Court allows condemnation jury to hear early appraisal

By Peter Vieth, Virginia Lawyers Weekly – 4/16/2015

A unanimous Supreme Court of Virginia says the state highway department cannot block evidence of an early, high-dollar appraisal when it asks a jury to put a value on land taken for a road project.

The court rejected the state’s contention that the initial appraisal of the property was part of a settlement offer and therefore should be excluded at trial.

A lawyer for the landowners in the case said the court’s ruling could affect future condemnation actions by the Virginia Department of Transportation. He pointed to eight other cases where, he said, VDOT sought to block evidence of early, lower-value, appraisals.

The case is Ramsey v. Commissioner.

VDOT wanted part of the land in Virginia Beach owned by Jim and Janet Ramsey. The department hired an appraiser named Savage who said the overall property was worth $500,000.

Based on the Savage appraisal, VDOT deposited $248,707 – as an estimate of the fair value of the property to be taken – with a court clerk to begin condemnation proceedings. The Ramseys withdrew the money, as allowed under the law.

VDOT then sought to have a jury set the value of the property it was taking.

VDOT had an appraiser named Colorito perform a second appraisal. He estimated the property as a whole was worth just $250,000, and the value of the acquired portion was only $92,127, including damages.

At trial, the Ramseys argued the jury should hear the original estimate, saying it should be considered an admission by the highway commissioner.

VDOT said the early appraisal should be considered part of a now-confidential attempt to compromise during settlement negotiations.

Circuit Judge William R. O’Brien agreed with VDOT that the Savage appraisal was an offer to settle, not admissible as a party admission or otherwise.

When the jury concluded the value of just compensation was $234,032, O’Brien ordered the Ramseys to repay the state $14,675, plus interest.

The Ramseys appealed.

Offering a high-value deposit and then barring evidence of the appraisal that produced that deposit was a “bait and switch” tactic, the couple said in arguments before the Supreme Court.

“It’s happening again and again by our government to citizens who’ve done nothing wrong,” attorney L. Steven Emmert told the justices at oral argument. He termed the practice “an abusive litigation tactic.”

The high court said the early estimate should not be barred as a settlement offer.

The Savage appraisal was prepared “before the initiation of negotiations” as required by the condemnation law, the court said.

Nothing in the condemnation statutes “bars the admission of the fair market value of the entire property determination in the pre-settlement appraisal,” wrote Justice Cleo E. Powell for the court. “Had the General Assembly intended to exclude such evidence, it could have plainly said as much.”

The court also said the Savage appraisal was not overly prejudicial to VDOT.

“The probative value of the fact that the Savage appraisal valued the entire property at twice the amount at which Colorito valued the property outweighs any prejudice to the Commissioner,” Powell wrote.

The decision opens one door for landowners in condemnation cases, Emmert said.

“The effect of the Ramsey holding will not be to end VDOT’s ability to get a second appraiser, or even to use a lower figure at trial,” Emmert said Thursday. “But it will enable the landowners in those cases to show the jury what the original certification of value was.

“VDOT’s appraiser will still be able to explain the reason why the second appraisal is lower, and it’s foreseeable to me that juries may accept that explanation in some cases. But the jury will know about the first report – assuming the Commissioner uses it for his pre-condemnation statement,” Emmert said.

A spokesperson for the state attorney general’s office referred an inquiry to VDOT. A VDOT spokesperson did not immediately respond to questions about the court’s decision.