                                 IN THE
                         TENTH COURT OF APPEALS

                                No. 10-13-00344-CV

                           IN RE HOLCIM (US), INC.



                                Original Proceeding



                           DISSENTING OPINION


      In this mandamus proceeding, Holcim asks this Court to compel the trial court to

withdraw its order for discovery regarding the cost of a cement plant constructed in Ste.

Genevieve, Missouri.    Because Holcim has established that the nature, technology,

location, and capacity of the Ste. Genevieve plant is so significantly different than the

construction of a cement plant comparable to the plant in Midlothian, Texas, I would

order the trial court to withdraw its order for discovery and to sustain Holcim’s

objection to discovery of the cost of construction of the cement plant at Ste. Genevieve,

Missouri. Because this Court has summarily denied Holcim relief, I will only briefly

outline my disagreement as to why I must, respectfully, dissent. Accordingly, I will not
set out the familiar standards for a writ of mandamus to issue or for discovery to be

limited or denied.

        The issue in the underlying case is the value of Holcim’s cement plant in

Midlothian, Texas. The real party in interest is the Appraisal District for the taxing

authority, Ellis County Appraisal District. There is generally agreement that one of the

proper methods of valuation of such a plant requires the appraiser to start with the cost

to build a similar plant that would have the same capacity as the one being valued.

Holcim contends that the construction cost of the recently completed plant at Ste.

Genevieve, Missouri is not relevant and identifies a number of differences as follows:

        1)   Capacity;
        2)   Terrain;
        3)   Seismology;
        4)   Distance to Quarry;
        5)   Location/Shipping Method vis-à-vis highway/river/SMSA; and
        6)   Design

        There are two basic problems for any appraiser trying to compare the cost of the

two plants for the purpose of valuing the Midlothian plant. I will call one the “First

Time Design” problem and the other the “Nature and Extent of Adjustments” problem.

Both are most easily understood by simple analogies.

        First Time Design is best understood by recognizing the need to quantify the

one-time development cost incurred any time a new design is utilized.            All the

development cost of the first Boeing 787 Dreamliner makes the first one off the

assembly line very expensive when compared to the second one. Only by building


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more than one can you effectively determine and isolate development cost from actual

production cost of the second, third, fourth, to the 100th unit. In this case, there is no

second unit after the unique design, engineering, and construction of the Ste. Genevieve

plant to effectively isolate development cost.

        Nature and Extent of Adjustment is also best understood by an analogy. An

appraiser’s stock-in-trade is their ability to identify comparable properties with known

values and make the necessary “adjustments” to the comparable property’s value to

estimate the value of the subject property.      Obviously, the closer the comparable

property is when directly compared to the subject party, the fewer the adjustments that

have to be made. Likewise, the greater the differences in the properties, the greater the

number and amount of adjustments that have to be made. And fundamentally, the

greater the number and amount of adjustments, the less reliable the result becomes,

which is the appraised value of the subject property.

        These are both plants that produce cement.        That is about the only truly

comparable feature of the two plants. It is like using the cost of Trump Tower in New

York City to value a four-story office building in Waco, Texas: The number, type, and

amount of “adjustments” needed to make a valuation comparison are simply too great

to yield a reliable result. But yet, they both include “commercial office space” for rent

or lease.




In re Holcim (US), Inc.                                                             Page 3
        Because the cost to build a cement plant in Ste. Genevieve with so many

differences from the Midlothian plant cannot yield any reliable data upon which to

value the Midlothian plant, I would hold the trial court abused its discretion when it

overruled Holcim’s objections to the discovery of the Ste. Genevieve data sought by the

Ellis County Appraisal District.   Because the Court holds otherwise, I respectfully

dissent.




                                        TOM GRAY
                                        Chief Justice

Dissenting opinion issued and Filed December 12, 2013




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