Wolfe v. VEPCO

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
VIRGINIA ELECTRIC AND POWER COMPANY
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.
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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
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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.
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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
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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.
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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.
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