ANALYSIS OF JUNE 15, 2017 SUPREME COURT OPINION

(Posted June 15, 2017) On the 802nd anniversary of the sealing of Magna Carta, we get a single opinion from the Supreme Court of Virginia, and that opinion actually cites Magna Carta. In AGCS Marine Insurance v. Arlington County, the justices take up a claim of inverse condemnation.

The insurer is the subrogee of a grocery store that sustained $1.8 million in losses when a county sewer backed up. The grocer’s primary claims were for the loss of its stock, plus cleanup costs. After paying the claim, the insurer sued the county, claiming that the damage arose from a public use. It cited the self-executing provisions of Art. I, §11 of the Constitution of Virginia.

The trial court looked at the suit and concluded that it stated nothing more than a garden-variety tort claim. Since condemnation (and hence inverse con) doesn’t apply to tort claims, the court sustained a demurrer and dismissed the suit. It also rejected a proposed amended complaint that would have added more detail.

The justices today unanimously affirm in part, but reverse and remand on the amendment issue. They agree that under Virginia’s law of eminent domain, the original suit didn’t state a claim for inverse con. That’s because the suit asserted that the damage merely came as a result of the sewer backup. To state an inverse-condemnation claim, you have to do more, and assert that the damage was the purpose of the public use, or at least a probable consequence of it.

While the original complaint didn’t meet that standard, the justices find today that the proposed amended complaint did. It contained allegations that the county knew that backups would occur on private property as a result of a diversion from another sewage-treatment plant, and that it was “most probable that a sewage backup would occur.” That, the Supreme Court rules, is enough to state a claim for which relief can be granted.

But wait; there’s more. Justice Kelsey’s opinion goes on for another ten pages to analyze a separate legal issue: Can you state an inverse-con claim for taking of or damage to personal property? Previous caselaw indicates that the answer is yes, but the county argued that that caselaw was limited to fixtures – personal property that had become annexed to, and hence a part of, the realty.

While the court has repeatedly explained the test for whether a given item is a fixture or not, you have to admit that a box of cereal and a bag of potatoes aren’t fixtures. The whole point of the grocer’s stocking them is that he wants them out the door as soon as possible.

The court rules today that personal property is indeed the proper subject of condemnation proceedings, and it doesn’t matter whether it’s a fixture or not. On remand, the insurer will get to press its claim, and if it can prove that the county knew or should have know that its sewer-plant diversion was likely to produce a result like this, the county might have to pay some or all of that claim.