Present: Kinser, C.J., Lemons, Goodwyn, and Millette, JJ., and
Lacy and Koontz, S.JJ.
TACO BELL OF AMERICA, INC.
OPINION BY SENIOR JUSTICE
v. Record No. 092465 ELIZABETH B. LACY
June 9, 2011
COMMONWEALTH TRANSPORTATION
COMMISSIONER OF VIRGINIA
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Jane Marum Roush, Judge
In this appeal we consider whether, in a condemnation case,
the trial court erred by striking evidence the landowner claims
supported its position that certain items were fixtures, not
personalty, and removing that issue from consideration by the
jury.
BACKGROUND
On February 15, 2008, the Commonwealth Transportation
Commissioner of Virginia (Commissioner) filed Certificate of
Take No. C-908012 in the amount of $1,496,550.00 to acquire
certain land and improvements owned by Taco Bell of America,
Incorporated (Taco Bell). The Commissioner directed that the
land and Taco Bell restaurant building, located near the
intersection of Route 29 and Gallows Road in Fairfax County, be
taken for all purposes incident to the construction,
reconstruction, alteration, maintenance and repair of Route 29,
identified as Project 0029-029-119, RW208. Because the parties
were unable to agree on the compensation amount due to Taco Bell
for the taking, the Commissioner filed a Petition in
Condemnation in accordance with Virginia’s eminent domain
statutes, Code §§ 25.1-100 et seq. and 33.1-89 et seq.
Prior to the trial, the Commissioner filed a motion in
limine seeking exclusion of Taco Bell’s evidence relating to the
nature and the value of approximately 42 pieces of equipment
used in the restaurant as part of Taco Bell’s business. The
Commissioner asserted that because those items were not affixed
to the property and could be moved, they were not fixtures and
therefore could not be included in determining the just
compensation for the property taken or damaged. That motion was
not resolved prior to trial, but was “continued to the trial
date for the trial judge to determine.” On the morning of the
hearing, the trial court denied the motion in limine, concluding
that the matter was a jury issue and noting that “[p]erhaps it
could be renewed in the form of a motion to strike.”
At trial, the Commissioner called Roy L. Boyer as an expert
witness in personal property appraisals to testify concerning
the nature and value of the disputed items. Prior to
questioning Boyer, the Commissioner argued, as he had in
conjunction with his motion in limine, that the court, not the
jury, should decide whether the items were fixtures. The court
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denied his renewed motion. 1 Boyer testified that he had
inspected, inventoried and photographed the contents of the Taco
Bell restaurant in June of 2007. The inventory consisted of 42
items, including warming ovens, freezers, refrigerators, wire
storage racks, sinks, tables, chairs, computerized cash
registers and monitors, various aluminum pans and frying
baskets, and a neon Taco Bell sign. Referring to the
photographs, which were introduced in evidence, showing the
items as they existed in the building before the building was
demolished by the Commonwealth in 2008, Boyer testified that he
classified all 42 items as personal property because the items
were “not attached to the real estate” and could be “relocated
and moved without damaging the building, the structure, or the
integrity of the unit, the building itself.” Boyer testified
that there was “a large business in used restaurant equipment”
and he set the fair market value for the 42 items at $49,795.00.
The Commissioner called Susan M. King to testify regarding
the value of the real property. King testified that she did not
include movable items in her appraisal of the real property, but
that she did include “those things that are pertinent to the
1
The Commissioner did not assign cross-error to this ruling
or to the trial court’s earlier statement that whether the items
at issue were fixtures or personalty was a matter for the jury
to decide.
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real estate, the drive[-]through window, the [exhaust] hoods,
the walk[-]in freezer, things that are part of the building.”
Taco Bell elicited expert testimony from John C. Reyle
regarding the nature and value of the disputed items. Reyle
testified that because he became involved in the case after the
building and disputed items were demolished, he relied, in part,
upon Boyer’s inventory of the disputed items to form his
opinion. Reyle explained that he considered whether the items
were annexed to or moved onto the property, whether the items
were incorporated into the use of the property, and whether the
user intended to keep the items on the property in determining
whether the items were fixtures or personalty. Applying this
analysis, Reyle concluded that the items on Boyer’s appraisal
list were fixtures, not personal property. Reyle testified that
he consulted with James R. DeSelms, the designated Taco Bell
representative, who “verified” that Taco Bell used the fixtures
in its restaurant business prior to the take but had no use for
them after the take and left them “in the property.” Reyle
testified that because “the fixtures and equipment became a part
of the Taco Bell property” and because Taco Bell restaurants are
sold “[t]ypically with the furniture and the fixtures in place”
the 42 disputed items were fixtures, not personal property.
Reyle valued the fixtures at $50,000.00, which he testified
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should be included in the amount due to Taco Bell as just
compensation for the taking.
DeSelms also testified on behalf of Taco Bell stating that
the company placed new equipment in its restaurants and expected
the equipment to remain in place “for the life of the
restaurant.” He testified that the company does not use “used
equipment” and that the used equipment “has no purpose for
another restaurant.” DeSelms agreed that the inventoried items
in dispute could be removed from the restaurant building but he
did not know if Taco Bell attempted to sell or “auction” any of
the items.
