PRESENT: All the Justices 

CITY OF VIRGINIA BEACH 

 OPINION BY 

v. Record No. 971117 JUSTICE CYNTHIA D. KINSER 

 February 27, 1998 

RICHARDSON C. BELL, 

TRUSTEE FOR BELL LAND TRUST 

FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH 

Edward W. Hanson, Jr., Judge 

 

 In this appeal, we consider first whether the City of 

Virginia Beach (the City) is a proper defendant in this 

action for inverse condemnation. We next determine whether 

the denial of a permit required by the City’s Coastal 

Primary Sand Dune Zoning Ordinance (the Ordinance) 

constitutes a regulatory taking and thereby requires the 

City to compensate the property owner for the value of the 

property taken. Because the denial of the permit was 

pursuant to the City’s Ordinance, the City is a proper 

defendant. However, because the City’s Ordinance pre-dates 

the owner’s acquisition of the property, the denial of the 

permit does not constitute a compensable taking. 

Accordingly, we will reverse the judgment of the circuit 

court. 

I. 

 The General Assembly enacted the Coastal Primary Sand 

Dune Protection Act (the Dune Act) in 1980. See Code §§ 
62.1-13.21 to -13.28.1 The policy behind the Dune Act is to 

“preserve and protect coastal primary sand dunes and 

beaches and to prevent their despoliation and destruction 

and whenever practical to accommodate necessary economic 

development in a manner consistent with the protection of 

such features.” Code § 62.1-13.21. The Dune Act contains 

a model ordinance which certain local governments, 

including the City, could adopt. See Code § 62.1-13.25. 

 In 1980, the City passed the Ordinance, which mirrors 

the Dune Act’s model ordinance. See Va. Beach Code §§ 

1600-1619. The Ordinance regulates the use and development 

of coastal primary sand dunes and requires developers who 

wish to “use or alter any coastal primary sand dune within 

this city” to obtain a permit from the Virginia Beach 

Wetlands Board (the Wetlands Board). Va. Beach Code § 

1603. If the Wetlands Board denies the permit application, 

the applicant may either resubmit the application in 

modified form or seek review by the Virginia Marine 

Resources Commission (VMRC). See Va. Beach Code § 1608 

(c); Code § 62.1-13.27. 

 1

 The Dune Act was originally codified in Code §§ 

62.1-13.21 to -13.28. For purposes of this opinion, 

references to the Dune Act are to the sections in effect 

when this action was commenced. The Dune Act is now 

recodified as Coastal Primary Sand Dunes and Beaches in 

Code §§ 28.2-1400 to -1420. 

2
The instant appeal involves two parcels of land, lots 

21 and 22, located seaward of the primary coastal dune on 

the Chesapeake Bay shore. In 1979, Seawall Enterprises, 

Inc. (Seawall), a corporation in which Richardson C. Bell 

(Bell) and his wife owned 50% of the stock, bought the two 

parcels. When Seawall purchased lots 21 and 22, neither 

the Dune Act nor the Ordinance was in existence. Seawall 

intended to develop residential houses on the lots and 

attempted to do so in 1979; however, the City did not 

approve the plan. 

 When Seawall dissolved, Bell and his wife received 

title to lots 21 and 22 by a deed dated August 5, 1982. In 

late 1982, Bell submitted to the City an application to 

develop lots 21 and 22, but the City did not approve the 

1982 plan either. In 1992, Bell again submitted a 

development plan for the two lots.2 The City informed Bell 

that he first had to submit the plan to the Wetlands Board 

and obtain a dune permit as required by the Ordinance. 

However, upon his pursuit of such a permit, the Wetlands 

Board denied Bell’s application. 

 2

 Bell’s development proposal was to construct a 

roadway, water and sewer extensions, and a bulkhead for a 

single family dwelling. 

3
 After the Wetlands Board’s denial, Bell appealed to 

the VMRC, which also denied Bell’s application. Bell then 

appealed to the court below, and on November 3, 1993, the 

court affirmed VMRC’s decision. By that time, the Bells 

had divorced, and in a deed dated March 17, 1993, Bell and 

his wife transferred lots 21 and 22 to the Bell Land Trust. 

Bell is currently the trustee of that trust.3

In August 1995, the Trustee filed an amended motion 

for judgment against the City. In the motion, the Trustee 

alleged that the Wetlands Board’s denial of Bell’s 

application for a permit deprived lots 21 and 22 of all 

economically beneficial use and therefore constituted a 

regulatory taking in violation of Article I, § 11 of the 

Constitution of Virginia. The Trustee thus sought 

compensation from the City for the value of the property 

taken. 

 A jury trial was held in January 1997. The City moved 

to strike the evidence at the conclusion of the Trustee’s 

evidence as well as at the conclusion of all the evidence. 

