Here's the latest in a case we've been following (briefs here, and oral argument recording here).
Any eminent domain lawyer will tell you that loss of access cases can be difficult. In some jurisdictions, you have to lose all access before the court will consider you harmed. Or the courts see a difference between a loss of "direct" access versus "circuitous" access. All we know is that from an owner's perspective, access to the property can be a key element of its value.
The big question in these cases is who gets to decide: the judge or the jury? And many courts for whatever reason (fear of jury compensation verdicts, perhaps?) cut off the inquiry with bright line no-compensation rules that seem designed more to reserve for judges the critical questions than to facilitate a searching inquiry to whether the property owner has truly suffered a loss of access that should be compensated.
Today, in Hooked Group, LLC v. City of Chesapeake, No. 190764 (May 28, 2020), the Virginia Supreme Court added to the lack of coherence. The court held that the loss of access to a "major" street can be a taking, but that loss of access to a "minor" street is, well, minor and not compensable.
And on the critical question of who gets to decide whether a street is major or minor? The judge. And how is the judge supposed to decide what counts as a "major" street, and what's a minor street? Who knows.
Here's the situation. Hooked owns some vacant land in the city. There are two ways to get to the property, Callison Drive around the back, and Battlefield Boulevard in the front. To placate neighbors some of whom are politically-connected, the city prohibited Hooked from using Callison Drive to access the property.
Hooked brought an inverse condemnation claim, asserting a taking. The trial court sustained the city's demurrer (motion to dismiss for failure to state a claim, to all you modern pleaders). The court concluded that the property didn't lose all access, so too bad, owner, no taking.
The Virginia Supreme Court affirmed (but for different reasons), concluding that because the owner still had access to the "major public highway" (Battlefield Boulevard), its total loss of access of a "minor residential street" (Callison Drive) could not be a taking as a matter of law. So it's not the amount of access you lose, property owner, it's the quality of access:
Under this body of case law, the exercise of police power by the City to close access to and from Callison Drive did not, as a matter of law, deprive the Landowner of reasonable access. That is because the Landowner retained access to its property through a major public highway, namely, Battlefield Boulevard. Dennison is simply inapposite. The factfinder could conclude from the facts presented in Dennison that there was a loss of reasonable access to the property at issue. In contrast, the facts pled in the present complaint in connection with the closure of Callison Drive do not permit an inference of a loss of reasonable access to the Landowner’s property. Therefore, the trial court properly sustained the demurrer.
Slip op. at 5 (footnote omitted). Put another way, as long as you have access to a "major" street, any other loss of access isn't going to require compensation.
To us, that is a very weird formulation because the court doesn't lay out anything that a trial judge must consider when trying to decide whether a street is major or minor and seem to base it entirely on the way the property owner pleads. Which means this is a possibly a one-off decision, because property owners can allege around it.
The court placed emphasis on the property alleged to have been taken:
The Landowner did not allege that it owned a private easement of access to Callison Drive. Instead, it alleged that it possessed an easement for direct access “as a property owner abutting Callison Drive.” The Landowner alleged that the Callison Drive entrance “was necessary to serve as a secondary ingress or egress” to the property, and that the closure of the Callison Drive entrance “has had a substantial negative effect on the value and highest and best use of [its] property.”
Slip op. at 2. Having now read this passage several times, we can't make heads or tails of what the court might mean. What does maybe having a "private easement" have to do with it (versus an "easement for direct access")? So in light of this decision, does a property owner now only have to allege that Callison Drive is a "major" street to defeat a demurrer? That's what we'd do.
The court also seemed to link the major/minor street distinction on certain magic words:
Here, the Landowner’s lost access to Callison Drive, although qualifying as a direct loss of access, is not, as a matter of law, “a material impairment of direct access to property” within the intendment of Code § 25.1-100. The Landowner did not plead any facts that would indicate that the closure of access to and from Callison Drive was of real importance or great consequence or that it was significant or essential.
Slip op. at 8. Putting aside for the moment the court's inexplicably overlooking the fact that the owner pleaded the "significant" and "essential" nature of access to Callison Drive ("…Callison Drive was necessary to serve as a secondary ingress or egress to support the property’s development to its highest and best use," which seems pretty "essential" in our view), the court has now given complaint drafters the magic words they need to avoid demurrers: "my loss of access was of real importance and great consequence and was significant or essential."
Two good things come out of this opinion, however.
First, the court rejected the argument that the city's invocation of the police power addressed the takings issue. Of course the city has the power to regulate things in to promote the public health, safety, and welfare. But that doesn't answer the taking question.
Nevertheless, the exercise of that power can constitute a taking under certain circumstances. The exercise of the police power must be balanced with the right landowners have to gain access to public streets from their property
Slip op. at 4. That was the position argued by an amicus brief we helped draft, so it is good to see that recognition.
Second, the court rejected the trial court's analysis that focused on total versus partial loss. The Supreme Court concluded that a partial loss of overall access might be a taking (provided that loss is via a "major" road):
Although we affirm the circuit court’s decision, the circuit court swept too broadly in its reasoning. The circuit court reasoned that government effects a taking only if there is “a complete extinguishment and termination of all access” from a property to public roads (“A necessary prerequisite to have the trier of fact consider whether or not the property has been damaged is a complete extinguishment and termination of all access to an abutting road.”). However, a taking can occur even if there is not “complete extinguishment” of all access, if the remaining access is unreasonably restricted. Dennison, 231 Va. at 246.
Slip op. at 5 n.2.
This decision just leaves us with the same conclusion that we had before: when faced with loss of access cases, courts are more than willing to cut off a jury's inquiry, preferring instead of substitute a judge's view of whether the owner really has lost anything.
More here from the property owner's appellate lawyer ("This last aspect of the case is an enormous win for condemnors. In the past, issues like this were typically matters for the factfinder. That was the ruling in Dennison. The Supreme Court has rarely taken on the task of finding what remaining access is reasonable, but it does so today.")
Hooked Group, LLC v. City of Chesapeake, No. 190764 (Va. May 28, 2020)
