             IN THE COURT OF APPEALS OF NORTH CAROLINA

                                 No. COA17-689

                               Filed: 7 August 2018

Burke County, No. 11 CVS 785

DEPARTMENT OF TRANSPORTATION, Plaintiff,

            v.

JAY BUTMATAJI, LLC; BYRD, BYRD, ERVIN, MCMAHON & DENTON, P.A.,
Trustee; MUKTI, INC., BB&T COLLATERAL SERVICE CORPORATION, Trustee,
and BRANCH BANKING AND TRUST COMPANY, Defendants.


      Appeal by defendant Jay Butmataji LLC from judgment entered 10 October

2016 by Judge W. Robert Bell in Superior Court, Burke County. Heard in the Court

of Appeals 11 January 2018.


      Attorney General Joshua H. Stein, by Assistant Attorney General Kevin G.
      Mahoney, for the State.

      Sigmon, Clark, Mackie, Hanvey & Ferrell, P.A., by Forrest A. Ferrell and
      Andrew J. Howell, for defendant-appellant Jay Butmataji LLC.


      STROUD, Judge.


      Defendant appeals the trial court’s judgment awarding him $150,000 as just

compensation for the taking of his property by the Department of Transportation.

Because the trial court did not abuse its discretion in excluding portions of

defendant’s appraiser’s testimony and appraisal report which valued the taking of a
                                    DOT V. JAY BUTMATAJI, LLC

                                           Opinion of the Court



temporary construction easement assuming conditions during construction which did

not exist, we affirm.

                                              I.      Background

          On 10 May 2011, plaintiff Department of Transportation (“DOT”) instituted

this action against defendant landowner Jay Butmataji LLC, trustees, and Branch

Banking and Trust Company.1 DOT had condemned and appropriated a portion of

defendant’s property in Burke County upon which it operated a motel. DOT took

0.184 acres of defendant’s 3.573 acres of property. DOT described the taking as a

temporary construction easement (“TCE”) to widen a highway.2 Defendant Butmataji

answered DOT’s complaint and requested a jury trial to determine just compensation

for the taking.

          Before the trial, DOT made a motion in limine requesting the trial court

                  to instruct all parties, their counsel, and witnesses not to
                  mention state, or intimate any of the matters listed below
                  by statement, question, or argument in the presence of the
                  jury or the jury panel without first approaching the Court
                  of the hearing of the jury and securing a ruling regarding
                  the same[.]

In its motion, DOT listed several matters subject to the motion in limine. Before trial

began, on 9 August 2016, the trial court considered the motion in limine and the




1   Only defendant Jay Butmataji LLC appeals so it is the singular “defendant” we refer to in this case.

2   DOT also took an easement in perpetuity for drainage, which is not at issue in this case.

                                                   -2-
                            DOT V. JAY BUTMATAJI, LLC

                                  Opinion of the Court



parties addressed at length their contentions about the appropriate evidence for the

jury to consider.

      Defendant owned and operated a motel on the property and contended ingress

and egress to his business was limited by the TCE during the construction of the road.

The State argued that the appraisal prepared by Mr. Damon Bidencope, defendant’s

expert witness, included valuation of loss of income to the motel and elements of

damages not supported by the actual conditions of the property during construction.

The State argued, “[C]ases are very clear, that you are not allowed loss of rent. It’s

only the rent of that particular piece of the easement, not loss of rent from your

business, even though this is a motel, Your Honor. You’re just not allowed. It’s very,

very clear.” Defendant’s attorney countered,

             [W]e’re entitled to present evidence through Mr. Bidencope
             and through our witnesses of the effect that this temporary
             construction easement had on the remainder of the
             property, because that's what the law says we can do.
                    ....
                    So we contend we’re wholly entitled to put on that
             evidence and that Mr. Bidencope’s appraisal addresses
             that in a[n] accurate manner. Now, if they want to take
             Mr. Bidenquote -- cope on voir dire and address it at that
             time, that’s fine, Your Honor. But we wholly don’t think
             you should exclude it at this time in any limited phase.

Mr. Bidencope then testified at length on voir dire.

