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Kamo Electric Cooperative, Inc. v. Nichols

Court of Appeals of Oklahoma, Division IV

September 11, 2017

KAMO ELECTRIC COOPERATIVE, INC., a Rural Electric Cooperative Corporation and K-POWERNET, LLC, an Oklahoma Limited Liability Company, Plaintiffs/Appellants,
v.
CURTIS L. NICHOLS and LORI D. NICHOLS, Husband and Wife, Defendants/Appellees.

          Mandate Issued: 11/14/2017

         APPEAL FROM THE DISTRICT COURT OF MAYES COUNTY, OKLAHOMA HONORABLE J. DWAYNE STEIDLEY, TRIAL JUDGE

          Stratton Taylor, Clint Russell, TAYLOR, FOSTER, MALLETT, DOWNS, RAMSEY & RUSSELL, Claremore, Oklahoma, for Plaintiffs/Appellants.

          K. Ellis Ritchie, K. ELLIS RITCHIE, P.C., THE RITCHIE LAW FIRM, Pryor, Oklahoma, for Defendants/Appellees.

          Paul F. Burdeaux, AMERICAN ELECTRIC POWER SERVICE CORPORATION/PUBLIC SERVICE COMPANY OF OKLAHOMA, Dallas, Texas, for Amicus Curiae Public Service Company of Oklahoma.

          Justin Sullivan, ENABLE MIDSTREAM PARTNERS, LP, Oklahoma City, Oklahoma, for Amicus Curiae Enable Midstream Partners.

          Brian W. Hobbs, WESTERN FARMERS ELECTRIC COOPERATIVE, INC., Anadarko, Oklahoma, for Amicus Curiae Western Farmers Electric Cooperative, Inc.

          P. THOMAS THORNBRUGH, VICE-CHIEF JUDGE.

         ¶1 Appellants, Kamo Electric Cooperative, Inc., and K-Powernet, LLC, appeal the result of a condemnation trial awarding Appellees compensation of $30, 615 for an easement across 3.9 acres of rural land. On review, we reverse this decision and remand for further proceedings.

         BACKGROUND

         ¶2 Kamo and K-Powernet sought a power line/telecommunications easement across approximately 3.9 acres of rural land that was used primarily for cattle. The parties were unable to agree on a negotiated price, and a condemnation proceeding ensued. The appointed commissioners found that the value of the property taken, plus damages to the remainder, totaled $20, 000. Both parties objected, and the matter went to trial. During pre-trial and trial proceedings, the admissibility of the testimony of Appellees' expert, Matt Earnest (Appraiser) was a major issue. The parties appear to have been in broad agreement that the general fee simple purchase price of similar agricultural land was in the region of $2, 000 per acre. Appraiser opined, however, that the 3.9 acres taken was worth approximately $8, 000 per acre, based on the negotiated acquisition price of similar easements by public utilities in the area, rather than sales of similar property for agricultural or domestic use.

         ¶3 Appellants objected to the admissibility of this testimony, but the trial judge found it admissible. The jury found just compensation for the taking to be $30, 615, approximately $7, 800 per acre. Appellants filed a motion for new trial, which was denied. Kamo and K-Powernet now appeal this decision on the grounds that Appraiser's testimony was inadmissible because his methodology was faulty. The Amici noted above have filed a joint brief in support of Kamo's position.

         STANDARD OF REVIEW

         ¶4 Appellate review of a motion for a new trial where the trial judge presided at the trial, heard the testimony, observed the witnesses, and had full knowledge of the proceedings is one of abuse of discretion. Gowens v. Barstow, 2015 OK 85, ¶ 11, 364 P.3d 644. An abuse of discretion occurs if a decision is based on an erroneous conclusion of law or where there is no rational basis in evidence for the ruling. See Smith v. City of Stillwater, 2014 OK 42, ¶¶ 10-11, 328 P.3d 1192. The conclusions of law in a condemnation case are subject to the de novo standard of review. State ex rel. Dep't of Transp. v. Little, 2004 OK 74, ¶ 10, 100 P.3d 707. De novo review is "plenary, independent and nondeferential." Id. (footnote omitted).

         ANALYSIS

         I. THE APPLICABLITY OF DAUBERT TO APPRAISER'S TESTIMONY

         ¶5 Appellants and Amici frame the evidentiary question in this case primarily in Daubert terms. The Amicus Brief goes so far as to argue that the result should be reversed because the court did not make the detailed Daubert findings required by certain federal courts. We find, however, little or no applicability of the core Daubert principles to this case. [1] The question of what appraisal methods give rise to admissible evidence in an Oklahoma condemnation action is typically one of Oklahoma common law and our constitutional requirement of just compensation, rather than one of scientific validity. [2]

         ¶6 The genesis of what are commonly referred to as the " Daubert factors" came in a case that involved "core" scientific testimony. In Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 113 S.Ct. 2786 (1993), the question was whether expert testimony that a mother's prenatal ingestion of the prescription drug Bendectin was the cause of birth defects was admissible. In this context, the U.S. Supreme Court stated a number of considerations that go to the basic reliability of scientific testimony, including whether the methodology can be (and has been) tested; whether the theory or technique has been subjected to peer review and publication; and the known or potential rate of error inherent to the methodology. These factors fit well in a conventional scientific field such as medicine, which has a tradition of published research, repeatable results obtained pursuant to the scientific method, and peer review. The Daubert test remains an excellent gauge of the reliability of this type of testimony.

         ¶7 In Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 119 S.Ct. 1167 (1999), the Supreme Court held that Daubert's "gatekeeping" obligation, requiring an inquiry into both relevance and reliability, applied not only to "scientific" testimony, but to all expert testimony. The immediate problem, recognized by the Court in Kumho Tire, was that the factors identified in Daubert were specifically adapted to traditional "hard" science, and may not have any applicability in other specialist fields. Unfortunately, the Kumho Tire Court gave little guidance as to what factors should be considered in place of peer review, independent scientific testing and statistical rates of error, informing us only that the Daube rt factors do not constitute a "definitive checklist or test" and that the gatekeeping inquiry must be "tied to the facts" of a particular case. Id. at 150, 119 S.Ct. at 1175. The Kumho test shrinks to little more than the previous "general acceptance" test in some cases.

         ¶8 Given this history, we are inclined to view the current matter as one of general admissibility and reliability pursuant to Oklahoma common law and the legal parameters of "just compensation" pursuant to Article II, section 24 of the Oklahoma Constitution, rather than a Daubert question.

         II. THE APPRAISAL QUESTION

         ¶9 In our assessment of whether Appraiser's methodology was legally permissible to determine the just compensation that our Constitution requires for a taking, two of Appellants' arguments stand out. The first is that Appraiser used previously negotiated sales of easements to parties with the power and need to condemn as a baseline for valuation. Appellants argue that such methodology is either invalid pursuant to current law, or that it cannot properly reflect just compensation because it resulted in a per-acre value for the easement that was approximately four times greater than the apparent fee simple value of ...


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