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PADUCAH INDEPENDENT SCHOOL APPELLANT
DISTRICT

ON REVIEW FROM COURT OF APPEALS
V. CASE NO. 2014-CA-OOl782-MR
MCCRACKEN CIRCUIT COURT NO. 11-CI-00316

PUTNAM & SONS, LLC APPELLEE

OPINION OF THE COURT BY JUSTICE HUGHES

REVERSING

In March 201 l, as part of a plan to replace its aging middle school, tlie
Paducah Independe_nt School District initiated condemnation proceedings
. against real property owned by Putnam & Sons, LLC, an Oregon Limited
Liability Cornpany (Putnarn).1 Following the Commissioners’ report and award
of $96,000 to Putnam, the property Was officially “taken” as of May 19, 2011.
Exceptions to the Commissioners’ report by both sides ensued, as did
numerous continuances to accommodate attorneys and Witnesses, as well as a

continuance to allow for reassignment of the case to another judge of the

 

1 See Kentucky Revised `Statute (KRS] 162.030 for the District’s authority, in
accord with T_he'Eminent Domain Act of Kentucky, KRS 416.540-'.670, to condemn-
property necessary for school purposes.

McCracken Circuit Court. Ultimately, a bench trial was held in July 2014, the
upshot being an award of compensation damages to Putnam of $115,.000.
Putnam appealed the award to the Court of Appeals, and_a unanimous panel of
that 0ourt reversed. In the panel’s View, the trial court relied on outdated and
otherwise incompetent evidence of the property’s fair market value, thus
necessitating a retrial of the compensation issue. We granted the District’s
motion for discretionary review to consider its claim that the trial court’s
findings were in fact adequately supported by the record and appropriately
addressed the parties’ starkly competing appraisals of Putnam’s loss. Agreeing
With the District that the trial court’s approach was both legally sound and
properly grounded in the record, We reverse the decision of the Court of
Appeals and reinstate the trial court’s judgment
RELEVANT FAc'rs

The property at issue is a 2.79 acre tract on the west side of South 318t
Street in Paducah at the southwest corner of the intersection of A_dams Street
and 31st. The record reflects that Putnam’s predecessor, Putnam & Son, an
Oregon-based cabinetry-rnanufacturing partnership, purchased this tract and
two others in March 1982 from the Modine Manufacturing Company. Modine,
at one time a renowned maker of tractor radiators, had, since the 19403,
operated a radiator factory on the opposite, or east, side of 31st Street. The
factory premises occupied an approximately 8.2 acre tract that extended south
from Clark Street to the four-lane Jackson Street (U.S. Highway 62), and east

from 31st Street some 500 feet to a spur of what was then the Paducah and

2

Illinois Railroad Company (more recently the lllinois Central Gulf Railroad,
Inc.). The main improvement on the factory premises was a single-story
manufacturing facility of nearly 132,000 square feet. This facility was divided
into a relatively small office space at the south end, which fronts along Jackson
Street, and storage and manufacturing space extending throughout the
remainder of the building to the north. At some point four smaller out
buildings, with an additional 20,000 or so square feet of storage, were added to
the north end of the property.
The Modine facility was served by two parking lots. An approximately

0. 19 acre lot at the northwest corner of Jackson' and 3 lst Street served the
facility’s office portion, while the tract at issue in this proceeding, the 2.79 acre
parcel across 31st Street from the factory and just south of Adams Street
(sometimes referred to herein as the Subject Tract), served the factory’s more
than two hundred production employees At the time of the taking, the smaller
lot on Jackson Street had an asphalt surface; the Subject Tract had a gravel
surface and a chain-link fence around its perimeter. Although the two parking
lots are near each other on the west side of 3lst Street, they are not
contiguous; they are separated rather by property improved with at least one
building that belongs to someone -else.

` As noted and according to Putnam’s appraiser, in 1982 Putnam’s
predecessor, the Putnam 85 Son partnership, purchased from Modine all three
tracts-the large, improved tract on the east side of 31st Street and the two

parking lots on the west side. Attracted especially by the ready rail access, the

3

company bought the large parcel, in particular,= to serve as a south-central
storage-and-distribution center for its mainly Oregon~based cabinetry
business. Through the years, apparently, Putnam 85 Son used the old Modine
facility for some light manufacturing, as storage space to support the
distribution its own products (through Sears and J.C. Penney stores, for
example) and as warehouse space it leased to others. The partnership never
used the facility for full-scale manufacturing and appears never to have
required more than a handful of employees at a time. Over time, the
percentages of the facility devoted to the different uses gradually tipped more
and more exclusively toward warehousing.

