                IN THE COURT OF APPEALS OF TENNESSEE
                           AT KNOXVILLE
                               September 13, 2016 Session

   OCOEE UTILITY DISTRICT OF BRADLEY AND POLK COUNTIES,
    TENNESSEE v. THE WILDWOOD COMPANY, INCORPORATED

              Direct Appeal from the Circuit Court for Bradley County
                 No. V-13-746    Lawrence Howard Puckett, Judge


              No. E2016-00382-COA-R3-CV-FILED-OCTOBER 6, 2016


This appeal involves the condemnation of property by a utility district. The trial court
entered an order of possession vesting title of the property in the utility district and
reserved the issue of just compensation for a jury trial. Prior to trial, the utility district
filed a motion in limine seeking to exclude the expert appraisal and testimony of the
landowner‟s expert witness. The trial court permitted the expert to testify over the
objections of the utility district. At the conclusion of the three-day jury trial, the jury
returned a verdict of $417,000 for the seven-acre parcel at issue, which was the same
value suggested by the landowner‟s expert witness. After the trial court denied the utility
district‟s motion for a new trial, the utility district timely filed a notice of appeal. The
utility district maintains on appeal that the trial court erred by failing to exclude the
testimony of the landowner‟s expert witness, and it also argues that the jury verdict is not
supported by material evidence. We vacate the judgment of the trial court and remand
for a new trial.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Vacated and
                                   Remanded

BRANDON O. GIBSON, J., delivered the opinion of the court, in which D. MICHAEL
SWINEY, C.J., and THOMAS R. FRIERSON, II, J., joined.

Benjamin A. Gastel, Donald Lee Scholes and James Gerard Stranch, III, Nashville,
Tennessee, for the appellant, Ocoee Utility District of Bradley and Polk Counties,
Tennessee.

Bradford Grant Harvey, Chattanooga, Tennessee, for the appellee, The Wildwood
Company, Incorporated.
                                           OPINION

                             I. FACTS & PROCEDURAL HISTORY

        Ocoee Utility District of Bradley and Polk Counties, Tennessee (“the Utility”) is a
utility district that operates a water and sewer system in Bradley and Polk Counties. The
Wildwood Company, Inc. (“Wildwood”) is a private fishing club with eleven member-
stockholders. For decades, Wildwood owned about 120 acres of land in Bradley County,
which included wetlands, a lake, and a nearby freshwater spring. The spring produced
more water than Wildwood needed, and a diversion ditch was created so that the lake
would not receive too much water. Around 1979, a representative of Wildwood showed
representatives of the Utility the amount of water that was being diverted around the lake.
The Utility was in need of new sources of water and proposed that the parties enter into a
lease agreement allowing the Utility to access the land and utilize the excess spring flow.
In 1981, the parties signed a long-term lease allowing the Utility to rent a five-acre
portion of Wildwood‟s land and withdraw water from the spring. The lease payments
began at $300 per month and were adjusted annually in accordance with an inflation
index. At some point, the parties lost or misplaced the 1981 lease, but they continued to
operate under its provisions. Over the years, the Utility constructed a pumping station
and filtration system on the property for withdrawing and filtering the water.

       In 2006, the general manager of the Utility, Tim Lawson, sent a letter to
Wildwood explaining that the Utility was evaluating its water supply and exploring the
possibility of expanding its water treatment plant on Wildwood‟s property. The letter
explained that the Utility would need to dig and test additional wells on the property and,
if successful, construct additional pipelines and buildings. The letter suggested that the
parties first reach an agreement regarding the test wells and then negotiate a new long
term lease.

        Wildwood allowed the Utility to dig the test wells, which were successful.
Around 2009, the parties began the process of negotiating a new long term lease.
Approximately twelve drafts of proposed lease agreements were created. In 2012,
Wildwood voted to approve the latest version of the proposed lease agreement and
delivered a copy of it to Lawson, the general manager at the Utility, so that he could
present it to the Utility‟s board of commissioners for approval.1 However, before the
Utility‟s board met to consider the proposed lease, Wildwood received a letter from an
attorney retained by one its members raising various concerns about the proposed lease.
As a result, on June 6, 2012, the president of Wildwood sent a letter to Lawson at the
Utility notifying him of Wildwood‟s desire “to withdraw the proposed contract due to
1
 According to Lawson‟s trial testimony, the Utility is a governmental entity that formally acts only
through official votes of its board of commissioners at public meetings.
                                                     2
concerns regarding legal action from a shareholder.” The letter stated that Wildwood was
working to remedy the situation and was confident that it could “re-present the contract”
in the near future. On June 27, 2012, Lawson responded with a letter stating that he had
informed the Utility‟s board of the development and that they were eagerly awaiting
resolution of the matter.

       Six months later, on January 14, 2013, the Utility sent a letter to Wildwood
offering to purchase the property outright for $35,000. The Utility attached an appraisal
of the property valuing it at only $21,500. The letter notified Wildwood that if it did not
accept the Utility‟s offer, the Utility would begin the process of acquiring the property
through eminent domain. Wildwood rejected the Utility‟s offer.

