Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.
-
Upload
edith-hopkins -
Category
Documents
-
view
215 -
download
1
Transcript of Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.
![Page 1: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/1.jpg)
![Page 2: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/2.jpg)
Complex Commercial Litigation
Taking Expert Valuation Skills to the Next Level
2
![Page 3: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/3.jpg)
Speakers
Drew K. Kapur, Esq.PartnerDuane Morris LLP
Richard Marchitelli, MAI, CRE, FRICSExecutive Managing DirectorCushman & WakefieldU.S. Practice LeaderDispute Analysis and Litigation Support Practice
3
![Page 4: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/4.jpg)
“The slower you move, the quicker you die.”
- Ryan Bingham (George Clooney) Up in the Air
Introduction
4
![Page 5: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/5.jpg)
“Failing to prepare, is preparing to fail.”
5
![Page 6: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/6.jpg)
“The best bridge builders are already on the other side.”
6
![Page 7: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/7.jpg)
Appraisers’ Advantages
• Highly defined body of knowledge• Training and education• Extraordinary practical experienceThese assets provide appraisers with a powerful
competitive advantage (that is seldom used) in the litigation arena over other experts providing the same services
7
![Page 8: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/8.jpg)
Appraisers’ ChallengesProblems• Resistance to change• Limited resources
Small size Lack of critical mass Limited capital
• Unwillingness to think outside of appraisal “box” “It doesn’t fit the template”
8
![Page 9: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/9.jpg)
SpecializationBody of knowledge grows so large that specialization inevitably results•Medicine•Law•Accounting•Appraisal
9
![Page 10: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/10.jpg)
Appraisal SpecializationHospitality•Hotels•Gaming (casinos)•Time sharesRetail•Regional malls•Other retailSelf-Storage
10
![Page 11: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/11.jpg)
Appraisal SpecializationEnergy and powerSports and entertainment Health Care•Hospitals•Skilled Care•Managed care•Others
11
![Page 12: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/12.jpg)
Appraisal SpecializationResidential •Multi-family•Student housing•PUD•Single familyGolf MarinasConvenience stores
12
![Page 13: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/13.jpg)
Appraisal SpecializationAirportsWaste•Landfills•RecyclesAgribusinessLitigation Others
13
![Page 14: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/14.jpg)
Litigation Support Service ProvidersCompetition consists of •Litigation consulting firms•Accounting firms•Boutiques•Other appraisers
14
![Page 15: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/15.jpg)
Why Lit Support SpecialistsSpecial expertise and knowledge in required including understanding•How the real estate and capital markets operate•Valuation theory•Damages theory (separate BOK)
15
![Page 16: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/16.jpg)
Why Lit Support Specialists• Nuances of litigation
Legal theories Case and statutory law IRS regulations and guidelines Rules of court Federal Rule 26 Daubert issues and exclusion of a witness Discovery rules
16
![Page 17: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/17.jpg)
Why Lit Support SpecialistsHigh stakes litigation requires a specialist willing to make commitments to •Performing the necessary, relevant research and understand the theory of the case•Willingness to testify and have your actions, personal character, and expert report subjected to intense scrutiny•Firm commitment to be available at time of trial to be mentally engaged and available to assist in preparation and during the actual trial
17
![Page 18: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/18.jpg)
OpportunitiesWhere they are notWhere they are• Law firms• In-house counsel and corporations• Debt holders (not mortgage departments of
banks)• Property owners• Government (limited opportunities beyond
eminent domain)18
![Page 19: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/19.jpg)
Engagement ProtocolsDuration of an engagement can be weeks, months, or years•Requires team approach with requisite experience, skill sets, and competencies •Billing is normally hourly with periodic (e.g., monthly) invoicing•Expenses are reimbursable•Reimbursement for administrative overhead•Retainers (three basic types)
19
![Page 20: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/20.jpg)
20
Damages ModelUniversal Damages Model
1 2 3 4 5 6 7 8 9 10
Time
Inc
om
e LOST INCOME
Event 1 Event 2
Today
Historical/Estmated"But For" Income
Actual HistoricalIncome
![Page 21: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/21.jpg)
21
![Page 22: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/22.jpg)
Understanding the engagement1
Are you qualified to be an expert? •Stay within your area(s) of expertise•You cannot be an expert in all things•What you say, can and will be used against you to impeach your credibility for years to come. The litigation arena is a small community in which lawyers and others research and share information regarding the prior testimony, writings, and reports of witnesses.
