Case Name: 7-ELEVEN, INC., f/k/a The Southland Corporation v. The DEPARTMENT OF ENVIRONMENTAL QUALITY
Court: Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 2003-12-30
Citations: 42 Va. App. 65
Docket Number: Record No. 2380-01-2
Parties: 7-ELEVEN, INC., f/k/a The Southland Corporation v. The DEPARTMENT OF ENVIRONMENTAL QUALITY.
Judges: 
Reporter: Virginia Court of Appeals Courts
Volume: 42
Pages: 65–118

Head Matter:
590 S.E.2d 84
7-ELEVEN, INC., f/k/a The Southland Corporation v. The DEPARTMENT OF ENVIRONMENTAL QUALITY.
Record No. 2380-01-2.
Court of Appeals of Virginia.
Dec. 30, 2003.
Wyatt B. Durrette, Jr. (Derrick L. Walker; Durrette Bradshaw, P.L.C., on briefs), Richmond, for appellant.
John R. Butcher, Special Assistant Attorney General (Jerry W. Kilgore, Attorney General; Roger L. Chaffe, Senior Assistant Attorney General, on brief), for appellee.
Present: FITZPATRICK, C.J., and BENTON, ELDER, ANNUNZIATA, BUMGARDNER, FRANK, HUMPHREYS, CLEMENTS, FELTON and KELSEY, JJ.

Opinion:
UPON A REHEARING EN BANC
BENTON, Jr., Judge.
The Department of Environmental Quality denied a substantial part of a request by 7-Eleven, Inc. for reimbursement from the Petroleum Storage Tank Fund for payments 7-Eleven made when it settled a suit brought by a third-party for property damage related to a petroleum spill. 7-Eleven contends the trial judge erroneously upheld that decision by (1) applying incorrect standards on review, (2) ruling that the issue on review was within the Department's specialized competence and expertise, (3) failing to properly consider evidence in the record, and (4) upholding the Department's Tank Fund guidelines. In reviewing these issues, we must examine the term "costs" in the context of a statutory indemnity scheme.
A divided panel of this Court affirmed the trial judge's decision. See 7-Eleven, Inc. v. Dep't of Env. Quality, 39 Va.App. 377, 573 S.E.2d 289 (2002). We granted 7-Eleven's petition for rehearing en banc, and, for the reasons that follow, we reverse the judgment.
I.
The Department of Environmental Quality, which the legislature created to consolidate the programs of the State Water Control Board and four other agencies, see Code § 10.1-1182 et seq., administers the Petroleum Storage Tank Fund for the Board. See Code § 62.1-44.34:10 through 62.1-44.34:13. In pertinent part, the Tank Fund statute provides as follows:
2. Disbursements from the Fund may be made only for the following purposes:
a. Reasonable and necessary per occurrence costs incurred for releases . by the owner or operator who is the responsible person, in taking corrective action for any release of petroleum into the environment from an underground storage tank which are in excess of the per occurrence financial responsibility requirement imposed in subsection B of § 62.1-44.34:12, up to one million dollars.
b. Reasonable and necessary per occurrence costs incurred for releases . by the owner or operator who is the responsible person for compensating third parties, including payment of judgments for bodily injury and property damage caused by the release of petroleum into the environment from an underground storage tank, which are in excess of the per occurrence financial responsibility requirement imposed by subsection B of § 62.1-44.34:12, up to one million dollars. Disbursements for third party claims shall be subordinate to disbursements for the corrective action costs in subdivision A 2 a of this section.
Code § 62.H4.34:11(A)(2).
The evidence in the record proved that in June 1990, 7-Eleven reported to the Board a leaking gasoline pump at one of its properties in Henrico County. After an environmental consultant found petroleum in the ground and in a spring and a stream, 7-Eleven hired a contractor to clean the contaminated area, which included a nearby parcel of property owned by Hechinger, Inc. The corrective action, however, only partially abated the petroleum plume in the groundwater. As permitted by the Tank Fund, 7-Eleven requested reimbursement of $599,746.94 from the Board for its "reasonable and necessary . costs" in correcting the release of petroleum into the environment. See Code § 62.1-44.34:ll(A)(2)(a). The Board, acting through the Department, approved $458,838.74 of the clean-up costs. After subtracting $50,000 for 7-Eleven's financial responsibility, see Code § 62.1-44.34:12(B), the Board reimbursed 7-Eleven for $408,838.74 of its costs. Those costs and reimbursements are not at issue in this appeal.