By about 2002, it appears, the Putnam 85 Son partnership was
succeeded by the Defendant, Putnam & Sons, LLC. Tom Putnam, the “Son” of
the original partnership, testified that in April 2002, not long after his father
(the _partnership’s “Putnam”) passed away, he transferred the partnership’s
property to the new LLC. He testified that the real property had been appraised
at the time as worth $ 1.1 million and that he understood the transfer as
pertaining only to his father’s one-half interest. No such appraisal Was
introduced into evidence, however, and as noted by the District, the deed
effecting the transfer is not so qualified lts required certificate of

consideration,2 on the contrary, provides that the fair market value of the

 

2 See KRS 382.135.

entire transferred property is $580,000, of which, Tom Putnam testified,
$30,000 was personalty.

In its new incarnation, the LLC seems essentially to have ceased to
maintain the nearly sixty-year-old Modine building, the usefulness of which
even for warehousing gradually diminished as the roof deteriorated and leaked.
The record indicates that between January 2007 and August 2010, just prior
to the commencement of this action, Putnam had its Modine property listed for
sale, initially for $-1.5 million in 2007, then gradually reduced to $975,000 in
the'summer of 2010. During roughly the same period, the LLC’s income from
storage leases decreased from about $70,'000 to about $31,000i y

Meanwhile, Paducah’s School District was having aging-building
problems of its own. According to Randy Green, the Superintendent of
Paducah Pu‘blic Schools at the time of the 2011 middle school project, portions
of Paducah’s Middle School were more than eighty years old. The building as a
whole had been designated a “category five” by state officials_the worst
building designation in the state system. According to Superintendent Green,
the building had become unsafe, and its replacement was imperative State
school-building codes had changed during the years, moreover, so that even
though the plan was to remove the old building and to build its replacement on
the same site_Paducah Middle School sits on the southeast side of Lone Oak y
Road (U.S. Highway 45), a couple of blocks west of 31st Street and the Subject

Tract_the then-current code required the new building to be supported by at

least eleven acres, a considerably larger space than the old school occupied.3
To meet that new, larger campus requirement, the District looked to acquire
property for the most part east of the school extending all the way to Putnam’s
2.7 9 acre tract on South 31st. The Superintendent testified that the District
negotiated the purchase of thirty-three relatively small intervening parcels,
most of which had been improved with modest, single-family residences, but
the parties could not agree as to the value of the Subject 'I-`ract. The
disagreement between Putnam and the District finally prompted the March
2011 initiation of condemnation proceedings

To a large extent, the parties’ disagreement concerns whether the 2.79
acre Subject Tractcan be valued independently of Putnam’s neighboring
properties, in particular the 8.2 acre tract across Slst Street, or whether it
should be valued as still an integral part of a larger whole. The District, not
surprisingly, argued for an independent valuation. Its appraiser, duly licensed
and certified and possessing more than forty years’ experience in the Paducah
and McCracken County market, acknowledged that more than thirty years
earlier the Modine Company had made an integrated use of the factory tract

and its employee parking lot. He noted, however, that Putnam’s own use of the

 

3 Although we have tried to simplify the description of how the various
properties are situated, we should note that Paducah’s street system is not strictly
grid-like, nor, in this old river town,_do the streets align very exactly with the compass
points, aligning.rather with a more-or-less northwest by southeast stretch of the Ohio
River. Lone Oak Road, for example, runs obliquely to 3lst Street, which itself runs
not so much north-south as parallel with the river northwest_to southeast, thus
making it possible for the Superintendent to testify that the District had acquired
property east of the school and south, not west, as we have put it, of 31st Street.

6

factory tract had never depended on the 2.79‘ acre Subject Tract across the
street, and he opined, based on his long experience in Paducah, that no such
integrated use was then reasonably foreseeable for the area. I_nstead, he
offered evidence of exchanges involving four other Paducah area vacant lots,
which evidence, he asserted indicated a stand-alone market value for the
Subject Tract of about $55,000 (about $0.45/ sq. ft. of land area-almost
exactly the tax-assessment value of $54,000), to which he would have added
$5,000 for the chain-link-fence improvement for a total value of $60,000.
Putnam, on the other hand, insisted that its compensation should be
based on the value of its property as a whole before and after the taking.
According to its appraiser, also licensed and well certified, although from
outside McCracken County and so with less direct experience of that particular
market, the factory tract, given its fairly direct access to Interstate 24 and to a
couple of Paducah’s U.S. Highways, could, in conjunction with the graveled
2.79 acre tract, be made into a regional or even national warehousing facility
Once the building’s roof was repaired. The 2.79 acre Subject Tract was
essential to that use, according to the appraiser, because such warehousing
facilities require a relatively high ratio of open space to building space in order
to accommodate the temporary storage of large, long-distance semi-trailers.
Without the Subject Tract, the Putnam appraiser testified, warehousing was
still the best use for the factory tract_assuming its building was repaired_but
the lessened ability to accommodate large trailers would limit the facility to a

more local shipping and storage market. Citing sales from cities well outside

7

Paducah, such as Henderson and Madisonville and even Bowling Green,
Bardstown, and Elizabethtown, the appraiser claimed that national / regional
warehousing facilities were worth in the neighborhood of $10/sq. ft. of building
area, whereas local storage facilities were worth only about $S/Sq. ft. Having
made what he claimed were appropriate adjustments for roof repair, Putnam’s
appraiser testified that the before-taking value of Putnam’s entire property as a
potential integrated regional warehousing facility was about $1.1 million,
whereas the after-taking value of the factory tract (plus the smaller parking lot)
as a potential primarily local storage facility would be only about $350,000.
Subtracting the latter amount from`-the former, the appraiser maintained that
Putnam’s compensation for the taking of the Subject Tract should be about

n $750,000.

