Title: Revocor Corp. v. Commonwealth Transp. Comm'n
Citation: N/A
Docket Number: 990830
State: Virginia
Issuer: Virginia Supreme Court
Date: March 3, 2000

Present:  Carrico, C.J., Compton,1 Lacy, Hassell, Keenan, 
Koontz, and Kinser, JJ. 
 
REVOCOR CORPORATION 
 
 
            OPINION BY JUSTICE LEROY R. HASSELL, SR. 
v.  Record No. 990830 
March 3, 2000 
 
COMMONWEALTH TRANSPORTATION 
COMMISSIONER OF VIRGINIA 
 
FROM THE CIRCUIT COURT OF YORK COUNTY 
J. Warren Stephens, Judge Designate 
 
 
In this appeal from a judgment entered in a condemnation 
proceeding, we consider whether the circuit court properly 
excluded evidence of adjustment costs as a factor to be 
considered by the commissioners when determining damage to the 
residue of the property. 
 
The Commonwealth Transportation Commissioner (the 
Commissioner) made a bona fide, but ineffectual, effort to 
purchase approximately 8.55 acres of land in York County that 
was necessary for the construction, reconstruction, 
alteration, maintenance, and repair of Interstate Highway 64.  
This land was part of two parcels owned by Revocor 
Corporation:  Parcel 023, which consisted of .4 of an acre and 
Parcel 003, which consisted of 55.5 acres. 
 
At a condemnation trial, Revocor sought $484,725 for the 
value of the property taken and $453,826 for the damage to the 
                     
1 Justice Compton participated in the hearing and decision 
of this case prior to the effective date of his retirement on 
February 2, 2000. 
residue.  The circuit court excluded Revocor's evidence of 
adjustment costs allegedly necessary to develop the property 
as a result of the taking.  The condemnation commissioners 
returned a report valuing the land taken at $403,000 and 
damage to the residue at $37,500.  Revocor filed exceptions to 
the commissioners' report and requested a new trial.  The 
circuit court denied Revocor's request and entered an order 
confirming the commissioners' report.  Revocor appeals. 
 
The approximately 56-acre parcel is near the intersection 
of Interstate 64 and Route 143.  The property is zoned for 
commercial use, and the litigants agree that at the time of 
the taking, the highest and best use of the property was for 
commercial development. 
 
Revocor's property consisted of land situated at several 
elevations ranging from highland to marsh.  Before the taking, 
the eastern portion of the property, which was at a high 
elevation, was encumbered by several easements, including a 
Virginia Natural Gas (VNG) pipeline easement.2  The remainder 
                     
 
2 Pursuant to the terms of the easement, Revocor, its 
successors and assigns, "may use the permanent right of way 
for any purpose not inconsistent with the rights hereby 
acquired including, but not limited to the right to construct, 
operate and maintain passways, roads, streets, railroad 
tracks, telephone, electric or other utility lines . . . 
across the permanent right of way, in such manner that the 
angle between the center line thereof and the center line of 
the permanent right of way shall be not less than forty-five 
(45) degrees, provided that such use does not interfere with 
 
2
of Revocor's property, which was considered the most desirable 
portion of the land for commercial development purposes, 
included a 12-acre lake. 
 
In 1989, Revocor submitted a site plan for development of 
the land to York County.  At that time, the property enjoyed a 
zoning classification which permitted residential uses, and 
Revocor sought to develop the property for residential 
purposes.  The site plan for development, which was approved 
by the County, contained a proposed road for the property.  
The road was never constructed, and in 1995, the zoning 
classification of the property was changed from multi-family 
residential to limited business. 
 
The Commissioner made a motion in limine to exclude 
evidence of damage to Revocor's property allegedly resulting 
from the relocation of a road shown on the 1989 plat for 
residential development.  The circuit court ruled that the 
exhibit of the preliminary unrecorded plat could not be used 
or referred to during the trial.  The Commissioner made 
another motion in limine to exclude evidence regarding "the 
alleged cost of relocating the roadway as a cost of adjusting 
the remaining property as a result of the take" because the 
evidence would be "speculative," "irrelevant and immaterial."  
                                                                
or endanger the construction, operation or maintenance of 
[VNG's] facilities."  
 
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The circuit court granted the motion stating that it "[was] 
not going to permit any consideration of relocation of any 
road because there is no road on the property at the time of 
the take." 
 
Revocor sought to introduce at trial the testimony of 
Fred Watkins, a licensed professional engineer.  According to 
Revocor's proffer, Watkins was retained to assess the impact 
of the taking upon Revocor's remaining property and upon the 
property's potential use and development.  Watkins opined that 
"development potential of the residue was dramatically reduced 
by the taking, and that it will be very expensive to adjust 
the residue to the new conditions caused by the taking.  The 
changed configuration and topography of the residual parcel 
seriously impede its use and development." 
 
