Wolfe v. VEPCO

• Court: Supreme Court of Virginia
• Decided: September 14, 2012
• Docket: 112113
• Status: Published

Opinion

Present: Kinser, C.J., Lemons, Millette, Mims, and McClanahan, JJ., and Lacy and Koontz, S.JJ.

TIMOTHY BYLER

v. Record No. 112112

VIRGINIA ELECTRIC AND POWER COMPANY

OPINION BY SENIOR JUSTICE LAWRENCE L. KOONTZ, JR. September 14, 2012

ROGER D. WOLFE, ET AL.

v. Record No. 112113

FROM THE CIRCUIT COURT OF FAUQUIER COUNTY Jeffrey W. Parker, Judge

In these appeals we consider whether Article I, Section

11 of the Constitution of Virginia provides for a cause of

action by a landowner for inverse condemnation when the

allegation of the complaint is that the landowner's property

has been "damaged" by a diminution in value resulting from a

public utility's construction and operation of an electrical

transmission line for public use on nearby property.

BACKGROUND

These cases were consolidated for trial and arise from

substantially similar facts. On May 19, 2011, Timothy A.

Byler filed in the Circuit Court of Fauquier County a

complaint for declaratory judgment against Virginia Electric and Power Company ("VEPCO") alleging that he was the owner of

"[a] developable tract of land consisting of 1 acre with

improvements" at 2303 Courthouse Road in Catlett, Virginia.

Byler alleged that as the result of the construction by VEPCO

of 230 kilovolt electric transmission lines "[o]n land

abutting and in proximity to" Byler's property, the property

was "less valuable, marketable and desirable" and "as a whole

suffered and suffers a diminution in value." 1 Byler further

alleged that the property was no longer suitable for its

former "highest and best use," which was as a residence.

Pursuant to Code § 8.01-187, Byler requested that the court

find the damage constituted an inverse condemnation under

Article I, Section 11 and empanel a jury of commissioners to

determine just compensation and other relief as provided for

in Code § 25.1-420.

Also on May 19, 2011, Roger D. Wolfe and Kathleen E.

Wolfe filed a substantially similar complaint against VEPCO

alleging that they were the owners of "[a] developable tract

of land consisting of 2.35 acres with improvements" at 2381

Courthouse Road in Catlett. As Byler had alleged in his

1 The construction of the lines was pursuant to a certificate of public convenience and necessity issued by the State Corporation Commission ("SCC") to VEPCO on March 10, 2010, and was part of a larger project for the construction of a 500 kilovolt transmission line from Warren County to Loudoun County approved by the SCC in 2008.

2 complaint, the Wolfes alleged that the construction of the

transmission lines caused a diminution in value of their

property because it was not possible to "buffer their prime

developable site and home from [the transmission lines']

blighting effects." They further alleged that the proximity

of the transmission lines to their property created a "strong

negative resistance" in the market for "using [their] property

as a residence." The Wolfes sought an award of damages for

inverse condemnation under Code §§ 8.01-187 and 25.1-420. 2

VEPCO filed identical demurrers and supporting briefs to

both complaints, asserting that the complaints failed to state

a claim for inverse condemnation because no property right

belonging to Byler and the Wolfes was actually taken or

damaged by the construction of the transmission lines, and

further that the complaints did not allege that the properties

had been deprived of all economic value as a result of the

placement of the lines in proximity to the properties. See,

e.g., City of Virginia Beach v. Virginia Land Investment

Ass'n., 239 Va. 412, 416-17, 389 S.E.2d 312, 314 (1990);

2 Both complaints also asserted a claim for monetary damages for common law nuisance. VEPCO contended that this claim was barred by the doctrine of legislative authorization. See, e.g., State Hwy. & Transp. Comm'r v. Lanier Farm, Inc., 233 Va. 506, 510-11, 357 S.E.2d 531, 533-34 (1987). The circuit court sustained VEPCO's plea in bar and dismissed the nuisance claims. Byler and the Wolfes have not appealed the dismissal of their separate counts for common law nuisance.

3 Commonwealth v. County Utilities Corp., 223 Va. 534, 542, 290

S.E.2d 867, 872 (1982). Relying on Lambert v. City of

Norfolk, 108 Va. 259, 266, 61 S.E. 776, 778 (1908), VEPCO

further contended that "diminution in value alone cannot be

the basis of an inverse condemnation claim."

Byler and the Wolfes responded to the demurrers by

asserting that their complaints "put[] VEPCO on notice as to

the nature and character of [their] claim[s]" for inverse

condemnation and, thus, were sufficient to survive a demurrer.

They maintained that the "blighting effects" of the

transmission lines "could be anything from noise, smoke, or

dust to the interference with light, air, or view or one of

the other appurtenant rights to property," which would

constitute a physical interference with those rights and thus

constitute "damage" under Article I, Section 11. Accordingly,

they contended that inquiring "into the nature of the

blighting effects" was a disputed issue of fact to be

developed though a bill of particulars or at trial.

