-way; and to remove, destroy, or otherwise dispose of any trees located beyond the limits of said right-of-way which in falling could come within five feet of any transmission line structure or conductor located thereon, the Tennessee Valley Authority to remain liable for any direct physical damage to the land and annual growing crops resulting directly from the operations of the construction and maintenance forces of its agents and employees in the erection and maintenance of or in exercising a right of ingress and egress to said transmission line structures, all upon, under, over, and across the described land[.]
The foregoing easement rights are acquired except insofar as those rights or any part thereof are already owned by Plaintiff, which heretofore acquired and now owns a preexisting permanent easement and right-of-way for electric power transmission purposes over said land totaling 0.36 acre, more or less, by virtue of a grant of transmission line easement (Tract SPC-92) recorded in Deed Book 87, page 255, in the office of the Register of Montgomery County, Tennessee.

(Decl. of Taking and Attach. 1, Doc. Nos. 2, 2-1.)

         Prior to the 2018 Taking, one part of the outdated transmission line structure being replaced (“old structure”) was situated within the SPC-92F right-of-way. (TVA Ans. to Interrog. 7, Doc. No. 36-2, at 3; see also 29-2, at 1.) The old structure was “a standard wooden H-framed structure, 55 feet tall (48 feet above ground), made of two vertical poles, 8-15 inches in diameter, with a 26 foot crossarm.” (Doc. No. 36-2, at 3.) The old structure supported one 69-kV electrical transmission line circuit and attachments. (Id.) One of the old structure's two vertical poles and one part of the cross arm were physically located within the SPC-92F right-of-way. (Id.) Besides the 69-kV transmission line, the vertical pole within the SPC-92F right-of-way supported a lightning protection shield wire (ground wire). (Id.)

         The configuration of the replacement structure (“new structure”) and its location within the SPC-92F right-of-way are depicted on the Stipulated Survey. (Doc. No. 29-2, at 2.) As described by TVA,

[t]he new structure is a steel, double-circuit, H-framed structure, made of two vertical poles, 120 feet tall (106 feet above ground) and 14.25-28 inches in diameter, with four, 28 foot crossarms. Only a portion of the new structure is situated on the Subject Property, and includes one vertical pole that supports one 69kV circuit (3-phase), one OPGW, [2] and portions of the four vertical crossarms. The remaining portion of the new structure is not located on the Subject Property; rather, it is located within Plaintiff's right-of-way on an adjacent property and consists of one vertical pole that supports one 161kV (3-phase) circuit, one OPGW, and the remaining portions of the four crossarms.

(TVA Ans. to Interrog. 8, Doc. No. 36-2, at 4; see also 29-2, at 2.)

         The sole issue to be resolved by this court is the amount of compensation owed by TVA to the Nearys for the property rights acquired by TVA in the 2018 Taking, over and above those already acquired in 1941. (See Doc. No. 21, at 4.) In an effort to establish the value of the additional property rights taken within the pre-existing SPC-92F right-of-way, the Nearys retained Russell E. Parrish, a licensed Tennessee appraiser, to offer opinions relating to the Subject Property's value before and after the taking of the additional rights. (See Appraisal Report of: Property Belonging to Lorraine M. Neary & Lorraine E. Neary, Map 064I, Group A, Parcel 010.00313 Fairway Drive Clarksville, Tennessee 37034 (July 17, 2019) (“Report” or “Parrish Report”), Doc. No. 34-6.)

         In his report, Parrish recognizes that the purpose of his appraisal is to (1) estimate the market value of the Subject Property as a whole as of the date of taking; (2) “estimate the value of that portion of the subject being acquired by [TVA] by Right of Eminent Domain”; and (3) “estimate damages, if any, to the remainder” of the Subject Property, and, based on these figures, “aid the [Nearys] in negotiating a fair price for the property acquired” by TVA. (Doc. No. 34-6, at 8.)

