McDaniel et al v. United States of America et al

Filing 613

MEMORANDUM OPINION AND ORDER by Chief District Judge William P. Johnson granting in part (1624 in 1:18-md-02824-WJ, 545 in 1:17-cv-00710-WJ-SCY) Opposed MOTION to Exclude Expert Testimony of McDaniel Plaintiffs' Expert, Lela Holmes,. Related document(s): (1624 in 1:18-md-02824-WJ, 545 in 1:17-cv-00710-WJ-SCY) Opposed MOTION to Exclude Expert Testimony of McDaniel Plaintiffs' Expert, Lela Holmes,. Associated Cases: 1:18-md-02824-WJ, 1:17-cv-00710-WJ-SCY (bap)

Case 1:17-cv-00710-WJ-SCY Document 613 Filed 08/18/22 Page 1 of 8
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
IN RE: GOLD KING MINE RELEASE
IN SAN JUAN COUNTY, COLORADO,
ON AUGUST 5, 2015
This Document Relates to:

No. 1:18-md-02824-WJ

No. 17-cv-710-WJ-SCY

MEMORANDUM OPINION AND ORDER
GRANTING IN PART UNITED STATES' MOTION TO EXCLUDE EXPERT
TESTIMONY OF McDANIEL PLAINTIFFS' EXPERT LELA HOLMES
The McDaniel Plaintiffs, who own properties near the Animas River, retained Lela Holmes
to present "expert testimony to support their claims for diminution of property value allegedly
resulting from stigma associated with environmental issues from the Gold King Mine release on
August 5, 2015." United States' Motion to Exclude the Expert Testimony of Lela Holmes at 5,
Doc. 1624, filed April 27, 2022. "Ms. Holmes is a licensed realtor" and "has been a realtor in San
Juan County New Mexico ... for 46 years. She possesses a wealth of local knowledge about her
local market." Motion at 6; McDaniel Plaintiffs' Response at 11, Doc. 1664, filed June 16, 2022.
Ms. Holmes issued a Broker's Opinion of Value ("BOV") for six different properties:
These six BOVs, along with supporting documents consisting of pictures and San Juan
County tax records, comprise the entirety of Ms. Holmes’s expert report. Id. Each of
the six BOVs is only a single page in length. Id. at 1–6. Each BOV consists of a brief
description of the property, along with a materially identical version of the following
opinions:
Lot is likely no longer [the original acreage] as when the Gold King
Mine Spill came down the river all of the river bank vegetation was
destroyed and when the next rains came some of the property was
washed into the river thereby creating new river banks and decreasing
the size of the land.
Value of the property would be [$X].
A Realtor or Owner marketing the property would be required to
disclose to that [sic] there could be environmental issues from the Gold
King Mine Spill.
After the legally required disclosure of the Gold King Mine Spill the
property value can be expected to decrease by 75% to 90%.

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Id.
Motion at 6-7.

The United States seeks to exclude Ms. Holmes' testimony because:
(i)

"Ms. Holmes' expert report failed to include any basis or reasons for her opinions
as required by Federal Rule of Civil Procedure 26(a)(2)(B)."

(ii)

Ms. Holmes "fail[ed] to perform interior inspections for the subject properties" and
"fail[e]d to consider any facts and data related to the environmental contamination
that she claims will result in a 75% to 90% reduction in value for all six of the
properties she evaluated."

(iii)

Ms. Holmes "failed to keep track of information that she relied upon in reaching
her opinions," "cannot recall how she reached her opinions," "could not even
remember what kind of principles and methods she used to reach certain opinions,"
and "can no longer replicate her analysis."

(iv)

Ms. Holmes "erroneously evaluated a property that has no connection to this
litigation, and also mistakenly assumed that all six properties were riverfront
properties."

Motion at 5-6.
The Court does not address the United States' argument that Ms. Holmes' opinions should
be excluded for failure to comply with the disclosure requirements of Fed. R. Civ. P. 26(a)(2)(b),
or the McDaniel Plaintiffs' response that the deficits in Plaintiffs' expert disclosures are not
prejudicial to the United States, because the Court excludes Ms. Holmes' opinions regarding the
decrease in the McDaniel Plaintiffs' property values due to the Gold King Mine Release because
they will not be helpful to the jury.

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None of the Parties have requested that the Court set a Daubert hearing prior to ruling on this
Motion.

