Even Qualified Experts Can Face Admissibility Challenges
Sometimes, even obviously qualified experts using reliable methods can find themselves the subject of challenges to the admissibility of their testimony. This article describes a Michigan case, B & L Development LLC v. City of Norton Shores, involving a property tax assessment. Ultimately, a court of appeals dismissed the city’s overarching contention that a trial court is required to conduct a “searching inquiry” into an expert’s underlying data before admitting the expert’s testimony.
Qualified expert testimony can make or break a case. But even obviously qualified experts using reliable methods can find themselves the subject of challenges to the admissibility of their testimony. In one extreme example, the challenge made it all the way to the Michigan Court of Appeals, despite the fact that the experts on both sides of the case used the same methods.
Developer disputes tax assessment B & L Development LLC v. City of Norton Shores began with a property tax assessment. The taxpayers owned a real estate development company that developed a strip mall. A much larger shopping mall was developed east of the taxpayers’ property and several big box retail stores were located to its south and southeast. Little development occurred near the strip mall and the taxpayers had difficulty landing tenants.
The city’s original property tax assessment valued the strip mall at about $6.2 million for 2009 and $5.9 million for 2010. The taxpayers claimed that the fair market value of the property was $3.8 million and $3.2 million, respectively. Both sides’ experts agreed that the capitalization of income method was the most appropriate valuation technique. The premise of the capitalization of income method is that a property’s value is related to how much income it can earn. The taxpayers’ expert testified that the character of the property and its location resulted in a low value. The city’s expert disagreed, contending that the location and character were fine but the taxpayers’ management was lacking. The state tax tribunal adopted the taxpayers’ value.
At the trial court level, the city argued that the tax tribunal — which is charged with following the rules of evidence as far as practical — abandoned its role as a gatekeeper for expert testimony. Specifically, the tribunal failed when it presented the taxpayers’ expert to testify without properly scrutinizing his data and methodology. However, the trial court also accepted the taxpayers’ expert as a witness and admitted his appraisal as evidence. The city turned to the state court of appeals for relief.
Weight vs. admissibility
On appeal, the city asserted that the tax tribunal had erred in failing to act as gatekeeper (under the state equivalent to Federal Rule of Evidence 702) in admitting the testimony and appraisal of the taxpayers’ expert into evidence. The city didn’t dispute the expert’s qualifications to offer an opinion but questioned the reliability of the specific opinion itself.
The city called on the tax tribunal to set forth a “full and throaty announcement to the tax bar” that the tribunal would actively enforce reliability standards. According to the appellate court, though, the gist of the city’s argument related to the interpretation and application of data.
Disagreements over an expert’s interpretation of the facts are relevant to the weight of that testimony, not its admissibility. The city complained about the expert’s comparables and various adjustments for market conditions. All of these complaints, the court said, focus on the weight of the evidence. The taxpayers weren’t required to show that the testimony and conclusions were absolutely true or uncontested. And, according to the court, the expert did use well-established methods for determining value.
The court of appeals ultimately dismissed the city’s overarching contention that a trial court (and tax tribunal) is required to conduct a “searching inquiry” into an expert’s underlying data before admitting the expert’s testimony. Questions regarding the data are properly left to cross- examination.