_ ________________1. Visit www.wisehart-wisehart
22
![Page 23: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/23.jpg)
Understanding the engagementDaubert or similar challenges•Methods must be able to be tested•Methods must be accepted and used by your peers•No “junk” science•Other criteria
23
![Page 24: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/24.jpg)
Understanding the engagementKnow rules of jurisdiction•Reports
• Written• Oral
•If written report, need to understand the scope, content, and format imposed by the local jurisdiction
24
![Page 25: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/25.jpg)
Case Study No. 1Plaintiff is suing for breach of fiduciary duty and overcharges by joint-venture partner•Nine major properties in various stages of completion plus portfolio of dozens of big box stores•Allegations that joint venture partner failed to complete a single construction project on time or on budget, failed to actively lease and sell properties, and overcharged for insurance, management, and maintenance
25
![Page 26: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/26.jpg)
Case Study No. 1Necessary to research, review, and analyze•Investment memoranda and partnership agreements•Detailed history of each property •Numerous financial models and spreadsheets•Pleadings and deposition testimony of important witness•Actual performance of each property from date acquired (all purchased on different dates)
26
![Page 27: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/27.jpg)
Case Study No. 1Necessary to research, review, and analyze (cont’d)•Trade areas of each property•Representations made by JV partner regarding rent levels achievable, when stabilized occupancy would be reached, when construction would be completed, when sales would occur, etc.•Comparison of what was promised to what actually took place (control for “noise” in the data)•Compare categories of alleged overcharges to market expenses for same costs
27
![Page 28: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/28.jpg)
Case Study No. 2
Indian Nation claim against the State of New York regarding damages for underpayment of 250,000 acres that were purchased by the state in a number of transactions between 1795 and 1824
Claim is for financial damages only. Indian Nation was not asserting right or title to the land
28
![Page 29: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/29.jpg)
Case Study No. 2
Issues for the experts•Is there factual evidence proving that the Indian Nation was paid less than market value?•What is the measure of damages
Land value today discounted back to the dates of each purchase?
Difference between what the state actually paid and the property’s market value?
29
![Page 30: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/30.jpg)
Case Study No. 2• Difference between payments and market value
How is the difference established? How can the present value of the damages be
calculated when no single index existed over the entire period that could provide a benchmark and the period’s history was often volatile, including bank failures, depressions, natural disasters, and armed conflict (e.g., War of 1812, the Civil War, and two world wars)?
30
![Page 31: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/31.jpg)
Case Study No. 3Lender liability case involving luxury condominiums•Construction loan assigned from one lender to another•Second lender taken over by FDIC in 2007•After takeover, the FDIC funded 4 monthly draws and then stops funding•Project remained partially completed; 2008 downturn occurs and damages any prospect for refinancing or completion of construction in the immediate future
31
![Page 32: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/32.jpg)
Case Study No. 4
Regional Mall•Anchor store had gone dark due to bankruptcy•Another major anchor department store decided to vacate its space 4 years prematurely (breach of operating agreement)
32
![Page 33: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/33.jpg)
Case Study No. 4
• Co-tenancy clauses presented a potentially cascading effect of vacancies
• Needed to develop “but for” or baseline scenario and then project what was likely to happen
• Inputs (assumptions) related to co-tenancy and lease renewals were largely based on retails sales per square foot
33
![Page 34: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/34.jpg)
Case Study No. 4
• Additional Problems Complex model to understand/explain Numerous inputs More than one year had elapsed to time of
the mediation (trial); model needed to be updated
• Other expert at mediation was not an appraiser
34
![Page 35: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/35.jpg)
Case Study No. 5
Alleged breach of contract by major hotel company•Property located western U.S.•Consisted of a master planned community of luxury home sites, several golf courses, and a large site at center for luxury resort hotel•Contract of sale to resort hotel required construction of luxury resort
35
![Page 36: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/36.jpg)
Case Study No. 5
• Hotel company breaches contract and fails to build
• Necessary to develop “but for” scenario Sales of home sites around golf and resort Financial performance of golf courses in
