3.4 SUBSTANTIVE DIFFERENCES IN EMINENT DOMAIN LAW— FEDERAL COURT VERSUS VIRGINIA STATE COURTS
3.401 Calculation of Just Compensation in Partial Takes. Federal courts use a different formula than Virginia courts in determining just compensation for partial takes. Federal court simply take the fair market value of the entire tract before the taking and then subtract the fair market value of the entire tract after the taking. The difference between the two reflects the total compensation to which the owner is entitled. 31 Virginia courts use a two-step approach, calculating the value of the property taken first, and then calculating any damage or enhancement to the residue, and combining those figures to determine just compensation. In practice, the main difference is that in federal court any enhancement to the residue is offset against the compensation for the property taken. In Virginia, enhancement offsets damages only to the extent that there is damage to the residue.
The U.S. Supreme Court, in Campbell v. United States, 32 held that "the just compensation assured by the Fifth Amendment to an owner, a part of whose land is taken for public use, does not include the diminution in value of the remainder caused by the acquisition and use of adjoining lands of others for the same undertaking." Although Campbell is often cited for the proposition that damages to the remainder of a property resulting from the project as a whole (as opposed to those resulting from the taking of a portion of the property itself) are not compensable in federal court, the decision must be interpreted in conjunction with other federal cases. In Olson v. United States, 33 the Court held that the landowner in a takings case "is entitled to be put in as good a position pecuniarily as if his property had not been taken." The Olsen Court then set forth the principle, adhered to in Virginia, that if the highest and best use of a property depends on using it in conjunction with other parcels, the landowner may demonstrate that a reasonable probability exists that the properties would have been used together. The Ninth Circuit explained in United States v. Pope & Talbot, Inc., 34 that, where the damages resulting to the remainder of a parcel of land are inseparable from damages resulting to nearby properties, the landowner is entitled to compensation for
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the diminished value of his or her land as a result of the taking and the use to which the taken property was put. 35
Virginia courts adhere to the rule set forth in Ryan v. Davis 36 : "A true test of damages to the residue is the difference in value immediately before and immediately after the taking, and in ascertaining such damages there may be considered every circumstance, present and future, which affects its value," although remote and speculative evidence is not admissible.
3.402 Special Versus General Damages and Benefits.
A. "Generally. The difference between special and general damages (and conversely special and general benefits) is a related topic to the recoverability for damages as a result of the project as a whole. Special damages are those damages that inure to a particular property but not to the public as a whole. Conversely, special benefits are the increased value to a residual property as a result of a taking or project, not merely the general benefit to the public as a result of the taking or project. Whereas general damages are not compensable in eminent domain proceedings, special damages are to be considered when determining just compensation. Although Campbell is often cited against this proposition, it is only rational that, because a project in its entirety is used to determine whether special benefits have accrued to the property retained by a landowner, so too should the project in its entirety be used to determine the special damages to the property, especially when the projects involve linear takings, like light-rail lines, utility lines, and highways. After all, although a particular property may benefit from a new four-lane road running directly past it, the benefit it gets is the result of the fact that the four-lane road also runs next to neighboring properties, and allows vehicles to travel from far distances. Similarly, the property may be damaged by such a road, and the damage results not simply from the fact that there is a new road immediately adjacent to the property, but from the fact that the road connects to another segment of roadway adjacent to neighboring properties, and so on, allowing increased traffic, noise, and exhaust to invade the landowner's residual property. Simply because a property owner suffers similar damages as neighboring property owners does not mean these damages are non-compensable
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general damages. The issue is one of degree: to the extent that a particular property suffers damages materially different in degree from those damages suffered by the community as a whole, the landowner must be compensated through just compensation. 37
Under the Fifth Amendment, following a take, if the land that the owner retains receives a benefit from the condemnor's project, the benefit is considered in the valuation of just compensation. The amount of compensation is decreased by the value of the benefit. To be considered in valuation, however, the benefit that accrues must be special or direct benefit, not a general benefit enjoyed by the public as a whole. The condemnor's project, in its entirety, is considered in determining these special benefits. Similarly, special damages that result from the condemnor's project as a whole should be used to determine the value of just compensation. The amount of just compensation should be increased by the decrease in value of the property retained caused by any special damages.
B. "Special Benefits" Defined. The Supreme Court, in United States v. River Rouge Improvement Co., 38 defined a special benefit, distinguishing it from a general benefit, stating:
The benefit is not less the direct and special to the land of the petitioner, because other estates upon the same street are benefited in a similar manner. The kind of benefit, which is not allowed to be estimated for the purpose of such deduction, is that which comes from sharing in the common advantage and convenience of increased public facilities, and the general advance in value of real estate in the vicinity by reason thereof. The advantages of more convenient access to the particular lot of land in question, and of having a front upon a more desirable avenue, are direct benefits to that lot, giving it increased value in itself. It may be the same, in greater or less degree, with each and every lot of land upon the same street. But such advantages are direct and special to each lot. They are in no proper sense common because there are several estates, or many even, that are similarly benefited. 39
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In that case, the government had taken land for the improvement of the Rouge River. 40 Using this definition of special benefits, the Court held that any increase in value caused by frontage on the newly-widened river, as well as access to and use of the improved stream, would constitute special benefits to the land retained by the property owners after the take. 41 Although these benefits accrued to all of the property with water frontage, they were no less special and direct. 42 The special benefit to the land retained was dependent on the condemnor's use of all the parcels along the river to widen the river. James River & Kanawha Co. v. Turner 43 is an old Virginia canal case that similiarly addressed special versus general benefits and damages.
C. Reciprocal Relationship Between Special Benefits and Special Damages. The Fourth Circuit recognized the relationship between special benefits and special damages in Washington Metropolitan Area Transit Authority v. One Parcel of Land in Montgomery County, Maryland, 44 explaining that "[a]s a general rule of law, the compensation paid for the taking of land, where less than the owner's whole tract is taken, should be reduced by the amount of the special benefit...