In April 1995, Hechinger sued 7-Eleven in the Circuit Court of the City of Alexandria for property damage caused by the petroleum release, alleging negligence, trespass, nuisance, and statutory liability under Code § 62.1 — 44.34:18(C)(4). Hechinger's motion for judgment sought damages of $2,000,000, interest, costs, and attorneys' fees. While the litigation was pending, 7-Eleven notified the Department of its potential claim against the Tank Fund for damages to Hechinger's property. See Code § 62.1-44.34:ll(A)(2)(b). After 7-Eleven stipulated to statutory liability under Code § 62.1-44.34:18(C)(4), the case went to trial in the circuit court on the issue of damages. During the second day of trial, the parties agreed that 7-Eleven would pay Hechinger $575,000 as a settlement of its $2,000,000 claim.
7-Eleven notified the Department of the settlement and sought reimbursement from the Tank Fund. See Code § 62.1-44.34:ll(A)(2)(b). In support of its claim, 7-Eleven presented to the Department various documents, including exhibits prepared for and used at trial. The Department held an informal fact-finding proceeding and allowed 7-Eleven to later submit additional evidence. Based on its consideration of the evidence, the Department found that 7-Eleven "was the responsible person for this release and the release was from a regulated [underground storage tank]." The Department awarded 7-Eleven $103,117 as reimbursement for payment of property damage to Hechinger. The Department found that this amount represented the diminution in the market value of Hechinger's property.
7-Eleven appealed to the circuit court, alleging the case decision was unlawful. Following written briefs and oral argument, the trial judge ruled that the Department's decision concerning "reasonable and necessary per occurrence costs" for compensating Hechinger for property damage was an issue involving the Department's special expertise. Finding that the decision was supported by substantial evidence and was not arbitrary and capricious, the trial judge upheld the Department's decision to award only partial reimbursement to 7-Eleven. This appeal followed.
II.
In simple terms, the issue in this appeal is whether, in evaluating the "reasonable and necessary . costs" 7-Eleven incurred in compensating Hechinger for property damage caused by the petroleum release, the Department could disregard the reasonableness of the $575,000 settlement. Noting that its liability was indisputable, 7-Eleven contends the Department erred by failing to consider the factors reflective of the reasonableness of the settlement, including "the strength of Hechinger's case heading into trial, 7-Eleven's exposure to liability and damages, the expense to the parties, the complexity of the issues presented in the litigation, the likely duration of the litigation, the amount offered at settlement, and the state of the proceedings at the time of the settlement." The Department responds that the trial judge correctly ruled that substantial evidence supported the Department's decision.
A.
The record reflects that neither the Department nor the trial judge found that the settlement was unreasonable or unnecessary given the circumstances of the litigation. Moreover, the Department found that "[a]t a minimum, information contained in the Department's corrective action files demonstrates that the contamination . originated from the 17-Eleven] release" and, thus, determined that 7-Eleven's liability was "fairly disputable."
To the extent the Department concluded, without determining the reasonableness of the settlement, that 7-Eleven's settlement costs were not recoverable, the Department's decision was based on an interpretation of Code § 62.1-44.34:ll(A)(2)(b) that excluded from the Code's definition of "costs" the kind of property damage settlement costs 7-Eleven incurred. Dismissing 7-Eleven's claims on its appeal to the circuit court, the trial judge ruled that "[b]ecause the statute does not tie the reasonableness requirement to the litigation arena, the Department did not need to consider the factors listed by [7-Eleven] and failure to do so was not error." We hold that those decisions are legally flawed.
B.
In reviewing those decisions, we hold that no special agency expertise is necessary for a resolution of the issues this appeal raises.
The sole issue involves a question of statutory interpretation. The issue does not involve "the substantiality of the evidential support for findings of fact," which requires great deference because of the specialized competence of the agency. Instead, when, as here, the question involves a statutory interpretation issue, "little deference is required to be accorded the agency decision" because the issue falls outside the agency's specialized competence.