residential communities with luxury resorts
36
![Page 37: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/37.jpg)
Case Study No. 5
• Damages resulting from breach of contract Comparison of “but for” scenario (with
luxury resort hotel) to scenario without luxury resort hotel reflecting impact of the breach on residential prices and golf course operations
37
![Page 38: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/38.jpg)
Case Study No. 6
Groundwater contamination – Background•Contamination of 1.5 acres of 31.5-acre site•Responsible party accepted cost of remediation•No liability of property owner for cleanup •Contamination is 10 feet and deeper; water table is 6 feet. Therefore, natural features (i.e., not contamination) limit excavation•Restrictions on well drilling imposed
38
![Page 39: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/39.jpg)
Case Study No. 6• Case studies of similar properties suggest no
damages• Public water readily available. Property owners in
the area do not drill wellsNecessary to review• Pleadings and deposition testimony• Statutes relating to contaminated properties• Consult with environmental engineers• Valuation and damages literature
39
![Page 40: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/40.jpg)
Case Study No. 6Hierarchy of proof in contamination matters•Empirical evidence•Case studies•Interviews and surveys
40
![Page 41: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/41.jpg)
Scope of Work – Review/Rebuttal ReportsScope of work may include review•Appraisal report or other expert report (e.g., damages model)•Workfile•Transcript of deposition testimony•Any combination of the aboveIf preparing an appraisal review report, it must comply with Standard 3
41
![Page 42: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/42.jpg)
Standard 3 Compliance Includes Many thingsStandard 3 compliance includes the following criteria, among others•Date of the review•Effective date of review•Edition of USPAP in effect on the date of the report under review•Other USPAP-imposed requirements
42
![Page 43: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/43.jpg)
Standard 3 Compliance Includes Many things• Identify
Report under review Date of that report Effective date of value Value appraised
• Other requirements
43
![Page 44: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/44.jpg)
Scope of Work• Whether property will be inspected• Data (e.g., sales, rentals, economic information) is
complete, accurate, and property analyzed, developed, and presented
• Other documents that will be examined as part of the review process
44
![Page 45: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/45.jpg)
Scope of WorkExample scope of work – assuming review of appraisal report, workfile, and deposition testimony•Evaluate completeness of report/work•Adequacy and relevance of data presented•Propriety of adjustments to the data•Appropriateness of valuation techniques employed
45
![Page 46: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/46.jpg)
Scope of Work• Whether conclusions expressed are appropriate
and reasonable• Identity material errors, if any• Determine whether report under review complies
with generally recognized and accepted valuation principles and damages theory
46
![Page 47: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/47.jpg)
Scope of Work• Review deposition testimony for inconsistencies
with written report and conformity with generally recognized appraisal methods and damages principles
• Review workfile for information that may be inconsistent with written report Contradicts written report Data contrary to the appraiser’s opinions that
was either ignored or overlooked.47
![Page 48: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/48.jpg)
Appraisal Review/Rebuttal Reports PresentationDo not make it look like an appraisal or an old-style appraisal reviewUse blank paper, double spacingInclude a table of contentsOrganize with headings that are numberedAvoid bold face or italicized text Make free use of footnotes and attached exhibitsFocus on organization, reasoning, clarity, accuracy, and brevity
48
![Page 49: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/49.jpg)
Appraisal Review/Rebuttal Reports
Use active voiceUse first person – avoid referring to yourself in the
third personIf you need to, use party names – avoid using
Plaintiff and DefendantAvoid invective and personal attack on opposing
expertBe professional and courteous
49
![Page 50: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/50.jpg)
Appraisal Review/Rebuttal Reports
May want to refer to the report itself as opposed to the opposing expert’s nameDo not use boilerplate (no one is fooled and it suggests a lack of comitment and attention)Do not use rote, meaningless appraiser-like wording (e.g., “misleading”)
50
![Page 51: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/51.jpg)
Avoid biased, perconceived reaction - merely because an opposing expert disagrees with you does not mean that he/she is unethical ( the appraiser’s disease).
51
![Page 52: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/52.jpg)
Other Lessons
Verify and reconfirm accuracy of all statements you make. This is vitally imortant.
