No. 02-187
IN THE SUPREME COURT OF THE STATE OF MONTANA
2004 MT 60
MONTANA DEPARTMENT OF TRANSPORTATION,
Plaintiff and Respondent,
v.
GREGORY T. SIMONSON and MONICA A. SIMONSON,
Husband and Wife,
Defendants and Appellants.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and for the County of Flathead, Cause No. DV 99-322B
The Honorable Katherine R. Curtis, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Peter W. LaPanne, LaPanne Law Firm, Missoula, Montana; M. Gene
McLatchy, Attorney at Law, Missoula, Montana
For Respondent:
Timothy W. Reardon & Susan J. Rebeck, Legal Services Unit, Department
of Transportation, Helena, Montana
Submitted on Briefs: October 24, 2002
Decided: March 16, 2004
Filed:
__________________________________________
Clerk
Justice James C. Nelson delivered the Opinion of the Court.
¶1 Gregory and Monica Simonson (the Simonsons) appeal from a judgment and final
order of condemnation and an order denying a motion for a new trial in the Eleventh Judicial
District, Flathead County. We affirm in part and reverse in part.
¶2 We restate the issues on appeal as follows:
¶3 1. Whether the District Court abused its discretion in denying the Simonsons’ motion
to strike the testimony of the DOT’s expert witness.
¶4 2. Whether the District Court abused its discretion in giving certain jury instructions.
¶5 3. Whether the District Court appropriately awarded costs to the DOT.
FACTUAL AND PROCEDURAL BACKGROUND
¶6 U.S. Highway 93 (the Highway) south of Kalispell, was changed from two lanes to
four lanes. The Simonsons own two adjacent tracts of land that fronted the Highway. Their
family home and a log furniture business were built upon the tracts. The Simonsons could
access the Highway from their property when the Highway was two lanes. In converting the
Highway to four lanes, a 1,600 foot frontage road was built in front of the Simonsons’
property, to control the access to the Highway. This required the condemnation of .455 acres
of the Simonsons’ two tracts of land which fronted the Highway. As a result, the Simonsons
no longer had direct access to the Highway, but the Highway could still be accessed from
each end of the frontage road via median crossovers that allowed the Simonsons, their
neighbors, and the public to access the Highway in either the northbound or southbound
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direction. In addition, turning and deceleration lanes were constructed to allow access to the
frontage road.
¶7 Initially, the Montana Department of Transportation (the DOT) attempted to acquire
the .455 acres through a written offer to the Simonsons but the Simonsons rejected the offer.
The State of Montana, acting by and through the DOT, then brought a complaint against the
Simonsons. The DOT alleged that it had broad powers to maintain and protect highway
facilities under the police power and that it had the authority to acquire the Simonsons’
property “by purchase or any other lawful manner” under the power of eminent domain.
¶8 The Simonsons moved to dismiss the complaint and the DOT moved for preliminary
condemnation. The Simonsons then stipulated to the DOT’s necessity in condemning the
.455 acres and after a preliminary order for condemnation was entered, the Simonsons filed
a motion requesting a value commission hearing. Subsequently, a commission was
appointed, met, and published a report determining that the DOT should pay the Simonsons
$23,415 for the land taken and improvements for both tracts and nothing for depreciation in
value to the remainder of the parcels not taken. The Simonsons appealed the Commissioners
assessment and a trial to determine just compensation commenced in September of 2001.
¶9 During the trial, experts for both the Simonsons and the DOT testified as to the value
of the property condemned and the depreciation of the remaining land due to severance. The
Simonsons expert, Bill Gould (Gould), testified that the value of the .455 acres was $27,315.
In addition, Gould determined that the Simonsons’ remaining property had depreciated, due
to severance, in the amount of $47,542 because “in the market, [commercial] property with
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highway frontage tends to have higher values than property that does not have highway
frontage” and due to “the fact that this [property] was set back from the highway by a
frontage road, and that a large portion--half the traffic, which was heading the north
direction, was considerably farther from the subject, . . . there definitely was damage to the
remaining commercial property.”
¶10 The DOT’s expert, Richard Reilly (Reilly), testified that the value of the .455 acres,
plus impact to a sign and a spigot, was $20,550. Reilly further testified that severance
damages were not appropriate. When Reilly was questioned about a procedure known as the
before and after appraisal, Reilly answered that he made an initial “value judgment” that
severing the .455 acres would not result in a depreciation of the Simonson’s remaining
property because “the acquisition . . . did not impact any buildings” and “did not impact any
accesses” and, as such, a before and after appraisal was not necessary.
