Palmyra Assocs., LLC v. Comm'r of Highways

851 S.E.2d 743

PALMYRA ASSOCIATES, LLC, et al.

v.COMMISSIONER OF HIGHWAYS

Record No. 191680

Supreme Court of Virginia.

December 17, 2020

Joseph E. Blackburn, Jr. (Blackburn, Conte, Schilling & Click, on briefs), Richmond, for appellants.

Jessica Merry Samuels, Assistant Solicitor General (Mark R. Herring, Attorney General; Toby J. Heytens, Solicitor General; Donald D. Anderson, Deputy Attorney General; Martine E. Cicconi, Deputy Solicitor General; Michelle S. Kallen, Deputy Solicitor General; Nancy C. Auth, Senior Assistant Attorney General; Zachary R. Glubiak, John Marshall Fellow, on brief), for appellee.

PRESENT: Goodwyn, Mims, Powell, Kelsey, McCullough, and Chafin, JJ., and Russell, S.J.

OPINION BY JUSTICE STEPHEN R. McCULLOUGH

The landowner in a condemnation proceeding challenges several rulings below: (1) the court's decision to strike the testimony of the owner of the property concerning damage to the residue of the property; (2) the court's refusal to admit site plans into evidence; and (3) the court's inquiry after the trial whether it should hold a new trial or confirm the value of the take. For the reasons noted below, we will affirm the judgment of the circuit court.

BACKGROUND

Palmyra Associates, LLC ("Palmyra") owned 44.048 acres of land in Fluvanna County. The property is situated at the intersection of Routes 15 and 53. Consistent with the County's comprehensive plan, Palmyra intended to develop the property into a commercial development. Palmyra had site plans drawn up in the decade prior to the take. As of the date of the take, however, the property remained an unimproved wooded lot.

To improve traffic flow at the intersection of Routes 15 and 53 in Fluvanna County, the Commissioner of Highways ("VDOT") decided to upgrade the "T" shaped intersection into a roundabout. VDOT sought to acquire from Palmyra approximately 7,200 square feet (0.166 of an acre) in fee simple, 4,500 square feet (0.103 of an acre) for a permanent drainage easement, and 1,930 square feet (0.0443 of an acre) in temporary construction easements.

The parties could not reach an agreement on VDOT's offer to purchase the land. VDOT then recorded a certificate of take on January 7, 2016 and a petition in condemnation on July 1, 2016. Palmyra asked for the appointment of commissioners to resolve the question of compensation.

Palmyra's initial expert witness designation stated that David G. Sutton, the co-owner of the property, would testify that "a one (1) acre pad site on the front portion of the property has a value of approximately $400,000," and his "opinion[ ]" as to "damages to the residue" would "us[e] ... $400,000 as the value of a one (1) acre pad site fronting Route 15." In a supplemental answer to an interrogatory, Palmyra indicated that Sutton would "opine that the roundabout has reduced the development potential of the residue by reducing its frontage size and thus eliminating a fourth building pad," resulting in damages to the residue in the amount of $545,000.

Relying on Appalachian Power Co. v. Anderson , 212 Va. 705, 187 S.E.2d 148 (1972), VDOT filed a pre-trial motion to exclude testimony from the owners of the parcel to the extent it relied on the loss of a non-existent pad site in estimating the value of the damage to the residue. VDOT argued that "[a]lthough Palmyra Associates may be able to present evidence that the subject property is ‘suitable’ to being subdivided for commercial pad sites, it is improper to value the subject property as if it was an actual subdivided one-acre pad site on the date of the take." The circuit court held that Sutton could testify, but that he could not offer evidence of damages to the residue on a per lot basis.

Palmyra also sought to introduce site plans into evidence, which the trial court refused. Those site plans depicted a proposed commercial development for the property. Refused Exhibit A consisted of 22 pages of detailed site plans of development prepared and filed with the county over 10 years prior to the take. Ex. Add. 2-23. Refused Exhibit B showed a site plan reflecting changes to Route 15 resulting from another construction project. Refused Exhibit C was an overlay of the roundabout project (including the planned "fourth leg" entrance) which was prepared using VDOT's plan for the roundabout project, overlaid on the site plans depicted in Refused Exhibits A and B.