Avoid statements that cannot be forcefully supported Avoid any and all speculation. (If you don’t know
with reasonable certainty, don’t say it)• Do not use of “assumption”
Has pejorative connotation in litigation Use “input” instead
52
![Page 53: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/53.jpg)
Other Lessons
• Avoid ambiguity and imprecision Be absolutely clear Think of all opinions expressed and
statements made in terms of ability to be distorted on cross examination or at depositions
• Avoid making statements or relying on information or data that has not been properly confirmed
53
![Page 54: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/54.jpg)
Drew K. Kapur, Esq.Partner
Duane Morris LLP
![Page 55: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/55.jpg)
Taking Expert Valuation Skills to the Next Level
• Role and Issues for Expert Appraisers in Legal Process
• Condemnation and Takings Issues• Severance Damages Issues in Condemnation• Special Damages-Related Issues in
Condemnation• Reasonable Probability Issues in Valuation
55
![Page 56: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/56.jpg)
EXPERTS
Generally, your role is as…
•Team Player•Salesman v. Report Writer
56
![Page 57: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/57.jpg)
EXPERTS
Discovery…•Listen to the Questions•Understand the Questions•Understand why you are being asked the Questions•Answer the Questions•Shut up (Don’t volunteer any additional information)
57
![Page 58: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/58.jpg)
EXPERTS
Examination•Direct
Jury interaction•Cross
Jury interaction less important•Rebuttal
Assignments where you are also testifying on direct
Assignments where your testimony is limited to rebuttal 58
![Page 59: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/59.jpg)
EXPERTSSpecial Issues for AppraisersAdvocacy: • An appraiser must not advocate the cause or
interest of any party or issue. [Ethics Rule, Conduct, USPAP 2012-2013 Edition]
Helping attorney prepare for cross examination Rebuttal
59
![Page 60: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/60.jpg)
CONDEMNATION
Just Compensation:•An owner of property is entitled to be put in as good a position pecuniarily as if his property had not been taken.
[Olson v. United States, 292 U.S. 246 (1934)]
60
![Page 61: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/61.jpg)
CONDEMNATION
Fair Market Value:•What a willing Seller would accept and a willing Buyer would pay, neither being under any compulsion to act
61
![Page 62: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/62.jpg)
CONDEMNATIONTakings:•Total: Single component of Just Compensation
Value of property•Partial: Two components of Just Compensation
Value of Property Diminution of value of remainder (Severance
Damages) Two formulas to calculate Just Compensation
in a partial taking case62
![Page 63: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/63.jpg)
CONDEMNATION
1. “Per Se” Analysis Value of property + Severance damages = Just
compensation
• Accurate, but not practical
63
![Page 64: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/64.jpg)
CONDEMNATION
2. “Before and After” Analysis Value of property before taking (as unaffected by the taking) – Value of property after the taking
= Just compensation
64
![Page 65: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/65.jpg)
CONDEMNATIONSeverance Damages•Compensable (protectable property rights}
1. Loss of parking/vehicle display2. Lot size/shape/building envelope3. On-site circulation4. Drainage/grading
65
![Page 66: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/66.jpg)
Sharkey’s Bar & Grill – Taking
66
![Page 67: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/67.jpg)
Sharkey’s Bar & Grill – Area #1
67
![Page 68: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/68.jpg)
Sharkey’s Bar & Grill – Area #2
68
![Page 69: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/69.jpg)
CONDEMNATION
Severance Damages•Compensable (protectable property rights}
5. Proximity6. Noise/dust/fumes
69
![Page 70: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/70.jpg)
New St. Mary’s Cemetery #1
70
![Page 71: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/71.jpg)
New St. Mary’s Cemetery #2
71
![Page 72: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/72.jpg)
New St. Mary’s Cemetery #3
72
![Page 73: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/73.jpg)
New St. Mary’s Cemetery #3
73
![Page 74: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/74.jpg)
CONDEMNATIONSeverance Damages•Compensable (protectable property rights}
7. Nonconformance with zoning / land use controls
- Pre-existing, non-conforming status8. Cures (interior / exterior)
- Cannot exceed damages
74
![Page 75: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/75.jpg)
Olga’s Diner #1
75
![Page 76: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/76.jpg)
Olga’s Diner #2
76
![Page 77: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/77.jpg)
Olga’s Diner #3
77
![Page 78: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/78.jpg)
Olga’s Diner #4
78
![Page 79: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/79.jpg)
Olga’s Diner #5
79
![Page 80: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/80.jpg)
Olga’s Diner #6
80
![Page 81: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/81.jpg)
Olga’s Diner #7
81
![Page 82: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/82.jpg)
Olga’s Diner #8
82
![Page 83: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/83.jpg)
Olga’s Diner #9
83
![Page 84: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/84.jpg)
CONDEMNATIONSeverance Damages•Noncompensable (nonprotectable property rights): Consistent with definition of Just Compensation?