, It so happened that a little more than a year after the taking, while the
case was still pending, Putnam in fact sold the factory tract and the smaller
parking lot for $435,000. In light of that sale, Putnam conceded at trial that
the factory-tract-plus-smaller-parking-lot remainder had been worth that
amount_$435,000_i-mmediately after the taking, thus reducing, the
compensation to which it was entitled under its integrated-property theory
from $750,000 to $665,000.

Even assuming that Putnam’s properties were not integrated so that a
stand-alone appraisal of the Subject Tract was appropriate, Putnam’s appraiser
took serious issue with the District’s appraisal. According to Putnam’s

appraiser, among the major driving forces in Paducah’s economy were its two

8

regional hospitals, Westem Baptist Hospital, to the northeast of Putnam’s
property toward downtown, and Lourdes Hospital, to the southwest and closer
to Interstate 24.' Even the District had observed that these two hospitals made
Paducah the largest medical center between St. Louis, Missouri and
Memphis/Nashville, Tennessee. Putnam’s appraiser opined that the Subject
Tract’s location only a block off the commercially well-developed Jackson Street
(U.S. I-Iighway 62) and its Strategic position directly between the two hospitals
made it a choice location for medical office or retail development It was thus,
according to Putnam’s appraiser, quite unlike the differently situated vacant
lots to which the District’s appraiser h\ad compared it, and quite like some of
the city’s most valuable vacant properties in other areas. Such properties,
according to Putnam’s appraiser, could be worth in excess of $SO0,000/acre,
but in his view the Putnam lot was most comparable with lots sold at prices
suggesting a value of $217,800/acre, or about $5/sq. ft. of land area. At that
rate, even standing alone, the Subject Tract (121,682 sq. ft.] was worth
$608,410, or more than ten times the District’s appraisal

As has been observed many_.times, “[d]etermining the value of real estater
is not a science,” Portland Nat. Gas fl‘ransm,ission Sys. v. 19.2 Acres ofLand,
318 F.3d 27 9, 281 (1st Cir. 2003). Confronted with appraisals as disparate as
those in this case, a fact-finder could be forgiven for thinking that it is not even
` much of an art, or if an art, a creative one rather than a practical. The trial
court here, in its Findings of Fact, Conclusions of Law and Judgment explained

why neither party’s appraisal approach Struck it as persuasive.

The court rejected, to begin with, Putnam’s bid to have its properties
evaluated as an integrated whole, noting that there was no evidence that the
8.2 acre factory tract had depended on the Subject Tract since Modine ceased
operations in the 19803. Further, the court noted that zoning ordinances
introduced by the District indicated that the smaller parking lot left to Putnam
would adequately support even a full-scale warehousing operation [as
understood by the zoning authorities) at a refurbished Modine facility. The
court also rejected Putnam’s $608,000 stand-alone evaluation of the Subject
Tract, on the ground simply that Putnam’s sale in 2012 of its remaining
holdings of more than eight acres for $435,000, made it unreasonable to
believe that a year earlier a quarter of that acreage (2.79 acres to be exact) had
been worth $175,000 more. In the trial court’s view, the District’s appraisal
was equally unhelpful because the appraiser’s ostensibly comparable sales
“were not arms-length transactions (or even sales at all) or they involved
properties where the highest and best use was not the same high level of
commercial use that is enjoyed by the Subject Property.”

Thus left in the lurch by the parties, the court relied on the only evidence
before it of transactions actually involving Putnam’s properties. It noted, first,
the deed that Tom Putnam executed in April 2002, whereby the Putnam & Son
partnership transferred the partnership’s entire holdings to the new Putnam 85
Sons, 1,LC. Aside from the small amount of personalty that Tom Putnam l
testified was included in the transfer, the deed indicates, as the court observed,

that in 2002, “Putnam valued all of the Modine properties at $550,000.” The

10

courtalso noted the 2012 sale of the 8.4 acre remainder--factory tract plus
small parking lot_for $435,000. Assuming that those values_$550,000 for
the whole in 2002 and $435,000 for the remainder in 2012, could serve as
reasonable approximations for their May 201 1 counterparts, the trial court
arrived (by subtraction] at a_May 2011 value for the taken 2.79 acre Subject
Tract of $ 115,000. That that amount for a tract roughly a fourth of the size of
the remainder turned out to be roughly a fourth of the amount Putnam had

7 received upon sale of the remainder, provided at least some confirmation, the
court believed, for its assumptions regarding 2011 values. lt also provided
reasonable assurance of fair and just compensation for Putnam’s loss.

