Fourth Circuit Reverses Summary Judgment in Favor of Pipeline Company

This case serves as a reminder that the client usually knows more about their property that anyone else.  Don’t hesitate to put them on the stand!

The Fourth Circuit issued an opinion on January 27, 2025 in Mountain Valley Pipeline, LLC v. 0.32 ACRES OF LAND, Owned by Grace Minor Terry. Full opinion here: Mountain Valley Pipeline 4th Cir 1-27-25.  The Circuit Court reversed the District Court’s grant of summary judgment that just compensation was $10,300, and remanded for further proceedings.  The Circuit Court found that the District Court abused its discretion in barring the lay opinion testimony of the property owner on the value of her property; and applied the incorrect legal standard in excluding her appraisal expert’s opinion on just compensation (i.e., the delta beyween the value of the property before the taking and after the taking).  The real salt in the wound was that after the District Court gutted the owner’s case, the Pipeline Company stipulated to the property owner’s “before value” of $1,000,000, and then moved for summary judgment that the after value was only 1% less, or $10,300 (when adding in $300 for the easement taking).

The Circuit Court emphasized that Grace Terry’s family had owned the property since the 1840s, which consisted of “more than 500 acres of unimproved land on top of Poor Mountain, Virginia.  In 2007, she voluntarily deeded a conservation easement over the entirety of her parcel to the Virginia Outdoors Foundation (the “conservation easement”). The conservation easement prohibits subdivision, limits construction to only one homesite, and restricts the location of that homesite.  Honeysuckle Road, a public thoroughfare, cuts through Terry’s land. It sees little traffic as it leads only to a gated police communications tower. An old logging road, impassable by car, branches off Honeysuckle Road through the northwest corner of the parcel toward the top of the mountain.” Slip op. at 3.

The District Court barred the property owner from testifying to the value of her property.  “The district court abused its discretion by preventing Terry, the landowner, from testifying as to damages.  The threshold for admissibility of landowner testimony in takings cases is low.  “Courts indulge a common-law presumption that a property owner is competent to testify on the value of his own property.” Landowner testimony is generally admitted as lay opinion testimony under Rule 701 and is sometimes justified by the landowner’s special knowledge of their land.

“First, the court incorrectly disregarded Terry’s argument that her personal knowledge of her land was a basis for her opinion on damages. When explaining why the access road interfered with the best location for a house on her property, Terry explained:

Well, the problem is, as I see it, is that that spot, that exact spot [of the access easement] was already there for [a buyer] to put a house close by, and then that is their place where they hike to and take their friends and say, “Look at this from here,” you know, “Look at this. Isn’t this glorious?” You can see Spring Hollow Reservoir. In the snow, it’s just a dot of blue, so . . . that ability to be able to hike up and enjoy that beautiful part of the property and have the way to get to it is, you know, gone[.] J.A. 253. This is precisely the kind of personal knowledge which justifies the presumption that landowners are qualified to testify to the value of their land.” Slip op. at 9.

Second, it was admissible for Terry to compare the damage caused by the access road to the damage caused by the pipeline easements in Sales One and Two. Landowners may base their valuation opinion on comparable property sales.  Terry is deeply familiar with her property—it has been in her family since the 1840s. Terry’s testimony on these comparable sales was particularly salient because she explained that she knew the seller in Sale One and that he “unloaded” his property for a loss because “it had a pipeline proposed to go through it.”

“The District Court also barred the owner’s expert from testifying.  Turning to the district court’s exclusion of the Gruelle Report under Rule 702, we conclude that it applied “erroneous legal principles.” Westberry, 178 F.3d at 261. In reaching this conclusion, we are guided by our analysis in 9.89 Acres, which we also issue today.  As we explain in 9.89 Acres, Federal Rule of Civil Procedure 71.1 does not change the court’s standard Federal Rule of Evidence 702 analysis, which is designed to ensure that an expert’s methodology is reliable.  Rule 702 requires courts to exclude an expert report where the expert’s methodology is not based on sufficient facts or data.”

“Here, rather than conducting a traditional analysis under Rule 702, the court stated that “[t]he gatekeeping role of the district court is particularly pronounced in condemnation proceedings under Rule 71.1.” 0.32 Acres of Land, 2022 WL 4091860, at *4. The court therefore identified contested factual issues in the Gruelle Report, disagreed with Gruelle’s view of those contested facts, and determined that these “errors and omissions” rendered the Report entirely inadmissible under the Rules of Evidence. Id. at *5. This was the wrong approach. “Rather, the court must first apply [the] Rules [of Evidence] to determine the universe of evidence that it will then use to ‘tr[y] all issues’ under Rule 71.1(h)(1).” 9.89 Acres, No. 23-2129, slip op. at 9. Thus, the correct inquiry at the admissibility stage is more modest than the one undertaken by the district court below: it should ask only whether the expert’s methodology was reliable and was based on sufficient facts or data, keeping in mind that the expert “need not be precisely informed about all details of the issues raised in order to offer an opinion.”  Therfore, the District Court’s decision to bar the report was error.

The field should be more level at the remand trial.