¶11 After Reilly testified, the Simonsons moved to strike his testimony because Reilly’s
“appraisal [did] not comply with Montana law requirements with respect to the modified
before and after appraisal which is required in a condemnation action.” The District Court
denied this motion stating that the law does not require a before and after appraisal in every
condemnation case. According to the District Court,
the law says if there is going to be damages for diminution in value of the
remainder, then the way to do it is a before and after appraisal.
The [DOT’s] expert testified that in his opinion there was no diminution in
value of the reminder (sic), and I think he’s entitled to state that opinion. If
that opinion is not the result of a before and after appraisal, I think that
argument goes to the weight of the evidence, not the admissibility.
4
After both parties had rested, the District Court and the parties discussed jury instructions.
The parties were unable to agree on some of the instructions so the District Court drew up
instructions on its own (Jury Instructions Nos. 9, 10, and 11) concerning impairment of
access, traffic diversion, and loss of business.
¶12 After the instructions were given, the jury retired and later awarded the Simonsons
$24,764.25 for the value of the .455 acres but did not find any depreciation to the remaining
land and so awarded no damages due to severance. Following the jury verdict, the State
presented a proposed judgment to the District Court reflecting the verdict and awarding to
the DOT costs associated with the appeal. The Simonsons submitted a memo in opposition
to the DOT’s proposed judgment but the District Court entered a judgment and final order
of condemnation which included an award to the DOT for “its costs of the appeal” pursuant
to §70-30-304(3), MCA.
¶13 The Simonsons moved for a new trial due to court errors with regard to Jury
Instruction Nos. 9, 10, and 11, and the District Court’s denial of the Simonsons’ motion to
strike Reilly’s testimony. The motion for a new trial was denied and the Simonsons appeal
from the judgment and final order of condemnation and the order denying the motion for a
new trial.
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STANDARD OF REVIEW
¶14 “‘[F]or error to be the basis for a new trial, it must be so significant as to materially
affect the substantial rights of the complaining party.’” Houdashelt v. Lutes (1997), 282
Mont. 435, 442, 938 P.2d 665, 669 (quoting Zeke’s Distributing v. Brown-Forman (1989),
239 Mont. 272, 278, 779 P.2d 908, 912). In addition, “[w]e have held that issues concerning
the admissibility of evidence are within the discretion of the district court.” Cottrell v.
Burlington Northern R. Co. (1993), 261 Mont. 296, 301, 863 P.2d 381, 384. Further,
because “[a] district court has broad discretion regarding the instructions it gives or refuses
to give to a jury,” we will not overturn a district court’s ruling with regard to jury instructions
absent an abuse of discretion. Harwood v. Glacier Elec. Co-op., Inc. (1997), 285 Mont. 481,
487, 949 P.2d 651, 655.
DISCUSSION
ISSUE ONE
¶15 Whether the District Court abused its discretion in denying the Simonsons’ motion
to strike the testimony of the State’s expert witness.
¶16 According to the Simonsons, Reilly’s opinion was based upon unsupported conjecture
and speculation because he did not appropriately compute just compensation. The
Simonsons maintain that the fair market value of the part taken must be added to the
depreciation in fair market value of the remaining parcel to determine just compensation (a
before and after appraisal) and because Reilly’s opinion did not take into account these latter
“severance damages,” the District Court abused its discretion when it denied the Simonsons’
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motion to strike Reilly’s testimony. The State contends that because the Simonsons failed
to object to the competency and qualification of Reilly, Reilly was therefore qualified as an
expert to state his opinion. The State further maintains that no law prescribes what a proper
appraisal is concerning just compensation so Reilly was not required to compute severance
damages with a before and after appraisal. However, the State maintains that even though
he was not required to do a before and after appraisal, Reilly actually did do a before and
after appraisal because he made an initial determination that severing the .455 acres would
not damage the remainder of the Simonsons’ property.
