United States of America v. Land et al

Filing 42

ORDER & REASONS: granting 25 the government's Motion to Exclude Testimony Which Violates the Unit Rule and Seeks Non-Compensable Damages (Rec. Doc. 25) is GRANTED. FURTHER ORDERED that the Culpepper report, and any testimony regarding the value of the four live oak trees themselves, are hereby EXCLUDED. Signed by Judge Carl Barbier on 6/5/14. (sek)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
UNITED STATES OF AMERICA

CIVIL ACTION

VERSUS

NO: 13-4722

0.648 ACRES OF LAND, MORE OR
LESS, SITUATED IN PARISH OF
PLAQUEMINES, STATE OF
LOUISIANA and
WALTER DAN THOMPSON, JR.

SECTION: J

ORDER AND REASONS
Before

the

Court

is

the

government's

Motion

to

Exclude

Testimony Which Violates the Unit Rule and Seeks Non-Compensable
Damages (Rec. Doc. 25), Defendant Thompson's Opposition (Rec. Doc.
28), the government's Reply (Rec. Doc. 34), and Thompson's Surreply (Rec. Doc. 38). Having considered the motion, the parties’
submissions, the record, and the applicable law, the Court finds,
for the reasons expressed below, that the motion should be GRANTED.
PROCEDURAL AND FACTUAL BACKGROUND
Walter Dan Thompson, Jr. ("Thompson") was the owner of a 1.014
acre tract of unencumbered land located on the north side of
Highway 11 and the south side of the Mississippi River in Buras,
Louisiana, located in Plaquemines Parish. There is a residence on
the property, which is in poor condition due to damage from
Hurricane Katrina. After the hurricane, the Corps of Engineers set
out to repair the levee that runs between Thompson's property and
1

the river. To perform the repairs, the Corps determined that it was
necessary to acquire an easement over 0.648 acres of Thompson's
property, and the government filed this action to acquire that
easement.

This

left

Thompson

a

remaining

tract

of

0.366

unencumbered acres.
According to Thompson, the easement has deprived him of the
entirety of his river frontage and extends from the levee all the
way to Thompson's residence. There were four mature live oak trees
that closely surrounded the residence but were located on the taken
portion of the property. The Corps removed these trees, and
Thompson claims that because the trees were located close to the
residence, they comprised a significant portion of the value of his
remaining property. Thompson seeks recovery for the diminution in
value of the remaining tract due to the removal of the four oak
trees.
Thompson has provided two expert reports. The first is an
appraisal of the market value of the property, both before and
after the taking, by S. Parkerson McEnery and Matthew B. Elder
("the

McEnery

report").

The

second

is

a

report

by

James

L.

Culpepper, a consulting arborist, who performed an appraisal of the
four

live

oak

trees

that

the

Corps

removed

("the

Culpepper

report").
The McEnery report states that the total compensation owed to
Thompson is $26,000, which includes $15,422 in compensation for the

2

taken

tract

and

$10,578

for

the

diminution

in

value

of

the

remaining tract. (Rec. Doc. 25-3, p. 6). The McEnery report employs
the "Sales Comparison Approach," which makes a direct comparison to
the sale prices of similar properties, to assess the market value
of the total 1.014 acre parent tract. (Rec. Doc. 25-3, p. 40).1
Using this approach, the report finds that the value of the total
parent tract before the taking was $68,000; the value of the taken
tract is $15,422;2 the value of the remaining tract before the
taking was $52,578; the value of the remaining tract after the
taking is $42,000; and the diminution in value of the remaining
tract is therefore $10,578. (Rec. Doc. 25-3, p. 122). The report
notes that because the value of the parent tract before the taking
was $68,000, and the value of the remaining tract after the taking
is $42,000, this yields a difference of $26,000 that the government
owes to Thompson. (Rec. Doc. 25-3, p. 122).
With respect to the diminution of the value of the remaining

1

The report defines "market value" as:

... the amount in cash, or on terms reasonably equivalent to cash,
for which in all probability the property would have sold on the
effective date of the appraisal, after a reasonable exposure time on
the open competitive market, from a willing and reasonably
knowledgeable seller to a willing and reasonably knowledgeable
buyer, with neither acting under any compulsion to buy or sell,
giving due consideration to all available economic uses of the
property at the time of the appraisal.
(Rec. Doc. 25-3, p. 43).
2

The $15,422 value of the taken tract was calculated by multiplying the
number of acres of the taken tract (0.648 acres) by the value per acre ($23,800).
(Rec. Doc. 25-3, p. 110).

