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He saw his land go, and now VDOT wants dough

The Virginian-Pilot
February 8, 2014
By Dave Forster

VIRGINIA BEACH

Imagine losing land to the state so it can build a road, then being told to return $158,000 because, on second look, the government says the property was worth less than it thought.

That's the scenario facing James and Janet Ramsey in their legal fight against the state highway department. The case, which goes to trial Monday in Circuit Court, highlights what eminent domain lawyers say is a common practice by VDOT to pressure property owners into settling.

What VDOT does is allowed by law. James Ramsey, a retired Virginia Beach city employee, called it appalling.

"You can't buy something and go back five years later and say you want half your money back," said Ramsey, 65. "For them to pull a trick like that is just outrageous."

Paul Terpak, an eminent domain lawyer in Northern Virginia who is not involved with the case, said VDOT wants to create risk for landowners to discourage them from going to court for more money. He said that he's had VDOT return with lower second appraisals often in cases with his clients, and that it has happened more frequently in recent years.

"But only VDOT," said Terpak, who also deals regularly with Virginia Dominion Power, the state's largest power company. "I don't have this problem with any other entity besides VDOT."

Richard Bennett, VDOT's director of the Right of Way and Utilities Division, said the agency tries to balance being a good steward of public dollars and sufficiently compensating property owners.

"It truly is not a tactic, at least from my viewpoint, that we use," he said.

Here is what happened in the Ramsey case:

VDOT needed about four-tenths of an acre from the couple to build on- and off-ramps between Interstate 264 and London Bridge Road.

The land has been in Janet Ramsey's family for a century. She and her husband have two houses on portions that were not taken; they have lived in one home for 40 years and are renovating the other to rent it.

When negotiations failed, VDOT took that four-tenths of an acre in 2009 through a process that required it to deposit with the court what it estimated to be the fair value of the property, plus damages: $248,707.

The Ramseys no longer held title to the land. They withdrew the deposit, invested it, and kept asking for what they believed was just compensation. That is also allowed by law.

Three years later, as the case headed to trial, VDOT's attorney had a different appraiser look at the land. That review said that the property was worth only $92,127, and that there were no damages to pay.

Later, at a meeting with VDOT representatives, James Ramsey said, an attorney for the agency looked across the table and told him:

"We don't expect you to give all the money back, but I'd like you to write me a check for 'x' amount of dollars today."

Tamara Rollison, a spokeswoman for VDOT, said she could not discuss specifics of past negotiations but said, "We have never requested that the Ramseys send us a check for the difference."

Ramsey said he likely would have settled by now had he not been asked to return some of VDOT's original deposit for his land. The money is in an investment he can't easily withdraw, and he and his wife would have to get a loan if they were forced to pay the difference, he said.

Bennett said large swings in appraised values of a property can result from a more detailed look at its development potential when the case is headed to court. When that happens, VDOT might allow the former owners to walk away without repaying the difference if they quit fighting the condemnation - to a point, he said.

That offer was withdrawn in the Ramsey case after it began running up legal bills for the state, Bennett said. Through last spring, VDOT had incurred about $35,000 in expenses with its outside counsel in the case, according to its invoices.

Jeremy Hopkins, one of Ramsey's attorneys at the Norfolk law firm Waldo & Lyle, noted that the majority of property owners accept VDOT's first offer for their land. He said Bennett's explanation means many are doing so without a sufficiently detailed appraisal by the state.

"If that level of detail is important enough for the courtroom, it should be important enough for the owners who are signing over their properties outside of the courtroom," Hopkins said.

If something is overlooked on the front end, VDOT is essentially asking owners to pay for its mistake, he said.

The firm of Waldo & Lyle has eight other clients who have challenged VDOT's first appraisal and drawn from the state's deposited amount, only to see the agency return with a significantly lower estimate.

Dorsey Rohrbaugh says the land taken from his family in Prince William County, plus damages, was worth in the neighborhood of $8.5 million.

The state's first appraisal said $3.9 million. The Rohrbaughs withdrew the deposit, challenged for more, and the state returned with a subsequent appraisal of $2.1 million.

The two sides continued to negotiate, and Rohrbaugh said they agreed to meet at $5.5 million.

Here's another twist in these cases: Attorneys for the property owners cannot introduce the state's first appraisals as evidence at trials. Nor can they say how much the state deposited when it took the land. State law forbids it.

So if Rohrbaugh had taken his chances with a jury - in hopes of having it award him the full $8.5 million he thought his commercially zoned property was worth - those jurors deciding the value of his land could not know about the state's higher initial estimate.

"We left at least a million on the table because they could get by with that arm-twisting second appraisal," Rohrbaugh said of VDOT.

Terpak, the Northern Virginia attorney, said he has a case that's headed to trial in which the highway department is asking his client to repay the difference between the state's $357,000 initial deposit and its second appraisal of $124,500.

"I don't ever remember it happening early in my career," he said. "With cases that go to trial, I'd say it happens maybe about half the time now."

Ramsey, who investigated accident claims for the city, said he found extra motivation to push back against VDOT when his lawyers told him this was happening elsewhere in Virginia.

It happens in other states, too, said Alan Ackerman, a lawyer based in Michigan who focuses on eminent domain law and practices nationally.

"A lot of the government agencies are doing that across the country, where they're lowering their offers to punish people for fighting them," he said.

Becky Kubin, a deputy city attorney for Virginia Beach, said instances in which someone must repay part of a deposit because of a lower second appraisal are "rare, but it does happen" in condemnation cases brought by the city.

Virginia Beach tries to make it clear to landowners that they risk such a scenario if they withdraw from a deposit before their case is settled, she said.

The court order in 2011 that allowed the Ramseys to withdraw their deposit also noted that risk. James said he was not aware of it.

When they face a jury on Monday, the couple will have taken their grievance with VDOT further than most do.

The highway department reported 985 land acquisitions from Oct. 1, 2012, to Sept. 30, 2013. Most of those ended with a voluntary sale, while 200 went into condemnation proceedings. Of those in condemnation, 5 percent to 7 percent typically will go all the way to a trial, Bennett said.