¶17 It is important to note at the outset that the Simonsons, in relying on § 70-30-
301(3)(c)(i), MCA, to support their argument, quote language from the 2003 statute and not
the 2000 statute. The appropriate version of the statute is the 2000 version, which was in
effect when the value commission hearing was held. Under § 70-30-301(b), MCA (2000),
the Commissioners duty was to determine “if the property sought to be appropriated
constitutes only a part of a larger parcel, the depreciation in current fair market value which
will accrue to the portion not sought to be condemned by reason of its severance from the
portion sought to be condemned.” In addition, we have held that “[j]ust compensation for
a public taking of private land is to be computed as: fair market value of land taken plus
(value of remainder before taking minus value of remainder after taking).” Meagher Cty.
Newlan Creek Water Dist. v. Walter (1976), 169 Mont. 358, 362-63, 547 P.2d 850, 853
(citing State, State Highway Commission v. Emery (1971), 156 Mont. 507, 481 P.2d 686;
Montana State Highway Commission v. Jacobs (1967), 150 Mont. 322, 435 P.2d 274). See
7
also Great Falls v. Temple Baptist Church (1993), 260 Mont. 319, 321-22, 859 P.2d 1015,
1017.
¶18 Here, though the Simonsons contend that Reilly did not look at the value of the
remainder before and after the taking of the .455 acres, the record reflects that Reilly did
consider the possible depreciation to the remainder of the Simonsons’ property. Reilly made
a “value judgment” that there was no depreciation to the remainder because in looking at
photos of the property and what the “property was being used for, how it was being used and
the size of it, the acquisition in front did not impact any buildings, did not impact any
accesses in there, . . .” Reilly’s additional testimony points to other factors he considered.
[O]ne of the things in the value judgment--we had sales that were on frontage
road down at Auction Road that showed for that value of properties, that size.
The 5-acre size in there was the same.
Later on we found one out here, the Penrod sale. Penco Power
Products up here is in an area where property was selling for $3 a square foot,
and they paid $3, and they don’t even--there’s a frontage road in front of their
property. They have no access to the highway.
So what we found in there was that no access to the highway did not
diminish the value of the property whatsoever. Exposure to the highway was
the big thing. If you can see it from the highway and have a reasonable, very
nice access--and this is probably one of the prettiest accesses off of the
highway frontage roads I’ve seen--then people can still get out there, there’s
no problem.
¶19 While “speculative and conjectural evidence cannot be the basis for a determination
of fair market value,” Reilly’s “value judgment,” that there was no depreciation to the
remainder of the Simonsons’ property, was based upon how the property was being used, the
impact on any buildings on the property, no unreasonable impairment of access to the
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remainder, comparable land sales in the area, and the value of comparable land without
highway access. State v. Smith (1962), 141 Mont. 302, 308, 377 P.2d 352, 355; State
Highway Commission v. Antonioli (1965), 145 Mont. 411, 416, 401 P.2d 563, 565-66.
Therefore, we hold that the District Court did not abuse its discretion in denying the
Simonsons’ motion to strike Reilly’s testimony.
ISSUE TWO
¶20 Whether the District Court abused its discretion in giving certain jury instructions.
¶21 The Simonsons argue that Jury Instruction Nos. 9, 10, and 11 incorrectly apply the
facts and the law. They contend that the instructions imply that they were seeking
compensation per se for impairment of access, diversion of traffic, and loss of business.
However, the Simonsons insist that they did not allege or contend that they should be
compensated for impairment of access, diversion of traffic, and loss of business. Rather, the
Simonsons showed, through Gould’s properly conducted modified before and after appraisal,
that because of these aforementioned factors, severance damages occurred when the
remaining property’s commercial value sustained a permanent market value loss.
¶22 The DOT first contends that the Simonsons did not timely object to the jury
instructions. Second, the DOT argues that there was sufficient testimony from which the
jury could have concluded that the Simonsons were claiming compensation per se and so it
was imperative that the District Court instruct the jury that lost income was not to be
compensated. Further, the DOT maintains that the Simonsons failed to introduce evidence
of proof of monetary damages for diversion of traffic so the District Court correctly
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anticipated that the jury might indirectly compensate the Simonsons for business loss due to
reduced commercial visibility and increased distance from the Highway and took reasonable
steps to prevent the jury from compensating the Simonsons for traffic diversion or loss of
business.
¶23 While the record reflects that the Simonsons did not object to Jury Instruction Nos.
9, 10, and 11, it also appears that the District Court did not afford them the opportunity to
do so prior to giving the instructions. Trial courts should provide litigants with the
opportunity to object to jury instructions. Rule 51, M.R.Civ.P. That said, any error here was
harmless as the instructions were correct statements of the law.