The trial court denied both motions, and the jury returned 

a verdict in favor of the Trustee, awarding damages of 

 3

 For purposes of clarification, when we use the name 

“Bell,” we refer to his acting in an individual capacity. 

When we address his actions as trustee of the Bell Land 

Trust, we will use the term “Trustee.” 

4
$110,000 plus interest. The City filed a motion to set 

aside the verdict, which the court denied. The trial court 

then entered judgment in favor of the Trustee. The City 

appeals. 

II. 

A. 

 The first issue is whether the City is a proper 

defendant. “It is axiomatic that a plaintiff has the duty 

to name the proper parties as defendants . . . .” Lake v. 

Northern Virginia Women’s Medical Center, Inc., 253 Va. 

255, 260, 483 S.E.2d 220, 222 (1997). The City contends 

that it is not a proper defendant because when it adopted 

the Ordinance, it was implementing state policy. The City 

also posits that the Wetlands Board, in denying Bell’s 

application, was acting pursuant to the Dune Act and was 

therefore also implementing state policy. Consequently, 

under this theory, the denial of the permit constituted 

state action. In sum, the City argues that since the City 

had minimal involvement with the regulation of lots 21 and 

22, the City is not a proper defendant. 

 We reject these contentions. First, the City enacted 

the Ordinance with the stated intent to “regulat[e] the use 

and development of coastal primary sand dunes.” Va. Beach 

Code § 1600. Thus, the restriction imposed on the property 

5
was the result of city, not state, policy. Second, in 

refusing to issue the permit, the Wetlands Board was acting 

pursuant to the City’s Ordinance, which bestows upon the 

Wetlands Board the power to grant or deny permit 

applications.4 Nor is it relevant that the final 

administrative decision was from the VMRC, a state agency. 

In denying the application, the VMRC was using its 

statutory power to review the decision of the Wetlands 

Board. Code § 62.1-13.11. In conducting its review, the 

VMRC was ensuring that the Wetlands Board, a city agency, 

was acting in accord with the Dune Act. Therefore, the 

VMRC was determining the legality of city, not state, 

action. Thus we conclude that the City is a proper 

defendant. 

B. 

 We next consider whether the Wetlands Board’s denial 

of Bell’s application resulted in a compensable taking. 

Article I, § 11 of the Constitution of Virginia prohibits 

the government from taking or damaging private property for 

public uses without just compensation.5 The United States 

 4

 Indeed, the Wetlands Board’s Notice of Public 

Hearing states that in considering the application, the 

Wetlands Board was acting “[p]ursuant to the City of 

Virginia Beach Zoning Ordinance, Articles 14 and 16.” 

5

 Article I, § 11 provides in pertinent part: 

6
Supreme Court has stated that a compensable taking exists 

for purposes of the Fifth Amendment, without the need for a 

“case-specific inquiry,” when state regulations compel 

property owners “to suffer a physical ‘invasion’ of [their] 

property” or when regulatory action “denies all 

economically beneficial or productive use of land.” Lucas 

v. South Carolina Coastal Council, 505 U.S. 1003, 1015 

(1992).6 The Trustee contends that the denial of the permit 

was a categorical taking under Lucas because the 

Ordinance’s effect is to eliminate the property’s only 

economically beneficial use.7

 However, in Lucas the Court also recognized that not 

all categorical takings are compensable. The Court 

_______________ 

 [T]he General Assembly shall not pass any law 

. . . whereby private property shall be taken or 

damaged for public uses, without just 

compensation . . . . 

6

 Lucas addressed the issue of regulatory taking in 

the context of the Fifth Amendment to the United States 

Constitution. However, in interpreting art. I, § 11 of the 

Constitution of Virginia, we have cited to and sought 

guidance from cases involving takings under the Fifth 

Amendment. See, e.g., City of Virginia Beach v. Virginia 

Land Investment, 239 Va. 412, 417, 389 S.E.2d 312, 314 

(1990); Commonwealth ex rel State Water Control Board v. 

County Utilities Corp., 223 Va. 534, 542, 290 S.E.2d 867, 

872 (1982). 

7

 We assume, without deciding, that the Trustee may 

assert the denial of a permit application submitted by 

7
declared that a state may “resist compensation,” even in 

categorical takings, if an “inquiry into the nature of the 

owner’s estate shows that the proscribed use interests were 

not part of his title to begin with.” Lucas, 505 U.S. at 

1027. Thus, a property owner may seek compensation for a 

categorical taking only when the state is exercising 

regulatory power over the “bundle of rights” that the owner 

acquired when first obtaining title to the property. Id.

