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ABSTRACT
Since Daubert v. Merrell Dow Pharmaceuticals was decided in 1993, there have been two primary issues in applying Daubert to expert testimony in valuation situations: qualification of an expert witness and the use of methodology. This article examines cases in which Daubert has been applied to the question of witness qualifications in real estate valuation. The cases reviewed indicate that courts have not strictly complied with the Daubert tests when considering the acceptance of a real estate expert witness. The courts have different interpretations in the application of Daubert for expert witness qualification, and there is some latitude for those permitted to testify on real estate value.
In 1993, the case of Daubert v. Merrell Dow Pharmaceuticals, Inc.1 set a new and far-reaching standard for the admissibility of expert testimony as required under Rule 702 of the Federal Rules of Evidence. Under Daubert, the court acts as a gatekeeper in the admission of expert testimony. Before Daubert, the courts relied on a narrower interpretation of Rule 702, named the Frye rule.2 The Frye rule qualifies expert witnesses based upon their knowledge, skill, experience, training, and education. It also looks at testimony as to its general acceptance in the scientific community. Daubert supersedes the Frye rule in federal courts and many state courts.
Under the Daubert standard, prior to the admission of expert testimony, the court must consider the following: (1) whether the theory has or can be tested; (2) if the theory has been subjected to peer review and publication; (3) if there is a known rate of error; and (4) general acceptance of the technique in question. There have been two primary arguments when applying the Dauberttest to expert testimony in real estate situations: the qualification of expert witnesses and the methodology used. This article examines cases involving real estate valuation situations and the qualification of real estate expert witnesses.
A previous article in The Appraisal Journal considered cases in which the Daubert factors were applied to the methodology used when the valuation of real estate was an issue.3 That article showed how the courts interpret and apply the Daubert factors differently. It also discussed how a court's interpretation of the methodology used by the expert witness may have real implications for...