Ramsey v. Commissioner of Highways

• Court: Supreme Court of Virginia
• Decided: April 16, 2015
• Docket: 140929
• Status: Published

Opinion

PRESENT: All the Justices

JAMES M. RAMSEY, JR., ET AL. OPINION BY v. Record No. 140929 JUSTICE CLEO E. POWELL APRIL 16, 2015 COMMISSIONER OF HIGHWAYS

FROM THE CIRCUIT COURT FOR THE CITY OF VIRGINIA BEACH William R. O’Brien, Judge

James M. Ramsey, Jr. and Janet D. Ramsey (“landowners”)

appeal from a final order entered April 21, 2014 in a

condemnation proceeding instituted against them by the

Commissioner of Highways (“Commissioner”).

I. BACKGROUND

In 2009, the Commissioner sought to acquire a .387-acre

portion of landowners’ property to facilitate road improvements

to Route 264 in the City of Virginia Beach, Virginia. Before

making an offer, the Commissioner ordered an appraisal of the

property as outlined in Code §§ 25.1-204 and -417. Thomas M.

Savage (“Savage”) completed this appraisal on August 24, 2009,

valuing the entire property before acquisition at $500,000, and

just compensation for the to-be acquired portion, including

damages, at $246,292. The Commissioner then attempted to

purchase the property directly from the landowners, but was

unsuccessful.

On December 7, 2009, the Commissioner filed a Certificate

of Take with the trial court, certifying that the Commissioner deposited $248,707 with the clerk of court as the Commissioner’s

estimated fair value of the property sought to be acquired. The

landowners withdrew the money from the clerk of court. On June

4, 2010, the Commissioner filed a Petition in Condemnation,

seeking an order confirming that the title to the desired

portion of property vested in the Commonwealth, and requesting

that a jury ascertain the value of the property.

The Commissioner hired Lawrence J. Colorito, Jr.

(“Colorito”) to conduct a second appraisal of the property

because Savage had retired. Colorito completed his appraisal on

September 5, 2012. He testified as an expert witness at trial

February 10-11, 2014. Colorito assessed the market value of the

landowners’ property at $250,000 and just compensation for the

acquired portion, including damages, at $92,127. Due to the

fact that the Virginia Department of Transportation (“VDOT”) had

already completed the improvements to Route 264 on the property,

Colorito adopted a $3,000 value of landscaping from Savage’s

appraisal into his own appraisal.

During trial, the landowners sought to have Savage’s

appraisal admitted into evidence. The trial court denied

admission of the appraisal, but allowed limited cross-

examination of Colorito regarding the existence of Savage’s

appraisal and Colorito’s adoption of the landscaping value from

Savage’s appraisal. Landowners proffered testimony that the

2 only places in the Savage appraisal where the $3,000 figure

appeared were on pages 2 and 32. Notably, the pages also

contained Savage’s determination that the value of the land was

$7 per square foot and that total estimated market value of the

property to be acquired was $246,292. The trial court excluded

these pages from evidence.

Also during trial, the landowners proffered that the

Commissioner gave them the Savage appraisal showing that their

entire property was valued at $500,000. The landowners

proffered that the appraisal was given to them prior to the

Commissioner making an offer to purchase a portion of the

property. The landowners claimed that the Savage appraisal was

a pre-condemnation statement, and should be admissible as an

admission by the Commissioner. The Commissioner argued that the

Savage appraisal was made as part of an attempt to compromise

during settlement negotiations and, as such, was inadmissible.

The trial court held that the Savage appraisal was an offer

to settle and was not admissible as a party admission or

otherwise. The trial court noted that the legislature’s intent

in statutorily requiring disclosure of the information prior to

a taking was to encourage settlement and evidence related to

settlement discussions is inadmissible at trial.

The jury report found just compensation for the landowners’

property to be $234,032. The landowners filed their exceptions

3 to the jury’s report. The trial court then issued a final order

confirming the jury report, holding that title in the relevant

portion of the landowners’ real estate vested in the

Commonwealth, and ordering the landowners to repay the

Commissioner $14,675, plus 3% interest from January 7, 2011.

This appeal followed.