Watkins would have also testified as follows.  "The 
access into Revocor's property from the public road remains 
the same after the take as it was before the take.  However, 
once into the interior of the property, the topography and 
configuration of the post-take parcel are such that the 
interior roadway serving the highland along the lake is now 
required to pass through a steep marshy area south and east of 
the lake.  Prior to the take, the interior roadbed was able to 
utilize the topography so as to maximize the use of the land, 
and minimize the effect of the steep and marshy area.  The 
 
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effect of the taking renders the development of the residual 
parcel, and the utilization of land otherwise available, much 
more difficult and expensive.  It also substantially reduces 
the proportional amount of usable land in the residual parcel, 
because of the necessity to construct retaining walls in some 
areas." 
 
Watkins stated that it was his "opinion that in addition 
to the reduction in usable land in the residual parcel, the 
cost of developing the residual parcel has increased by 
$377,130.68 (exclusive of engineering costs) solely because of 
the necessity to relocate the interior roadway through the 
marshy portion of the property which has steep side slopes.  
This increased expense includes bringing in additional fill 
material, and the construction of retaining walls, neither of 
which were necessary prior to the taking." 
 
Even though the circuit court refused to permit Watkins 
to testify, the court permitted Revocor's appraiser, Howard 
Clayton, to testify that before the taking, Revocor's land 
enjoyed a "favorable topography."  Clayton stated that access 
to the most desirable portion of the property for development 
purposes after the taking would be "a mountain of a problem" 
because the terrain that would have to be traversed by a road 
"is wet and in a bowl."  Clayton also testified that in 
arriving at his conclusions, he consulted with Watkins.  
 
5
Clayton opined that the total value of the taking was $484,725 
and that the damage to the residue was $453,826. 
 
Henry G. Warren, Jr., an appraiser employed by the 
Virginia Department of Transportation, testified that the 
value of the taking was $355,884, and there was no damage to 
the residue.  John C. Harry, a real estate appraiser who also 
testified on behalf of the Commissioner, testified that the 
taking was valued at $370,000 and that there was no damage to 
the residue.  
 
Revocor argues that the circuit court erred in refusing 
to permit Watkins' proffered testimony that as a result of the 
taking, the configuration and topography of the land was 
dramatically changed and that such changes seriously impeded 
the use and development of the land which in turn reduced the 
amount of usable land in the residue.  Continuing, Revocor 
asserts that Watkins would have testified that prior to the 
taking, Revocor easily could have gained access to its 
interior lakefront property along the eastern portion of the 
property without violating the VNG easement.  Watkins would 
have explained the physical difficulties that Revocor would 
encounter in creating a road through the steep and marshy area 
which was necessitated as a result of the taking. 
 
Responding, the Commissioner argues that Watkins' 
testimony was speculative evidence that was inadmissible in an 
 
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eminent domain trial.  The Commissioner asserts that "the 
costs allegedly necessitated to relocate a road if [Revocor] 
develops its property in the future are remote and speculative 
and that the [circuit] court properly excluded the engineer's 
testimony concerning those costs."  
 
In Lynch v. Commonwealth Transp. Comm'r, 247 Va. 388, 
391, 442 S.E.2d 388, 389-90 (1994), we discussed well-
established principles governing the taking of property in a 
condemnation proceeding: 
"The measure of compensation for the property taken 
is the fair market value of the property at the time 
of the taking.  In determining fair market value, 
consideration is given to the property's 
adaptability and suitability for any legitimate 
purpose in light of conditions and circumstances 
that exist at the time of the take or that 
reasonably may be expected in the near future.  The 
test of damages to the land remaining after the 
taking is the difference in the residue's value 
immediately before and immediately after the taking.  
In determining such damages, consideration may be 
given to every circumstance, present or future, that 
affects the residue's value at the time of the take.  
Remote or speculative advantages and disadvantages, 
however, are not to be considered." 
 
Accord Wammco, Inc. v. Commonwealth Transp. Comm'r, 251 Va. 
132, 137, 465 S.E.2d 584, 586 (1996); Appalachian Elec. Power 
Co. v. Gorman, 191 Va. 344, 353, 61 S.E.2d 33, 37-38 (1950). 
 
We stated in Dressler v. City of Covington, 208 Va. 520, 
522, 158 S.E.2d 660, 662 (1968), that it "is well settled that 
in determining the diminution of the market value of the land 
 
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not taken or the damages thereto, it is proper to consider the 
expense made necessary by reason of the improvement in 
adjusting the property to the changed conditions brought about 
by the taking."  Such increased development costs, commonly 
referred to as adjustment costs, are necessary to adjust the 
property to the changed conditions caused by the taking.  
Adjustment costs are relevant when determining any diminution 
in the market value of the residue as a result of the taking.  
Id.  Such costs, however, are "not the measure of damages and 
cannot be recovered specifically.  In other words, evidence of 
the actual cost of necessary improvements is admissible as a 
factor of evaluation, though not as a measure of damages."  
Id.  The measure of damages to the residue is the difference 
in the value before and immediately after the taking, less any 
enhancement that resulted from the taking.  Wammco, 251 Va. at 
137, 465 S.E.2d at 587; State Highway & Transp. Comm'r v. 
Parr, 217 Va. 522, 524, 230 S.E.2d 253, 255 (1976).  
Additionally, evidence of adjustment costs is inadmissible if 
such costs are based upon remote or speculative factors.  
Lynch, 247 Va. at 391, 442 S.E.2d at 390. 
 