      The trial court granted the State’s motion in limine in part and excluded the

portion of Mr. Bidencope’s appraisal entitled “Building Rent Lost During TCE[,]”



                                         -3-
                                  DOT V. JAY BUTMATAJI, LLC

                                         Opinion of the Court



approximately two to three pages of the 91 page appraisal.3 The trial court later

clarified its ruling for defendant as follows: “He can testify as to the [a]ffect of the

TCE on the remainder of the property, but not as to the taking of the entryway.” The

only question before the jury was the amount of just compensation defendant should

receive. The jury determined damages of $150,000.00, and the trial court entered

judgment accordingly. Defendant appeals.

                                 II.     Exclusion of Testimony

       Defendant’s only argument on appeal is that “the trial court erred in granting

plaintiff DOT’s motion in limine to exclude defendant landowner’s expert appraiser

Damon Bidencope’s testimony concerning the effects of the temporary construction

easement on the remainder of the defendant landowner’s property.” (Original in all

caps.) “The standard of review for a trial court’s ruling on a motion in limine is abuse

of discretion.” Kearney v. Bolling, 242 N.C. App. 67, 78, 774 S.E.2d 841, 849 (2015),

disc. review denied, ___ N.C. ___, 783 S.E.2d 497 (2016). “A trial court abuses its

discretion where its ruling is manifestly unsupported by reason or is so arbitrary that

it could not have been the result of a reasoned decision.” City of Charlotte v. Combs,




       3  Defendant’s counsel noted that removing this portion of the appraisal would also have an
effect on other portions of the appraisal, since “information about the TCE coming across the access
and having an effect on the remainder of the property is not only found on pages 85 through 86; it
effects an analysis of the other portions of his report and the other damages that he’s gone through in
his report.” The trial court required Mr. Bidencope to revise his appraisal to remove the excluded
portions. Defendant presented a full proffer of evidence of Mr. Bidencope on voir dire and reserved his
objection to the modifications to the appraisal report.

                                                 -4-
                             DOT V. JAY BUTMATAJI, LLC

                                   Opinion of the Court



216 N.C. App. 258, 262, 719 S.E.2d 59, 63 (2011) (citation and quotation marks

omitted).

      Defendant’s argument focuses on Daubert v. Merrell Dow Pharmaceuticals,

Inc., 509 U.S. 579, 125 L. Ed. 2d 469 (1993) and Rule 702 of the Rules of Evidence

regarding an expert witness’s qualification to testify; defendant argues “the trial

court’s ruling was, in effect, a determination that Mr. Bidencope’s testimony on the

TCE’s effect on the remainder of the property was not admissible expert testimony.”

But defendant misconstrues the trial court’s ruling. Mr. Bidencope was not excluded

as an expert witness, and he actually testified at length to the jury about the portions

of the appraisal not at issue here. Defendant’s argument stresses Mr. Bidencope’s

qualifications and his methodology, but there was really no question as to his

qualifications and no question that he used recognized methodologies in valuing the

property generally. Defendant’s argument assumes that once a witness has been

properly qualified as an expert, he may testify to anything within his expertise, but

that is simply not the case. Neither experts nor lay witnesses may testify unfettered

by the rules of evidence and law applicable to the subject of their testimony.

Furthermore, in condemnation cases, the trial court must also consider whether the

appraiser’s opinion is based upon the correct factual basis and whether the appraisal

is based upon any element of damages not considered as a proper consideration for

that type of case. See Department of Transp. v. M.M. Fowler, Inc., 361 N.C. 1, 6, 637



                                          -5-
                             DOT V. JAY BUTMATAJI, LLC

                                  Opinion of the Court



S.E.2d 885, 890 (2006) (“An opinion concerning property’s fair market value must not

rely in material degree on factors that cannot legally be considered.”).

      From reviewing the transcript of the voir dire, arguments, and colloquy with

the trial court, it appears the trial court’s concern focused on two aspects of the

appraisal. First, Mr. Bidencope valued the “Building Rent Lost During TCE” on the

assumption that the actual physical access to the motel was cut off or may be cut off

at any time during the 5.1 year period of the construction project. Second, Mr.

Bidencope used the loss of income from rental of rooms during the TCE as a portion

of his opinion of damages.