'As noted, Putnam appealed from that ruling, and the Court of Appeals
reversed. The appeals panel expressed concern that in rejecting Putnam’s
integration theory the trial court gave too much weight to how Putnam had
actually used the property_in a very limited warehousing capacity-and had
not'paid Sufficient heed to Putnam’s appraiser’s testimony. He had testified to
the potential use of the property for full-scale warehousing on a regional basis,
a use that would require (according to the appraiser) both the factory tract and
the Subject Tract and would thus affect the market value of both.

The appeals panel also rejected the trial court’s assumption that

L

Putnam’s 2002 valuation of its Modine properties could be considered a
reasonable approximation of their value as a whole in May 201 1. The 2002
deed was unreliable, the panel believed, both because of its age (“It is difficult

to fathom that the entire property was worth the same amount in 201 1 as it

11

was in 2002.”) and because it “represented a transfer between interrelated
companies.” This latter fact called into doubt, in the panel’s view, whether the
2002 _deed could even be thought reliable evidence of fair market value in 2002,
much less in 2011. (“There was no testimony that this transfer represented the
actual fair market [value] of the property in 2002.”_) The trial court’s reliance
on this “incompetent” evidence, the panel concluded, was by itself enough to
require reversal of the judgment

Contesting that conclusion, the District maintains that the Court of
Appeals converted a question about evidentiary weight~the probative value of
the 2002 transfer_into a question about evidentiary “competency.” As the
District sees it, by a sort of sleight of hand, the appellate court substituted its
view of the evidence for that of the fact finder. With respect to Putnam’s
integration theory, the District insists that the trial court properly discounted
that theory as speculative. The District contends it is the appeals panel that
errs, dangerously and fundamentally, by opening the door in condemnation
proceedings to valuations based on mere theoretical uses of the taken property,
rather than on uses shown to have a real likelihood of being made.

This case provides yet another example of the dueling-appraisal dilemma
regularly confronted by trial courts in condemnation proceedings. We granted
the District’s motion for discretionary review to consider the trial court’s
discretion in the face of that dilemma Having carefully reviewed the record, we
agree with the District that the trial court did not err or abuse its discretion in

this case. We begin our analysis with the trial court’s rejection of Putnam’s

12

integration theory, and then consider the use the trial court made of Putnam’s
2002 valuation of its property,
ANALYSIS4

'I. The Trial Court Appropriately Rejected Putnam’s Integrated-
Use/Warehousing Theory of Valuation.

As Putnam rightly insists, the taking of its property by a public entity
has constitutional implications The constitutions of both Kentucky and the
United States allow such takings, but only for valid public purposes, and then
only where the private interest is “justly compensated.” Baston v. Cty. of
Kenton ex rel. Kenton Cty. Airport Bd., 319 S.W.3d 401, 406 (Ky. 2010]
(“Sections 13 and 242 of the Kentucky Constitution and the Fifth Amendment
of the United States Constitution permit the taking of private property for
public use, but not ‘without just compensation.”’). Putnam concedes that the
District’s need and desire to replace its eighty-year-old middle school is a valid
public purpose. The main issue before the trial court, therefore, was
compensation. '

ln Baston, we addressed the idea of “just compensation” as follows:

 

4 As noted above, the parties opted in this case to have the compensation
question decided without a jury at a bench trial. Appellate review of such trials is
governed by Kentucky Rule of Civil Procedure (CR] 52.01, which requires the court to
render its judgment by way of specific factual findings and express legal conclusions
based thereon. The trial court’s findings are subject to review only for clear error.
That is, they are to be upheld if supported by substantial evidence, and of course due
regard must be given to the court’s prerogative to judge the credibility of witnesses and
to assess the weight of evidence. “[S]imple doubt as to the appropriateness of a
finding will not justify its reversal.” Ky. Props. Holding LLC v. Sproul, 507 S.W.3d 563,
569 (Ky. 2016) (citation omitted). Appellate review o_f the trial court’s legal
determinations and conclusions is de novo. Id. '

13

Just compensation means a compensation fair to the public in
need of the property and paying for it as well as fair to the
individual obliged to surrender it, United States v. 320.0 Acres of
Land, 605 F.2d 762, 780 (5th Cir. 1979) (citing Bauman v. Ross,
167 U.S. 548, 17 S. Ct. 966, 42 L. Ed. 270 (1897); Commonwealth,
Dep’t oinghways v. Sher'rod, 367 S.W.2d 844 (Ky. 1963).
Generally, this balance is struck by determining the fair market
value of the property at the time of the taking, United States v.
Miller, 317 U.S. 369, 63 S. Ct. 276, 87 L. Ed. 336 (1943); Bianchi 1).
City of Harlan, 274 S.W.3d 368 (Ky. 2008) (citing Sherrod and KRS
416.660).

