Court Opinion

ID: 1059642
Source: CourtListenerOpinion
Date Created: 2013-10-09 18:38:41.123083+00
Date Added: 2024-06-11T12:37:49.049107
License: Public Domain

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."

                                3
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

                                6
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

                                7
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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