Valuation Expert Witness Estimates Damage to Property Values After Chemical Spill

Valuation Expert WitnessCASE: Alexander v. Halliburton Energy Servs., 2015 U.S. Dist. LEXIS 96825 (W.D. Okla. July 22, 2015)

BACKGROUND: From the mid-1960s until 1991, Halliburton Energy Services (HESI) cleaned missile motor casings for the United States Department of Defense and its contractors on a portion of its Osage Road facility near Duncan, Oklahoma (“Site”). Plaintiffs alleged that, as a result of those operations, the groundwater at the Site became contaminated with perchlorate, which eventually migrated offsite and into the private water wells of numerous area residents. In support of their property diminution claims, plaintiffs identified four separate valuation experts. One of those experts was Kevin J. Boyle, Ph.D.


Dr. Kevin J. Boyle is a Ph.D. with a degree from the University of Wisconsin in Agricultural Economics. He is currently serving as a professor at Virginia Polytechnic Institute in the Department of Agricultural and Applied Economics.


HESI asserted that Dr. Boyle was not qualified to testify about market value of real property. HESI further asserted that Dr. Boyle’s opinions were irrelevant and failed the Daubert “fit” prong as they were contrary to: (1) Oklahoma law because they were based on an economics model that ignores market value; (2) the Court’s ruling denying class certification because his analysis was based on assumptions about the area generally and ignored individual properties’ characteristics; and (3) the Court’s ruling that proximity to contamination is not a sufficient basis for a claim for diminution in property value. Finally, HESI asserted that Dr. Boyle’s opinions were unreliable and speculative because his methodology ignored sales, market, and other relevant data, and the relevant valuation literature, and he cherry-picked data to suit his preconceived opinions.


After reviewing Dr. Boyle’s expert report and deposition testimony, the Court found that the report and opinions of Dr. Boyle should be excluded. Specifically, the Court found that Dr. Boyle’s testimony would not help the trier of fact to understand the evidence or to determine a fact in issue, as required by Federal Rule of Evidence 702(a). Under Oklahoma law, “the measure of damages for permanent injuries to land is the difference between the reasonable market value of the land immediately before the injuries and the reasonable market value of the land immediately after the injuries.” Houck v. Hold Oil Corp., 1993 OK 166, 867 P.2d 451, 461 (Okla. 1993). Further, the Oklahoma Supreme Court has found that evidence of the value of land at the time of trial, two years after the alleged pollution of a stream, was insufficient to establish damages. See Sinclair Oil & Gas Co. v. Allen, 1930 OK 287, 143 Okla. 290, 288 P. 981 (Okla. 1930).

In his report, Dr. Boyle states that his report “addresses long-term property-value diminutions, not losses immediately after the contamination became public knowledge, that occur after the residential real estate market has adjusted to the presence of perchlorate contamination and other losses incurred by property owners.” Additionally, in his October 2, 2014 deposition, Dr. Boyle testified that the real estate market in Duncan, Oklahoma had not had a chance to adjust to the announcement of potential contamination as of the date of his deposition. The Court believed that Dr. Boyle’s model did not give the value of the properties immediately after the injuries, as required by Oklahoma law. In fact, based upon his deposition testimony, Dr. Boyle’s model did not even give the value of the properties more than three years after the announcement of the potential contamination. Accordingly, the Court found that Dr. Boyle’s opinions were not relevant to the issues of damages in these cases and should be excluded.


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