Present: Carrico, C.J., Compton, 1 Lacy, Hassell, Keenan, Koontz,
and Kinser, JJ.
CITY OF VIRGINIA BEACH
OPINION BY
v. Record No. 990919 JUSTICE LAWRENCE L. KOONTZ, JR.
March 3, 2000
CARMICHAEL DEVELOPMENT COMPANY
FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH
H. Thomas Padrick, Jr., Judge
In this appeal, we consider whether the trial court erred
in entering judgment against a locality for alleged tortious
interference with a contract.
BACKGROUND
The Virginia Beach Society for the Prevention of Cruelty to
Animals (the SPCA) acquired land (the property) in the City of
Virginia Beach near the corner of General Booth Boulevard and
Oceana Boulevard from the City for the operation of an animal
shelter. The original agreement between the SPCA and the City
provided that the property would revert to the City if the SPCA
discontinued its use of the property. Subsequently, the City
agreed to waive the reversion right and deeded the property to
the SPCA in fee simple so that the SPCA might benefit from a
sale of the property.
1
Justice Compton participated in the hearing and decision of
this case prior to the effective date of his retirement on
February 2, 2000.
The SPCA thereafter relocated its shelter operation, but
was unable to find a purchaser for the property. To enhance the
marketability of the property, the SPCA obtained a rezoning of
the property from agricultural to commercial use in 1986. As
part of the rezoning, the City required the SPCA to dedicate “an
appropriately sized controlled access and scenic easement along
the frontage on General Booth Boulevard.”
In April 1997, the SPCA entered into a contract for the
sale of the property to Carmichael Development Company
(Carmichael) for $610,000. Carmichael intended to develop the
property as a shopping center and employed an engineering firm
to draft a site development plan. Because the site development
plan would require approval from the City director of planning
or his assignee (the City planning office) for several
modifications to the property, Carmichael and the SPCA
subsequently amended their contract to include a condition that
Carmichael obtain approval of a site plan for the proposed
shopping center from the Virginia Beach City Council by April 3,
1998. Relevant to this appeal, Carmichael desired to obtain
approval for a “curb cut” on General Booth Boulevard. A “curb
cut” is an opening from a highway into a parking lot cut through
a curb and/or the sidewalk.
Pursuant to Virginia Beach City Code, App. C, § 3.1,
Carmichael requested a “preapplication conference” with the City
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planning office. Under this ordinance, a “preapplication
conference” is an informal meeting between a developer and the
City planning office to discuss a general proposal for
development. The request for a conference does not constitute a
formal application for approval of a site development plan or
otherwise satisfy the requirements for filing such a plan.
After reviewing Carmichael’s “preliminary site plan,” the
City planning office advised Carmichael that the proposed curb
cut would not be approved because of public safety concerns over
anticipated traffic problems the proposed curb cut would create
on General Booth Boulevard. Although Carmichael’s engineers
wrote the planning officials several times indicating that
Carmichael wished to receive a formal decision on the proposed
curb cut so that the matter could be “appealed” to the City
Council, a formal site plan application was never submitted to
the City planning office for a recommendation, nor did
Carmichael pay a filing fee as required by the City code.
Accordingly, the City planning office took no action on
Carmichael’s request and the matter was not forwarded to the
Office of the City Manager to be placed on the City Council’s
agenda.
The SPCA informed the City that the failure to approve the
curb cut would defeat the consummation of its contract with
Carmichael, and that it would result in the organization losing
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needed revenue. The SPCA asked the City to reconsider the
decision to disapprove the curb cut. Thereafter, the City
planning office began to explore the option of the City
purchasing the property from the SPCA as part of a policy to
acquire “troublesome parcels” to control development. On March
26, 1998, the City made a formal written offer to purchase the
property from the SPCA for the same price Carmichael had
offered.
On April 3, 1998, Carmichael informed the SPCA that it
intended to file suit against the City to obtain an injunction
to prohibit the City from acquiring the property. Carmichael
requested an extension of its contract right to May 3, 1998 and
offered to increase the purchase price by $5,000. The SPCA
declined Carmichael’s request for an extension and subsequently
agreed to sell the property to the City.
On April 3, 1998, Carmichael filed a bill of complaint
contending that the City tortiously interfered with Carmichael’s
contract to purchase the property from the SPCA by refusing to
approve the requested curb cut and subsequently offering to buy
the property from the SPCA. 2 Carmichael sought monetary damages
in addition to injunctive relief.
2
Carmichael subsequently argued to the trial court that the
City further interfered with the contract by denying Carmichael
a hearing before City Council on its curb cut request. Although
4
On July 31, 1998, the trial court denied Carmichael’s
request for a temporary injunction to prohibit the sale of the
property to the City, finding that Carmichael had an adequate
remedy at law. Thereafter, the parties agreed to transfer the
case from the chancery docket to the law docket and to limit the
issue of the suit to monetary damages for the City’s alleged
tortious interference with Carmichael’s contract with the SPCA.
On September 9, 1998, the City filed a motion for summary
judgment asserting, inter alia, that it was protected by
sovereign immunity because the actions of which Carmichael
complained fell within the proper governmental function of
controlling land development and regulating and controlling
traffic for public safety and welfare. The City was
subsequently granted leave to file an amended answer asserting a
defense of sovereign immunity.