Sims Wholesale Co. v. Brown-Forman Corp., 251 Va. 398, 404, 468 S.E.2d 905, 908 (1996) (citation omitted). "The reviewing court may set the agency action aside, even if it is supported by substantial evidence, if the court's review discloses that the agency failed to comply with a substantive statutory directive." Browning-Ferris Indus. of South Atlantic, Inc. v. Residents Involved in Saving the Env't, Inc., 254 Va. 278, 284, 492 S.E.2d 431, 434 (1997).
C.
The principle is well established that "[w]ords in a statute are to be construed according to their ordinary meaning, given the context in which they are used." Grant v. Commonwealth, 223 Va. 680, 684, 292 S.E.2d 348, 350 (1982); Loyola Fed. Savings and Loan Ass'n v. Herndon Lumber & Millwork, Inc., 218 Va. 803, 805, 241 S.E.2d 752, 753 (1978). The clear wording of Code § 62.1-44.34:11(A)(2)(b) provides that an owner may recover "[r]easonable and necessary . costs incurred for releases [of petroleum from an underground storage tank] ., including payment of judgments for bodily injury and property damage." In the context of the statute, the word "costs" means either "an item of outlay incurred in the operation of a business enterprise," Webster's Third New International Dictionary 515 (1981), or, more generally, "the expenditure or outlay of money." Id. Thus, if the litigation that Hechinger instituted against 7-Eleven for property damage caused by the spill had gone to judgment in Hechinger's favor, the judgment amount certainly would have established the base-line for the computation of 7-Eleven's reasonable and necessary costs for purposes of Code § 62.1-44.34:11(A)(2)(b), subject only to the statutory limitation. A plain reading of the statute permits no other conclusion.
Except as generally circumscribed by the Tank Fund scheme, Code § 62.1-44.34:ll(A)(2)(b) does not contain an enumerated listing of costs to be reimbursed and clearly does not exclude money paid in a settlement for property damage as a factor to be used in determining the "[rjeasonable and necessary . costs" of an owner. Moreover, the statutory directive to consider "payment of judgments for . property damage caused by the release of petroleum" as a measure of the "[rjeasonable and necessary per occurrence costs" clearly encompasses settlements that occur during litigation concerning the property damage. Because the statute is without limitation in defining the type of costs an owner, who is the responsible party for compensating third parties, can recover for compensating a third party for damage caused by a petroleum release from an underground tank, a plain reading of the statute manifests an intention that settlement expenses are "costs" contemplated by the legislature.
By specifically denoting that "[rjeasonable and necessary . costs" would "includ[e] payment of judgments for . property damages," the legislature obviously contemplated that litigation might occur and that any resulting judgment would be included in the determination of costs to be reimbursed from the Tank Fund.Code § 62.1-44.34:ll(A)(2)(b). In addition, the statutory term "costs," is inclusive of the expenditures an owner makes to third parties for property damage and does not pertain exclusively to judgments as the Department suggests. The clear and ordinary language of the statute manifests that "[b]y the use of the term 'including,' [the legislature] indicated that the specifically mentioned [payments] are not exclusive." Herb's Welding, Inc. v. Gray, 470 U.S. 414, 423 n. 9, 105 S.Ct. 1421, 1427, 84 L.Ed.2d 406 (1985). We hold that the wording of the statute leaves no doubt that the legislature envisioned legal actions being brought against owners who are the responsible parties for causing petroleum spills and that the legislature intended that the monetary result of those legal actions for property damage, including settlements, be included as a cost to be reimbursed.
Furthermore, our reading of the statute must be governed by the following principles:
Every statute is to be read so as to "promote the ability of the enactment to remedy the mischief at which it is directed." Natrella v. Board of Zoning Appeals, 231 Va. 451, 461, 345 S.E.2d 295, 301 (1986) (quoting Jones v. Conwell, 227 Va. 176, 181, 314 S.E.2d 61, 64 (1984)). The ultimate purpose of all rules of construction is to ascertain the intention of the legislature, which, absent constitutional infirmity, must always prevail. All rules are subservient to that intent. Shackelford v. Shackelford, 181 Va. 869, 877, 27 S.E.2d 354, 358 (1943). Further, it is a universal rule that statutes . which are remedial in nature, are to be "construed liberally, so as to suppress the mischief and advance the remedy," as the legislature intended. Shumate, 56 Va. (15 Gratt.) 653, 661 (1860) (emphasis added).