       On October 10, 2013, the Utility filed a petition for condemnation to acquire fee
simple title to a 7.39-acre tract of property belonging to Wildwood in order to expand the
operation of its water treatment plant. The 7.39-acre tract does not include the lake but
does encompass the location of the spring. The Utility deposited with the court clerk the
sum of $21,500, which the Utility claimed was the amount of compensation to which
Wildwood was entitled for the condemned property. Wildwood filed an answer
demanding compensation “for the value of the surface land taken, and the value of water
available below the surface of the land being taken,” which, according to Wildwood, was
“substantially in excess of the amount tendered.”2

       The trial court entered an order of possession on March 5, 2014, finding no valid
objection to the Utility‟s right to condemn the property for the extension and
improvement of its water system. The order reserved the determination of the amount of
just compensation for the taking.

       Each party retained an appraiser to value the condemned property. In May 2015,
the Utility filed a motion in limine seeking to exclude the expert report and testimony of
Henry Glasscock, the appraiser retained by Wildwood. The Utility claimed that
Glasscock‟s appraisal of the property violated fundamental rules for evaluating the “fair
market value” of property in an eminent domain proceeding. Specifically, the Utility
argued that it is inappropriate for an appraiser to value a condemned property based
solely on its use for a particular purpose or its “highest and best use.” The Utility
asserted that Glasscock‟s analysis overemphasized a single use of the property and valued
the property solely and exclusively based on the Utility‟s use of the property as a water
source. The Utility argued that Wildwood was not entitled to an enhanced value of the
property based on its particular importance to the condemnor. It also argued that
Glasscock erred in valuing the water on the property rather than the property itself.

2
    By this time, the Utility‟s monthly payments under the 1981 lease had increased to $712 due to inflation.
                                                       3
       In support of its motion in limine, the Utility submitted Glasscock‟s appraisal
report and deposition testimony, which indicated his opinion that the highest and best use
of the Wildwood property was for the sale of water. Glasscock‟s valuation of the
property involved “an analysis of the present value of future income derived from water
sales.” Glasscock estimated the landowner‟s annual net operating income from the sale
of water from the condemned property at $25,000 by estimating the price of water and
multiplying it by the amount of water the Utility anticipated using from the property.3 He
determined that a low capitalization or risk rate of 6% was appropriate because the Utility
was “ready to sign” a long-term lease of the property before Wildwood withdrew its
consent to it. Applying this risk rate to the estimated annual rental income, he reached an
overall value of the property of $417,000 (presumably calculated as $25,000/.06 =
416,666).

        Wildwood filed a response in opposition to the motion in limine, arguing that
Glasscock considered all possible uses for the property and did not overemphasize the
use for which the property was taken. Wildwood claimed that Glasscock valued the land
rather than the water and applied methods that were appropriate under Tennessee law.

        The trial court did not rule on the motion in limine prior to the jury trial, which
was held over the course of three days in October 2015. The trial court heard testimony
from Thomas Hopper, the president of Wildwood; Tim Lawson, the general manager of
the Utility; Weyman Dooly, a member of Wildwood and former board member of the
Utility; and Henry Glasscock, the expert appraiser retained by Wildwood.4

        At trial, counsel for the Utility continued to argue to the trial judge that it is
inappropriate for an expert to base a real estate appraisal solely on the basis of the highest
and best use of the condemned property. Just before Glasscock was called to testify, the
Utility orally moved to renew its motion in limine to exclude his testimony in its entirety.
The Utility argued that Glasscock based his entire valuation opinion on the Utility‟s need
for the property in question and its water source. The trial court said he would “let the
expert testify and we‟ll do what we have to do as it comes in.”

        Glasscock is a commercial real estate appraiser. He testified that he considered

3
  Specifically, Glasscock‟s report stated, “The Ocoee Utility District states that a typical value for
wholesale water sales in the state of Tennessee ranges from $.07 to $.10 per 100[0] gallons. Currently,
OUD is drawing 600,000 to 800,000 gallons of water per day which would translate into an approximate
annual income of $25,000.” Glasscock determined the price of water and the amount of water that the
Utility anticipated using based on statements made and documents produced by the Utility during the
failed lease negotiation process and deposition testimony of the Utility‟s general manager.
4
  The appraiser retained by the Utility did not testify at trial, but his appraisal report was included among
the exhibits submitted at trial.
                                                       4
Wildwood‟s present use of the property in his analysis and concluded that Wildwood was
using the property at its highest and best use by renting it for the pumping of water.
Glasscock testified generally about various possible approaches for valuing property and
said that he chose the income approach for valuing Wildwood‟s property in this case. He
explained that the income approach “analyz[es] rental income” using a simple equation to
arrive at the fair market value, and this approach is normally used for properties that are
purchased for their rental potential. Glasscock generally described how he normally
reaches a conclusion about a fair rental rate for a property and then turns that number into
a value by applying a “risk rate” or capitalization rate. Glasscock said that he applied his
usual income approach when appraising Wildwood‟s 7.39-acre property, and he
concluded that its value was $417,000. However, he did not state what rental rate or
capitalization rate he used in his underlying calculation to reach this figure, and his
appraisal report was not admitted into evidence. Glasscock simply said, “I took what I
thought was a very reasonable rental income, I turned it into a value.” Glasscock
conceded that he referenced the “sale of water” in his appraisal report when determining
the reasonable rental rate to use in his calculation. Glasscock acknowledged that his
“rental rate is based on water” and opined that “[y]ou‟re buying the right to the water.”
The Utility then renewed its previous objection and moved to strike all of Glasscock‟s
testimony, but the trial court ruled, without further argument, “I‟m going to let him
testify. Go ahead.”

