Saturday, April 03, 2004

1st Circuit Refuses to Overturn Real Estate Appraiser's Report

The First Circuit has published an opinion holding that the trial court's refusal to exclude testimony from a real estate appraiser was, if erroneous, harmlessly so. The underlying dispute involved the sale of a Nantucket property. The buyers backed out, late in the proceedings, when they decided to move to the West coast for a job opening. As an alternative to forfeiture of the buyers' $205,000 deposit, the parties agreed that the owners would relist the property through the real estate brokerage they owned, at a price of their specification, for eight months, and apply toward the first buyers' deposit any proceeds from resale exceeding the original price. When the property failed to sell within the prescribed period (at an asking price about $500,000 higher than the original one), the property was taken off the market, and the owners refused to repay any portion of the deposit. The buyers sued, alleging that the owners had failed to make good-faith efforts to resell the property.

The jury rendered a verdict in the buyers' favor. Part of the evidence before the jury was a 45-page report from the buyers' appraisal expert. "Buried" in the final page of that report (that's the First Circuit's language) was the appraiser's opinion that a reasonable marketing period for the property would have been six to twelve months.

On appeal, the owners argued that the buyers' expert was unqualified to render an opinion on the appropriate marketing period, and also that he failed to employ reliable methods. The buyers countered that the owners had waived the issue, because at trial, the owners merely objected globally to the entire report, without specifying what specific portions were objectionable. The First Circuit panel held that even if the owners' trial objection failed to satisfy Fed. R. Evid. 103(a)(1) (requiring that evidentiary objections at trial include a statement of the "specific ground of objection"), the owners had otherwise preserved the point under Rule 103(a) by securing a definitive ruling on the report's admissibility via pretrial motion in limine. (What the First Circuit's opinion doesn't say is whether that prior motion in limine satisfied the particularity requirements of Fed. R. Civ. P. 7(b)(1), but perhaps that issue wasn't before it.)

"Freed from this procedural snag," the First Circuit turned to the substance of the owners' argument and concluded that any error was harmless. The buyers' counsel never referred during closing to the expert's opinion on an appropriate marketing period, and the jury heard ample evidence from other sources, the panel said, to support a conclusion that the owners kept the property listed at an inflated asking price to ward off potential buyers. See Zachar v. Lee, No. 03-2189 (1st Cir. Apr. 2, 2004) (Selya, Coffin, & Smith, JJ.).

Update 4/4/04: Our original description of the facts of this case didn't get things quite straight, and so we have revised it.

Further update 4/4/04: Tom Kirkendall got it right on the first try, so maybe you should go read his weblog.
Fed. R. Evid. 702: If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.