II. ANALYSIS

On appeal, the landowners contend the trial court erred in

refusing to admit oral and written evidence of the property

value as determined in the Savage appraisal. The landowners

assert that the trial court erroneously treated the Savage

appraisal as part of the actual offer. The landowners rely on

the fact that the Savage appraisal was completed before any

offer was made by the Commissioner to purchase the property and

before the Commissioner filed the Certificate of Take with the

trial court.

“‘Generally, we review a trial court’s decision to admit or

exclude evidence using an abuse of discretion standard and, on

appeal, will not disturb a trial court’s decision . . . absent a

finding of abuse of that discretion.’” Dean v. Board of County

Supervisors, 281 Va. 536, 540, 708 S.E.2d 830, 832 (2011)

(quoting Avent v. Commonwealth, 279 Va. 175, 197, 688 S.E.2d

244, 256 (2010)). However, the issue raised by the landowners

is essentially a matter of statutory construction which we

4 review de novo. Hale v. Board of Zoning Appeals, 277 Va. 250,

269, 673 S.E.2d 170, 179 (2009). “[U]nder settled principles of

statutory construction, we are bound by the plain meaning of the

statutory language.” Id.

In an eminent domain proceeding, a condemnor must make “a

bona fide but ineffectual effort to purchase from the owner the

property to be condemned.” Code § 25.1-204(A). “Before

initiating negotiations for real property, the state agency

shall establish an amount which it believes to be just

compensation therefor and shall make a prompt offer to acquire

the property for the full amount so established.” Code

§ 25.1-204(E)(1)(emphasis added). 1 “Real property shall be

appraised before the initiation of negotiations. . . .” Code

§ 25.1-417(A)(2)(emphasis added).

The record demonstrates that the landowners were given the

Savage appraisal, showing that the value of their entire

property was $500,000, prior to the time any offer to purchase

was made and/or settlement negotiations were initiated. The

landowners rely on United States v. 320.0 Acres of Land, 605

F.2d 762 (5th Cir. 1979) for the proposition that the Savage

appraisal was admissible into evidence as pre-condemnation party

1 Code § 25.1-204 was amended in 2011. 2011 Acts ch. 117. We apply the former version of the Code section to this case as the Certificate of Take and the Petition in Condemnation were filed prior to the effective date of the revisions to Code § 25.1-204.

5 admissions by the Commissioner. In 320.0 Acres of Land, the

landowners sought to introduce into evidence the 42 U.S.C.

§ 4651 2 statements of just compensation given to them by the

Federal agency seeking to condemn their property. The Fifth

Circuit noted that the § 4651 statements were admissible because

“[t]echnically, at the time the statements are provided, there

is no disputed claim, and hence no settlement negotiations of a

disputed claim.” 320.0 Acres of Land, 605 F.2d at 824-25. The

Fifth Circuit held that “if § 4651 statements of just

compensation are provided a prospective condemnee, they are

admissible at a subsequent compensation trial as an admission,

once it becomes known that at trial the Government is valuing

the property at a lower figure.” Id. at 825. See also

Department of Transp. v. Frankenlust Lutheran Congregation, 711

N.W.2d 453, 462 (Mich. Ct. App. 2006)(“[A] landowner may, if the

condemning authority seeks to establish a lower valuation for

the property at trial, introduce evidence of the higher,

precondemnation valuation for the purpose of rebutting the

authority’s lower valuation.”). We agree with this logic, which

is consistent with the language adopted by the General Assembly.

In the present case, the Savage appraisal was prepared

“before the initiation of negotiations” as required by the plain

2 Code § 25.1-417 closely resembles 42 U.S.C. § 4651 which provides, in pertinent part, that “(2) Real property shall be appraised before the initiation of negotiations. . . .”

6 language of Code § 25.1-417(2). The landowners were given the

fair market value figure of $500,000 from the pre-settlement

Savage appraisal prior to the Commissioner’s offer to purchase

and prior to the beginning of settlement negotiations. The

plain language of Code § 33.2-1023(H) also supports the logic

that the appraisal is admissible. While Code § 33.2-1023(H)

bars the admission into evidence of any amount deposited with

the trial court with a Certificate of Take, nothing in Code

§§ 25.1-204 or -417 bars the admission of the fair market value

of the entire property determination in the pre-settlement

appraisal. Had the General Assembly intended to exclude such

evidence, it could have plainly said as much.

