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United States of America v. 14.3 Acres of Land

June 10, 2011

UNITED STATES OF AMERICA,
PLAINTIFF,
v.
14.3 ACRES OF LAND, MORE OR LESS, RELATED TESTIMONY SITUATED IN SAN DIEGO COUNTY, STATE OF CALIFORNIA; TIMOTHY LICHTY AND
CHERYL LEE LICHTY, CO-TRUSTEES OF THE TIM AND SHERRY LICHTY FAMILY TRUST ; AND OTHER INTERESTED PARTIES, DEFENDANTS.



The opinion of the court was delivered by: Hon. Nita L. Stormes U.S. Magistrate Judge United States District Court

DATED OCTOBER 24, 1991

ORDER GRANTING PLAINTIFF'S MOTION TO STRIKE DEFENDANTS' EXPERT'S REPORTS AND EXCLUDE [Doc. No. 165]

Before the Court in the above-captioned matter is Plaintiff's Motion to Exclude the Second Supplemental Expert Report of Jeffrey Kauttu. [Docket No. 165.] Plaintiff requests that the Court find good cause to impose evidentiary sanctions pursuant to Federal Rule of Civil Procedure 37(c) against Defendants for alleged violations of court-imposed deadlines and the Federal Rules of Civil Procedure governing the exchange of expert reports. Defendants filed an opposition to the motion [Docket No. 169], and Plaintiff filed a reply [Doc. No. 170.] This is the third time that a motion to exclude a Kauttu report has been brought in this case. The Original Kauttu Report was timely submitted on January 25, 2008. On December 19, 2008, Defendants submitted a Supplemental Kauttu Report. On January 30, 2009, the Court Granted the Government's Motion to Strike the Supplemental Report. [Docket No. 78.] On February 3, 2011, the Court granted in part the Government's Motion in Limine Number 2, and excluded a part of the Original Kauttu Report. [Docket Nos. 152, 154.] On April 26, 2011, Defendants submitted a Second Supplemental Kauttu Report. [Docket No. 165-2.] It is this Second Supplemental Kauttu Report that is the subject of the current motion to strike. The Court finds that the Motion is suitable for disposition on the papers submitted. For the reasons stated below, the Court GRANTS Plaintiff's motion.

I.BACKGROUND

A. The Litigation

This action arises from the condemnation of 14.3 acres of land adjacent to the United States -- Mexico border. On May 16, 2007, the United States government (Plaintiff in this case, hereafter "Government"), acting under the authority of the Department of Homeland Security Act,6 U.S.C. §§ 111, 202, 251, and 557, took possession of Defendants Timothy and Cheryl Lichty's (hereafter "Defendants") property in south San Diego County in connection with the Border Fence project. (See Decl'n. of Taking, Docket No. 3, Schedules "A" and "C" attached.) At the time of filing the Declaration of Taking, the government deposited into the Registry of this Court the amount of Three Hundred Fifty-Eight Thousand Dollars ($358,000.00) as estimated just compensation for Defendants' condemned property. (See Joint Motion for Disbursement of Funds, Docket No. 6.) On October 17, 2008, the Government deposited supplemental estimated just compensation for taking the estate condemned, in the amount of Seven Hundred Eighty-Seven Thousand Dollars ($787,000.00.) [Docket No. 50.] Defendants do not challenge the statutory authority for the taking. The sole issue in this case is whether the previously disbursed funds constitute just compensation for the land.

The discovery period in this case began in September 2007 and closed on August 1, 2008. The parties focused their discovery efforts primarily on obtaining documentation and expert opinions regarding the fair market value of Defendants' land on the date of the taking. In November 2007, the Court issued a Scheduling Order setting discovery deadlines and other pretrial proceedings. [Scheduling Order, Docket No. 14.] The instant motion concerns the deadlines set for the exchange of expert disclosures. Paragraph 3 of the Scheduling Order provides as follows:

Defendants' expert disclosures required by Fed. R. Civ. P. 26(a)(2) shall be served on all parties on or before January 31, 2008. Plaintiff's expert disclosures required by Fed. R. Civ. P. 26(a)(2) shall be served on all parties on or before April 30, 2008. Any contradictory or rebuttal information shall be disclosed on or before May 30,2008. [Docket No. 14 at p.2.] (Emphasis in original). This paragraph also references the duty to supplement expert disclosures pursuant to Federal Rules of Civil Procedure 26(e) and 26(a)(3) prior to the December 1, 2008 deadline set for pretrial disclosures, and emphasizes that failure to comply with these deadlines may result in the sanctions provided for by Rule 37, including the exclusion of evidence. (Id.)

B. The Original Kauttu Report

The Original Kauttu Report estimated the value of the property at $6.2 million, based on a valuation of the residential component of the property at $5.2 million and a valuation of an additional $1 million for the coastal wetland mitigation component, consisting of 3.96 acres of degraded wetlands. Because this land is part of the Multiple Species Conservation Program, only 25% of the parcel can be developed and 75% of the parcel must be set aside and used solely for environmental mitigation. SDMC § 143.0152; see also Stedt Depo, Consol Ex. 3.*fn1 Accordingly, the report's valuation of the residential component is based upon 3.58 acres (25% of the 14.3 acres) available for residential development.

C. The First Supplemental Kauttu Report

On December 19, 2008, Defendants issued the First Supplemental Report of expert witness Jeffrey Kauttu ("Kauttu"). The First Supplemental Report was served three weeks after the December 1, 2008 deadline for producing Supplemental Expert Reports and only days before the Pretrial Conference. The First Supplemental Kauttu Report was different from the original in two ways: 1) the valuation of the 3.96 acres of degraded wetlands was increased from $1,000,000 to $1,600,000; and 2) a mitigation valuation of $546,000 for the 6.83 acres of uplands was provided for the first time. The First Supplemental Kauttu Report did not alter Kauttu's conclusion in the Original Kauttu Report that the best use is as mixed residential and mitigation, but it did increase the estimated value from $6.2 million to $6.8 million. The Government moved to Strike the First Supplemental Report, asserting that it was untimely and should be excluded. [Docket No. 75.] On January 30, 2009, the Court issued an Order Granting the Motion to Strike and Exclude Testimony. [Docket No. 78.]*fn2 The Court rejected Defendants' argument that the First Supplemental Kauttu Report was based on new information that, despite their best efforts, Defendants could not obtain until three days before the Final Pretrial Conference. The Court found that the First Supplemental Kauttu Report was neither justified nor harmless and had to be excluded.

D. The Striking of Part of the Original Kauttu Report

The Government moved in limine to exclude the Original Kauttu Report based on a violation of the unit rule and other methodological errors. On February 3, 2011, the Court granted, in part, the Government's Motion in Limine to Exclude Kauttu's valuation of the property because it violated the unit rule. [Docket No. 152.] The Court found that the Original Kauttu Report had improperly double counted the 3.96 acres of degraded wetlands as both for the sale of mitigation credits and as part of the 75% of the parcel that had to be set aside in order to develop the remaining 25% of the land. Under the unit rule, "separately appraising individual components of value and adding them together to reach the whole value is a piecemeal approach which can easily result in double-counting and is impermissible." U.S. v.6.24 Acres of Land, 99 F.3d 1140, 1144 (6th Cir.1996), quoting United States v. 2,175.86 Acres of Land, 687 F.Supp. 1079, 1088 (E.D. Tex.1988); see also United States v. 8.41 Acres of Land, 680 F.2d 388, 395 (5th Cir.1982)(valuation of separate ...


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