Where a city council revoked a nightclub’s conditional use permit after a shooting occurred on the premises, the nightclub will not be granted a preliminary injunction to prevent enforcement of the revocation.
The Legacy Lounge obtained a conditional use permit (CUP) from the city of Norfolk to operate as a restaurant and nightclub. As part of the CUP application, Legacy provided the required security while operating.
About a year after the CUP approval, a Legacy employee ejected an unruly patron, who went to his car, retrieved a firearm and started shooting at people gathered outside the nightclub.
The city served notice of its intent to revoke the CUP because of “an apparent lack of uniformed security at the nightclub, failure to comply with Legacy’s approved security plan, that Legacy ‘”substantially diminish[ed] or impair[ed] the value of the land within the neighborhood[,] … and [that Legacy] cause[d] a negative cumulative effect within its immediate neighborhood or the City as a whole.’ …
“Consequently, City Council scheduled a hearing on September 13 (the ‘City Council Hearing’) to decide whether to revoke Legacy’s CUP.
After a hearing before the Norfolk City Council, the council voted to revoke legacy’s CUP. Legacy appealed and sought a preliminary injunction to prevent the city from enforcing the revocation.
“The Fourth Circuit and the Supreme Court of Virginia have both opined that the purpose of a preliminary injunction, or temporary injunction, is to preserve the status quo while the underlying litigation continues. …
“In order for the Court to grant Legacy its requested temporary injunction, Legacy must establish that (1) it is likely to succeed on the merits of its underlying ‘Petition for Appeal,’ (2) it is likely to suffer irreparable harm in the absence of the requested temporary injunction, (3) the balance of equities tips in its favor, and (4) the requested injunction is in the public interest. …
On the merits
“Operating under the presumption that the City’s zoning ordinance is reasonable and recognizing that Legacy essentially admits to violating the terms of its CUP by employing a different security company, that seven of eight City Council members voted to revoke Legacy’s CUP based on all of the information available to them, and that even if Legacy were to prove that City Council’s actions were unreasonable, City Council would have the opportunity at trial to produce evidence that revocation of Legacy’s CUP was fairly debatable, this Court holds that Legacy has not established at this early juncture that it is likely to succeed on its claim that City Council violated Virginia law when it adopted Ordinance 38,746 to revoke Legacy’s CUP.”
“Legacy argues that its right to procedural due process was violated because, unlike a full evidentiary hearing before a board of zoning appeals, City Council procedures provided Legacy only twenty minutes to present evidence before council members voted to revoke its CUP.
“Legacy initially claimed that City Council did not provide adequate notice regarding the City Council Hearing, but it conceded at the temporary injunction hearing that City Council had provided proper notice. Although Legacy complains that its opportunity to respond before City Council was inadequate in terms of the allotted time, City Council appears to have followed the procedures it adopted more than twentyfive years ago.
“Further, Legacy is now engaged in full-blown litigation – with the opportunity for, inter alia, pretrial discovery and motions and a full trial on the merits-pursuant to a postdeprivation statutory right of appeal.
“In light of the notice and opportunity to be heard – including through the submission of responsive documents – that Legacy has had thus far, and that it will have during the course of this litigation, the Court holds that Legacy has not established that it is likely to succeed on its claim that City Council violated Legacy’s right to procedural due process.”
“Legacy’s alleged irreparable injury without the requested temporary injunction is the closure – arguably permanent – of Legacy Lounge and, by extension, the related lost income and lost business opportunity.
“However, as City Council demonstrated at the Hearing, Legacy can continue to operate as a restaurant, although it admittedly must first surrender its Virginia Alcoholic Beverage Control Authority License, must close before midnight, and cannot have live entertainment.
“Legacy claims that, under those conditions, it would be unable to bring in more revenue than its expenses. Although Legacy representatives generally opined about Legacy Lounge’s current income and expenses and the potential financial impact of operating Legacy Lounge without a CUP, Legacy provided no proof of either.
“Between now and trial, Legacy’s alleged harm without a temporary injunction is it possibly going out of business permanently. However, as noted above, City Council established that Legacy can still operate Legacy Lounge as a restaurant, albeit with the likelihood of reduced net revenue.
“By contrast, the harm to City Council, and by extension to Norfolk citizens, with the temporary injunction is the possible detrimental effects to Legacy patrons and the surrounding public if Legacy is allowed to continue to operate as a nightclub, arguably in violation of its CUP.”
“Legacy claims that the requested temporary injunction is in the public interest because it would allow Legacy ‘to conduct lawful business operations’ between now and a trial on the merits. City Council, on the other hand, asserts that Legacy can still conduct business and that revocation of a CUP is in the public interest when an entity is not complying with the CUP’s terms. …
“Legacy did not present to the Court any substantive evidence that, without a CUP, it must cease all operations. In fact, Legacy appears to have conceded that it could operate, admittedly with reduced net revenue that may be insufficient to fully cover its expenses.
“On the other hand, City Council of course is correct that the public has an interest in area entities complying with their CUPs. Here, that includes preventing – to the extent possible – injury to Norfolk citizens that may stem from any CUP non-compliance.
“Considering these interests, the Court holds that, at this early stage in the proceedings, Legacy has not established that issuance of the requested temporary injunction is in the public interest.”
The motion for a preliminary injunction is denied.
Legacy Investments v. Norfolk City Council, Record No. CL22-13201, Oct. 20, 2022. Circuit Court of the City of Norfolk (Lannetti). Samuel K. Walsh for plaintiff, Kevin F. Martingayle for defendants. VLW 022-8-071, 15 pp.