Relying on Ryan v. Davis, 201 Va. 79, 109 S.E.2d 409 (1959)

and Duncan v. State Highway Comm’n, 142 Va. 135, 128 S.E. 546

(1925), the Commissioner argues that the Savage appraisal is

inadmissible because the offer to purchase the property and the

Certificate of Take amounts both came from that appraisal. Our

interpretation and application of the pertinent statutes in this

case is not inconsistent with our previous holdings in Ryan and

Duncan. Both of those cases focused on the inadmissibility of

offers to purchase at trial. “[O]ffers made by the condemning

party to the owner are in the nature of an attempt to compromise

and cannot be proved.” Ryan, 201 Va. at 84, 109 S.E.2d 413-14

(citing Duncan, 142 at 141, 128 S.E. at 548). Neither Ryan nor

7 Duncan addressed the admissibility of a pre-settlement appraisal

of a property’s fair market value.

The Commissioner further asserts that admission of the

Savage appraisal would be too prejudicial. We disagree. “All

relevant evidence is admissible. . . .” Va. R. Evid. 2:402(a).

However, “[e]vidence that is factually relevant may be excluded

from the jury’s consideration if the probative value of that

evidence is substantially outweighed by the danger of unfair

prejudice.” Gamache v. Allen, 268 Va. 222, 227, 601 S.E.2d 598,

601 (2004). Here, the $500,000 fair market value for the entire

property contained in Savage’s pre-settlement appraisal was

relevant evidence that was not unfairly prejudicial.

The purpose of the eminent domain procedure is to

compensate landowners for the value of the property the

Commissioner seeks to condemn.

“Compensation should be awarded upon the basis of the most advantageous and valuable use of the land, or, stated differently, its highest and best use, having regard to the existing business demands of the community or such as may reasonably be expected in the near future. Compensation must be a full and perfect equivalent for the property.”

Appalachian Power Co. v. Anderson, 212 Va. 705, 708, 187 S.E.2d

148, 152 (1972) (citing Appalachian Elec. Power Co. v. Gorman,

191 Va. 344, 354, 61 S.E.2d 33, 38 (1950)). The probative value

of the fact that the Savage appraisal valued the entire property

8 at twice the amount at which Colorito valued the property

outweighs any prejudice to the Commissioner. “Permitting the

landowner to dispute a condemning authority’s contention of a

lower value at trial . . . ‘will serve as a limited [and wholly

appropriate] check on the broad powers of the State in

condemnation proceedings.’” Frankenlust Lutheran Congregation,

711 N.W.2d at 462 (alterations in original) (quoting Thomas v.

State, 410 So. 2d 3, 4 (Ala. 1981)). “[A]s recognized by the

court in 320.0 Acres, [605 F.2d] at 825, ‘as [is] generally true

of all admissions, [the condemning authority’s precondemnation

determination of value] is not binding, and the Government is

free to explain [at trial] why it now believes its earlier

appraisal to be inaccurate.’” Id. at 461 (alterations in

original).

Accordingly, the trial court erred in finding that the

Commissioner’s statement valuing the property at $500,000 was an

offer to settle and, as such, was inadmissible at trial. Our

holding is limited to the issue of whether the eminent domain

statutes forbid admission of otherwise admissible evidence of

value like the evidence proffered in this case. Given the trial

court’s contrary holding, it found it unnecessary to address

whether the proffered evidence was admissible under the Virginia

9 Rules of Evidence. 3 We, too, find it unnecessary because we

cannot speculate concerning how the landowners may seek to

introduce evidence of value on remand. Because we hold the

trial court erred, we need not address appellant’s remaining

issues.

III. Conclusion

For the foregoing reasons, we will reverse the judgment of

the trial court and we will remand the matter for further

proceedings.

Reversed and remanded.

3 On remand for retrial, the trial court should apply applicable rules of evidence to any proffered evidence.