Board of Sup. v. King Land Corp., 238 Va. 97, 103, 380 S.E.2d 895, 897-98 (1989).
Our holding is consistent with the legislative policy manifested by the statute. The Tank Fund is a part of a broader scheme of the State Water Control Law adopted to protect the quality of state waters and to prevent any increase in pollution. Code § 62.1-44.2. "Monies held in the Tank Fund originate from expenses and penalties recovered pursuant to various provisions of state and federal law, fees levied on fuel sold, delivered and used in the Commonwealth, and interest earned on monies in the Fund." May Dep't Stores Co. v. Commonwealth of Va., Dep't of Environmental Quality, 29 Va.App. 589, 598, 513 S.E.2d 880, 884 (1999) (citing Code § 62.1-44.34:11, 62.1-44.34:13). The Tank Fund was designed to provide a prompt and efficient means of abating pollution caused by underground storage tanks and to facilitate payment of compensation to third parties who have suffered bodily injury and property damage caused by release of petroleum from underground storage tanks. The statute renders irrelevant whether the third party has been compensated for those injuries by a judgment or by a reasonable settlement prior to judgment.
In determining the costs to be reimbursed, the Department can only fulfill its responsibility under the statute — to ensure that the public interest is served — if it considers the reasonableness of the cost of settling litigation. This conclusion is buttressed by long-standing "settled principles of law," which the Supreme Court has recognized as a matter of public policy and equity, that " '[t]he law favors compromise and settlement of disputed claims.' " Snyder-Falkinham v. Stockburger, 249 Va. 376, 381, 457 S.E.2d 36, 39 (1995) (citation omitted); see also Eggleston v. Crump, 150 Va. 414, 418-19, 143 S.E. 688, 689 (1928). Indeed, in this case, where the issue of liability is uncontested, it would be contrary to the clear meaning of the statute and, furthermore, would be incongruous and injurious to public policy to hold that the Department could fail to consider the settlement costs as a factor in determining reasonable and necessary costs for property damage caused by 7-Eleven's petroleum spill.
The Department's interpretation would lead to a costly and irrational result. Because the Department's decision creates uncertainty in what is reimbursable, owners who caused spills would be forced to reject most reasonable settlements in favor of adjudication. Owners would refuse to settle whenever the difference between the proposed settlement and what they estimate the Department is willing to pay is greater than the difference between the potential judgment and the fund's maximum pay-out limit. Assuming judgments are generally higher than settlements, the Department generally will pay more out of the Tank Fund because owners would have great incentive to allow a jury to adjudicate the claims brought by third parties.
The Department does not offer and we do not discern any logical reason why the legislature would have intended to differentiate between reimbursement for settlements and reimbursement for judgments. When we read the statute, as we must, to promote its ability to "remedy the mischief at which it is directed," King Land Corp., 238 Va. at 103, 380 S.E.2d at 897, the statute inexorably and logically manifests the conclusion that settlements of legal actions would occur, that settlements would be judged by determining the reasonableness of the settlement, and that the amount of a reasonable settlement would also be an item the Department would reimburse as "reasonable and necessary . costs." Thus, we hold that the Department's interpretation of the statute to preclude recovery of settlement costs is contrary to a plain reading of the statute which requires, subject only to the statutory limitation of one million dollars, that costs an owner incurs for compensating third parties for property damage caused by petroleum releases be reimbursed based on whether they are reasonable and necessary.
D.
Significantly, the Department now recognizes in the preamble to its Guidelines, which were adopted on February 12, 1998, after 7-Eleven settled the litigation, that "disbursements . may be made for costs incurred . to compensate third parties for the reasonable and necessary costs of settlements and judgments for . property damage." Virginia Petroleum Storage Fund Third Party Disbursement Guidelines (emphasis added). To implement that policy, the Guidelines now provide that the Department will "review all settlements for reasonableness." Guidelines, VIII(A)(3) (emphasis added). This policy, which the Department apparently derives from the authority of the statutes, is precisely the remedy 7-Eleven contends is mandated by the statutes and pre-existed the adoption of the Guidelines.