3

tract as a result of the taking, the McEnery report states:

... the subject site has been reduced from 1.014 acres to
0.366 acres. From the standpoint of the subject's appeal
for rehabilitation of the improvements, the after status
of the tract presents a less appealing picture. ... In
the "before," the property enjoyed riverfront access and
a large back-yard with numerous mature oak trees. It is
our understanding that rights of use for the levee and
water-front access are no longer a reality for this
tract. With this in mind, the location of the [remaining]
property from the standpoint of water-access has been
downgraded, which will be reflected in our improved sales
comparison approach. It will also result in severance
damages (Diminution in Value of Remaining Real Estate) to
the property owner.

(Rec. Doc. 25-3, p. 113) (emphasis in original). The report also
states:

In the "after" status of the property, the site now is
essentially a non-riverfront parcel now cleared of the
formerly existing oak grove. An arborist report performed
by James L. Culpepper of Greener Trees, Louisiana, LLC is

4

provided in the Addenda for reference and as additional
information

pertaining

[sic]

the

trees

that

were

previously in place, prior to the acquisition.

(Rec. Doc. 25-3, p. 39). Additionally, the McEnery report states
that its appraisal pertains to real property only, not to nonrealty items, and that the Culpepper report uses methodologies
comporting with the industry standard for plant appraisals. (Rec.
Doc. 25-3, p. 122).
The Culpepper report uses the "Trunk Formula Method" to
appraise the four live oak trees themselves, arriving at a figure
of $64,370 per tree, or $257,200 total. (Rec. Doc. 25-4, p. 6).
This report does not explicitly evaluate the diminution in value of
the remaining tract caused by the removal of the trees; it merely
evaluates the value of the trees themselves. (Rec. Doc. 25-4, p. 16). On March 11, 2014, the government filed this instant motion in
limine, seeking to exclude Culpepper's expert testimony.
PARTIES' ARGUMENTS
A. Severance Damages
The government argues that Culpepper's testimony, which
separately values oak trees on the subject property, should be
excluded because the property must be valued as a whole, both
before and after the taking, according to the "unit rule." The
government also contends that under controlling law, severance
5

damages should not be assessed separately from the before-and-after
method

because

the

before-and-after

method

already

includes

severance damages in the calculation. Therefore, according to the
government, the Culpepper report should be excluded because it
evaluates the cost of the trees themselves, not the diminution in
value of the remaining tract caused by the removal of the trees.
The government also argues that in Louisiana, standing timber is a
component part of an immovable tract of land, and therefore, the
oak trees were already included in the McEnery appraisal of the
parent tract prior to the taking. The government therefore contends
that adding the value of the trees according to the Culpepper
report would amount to double-counting. The government anticipates
that Thompson might argue that the McEnery appraisal explicitly
excluded the value of the trees. In that case, the government
argues that the Culpepper appraisal is still inadmissible because
it

is

impermissible

for

a

fact-finder

to

arrive

at

a

just

compensation figure by adding the value of the land without the
trees to the value of the trees themselves.
Thompson maintains that he is owed compensation not only for
the market value of the portion of his property that was taken, but
also for "severance damages" that account for the diminution in
value of the remaining property as a result of the taking –
specifically, the removal of the four live oak trees that were
situated on the taken property but were very near to Thompson's

