Present: Hassell, C.J., Keenan, Koontz, Kinser, Lemons,
and Agee, JJ., and Compton, S.J.
XSPEDIUS MANAGEMENT CO. OF
VIRGINIA, L.L.C.
v. Record No. 041720 OPINION BY JUSTICE CYNTHIA D. KINSER
April 22, 2005
ALBERT J. STEPHAN, ET AL.
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Stanley P. Klein, Judge
In this action for a continuing trespass on real
property, the dispositive issue is whether there was
sufficient evidence to support the jury’s award of punitive
damages. Because the defendant did not act with such
recklessness as to evince a conscious disregard of property
rights, we will reverse the circuit court’s judgment
awarding punitive damages.
Albert J. and Helene Stephan (the Stephans) own a
parcel of real estate located on Hidden Road in Vienna,
Virginia. The Stephans purchased the property in 1987 and
have lived there continuously since then. In the fall of
1999, they discovered that workers were installing an
underground fiber optic line on their property. The line
installation was completed “over [a] few months in [19]99
and 2000.” The line traverses the Stephans’ property for a
distance of approximately 218 feet. At the widest point,
the fiber optic line is approximately 15 feet inward from
the boundary of the property. 1
The Stephans commenced an action for trespass against
the company that had installed the fiber optic line, but
the company filed for bankruptcy shortly thereafter.
Subsequently, Xspedius Management Company of Virginia,
L.L.C. (Xspedius), purchased assets of the bankrupt
company. Those assets consisted of, among other things,
4,700 miles of fiber optic lines, including the line at
issue in this case. During the negotiations for the sale,
Xspedius inquired about any known encroachments by the
fiber optic lines. It received a list showing five
encroachments affecting about 12 property owners; however,
the encroachment on the Stephans’ property was not on the
list. Xspedius became aware of the encroachment of the
fiber optic line on the Stephans’ property in October 2002.
After learning that fact, Xspedius negotiated with the
Stephans in order to compensate them monetarily for the
trespass on their property. The negotiations stalled in
April 2003. At about that time, the Stephans filed this
action for trespass against Xspedius.
1
Apparently, there was a right-of-way where the fiber
optic line could have been installed without encroaching on
the Stephans’ property.
2
In their motion for judgment, the Stephans alleged
that the continuing trespass by Xspedius’ fiber optic line
on their property had diminished the value of their real
estate, had caused a loss of use of the property, and had
damaged the landscaping. The Stephans sought compensatory
and punitive damages. Approximately three weeks before
trial, the Stephans, in a letter from their attorney to
counsel for Xspedius, directed Xspedius to cease and desist
from its continuing trespass and to remove its property and
equipment from the Stephans’ property.
At trial, both after the close of the Stephans’
evidence and at the close of all the evidence, Xspedius
moved to strike the claim for punitive damages. The court
took the motion under advisement and allowed the action to
go to the jury. The jury returned a verdict in favor of
the Stephans and awarded them $15,000 in compensatory
damages and $5,000 in punitive damages.
In a post-trial motion to strike the claim for
punitive damages and to enter partial summary judgment in
its favor, Xspedius argued, among other things, that the
Stephans’ sole ground to justify an award of punitive
damages was Xspedius’ failure to remove the fiber optic
line but that, in this case, no reasonable person could
conclude that the failure to do so was coupled with any
3
“fraud, malice, oppression, or other special motives of
aggravation,” PGI, Inc. v. Rathe Prods., Inc., 265 Va. 334,
345, 576 S.E.2d 438, 444 (2003), which Xspedius argued are
necessary elements for an award of punitive damages. The
circuit court denied Xspedius’ motion and entered judgment
for the Stephans in accordance with the jury verdict. The
court reasoned that from October 2002, when Xspedius
learned of the encroachment on the Stephans’ property,
until April 2003, when this action was filed, Xspedius was
“on notice of an ongoing trespass,” and could have taken
some action to end the trespass, but elected not to do so.
We awarded Xspedius this appeal.
On appeal, Xspedius challenges the award of punitive
damages. The dispositive issue is whether the circuit
court erred by refusing to strike the Stephans’ claim for
punitive damages. Xspedius argues that the evidence was
insufficient as a matter of law to sustain an award of
punitive damages because, during the time frame after it
learned of the encroachment until this action was filed, it
attempted to negotiate a settlement of the matter with the
Stephans. Thus, according to Xspedius, it did not act in
reckless disregard of the Stephans’ property rights. In
response, the Stephans argue that they “presented evidence
that [Xspedius] knew it was trespassing, had an alternative
4
to the trespass, knew the [Stephans] did not want the
continuing trespass, and considered cessation of the
trespass to be expensive.”
To decide the issue before us, we apply well-
established principles of appellate review. “When parties
come before us with a jury verdict that has been approved
by the trial court, they hold the most favored position
known to the law.” Stanley v. Webber, 260 Va. 90, 95, 531
S.E.2d 311, 314 (2000); accord Virginia Polytechnic Inst. &
State Univ. v. Interactive Return Serv., 267 Va. 642, 650,
595 S.E.2d 1, 5 (2004). “The trial court’s judgment is
presumed to be correct, and we will not set it aside unless
the judgment is plainly wrong or without evidence to
support it.” Stanley, 260 Va. at 95, 531 S.E.2d at 314;
Code § 8.01-680. We view the evidence and all reasonable
inferences fairly deducible from it in the light most
favorable to the prevailing party at trial, the Stephans.