In Wammco, we considered whether a circuit court properly 
excluded evidence of adjustment costs as a factor of 
evaluation when ascertaining the damage to the residue of 
certain property.  There, the Commonwealth Transportation 
 
8
Commissioner filed a petition in condemnation and requested 
that the circuit court appoint commissioners to determine just 
compensation due to a landowner as a result of a taking.  The 
Commissioner had taken 17.6 acres of land in the City of 
Chesapeake for the construction of a portion of Interstate 
Highway 664.  This tract of land was part of a larger tract 
consisting of 314 acres.  Before construction of the 
interstate, the 314-acre parcel was bisected by Gum Road, a 
road which was then a segment of the only continuous north-
south route through the Western Branch area of Chesapeake.  
Wammco, 251 Va. at 134, 465 S.E.2d at 584-85. 
 
When the interstate was constructed through the property, 
Gum Road was severed in half.  A cul-de-sac was created at the 
end of Gum Road next to the highway, eliminating any access to 
the interstate.  That portion of the landowner's property west 
of Gum Road was zoned for industrial use at the time of the 
taking.  The portion of the property east of Gum Road was 
zoned for agricultural use at the time of the taking, but was 
later rezoned for residential development.  Id. at 134-35, 465 
S.E.2d at 585. 
 
The parties agreed that the highest and best use of the 
eastern portion of the property was for residential 
development.  The portion of the property west of Gum Road 
enjoyed an industrial zoning classification at the time of the 
 
9
taking.  A civil engineer testified that before the taking, 
Gum Road provided sufficient access to the property to support 
development in accordance with its highest and best use.  
However, when the road was severed by the taking, access to 
the property was so severely restricted that the western 
portion was rendered unsuitable for industrial use.  Id. at 
135, 465 S.E.2d at 585. 
 
Before trial, the transportation commissioner made a 
motion in limine to exclude any evidence of adjustment costs 
allegedly necessitated by the taking because such testimony 
would have been speculative.  The landowner had made a proffer 
that as a result of the taking, both on-site and off-site 
improvements would be necessary to develop the property in 
accordance with its highest and best use, that additional land 
and rights-of-way would have to be acquired, and that the off-
site road network to the residue would have to be improved in 
order to provide sufficient road access to develop the western 
portion of the property for industrial use.  Additionally, the 
landowner presented evidence that an additional road would 
have to be built off the property in order for the eastern 
portion of the residue to be developed in accordance with the 
landowner's post-taking development plans.  Id. at 135-36, 465 
S.E.2d at 585-86. 
 
10
 
We held that the circuit court properly excluded the 
landowner's proffered evidence because the development of the 
residue was contingent upon the improvement of off-site roads 
in the vicinity of the residue and the acquisition of property 
owned by others.  We also noted that the landowner's evidence 
showed that the development of the property was contingent 
upon future acts beyond the landowner's control which were 
remote and speculative.  Id. at 138, 465 S.E.2d at 587. 
 
Here, unlike the landowner in Wammco who was unable to 
develop its property unless it acquired the adjacent 
properties of others, Revocor, according to its proffer, would 
have been able to construct a road through the steep and 
marshy areas of its residue provided it was able to do so in 
accordance with the terms of the VNG easement.  Also, unlike 
the property owner in Wammco, Revocor's ability to relocate a 
road was not predicated upon speculative factors such as the 
acquisition of rights-of-way from others.  We hold that in 
determining the damage to the residue, Revocor was entitled to 
present as a factor of evaluation the actual costs of 
relocation of a road to the more desirable portions of its 
property.  Therefore, the circuit court erred in excluding the 
proffered evidence. 
 
The Commissioner argues that even if the circuit court 
erred in excluding the proffered evidence, such error was 
 
11
harmless because Clayton testified that he had consulted with 
an engineer and that this consultation led him to conclude 
that after the taking, Revocor would be required to construct 
a road in a less favorable location.  We disagree. 
 
Clayton's testimony simply failed to encompass the facts 
and opinions that were contained in Watkins' proffered 
testimony.  Furthermore, Clayton, unlike Watkins who is a 
licensed professional engineer, could not render opinions 
about the construction of retaining walls and additional fill 
materials that might be necessary to relocate the roadway 
through the marshy portion of Revocor's property. 
 
Accordingly, we will reverse the judgment of the circuit 
court and remand this proceeding for a new trial. 
Reversed and remanded. 
 
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