 We, therefore, disagree with the Trustee’s contention 

that the denial of the application is akin to the 

compensable taking found in Lucas. The instant case 

differs from Lucas in a significant aspect: the timing of 

the owner’s purchase of the property in relation to the 

effective date of the regulatory restriction. In Lucas, 

the plaintiff property owners purchased the land prior to 

the enactment of the regulation restricting the use of 

their property. Thus, the subsequent regulation directly 

affected the property owners’ “bundle of rights” which, at 

the time of their purchase, included the right to develop 

their property freely. 

 In contrast to Lucas, however, the Ordinance at issue 

here predated Bell’s and the Trustee’s acquisition of the 

_______________ 

Bell, not the Trustee, as the basis for the Trustee’s claim 

for inverse condemnation. 

8
property. Therefore, the “bundle of rights” which either 

Bell or the Trustee acquired upon obtaining title to the 

property did not include the right to develop the lots 

without restrictions.8 Thus, because the regulatory 

restriction was in Bell’s and the Trustee’s chain of title, 

the City did not deprive Bell or the Trustee of the right 

to develop the property freely since that right was never 

Bell’s or the Trustee’s to lose. At best, any rights 

impaired by the Ordinance were those of the property owner 

at the time the Ordinance came into effect. 

 The Trustee argues, however, that the principle in 

Lucas is not that a property owner, in order to enjoy 

unrestricted development of the property, must buy the 

property before the enactment of the regulatory 

restriction. Rather, the Trustee posits that under Lucas, 

a state must show that the regulatory restriction “does not 

proscribe a productive use that was previously permissible 

under relevant property and nuisance principles,” and only 

then can the state claim that it is not taking any rights 

 8

 Contrary to the Trustee’s assertions, the fact that 

a residential home had once occupied lot 21 or that the 

surrounding lots similar to lots 21 and 22 contained 

residential houses does not necessitate a finding that the 

“bundle of rights” included the right to develop a 

residential home. The only fact relevant to a proper 

determination of Bell’s or the Trustee’s property rights is 

the date of acquisition of the lots. 

9
from the property owner. Lucas, 505 U.S. at 1029-30. In 

other words, according to the Trustee, the prohibited 

purpose under a regulatory restriction must have “always 

[been] unlawful;” otherwise, a restriction on development 

constitutes a taking. Lucas, 505 U.S. at 1030. 

However, the Trustee’s argument again ignores the 

critical fact distinguishing Lucas from the instant case. 

In Lucas, the owners’ acquisition pre-dated the regulatory 

restriction. Therefore, the only way the State of South 

Carolina could have argued that the restriction was not a 

taking would have been to show that, at the time of the 

owners’ purchase, fundamental nuisance and property law had 

always prevented them from developing their property and 

that the statutory restriction was simply making explicit 

relevant property and nuisance law. In contrast to Lucas, 

not only Bell but also the Trustee acquired lots 21 and 22 

after the enactment of the Ordinance restricting the 

property’s development. Therefore, the City need not prove 

the existence of any nuisance or property law preceding the 

Ordinance that would have prevented the development of the 

property. Such an inquiry is irrelevant and unnecessary 

since Bell and the Trustee acquired property already 

burdened by regulatory restrictions. Thus, the City, by 

enacting the Ordinance, took no property rights from Bell 

10
or the Trustee since they cannot suffer a taking of rights 

never possessed. 

 Nevertheless, the Trustee seeks to avoid the 

Ordinance’s restrictions by contending that the Ordinance 

did not pre-date Bell’s ownership rights to lots 21 and 22. 

The Trustee posits that Seawall’s acquistion of lots 21 and 

22 in 1979 established Bell’s ownership rights in the 

property because he was a shareholder in Seawall. 

Essentially, the Trustee asks this Court to look at the 

substance, and not the form, of ownership and to determine 

Bell’s ownership rights as of 1979.9

 The Trustee’s position, however, is contrary to wellsettled principles of law. It “is elementary that a 

corporation is a legal entity entirely separate and 

distinct from the shareholders or members who compose it.” 

Cheatle v. Rudd’s Swimming Pool Supply Co., Inc., 234 Va. 

207, 212, 360 S.E.2d 828, 831 (1987). In Bogese, Inc. v. 

State Highway and Transp. Comm’r, 250 Va. 226, 462 S.E.2d 

345 (1995), we considered whether, under the unity of lands 

doctrine, unity of ownership existed when a corporation 

owned one parcel of land and a general partnership, whose 

 9

 Again, we assume, without deciding, that the Trustee 

can assert whatever rights Bell, as one of the grantors of 

the Bell Land Trust, has. 

