Real Estate Valuation Expert Witnesses Allowed

In the case, the plaintiff seeks a declaratory judgment against defendant regarding language in a lease agreement.  Both parties hired real estate valuation expert witnesses and both filed motions to exclude.  The court denied these motions.

Facts:  This case (Buchanan Energy (N), LLC v. Lake Bluff Holdings, LLC – United States District Court – Northern District of Illinois – April 4th, 2017) is a declaratory judgment action in which the plaintiff (Buchanan) argues that it is entitled to purchase property from the defendant (Lake Bluff) in Lake County Illinois, based on a purchase option in a Lease.  The dispute surrounds whether the appraisers should value the property with or without improvements.  Buchanan maintains that the valuation should not include improvements, while Lake Bluff argues that it should include a gas station, which was improved on the property. Both parties have filed motions to exclude the expert witness testimony of their respective real estate valuation expert witness, Michael MaRous for Lake Bluff and Daniel P. Currier for Buchanan.

Discussion: Neither party argues that their opposing real estate appraisers are unqualified. MaRous has appraised properties for 40 years and and is a licensed real estate appraiser in Illinois. Cuurier is also a licensed real estate appraiser in Illinois and has 25 years of experience in the business.  In addition, neither party challenges the relevancy of either appraisers’ reports.  The court does state that both of the reports by the appraisers will assist the trier of fact and satisfy the relevancy standard.

Before the court turned to the reliability of the experts’ methodology, they turned to Buchanan’s argument that Daubert is not applicable to real estate appraisal is not a branch of social science.  In addition, Buchanan cites to court cases stating that appraisal is an art, not a science, and is largely a matter of opinion.  The court disagreed, stating that although experiential experts have a different threshold inquiry, they are still subject to Rule 702 as it applied to all expert testimony.

The court opined that MaRous and Currier used reliable methods that pass muster under Daubert.  Both of the appraisers used sales comparison approaches to come to their analyses.  The court noted that the sales comparison approach qualifies as an accepted methodology under Rule 702.

The parties do, however, argue that each appraiser used unsupported facts and that they did not execute the sales comparison reliably.  Buchanan challenges the assumption upon which MaRous relies and states that he committed a Uniform Standards of Professional Appraisal Practice (USPAP) violation by not considering Buchanan’s purchase option.

Buchanan’s arguments are directed toward the bases and resources of MaRous’s opinion.  They also state that there was bias in his opinions.  Buchanan does not take issue towards the methodology used.  The court opined that any arguments towards MaRous go to the weight of the evidence, not their admissibility.  The court points to various caselaw opinions in which an appraiser’s opinion was challenged, but the court in those cases ruled that any arguments go to the weight of the evidence.

The court also states that Lake Bluff’s attacks on Currier are similar to those made against MaRous and that any arguments, again, go to the weight of the evidence, not the admissibility.

Conclusion:  The motions to exclude the expert witness testimony of Michael MaRous and Daniel P. Currier are denied.