SUPREME COURT OF VIRGINIA DENIES LANDOWNER’S ATTEMPT TO CLAIM DAMAGES BASED ON SPECULATIVE PAD SITE

The landowner had previously developed site plans for the commercial development of about 5.5 acres of the subject property that front on Route 15. The plans called for development of the property into 4 one-acre pad sites. While the plans had been submitted to the County over 10 years before the project, the County had never approved them. In fact, a significant portion of the property was located in a flood plain, which meant that the owner would need to obtain County approval to build there and may be required to construct a retaining wall to do so. In addition, the County had imposed other conditions that the owner had not yet met.

During discovery, the landowner disclosed that he intended to testify that the project would eliminate one of the planned pad sites, resulting in damages of $545,000. VDOT objected to this, arguing that a landowner may not rely on the loss of a non-existent building site to claim damage to the residue. The trial court agreed and forbade the owner from testifying to that effect. It also declined to admit the site plans into evidence. Nevertheless, the landowner testified that the taking would damage his property in the amount of $545,000, which was 25% of his estimate of the value of the acreage fronting on Route 15.

The commissioners all awarded the same amount for the taking, $107,131, but split on the amount due the owner for damages to the remainder. The majority awarded $350,000 in damages, but the minority only awarded $125,000 in damages. VDOT filed exceptions to the report, arguing that the landowner had impermissibly testified about damages based on the elimination of the fourth pad site. The trial court agreed and struck the landowner’s testimony and, because no other evidence of damages had been introduced, also struck the damages award. The landowner appealed, arguing that the trial court should have admitted the site plans into evidence and should not have struck the testimony about damages.

The Supreme Court of Virginia affirmed the trial court’s rulings. As to the site plan issue, it noted that such plans can be relevant to the determination of damages. The court noted that the general rule in determining damages is that “present and future circumstances which actually affect the value of the property at the time of taking may be considered, but remote and speculative damages may not be allowed.” Thus, site plans can be relevant “if a prospective willing buyer would recognize the probability of site plan approval in the near future when determining market value.” A trial court thus has discretion as to whether to admit such plans into evidence. The court found that the trial court had not abused its discretion in refusing to admit the site plans here because the County had not approved them, a number of conditions on approval imposed by the County had not been met by the landowner, the landowner had not obtained approval to build in a flood plain, and no entrance to the proposed development had been approved. Accordingly, the plans were too speculative and contingent to be admitted.

The court also ruled that the trial court properly struck the landowner’s testimony about damages. It held that the landowner’s testimony was necessarily rooted in the loss of one of the four planned pad sites because the amount of damages was the same as he had previously calculated based on the loss of the site and he testified that he arrived at the figure by estimating that the remainder was damaged by 25%. The loss of the pad site was, in turn, dependent on site plans that were, as noted above, contingent and speculative. The testimony was therefore too speculative and contingent to be admitted.

The case is styled Palmyra Associates, LLC v. Commissioner of Highways and the opinion can be found here: http://courts.state.va.us/opinions/opnscvwp/1191680.pdf.