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.
In a case we posted about briefly here, a Virginia trial court viewed the required "statement" as a "settlement offer," and prohibited the property owner from both telling the jury about the statement, and cross-examining the state's appraiser about it. Even though the state's initial statement of just compensation was $246,292, and later, its appraiser at trial testified that just compensation was only $92,127. Whoa!
Earlier this week, we and our Owners' Counsel of America colleagues filed this amicus brief in support of the property owners' arguments that the jury was entitled to be told about the state's earlier statement of just compensation, and to cross-examine the state's appraiser about why the state changed its tune.
The background of the case is set out succinctly at pages 2-5 of the property owners' Petition for Appeal, and this newspaper report on the case has more. In short, the state presented to the property owners one appraisal before trial, but after switching appraisers, introduced a much lower number (less than half) at trial. The trial court tied the property owners' hands after it concluded that the statutory statement was a settlement offer. And we all know offers of compromise are not admissible. 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 lower.
The Owners' Counsel brief argues:
If affirmed, the Commissioner’s actions and the circuit court’s ruling will not only work injustice on the Ramseys, but will serve as the template for future governmental conduct and systematic undercompensation. Owners like the Ramseys, whose property was taken prior to the determination of just compensation at trial, will be forced to yield to the condemnor’s demands or face a trial at which the condemnor will present a significantly lower value and the jury will not be permitted to hear the condemnor’s prior, inconsistent statement. In this case, the circuit court instructed the jury to make its decision regarding the value of the Ramseys’ property without ever knowing the Commissioner prior, inconsistent statement of value that the property was worth twice as much as what the Commissioner told the jury. Many owners placed in such a position will have no choice but to surrender in the face of such undue pressure and fundamental unfairness.
Br. at 2-3. The brief makes several points:
- An eminent domain action isn't your usual civil case: "An owner in an eminent domain action has done nothing wrong, broken no promises, and committed no negligence; he or she is mired in litigation solely because their property is coveted by another." As the Virginia Supreme Court has noted, eminent domain is no ordinary proceeding. See Trout v. Commonwealth Transp. Comm'r of Virginia, 400 S.E.2d 172, 174 (Va. 1991). See also Norfolk & W. Ry. Co. v. Lunchburg Cotton Mills Co., 376 S.E.2d 146 (Va. 1907) (power of eminent domain is "more harsh and peremptory in its exercise and operation than any other [government power].").
- The condemnor has the duty to to justice, and not merely keep just compensation low. For example, the California Supreme Court recognized that "[t]he duty of a government attorney in an eminent domain action, which has been characterized as 'a sober inquiry into values, designed to strike a just balance between the economic interests of the public and those of the landowner', is of high order. 'The condemnor acts in a quasi-judicial capacity and should be encouraged to exercise his tremendous power fairly, equitably and with a deep understanding of the theory and practice of just compensation.'"). City of Los Angeles v. Decker, 135 Cal. Rptr. 647 (Cal. 1977).
- Finally, the statutory statement of just compensation is not a confidential offer of compromise which is excludable under the rules of evidence. Rather, it is a statement, required by statute, that is a jurisdictional prerequisite to the circuit court having authority to consider an eminent domain case. See United States v. 320.0 Acres of Land, 605 F.2d 762 (5th Cir. 1979), a case in which the Fifth Circuit 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.
Unfortuntely, the practice of condemnors lowering their appraisals for trial is not limited to Virginia, and it appears to be spreading. Hopefully, the Virginia Supreme Court will put a stop to it, and at least allow the jury to consider all the relevant evidence.