       The Utility moved for a directed verdict at the close of Wildwood‟s proof, arguing
that the jury heard no competent evidence to support Glasscock‟s estimation of the value
of the property at $417,000 because he did not explain how he arrived at that particular
figure. The trial court denied the motion. After very brief additional testimony from the
general manager of the Utility, the jury heard the jury instructions and the attorneys‟
closing arguments. The jury returned a verdict of $417,000 as the fair market value of
the 7.39-acre tract, and the trial court entered judgment on the jury verdict.

       The Utility filed a motion for new trial, arguing, among other things, that
Glasscock‟s analysis overemphasized a single use of the property, that being the
particular use of the property by the Utility as a source of water. The trial court denied
the motion for new trial, and the Utility timely filed a notice of appeal.

                                 II. ISSUES PRESENTED

       The Utility presents the following issues for review on appeal:

       1.     Did the trial court err by failing to grant the Utility‟s motion in
              limine seeking to exclude Wildwood‟s real estate appraiser expert
              because his opinion on valuation violated the Davidson County Rule
                                             5
              by valuing the land for a particular purpose?

       2.     Did the trial court err by failing to grant the Utility‟s motion in
              limine seeking to exclude Wildwood‟s real estate appraiser because
              his opinion on valuation was based on the value of water?

       3.     Did the trial court err by allowing Wildwood‟s real estate appraiser
              expert to rely on data that was irrelevant in formulating his opinion?

       4.     Is the jury verdict supported by the evidence?

In its posture as appellee, Wildwood raises the following additional issues:

       5.     Whether the Utility waived its right to appeal its first three
              evidentiary issues regarding Glasscock‟s testimony by failing to
              properly raise the issues at trial;

       6.     Whether the Utility waived its right to appeal its fourth issue based
              on the sufficiency of the evidence by failing to renew its motion for
              directed verdict at the close of the proof;

       7.     Whether the trial court abused its discretion by excluding from trial
              evidence of lease negotiations between Wildwood and the Utility.

For the following reasons, we vacate the judgment of the trial court and remand for a new
trial.

                                    III. DISCUSSION

       The Tennessee Constitution provides that no man‟s property shall be taken, or
applied to public use, without the consent of his representatives “„or without just
compensation being made therefor.‟” Nashville Hous. Auth. v. Cohen, 541 S.W.2d 947,
950 (Tenn. 1976) (quoting Tenn. Const. Art. 1, § 21). Accordingly, “a court‟s objective
in an eminent domain proceeding is to award just compensation to the landowner for the
taking.” State v. Brandon, 898 S.W.2d 224, 226 (Tenn. Ct. App. 1994) (quoting State ex
rel. Comm’r v. Williams, 828 S.W.2d 397, 400 (Tenn. [Ct.] App. 1991)). However,
condemnation “is not in the nature of a wrongful taking for which damages are to be
assessed.” Wray v. Knoxville, L.F. & J.R. Co., 82 S.W. 471, 473 (Tenn. 1904). The
burden is on the landowner to show the value of the property taken. Lebanon &
Nashville Tpk. Co. v. Creveling, 17 S.W.2d 22, 24 (Tenn. 1929); Williams, 828 S.W.2d at
402. Generally, as one would expect, “the property owner is trying to establish the
                                             6
highest value possible for the property to be taken and the condemnor is trying to
establish the least value for the property.” Town of Erin v. Brooks, 230 S.W.2d 397, 399
(Tenn. 1950). The finder of fact must evaluate the evidence presented by both sides to
arrive at a fair and just compensation for the property taken. Id.


         In Tennessee, “just compensation must be measured by the fair market value of
the land in view of its value for all available uses as distinguished from its value for the
best use.” Layne v. Speight, 529 S.W.2d 209, 214 (Tenn. 1975). This rule has been
applied in Tennessee condemnation cases for over a century. One of the seminal cases
applying this principle is Alloway v. City of Nashville, 13 S.W. 123 (Tenn. 1890), where
the City of Nashville condemned property for reservoir purposes. The issue on appeal
was whether the landowners should have been permitted to show the property‟s
“particular value as a reservoir site.” Id. at 123. Our supreme court explained that the
“just compensation” required by our Constitution is “the fair cash value of the land taken
for public use, estimated as if the owner were willing to sell, and the corporation desired
to buy, that particular quantity at that place and in that form.” Id. The court added,


       It includes every element of usefulness and advantage in the property. If it
       be useful for agriculture or for residence purposes; if it has adaptability for
       a reservoir site, or for the operation of machinery; if it contains a quarry of
       stone, or a mine of precious metals; if it possesses advantage of location, or
       availability for any useful purpose whatever; all these belong to the owner,
       and are to be considered in estimating its value.