Neither the Department in its fact finding nor the trial judge on review determined that $575,000 was an unreasonable amount to settle the pending property damage litigation or that $575,000 was not within the range of a judgment of a rational jury had the litigation, which already had consumed a day and one-half at trial, proceeded to judgment on the merits. See Dauphin Deposit Bank and Trust Co. v. Hess, 556 Pa. 190, 727 A.2d 1076, 1078 (1999) (holding that criteria used in assessing the reasonableness of settlement "include evaluations of (1) the risks of establishing liability and damages, (2) the range of reasonableness of the settlement in light of the best possible recovery, (3) the range of reasonableness of the settlement in light of all the attendant risks of litigation, (4) the complexity, expense, and likely duration of the litigation, (5) the stage of the proceedings and the amount of discovery completed, (6) the recommendations of competent counsel, and (7) the reaction of the [beneficiaries] to the settlement"). Likewise, the record contains no finding that a $575,000 judgment by a jury for the property damage would have been so excessive as to require a trial judge to set it aside or as to require an appellate court to do the same. See Edmiston v. Kupsenel, 205 Va. 198, 202, 135 S.E.2d 777, 780 (1964). The Department's implicit suggestion that, prior to the adoption of the Guidelines, it had the discretion to refuse to consider the settlement as an element of "costs" is simply based on a misreading of the Tank Fund statutes.
E.
Without assessing any of the issues concerning the likelihood of success at trial or the reasonableness of the settlement, the Department made its own judgment that the lowest valuation of damage was more credible and found as follows:
Based on the valuation information provided, a reasonable range for the permanent damages was between $138,700 and $103,117 (i.e., $938,700 or $903,117 minus $800,000). It is not necessary to make an adjustment to reflect partial cure costs, because the $800,000 offer [to purchase the property] appeared to be from an arms-length buyer and was made at a time when the cure of the property was nearly complete. Additionally, the evidence does not clearly demonstrate that topographical problems at the site affected the offer price. Therefore, [7-Eleven] will be given the benefit of the doubt on this issue, and no adjustment will be required to address this alleged cause of reduced property value. For the foregoing reasons, third party claim costs in the amount of $103,117 are approved, as this amount reflects actual market values.
This record clearly "demonstrate^] an error of law . [concerning] compliance with statutory authority." Code § 9-6.14:17. In short, the Department did not evaluate the reasonableness and necessity of the settlement but, instead, reviewed the evidence developed during the litigation and decided, independent of the litigation risk, an amount it believed represented the diminution of the fair market value of the property. The Department then ruled that this amount constituted the reasonable and necessary costs to be reimbursed.
Put simply, the Department's decision was contrary to the plain language of the statute. "Since the issue before us is purely one of law, containing no underlying factual issues, we do not apply a presumption of official regularity or take account of the experience and specialized competence of the administrative agency." Browning-Ferris Indus., 254 Va. at 284, 492 S.E.2d at 434. A reviewing court may reverse an agency's determination where the agency's decision is based on an improper statutory interpretation. Johnston-Willis, Ltd. v. Kenley, 6 Va.App. 231, 247, 369 S.E.2d 1, 10 (1988).
Code § 9-6.14:19, a part of the Administrative Process Act, controls the action a . court may take when it finds a case decision "to be not in accordance with law under § 9-6.14:17." Among the errors of law addressed in the latter statute is failure of the agency to comply "with statutory authority" and failure of the agency to observe "required procedure." § 9 — 6.14:17(ii) and (iii). When the court finds the case decision to be unlawful on these grounds, it "shall suspend or set it aside and remand the matter to the agency for such further proceedings, if any, as the court may permit or direct in accordance with law." § 9-6.14:19.
Virginia Bd. of Med. v. Fetta, 244 Va. 276, 280, 421 S.E.2d 410, 412 (1992).
For these reasons, we hold that because Code § 62.1-44.34:ll(A)(2)(b) requires the Department, in administering the Tank Fund, to assess the "reasonable and necessary . costs incurred for releases . by the owner . for compensating third parties, including payments of judgments for . property damage caused by the release," the Department erred when it failed to assess the reasonableness of the settlement and failed to determine as a factor in reimbursing 7-Eleven for its reasonable and necessary costs the settlement amount paid by 7-Eleven to Hechinger.