11
partners were the same individuals as the corporate 

shareholders, owned the adjacent parcel. In holding that 

unity of ownership did not exist and that two distinct 

entities owned the two parcels, we stated that “where 

persons have deliberately adopted the corporate form to 

secure its advantages, they will not be allowed to 

disregard the existence of the corporate entity when it is 

to their benefit to do so.” Id. at 230, 462 S.E.2d at 347 

(quoting Board of Transp. v. Martin, 249 S.E.2d 390, 396 

(N.C. 1978)). Thus, we recognized that only “‘an 

extraordinary exception’ will justify piercing the 

corporate veil.” Id. at 230, 462 S.E.2d at 348 (quoting 

Cheatle, 234 Va. at 212, 360 S.E.2d at 831). 

 Accordingly, Bell, who accepted the benefits of 

corporate ownership, cannot avoid its disadvantages. 

Seawall’s acquisition of lots 21 and 22 in 1979 does not 

protect Bell or the Trustee from the restrictions of the 

Ordinance. Any rights that Seawall acquired in lots 21 and 

22 belonged solely to Seawall as Seawall was an entity 

distinct and separate from Bell.10 Thus, Bell’s ownership 

 10 The mere dissolution of Seawall did not effect a 

transfer in title to its property. Code § 13.1-745(B)(1). 

Furthermore, “[t]he termination of corporate existence 

shall not take away or impair any remedy available to . . . 

the corporation . . . for any right or claim existing . . . 

prior to such termination. Any such action or proceeding 

12
rights in lots 21 and 22 must be defined as of 1982, not 

1979. Since the Ordinance pre-dated Bell’s acquisition of 

lots 21 and 22, Bell, and now the Trustee, took the 

property subject to the Ordinance’s restrictions. 

 Our decision that neither Bell’s nor the Trustee’s 

ownership rights include the right to develop the property 

free from regulatory restrictions is in accord with Prince 

William County v. Omni Homes, Inc., 253 Va. 59, 481 S.E.2d 

460, cert. denied, U.S. , 118 S.Ct. 58 (1997). In 

that case, Omni purchased a parcel of unimproved land, 

which was adjacent to another undeveloped parcel, with the 

intent of building an urban residential development. Since 

the development of Omni’s subdivision would require 

obtaining road and utility access, Omni secured an informal 

agreement with the adjacent landowners to gain such access 

through the adjoining parcel. However, Prince William 

County subsequently purchased the adjoining tract, 

thwarting Omni’s plans to obtain road and utility access 

through the adjacent property. Omni therefore brought 

_______________ 

by . . . the corporation may be prosecuted . . . by the 

corporation in its corporate name.” Code § 13.1-755. 

Finally, any right Seawall may have had to compensation for 

a regulatory taking would not have passed to Bell or the 

Trustee. See Riddock v. City of Helena, 687 P.2d 1386, 

1388 (Mont. 1984) (holding that “the right to compensation 

for a taking is a personal right which does not pass to a 

successor with the transfer of land”). 

13
suit, and the trial court ruled that the county’s purchase 

of the adjoining tract was a regulatory action that 

constituted a taking in violation of the Fifth Amendment of 

the United States Constitution and Article I, § 11 of the 

Constitution of Virginia. 

 This Court reversed, holding that the county’s 

purchase of the adjoining tract was not a taking. We 

stated that Omni had not “lost the right to develop its 

property.” Id. at 72, 481 S.E.2d at 467. Rather, Omni 

“had not acquired the rights necessary to realize its 

preferred method of development either as a matter of 

contract or easement.” Id. Accordingly, the county’s 

action did not affect Omni’s property rights since Omni, at 

the time of the county’s purchase, had no right of access 

through the adjacent property. Thus, since the county 

could not damage a nonexistent right, the purchase was not 

an uncompensated taking under either the United States or 

Virginia Constitutions. 

 Like the property owners in Omni, neither Bell nor the 

Trustee acquired the right to develop lots 21 and 22 free 

of the Ordinance’s restrictions. Rather, the restriction 

on the lots was in the chain of title at the time of Bell’s 

acquisition and likewise when Bell and his wife deeded the 

property to the Bell Land Trust. Thus, Bell, and now the 

14
Trustee, acquired the property with full knowledge of the 

risk involved in attempting to develop it. “One who buys 

with knowledge of a restraint must assume the risk of 

economic loss.” Omni, 253 Va. at 69, 481 S.E.2d at 465. 

For these reasons, we hold that the denial of Bell’s 

permit was not a regulatory taking for which the City owes 

compensation to the Trustee. Accordingly, we will reverse 

the judgment of the circuit court and enter final judgment 

here for the City.11

 Reversed and final judgment.

 11 The City also assigned error to the trial court’s 

failure to dismiss the instant action on the basis of res 

judicata and in admitting evidence regarding the value of 

lots 21 and 22. Because we find that the denial of a 

permit under the Ordinance does not constitute a taking for 

which the City owes compensation, we do not address the 

City’s additional assignments of error. 

15