Id. However, the court explained that it is inappropriate to restrict the estimate of value
to any one use because doing so “would tend to make the degree of benefit to the party
appropriating and condemning for a particular purpose the real measure of value, which
is never allowable.” Id. For example,


       “where a condemnation is sought for the purposes of a railroad, to single
       out from the elements of general value the value for the special purposes of
       such railroad is, in effect, to put to a jury the question, what is the land
       worth to the particular railroad company? [R]ather than what is it worth in
       general? The practical result would be to make the company‟s necessity the
       landowner‟s opportunity to get more than the real value of his land.”


Id. at 124 (quoting Stinson v. Railroad Co., 6 N.W. 784 (Minn. 1880)). The supreme
court concluded that the trial judge appropriately rejected the landowners‟ evidence of the
                                             7
property‟s “amount of value for a reservoir site” and correctly instructed the jury that it
“could not single out and estimate the value for a special purpose.” Id. When estimating
the market value of property, the particular purpose for which a piece of property is most
adaptable must be considered, but “the value for such a purpose exclusively cannot be
shown in proof, and made the sole basis of a recovery[.]” Id. Instead, “the market value
in view of all available uses is the measure of compensation.” Id.


       Another case that illustrates the point is McKinney v. City of Nashville, 52 S.W.
781 (Tenn. 1899). The condemned property at issue was more valuable, because of its
location, for saloon purposes than any other. Id. at 781. In fact, when the condemnation
suit began, the property was being used as a saloon under a lease for a term of five years.
Id. In order to value the property, the trial court instructed the jury to consider all
legitimate purposes for which the property could be used and its rental value for all
legitimate purposes rather than confining its consideration to any one particular use. Id.
On appeal, the property owner argued that if a saloon keeper would pay more for the
property than any other, “why should the owner not receive the highest value which any
one would give for the property?” Id. He argued that the property‟s “highest value for
one use,” or “most valuable use,” should be deemed the property‟s value in the market
without any consideration of the property‟s value for other uses. Id. Nevertheless, the
supreme court stated that it did not hesitate to approve the trial judge‟s jury instruction.
Id. The supreme court explained that in estimating market value, “all the capabilities of
the property and all the uses to which it may be applied, or for which it is adapted, are to
be considered, and not merely the condition it is in at the time, and the use to which it is
applied by the owner.” Id. (quotation omitted). The value of the land “„is to be assessed
with reference to what it is worth for sale, in view of the uses to which it may be put, and
not simply in reference to its productiveness to the owner in the condition in which he has
seen fit to have it.‟” Id. (quoting Bridge Co. v. Ring, 58 Mo. 491 (1874)).


        In Davidson County Board of Education v. First American National Bank, 301
S.W.2d 905, 907 (Tenn. 1957), the supreme court noted that a minority of jurisdictions
allow valuation of condemned property “for the best use,” but the court reiterated that
Tennessee courts use the “value in view of all available uses.” Tennessee‟s “all available
uses” formula is meant to avoid overvaluation by preventing the jury from giving
excessive weight to the value for the purpose for which the property is being condemned.
Id. at 908. When defining “the rule to be followed in this State,” the supreme court held
that just compensation must be measured by “„the fair market value of the land in view of
all the purposes to which it is naturally adapted,‟” and “„not the value for a special
purpose.‟” Id. (quoting Sacramento Southern R. Co. v. Heilbron, 104 P. 979, 981 (Cal.
1909)). “„[W]hile evidence that it is „valuable‟ for this or that or another purpose may
always be given and should be freely received, the value in terms of money, the price,
                                             8
which one or another witness may think the land would bring for this or that or the other
specific purpose is not admissible as an element in determining that market value[.]‟” Id.
(quoting Heilbron, 104 P. at 981).


     The supreme court also explained the effect of this rule on witness testimony in
condemnation proceedings:


      “The courts are unanimous in admitting testimony on the adaptability of
      property for this use and for that, save for the familiar restrictions against
      the consideration of highly „remote and speculative‟ contingencies. But it
      has been held in most cases that a witness may not himself translate that
      adaptability into a statement of its money value. A properly qualified
      witness may express an opinion that the property has a „fair market value‟
      of $10,000, and he may explain, both on direct and on cross examination,
      the particular qualities of the property which lead him to conclude that it is
      worth this amount. But he is not ordinarily permitted to testify that the
      property „has a value of $10,000 for building lot purposes‟ or „for the best
      use.‟”


Id. (quoting Orgel on Valuation § 30 p.146) (emphasis added). The jury is likely to reach
a figure between the higher and lower figures presented by the parties “at which it
believes that the property might be sold for various purposes.” Id.