At the close of all evidence, the Commissioner asked the
trial court “to make a decision with regard to the fixtures.”
In response, the trial court held that the items in question
were “purely personal property” and there was no factual
determination to be made by the jury because the undisputed
evidence showed that the items could have been removed from the
property. The trial court also stated that Taco Bell’s decision
to leave the items in the restaurant and neither move nor resell
them was a “business decision.” The trial court “grant[ed] [the
Commissioner’s] motion” and instructed the jury not to consider
any of the evidence regarding the 42 items at issue. The jury
awarded Taco Bell $1,246,801.60 for the property interests
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acquired by the Commissioner and $480,000.00 in damages to the
residue.
We granted Taco Bell this appeal on its assignment of error
that the trial court erroneously struck Taco Bell’s evidence on
the value of fixtures on the property and erroneously instructed
the jury to disregard that evidence.
DISCUSSION
Whether certain property is personal property or fixtures
for purposes of establishing just compensation in a condemnation
action is determined by the application of a three-part test:
(1) Annexation of the chattel to the realty,
actual or constructive; (2) Its adaptation to the
use or purpose to which that part of the realty
to which it is connected is appropriated; and (3)
The intention of the owner of the chattel to make
it a permanent addition to the freehold.
[T]he method or extent of the annexation
carries little weight, except insofar as they
relate to the nature of the article, [and] the
use to which it is applied . . . as indicating
the intention of the party making the annexation.
The second test . . . is entitled to great
weight, especially in connection with the element
of intention. If the chattel is essential to the
purposes for which the building is used or
occupied, it will be considered a fixture,
although its connection with the realty is such
that it may be severed without injury to either.
The intention of the party making the
annexation is the paramount and controlling
consideration.
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Danville Holding Corp. v. Clement, 178 Va. 223, 232, 16 S.E.2d
345, 349 (1941). Taco Bell argues that the trial court’s
decision was based solely on whether the items in question were
moveable or annexed to the realty taken and, therefore, the
trial court did not properly apply the test for determining
whether sufficient evidence was presented to submit the issue to
the jury. Taco Bell asserts that if the test had been applied
properly, the evidence on the issue of whether the items in
question were fixtures was sufficient to submit to the jury. We
agree with Taco Bell.
The items in question range from aluminum pans, chairs and
frying baskets to a refrigerator/cooler, freezer, sinks, warming
ovens, work stations and a “drive thru” neon sign. While the
evidence is uncontroverted that all of these items are moveable,
whether an item can be removed from the realty is not the test
for establishing whether or not it is a fixture. Danville
Holding Corp., 178 Va. at 232, 16 S.E.2d at 349. For example,
in State Highway & Transportation Commissioner v. Edwards Co.,
220 Va. 90, 92-94, 255 S.E.2d 500, 502-03 (1979), the landowner
contended that items such as a coal conveyor system, scales,
advertising signs, underground storage tanks and railroad siding
tracks used by a coal and fuel oil distribution company were
personalty not subject to condemnation because the items were
moveable and could be relocated. The trial court agreed, id. at
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93, 255 S.E.2d at 502, but this Court, applying the Danville
Holding Corp. test, reversed, holding that the items were
“adapted to and used for the purpose to which the property was
devoted” and that the facts and circumstances were “strong
indicia of the landowner’s permanency of enterprise and, we
believe, conclusively establish [the company’s] intent to make
such machinery and equipment a permanent accession to its realty
despite [the] landowner’s present disavowals of such intent.”
Id. at 95-96, 255 S.E.2d at 503.
In this case, while the evidence was undisputed that the
items in question could be physically removed from the property,
there was also testimony that the items were used for the
purpose of the restaurant. In other words, the items were of
the type needed “for the purpose to which the property was
devoted.” Id. at 95, 255 S.E.2d at 503. Taco Bell also
presented testimony that it intended that the items remain on
the property for the life of the business, or, as stated in
Edwards Co., there was an “intent to make such machinery and
equipment a permanent accession to its realty.” Id. at 96, 255
S.E.2d at 503. Furthermore, although the jury could not view
the restaurant and the equipment at issue, it was able to review
photographs taken of the items in place at the restaurant prior
to the demolition of the building and its contents. Considering
the evidence in the light most favorable to Taco Bell, as we
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must on appellate review, we conclude that the evidence on the
issue whether the items in question were fixtures or personalty
for condemnation purposes was sufficient to submit to the jury.
Austin v. Shoney's, Inc., 254 Va. 134, 135, 486 S.E.2d 285, 285
(1997). Accordingly, we will reverse the judgment of the trial
court and remand the case for further proceedings consistent
with this opinion. 2
Reversed and remanded.
2
The Commissioner suggests that on remand the only issue to
be considered is whether the items at issue, or any of them, are
fixtures and therefore compensable as part of the realty in this
condemnation proceeding. However, a just compensation award in
a condemnation proceeding is a unitary award. In determining
just compensation, the jury considers the realty taken as a
whole and not as separate values for discrete elements. See
Virginia Electric & Power Co. v. Webb, 196 Va. 555, 569-70, 84
S.E.2d 735, 743 (1954). Therefore, the items, which Taco Bell
contends are fixtures and thus part of the realty, must be
considered in conjunction with all property taken in determining
just compensation.
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