The County had not approved these site plans. Sutton testified that the County had approved "the concept" but had not given approval of the final plan. He also explained that the County imposed a number of conditions, but, as of the date of the take, Palmyra had not met those conditions. A significant portion of the property was in a floodplain. Therefore, Palmyra needed County approval to build on the floodplain. Palmyra acknowledged it may need to construct a retaining wall to gain the County's approval. The site plans also showed additional infrastructure improvements, such as the widening of a road and bridge and the construction of two entrances.

At trial, Sutton testified that the loss to the residue caused by the taking was $545,000. When asked how he arrived at that figure, he responded that he "took the frontage acreage, which is roughly 5.5 acres that [he] had previously valued at $2.2 million, and [the take] damaged that at twenty-five percent." Sutton further explained that "we've lost significant development potential across that frontage because of the imposition of the fourth leg of the roundabout, as well as because the property that was taken reduced our frontage and compressed where we could develop on that first primary acreage." After deliberating, the commissioners returned with a majority award and a minority award. The three commissioners nominated by Palmyra returned the majority award, including $66,400 for the fee simple acquisition, $37,187 for the drainage easement, $3,544 for the temporary construction easement, and $350,000 for damages to the residue, amounting to total just compensation in the amount of $457,131. The two commissioners nominated by VDOT returned the minority award, including $66,400 for the fee simple acquisition, $37,187 for the drainage easement, $3,544 for the temporary construction easement, and $125,000 for damages to the residue, amounting to total just compensation in the amount of $232,131.

VDOT filed post-trial exceptions to the commissioners’ report. Among other things, VDOT argued that Sutton's testimony about damage to the residue must have been based on the loss of a pad site, in contravention of the court's pre-trial ruling that such testimony was inadmissible. VDOT pointed to the fact that, at trial, Sutton estimated the damage to the residue at $545,000, the same figure as the damages estimate Sutton reached pre-trial based on the loss of a pad site. VDOT further noted that, at trial, Sutton's testimony did not supply "any basis for his conclusion that the development potential of the property was reduced in any way other than the elimination of a fourth building pad site." Consequently, VDOT contended, "[t]he only basis for Mr. Sutton's opinion that the development potential of the residue was reduced was the elimination of a fourth building pad site, which the Court previously ruled was improper." The circuit court agreed. It concluded that Sutton had testified in contravention of the court's pre-trial ruling and his testimony should be stricken.

Following the trial, the circuit court stated that it would "entertain argument" by counsel "as to whether the Court should" follow one of two approaches: "confirm the award of the take only, or grant a new trial." Counsel for VDOT responded that the parties "agree ... that ... the Court should enter a Final Order in this matter setting aside the damage award and confirming the award for the value of the take, only." Counsel for Palmyra clarified that while the parties did not agree on the court's ruling striking the testimony, "both sides agree to the first of the 2 options [the court] gave [them]." That option was that "the Court should confirm the award of the take only" rather than "grant a new trial."

The circuit court entered a Final Order confirming the commissioners’ award of $107,131 for the take and setting aside the award for damages to the residue. This appeal followed.

ANALYSIS

I. THE CIRCUIT COURT DID NOT ABUSE ITS DISCRETION IN EXCLUDING PALMYRA'S SITE PLANS FROM CONSIDERATION BY THE COMMISSIONERS BECAUSE A NUMBER OF SIGNIFICANT CONTINGENCIES EXISTED BEFORE THOSE PLANS COULD BE APPROVED .

Palmyra assigns error to the circuit court's

refus[al] to admit into evidence site plans [the] Landowner had prepared over 10 years prior to the take showing the development potential of their property and overlays showing the impact of the imposition of the fourth leg of the roundabout on the development potential of their property.¹

"In every eminent domain case involving a partial taking, the measure of damages to the residue of the property not taken is the difference in the fair market value of the residue immediately before and immediately after the taking." City of Virginia Beach v. Oakes , 263 Va. 510, 516, 561 S.E.2d 726 (2002) (quoting East Tennessee Nat. Gas Co. v. Riner , 239 Va. 94, 100, 387 S.E.2d 476 (1990) ). "In ascertaining such damages, both present and future circumstances which actually affect the value of the property at the time of taking may be considered, but remote and speculative damages may not be allowed." Id. For example, when there exists a reasonable probability of a favorable re-zoning, a prospective buyer and seller would consider that circumstance in valuing the parcel on the date of the take. Helmick Family Farm, LLC v. Commissioner of Highways , 297 Va. 777, 791, 832 S.E.2d 1 (2019). Site plans can similarly be relevant if a prospective willing buyer would recognize the probability of site plan approval in the near future when determining market value.

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