         Regarding the first objective, Parrish concludes that the overall value of the Subject Property, “As-Is, ” before the 2018 Taking, was $266, 500. (Id. at 10, 5.) To reach that valuation, he determines that the unencumbered value of the unimproved land on which the Nearys' house is located-that is, its value assuming the presence of no house and no easement-would be $30, 000 per acre, multiplied by 3.02 acres, or $90, 600, based on a sales comparison with several specific similar-but unimproved and unencumbered-properties. He calculates this to be equivalent to $0.69 per square foot. (Doc. No. 34-6, at 98.) To account for the pre-existing SPC-92F right-of-way, he then assumes, without explanation, that the value of that portion of the land covered by the right-of-way (0.36 acre) would be reduced by 90% (or $9, 738.27) and, again without explanation, that the overall value of the remainder of the land-that portion not covered by the easement-would be reduced by 25% ($19, 987.51), yielding a rounded value of the land alone, as of the Date of Taking, of $61, 000. (Id.) The important part of that calculation, for purposes of his additional calculations, is that the damages to the land covered by the SPC-92F right-of-way resulting from the 1941 Easement was $9, 738.27.

         He then purports to perform a sales comparison approach to determine the improved value of the Subject Property-again as unencumbered by the SPC-92F right-of-way. To do this, he compared the Subject Property to four specific comparable, but unencumbered, properties and analyzed their sale prices. Based on this comparison, he determined, hypothetically, that the improved but unencumbered value of the Subject Property would be $365, 000. (Doc. No. 34-6, at 107.) To determine the value of the Subject Property as of the date of taking and “as is, ” that is, as actually encumbered by the SPC-92F right-of-way, Parrish deducts from the $365, 000 the amount of the damages to that portion of the property subject to the SPC-92F right-of-way, or $9, 738.27 (90 percent of the unencumbered value of the 0.36-acre portion of the land covered by the easement), to reach an adjusted value of $355, 261.73. From there, he decides that the existence of the right-of-way diminished the value of the remainder by 25 percent, or $88, 815.43 ($355, 261.73 x 25%), but without any explanation for his selection of 25 percent as the appropriate figure. Subtracting that $88, 815.43 from $355, 261.73, Parrish concludes that the total as-is value of the improved property on the date of taking was $266, 446.30, which he rounded to $266, 500. (Id. at 107.)

         Although, as indicated above, Parrish apparently recognized that he was called upon, next, to estimate both the value of the rights being acquired by TVA and the damages to the remainder of the Subject Property, Parrish skipped directly to the question of the damages to the remainder. With regard to this question, his Report states as follows:

MEASUREMENT OF DAMAGES
TVA has acknowledged buffer areas of 300' for occupied buildings and 1, 200 for schools. The purpose of these buffers is to reduce the potential land use conflicts with trees, outbuildings, and ancillary facilities and potential visual impacts as well as exposures to Electric and Magnetic Fields (EMF).
With the existence of a pre-existing easement, I have determined that the damages to the remainder at are [sic] 25% due to 300' buffer of the entire tract, excluding .10 acre that is over 300', outside of the easement area.
0.10 x 43, 560 [square feet] = 4, 356.00 [square feet]
4, 356 [square feet] x $0.69 = $3, 005.64
$266, 500.000 - $3, 005.64 = $263, 494.36
$263, 494.36 x .25: $65, 873.59

(Doc. No. 34-6, at 108.)

         These conclusions inform his ultimate opinion, expressed as follows:

Value Overall Before take: $ 266, 500.00
Value of Remainder Before Take: $ 266, 500.00

         Damages to the Remainder:

TVA has acknowledged buffer areas of 300' for occupied buildings and 1, 200 for schools. The purpose of these buffers is to reduce the potential land use conflicts with trees, outbuildings, and ancillary facilities and potential visual impacts as well as exposures to Electric and Magnetic Fields (EMF). With the existence of a pre-existing easement, I have determined that the damages to the remainder at are [sic] 25% due to ...

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