813 S.E.2d 322
Va.2018Background
- Commissioner of Highways condemned a 0.115-acre strip (plus drainage and utility easements) from Karverly, Inc., a daycare owner, to build a multi‑use trail and reconstruct Route 5. The remainder is ~5.17 acres with improvements (daycare, parking, playgrounds, fence, and landscaped buffer).
- Karverly claimed the take required installing a new buffer, moving the fence inward, and relocating playscapes, generating mitigation/adjustment costs and functional obsolescence that reduced the remainder’s value. Karverly’s expert (Gruelle) estimated $193,270 in damages to the remainder (market discount plus mitigation/contingency).
- The Commissioner’s appraiser (Call) valued acreage per square foot and opined the remainder suffered no diminution: the trail and easement had no measurable impact on the utility or value contribution of improvements.
- Trial court permitted Karverly’s expert to testify on damages but excluded the Commissioner’s expert from testifying that the take caused zero damage, reasoning the expert did not calculate a full post‑take appraisal of improvements.
- A five‑member jury awarded $29,181 for the strip taken; on residual damages three jurors awarded $167,866 and two jurors dissented (saying the after‑value offered was incorrect). Trial court entered judgment on the majority report.
- On appeal the Supreme Court of Virginia held the exclusion of the Commissioner’s expert was erroneous and reversible because it unfairly prevented presentation of a legitimately competing opinion about whether adjustment costs (and thus any diminution) were necessary.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of Commissioner’s expert testimony that remainder suffered no damage | Commissioner: expert should be admissible to contest functional obsolescence and show no diminution | Karverly: expert’s opinion inadmissible because he did not perform a full post‑take appraisal of improvements as required by the before/after formula | Court: Exclusion was error; expert opinion on no damage should have been heard — competing expert evidence was proper |
| Proper legal measure of residual damages | Karverly: damages measured by before value minus after value; must show after value calculation | Commissioner: that equation is met either by calculating before and after or by showing they are equal (no diminution) | Court: Agrees the measure is before minus after; but if an expert reasonably explains why before = after, that opinion is admissible |
| Role of adjustment/mitigation costs and functional obsolescence | Karverly: buyers would view remainder as functionally obsolete absent relocation; mitigation costs are relevant to before/after difference | Commissioner: no objective basis for functional obsolescence; thus no mitigation costs needed and no diminution | Court: Adjustment costs/functional obsolescence are legitimate issues for expert testimony and factfinder; both sides’ experts should be presented |
| Effect of excluding one expert on fairness of trial | Commissioner: exclusion prejudiced ability to present full defense and unbalanced the jury’s view | Karverly: jury’s verdict reflects rejection of some of Gruelle’s numbers; exclusion not outcome‑determinative | Court: Exclusion leveled the playing field unfairly; reversal and remand for retrial required |
Key Cases Cited
- City of Virginia Beach v. Oakes, 263 Va. 510 (establishes measure of damages for partial takings as before value minus after value)
- Revocor Corp. v. Commonwealth Transp. Comm’r, 259 Va. 389 (adjustment costs are relevant as factors in determining diminution but are not independent measures of damages)
- Bradshaw v. State Highway Comm’r, 210 Va. 66 (adjustment costs considered as affecting before/after value difference)
- Du v. Commonwealth, 292 Va. 564 (expert disputes on valuation create legitimate factual contests for the factfinder)