Title: Taco Bell of America, Inc. v. Commonwealth

State: virginia

Issuer: Virginia Supreme Court

Document:

Present:  Kinser, C.J., Lemons, Goodwyn, and Millette, JJ., and 
Lacy and Koontz, S.JJ. 
 
TACO BELL OF AMERICA, INC. 
 
 
OPINION BY SENIOR JUSTICE 
v.  Record No. 092465 
 
    ELIZABETH B. LACY 
 
 
 
 
 
 
 
 June 9, 2011 
COMMONWEALTH TRANSPORTATION  
COMMISSIONER OF VIRGINIA 
 
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY  
Jane Marum Roush, Judge 
 
 
In this appeal we consider whether, in a condemnation case, 
the trial court erred by striking evidence the landowner claims 
supported its position that certain items were fixtures, not 
personalty, and removing that issue from consideration by the 
jury. 
BACKGROUND 
 
 
On February 15, 2008, the Commonwealth Transportation 
Commissioner of Virginia (Commissioner) filed Certificate of 
Take No. C-908012 in the amount of $1,496,550.00 to acquire 
certain land and improvements owned by Taco Bell of America, 
Incorporated (Taco Bell).  The Commissioner directed that the 
land and Taco Bell restaurant building, located near the 
intersection of Route 29 and Gallows Road in Fairfax County, be 
taken for all purposes incident to the construction, 
reconstruction, alteration, maintenance and repair of Route 29, 
identified as Project 0029-029-119, RW208.  Because the parties 
were unable to agree on the compensation amount due to Taco Bell 
 
 
for the taking, the Commissioner filed a Petition in 
Condemnation in accordance with Virginia’s eminent domain 
statutes, Code §§ 25.1-100 et seq. and 33.1-89 et seq.  
Prior to the trial, the Commissioner filed a motion in 
limine seeking exclusion of Taco Bell’s evidence relating to the 
nature and the value of approximately 42 pieces of equipment 
used in the restaurant as part of Taco Bell’s business.  The 
Commissioner asserted that because those items were not affixed 
to the property and could be moved, they were not fixtures and 
therefore could not be included in determining the just 
compensation for the property taken or damaged.  That motion was 
not resolved prior to trial, but was “continued to the trial 
date for the trial judge to determine.”  On the morning of the 
hearing, the trial court denied the motion in limine, concluding 
that the matter was a jury issue and noting that “[p]erhaps it 
could be renewed in the form of a motion to strike.” 
At trial, the Commissioner called Roy L. Boyer as an expert 
witness in personal property appraisals to testify concerning 
the nature and value of the disputed items.  Prior to 
questioning Boyer, the Commissioner argued, as he had in 
conjunction with his motion in limine, that the court, not the 
jury, should decide whether the items were fixtures.  The court 
 
 
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denied his renewed motion.1  Boyer testified that he had 
inspected, inventoried and photographed the contents of the Taco 
Bell restaurant in June of 2007.  The inventory consisted of 42 
items, including warming ovens, freezers, refrigerators, wire 
storage racks, sinks, tables, chairs, computerized cash 
registers and monitors, various aluminum pans and frying 
baskets, and a neon Taco Bell sign.  Referring to the 
photographs, which were introduced in evidence, showing the 
items as they existed in the building before the building was 
demolished by the Commonwealth in 2008, Boyer testified that he 
classified all 42 items as personal property because the items 
were “not attached to the real estate” and could be “relocated 
and moved without damaging the building, the structure, or the 
integrity of the unit, the building itself.”  Boyer testified 
that there was “a large business in used restaurant equipment” 
and he set the fair market value for the 42 items at $49,795.00. 
The Commissioner called Susan M. King to testify regarding 
the value of the real property.  King testified that she did not 
include movable items in her appraisal of the real property, but 
that she did include “those things that are pertinent to the 
                                                 
1 The Commissioner did not assign cross-error to this ruling 
or to the trial court’s earlier statement that whether the items 
at issue were fixtures or personalty was a matter for the jury 
to decide. 
 
 
real estate, the drive[-]through window, the [exhaust] hoods, 
the walk[-]in freezer, things that are part of the building.” 
Taco Bell elicited expert testimony from John C. Reyle 
regarding the nature and value of the disputed items.  Reyle 
testified that because he became involved in the case after the 
building and disputed items were demolished, he relied, in part, 
upon Boyer’s inventory of the disputed items to form his 
opinion.  Reyle explained that he considered whether the items 
were annexed to or moved onto the property, whether the items 
were incorporated into the use of the property, and whether the 
user intended to keep the items on the property in determining 
whether the items were fixtures or personalty.  Applying this 
analysis, Reyle concluded that the items on Boyer’s appraisal 
list were fixtures, not personal property.  Reyle testified that 
he consulted with James R. DeSelms, the designated Taco Bell 
representative, who “verified” that Taco Bell used the fixtures 
in its restaurant business prior to the take but had no use for 
them after the take and left them “in the property.”  Reyle 
testified that because “the fixtures and equipment became a part 
of the Taco Bell property” and because Taco Bell restaurants are 
sold “[t]ypically with the furniture and the fixtures in place” 
the 42 disputed items were fixtures, not personal property.  
Reyle valued the fixtures at $50,000.00, which he testified 
 
