Norfolk 102, LLC v. City of Norfolk

Supreme Court of Virginia·Decided February 28, 2013·No. 120634·Published

Opinion

PRESENT: All the Justices

NORFOLK 102, LLC, T/A BAR NORFOLK, ET AL.

OPINION BY

v. Record No. 120634 CHIEF JUSTICE CYNTHIA D. KINSER February 28, 2013

CITY OF NORFOLK, ET AL.

FROM THE CIRCUIT COURT OF THE CITY OF NORFOLK Norman A. Thomas, Judge

Norfolk 102, LLC, and Norfolk 302, LLC, are business establishments operating in the City of Norfolk (the City) and trading as Bar Norfolk and Have a Nice Day Café (the Café), respectively. In 2009, the City of Norfolk Council (the City Council) revoked a blanket special exception permitting Bar Norfolk and the Café to operate as "Entertainment Establishments" serving alcoholic beverages for on-site consumption and denied their individual applications for special exceptions to continue such operations. Both establishments now assert that the City Council's actions impaired their vested rights and that the manner in which the City Council executed these actions violated their statutory notice and constitutional due process rights.

Bar Norfolk and the Café, however, cannot claim vested rights under Code § 15.2-2307 to a land use that was impermissible under the applicable zoning ordinance when they opened for business, and no City official issued a determination under Code § 15.2-2311(C) authorizing the use of their premises

in a manner not otherwise permitted under the existing zoning ordinances. Furthermore, Bar Norfolk and the Café had notice of and an opportunity to be heard at the City Council meeting when these matters were considered. Therefore, we will affirm the circuit court's judgments.

I. RELEVANT FACTS AND PROCEEDINGS Bar Norfolk and the Café are located in the City along the Elizabeth River in a business park known as the Waterside Festival Marketplace (Waterside). Waterside originally opened in 1983, at which time it was in the zoning district SPI-1: Downtown Waterfront Special Public Interest District. Permitted uses in that district included "[e]ating and drinking establishments" with the sale of alcoholic beverages for on- premises consumption provided an establishment obtained a "use permit." Prior to Waterside's opening, the City Council granted Waterside's developer such a use permit by enacting Ordinance 32,160 (1983 Ordinance).

That ordinance stated:

[A] Use Permit is hereby granted to Waterside Associates authorizing the use of property as an urban marketplace type shopping center having uses such as . . .

restaurants, including the sale of beer, wine and mixed beverages for on-premises consumption within such specific premises as may be licensed by the Virginia Alcoholic Beverage Control [ABC] Commission on the herein described property:

All that certain lot, piece or parcel of land known and designated as Parcel R-1 on that certain plat entitled "Plat of Property – Parcel R-1" attached . . . to the Deed of Lease dated November 25, 1981, between Waterside Associates and the Norfolk Redevelopment and Housing Authority . . . .

As originally constructed, Waterside was situated entirely within Parcel R-1 encompassed by the 1983 Ordinance.

In addition to granting the blanket use permit to Waterside, the 1983 Ordinance authorized the issuance of "Sub- Use Permits," which were "to distinguish for enforcement convenience a permit issued for specific ABC licensed premises as the result of and deriving from the existence of the general use permit for the entire Waterside premises." An entity leasing space in Waterside and licensed by the ABC Commission was required to apply to the City's zoning administrator for a Sub-Use Permit to operate its proposed business.

Following enactment of the 1983 Ordinance, the City Council took several actions with respect to Waterside and its zoning. First, it re-subdivided several adjoining parcels of real estate and combined them with the original Parcel R-1, thereby vacating all the existing property lines and expanding the size of the original parcel upon which Waterside was located. Waterside was

then situated on property designated Parcel R-1-A. 1 In 1992, the City Council enacted a new comprehensive zoning ordinance, placing the entire Waterside parcel in a new D-1 Downtown Waterfront District. 2 Uses in that district requiring the City Council's approval as a special exception included "Eating and Drinking Establishments" and "Entertainment Establishments." An ordinance enacted in 1997 (1997 Ordinance), in turn, defined the terms "Eating and Drinking Establishment" and "Entertainment Establishment." The 1997 Ordinance also created the permitted use, not requiring a special exception, of an "Eating Establishment" and defined that term as well. 3

1 Sometime after the re-subdivision, the Waterside structure itself was expanded.

2 Although the 1992 zoning ordinance repealed the City's previous comprehensive zoning ordinance dating from 1968, it nevertheless provided that "all zoning clearances, permits, site plan approvals and other such regulatory authorizations as have been granted or duly applied for . . . shall, at option of the grantor or applicant, be governed by the substantive provisions" of the 1968 zoning ordinance.

3 The term "Eating Establishment" was defined as a "business establishment whose function is the preparation and selling of unpackaged food to the customer in a ready to consume state, and where the customer consumes these foods while seated at tables or counters primarily located within a building. There shall be no sale of alcoholic beverages." The term "Eating and Drinking Establishment" was defined as an "eating establishment also having as a function the sale of beer, wine and/or mixed beverages for consumption on the premises and requiring a retail on-premises license from" the ABC Commission. "Such establishment shall not provide entertainment, but may have as an accessory function live performances with only one nonelectronic musical instrument and/or recorded background music and a dance floor not to exceed 10% of the seating area of

In June 1998, the Café entered into an agreement to lease space in the expanded Waterside structure; in January 1999, Bar Norfolk did the same. And in June 1998 and March 1999, respectively, the Café and Bar Norfolk received a document signed by the City's zoning administrator and titled "Cash Receipt." On the top, right-hand side, each document bore the inscription "Zoning Clearance Certificate," and in a box titled "Description," the words "Zoning Clearance for Business License" were typed. On a line next to the heading "License Category" someone had written the words "Eating Place," a land use that did not exist under the terms of the 1992 comprehensive zoning ordinance or the definitions enacted in the 1997 Ordinance. Both businesses opened in March 1999 as "Entertainment Establishments" and, having obtained ABC licenses, both sold alcoholic beverages for on-premises consumption.

In May 1999, the City Council enacted Ordinance 39,579 (1999 Ordinance), titled "An Ordinance Authorizing Operation of the Waterside Festival Marketplace as an Entertainment Establishment." The 1999 Ordinance granted an "Adult Use Special Exception . . . authorizing the operation of an

the establishment." Finally, the term "Entertainment Establishment" was defined as an "establishment where entertainment is provided, or having a dance floor which occupies more than 10% of the seating area of the establishment. This shall not include commercial [recreation] restaurants or commercial indoor recreation centers."

Entertainment Establishment" on the entire expanded Waterside parcel. The special exception was subject to several conditions, including that "[a]ny requirements, limitations, or restrictions imposed by the Virginia ABC Commission" were "effective and binding." In addition, any violation of the terms of an ABC license also constituted a violation of the special exception and permitted the City Council to bring proceedings to revoke the special exception as to the offending business establishment.

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