III.
7-Eleven additionally contends the Department's Guidelines impermissibly restrict recovery of property damage. The Department responds that the question of which costs are eligible for reimbursement is an issue of fact and that 7-Eleven's evidence failed to prove other costs were attributable to the spill. Alternatively, the Department contends that 7-Eleven's other costs were "intangible property damage costs and interest," which the Department properly excludes from the Guidelines. Assessing these arguments, the trial judge ruled that "[t]he Department [was within] . its discretion [in concluding] that those costs associated with permanent damages to property which are both reasonable and necessary are either the diminution in value of the property or the cost to restore the property."
A.
The Guidelines provide in pertinent part as follows:
Costs incurred by owners/operators, in compensating third parties for real property damage proximately caused by a release from an owner's/operator's eligible tank, which are eligible for disbursement from the Fund include the following:
1. For temporary damage to real property, the decrease in rental value during the continuance of the injury, and
2. For permanent damage to real property, the lower of (I) the diminution in the value of the real property and fixtures or (as determined after completion of corrective action) (ii) the cost to restore the real property to its condition prior to the injury.
Guidelines VT(C).
In granting the Department the discretion to determine whether costs an owner incurred "for compensating third parties . for property damage caused by the release of petroleum" were reasonable and necessary, Code § 62.1-44.34:ll(A)(2)(b), the General Assembly obviously intended that the Department determine, on a case-by-case basis, which costs would be reimbursed. In other instances, where a statute has given an agency such discretion, we have reversed agency action, noting that, "[although the statute authorizes the use of discretion, the current policy guidelines allow no discretion to be exercised in determining [the statutorily delegated function]." Woods v. Commonwealth, 26 Va.App. 450, 458-59, 495 S.E.2d 505, 509 (1998).
By restricting recovery of property damages to only those specifically listed in the Guidelines, the Department concluded as a matter of law that other costs would not be reimbursed. The trial judge ruled that the Department's interpretation of permissible damages for permanent injury to real property was "implemented through the Guidelines . [and was not] arbitrary and capricious." We hold that the trial judge erred in applying this standard.
B.
Limiting permanent damages to the diminution in the value of the property, the Department ruled as follows:
Upon site closure, contamination remained on the Hechinger property. The Regional Office's July 7, 2000 memorandum indicates that it is simply not possible to predict how long it will take for natural attention [sic] to return the site to background levels. [7-Eleven] provided no evidence and no evidence exists in the Agency's records that indicates the remaining contamination will attenuate within a known time frame. Consequently, it is appropriate to treat the injury as permanent. The measure for permanent injury to real property pursuant to Packett v. Herbert is the permanent diminution in the value of the property.
To determine the permanent diminution in the value of the property, the fair market value of the property after the injury is subtracted from the fair market value of the property before the injury.
The Department, however, improperly relied on Packett v. Herbert, 237 Va. 422, 377 S.E.2d 438 (1989), to conclude that damages are limited to the diminution in the value of the property.
The Supreme Court long ago rejected an appellant's contention "that inconsistent elements of damage are claimed . because the permanent depreciation in the market value of property comprehends the whole damage that can be caused to property by the establishment of a permanent nuisance." Virginian Railway Co. v. London, 114 Va. 334, 343, 76 S.E. 306, 307 (1912). The principle is well settled in Virginia that a party may recover for all damages proximately caused by another party's tortious conduct. Lochaven Co. v. Master Pools by Schertle, Inc., 233 Va. 537, 541, 357 S.E.2d 534, 537 (1987). The Supreme Court held in Lochaven Co. that "[t]he measure of damages in a negligence action is that amount necessary to compensate the injured party for the damages proximately caused by the tortious conduct." 233 Va. at 541, 357 S.E.2d at 537. Indeed, the Court has held that a jury may properly "assess damages for defendant's conduct in diminishing the value of plaintiffs' properties, for continuously interfering with the enjoyment of that property, and for causing material disturbance or annoyance to plaintiffs in their use and occupation of the property." National Energy Corp. v. O'Quinn, 223 Va. 83, 91, 286 S.E.2d 181, 186 (1982). See also Bowers v. Westvaco Corporation, 244 Va. 139, 149, 419 S.E.2d 661, 667 (1992) (restating the Court's prior holdings that " '[a] nuisance may diminish value of realty . [and] also may interfere with some right incident to the ownership or possession of real property' ").