Jury Instruction No. 9
¶24 Compensating a party for loss of access is appropriate only when access has been
completely denied or the access provided is unreasonable. State v. Keneally (1963), 142
Mont. 256, 266, 384 P.2d 770, 776. Jury Instruction No. 9 instructed the jury that:
[i]n order to award damages for impairment of access to the remaining land of
the Defendants, you must determine whether there has been a substantial
diminution in access as a direct result of the taking. “Access” means physical
impairment of access, not an impairment of traffic flow. If you find that there
has been a substantial diminution in access as a direct result of the taking, you
must determine the resulting damages, if any.
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There is no indication that the Simonsons have been unreasonably deprived of access to the
Highway from their property. Indeed, Gregory Simonson himself testified that after the
taking of the .455 acres and the completion of the frontage road, he has northbound and
southbound access to the Highway and each access is about a quarter of a mile away to the
north and south of his property. While the Simonsons and their customers cannot turn
directly off the Highway to the property now, there is still access to the Simonsons’ property
from the Highway via turning and deceleration lanes to the frontage road. Therefore, we
hold that the District Court did not abuse its discretion in giving Jury Instruction No. 9.
Jury Instruction Nos. 10 and 11
¶25 In State v. Peterson (1958), 134 Mont. 52, 68, 328 P.2d 617, 626, we stated that
“[t]he highways primarily are for the benefit of the traveling public, and are only incidentally
for the benefit of those who are engaged in business along its way,” and that “compensation
cannot be had for loss of business by relocation of the highway and diversion of traffic.”
Jury instruction Nos. 10 and 11 instructed the jury “that the Defendants are not entitled to
compensation merely because traffic has been diverted as the result of construction on the
highway” and that the jury could “not award any compensation to the Simonsons for any loss
of business resulting from the taking.” When the District Court denied the Simonsons’
motion for a new trial it noted that:
[the Simonsons] were instructed . . . that they would be required at trial to
offer competent evidence of the loss of revenue from their business and the
impact thereof on the fair market value of the remainder of their property.
They failed to offer any such evidence, and the Court concluded and instructed
the jury that compensation for loss of business was not allowable. [Emphasis
11
added.]
We agree with the District Court.
¶26 Gregory Simonson’s testimony concerned only significant improvements the
Simonsons made to the house, improvements on the surrounding property, visibility from the
Highway before the frontage road was constructed, the log business’s customer base, the
storage rental facilities that the Simonsons had constructed on one of the parcels, and loss
of direct access to the Highway after the frontage road’s construction. While Simonson did
testify, that before the highway was constructed the Simonsons had up to five tourist
customers a day but after construction, they had “maybe only four [tourist customers] in the
last three or four months, five months that [they had] sold actual furniture to.” The
Simonsons did not present the court with any additional competent evidence of the log
business’s loss of revenue and the impact thereof on the fair market value of the Simonsons’
remainder. Even Gould’s testimony failed to establish this essential link. Gould’s testimony
based the depreciation to the remainder on: the change in the configuration of the Highway;
the reduced visibility of the property from the northbound lanes of traffic; and a loss of direct
access to the Highway from the property.
¶27 Neither Simonson’s, nor Gould’s testimony, offered competent evidence of the loss
of revenue from the log business “and the impact thereof on the fair market value of the
remainder of their property.” Therefore, we hold that the District Court did not abuse its
discretion in giving Jury Instruction Nos. 10 and 11.
¶28 Further, because we have held that the District Court did not abuse its discretion in
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giving the jury instructions or in denying the Simonsons’ motion to strike Reilly’s testimony,
the District Court did not “materially affect the substantial rights of” the Simonsons and,
therefore, the District Court was correct in denying the Simonsons motion for a new trial.
Houdashelt, 282 Mont. at 442, 938 P.2d at 669.
ISSUE THREE
¶29 Whether the District Court appropriately awarded costs to the DOT.
¶30 The District Court, in its judgment and final order of condemnation filed October 31,
2001, decreed that “the Plaintiff [the DOT] duly served upon the Defendants [the Simonsons]
a Written Offer of Judgment in excess of the sum awarded by the jury, . . . and thus, said
Defendants are not entitled to costs of this action nor any of their necessary expenses of
litigation.” The District Court went on to order that “[p]ursuant to Mont. Code Ann. Section
70-30-304(3), Plaintiff is awarded its costs of the appeal.” The DOT echoes the District
Court’s summary arguing that its final offer to the Simonsons was $30,000 and the jury
award was $24,764.25, therefore, the DOT is instead entitled to recover its costs.
