The Virginia Supreme Court clarified how courts should review inverse condemnation claims in its recent decision, AGCS Marine Insurance Company v. Arlington County, 293 Va. 469 (2017). In addition to providing a detailed framework for judicial review of eminent domain/inverse condemnation cases, the Court also clarified that landowners can assert a claim for damages relating to personal property. This decision potentially provides landowner/claimants with more a more extensive award while similarly imposing additional liability on state and local governments.
In the case, two plaintiff insurers of a Harris Teeter in Arlington filed suit against Arlington County alleging a claim of inverse condemnation after the County’s sewer line malfunctioned, resulting in $1.8 million in claimed damages. Included in the damages was the loss of groceries.
The Court overturned the lower court’s decision to deny the insurers the ability to amend their original complaint – holding that they may have a viable claim for inverse condemnation.
Inverse condemnation defined
As discussed in AGCS, the right to be compensated for the government’s taking or damaging of private property for a public use is fundamental. In the “typical” eminent domain scenario, the government initiates a taking for a public purpose, such as the widening or improvement of local roads. Landowners impacted by the taking must be awarded just compensation – or fair market value for the portion of their property taken.
In inverse condemnation, the individual (rather than the government) initiates a claim for just compensation. Individuals with property that has been damaged/taken in some way must show that the government action taken was for “public use.”
The AGCS court clarified that the right of a party alleging inverse condemnation is not absolute. Tortious actions (i.e. negligence) on behalf of the government that result in the damage of private property are generally not recoverable. However, the Court opined that if a property owner can show that the government made a “deliberate and calculated decision to proceed with a course of conduct in spite of a known risk, just compensation must be paid.” Accordingly, the ability to demonstrate intentional acts on behalf of the government is critical.
The government must maintain roads and keep communities safe. The AGCS decision demonstrates that such projects may bring potential liability if not planned/executed properly.
What is personal property and how does the AGCS decision overall impact the rights of government and private property owners?
Eminent domain law clearly provides the right to recover for loss/damaging of “real property” – or fixed property such as land or buildings. However, the ability to recover for “personal property” or movable property – such as the groceries in the AGCS case, was typically not as defined. The AGCS clarified that the right to compensation absolutely extends to personal property.
The Court’s holding on personal property potentially widens the scope of what is potentially recoverable under an inverse condemnation claim. For example, a claim filed based on the government’s intentional acts for public use (i.e. damage to certain homes as a result of a state road project) – may arguably include the actual home but the personal property (i.e. personal effects such as books) included in the home. Accordingly, damages sought and ultimately awarded may be significantly higher.
For state and local governments, this results in a potential increase in liability. Demands on local budgets could become more intense if larger demands for damages are filed (and subsequently awarded). It is possible that claims for judgments awarding damages to businesses with expensive personal property (i.e. equipment at an electronics store) could severely impact the ability of the government to execute its regular budgetary functions.
That being said, the AGCS decision makes equally clear that eminent domain/inverse condemnation law is complex and fact-intensive. Failure to properly initiate a taking/damaging on the government side can result in significant exposure to liability. Similarly, failure by a landowner to properly plead or demonstrate the many requirements in an inverse condemnation claim may result in its dismissal by the courts. Accordingly, those impacted on both sides should proceed with caution and in an informed manner when navigating eminent domain claims.
For more information about inverse condemnation, please contact us
ABOUT THEODORA STRINGHAM
Theodora Stringham focuses her litigation practice on providing diligent attention to clients’ needs. She distills complicated and contentious issues into a succinct and persuasive manner for negotiation and trial presentation.
Theodora litigates complex land use issues, including but not limited to, eminent domain/condemnation matters, zoning disputes, access, and valuation concerns. She has served as a fee counsel for the Virginia Department of Transportation and has also provided representation to individual landowners and developers alike.
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