       Applying these principles, this Court reversed a jury verdict in Memphis Housing
Authority v. Mid-South Title Co., 443 S.W.2d 492, 501 (Tenn. Ct. App. 1968), due to the
parties and some of the expert witnesses having placed “so much emphasis” on the value
of the condemned property for potential use as a motel that the jury was probably
influenced by the specific value stated for motel purposes. We explained that “the jury
could not determine the value to the owners or any other person . . . for use as a motel,”
nor could they set the value based on the property‟s particular utility to the condemning
authority or the landowners. Id. at 500. Instead, the jury was required to set the fair
market value of the lots after a consideration of all the uses for which they were
reasonably adaptable. Id. We recognized that the landowners were entitled to prove the
feasibility of erecting a motel on their property, but it was not necessary or proper for
them to introduce specific plans for construction of a nine-story motel with shops,
offices, and a swimming pool, at a cost of over two million dollars, as such evidence
“over-emphasize[d] in the mind of the jury the value of the lots to the owners for motel
purposes.” Id. We held that the evidence should have been excluded and remanded for a

                                            9
new trial. Id. at 502.


       Determining whether a witness has crossed the line into overemphasizing a
particular use is not always a simple task. In State v. Parkes, 557 S.W.2d 504, 506
(Tenn. Ct. App. 1977), the landowners‟ property contained an abandoned gas station, and
witnesses testified about the potential use of the property for commercial development,
such as an office building or bank. On appeal, we recognized and elaborated on “the rule
that a witness in an eminent domain proceeding will not be allowed to state the value of
the property for a specific purpose.” Id. at 508.


       This rule, a corollary of the requirement that all uses be considered in
       determining value, originally was used to protect against an overemphasis
       on the use for which the property was being taken, and to prevent the jury
       from valuing it in terms of its particular importance to the condemnor.
       Alloway, supra; see L. Orgel, Valuation Under the Law of Eminent Domain
       (2d ed. 1953), s 30, at 149. In Davidson County, supra, however, the rule
       was applied to uphold exclusion of a map, prepared by the landowners for
       use in the eminent domain proceeding, which detailed an imaginary plan
       for subdividing the property taken. Similarly, in Memphis Housing
       Authority, supra, it was held error to admit plans which were introduced by
       the owners of the taken property and which graphically depicted placement
       of a nine story motel on it. These cases, while stating broadly that
       testimony of value for a single particular purpose is inadmissible, clearly
       demonstrate that the concern underlying this rule is to prevent
       overemphasis of any single use of the property, and especially that
       overemphasis which results from depicting excessive details of a possible
       use. A broad prohibition against description and valuation of a particular
       use, however, may conflict with the widely acknowledged privilege of the
       witness to explain how he arrived at his value for the property, if he has
       taken the peculiarities of one particular use into account in making his
       estimate. Obviously, a balance must be struck. Since the major concern of
       the Davidson County rule [is] to prevent overemphasis of a particular use
       and its value, its effect must be to require excluding evidence of a particular
       use when it reaches the point of being an unreasonable emphasis on that use
       and not merely an explanation of the witness‟s valuation processes.


Id. This Court determined that the witnesses‟ testimony about the possibility of
commercial development of the lot with the abandoned gas station “did not reach th[e]
point” of being an unreasonable emphasis of a particular use. Id. The witnesses
                                             10
discussed the property‟s desirability for commercial rental but did not include any plans,
maps, or oral descriptions of any particular possible project. Id. They discussed the
possibility of constructing a commercial building on the property but did not venture
“outside the bounds of reasonableness” when explaining their valuation testimony, nor
did they unduly emphasize a value for a particular use in violation of the Davidson
County rule. Id. at 509. The witnesses did use rental value when addressing the value of
the property, but we explained that “there is no absolute prohibition against admitting
evidence of rental value, at least where it is presented and interpreted by an expert as a
criterion in his assessment of the property‟s fair market value.” Id. It did not appear to
this Court that the witnesses used rental value “as the sole test of value rather than as a
guide to the property‟s worth in the market.” Id. As a result, we found no error in the
trial court‟s admission of the testimony. Id.


       On the other hand, in Love v. Smith, 566 S.W.2d 876, 877-79 (Tenn. 1978), the
supreme court held that an expert witness‟s testimony was improper when he valued
condemned property based solely on its adaptability for use as a subdivision without
considering its current use for farm purposes. Again, the court held, “it is improper to
base the value of land solely upon its use for a particular purpose, such as, „its highest
and best use.‟” Id. at 878. The highest and best use may be considered, but it may not be
the sole measure of determining value. Id. “A corollary of this principle is that expert
witnesses in expressing their opinions of value should not be allowed to give their
opinions as to the value of property for a particular purpose.” Id. (quotation omitted).