¶31 This conclusion ignores the specific language of § 70-30-304(3), MCA (1999),
entitled, “Appeal to district court from assessment of the commissioners.” It reads
[i]n case the party appealing from the award of the [Value Commission] in any
proceeding, . . . shall not succeed in changing to his advantage the amount
finally awarded in such proceeding, he shall not recover the costs of such
appeal, but all the costs of the appellee upon such appeal shall be taxed against
and recovered from the appellant.
The Simonsons appealed the Value Commission’s award of $23,415 to the District Court and
the jury awarded the Simonsons $24,764.25. The Simonsons final judgment was $1,349.25
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greater than the Value Commission’s award. Due to the fact that the Simonsons received an
award in excess of the Value Commission award, we hold that the District Court erred in
awarding costs to the State.
¶32 Affirmed in part, reversed in part, and remanded for entry of an amended judgment
consistent with this Opinion.
/S/ JAMES C. NELSON
We Concur:
/S/ PATRICIA O. COTTER
/S/ JIM REGNIER
/S/ JIM RICE
Chief Justice Karla M. Gray concurring.
¶33 I join in the Court's opinion. I write separately on Issue 3, however, to respectfully
invite the Legislature to revisit several statutes and clarify their intended effect.
¶34 As the Court correctly determines, the District Court's reliance on § 70-30-304(3),
MCA, to award costs to the State cannot be supported. That statute clearly relates to the
factual circumstances before us in this case--an appeal by the Simonsons from the Value
Commission's award in which they finally obtained an amount in excess of the initial award.
Nothing in § 70-30-304(3), MCA, supports the District Court's conclusion that the State was
entitled to its costs of the Simonsons' appeal.
¶35 Indeed, the State advances no argument at all pursuant to which § 70-30-304(3),
15
MCA, might apply here. Instead, the State argues, in two sentences, that § 70-30-305(2),
MCA, which provides that when a condemnee receives an award in excess of the
condemnor's final offer, the condemnee (here, the Simonsons) is entitled to an award of
necessary expenses of litigation. Even aside from the fact that the District Court did not rely
on this statute, nothing in its plain language authorizes an award to the condemnor.
¶36 In any event, I have difficulty reading these two statutes together and harmonizing
them. What does the Legislature intend to occur if the circumstances set forth in § 70-30-
304(3), MCA (the condemnee succeeds in obtaining a larger amount during the court
process) and § 70-30-305, MCA (a rejected prejudgment final offer in excess of the Value
Commission's determination) both take place, but the rejected final offer is more than the
amount ultimately awarded? In order words, which party gets costs when?
¶37 My confusion is exacerbated by the Legislature's use of the word "costs" of the
appeal in §§ 70-30-304(3) and -305(1), MCA, but the phrase "necessary expenses of
litigation" in § 70-30-305(2), MCA and similar wording in § 70-30-306, MCA. Are these
intended to be equivalent terms, or are "costs" meant to be the more limited and generally
available costs as set forth in §§ 25-10-201 through -206, MCA? It strikes me that
clarification by the Legislature, at a time when no case raising those questions is before us,
may be helpful to all concerned in the future.
¶38 That said, I join the Court's opinion affirming, reversing and remanding.
/S/ KARLA M. GRAY
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Justice James C. Nelson specially concurs.
¶39 As a follow up to Chief Justice Gray’s concurring opinion, and should the Legislature
choose to amend the statutes, it also bears considering that condemnation statutes which
purport to award costs, fees, or litigation expenses to the condemnor may face an uphill
battle against the Constitution.
¶40 Article II, Section 29, appears to limit an award of litigation expenses to the
prevailing private property owner with no authorization for a reciprocal award if the
condemnor prevails. This section provides:
Eminent domain. Private property shall not be taken or damaged for public
use without just compensation to the full extent of the loss having been first
made to or paid into court for the owner. In the event of litigation, just
compensation shall include necessary expenses of litigation to be awarded by
the court when the private property owner prevails. [Emphasis added.]
/S/ JAMES C. NELSON
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Montana Department of Transportation v. Simonson
Court: Montana Supreme Court
Date filed: 2004-03-16
Citations: 2004 MT 60, 87 P.3d 416, 320 Mont. 249
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