319 S.W.3d at 406.

Since for condemnation purposes “fair market value” is understood as
“the amount in cash that a willing buyer would pay to a willing seller,” id.,
Putnam correctly notes that the fair-market-value determination is not limited
to the use currently being made of the property, The estimate of fair market
value, rather, should take into consideration

all the uses for which it [the taken property] is suitable The

highest and most profitable use for which the property is adaptable
and needed or likely to be needed in the reasonably near future is

to be considered . . . to the full extent that the prospect of- demand
for such use affects the market value while the property is privately
held.

Id. (quoting Olson 1). United States, 292 U.S. 246, 255, 54 S. Ct. 704, 78 L. Ed. _
1236 (1934)). ln this connection, as the United States Supreme Court has
explained, “the value may be determined in light of the special or higher use of
the land when combined with other parcels, it need not be measured merely by
the use to which the land is`or can be put as a separate tract.” United States
ex rel. Tennessee Valley Auth. 1). Powelson,-319 U.S. 266, 275 (1943) (citation-

omitted).

14

But this does not mean that market value is to be determined according
to any theory of combination and adaptability the landowner can conjure up.
Rather,' “in order for that special adaptability to be considered, there must be a
reasonable probability of the lands in question being combined with other
tracts for that purpose in the reasonably near future.” 3 19 U.S. at 275-76.
The burden of establishing that reasonable probability, moreover, is the
landowner’S, and “[i]n absence of such a showing, the chance of their [the
separate tracts] being united for that special use is regarded ‘as too remote and
speculative to have any legitimate effect upon the valuation.”’ 319 U.S. at 276
(quoting McGovem v. New York, 229 U.S. 363, 372 (1913)).

The rule in Kentucky is in complete accord:

Our cases have consistently observed the rule that it is appropriate

to admit testimony of the adaptability of property for particular

uses, even though the property is not then being so used.

I-lowever, the rule is subject to the qualification that if the land is

reasonably adaptable to another use, there must be an expectation

or probability in the near jiture that it can or will be so used.
Commonwealth, Dep’t of Highways v. Stocker, 423 S.W.2d 510, 517 (Ky. 1968)
(quoting Commonwealth, Dep’t of Highways v. Gearhart, 383 S.W.2d 922, 926
. (Ky. 1964)) (emphasis supplied).

The Court of Appeals was concerned that the trial court violated this
highest-and-best-use-of-the-property rule by emphasizing too much the limited
use Putnam had made of its Modine factory, especially since about 2002, and
by failing to give sufficient heed to the testimony by Putnam’s appraiser that in

conjunction with the factory tract, the 2.37 Subject Tract was adaptable for use

as part of a highly valuable regional warehousing facility. The Court of Appeals
15

is certainly correct to the extent that Putnam’s appraiser testified to the effect
that warehousing facilities catering to the needs of long-distance trucking
companies exist in other Kentucky cities served by different highways

The Court of Appeals is also correct in noting that the trial court, in the
two short “conclusions” paragraphs it devoted to the question, dismisses rather
cursorin Putnam’s long-distance warehousing theory as the highest and best
use of the Subject Tract, Our review of the entire record, however, convinces
us, contrary to the Court of -Appeals’ concerns, that the trial court was well
aware of the highest-and-best-use rule noted above and, notwithstanding its
succinct and unelaborated “conclusions,” that the trial court appropriately
rejected Putnam’s integrated warehousing theory as unduly speculative
Putnam simply offered no evidence that the old and dilapidated Modine factory
was in any way likely to be put to use as a high-end regional warehousing
facility “in the near future.” Stocker, 423 S.W.2d at 517.

With respect to the trial court’s awareness of Putnam’s responsibility to
make that showing, we note in particular that following the District’s cross-
examination of Putnam’s appraiser, the trial court itself questioned him for
some fifteen transcript pages The court focused, among other concernsz on
whether the appraiser, in arriving at his notion of the property’s highest and
best use, considered at all whether there was evidence of an actual local
demand for that use of the property. The appraiser testified that he did not.
He said, in effect, that his job Was to identify the property’s potential, and

having done so he assumed that eventually, through the mysterious workings

16

of the market, a buyer would materialize willing to pay for that potential ln
the meantime, in his view, the landowner would be content to wait and to put
the property to Some interim use_as Putnam had done-and that it was none
of his, the appraiser’s, concern how long the wait might be.

The trial court basically had the Putnam appraiser’s own admission that
there was no reason to think that regional warehousing at theModine facility
was apt to take place in the reasonably near future On the other hand, the
trial court had evidence_the age and neglected condition of the building, the
long history of the property’s not being used for full-scale warehousing of any
sort, and the District appraiser’s report, noted above, which included the
observation that Putnam had been actively marketing its Modine properties as
“high potential” without success for at least several years-which tended to
Show that regional warehousing was not a reasonably imminent use. This
record convinces us that contrary to the concerns voiced by the Court of
Appeals, the trial court did not misconceive the law and was well within its
discretion when it rejected Putnam’s integrated-use/warehousing valuation of
the Subject Tract taken by the District.