6

house on the remaining property. Thompson claims that those oak
trees contributed substantially to the value of the remaining
property,

and

their

destruction

is

therefore

recoverable

as

severance damages. Thompson argues that the methods that Culpepper
used to value the trees are proper methods for evaluating severance
damages. Additionally, Thompson argues that the McEnery report
explicitly incorporated the Culpepper report by reference.
B. Equitable Estoppel
Thompson

argues

that

the

government

should

be

equitably

estopped from arguing that Thompson should not be separately
compensated for the oak trees. Thompson claims that Rhonda Young,
an agent of the government, acknowledged that the trees were
compensable in an email to Thompson when she made a settlement
offer that included an amount to compensate Thompson for the trees.
According to Thompson, the government has intentionally misled him
by admitting that the trees are compensable while waiting for
Thompson's separate claim for the destruction of the trees to
become time-barred, and Thompson argues that this constitutes
affirmative misconduct for the purpose of equitable estoppel.
The government maintains that Thompson's argument based on
equitable
government

estoppel

has

claims

that

no

basis

Young's

in
email

law

or

fact.

pertained

to

First,

the

settlement

negotiations and is thus inadmissible. Second, the government
argues that even if Young's email were admissible, it does not

7

constitute an admission that Thompson is legally entitled to
compensation for the trees but merely constitutes a negotiation
tool. Additionally, the government argues that estoppel against the
government

is

generally

impermissible

and

has

never

been

successfully used in an eminent domain case.
DISCUSSION
A. Severance Damages
In partial taking cases,

... the compensation to be awarded includes not only the
market value of the part of the tract appropriated, but
the damage to the remainder resulting from the taking,
embracing, of course, injury due to the use to which the
part appropriated is to be devoted.

U.S. v. 101.88 Acres of Land, 616 F.2d 762 (5th Cir. 1980) (citing
U.S. v. Grizzard, 219 U.S. 180, 183 (1911)). Therefore,

... the appropriate measure of damages is the difference
between the value of the parent tract before the taking
and its value after the taking. ... When the property
interest taken from a parent tract is merely an easement,
the proper measure of damages is still the before-andafter method of valuation, expressed as the difference
8

between the market value of the land free of the easement
and the market value as burdened with the easement.

U.S. v. 8.41 Acres of Land, 680 F.2d 388, 392 (5th Cir. 1982)
(citing U.S. v. Va. Elec. Co., 365 U.S. 624, 630-32 (1961)).
The Fifth Circuit has acknowledged that there exist at least
two different methods for determining just compensation in partial
taking cases, but the Fifth Circuit "requires the exclusive use of
the before-and-after method of valuation." 8.41 Acres, 680 F.2d at
392 n.5. That method "computes damages to be the difference in the
value of the entire parent tract before the taking and the value of
the

portion

remaining

after

the

taking."

Id.

This

can

be

accomplished "by subtracting the fair market value of what remains
after

the

taking,

from

the

fair

market

value

of

the

whole

immediately before the taking." Id. (internal citations omitted).
This method does "take into consideration the loss of the part
taken and the 'severance damages' to the remainder of the property
left after the taking."

Id.

The Fifth Circuit's "unit rule"

requires that the property be valued as a whole, meaning that
separate

aspects

of

a

parcel

of

land

should

not

be

valued

separately. See U.S. v. 499.472 Acres of Land, 701 F.2d 545, 549
(5th Cir. 1983). For example:

... if the condemned land contains a mineral deposit, ...

9

it is proper to consider this fact in determining the
market value of the land as a whole, but it is not
permissible to determine separately the value of the
mineral deposit and add this to the value of the land as
a unit.

