Virginia Supreme Court Puts an End to Condemnors’ “Sandbagging.”

For many years, condemnors have been using a nasty gimmick as a weapon against condemnees. It goes like this: First, the condemnor deposits its version of just compensation (and usually takes possession of the subject property, even though the valuation phase of the case is yet to be tried and real just comensation is yet to be determined). Then, when the case goes to a valuation trial, the condemnor shows up with a new appraiser and a new appraisal report, that expresses an opinion of value that is much lower than the deposit which by now the owner has withdrawn in order to replace the subject property. The condemnor then takes the position at trial that the “just compensation” payable to the owner is whatever the second appraiser says. If the condemnor is successful, in so persuading the jury, the owner has to pay back that portion of the deposit that exceeds the verdict. But if you have been paying attention, you probably noted that he had to spend that money for replacement property, and no longer has it. But if the owner seeks to demonstrate the insincerity of the second appraisal and put condemnor’s pretrial offer (and deposit) into evidence to rebut  condemnor’s trial evidence, condemnors take the position that the amount of the deposit was “merely” a settlement offer and as such is inadmissible.

For many years owners have been complaining that this sort of thing is unfair. Condemnor presents the first (higher) offer to a judge to get the court tom act by issuing an order of possession of the subject property before trial, but then argues that the amount of this “offer” which it solemnly presented to the court to get it to act in a manner adverse to the condemnee, is not admissible when the condemnee wants it admitted. Believe it or not, many courts have been going along with such underhanded jiggery-pokery. In California — where else? — there have even been cases where the condemnor used the same appraiser to come up with these two inconsistent opinions of value.

But the Virginia Supreme Court put an end to it in Ramsey v. Commissioner of Transportation, Record No. 140989, April 16, 2015. It held that the condemnor’s first (higher) opinion of value was not a mere “offer of settlement” but rather an appraisal of just compensation required by statute, and as such could be placed into evidence by the condemnee.

Here, the condemnor’s deposit was $248,707 for the part taken, based on its appraiser’s opinion of $500,000 for the total value of the larger parcel. At trial, however, condemnor came up with a new appraiser and a new appraisal. He opined to a value of $92,127 for the part taken and $250,000 for the entire larger parcel. The jury, having been prevented from hearing the first condemnor’s appraiser’s higher figures by the trial court, and unaware of condemnor’s higher appraisal, came in with a verdict of $234,032, leaving the owner in a hole of $14,675 which he was ordered to repay with 3% interest.

When the owner appealed, the Virginia Supreme Court reversed, holding that condemnor’s first appraisal was no mere offer but a statement of valuation required by law.

The case was remanded for retrial.

 

 

 

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