II. The Trial Court Did Not Err by Relying on Putnam’s Own Nine-Year-
Old Valuation of its Property.

The Court of Appeals also believed that the trial court, having rejected
the extreme stand-alone valuations of the Subject Tract offered by the
contending sides ($60,000 vs. $608,000], erred in trying to arrive at its own
valuation. In particular, the appellate panel faulted the court for its reliance on

Putnam’s 2002 internal transfer of the entire Modine property. That transfer,
17

in the panel’s view, was, as a matter of law, too old and insufficiently objective
to bear the evidentiary weight the trial court placed upon it. We agree with the
District, however, that the trial court’s valuation was not “clearly erroneous,”
for the purposes of CR 52.01, and that the Court of Appeals thus overstepped
its role by setting that finding aside

To recap briefly how this issue arose, the District claimed, based on what
it maintained were sales of comparable vacant lots (so-called “comps”), that the
subject property was worth $60,000. The trial court rejected that valuation as
too low, because the purported comps either were not bona fide sales or
involved properties of patently lesser commercial value On the other hand,
Putnam, claiming that standing alone the Subject Tract was suitable for
development as medical office space and citing a starkly contrasting set of
comps, placed a stand-alone value on the Subject Tract of more than
$600,000. The trial court believed this valuation patently excessive, inasmuch
as in 2012, about a year after the District took the 2.79 acre Subject Tract,
Putnam sold the 8.4 acre remainder for considerably less-only $435,000.
Thus dissatisfied with both parties’ valuations, the trial court noted that in
2002 Putnam valued the entirety of its l 1-plus Modine properties at $550,000.
ln light of the 2012 sale of the 8.4-acre remainder for $435,000, the v
difference_$l 15,000_struck the court as reasonable compensation for the
Subject Tract,

Did the trial court err, as the Court of Appeals believed, by using

Putnam’S 2002 valuation of the entirety as though that were an acceptable

18

approximation of the value of the entirety at the time of the taking in 201 1?
Certainly, a nine-year-old comparable sale, even a sale involving the Subject
Tract itself, is not the evidence one might hope for, and where there is evidence
of markedly changed market conditions in the interim, a nine-year-old comp
might retain so little probative value as not even to be admissible See,
Commonwealth by State Hig_hway Comm’n v. Combs, 229 Ky. 627, 17 S.W.2d
748, 749 (1929) (holding inadmissible an eight-year-old prior sale of the
subject property “made under conditions entirely different from those existing
at the time of this trial”).

In general, however, our case law has sought not to get bogged down in
“collateral controversy over comparables,”5 Commonwealth, Dep’f of Highways
1). Cole, 437 S.W.2d 736, 738 (Ky. 1968). Our approach, rather, has been to
liberally allow the‘admission of evidence of other sales “where there are any
reasonable elements of comparability,” Commonwealth, Dep’t of Highways v.
Whitledge, 406 S.W.2d 833, 836 (Ky. 1966) (citations and internal quotation
marks omitted), and we have granted considerable leeway to expert witnesses
“to exercise their own skilled judgment in deciding’ what those elements might
be Hatfield v. Comrnonwealth, Dep’t of Transp., 626 S.W.2d 213, 214 (Ky.

1982). Rather than excluding doubtful comps, where “the land being used for

 

5 We realize, of course, that much of our eminent domain case law, including
the evidentiary rulings here discussed, developed before the adoption in 1990 of the
Kentucky Rules of Evidence. As Professor Lawson has noted, questions concerning
the relation of the Rules to pre-existing cases can be vexed. Robert G. Lawson, The
Kentucky Evidence Law Handbook, § 2.10, p.p. 86-87 (5th ed. 2013]. No such
questions having been raised in this case, however, we leave them for another day.

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comparison is ill suited for that purpose due ton its location, topography, size, or
any other characteristic,” we have relied on “its inadequacy [being] exposed . . .
during cross-examination just as any other witness’ testimony is challenged.”
Id. Under this approach, we have upheld the admission of comparable sales
distant both in space and time from the condemnation. Comm.onweafth v.
Oaklar_td United Baptist Church, 372 S.W.2d 412, 414 (Ky. 1963) (upholding the
admission of a comp more than ten miles away from the taking and observing
that “distance alone [is] not a disqualifying factor”); Maxwell v. Commonwealth,
Dep’t of Highways, 404 S.W.2d 9, 1 1 (Ky. 1966] (upholding the admission of a
comp six years prior to the condemnation and noting that despite evidence of
changed conditions the prior sale was not “so remote as to lack relevancy”);
and cf. Combs, 17 S.W.2d at 749 (noting that, While the eight-year-old prior
sale of the subject property was not admissible in that case due to the radically
altered market conditions in the absence of evidence of such market changes
even prior-sale evidence that old could well be admissible].