      In accordance with these standards, Tennessee Code Annotated section 29-17-
1004 was enacted in 2006 to provide that “in any condemnation proceeding in this state,
an appraisal of the property must be obtained. The appraisal shall value the property
considering its highest and best use, its use at the time of the taking, and any other uses to
which the property is legally adaptable at the time of the taking.” (Emphasis added.)
       We now turn to the trial court‟s ruling in this case regarding Glasscock‟s
testimony. This Court “reviews a trial court‟s decision to admit or exclude evidence,
including a ruling on a motion in limine, under the abuse of discretion standard of
review.” Allen v. Albea, 476 S.W.3d 366, 377 (Tenn. Ct. App. 2015). A trial court
abuses its discretion when it applies an incorrect legal standard or reaches a decision that
is against logic or reasoning that causes an injustice to the party complaining. Mercer v.
Vanderbilt Univ., Inc., 134 S.W.3d 121, 131 (Tenn. 2005) (citing Eldridge v. Eldridge,
42 S.W.3d 82, 85 (Tenn. 2001)). “„A trial court that premises its analysis on an
erroneous understanding of the governing law acts outside its discretion.‟” Wicker v.
Comm’r, 342 S.W.3d 35, 37 (Tenn. Ct. App. 2010) (quoting Gov’t Employees Ins. Co. v.
Bloodworth, No. M2003-02986-COA-R10-CV, 2007 WL 1966022, at *5-6 (Tenn. Ct.

                                             11
App. June 29, 2007)). The standards set forth above, in Davidson County and its progeny,
as well as the statutory directive, are those that the trial judge should employ when
exercising his discretion to admit or exclude evidence. See Nashville Hous. Auth. v.
Cohen, 541 S.W.2d at 952.


        In support of its motion in limine to exclude Glasscock‟s testimony, the Utility
submitted Glasscock‟s appraisal report and deposition testimony indicating his opinion
that the highest and best use of Wildwood‟s property was for the sale of water.
“Therefore,” Glasscock‟s report stated, “the valuation of this property will involve an
analysis of the present value of future income derived from water sales.” As stated
above, he estimated the landowner‟s net operating income from the sale of water at
$25,000 per year by estimating the price of fresh water and multiplying it by the amount
of water the Utility anticipated using. He used a low capitalization or risk rate of 6%
because the Utility had a strong interest in the property and was “ready to sign” a long-
term lease before Wildwood withdrew its consent. Applying this risk rate to the
estimated annual rental income, he reached an overall fair market value of the property of
$417,000 ($25,000/.06 = 416,666). Glasscock was asked during his deposition if his
appraisal for the value of the condemned property was based on the use of the property
“for the particular purpose of selling water to [the Utility],” and he replied, “Yes. To an
extent.” He noted that there could be other buyers for the water. However, he later
admitted, “I‟m basing this solely on what I have come to understand as the rate that
Ocoee [Utility] is willing to pay for this property. And I have not made any comparison
analysis as to what anyone else is paying.” He was asked if a prudent investor would be
willing to purchase the condemned property for $417,000 and replied that it would be
more accurate to say that “there is a great probability that a prudent investor would be
willing to purchase the right to receive this income for $417,000.” (Emphasis added.)
He said, “In this particular case, I‟m appraising the value of the right to receive income.
It‟s based on a contractual agreement between the landowner and Ocoee [the Utility].”

        The trial judge did not rule on the Utility‟s motion in limine before trial, but the
Utility renewed the motion before Glasscock took the stand and sought to exclude
Glasscock‟s testimony in its entirety. The Utility argued that it was inappropriate for
Glasscock to base his entire valuation opinion on the Utility‟s need for the property in
question and on the value of the water, effectively increasing the value of Wildwood‟s
property based on the Utility‟s interest in it. The trial court said he would “let the expert
testify and we‟ll do what we have to do as it comes in.” Glasscock‟s trial testimony,
while not as detailed about his valuation calculation, confirmed that he based his
valuation of the property only on its use as a water source for the Utility (and resulting
rental income for Wildwood). He testified that he considered Wildwood‟s present use of
the property and concluded that Wildwood was using the property at its highest and best
use by renting it for the pumping of water. Glasscock explained the four criteria that he
                                             12
considers in determining the highest and best use and said “[t]hose are fancy words of
saying, what is a prudent buyer or seller for this property going to pay if it is utilized
meeting all four of those characteristics,” at its highest and best use. (Emphasis added.)
He said, “Nobody in their right mind, if you own it, would sell it just for its land value.”

       Glasscock generally described various approaches for valuing property and said
that he chose the income approach for valuing Wildwood‟s property, as it is normally
used for properties that are purchased for their rental potential. According to Glasscock,
the income approach is “a way of converting rental income into a value.” He explained
that the income approach “analyz[es] rental income” using a simple equation to arrive at
fair market value. He said, “You analyze the rent and say, well, if I‟m renting the
property for x dollars, it would probably be worth this amount.” He said that the income
analysis “is really a rental analysis.” Glasscock described, in general terms, how he
determines a fair rental rate for a property and then turns the number into a value by
applying a “risk rate” or capitalization rate. He was asked if he applied his usual
approach when appraising Wildwood‟s property and responded:

       Yes. It‟s a very unique property, though. It is not often that you find
       somebody wanting property for such a unique reason. And I – I‟m going to
       seem like I contradict myself here, but this particular property has a very
       unique purpose. And how in the world do you go out and find, well, what
       are similar properties being rented for? This is so unique, that that kind of
       information is really scarce. So you have to make some judgment calls
       based on that. And this particular piece of property, I had a history of
       income. And there‟s evidence out there that what similar properties are
       commanding,5 and so you use that kind of information to arrive at that
       conclusion.