Id. (internal citations omitted).
Here, Thompson is entitled to just compensation that includes
the diminution in value of the remaining tract, or "severance
damages." The before-and-after method, the exclusive method of
valuation in the Fifth Circuit, takes severance damages into
account in the partial taking calculation, whereby the value of the
remaining tract after the taking is subtracted from the value of
the parent tract before the taking. The McEnery report offers
appraisals for both figures. It is true that the McEnery report
expressly states that its appraisals pertain to real property only,
not to non-realty items. However, under the law, a separate
appraisal of the trees themselves is irrelevant; an appraisal
should only be concerned with the value of the real property as a
whole, which takes into account the value of the trees on the
property. The McEnery report accomplishes its purpose by finding
that the value of Thompson's parent tract before the taking was
$68,000, and the value of the remaining tract after the taking is
$42,000, which yields a difference of $26,000. This figure accounts

10

for the diminution in value of Thompson's remaining tract caused by
the loss of the four oak trees surrounding his property. In fact,
the report explicitly states that the $26,000 figure includes
$15,422 in compensation for the taken tract and $10,578 for the
diminution in value of the remaining tract. For these reasons, the
Court finds that the Culpepper report's appraisal of the trees
themselves is irrelevant and that the report should therefore be
excluded.
B. Equitable Estoppel
The remedy of equitable estoppel is very rarely used against
the government, and therefore "the burden that a petitioner must
meet is very high." Robertson-Dewar v. Holder, 646 F.3d 226, 230
(5th Cir. 2011). For Thompson to establish equitable estoppel
against the government, he must "prove affirmative misconduct by
the government in addition to the four traditional elements" of
equitable estoppel, which are:

... (1) that the party to be estopped was aware of the
facts, and (2) intended his act or omission to be acted
upon; [and] (3) that the party asserting estoppel did not
have knowledge of the facts, and (4) reasonably relied on
the conduct of the other to his substantial injury.

Peacock v. U.S., 597 F.3d 654, 661 n.3 (5th Cir. 2010) (internal

11

citations omitted). "Affirmative misconduct requires an affirmative
misrepresentation or affirmative concealment of a material fact by
the government." Robertson-Dewar, 646 F.3d at 229-30 (internal
citations

omitted).

"Although

courts

have

been

less

than

forthcoming in defining what a government official must do to
satisfy the affirmative misconduct element of an estoppel defense,
the cases support the conclusion that at minimum the official must
intentionally or recklessly mislead the estoppel claimant.” United
States

v.

Marine

Shale

Processors,

81

F.3d

1329,

1350

(5th

Cir.1996). A finding of affirmative misconduct requires "more than
mere negligence, delay, inaction, or failure to follow an internal
agency guideline." Mangaroo v. Nelson, 864 F.2d 1202, 1204–05 (5th
Cir. 1989) (internal citations omitted). "Those who deal with the
Government are expected to know the law and may not rely on the
conduct of Government agents contrary to the law."

Jamal v.

Travelers Lloyds of Tex Ins. Co., 131 F. Supp. 2d 910, 919 (S.D.
Tex. 2001).
Thompson argues that the government engaged in affirmative
misconduct in intentionally misleading him by admitting, through
Rhonda Young's email, that the trees were compensable while waiting
for Thompson's separate claim for the destruction of the trees to
become time-barred. The Court finds that Thompson has failed to
meet his high burden to show that the government has engaged in
affirmative misconduct in this case. Any statements made in this

12

email

were

communications

regarding

a

settlement

offer

and,

assuming arguendo that the email is admissible, these statements do
not amount to an affirmative misrepresentation by the government
that Thompson should be compensated for the value of the trees
themselves. Furthermore, Thompson is expected to know the law in
the Fifth Circuit, which clearly indicates that he is not entitled
to the separate value of the trees, and any alleged statement by a
government agent that he was so entitled would not change the law.
Therefore, Thompson's claim that the government should be equitably
estopped must fail.
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that the government's Motion to Exclude
Testimony Which Violates the Unit Rule and Seeks Non-Compensable
Damages (Rec. Doc. 25) is GRANTED.
IT IS FURTHER ORDERED that the Culpepper report, and any
testimony

regarding

the

value

of

the

four

live

oak

trees

themselves, are hereby EXCLUDED.
New Orleans, Louisiana this 5th day of June, 2014.

________________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

13