With respect to the time gap in this case, Putnam has offered no evidence
of market changes Neither in its post-trial Motion to Reconsider before the
trial court, nor in its brief before this Court, does Putnam contend that market
conditions were radically different at the time of the taking in 2011 from those
existing in 2002, when Putnam internally transferred its Modine properties and
assessed them in conjunction with the transfer at $550,000. Putnam merely
presumes rather, as did the Court of Appeals, that nine years will produce

changes that disqualify the comparison. According to Putnam, therefore, it is

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the proponent of an “old” comp who bears the burden of showing why that
presumption should not apply and in this case the District made no such
showing.

ln light of the cases discussed above, however, with their liberal rule of
comparable sales admissibility, we believe that the presumption regarding
more distant-in-time comps works in the opposite direction. Even seemingly
remote comps, that is, are admissible and subject to cross-examination unless
shown to have such attenuated probative value as to be irrelevant or
misleading

Notably, Robinette v. Commonwealth, Dep’t of Hight_uays, 380 S.W.2d 78
(Ky. 1964), which Putnam cites in support of its position on this question, is
not to the contrary. lndeed, in that case the Court simply applied the liberal
admissibility rule discussed above to uphold the admission of comps that
occurred as much as three years prior to the taking. That “remoteness,” the
Court explained, did not “destroy their [the prior sales] probative worth as
comparisons of valuation. . . [Rather,] [i]f distance or time of sale of comparable
properties makes a difference it kis a matter [not of admissibility, bu-t] to be
developed by the expert under direct examination and cross-examination.” Id.
at 82. .

Admittedly, a‘nine-year-old prior sale will raise questions about
comparability. This particular nine-year period (2002 to 2011), however, as
reflected in Putnam’s appraisal report, was an unusually recessionary one.

And, as the trial court noted, any presumption that after nine years the

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property would have appreciated beyond compare would be further tempered
by the fact that during that same period Putnam apparently ceased
maintaining the Modine factory building and allowed it to deteriorate
Notwithstanding the nine-year gap, in other words, we think the trial court
correctly determined that Putnam’s 2002 transfer of its entire Mod-ine
properties remained sufficiently probative of 201 1 values to be relevant and
material here The Court of Appeals erred, therefore, by deeming the prior
transfer “incompetent” as a matter of law.

Putnam and the Court of Appeals also fault the trial court’s use of the
2002 internal transfer of Putnam’s Modine property because it did not
represent an arm’s length sale of the property, but was instead merely a
transfer between related parties, the sort of “comparable sale” generally deemed
an unreliable indicator of the purported comp’s value and therefore
inadmissible in a condemnation action. Commonwealth Dep’t of Highways v.
Cecif, 465 S.W.2d 250, 251-52 (Ky. 1971]. As Putnam essentially concedes in
its brief before us, however, the difference here is that the 2002 transfer was
not a “comp” involving unrelated property and parties Instead, it included the
very property at issue, and it contains the owner’s own attested assessment of
value lt is well established that an owner’s certified assessment of value is
admissible in a condemnation action as an admission against interest. Major
v. Commonwealth, Dep’t of Highways, 448 S.W.2d 54, 55 (Ky. 1969) (citing
Commonwealth, Dep’t of Highways v. Ranlc_in, 346 S.W.2d 714 (Ky. 1961), and

Maxwell, 404 S.W.2d 9).

\_,

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Although more-or-less conceding this point, Putnam still insists that the
owner, Tom Putnam, testified that notwithstanding the certification, his
understanding in 2002 was that the transfer price_$550,000 (excluding the
price of some personalty)l_represented only his father’s half of the Modine
property’s value, not its full value lt was for the trial court, however, the fact'-
finder in this bench trial, to determine the weight and credibility of that
testimony.

Putnam’s and the Court of Appeals’ final point is no more persuasive.
They complain that the trial court somehow contradicted itself by rejecting
Putnam’s theory that its property was integrated and thus should be evaluated
as a partial taking;the fair market value of the entirety immediately prior to
the taking less the fair market value of the remainder immediately after, see
KRS 4 16.660_but then turning around and using that very entirety minus
remainder calculation to arrive at its valuation of the property. In their view,
the trial court’s rejection of Putnam’s regional warehousing theory of
integration somehow committed the trial court to valuing the-Subject Tract on
a stand-alone basis ln our view, the trial court attempted to do just that, but
was frustrated by the parties’ failures to present convincing evidence of a
stand-alone value

What the trial court rejected, however, was not the idea that the value of
the Subject Tract could be determined by subtracting the value of the
remainder from the value of the entire Modine tract. What it rejected was

Putnam’s claim that the value of the entirety_Putnam’s dilapidated, sixty-year-

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old former radiator factory and its two parking lots_was to be based upon
modern, regional warehousing facilities operating in cities seventy miles or
more from Paducah. There is no inconsistency in rejecting that theory, but
then using the entirety-less-remainder approach with values for entirety and
remainder that accord better with the property’s real characteristics and
circumstances