Evaluation Research Corp. v. Alequin, 247 Va. 143, 147, 439
S.E.2d 387, 390 (1994).
“Punitive or exemplary damages are allowable only
where there is misconduct or actual malice, or such
recklessness or negligence as to evince a conscious
disregard of the rights of others.” Giant of Virginia,
Inc. v. Pigg, 207 Va. 679, 685, 152 S.E.2d 271, 277 (1967);
5
accord Hamilton Dev. Co. v. Broad Rock Club, Inc., 248 Va.
40, 45, 445 S.E.2d 140, 143 (1994). The purpose of
punitive damages “is not so much to compensate the
plaintiff but to punish the wrongdoer and to warn others.”
Hamilton Dev. Co., 248 Va. at 45, 445 S.E.2d at 143.
Accordingly, punitive damages are generally not favored and
“should be awarded only in cases involving the most
egregious conduct.” Bowers v. Westvaco Corp., 244 Va. 139,
150, 419 S.E.2d 661, 668 (1992). “ ‘[W]here the act or
omission complained of is free from fraud, malice,
oppression, or other special motives of aggravation,
damages by way of punishment cannot be awarded, and
compensatory damages only are permissible.’ ” Wright v.
Everett, 197 Va. 608, 615, 90 S.E.2d 855, 859 (1956)
(quoting Wood v. American Nat’l Bank, 100 Va. 306, 316, 40
S.E. 931, 934 (1902)); accord PGI, 265 Va. at 345, 576
S.E.2d at 444; Baker v. Marcus, 201 Va. 905, 909, 114
S.E.2d 617, 621 (1960).
We conclude that, in this case, the evidence was
insufficient as a matter of law to support an award of
punitive damages. As Xspedius pointed out, the sole basis
for the Stephans’ claim for punitive damages was Xspedius’
failure to remove the fiber optic line as soon as it
learned about the encroachment; Xspedius was not the entity
6
that committed the initial trespass on the Stephans’
property when the fiber optic line was installed. Xspedius
became aware of the trespass at issue in October 2002,
after it had purchased many miles of fiber optic lines.
Xspedius then negotiated with the Stephans to compensate
them monetarily for the encroachment on their property.
Although the Stephans testified that they always wanted the
fiber optic line removed from their property and had never
changed their position in that regard, they did not dispute
the testimony of an Xspedius employee that the company had
attempted to negotiate in good faith to compensate the
Stephans for the encroachment. The employee stated, “From
the time [Xspedius] became aware of [the encroachment] in
October of 2002 up until three weeks ago, [Xspedius was]
never asked to move it. [Xspedius was] simply asked for
money.”
When the negotiations stalled, the Stephans filed this
action, but they did not specifically seek injunctive
relief to require the removal of the fiber optic line from
their property. In fact, the letter directing Xspedius to
cease and desist from its continuing trespass was not sent
until approximately three weeks prior to trial. Upon
receiving the letter, Xspedius contacted a construction
7
firm to begin the engineering work that would be necessary
to remove the fiber optic line from its present location.
As Xspedius argues, the facts in this case are
analogous to those in Norfolk & Western Railway Co. v. A.C.
Allen & Sons, 122 Va. 603, 95 S.E. 406 (1918). There, the
defendant continued to use the plaintiffs’ water supply
after this Court had affirmed a judgment for the
plaintiffs. Id. at 606-08, 95 S.E. at 406-07. The
defendant did so because it needed time to ascertain where
a new supply of water could be obtained. Id. at 616, 95
S.E. at 410. We concluded that
[t]he evidence in the case [did] not show that
the [defendant] was actuated by malice,
wantonness or oppression, or that there was any
fraud on its part, or that it was guilty of any
gross negligence or recklessness, or that its
action in continuing to take the water . . .
evinced any intention on the part of the
[defendant] to disregard the rights of the
[plaintiffs], or to defy the law of the land.
Id. at 616-17, 95 S.E. at 410. In the absence of one of
these situations, the plaintiffs were not entitled to
recover punitive damages. Id. at 617, 95 S.E. at 410.
In contrast, we held that the evidence presented in
Hamilton Development was sufficient to support an award of
punitive damages for a trespass to real property. 248 Va.
at 45, 445 S.E.2d at 143. There, the defendant had been
warned about 12 months before the trespass that the
8
plaintiff owned the property at issue. Id. The defendant
received another notice conveying the same information but
ignored it, and proceeded to clear and grade the
plaintiff’s property over a seven-day period. Id. at 42,
45, 445 S.E.2d at 142, 143. We concluded that the
defendant “acted with such recklessness or negligence to
evince a conscious disregard of plaintiff’s property
rights.” Id. at 45, 445 S.E.2d at 143.
As in Norfolk & Western Railway, the evidence in this
case, viewed in the light most favorable to the Stephans,
did not demonstrate that Xspedius, by failing to remove the
fiber optic line as soon as it learned of its encroachment
on the Stephans’ real estate, acted with such recklessness
as to evince a conscious disregard of the Stephans’
property rights. Thus, we hold that the circuit court
erred in refusing to strike the punitive damage claim.
For these reasons, we will reverse that portion of the
circuit court’s judgment awarding punitive damages to the
Stephans. 2
Reversed in part,
and final judgment.
2
In light of our decision, it is not necessary to
address Xspedius’ remaining assignments of error.
9