Inversecondemnation.com and National Eminent Domain Blog posted yesterday about a recent Virginia Supreme Court decision regarding the treatment of fixtures in eminent domain cases. The opinion is here. In that case, the condemning authority sought to exclude evidence of the value of certain items it argued were personal property and not fixtures, which would be otherwise compensable. Further, the condemnor argued that the court, not the jury, should decide whether those items were personal property or fixtures. The items were moveable and not permanently attached to the real estate, however, the landowner testified that it intended for the items to be used as part of the building and had no use for the items after condemnation. The trial court determined that the items were personal property.
On appeal, the Supreme Court held that whether the items are moveable is not determinative of their status as fixtures or personal property. The Court then applied a 3-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."
The items in question met these requirements and, therefore, the Supreme Court reversed the trial court and held that the evidence was sufficient to submit to the jury.
Our firm handled a similar case several years ago. In that case, our client had installed a signifant amount of equipment into its building for use in its commercial operations. Prior to demolition of the building, some, but not all, of the equipment was relocated. We argued that the question of what items were fixtures was one for the commission (our "jury" for determining compensation). The trial court agreed and denied a motion in limine on this issue, ruling that this is a question of fact for determination on an item-by-item basis at the valuation trial. On appeal (in an unpublished opinion), the Court of Appeals agreed and applied essentially the same 3-part test relied upon by the Virginia Supreme Court. See Ferganchick v. Johnson, 473 P.2d 990, 992 (Colo. 1970) (the test is (1) annexation to the real property; (2) adaptation to the use to which the real property is devoted; and (3) intention that the object become a permanent accession to the freehold). Because the condemnor did not remove the items before it took immediate possession of the property, and because it requested a total taking of the property, the commission could determine what constituted a fixture on the date of value. Just as in Virginia, moveability is not the critical inquiry, although it is relevant for the fact-finder; moreover, this factual inquiry necessarily relates the question of compensation, which was to be determined by the commission. As such, the outcome may have been different in the case of a partial taking, where the court may make the determination of what property was actually taken.