Admission of Expert Testimony Under Rule 702
Rule 702, which governs testimony by expert witnesses, provides:
A witness who is qualified as an expert by knowledge, skill, experience, training,
or education may testify in the form of an opinion or otherwise if:
(a) the expert's scientific, technical, or other specialized knowledge will help the
trier of fact to understand the evidence or to determine a fact in issue;
(b) the testimony is based on sufficient facts or data;
(c) the testimony is the product of reliable principles and methods; and
(d) the expert has reliably applied the principles and methods to the facts of the
case.
Fed. R. Evid. 702.
Federal Rule of Evidence 702 requires the district court to “ensur[e] that an expert's
testimony both rests on a reliable foundation and is relevant to the task at hand.”
Daubert, 509 U.S. at 597, 113 S.Ct. 2786. Under Rule 702, the court must first
decide whether the proffered expert is qualified “by knowledge, skill, experience,
training, or education” to render an opinion. See Fed. R. Evid. 702. Then “the court
must determine whether the expert's opinion is reliable by assessing the underlying
reasoning and methodology, as set forth in Daubert.” United States v. Nacchio, 555
F.3d 1234, 1241 (10th Cir. 2009) (en banc).
Bill Barrett Corp. v. YMC Royalty Co., LP, 918 F.3d 760, 770 (10th Cir. 2019).
Expert Qualifications
To perform its gatekeeping function, the Court generally takes two steps. First, it
determines whether the expert is qualified by “knowledge, skill, experience, training, or education”
to render an opinion. See Fed. R. Evid. 702. The second step is to decide whether the expert's
opinions are sufficiently reliable. See United States v. Nacchio, 555 F.3d 1234, 1241 (10th Cir.
2009) (en banc).
The United States challenged Ms. Holmes' expert qualifications stating:
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Ms. Holmes’s “expertise” in this case is almost entirely based on her experience as a
realtor in New Mexico. See generally, id. at 7. Ms. Holmes has no degrees, and her
relevant education primarily consists of the continuing education courses required to
maintain her status as a licensed realtor. Ms. Holmes’s experience in the field consists
of (1) representing buyers and sellers in real estate transactions, and (2) issuing
Broker’s Opinions of Value (BOV) for banks and other companies. Id.
Although Ms. Holmes has many years of experience as a realtor, very little of that
experience involved the kinds of property at issue here. Ms. Holmes testified that she
does not “have a lot of experience selling riverfront property.” Ex. B at 209:25–210:1
(Deposition of Lela Holmes).2 Similarly, Ms. Holmes testified that she would not be
comfortable marketing any of the Plaintiffs’ properties because “they are rural
properties,” “rural property is a totally different market,” and Ms. Holmes markets
“very little rural property.” Id. at 309:25, 358:14–20.
Of particular significance here, Ms. Holmes has no experience with assessing
diminution in value resulting from environmental contamination. Id. at 41:24–42:2. In
fact, Ms. Holmes has no experience at all dealing with properties potentially impacted
by environmental contamination. Id. at 350:2–352:8. Ms. Holmes’s only experience
within the broad category of environmental issues is limited to properties that had
illegal septic systems. Id. at 329:20–330:1, 350:2–352:8.

Motion at 7 (n.2 states: "At deposition, Ms. Holmes could only recall selling two riverfront
properties in her entire career, one of which was a vacant tract of land. Id. at 209:10-24.").
The McDaniel Plaintiffs responded stating:
Lela Holmes is realtor licensed by the New Mexico Real Estate Commission to list,
evaluate, and sell property, and to provide broker’s professional opinions of value
(BPOV). Ex. 1, p. 229:2-11. She followed her professional criteria to provide the
subject BPOVs. Ex. 1, pp. 366:25 to 367:2. Ms. Holmes has worked with state
regulatory agencies to develop standards in the field of real estate. Ex. 1, pp. 241:25
to 242:3.
Ms. Holmes does not perform the appraisal function of advising lenders; her
expertise is in evaluating properties for the amounts they could actually be
marketed to prospective buyers. Ex. 1, pp.229:19 to 230:16. She does not need an
appraiser’s license to perform a BPOV. Ex. 1, pp. 232:21 to 233:4; p. 237:14-17;
p. 239:19-21; p. 240:14-17; p. 269:11-13. She does not need an advanced college
degree, specialized scientific knowledge in soils or hydrology, a legal education,
an attorney, or a licensed surveyor to perform a BPOV. Ex. 1, pp. 235:23 to 237:4;
p. 356:15-22; p. 359:20-22; p. 360:2-5. There is no law, regulation, or ordinance
that prevents a realtor from providing a BPOV. Ex.1, p. 356:3-6. Ex. 1, A property
can be sold without a formal appraisal. Ex. 1, p. 239:16-18. The principles of
assessing diminution of property value have not changed substantially over her 46
year career. Ex. 1, pp. 238:16 to 239:6.
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Ms. Holmes is qualified to perform BPOVs for customers seeking comparative
values for properties. Ex. 1, p. 237: 6-9. She has performed hundreds of these
analyses over the course of her career. Ex. 1, p. 288:4-7. No court or entity has ever
refused Ms. Holmes’ expert testimony, challenged her methodology, or told her
that the methodology she used to develop BPOVs is invalid. Ex. 1, p.239:11-15; p.
250:16-19; p. 251:13-20; pp. 286:25 to 287:11; p. 288:8-14; p. 356:7-13.
Response at 18-19. The United States' Reply does not address any of the statements in the
McDaniel Plaintiffs' Response that support Ms. Holmes' qualifications. See Doc. 1734, filed July
21, 2022.
The Court finds that Ms. Holmes is qualified by knowledge and 46 years of experience as
a realtor in San Juan County to testify regarding property value.
Opinion Reliability
The Court grants in part the United States' Motion to exclude Ms. Holmes' testimony
regarding decreases in value of the McDaniel Plaintiffs' properties due to the Gold King Mine
Release. The Court denies the United States' Motion to the extent that it seeks exclude Ms. Holmes'
general testimony regarding factors that can affect property values.
Ms. Holmes' report states the property values can be expected to decrease by 75 to 90%
after disclosure of the Gold King Mine Release. See Doc. 1624-1, filed April 27, 2022. Ms.
Holmes' report does not contain "the basis and reasons for" her opinions or "the facts or data" she
considered in forming her opinions as required by Rule 26(a)(2)(B). At her deposition, Ms.
Holmes, who is 86 years old, testified that she did not know if she ever heard the term "expert
witness," she was "asked to do a market evaluation," and she "was never told that I would be an
expert witness." Doc. 1624-2 at 37.