      Defendant’s argument conflates the measure of damages for the permanent

partial taking -- the portion of the property which was taken -- with the damages for

the temporary construction easement -- damages arising from the actual construction

period. For the permanent partial taking, just compensation is based upon the fair

market value of the property just before the taking as compared to the value

immediately after the taking, assuming the project has been completed as designed.

See Barnes v. Highway Commission., 250 N.C. 378, 387, 109 S.E.2d 219, 227 (1959)

(“When the property is appropriated by the State Highway Commission for highway

purposes, the measure of damages is the difference between the fair market value of

the entire tract of land immediately before the taking and the fair market value of

what is left immediately after the taking.”). In other words, damages are based upon



                                         -6-
                             DOT V. JAY BUTMATAJI, LLC

                                   Opinion of the Court



a legal fiction that the project as planned has been completed immediately after the

condemnor acquires the property. See generally id. The highest and best use and

fair market value of the property in its condition immediately before the taking is

compared to the highest and best use and fair market value of the remainder

immediately after the taking as if the project were complete. See generally Barnes,

250 N.C. 378, 109 S.E.2d 219. This measure of damages skips over the construction

period, if any, and any temporary interference with use of the remaining property

during construction.    The interference with the property during construction is

compensable, but the method of valuation is a bit different. See generally Combs, 216

N.C. App. at 261-62, 719 S.E.2d at 62-63.

      The only valuation issue in this case is for the temporary construction

easement, so the law regarding valuation for a permanent partial taking does not

apply. Damages for the temporary construction easement are based upon the same

general principles of valuation as for the permanent taking, but the legal fiction of

immediate completion of the project does not apply; this measure of damages

considers interference with the property’s use during the construction, but not the

impact of the project as completed on the remaining property’s value as a whole. See

generally id. This Court summarized the law regarding the measure of damages for

a temporary taking of a construction easement in Combs:

             A temporary taking, which denies a landowner all use of
             his or her property for a finite period, is no different in kind


                                          -7-
               DOT V. JAY BUTMATAJI, LLC

                     Opinion of the Court



from a permanent taking, and requires just compensation
for the use of the land during the period of the taking.
       Generally, the measure of damages for a temporary
taking is the rental value of the land actually occupied by
the condemnor. Leigh v. Garysburg Mfg. Co., 132 N.C. 167,
170, 43 S.E. 632, 633 (1903); accord Kimball Laundry Co.
v. United States, 338 U.S. 1, 7, 93 L. Ed. 1765, 1773 (1949)
(concluding that the proper measure of compensation for
temporary taking is the rental that probably could have
been obtained); United States v. Banisadr Bldg. Joint
Venture, 65 F.3d 374, 378 (4th Cir. 1995) (explaining that
when the Government takes property only for a period of
years, it essentially takes a leasehold in the property, and
thus, the value of the taking is what rental the marketplace
would have yielded for the property taken; State v. Sun Oil
Co., 160 N.J. Super. 513, 527, 390 A.2d 661, 668 (1978)
(holding that where a temporary construction easement is
taken, the rental value of the property taken is the normal
measure of damages and is awarded for the period taken)[.]
       Where, as here, the temporary taking is in the form
of a temporary construction easement, our Supreme Court
has held that, in addition to paying the fair rental value of
the easement area for the time used by the condemnor, the
condemnor is liable for additional elements of damages
flowing from the use of the temporary construction
easement, which may include: (1) the cost of removal of the
landowner’s improvements from the construction
easement that are paid by landowner; (2) the cost of
constructing an alternate entrance to the property; (3) the
changes made in the area resulting from the use of the
easement that affect the value of the area in the easement
or the value of the remaining property of the landowner;
(4) the removal of trees, crops, or improvements from the
area in the easement by the condemnor; and (5) the length
of time the easement was used by the condemnor. Colonial
Pipeline Co. v. Weaver, 310 N.C. 93, 107, 310 S.E.2d 338,
346 (1984); see also 26 Am. Jur.2d Eminent Domain § 283
(Where land has been appropriated for a temporary use,
the measure of compensation is the fair productive value of
the property during the time in which it is held. More


                            -8-
                            DOT V. JAY BUTMATAJI, LLC

                                   Opinion of the Court



             specifically, the rental value during the period of the
             taking, together with any damage sustained by the
             property, may be awarded as full compensation.