 
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should be included in the amount due to Taco Bell as just 
compensation for the taking. 
DeSelms also testified on behalf of Taco Bell stating that 
the company placed new equipment in its restaurants and expected 
the equipment to remain in place “for the life of the 
restaurant.”  He testified that the company does not use “used 
equipment” and that the used equipment “has no purpose for 
another restaurant.”  DeSelms agreed that the inventoried items 
in dispute could be removed from the restaurant building but he 
did not know if Taco Bell attempted to sell or “auction” any of 
the items. 
At the close of all evidence, the Commissioner asked the 
trial court “to make a decision with regard to the fixtures.”  
In response, the trial court held that the items in question 
were “purely personal property” and there was no factual 
determination to be made by the jury because the undisputed 
evidence showed that the items could have been removed from the 
property.  The trial court also stated that Taco Bell’s decision 
to leave the items in the restaurant and neither move nor resell 
them was a “business decision.”  The trial court “grant[ed] [the 
Commissioner’s] motion” and instructed the jury not to consider 
any of the evidence regarding the 42 items at issue.  The jury 
awarded Taco Bell $1,246,801.60 for the property interests 
 
 
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acquired by the Commissioner and $480,000.00 in damages to the 
residue.  
We granted Taco Bell this appeal on its assignment of error 
that the trial court erroneously struck Taco Bell’s evidence on 
the value of fixtures on the property and erroneously instructed 
the jury to disregard that evidence.  
DISCUSSION 
 
Whether certain property is personal property or fixtures 
for purposes of establishing just compensation in a condemnation 
action is determined by the application of a three-part test: 
(1) Annexation of the chattel to the realty, 
actual or constructive; (2) Its adaptation to the 
use or purpose to which that part of the realty 
to which it is connected is appropriated; and (3) 
The intention of the owner of the chattel to make 
it a permanent addition to the freehold.  
 
 
[T]he method or extent of the annexation 
carries little weight, except insofar as they 
relate to the nature of the article, [and] the 
use to which it is applied . . . as indicating 
the intention of the party making the annexation. 
 
 
The second test . . . is entitled to great 
weight, especially in connection with the element 
of intention.  If the chattel is essential to the 
purposes for which the building is used or 
occupied, it will be considered a fixture, 
although its connection with the realty is such 
that it may be severed without injury to either.  
 
 
The intention of the party making the 
annexation is the paramount and controlling 
consideration. 
 
 
 
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Danville Holding Corp. v. Clement, 178 Va. 223, 232, 16 S.E.2d 
345, 349 (1941).  Taco Bell argues that the trial court’s 
decision was based solely on whether the items in question were 
moveable or annexed to the realty taken and, therefore, the 
trial court did not properly apply the test for determining 
whether sufficient evidence was presented to submit the issue to 
the jury.  Taco Bell asserts that if the test had been applied 
properly, the evidence on the issue of whether the items in 
question were fixtures was sufficient to submit to the jury.  We 
agree with Taco Bell. 
The items in question range from aluminum pans, chairs and 
frying baskets to a refrigerator/cooler, freezer, sinks, warming 
ovens, work stations and a “drive thru” neon sign.  While the 
evidence is uncontroverted that all of these items are moveable, 
whether an item can be removed from the realty is not the test 
for establishing whether or not it is a fixture.  Danville 
Holding Corp., 178 Va. at 232, 16 S.E.2d at 349.  For example, 
in State Highway & Transportation Commissioner v. Edwards Co., 
220 Va. 90, 92-94, 255 S.E.2d 500, 502-03 (1979), the landowner 
contended that items such as a coal conveyor system, scales, 
advertising signs, underground storage tanks and railroad siding 
tracks used by a coal and fuel oil distribution company were 
personalty not subject to condemnation because the items were 
moveable and could be relocated.  The trial court agreed, id. at 
 
 
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93, 255 S.E.2d at 502, but this Court, applying the Danville 
Holding Corp. test, reversed, holding that the items were 
“adapted to and used for the purpose to which the property was 
devoted” and that the facts and circumstances were “strong 
indicia of the landowner’s permanency of enterprise and, we 
believe, conclusively establish [the company’s] intent to make 
such machinery and equipment a permanent accession to its realty 
despite [the] landowner’s present disavowals of such intent.”  
Id. at 95-96, 255 S.E.2d at 503. 
In this case, while the evidence was undisputed that the 
items in question could be physically removed from the property, 
there was also testimony that the items were used for the 
purpose of the restaurant.  In other words, the items were of 
the type needed “for the purpose to which the property was 
devoted.”  Id. at 95, 255 S.E.2d at 503.  Taco Bell also 
presented testimony that it intended that the items remain on 
the property for the life of the business, or, as stated in 
Edwards Co., there was an “intent to make such machinery and 
equipment a permanent accession to its realty.”  Id. at 96, 255 
S.E.2d at 503.  Furthermore, although the jury could not view 
the restaurant and the equipment at issue, it was able to review 
photographs taken of the items in place at the restaurant prior 
to the demolition of the building and its contents.  Considering 
the evidence in the light most favorable to Taco Bell, as we 
 
 
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must on appellate review, we conclude that the evidence on the 
issue whether the items in question were fixtures or personalty 
for condemnation purposes was sufficient to submit to the jury. 
Austin v. Shoney's, Inc., 254 Va. 134, 135, 486 S.E.2d 285, 285 
(1997).  Accordingly, we will reverse the judgment of the trial 
court and remand the case for further proceedings consistent 
with this opinion.2 
Reversed and remanded. 
                                                 
2 The Commissioner suggests that on remand the only issue to 
be considered is whether the items at issue, or any of them, are 
fixtures and therefore compensable as part of the realty in this 
condemnation proceeding.  However, a just compensation award in 
a condemnation proceeding is a unitary award.  In determining 
just compensation, the jury considers the realty taken as a 
whole and not as separate values for discrete elements.  See 
Virginia Electric & Power Co. v. Webb, 196 Va. 555, 569-70, 84 
S.E.2d 735, 743 (1954).  Therefore, the items, which Taco Bell 
contends are fixtures and thus part of the realty, must be 
considered in conjunction with all property taken in determining 
just compensation.