7-Eleven, Inc. v. Department of Environmental Quality

590 S.E.2d 84, 42 Va. App. 65, 2003 Va. App. LEXIS 703
Court of Appeals of Virginia·Decided December 30, 2003·No. 2380012·Published·Cited by 16 cases

Opinions

ANNUNZIATA, J.,

dissenting.

I respectfully dissent from the majority opinion. 7-Eleven claims on appeal that the trial court applied the wrong standard of review and that it erroneously affirmed the Department of Environmental Quality’s damages analysis. 7-Eleven specifically claims that the Department erroneously: 1) failed to award reimbursement for temporary damages, including lost rental income, carrying costs, lost profits, and lost investment income; 2) failed to properly consider the opinions of qualified experts; 3) failed to apply the “common law factors traditionally used to evaluate the reasonableness and necessity of a settlement”; and 4) erroneously conducted a “de novo examination of the evidence” to determine whether its settlement was reasonable and necessary. The claims that 7-Eleven raises involve issues of law and fact and implicate different standards of review on appeal. For the reasons that follow, I would affirm the trial court’s judgment in this case.

I. Background

The record makes clear that the Department considered the settlement reached between 7-Eleven and Hechinger, but that [98]*98it rejected the figure proffered, finding it to be an inaccurate reflection of the reasonable and necessary costs incurred as a result of injury to Heehinger’s property. The injury in question was caused by leakage from an underground petroleum tank located on 7-Eleven’s property. The Department rejected the settlement figure on two grounds. First, it rejected the settlement amount as neither “reasonable [nor] necessary” because it found the law and the evidence failed to support certain elements of the claim. Second, the Department rejected 7-Eleven’s contention that it was required to determine the reasonableness and necessity of the settlement amount by considering “the appropriate settlement range” found in similar, litigated claims and that the Department was, therefore, precluded from considering, de novo, whether the underlying evidence supported 7-Eleven’s claim for reimbursement.

II. Standard of Review

Although decisions by administrative agencies regarding matters within their specialized competence are “entitled to special weight in the courts,” Johnston-Willis, Ltd. v. Kenley, 6 Va.App. 231, 244, 369 S.E.2d 1, 8 (1988), “when, as here, the question involves an issue of statutory interpretation, ‘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) (quoting Kenley, 6 Va.App. at 246, 369 S.E.2d at 9). “In sum, pure statutory interpretation is the prerogative of the judiciary.” Id. In the case before the Court, the Department’s interpretation of Code § 62.1-44.34:11(A)(2), and its determination that certain damages are not recoverable as a matter of law, must, therefore, be reviewed in accordance with the least deferential standard of review. Id. The Department’s factual determinations, however, are entitled to great deference. Holtzman Oil Corp. v. Commonwealth, 32 Va.App. 532, 539, 529 S.E.2d 333, 337 (2000) (“Where the issue is whether there is substantial evidence to support findings of fact, great deference is to be accorded the agency decision.”).

[99]*99III. The Trial Court Did Not Err in Affirming the Agency’s Damages Analysis

7-Eleven contends that the trial judge erred in affirming the Department’s damage analysis under which it rejected its claim for both permanent and temporary damages, including lost rental income and various carrying costs. In support of its contentions, 7-Eleven relies on the general principle enunciated in Lochaven Co. v. Master Pools by Schertle, Inc., 233 Va. 537, 357 S.E.2d 534 (1987), 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.” Id. at 541, 357 S.E.2d at 537. The general principle, albeit applicable, does not necessarily support the conclusion that the particular damages sought are recoverable in their entirety. Numerous, specific principles of law defining appropriate damages in cases involving tortious injury to real property have equal, if not greater, relevance to this Court’s resolution of the question. The Department properly accepted these specific principles of law in determining the reasonable costs incurred by 7-Eleven in settling its litigation with Heehinger.

A. The Department Did Not Use An Improper Measure of Damages

Two concerns animated the Department’s consideration of 7-Eleven’s request for reimbursement of its costs in this case: the avoidance of double recovery and the application of relevant law governing recovery of damages for injury to real property. To determine whether 7-Eleven’s claimed damages were reasonable and necessary, the Department discussed and applied the following principles.

The measure of damages for permanent injury to property is the diminution, in the market value of the property, viz., the difference between the market value of the property before and after the injury. The Department cited four Virginia cases in support of that proposition: Packett v. Herbert, 237 Va. 422, 377 S.E.2d 438 (1989); Douthat v. Chesapeake & Ohio Ry. Co., 182 Va. 811, 30 S.E.2d 578 (1944); Norfolk & Western Ry. Co. [100]*100v. Richmond Cedar Works, 160 Va. 790, 170 S.E. 5 (1933); and Raleigh Court Corp. v. Faucett, 140 Va. 126, 124 S.E. 433 (1924). When damages to real property are deemed to be permanent, temporary damages, including lost rental income, are not recoverable. For this proposition, the Department relied on the holding in Georgia v. City of East Ridge, Tenn., 949 F.Supp. 1571 (N.D.Ga.1996).5 Equally relevant to whether both temporary and permanent damages for injuries to real property are recoverable is the proposition that where temporary damages, such as cost of repair, exceed the diminution of market value, damages are limited to the diminution of market value. The Department cited United States Steel Corp. v. Benefield, 352 So.2d 892 (Fla.Dist.Ct.App.1977), in support of this proposition. It also cited the Virginia Supreme Court case, Averett v. Shircliff, 218 Va. 202, 237 S.E.2d 92 (1977), as authority for an analogous principle which it expected to apply in addressing evidence which established that the contamination to the Hechinger property had been “partially cured.” That principle states that, where evidence of repair and depreciated value after repairs exists, the proper measure of damages is the lower of 1) the difference in the fair market value of the property before and after the accident, or 2) if the property could be restored to its former condition, the cost of repairs, plus applicable depreciation. Averett, 218 Va. at 207-08, 237 S.E.2d at 95-96. Finally, to address evidence in the case which showed that factors other than contamination were relevant to determining the post-injury value of the subject property, the Department cited the Virginia Supreme Court case of

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7-Eleven, Inc. v. Department of Environmental Quality, 590 S.E.2d 84, 42 Va. App. 65, 2003 Va. App. LEXIS 703 (Va. Ct. App. 2003).

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7-Eleven, Inc. v. Department of Environmental Quality
590 S.E.2d 84 (Court of Appeals of Virginia, 2003)