Title: City of Virginia Beach v. Bell
Citation: N/A
Docket Number: 971117
State: Virginia
Issuer: Virginia Supreme Court
Date: February 27, 1998

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 well-
settled 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