The Texas Supreme Court recently reviewed an eminent domain, State v. Central Expressway Sign Associates, where the trial court excluded the state’s expert report on the fair market value of real property because he failed to account for the revenue generated by the use of the property.
Specifically, the State of Texas condemned a 3,950-square foot parcel of land in Dallas owned by Central Expressway Sign Associates (CESA) that was needed to improve a highway interchange. CESA leased the land to Viacom Outdoor, Inc., which in turn managed a billboard on the property. The sign allegedly generated $168,000 a year in advertising revenue.
In a pretrial hearing, the trial court excluded the State’s expert witness on the value of the property because it concluded the expert’s failure to account for billboard advertising revenues in his appraisal made his report unreliable.
On appeal, the Texas Supreme Court found that the expert did not improperly exclude the revenue generated by the billboard from his estimate. The court noted that too many variables impact revenue in addition to actual location, including proper permits, constructing, lighting, and employing personnel to sell advertising space and to place and remove the advertisements. Moreover, the court concluded that because the testimony was directly related to the central issue in the case, the state suffered harm when the trial court excluded its witness. Thus, the court reversed and remanded for a new trial.
The opinion can be found HERE.