City immune over shopping center demolition

A city was performing a governmental function when it demolished a shopping center by a controlled burn and was therefore entitled to sovereign immunity on the property owner’s tort claims and request for declaratory relief, the Supreme Court of Virginia has unanimously ruled.

Shree Arihant Motel Inc. owns real property in Hopewell near the intersection of Interstate 295 and State Route 36, where Colonial Corner, a shopping center, was located.

After the shopping center was vacant for many years and the city received reports about squatters and trespassers — including children — the city demolished the shopping center.

Shree Arihant Motel filed a civil complaint, alleging that the city committed intentional trespass, statutory business conspiracy, tortious interference with a business expectancy and waste. The company also filed a takings claim based on the state constitution and a request for declaratory judgment.

The city acknowledged that it was not immune from the takings claim but filed a plea in bar based on sovereign immunity for the rest of the claims. The circuit court denied the plea in bar.

On appeal, the state’s highest court reversed.

“When the City exercised its discretionary authority to demolish a blighted shopping center that posed a threat to public safety, it engaged in a governmental function that triggered the protection of municipal sovereign immunity,” Justice Teresa M. Chafin wrote.

The 10-page opinion is City of Hopewell v. Shree Arihant Motel, Inc. (VLW 026-6-031).

Scott C. Oostdyk of O’Hagan Meyer in Richmond represented Shree Arihant Motel.

“Lawyers need to know that the court is protective of sovereign immunity and fashion their pleadings accordingly,” he said.

Richmond attorney Robert W. Loftin of McGuireWoods represented the city and declined to comment on the decision.

Squatters and trespassers Colonial Corner was built in the 1970s on property owned by Shree Arihant Motel and became vacant following two unsuccessful attempts to redevelop the property in 2008 and 2014.

In a February 2019 letter, a city official informed Shree Arihant Motel that Colonial Corner was blighted; a few months later, a second letter informed the company that demolition of the shopping center was recommended and invited Shree Arihant Motel to address the issue before Hopewell City Council at a public meeting in July.

A company representative spoke at the meeting and explained that he was trying to find new tenants and had spoken to restaurant chains that were interested in renting space.

The City Council ordered Shree Arihant Motel to “board up” the shopping center and “work with the city to develop a plan concerning the property.”

After the hearing, a building official proposed to demolish Colonial Corner by a controlled burn conducted by the city’s fire department. Although Shree Arihant Motel did not agree to allow the burn, the representative said he would consider the proposal and asked the city to provide a cost estimate.

At its August meeting, Hopewell City Council voted to move forward with planning the demolition of Colonial Corner.

In May 2020, the city grew concerned about trespassing on the property and ordered Shree Arihant Motel to construct a fence. The company complied and paid for a fence. However, in January 2021, a building official informed City Council that squatters and trespassers, including children, continued to access Colonial Corner.

The building was “unsafe” and posed an “immediate danger” to the public, asserted the official, who requested permission to proceed with demolition.

The city notified Shree Arihant Motel by letter that the burn would occur “on or soon after Feb. 26, 2021.” The burn took place on Feb. 26, and the resulting debris was removed.

Shree Arihant Motel filed suit. The second amended complaint alleged that the city committed intentional trespass, statutory business conspiracy, tortious interference with a business expectancy and waste, as well as a takings claim based and a request for declaratory judgment regarding Shree Arihant Motel’s liability for certain costs and penalties imposed by the city.

The circuit court denied the city’s plea in bar and the city appealed.

Immunity ‘alive and well’

Sovereign immunity is “alive and well in Virginia,” the court noted, protecting municipalities from claims arising from the performance of governmental functions, but not proprietary functions.

While Shree Arihant Motel pointed out that the city failed to comply with statutory and municipal provisions governing spot blight abatement — City Council was required to adopt a specific ordinance declaring Colonial Corner to be a blighted property and failed to do so — the city’s immunity was not contingent upon its compliance with statutory and municipal provisions, the court explained.

“We have consistently held that municipal sovereign immunity is contingent upon the nature of the actions underlying the claims at issue,” the court wrote. “When viewed together, the allegations of the second amended complaint and the attached exhibits establish that the City was — at least partially — engaged in a governmental function when it burned Colonial Corner.”

The second amended complaint “plainly” showed that the city was attempting to abate blight when it demolished the shopping center, the court said, citing the issue in notices sent to Shree Arihant Motel.

Governmental function

Blight abatement is a governmental function, the court said.

“It involves the exercise of a municipality’s discretionary authority and promotes the health, safety, and general welfare of a municipality’s citizens,” the court wrote.
The court acknowledged that the allegations suggested that the city may have been motivated by the potential redevelopment of the property when it demolished the shopping center, but the abatement of blighted property often promotes economic development, the court said.

“The City’s pursuit of economic development opportunities, however, is irrelevant to the outcome of this case,” the court said. “At most, the second amended complaint establishes that the City burned

Colonial Corner for dual purposes. While the City may have considered the redevelopment of the Colonial Corner property when it decided to burn the shopping center, it also burned the shopping center to eliminate blight. Therefore, the claims at issue in this case arise — at least in part — from the performance of a governmental function.”

Reversing the circuit court’s judgment, the court held that the city has sovereign immunity from all claims with the exception of Shree Arihant Motel’s takings claim.

City of Hopewell v. Shree Arihant Motel, Inc.

ISSUE: Was a city performing a governmental function when it demolished a shopping center by a controlled burn and therefore entitled to sovereign immunity on the property owner’s tort claims and request for declaratory relief?

ANSWER: Yes (Supreme Court of Virginia)

ATTORNEYS: Scott C. Oostdyk, Richmond, O’Hagan Meyer (plaintiff), Robert W. Loftin, Richmond, McGuireWoods (defendant)

• City of Hopewell v. Shree Arihant Motel, Inc.