Glasscock then opined that the appraisal value of the 7.39-acre tract in this case was
$417,000. However, he did not state what rental rate or capitalization rate he used in his
underlying calculation to reach this figure, and his appraisal report was not admitted into
evidence at trial. Glasscock simply said, “I took what I thought was a very reasonable
rental income, I turned it into a value.” Glasscock acknowledged that he used the “sale of
water” in his appraisal report when determining the rental rate he used in his calculation.
Glasscock went on to say, “The rental rate is based on water, for sure . . . . You‟re buying
the right to the water[.]” The Utility renewed its previous objection and moved to strike
all of Glasscock‟s testimony, but the trial court ruled, without further argument, “I‟m
going to let him testify. Go ahead.” Glasscock later testified that “what I‟m really
looking for is what will the market pay for this income.” (Emphasis added.)
5
 Despite this reference to “what similar properties are commanding,” Glasscock later testified that he
looked for similar properties in Bradley County and was unable to find any.
                                                   13
       Having carefully reviewed Glasscock‟s testimony in light of the applicable
caselaw, we conclude that the trial court should have excluded his testimony. The
existence of the spring on the property was appropriate for consideration when
determining the fair market value of the condemned property. See Alloway, 13 S.W. at
123 (explaining that every element of usefulness and advantage in the property is to be
considered, such as a quarry of stone or a mine of precious metals). Likewise, the history
of rental income from the property could be considered as a factor impacting its value.
See McKinney, 52 S.W. at 781 (affirming the trial court‟s jury instruction to consider all
legitimate purposes for which the property could be used and its rental value for all
legitimate purposes). However, it was not appropriate for Glasscock to calculate the fair
market value of the condemned property by looking solely to the rental income from the
use of water on the property and simply “turn[ing] it into a value.” Interestingly,
Wildwood recognizes in its brief on appeal that Glasscock “appraised the condemned
property based on its rental value.” However, just compensation must be measured by
“the fair market value of the land in view of all the purposes to which it is naturally
adapted,” and “not the value for a special purpose.” Davidson County, 301 S.W.2d at
908. Evidence of net income from the property is competent evidence, but it “is not
controlling.” Creveling, 17 S.W.2d at 26. Evidence of rental value is permissible “where
it is presented and interpreted by an expert as a criterion in his assessment of the
property‟s fair market value” and used as “a guide to the property‟s worth in the market.”
Parkes, 557 S.W.2d at 509. However, rental value may not be “the sole test of value.”
Id. “[A]ll the capabilities of the property and all the uses to which it may be applied, or
for which it is adapted, are to be considered, and not merely the condition it is in at the
time, and the use to which it is applied by the owner.” McKinney, 52 S.W. at 781.

        Like the landowner in Davidson County, Wildwood impermissibly “hinge[d] its
proof” on the value of the property purely for one purpose. 301 S.W.2d at 909. Because
Glasscock determined the property‟s value for a specific use, rather than the fair market
value of the property giving due consideration to all the capabilities of the property and
all the uses to which it could be applied, his testimony should have been excluded.

        We find this case factually and procedurally analogous to City of Gatlinburg v.
Fox, No. 03A01-9606-CV-00199, 1996 WL 673992 (Tenn. Ct. App. Nov. 22, 1996) aff’d
and remanded 962 S.W.2d 479 (Tenn. 1998).6 The City of Gatlinburg condemned
property consisting of pastures and woodland for the site of a new landfill after
consideration of the property‟s size, soil content, accessibility, and proximity to an older
landfill. Id. at *1. Just as the Utility did here, the City of Gatlinburg filed a motion in
limine prior to trial seeking to exclude the testimony of the landowners‟ expert witness
6
 The Tennessee Supreme Court granted permission to appeal in Fox and affirmed a ruling of the court of
appeals regarding a remittitur. However, the supreme court did not review the valuation issues addressed
by the court of appeals and discussed in this opinion.
                                                     14
because he allegedly based his opinion of the property‟s value solely upon its highest and
best use. Id. The trial court permitted the expert to testify but ruled that he would not be
allowed to limit his appraisal to the land‟s highest and best use. Id. At trial, the expert
testified that the property was uniquely suited for use as a landfill, and this would be its
highest and best use. Id. at *5. He acknowledged that the property‟s suitability for such
use was the reason he placed a high value on the property and conceded that he did not
include any farm sales in his analysis. Id. After reviewing the testimony, we concluded
that, contrary to the trial court‟s directive, the expert did in fact base his opinion of value
only on the highest and best use by calculating “the value of the land based only upon its
use as a landfill.” Id. Even though the expert purportedly “considered” other uses for the
land, such as residential use or farming, he apparently “discarded them and did not factor
the land‟s value for those purposes into his calculations.” Id. We deemed this
insufficient, stating:

        We believe that the principles of valuation expressed in the cases
        contemplate more than the computation of a piece of property‟s overall
        value based solely upon its highest and best use, preceded by a mere
        acknowledgement that other possible uses exist. Land values based upon
        these other uses must be taken into account in calculating the property‟s
        value.