Where, as 7-Eleven contends in this case, Hechinger sued for and was entitled to carrying costs, lost profits, and lost investment income proximately caused by 7-Eleven's conduct, those costs are recoverable under Virginia tort law if proved. O'Quinn, 223 Va. at 91, 286 S.E.2d at 186. See also Restatement (Second) of Torts § 929 (1979) (providing that damages for injury to real property include compensation for loss of use of the property and other consequential injuries in addition to any permanent property damage, whether measured by restoration or market value). Indeed, Code § 62.1^4.34:18(0(4), which addresses an owner's liability for the petroleum spill, recognizes potential liability for "damage to . property, . loss of income, loss of the means of producing income, or loss of the use of the damaged property for . commercial, industrial, . or other reasonable uses, caused by such discharges."
The record contains the expert appraisals on the pre-injury and post-injury value of Hechinger's property. The record also contains the opinion of Salzman Real Estate Services, Inc., an expert hired by Hechinger, that Hechinger incurred as a result of the spill lost rental income of $710,000 and lost investment returns of $550,000. Salzman calculated that Hechinger had also incurred and paid as property expenses resulting from the spill $283,000 in additional insurance, taxes, administrative expenses, legal fees, and expert fees. The Department, however, did not consider whether the expenses Hechinger claimed in the litigation represented the damage caused by the petroleum spill. Once the Department summarily concluded that it was appropriate to treat the damages in the present case as permanent because no evidence proved that the damage to the property "[would] attenuate within a known time frame," the Department declined to address whether damages, other than the diminution in the value of the property, were also appropriate. Indeed, the Department's decision states that proof of lost investment income, lost rental income, and carrying costs were not considered because they did not conform to the damage formula prescribed in Packett.
In Packett, upon which the Department relied in limiting its award to only diminution in value of the property, the Supreme Court did not preclude recovery of other damages. See 237 Va. at 426-27, 377 S.E.2d at 442. The Court simply held that it would be improper to allow both an injunction and permanent damages because both remedied future harm, i.e., while permanent damages compensate for the future harm, an injunction eliminates future harm. Id. In so ruling, the Court noted that in Miller v. Trueheart and Others, 31 Va. 569, (4 Leigh) 569 (1833), a party properly was entitled to temporary damages and later an injunction. Packett, 237 Va. at 427, 377 S.E.2d at 442. Such damages do not constitute an improper double compensation to the injured party because the temporary damages compensate for past harm while the injunction remedies future harm. See Raleigh Court Corp. v. Faucett, 140 Va. 126, 143, 124 S.E. 433, 438 (1924) (permitting recovery for "temporary and permanent damage . done to the plaintiffs lot [of land]"). It is evident from these cases that the motivating factor behind distinguishing between temporary and permanent damages is the prevention of double recovery for property damage. Cf. Jarrett v. E.L. Harper & Son, Inc., 160 W.Va. 399, 235 S.E.2d 362, 365 (1977) (where the Supreme- Court of West Virginia noted that the fundamental principle regarding damages is that the injured owner is entitled to the amount of compensation that reasonably will make the injured owner whole, and the Court "eliminat[ed] the temporary and permanent classifications" that had been previously used to distinguish property damage). In the present case, Hechinger sued 7-Eleven for carrying costs, lost profits, and lost investment income, which were in addition to and distinct from its claim of diminution in land value.
C.
Without permitting double recovery, the Department should have analyzed whether any of the other expenses alleged by Hechinger were proximately caused by the petroleum spill and were properly encompassed by the settlement. We hold, therefore, that because the Department determined without factual analysis that 7-Eleven was not allowed to recover as costs other items that Hechinger alleged as expenses resulting from the property damage, the Department erred as a matter of law in its assessment of the extent of 7-Eleven's liability to Hechinger for property damage.
IV.
For these reasons, we reverse the judgment and remand for reconsideration with instructions to analyze the reasonableness of the settlement, giving due consideration to the property damages for which 7-Eleven was liable to Hechinger.
Reversed and remanded.