X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:Appellee, Hartman Reit Operating Partnership, sued appellant, Harris County Appraisal District, to lower its ad valorem tax liability for tax years 1999 through 2003 for its Kempwood Plaza Ltd. (Kempwood) property. Prior to the trial, HCAD filed a motion to exclude Gary Brown, Hartman’s expert appraisal witness. The trial court denied HCAD’s motion. HCAD subsequently re-urged the motion prior to Brown’s testimony, after Hartman closed, and, after the jury returned a verdict in favor of Hartman, in a motion for judgment notwithstanding the verdict. Each time, the trial court denied the request. HCAD appeals the judgment, HOLDING:Affirmed. In addressing relevance of Brown’s testimony, the court determines that Brown’s job for the trial, at minimum, was to find a reasonable number of comparable properties, make appropriate adjustments, and compare the median appraisal value of those properties to the appraisal value applied to Kempwood. The court states that he did this. This case turns on whether Brown’s underlying data was reliable. Both parties pay significant attention to Weingarten Realty Investors v. Harris County Appraisal District, 93 S.W.3d 280 (Tex. App. -Houston [14th Dist.] 2002, no pet.). The facts of Weingarten are similar to this case. However, in that case, the trial court granted HCAD’s motion to exclude the expert witness. The court of appeals affirmed, finding deficiencies in the witness’s underlying data. The court finds that Brown avoided the types of deficiencies in Weingarten. For example, Brown’s final list contained properties both larger and smaller than Kempwood to avoid the first problem in Wiengarten, that of choosing only smaller compared properties. HCAD argues that nine properties was not a reasonable number for the purposes of the former �42.26(d) of the Texas Tax Code. The court disagrees. Brown ran a query for similar properties in the same approximate area as Kempwood in order to avoid the pitfall of comparing unrelated properties. Based on his criteria, he was left with nine properties. Thus, Brown had the choice to either base his evaluation on those nine properties or to expand his list by including properties that had fewer similarities to Kempwood. HCAD complains that Brown “made no effort to verify [HCAD's] information.” The court sees no reason why Brown should be expected to verify HCAD’s data. HCAD complains that Brown did not research the occupancy rates of the compared properties. Brown admitted that he did not, but he also said that the classification of Building Class D already accounted for this characteristic. HCAD argues that Brown’s adjustments for age were flawed because they did not take into account the correct year that Kempwood was constructed. Absent a showing that HCAD did not use 1970, the year used by Brown and listed on HCAD’s Website, as the year of construction, the court holds there was no error in Brown’s using the same year. For the properties that Brown did adjust for age, HCAD argues that Brown was unable to “explain the math” behind his adjustments. While Brown providef a rationale for the adjustments he made, there was no precise mathematical formulation that led to his using 15 percent as the rate of adjustment. However, this was not required. For each of the compared properties adjusted with respect to age, Brown used the same 15 percent rate of adjustment; thus, the lack of a mathematical formula in this circumstance does not raise any suspicion of an analytical gap. Brown made a number of adjustment decisions based on the assumption that the Building Class D already accounted for a number of factors. The court does not hold that those assumptions were correct. But, while HCAD questioned the reliability of that assumption multiple times, it presented no evidence to show that this assumption was incorrect. HCAD argues that United Investors, a case in the line of Weingarten, holds that when there is no evidence of market value, the court should presume that all of the properties were valued at their market value. Harris County Appraisal Dist. v. United Investors Realty Trust, 47 S.W.3d 648 (Tex. App. Houston [14th Dist.] 2001, pet. denied). HCAD further argues that, because there is evidence of Kempwood’s market value in 1999, it would be unconstitutional not to use that value. The court finds no such holding in United Investors. Four of the compared properties were divided among different owners and three of the compared properties had additional construction in later years. These problems raise some question as to the reliability of Brown’s underlying data, and the trial court expressed misgivings about the reliability of Brown’s data. Nevertheless, a trial court enjoys wide latitude in determining whether expert testimony is admissible. The court concludes that the trial court did not abuse its discretion in admitting Brown’s expert testimony. OPINION:Higley, J.; Nuchia, Jennings and Higley, JJ.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 1 article* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.