Id. Because the expert improperly used the property‟s highest and best use as a landfill
as the sole measure of valuation, we deemed his testimony improper. Id. The jury‟s
verdict was closer to the valuation suggested by this particular expert than that of any
other witness. Id. Consequently, we concluded that his testimony substantially
influenced the jury verdict, and its admission did not constitute harmless error. Id. We
vacated the jury verdict and remanded for a new trial. Id. We explained that on remand,
the property‟s potential for use as a landfill could properly be considered in the overall
determination of value, but the use of the property as a landfill could not be the sole
measure of its value. Id. at *7.

       The same holds true here. The jury‟s verdict was obviously influenced by
Glasscock‟s impermissible valuation testimony, as it adopted the identical figure he
suggested -- $417,000. We are left with no choice but to vacate the judgment of the trial
court and remand for a new trial.7

7
 We reject Wildwood‟s assertion that the Utility waived its right to complain about the admission of
Glasscock‟s testimony and its alleged violation of the Davidson County rule by failing to give the trial
court a meaningful opportunity to rule on the issue. The Utility‟s motion in limine regarding this issue
was filed months before trial. During the jury trial, when the parties were addressing some
“housekeeping” matters with the trial judge outside the presence of the jury, the trial judge mentioned
“valuing the rental value of the property.” Counsel for the Utility encouraged the trial judge to read the
                                                   15
       We note that Wildwood raised an additional issue on appeal regarding whether
Glasscock should have been permitted to rely on the proposed lease agreement between
the Utility and Wildwood that was negotiated in 2012 but never signed when forming his
valuation opinion. Because we have concluded that Glasscock‟s valuation testimony was
inadmissible, we deem the issue pretermitted.

        Wildwood also vaguely asserts that the trial court abused its discretion “by
excluding from trial evidence of lease negotiations between Wildwood and the Utility.”
Without citation to authority, or the record, Wildwood asserts that the “lease
negotiations” were relevant to the rental value of the condemned property. Having
reviewed the transcript of the three-day jury trial, this Court recognizes that the trial
judge made numerous rulings regarding the admissibility of various documents that
pertained to the “lease negotiations” and also considered numerous objections to
testimony from several witnesses regarding those negotiations. However, Wildwood
does not cite to any particular portion of the trial record to identify which of these
specific rulings regarding “evidence of lease negotiations” it seeks to challenge. In this
section of its brief, its only citations to the record point us to: (1) a statement in a pretrial
expert report from a third expert who did not testify at trial, and (2) a statement made by
the trial judge during the hearing on the Utility‟s motion for new trial. Tennessee Rule of
Appellate Procedure 27(g) provides, with regard to briefs on appeal, “If reference is made
to evidence, the admissibility of which is in controversy, reference shall be made to the
pages in the record at which the evidence was identified, offered, and received or
rejected.” Tenn. R. App. P. 27(g). “„It is not the role of the courts, trial or appellate, to
research or construct a litigant‟s case or arguments for him or her, and where a party fails
to develop an argument in support of his or her contention or merely constructs a skeletal
argument, the issue is waived.‟” Cartwright v. Jackson Capital Partners, Ltd. P’ship,
478 S.W.3d 596, 614 (Tenn. Ct. App. 2015) (quoting Sneed v. Bd. of Prof’l

City of Gatlinburg v. Fox case. Counsel explained that a new trial was ordered in Fox because the
landowner‟s expert witness “based his real estate appraisal solely on the basis of the highest and best use,
which we have repeatedly said is not appropriate.” He said, “they exclude[d] the expert in that case for
doing exactly what they‟re trying to do here.” Counsel renewed his motion in limine just before
Glasscock took the stand. He read aloud a sentence from Glasscock‟s appraisal report regarding the fact
that the Utility “ha[d] expressed a strong desire to utilize this water source for the foreseeable future” and
argued that it was inappropriate for Glasscock to base his entire valuation opinion on the Utility‟s need
for the property in question and on the value of the water. The trial judge allowed Glasscock to testify.
The Utility renewed its objections yet again during Glasscock‟s testimony when he acknowledged that his
valuation opinion was based on rental income, and specifically, a rental rate “based on water.” At that
point, the Utility moved to strike all of Glasscock‟s testimony, but the trial court ruled, without further
argument, “I‟m going to let him testify.” The issues were argued again in the Utility‟s motion for new
trial. In sum, throughout the proceedings, the Utility repeatedly argued that Glasscock impermissibly
based his entire valuation opinion solely on the particular use of the property as a source of water for the
Utility and resulting rental income for Wildwood. We conclude that the Davidson County issue was not
waived.
                                                      16
Responsibility of Sup.Ct., 301 S.W.3d 603, 615 (Tenn. 2010)). Due to the lack of
sufficient citations to the record and to relevant authority, we deem this issue waived. All
other issues are pretermitted.

                                    IV. CONCLUSION

        For the aforementioned reasons, the judgment of the circuit court is hereby
vacated, and this matter is remanded for further proceedings. Costs of this appeal are
taxed to the appellee, The Wildwood Company, Incorporated, for which execution may
issue if necessary.



                                                 _________________________________
                                                 BRANDON O. GIBSON, JUDGE




                                            17