The circuit court conducted a hearing on VEPCO's

demurrers on August 26, 2011. The parties reiterated the

contentions previously made in their pleadings. The court

stated its rationale for sustaining the demurrers, which it

subsequently adopted by reference in final orders entered at

the conclusion of the hearing. The court opined that there

4 was "no taking at all," but "simply . . . the allegation of

blighted property." Accordingly, because the complaints did

not allege "that the entire property has been rendered

useless" and "[t]he property can still be used," there was no

cause of action for inverse condemnation on the facts as

alleged. The court further opined that even if given the

opportunity to amend, the complainants could not allege facts

to support an allegation that their property had lost all

economic value. Accordingly, the court sustained the

demurrers with prejudice, rather than granting leave to amend. 3

We awarded appeals to Byler and the Wolfes to address the

following assignment of error:

The circuit court erred by holding that a damaging under Article I, Section 11 of the Constitution of Virginia only occurs when a property has been rendered totally useless by a condemnor’s project.

DISCUSSION

As relevant to the issue raised in these appeals, Article

I, Section 11 of the Constitution of Virginia provides, "no

person shall be deprived of his . . . property without due

process of law [and] the General Assembly shall not pass . . .

any law whereby private property shall be taken or damaged for

3 Although counsel for Byler and the Wolfes indicated during a colloquy with the circuit court that he "can allege" the property had been deprived of all economic value, error has not been assigned to the court's decision not to grant leave to amend.

5 public uses, without just compensation." (Emphasis added.)

Where a property owner believes that his property has been

taken or damaged within the meaning of this Constitutional

provision and compensation has not been paid, the remedy

afforded by statute is for the property owner to file a

complaint for declaratory judgment to determine the

compensation to be paid. Code § 8.01-187.

Byler and the Wolfes contend that the circuit court erred

by concluding that when, as here, there is no physical taking

of property through a government-authorized act, an inverse

condemnation will be found only where the property has been

deprived of all economic use. In applying this standard to a

damage claim, they contend that the court essentially applied

a standard that "erased the 'damage' clause from the

Constitution."

Although VEPCO does not concede that the circuit court's

application of the "deprived of all economic use" standard to

these cases was error, neither did it offer any defense of

that standard in briefing these appeals. Rather, VEPCO

responds that even if it is assumed that the court applied the

wrong standard, its judgment may nonetheless be upheld under

"a right result, wrong reason" analysis because VEPCO further

argued below that the complaints failed to state any damage to

a property right, but only asserted an economic loss. See

6 Shipman v. Kruck, 267 Va. 495, 509, 593 S.E.2d 319, 327

(2004); see also Deerfield v. City of Hampton, 283 Va. 759,

767, 724 S.E.2d 724, 728 (2012); Miller v. Highland County,

274 Va. 355, 372, 650 S.E.2d 532, 540 (2007).

The "deprived of all economic use" standard is derived

from claims that a regulatory action by the government has

resulted in a "categorical taking" which results in "a

deprivation of all economic use of [the] property" without the

acquisition of any right in the property by the government.

Board of Supervisors of Culpeper County v. Greengael, L.L.C.,

271 Va. 266, 287, 626 S.E.2d 357, 369 (2006). "[A] property

owner may seek compensation for a categorical taking only when

the state is exercising regulatory power over the 'bundle of

rights' that the owner acquired when first obtaining title to

the property." City of Virginia Beach v. Bell, 255 Va. 395,

400, 498 S.E.2d 414, 417 (1998). Thus, we agree with Byler

and the Wolfes that this standard has no application to a

claim for damage to an owner's property that is not the result

of a regulatory restriction on the owner's property, but

instead results from the public use of land in proximity to

the owner's property.

However, we also agree with VEPCO that the circuit

court's error in referencing this standard does not end the

inquiry, because the court was presented with the alternative

7 argument that the complaints did not allege an actual taking

of the property or damage to any appurtenant property right,

but only asserted an economic loss resulting from "the

infringement on [that] 'beneficial use and enjoyment' of the

[p]roperty." If VEPCO is correct that a complaint for inverse

condemnation must allege an actual taking of the property,

physical damage to the property itself, or interference with a

property right, and that the complaints in these cases did not

do so, then, as we are in an equal position with the court

below to judge the sufficiency of the pleadings and will do so

de novo, Lee v. City of Norfolk, 281 Va. 423, 432, 706 S.E.2d

330, 334 (2011), the court's judgment may be upheld on that

basis. See Perry v. Commonwealth, 280 Va. 572, 581-82, 701

S.E.2d 431, 436-37 (2010)(holding that if the factual record

supports the determination, a judgment may be upheld on any

basis apparent in the record).

Byler and the Wolfes assert that "an actual physical

invasion of the owner's real estate" is not required to

establish that the property has been damaged by a physical

taking of adjoining land. Tidewater Ry. Co. v. Shartzer, 107

Va. 562, 569, 59 S.E. 407, 410 (1907). Rather, they contend

that Shartzer, Lambert, and City of Lynchburg v. Peters, 156

Va. 40, 49, 157 S.E. 769, 772 (1931), all stand for the

principle that the "damage" clause of Article I, Section 11 is

8 merely a waiver of sovereign immunity which subjects the

Commonwealth, or others authorized to exercise the

Commonwealth's power of eminent domain, to be "liable in the

same manner as a private party under common law."