Resisting that conclusion, Putnarn contends, citing State ex rel Ordway
v. Buchanan, 741 P.2d 292 (Ariz. 1987), that if the Subject Tract has a stand-
alone value greater than its value as part of a larger tract, then the condemnor
must use the higher, stand-alone value That may well be correct, but the
point is irrelevant. Putnam’s theory at trial was the opposite_that the Subject
Tract was more valuable integrated with the whole, and it failed to offer

persuasive proof, in the alternative of the Subject Tract’s stand-alone value,6

 

6 Putnam several times complains that the trial court rejected its stand-alone
valuation of the subject tract “based on nothing at all” but its own “sense” that the
value was extravagant As noted above, however, the trial court deemed Putnam’s
$608,000 stand-alone valuation for the 2.79 acre Subject Tract patently excessive in
light of Putnam’s sale, only a year later, of the 8.4 acre remainder for $435,000. Even
granting that the comparison of the “improved” (or maybe “encumbered”] remainder
tract and the graveled parking lot that was taken is not as straight forward as would
be the comparison of two vacant lots, the trial court’s finding of excessiveness and
accordingly its rejection of Putnam’s stand-alone valuation, far from based on “nothing
at all,” was substantially based on the record and was not clearly erroneous

In this same vein, at the end of trial, Putnam moved to introduce evidence
tending to show, it claimed, that the purchaser of the remainder had razed the old
Modine factory and was hoping to develop the factory tract as a medical office park. lt
claimed even to have evidence that this would-be developer was offering office space at
$5/ sq. ft. The trial court disallowed this evidence (which Putnam introduced by
avowal], on the grounds that it was untirnely, the District having been given no prior
notice of it, and was inadmissible anyway, since mere offers to buy or sell property
obviously are not arm’s length transactions and so are generally deemed not to be
reliable evidence of market value Commonwealth, Dep’t of Highways v. Rogers, 399
S.W.2d 7 06, 708 (Ky. 1965] (citing Combs, supra). lt might be observed that this

24

much less proof that it was worth more than the trial court determined by
considering it a part of the whole

Putnam’s invocation of Buchanan notwithstanding the trial court’s valid
rejections of Putnam’s $ 10 / sq. ft. regional-warehousing theory for valuing the
entire Modine properties and its $5/sq. ft. office space theory for valuing the
Subject Tract by itself do not entitle Putnam to a do over.7 Rejecting valuations
by both sides it had good reason to deem inadequate and excessive
respectively, the trial court appropriately did the best it could with the evidence
the parties had provided. Its determination of the market value of the Subject
Tract at the time of taking was reasonably based on duly probative (even if not
ideal) evidence of the value of the entirety and of the remainder at that time,
and as the trial court aptly noted; the result of that method was a
compensation award for the taken 2.79 Subject Tract that harmonized well
with the price Putnam accepted in 2012 for the remainder.

CONCLUSION
ln sum, we agree with the District that the trial court’s rejection of

Putnam’s integrated-warehousing theory of the Subject Tract’s best use was

 

evidence rather convincingly refutes Putnam’s appraiser’s insistence that the highest
and best use of the Modine factory tract even apart from the Subject Tract was
warehousing, thus lending support to the trial court’s rejection of Putnam’s
warehousing theory for the combined tracts Be that as it may, we are convinced that
the trial court did not abuse its discretion by not allowing Putnam to reinvent its case
at the end of trial, and with inadmissible evidence to boot.

7 The appellate panel suggested that when it rejected the parties’ appraisals the
trial court should have appointed an appraiser pursuant to KRE 706. The Rule did
indeed give the court that option, but in the circumstances of this case the procedures
the Rule requires would have meant, essentially, a retrial. The trial court most
assuredly did not abuse its discretion by deciding against that course here

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both legally sound (the theory requiring evidence of use for that purpose in the
near future) and factually supported (there being no such evidence). We
further agree that Putnam’s.20'02 self-assessment of its property’s value and
the 2012 sale of the remainder provided competent, substantial evidence
supporting the trial court’s determination of the Subject Tract’s value at the l
time`of taking in 2011. By second guessing the trial court’s duly supported
findings the Court of Appeals exceeded the scope of its review. Accordingly, we
hereby reverse the Court of Appeals Opinion and reinstate _the Judgment of the
McCracken Circuit Court.

Minton, C.J.; Cunningham, Keller, VanMeter, and Venters, JJ., concur.

Wright, J., not sitting. “

COUNSEL FOR APPELLANT:

Mark C. Whitlow

Nicholas M. Holland

Whitlow, Roberts, Houston 8a Straub, PLLC

COUNSEL FOR APPELLEE:

Samuel Wright
Farmer 85 Wright, PLLC

Dan Biersdorf
Biersdorf 85 Associates_

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