When asked how she arrived at the 75-90% decrease in

value, Ms. Holmes stated: "I'm afraid I can't answer that because it's just been too far in the
distance." Doc. 1624-2 at 10. Ms. Holmes stated that her opinion was based partially on a
comparable sales analysis that she performed but that she does not have a record of what properties
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she identified as potential comparables, "couldn't even find comparables for some of them," and
"doubt[ed] she would be able to re-create the comparable sales analysis that she performed for this
case "because of the time that has gone by." Doc. 1624-2 at 8-9, 25. Ms. Holmes did not review
any materials regarding environmental issues at the McDaniel Plaintiffs' properties due to the Gold
King Mine Release. See Doc. 1642-2 at 36.
The McDaniel Plaintiffs state: "Ms. Holmes fully described her methodology in Plaintiffs'
Exhibit 2: Lela Holmes' Methodology." Response at 25. "Plaintiffs' Exhibit 2: Lela Holmes'
Methodology" is two pages of excerpts from Ms. Holmes' deposition in which she discusses in
general terms the methodology she goes through when developing a broker's professional opinion.
See Doc. 1664-2 at 2-3. "Plaintiffs' Exhibit 2: Lela Holmes' Methodology" indicates that she
applied that methodology when developing the broker's professional opinions for this case, but
does not specifically describe the information she considered for each property. See Doc. 16642 at 2-3.
The Court excludes Ms. Holmes' opinions regarding the decrease in value of the McDaniel
Plaintiffs' properties due to the Gold King Mine Release. Rule 702 requires that an expert's
"specialized knowledge will help the trier of fact to understand the evidence or to determine a fact
in issue" and the "testimony is based on sufficient facts or data." Fed. R. Evid. 702(a-b).
An expert must base her opinion on at least the amount of data that a reliable
methodology demands ... The expert may properly base her opinion on something
less than all the pertinent facts or data. Thus ... sufficiency is a function of the nature
and scope of the opinion offered, the quantity of data both available and pertinent
to the issue at hand, and what is deemed sufficient by experts in the pertinent field
when working outside the courtroom.
Charles Alan Wright & Arthur R. Miller, 29 Fed. Prac. & Proc. Evid. § 6268. The Court finds that
Ms. Holmes' testimony that the value of the McDaniel Plaintiffs' properties would decrease after
disclosure of the Gold King Mine Release will not be helpful to the jury because: (i) Ms. Holmes
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did not retain and did not remember the specific data she considered when preparing her opinion;
(ii) Ms. Holmes did not review any materials regarding environmental issues at the McDaniel
Plaintiffs' properties due to the Gold King Mine Release; (iii) Ms. Holmes does not remember how
she arrived at the 75-90% decrease in value; and (iv) Ms. Holmes cannot replicate her analyses.
The Court does not exclude Ms. Holmes' general opinions regarding factors that affect a
property's value. Ms. Holmes testified that stigma and other factors can affect the value of a
property. See Doc. 1664-1 at 10-16. Ms. Holmes is qualified by knowledge and her 46 years of
experience as a realtor in San Juan County to testify generally regarding factors affecting property
value. Ms. Holmes' testimony regarding factors such as stigma that affect property values will be
helpful because it involves specialized real estate knowledge that most untrained laypersons are
not familiar with.
Whether the situation is a proper one for the use of expert testimony is to be
determined on the basis of assisting the trier. "There is no more certain test for
determining when experts may be used than the common sense inquiry whether the
untrained layman would be qualified to determine intelligently and to the best
possible degree the particular issue without enlightenment from those having a
specialized understanding of the subject involved in the dispute." Ladd, Expert
testimony, 5 Vand.L.Rev. 414, 418 (1952).
Fed. R. Evid. 702 advisory committee's note to 1972 proposed rules.
IT IS ORDERED that the United States' Motion to Exclude the Expert Testimony of Lela
Holmes, Doc. 1624, filed April 27, 2022, is GRANTED in part as follows:
(i)

The Court grants the United States' Motion to exclude Ms. Holmes' testimony regarding
the decreases in value of the McDaniel Plaintiffs' properties due to the Gold King Mine
Release.

(ii)

The Court denies the United States' Motion to exclude Ms. Holmes' testimony regarding
regarding factors that can affect property values.

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________________________________________
WILLIAM P. JOHNSON
CHIEF UNITED STATES DISTRICT JUDGE

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