Byler and the Wolfes concede that Shartzer, Lambert, and

Peters all included a requirement that "the common law at

[that] time restricted actions for damages [against private

parties] to those physically impacting a property or

interfering with a right appurtenant to property." They

contend, however, that in the time intervening between Peters,

the last case to address directly this issue, and the present,

the common law has been greatly expanded to include claims for

injury to property against private parties based solely on

economic considerations. 4 Thus, they contend that we should

now recognize that a property can be "damaged" within the

meaning of Article I, Section 11, when a public use, such as

the construction and operation of the electrical transmission

lines at issue here, on adjacent or proximate property results

in a diminution of value of their property by interfering with

4 Byler and the Wolfes principally rely upon Foley v. Harris, 223 Va. 20, 286 S.E.2d 186 (1982), to support their contention that a private party may be held liable for monetary losses that result from "aesthetic" damage to property. This reliance is misplaced. The basis for liability in Foley arose from the violation of a restrictive covenant, not a common law tort.

9 the use and "quiet enjoyment" of their property. We decline

to make such a sweeping revision to the law of eminent domain.

First, we do not agree with the contention that the

function of the "damage" clause of Article I, Section 11 is to

waive sovereign immunity for the Commonwealth and its proxies

in order to subject them to liability as private parties for

any damage asserted by a property owner that might conceivably

arise from a public use of land adjoining or proximate to the

property allegedly damaged. Rather, Article I, Section 11 has

always been interpreted as a waiver of immunity for having to

pay compensation for the actual taking of property or damaging

of the property or a property right. As we explained in

Richmeade, L.P. v. City of Richmond:

Taking or damaging property in the constitutional sense means that the governmental action adversely affects the landowner's ability to exercise a right connected to the property. Thus, an action for inverse condemnation is an action seeking redress for the government's action in limiting property rights the landowner holds. In that regard, the act giving rise to the [claim] is not an act aimed at the property, but rather an act that limits the landowner's ability to exercise his property rights without paying the landowner for that limitation.

267 Va. 598, 602-03, 594 S.E.2d 606, 609 (2004)(emphasis

added; citations omitted); see also Board of Supervisors v.

Omni Homes, Inc., 253 Va. 59, 72, 481 S.E.2d 460, 467 (1997),

overruled in part on other grounds as stated in Greengael, 271

Va. at 287 n.12, 626 S.E.2d at 369 n.12; Peters, 156 Va. 40,

10 49, 157 S.E. 769, 772 (1931). Thus, the long-standing rule in

Virginia has been that a "partial diminution in the value of

property [is] compensable only if it results from dislocation

of a specific right contained in the property owner's bundle

of property rights." Omni Homes, 253 Va. at 72, 481 S.E.2d at

467 (citing Lambert, 108 Va. at 268, 61 S.E. at 778-79); see

generally Livingston v. Virginia Dep't. of Transp., 284 Va.

140, 155-57, 726 S.E.2d 264, 273-74 (2012) (distinguishing

physical damage to property from damage to an appurtenant

property right in the context of an inverse condemnation).

Byler and the Wolfes did not allege in their complaints

that the presence of the transmission lines was interfering

with their ability to exercise any specific property right.

Rather, they alleged that their properties were "less

valuable, marketable and desirable" because they were no

longer suitable for their "highest and best use" as

residential properties. Article I, Section 11 " 'does not,

however, authorize a remedy for every diminution in the value

of property that is caused by a public improvement.' "

Shartzer, 107 Va. at 571, 59 S.E. at 410 (quoting Eachus v.

Los Angeles Consol. Elec. Ry. Co., 37 P. 750, 751 (Cal. 1894);

see also Lambert, 108 Va. at 267, 61 S.E. at 778 (quoting

Shartzer with approval). There must be some " 'damage to the

property itself, [that] does not include a mere infringement

11 of the owner's personal pleasure or enjoyment. Merely

rendering private property less desirable for certain

purposes, or even causing personal annoyance or discomfort in

its use, will not constitute the damage contemplated by the

constitution.' " Shartzer, 107 Va. at 571, 59 S.E. at 410

(quoting Eachus, 37 P. at 751). Proximity to a public use of

land may "render the property less desirable, and even less

salable; but this is not an injury to the property itself, so

much as an influence affecting its use for certain purposes."

Id. at 572, 59 S.E. at 410.

Accordingly, we hold that the complaints in these cases

did not, and could not, state a cause of action for

declaratory relief for inverse condemnation when the sole

damage alleged was a diminution in value arising from the

public use of proximately located property. Thus, while the

circuit court applied the wrong standard in reviewing the

pleadings, its judgment sustaining the demurrers was

nonetheless correct under the proper standard.

CONCLUSION

For these reasons, we will affirm the judgment of the

circuit court sustaining VEPCO's demurrers to the complaints

for declaratory judgment.

Record No. 112112 - Affirmed. Record No. 112113 - Affirmed.