Id. at 261-62, 719 S.E.2d at 62-63 (emphasis added) (citations, quotation marks,

ellipses, and brackets omitted).

      The trial court excluded evidence of loss of motel income during the

construction period.   Defendant contends the jury should have been allowed to

consider “the interference with motel occupancy identified by Mr. Bidencope in his

original appraisal report includ[ing] interference with access but also interference

with ingress and egress, interference with parking, interference with walk-in

revenue, and construction noise.” Defendant cites to Colonial Pipeline Co. v. Weaver,

310 N.C. 93, 104, 310 S.E.2d 338, 344 (1984), to argue that loss of income is an

“additional element[] of damage[,]” but the law simply does not support that type of

damage. See Dep’t of Transp. v. M.M. Fowler, Inc., 361 N.C. 1, 6–10, 637 S.E.2d 885,

890-93 (2006).

      In a section entitled, “ADMISSIBILITY OF LOST BUSINESS PROFITS

EVIDENCE[,]” our Supreme Court explained that in a partial taking such as this, a

landowner’s loss of business income is not admissible evidence. Id. Although the

Court was addressing valuation of the remainder of the land after a partial

permanent taking, these same principles regarding loss of business profits would

apply to valuation of a temporary construction easement:



                                          -9-
                DOT V. JAY BUTMATAJI, LLC

                     Opinion of the Court



        During a proceeding to determine just compensation
in a partial taking, the trial court should admit any
relevant evidence that will assist the jury in calculating the
fair market value of property and the diminution in value
caused by condemnation. Admission of evidence that does
not help the jury calculate the fair market value of the land
or diminution in its value may confuse the minds of the
jury, and should be excluded. In particular, specific
evidence of a landowner’s noncompensable losses following
condemnation is inadmissible.
        Injury to a business, including lost profits, is one
such noncompensable loss. It is important to note that
revenue derived directly from the condemned property itself,
such as rental income, is distinct from profits of a business
located on the property. This case is concerned with lost
business profits. When evidence of income is used to
valuate property, care must be taken to distinguish
between income from the property and income from the
business conducted on the property. . . .
        The longstanding rule in North Carolina is that
evidence of lost business profits is inadmissible in
condemnation actions, as this Court articulated in
Pemberton v. City of Greensboro, 208 N.C. 466, 470–72, 181
S.E. 258, 260–61 (1935). . . .
        ....
        Just compensation is not the value to the owner for
his particular purposes. Awarding damages for lost profits
would provide excess compensation for a successful
business owner while a less prosperous one or an
individual landowner without a business would receive less
money for the same taking. Indeed, if business revenues
were considered in determining land values, an owner
whose business is losing money could receive less than the
land is worth. Limiting damages to the fair market value
of the land prevents unequal treatment based upon the use
of the real estate at the time of condemnation. Further,
paying business owners for lost business profits in a partial
taking results in inequitable treatment of the business
owner whose entire property is taken, in which case lost
profits clearly are not considered.


                            - 10 -
                            DOT V. JAY BUTMATAJI, LLC

                                  Opinion of the Court



                    Evidence of lost business profits is impermissible
             because recovery of the same is not allowed. Additionally,
             the speculative nature of profits makes them improper
             bases for condemnation awards as they
                    depend on too many contingencies to be
                    accepted as evidence of the usable value of the
                    property upon which the business is carried
                    on. Profits depend upon the times, the amount
                    of capital invested, the social, religious and
                    financial position in the community of the one
                    carrying it on, and many other elements
                    which might be suggested. What one man
                    might do at a profit, another might only do at
                    a loss. Further, even if the owner has made
                    profits from the business in the past it does
                    not necessarily follow that these profits will
                    continue in the future.
                    Recognizing that profits can rarely be traced to a
             single factor, business executives rely on complex models
             to determine profitability. Further, the uncertain character
             of lost business profits evidence could burden taxpayers
             with inflated jury awards bearing little relationship to the
             condemned land’s fair market value.
                    Moreover, our well-established North Carolina rule
             prohibiting lost business profits evidence comports with
             the federal rule.
                     ....
                    In summary, the prevailing rule excluding lost
             business profits evidence in condemnation actions is firmly
             rooted in our jurisprudence. As a case that
             comprehensively discussed and applied this enduring rule,
             Pemberton provides the framework upon which we base our
             decision today.

