Ramsey v. Commissioner of Highways

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
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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
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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
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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.
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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. . . .”
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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
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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
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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
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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.
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