1. Access per se- Right of reasonable access- “Police power”
2. Circuity of travel- No property right
84
![Page 85: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/85.jpg)
CONDEMNATIONSeverance Damages•Noncompensable (nonprotectable property rights): Consistent with definition of Just Compensation?
3. Diversion of traffic- No property right
4. Visibility- View in (nonprotectable)- View out (protectable)
85
![Page 86: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/86.jpg)
CONDEMNATIONSeverance Damages Utah Department of Transportation v. Admiral Beverage, 275 P.3d 693 (Utah 2011) 1. Recognition that it is extremely difficult for an appraiser to segregate and apportion market value based on artificial distinctions between protectable and nonprotectable property rights
86
![Page 87: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/87.jpg)
CONDEMNATIONSeverance Damages
Utah Department of Transportation v. Admiral Beverage, 275 P.3d 693 (Utah 2011) 2. No set of conventions that appraisers can readily apply when they are asked to value a property in reference to protected and nonprotected property rights; impossible to isolate and identify the values associated with loss of view and loss of visibility
87
![Page 88: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/88.jpg)
CONDEMNATIONSeverance Damages
Utah Department of Transportation v. Admiral Beverage, 275 P.3d 693 (Utah 2011) 3. Comparable sales are not available in which buyers and sellers ignore value that can be attributed to categories of certain nonprotectable property rights
88
![Page 89: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/89.jpg)
CONDEMNATIONSeverance Damages
Utah Department of Transportation v. Admiral Beverage, 275 P.3d 693 (Utah 2011) 4. “Given the extreme difficulty, if not impossibility, of properly apportioning value based on artificial distinctions between protectable and nonprotectable property rights,… [appraisers must] resort to rank speculation when attempting to exclude the loss of visibility from fair market value.” 89
![Page 90: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/90.jpg)
CONDEMNATIONSeverance Damages•Noncompensable (nonprotectable property rights): Consistent with definition of Just Compensation?
5. Business loss / lost profit- Speculation- Highest and Best use v. business loss / lost
profit* Gallonage
90
![Page 91: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/91.jpg)
CONDEMNATIONSpecial Damages-Related Issues1.Condemnation v. Ad Valorem Assessment Appeals
– Noncompensable / nonprotectable property rights)
2.Benefits– General benefits– Special benefits
* “Before and After” analysis* Offset damages
91
![Page 92: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/92.jpg)
CONDEMNATIONSpecial Damages-Related Issues
3. Temporary takings / construction easements–Duration–Area impacted
* Area encumbered only* Remainder of site
–Valuation* Rental value* Discounted After value
4. Permanent easements92
![Page 93: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/93.jpg)
REASONABLE PROBABILITYDate of value (snapshot in time)•Existing conditions•Future conditions
93
![Page 94: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/94.jpg)
REASONABLE PROBABILITYDate of value (snapshot)•Existing conditions•Future conditions
Zoning Change
94
![Page 95: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/95.jpg)
REASONABLE PROBABILITYDate of value (snapshot)•Existing conditions•Future conditions
Variance
95
![Page 96: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/96.jpg)
REASONABLE PROBABILITYDate of value (snapshot)•Existing conditions•Future conditions
Site Plan approval
96
![Page 97: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/97.jpg)
Taking Expert Valuation Skills to the Next Level
• Role and Issues for Expert Appraisers in Legal Process
• Condemnation and Takings Issues• Severance Damages Issues in
Condemnation• Special Damages-Related Issues in
Condemnation• Reasonable Probability Issues in Valuation
97
![Page 98: Complex Commercial Litigation Taking Expert Valuation Skills to the Next Level 2.](https://reader030.fdocuments.in/reader030/viewer/2022032722/56649ced5503460f949ba08a/html5/thumbnails/98.jpg)
Contact Information
Drew K. KapurDuane Morris [email protected]
Richard MarchitelliCushman & [email protected]
98