Id. (emphasis added) (citations, quotation marks, and footnotes omitted).

      Turning back to Mr. Bidencope’s excluded testimony and evidence, a motel’s

business is renting rooms, so its business income is derived from rent, but the proper



                                         - 11 -
                                DOT V. JAY BUTMATAJI, LLC

                                       Opinion of the Court



measure of damages is the rental value of the property actually taken—not the

interference with the business income for the entire property. See Combs, 216 N.C.

App. at 261, 719 S.E.2d at 62 (“[T]he measure of damages for a temporary taking is

the rental value of the land actually occupied by the condemnor.”) The distinction

between damages for the property taken and business income for the entire property

may be more obvious in a situation where access was entirely blocked for a period of

time and the motel could not operate at all; the landowner would be entitled to the

rental value of the land for its use as a motel, but not the business income that

particular motel may have generated if it had been in operation. See generally id. at

261-62, 719 S.E.2d at 62-63. Here, the “land actually occupied” for the TCE was 0.184

acres of defendant’s 3.573 acres, so the rental value of the 0.184 acres would be a

proper element of the damages.4 Id.

       Furthermore, based upon the transcript, Mr. Bidencope assumed that access

to the motel was entirely blocked at least part of the time during construction, but

the evidence showed that access was never blocked; he also stressed that DOT could

have blocked the access at any time, so access was uncertain. It is true that DOT

could have blocked the access, but it did not. Although the access was less convenient




4Mr. Bidencope’s appraisal and testimony addressed the rental value of the “TCE Area Loss” as well
and that portion of the evidence is not at issue on appeal.



                                              - 12 -
                                 DOT V. JAY BUTMATAJI, LLC

                                        Opinion of the Court



due to the construction project, it was open. To this extent, Mr. Bidencope’s valuation

was not based upon the actual conditions on the property.5

       Also, Mr. Bidencope’s appraisal seemed to consider the effect of the

construction on the fair market value of the property as if it were being valued for

sale during the construction. One portion of the appraisal stated:

               The motel’s ability to function is affected due to the
               uncertainty and possible disturbance of ingress and egress
               during this period. A potential buyer or tenant operator
               looking to buy or rent the property on the effective date of
               the condemnation would consider this factor. . . . .
                     ....
                     . . . . The uncertainly of use adds risk and adversely
               impacts the operation of the remainder of the property,
               which impact[s] the real property market value that a
               knowledgeable and willing buyer would pay.

But the consideration of what a willing buyer would pay for the entire property

during the construction is not part of the measure of damages for a temporary

construction easement.6 See generally id.

       In summary, Mr. Bidencope’s opinions regarding the motel’s loss of income, the

assumption of access being totally blocked to the motel, and the amount a willing



5 Mr. Bidencope also assumed that the change in slope of the driveway made it “uncertain” that “large
trucks and emergency vehicles” such as fire trucks could enter the property. Mr. Bidencope’s appraisal
stated that “[a] motel property cannot operate without the ability of emergency vehicles being able to
access the property.” But again, there was no evidence that emergency vehicles could not enter the
property.

6 Valuation during construction is also not part of the valuation of a permanent partial taking, since
that valuation is based upon the legal fiction that the project has been completed immediately after
the taking. See generally Barnes v. Highway Commission., 250 N.C. at 387, 109 S.E.2d at 227.

                                                - 13 -
                            DOT V. JAY BUTMATAJI, LLC

                                 Opinion of the Court



buyer might pay for the property during construction were either not supported by

the actual evidence or not proper considerations for the jury to calculate damages.

The trial court did not abuse its discretion by granting the State’s motion in limine

on these issues. This argument is overruled.

                                 III.   Conclusion

      We affirm.

      AFFIRMED.

      Judges DILLON and INMAN concur.




                                        - 14 -
