The Virginia Supreme Court today came back with an opinion in Ramsey v. Commissioner of Highways, No, 140929 (Apr. 16, 2015), a eminent domain case in which we filed an amicus brief in support of the property owner.
Under Virginia's condemnation procedures, as a prerequisite to a court exercising jurisdiction over an eminent domain action, a state condemning agency must as an initial step present to the property owner a statement of "the amount which [the condemnor] believes to be just compensation," and must include an appraisal if an appraisal is required:
The state agency concerned shall provide the owner of real property to be acquired with a written statement of, and summary of the basis for, the amount it established as just compensation, and, if an appraisal is required or obtained, such written statement and summary shall include a complete copy of all appraisals of the real property to be acquired that the state agency obtained prior to making an offer to acquire or initiating negotiations for the real property.
The DOT took a portion of the Ramseys' property for a highway project, and presented them with the required statement, which valued their land at $246,292. At trial however, a new DOT appraiser opined the taken land at $92,127. The trial court viewed the earlier required "statement" as a settlement offer, and prohibited the property owner from both telling the jury about it or cross-examining the state's appraiser. The jury never got to hear about the earlier, lower appraisal, nor the reasons why the state's trial argument of just compensation was radically different, and rendered a valuation verdict that required the property owners to pay the DOT $14,675 plus 3% interest from the date which they withdrew the deposit.
The Virginia Supreme Court disagreed, and concluded that the statement wasn't a settlement offer because it must be made "before initiating negotiations." The court agreed with the logic of the Fifth Circuit's opinion in United States v. 320.0 Acres of Land, 605 F.2d 762 (5th Cir. 1979), which held that a similar statement of just compensation, required by the federal relocation act (on which the Virginia statute is modeled), was not a settlement offer and the trier of fact was entitled to hear about it and why the government's estimate changed.
The court rejected the DOT's contention that this evidence would be too prejudicial. The statement was relevant, and any prejudice which would come the DOT's way was outweighed by the constitutional imperative and the ability of the DOT to explain to the jury why its view of just compensation changed so dramatically. The court wrote, "'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.'" Slip op. at 9 (quoting Frankenlust Lutheran Congregation, 711 N.W.2d at 462 (alterations in original) (quoting Thomas v. State, 410 So. 2d 3, 4 (Ala. 1981))).
More on the opinion here ("Beach couple fighting VDOT wins Supreme Court appeal") and here from our Owners' Counsel of America colleagues on whose behalf we filed the amicus brief.
Hopefully, the Virginia Supreme Court's opinion will add to the growing trend of courts viewing tactics such as this with disfavor. See, for example, this recent similar decision by the Mississippi Supreme Court. As the Fifth Circuit noted in 320.0 Acres, "the Government [should] not [be] completely free to play fast and loose with landowners telling them one thing in the office and something else in the courtroom." 320 Acres, 605 F.2d at 825.