Righting a decades-old wrong
Righting a decades-old wrong
– By Dennis Hartig
Like almost every American in the early 1960s, Irvine Clarke Jr. was glued to the television watching America’s first astronauts return from space, splashing into the ocean in their tiny Project Mercury capsule.
Everyone was caught up in the courage of the astronauts, the awe for the scientific magic and the national pride in the historic achievements. Irvine had another reason to be proud: He played a small role in the Mercury missions.
In his Norfolk machine shop, Irvine fabricated a one-of-a-kind part in the hoist used by the helicopters for safely retrieving the capsule from the sea.
It was a story that Irvine loved to tell, and one that propelled his business to success. That was until the Norfolk Redevelopment and Housing Authority killed it. In 2001, Irvine’s Ballentine Boulevard business was condemned to make way for NRHA’s Broad Creek housing project. It was a bitter loss. He lost not only his business, but was reimbursed nothing by the government for the lathes, motors, presses, compressors, saws and welders on which it was built.
His Waldo & Lyle attorneys argued that without those tools— all together and part of an integrated production system — there was no business. Irvine installed them and never intended to remove them from the building. Their value in place, functioning as a unit, was immense. That is exactly how Irvine intended to sell his property before retiring, as a functioning machine shop. But the Norfolk judge rejected the argument that NRHA should pay Irvine for his machinery as a buyer would. And the judge refused to allow to be put before the jury evidence of the value of the equipment.
Irvine paid a huge penalty.
He was reimbursed $130,000 for the land and building. But he was paid hardly anything for the $300,000 worth of equipment and machinery.
Like so many thousands of businesses before him over so many decades, the jury never heard testimony about the true value of Irvine’s equipment. Irvine had to sell his machinery for whatever he could get – salvage value. The Norfolk judge saw no injustice in this. Worse yet, the NRHA forced these huge losses upon Irvine right at the time he was looking to retire and sell his business.
It was a grave injustice, but Irvine did not have the money or energy to keep fighting into a higher court.
A decade later, Waldo & Lyle had a client to pick up the battle that Irvine lost, a national fast food chain. Taco Bell had the money and determination to challenge the status quo that had prevailed in trial courts across Virginia for so many years and to the detriment of so many of Waldo & Lyle clients.
Taco Bell’s restaurant in Fairfax County at the intersection of Route 29 and Gallows Road was condemned by the Virginia Department of Highways (VDOT) for a highway improvement.
The state put the value of the Taco Bell at $1.5 million, but refused to reimburse the company for 42 pieces of equipment valued at $50,000. As in the Norfolk case, the Fairfax judge ruled that these items were temporary, could be removed and sold off and thus were not an intrinsic part of the condemned property. Taco Bell insisted that it never re-uses second-hand equipment and the original fixtures were meant to be permanent. As in Irvine’s case, the judge refused to put the question before the jury.
After losing in Fairfax, Taco Bell appealed to the Virginia Supreme Court in hopes of getting fairly compensated for its loss, but also to reverse decades of wrongheaded decisions in Virginia courts.
The source of the injustice, attorneys at Waldo & Lyle believed, was a misreading of an 1870 law governing business compensation and a 1940 Supreme Court case interpreting it. These two described how courts should lay out the rules for just compensation in cases like Taco Bell and the machine shop. This misreading was an error that had become so widely accepted as to be its own law.
Steve Clarke, who worked the case explains: “This law dates back more than century ago… But somehow over the years, VDOT had persuaded trial courts and local condemning authorities the law did not mean what it plainly said, that if a piece of machinery or a kitchen stove, or refrigerator was an essential part of the business then the owner should be paid for its loss. What could be more essential to Taco Bell than its frying baskets, ovens, freezers, sinks and tables.”
Clarke said there is a logic to the law — logic ignored by decades of injustices — that without these permanent fixtures, the Taco Bell would not be a Taco Bell and the Norfolk machine shop would not be be a machine shop.
There is no telling how much businesses in Virginia have lost, Clarke said.
In an unanimous opinion in 2011, the Virginia Supreme Court viewed the issue exactly as Waldo & Lyle had argued, that trial courts in Virginia had the law all wrong. The court ordered the Fairfax judge to rehear the case, to let the jury hear Taco Bell’s claim and decide whether and how much compensation was owed for the 42 pieces of equipment.
VDOT threw in the towel and made a generous settlement with Taco Bell.
It was a stunning, precedent-setting decision. It overturned a prevailing practice in Virginia courts that deprived business of their rightful due. And it made a promise that business owners would be spared the pain and penalty suffered by Irvine Clarke.
Before his retirement in 2008, Dennis Hartig spent four decades reporting and editing for The Virginian-Pilot. As managing editor he directed reporting on eminent domain abuses and, later, as editorial page editor he crusaded for reforms.