The trial court heard argument on the motion for summary
judgment immediately prior to trial and granted the City partial
summary judgment on the ground that the approval or denial of a
curb cut was a governmental function protected by sovereign
immunity and, therefore, that it could not form the basis for a
this theory was not expressly pled in the bill of complaint, the
trial court apparently accepted that it was subsumed within the
allegations relating to the denial of the curb cut by the City’s
planning officials.
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tort claim against the City. The trial court permitted
Carmichael’s case to go forward on the theory that the City’s
offer to purchase the property tortiously interfered with
Carmichael’s contract with the SPCA. The case was also
permitted to go forward on the theory that the actions of the
City planning office denied Carmichael the opportunity to
present the request for a curb cut to City Council and, thus,
interfered with its efforts to meet the condition of its
contract with the SPCA. See note 2, supra.
After evidence in accord with the above-recited facts was
presented, the trial court, consistent with a concession made by
Carmichael, instructed the jury “that the mere fact that the
City made an offer to purchase the SPCA parcel is not improper.”
The jury was further instructed that “[i]f you find that the
City’s refusal to allow the “curb cut” on General Booth
Boulevard was the only reason that Carmichael did not purchase
the property, then you shall find that the City’s inaction was
the proximate cause of Carmichael’s inability to complete the
contract to purchase” the property. The jury was also
instructed to find its verdict for Carmichael if it found “by
the greater weight if the evidence . . . that the City used
improper methods to cause the SPCA to terminate the contract.”
The jury returned its verdict for Carmichael and awarded
damages of $74,000. The trial court denied the City’s motion to
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set aside the verdict, Carmichael’s motion for additur, and
entered judgment on the jury’s verdict. We awarded the city
this appeal.
DISCUSSION
Although the City challenges the judgment against it on
several grounds, the dispositive issue in this appeal is whether
the trial court erred in determining that the doctrine of
sovereign immunity did not shield the City from Carmichael’s
claim of tortious interference with a contract relationship
under the specific facts of this case.
“The doctrine of sovereign immunity is ‘alive and well’ in
Virginia.” Messina v. Burden, 228 Va. 301, 307, 321 S.E.2d 657,
660 (1984). Sovereign immunity is “‘a rule of social policy,
which protects the state from burdensome interference with the
performance of its governmental functions and preserves its
control over state funds, property, and instrumentalities.’”
Hinchey v. Ogden, 226 Va. 234, 240, 307 S.E.2d 891, 894 (1983)
(quoting 72 Am.Jur.2d States, Territories, and Dependencies § 99
(1974)). Most importantly, the doctrine of sovereign immunity
provides for “smooth operation of government” and prevents
“citizens from improperly influencing the conduct of
governmental affairs through the threat or use of vexatious
litigation.” Messina, 228 Va. at 308, 321 S.E.2d at 660; accord
Lentz v. Morris, 236 Va. 78, 81, 372 S.E.2d 608, 610 (1988).
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It is a frequently recited proposition that a municipality
is authorized to perform both “governmental” and “proprietary”
functions. Governmental functions, as the term implies, are
powers and duties to be performed exclusively for the public
welfare. When a municipality exercises, or fails to exercise, a
governmental function, it is shielded from liability by
sovereign immunity on the theory that the municipality is
performing as an agency of the state. In contrast, proprietary
functions are privileges and powers performed primarily for the
benefit of the municipality and, thus, do not enjoy the shield
of sovereign immunity. See Hoggard v. Richmond, 172 Va. 145,
147-48, 200 S.E. 610, 611 (1939). The regulation of traffic or
a similar activity intended to protect the general public safety
is a governmental function of a municipality. See, e.g.,
Transportation Inc. v. Falls Church, 219 Va. 1004, 1006, 254
S.E.2d 62, 64 (1979). The routine maintenance of a
municipality’s streets, however, is a proprietary function.
See, e.g., Bialk v. City of Hampton, 242 Va. 56, 58, 405 S.E.2d
619, 620 (1991). As just these few examples illustrate, while
the principle of law is clear and well-established, the
application of it to various municipal activities is sometimes
difficult. This is particularly so in cases where the activity
in question has aspects of both governmental and proprietary
functions. However, when governmental and proprietary functions
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coincide, “the governmental function is the overriding factor”
and the doctrine of sovereign immunity will shield the locality
from liability. Taylor v. Newport News, 214 Va. 9, 10, 197
S.E.2d 209, 210 (1973).
Carmichael has not assigned cross-error to the trial
court’s finding that the denial of the curb cut requested by
Carmichael in its preliminary site plan was a governmental
function protected by sovereign immunity and, therefore, could
not constitute tortious interference with the contract in
question. Accordingly, that aspect of the trial court’s ruling
is not subject to review in this appeal. The City contends,
however, that the trial court’s judgment that sovereign immunity
barred any claim premised on the denial of the curb cut should
have been dispositive of Carmichael’s entire claim and that the
trial court erred in not extending that judgment to its
“necessary and logical conclusion.”
Carmichael responds that the City “does not understand this
case.” Carmichael asserts that while the decision to deny the
curb cut requested in the preliminary site plan was a
governmental function shielded by sovereign immunity, “what the
City [planning office] did to prevent . . .a hearing” of
Carmichael’s appeal of that decision before the City Council
constituted tortious interference. In effect, Carmichael is
asserting that while the governmental function of reviewing the
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preliminary site plan would be subject to sovereign immunity,
allegedly improper actions of the City’s employees relevant to
that review would not be shielded from liability. As previously
noted, it was on this theory of liability that the trial court
permitted Carmichael to proceed at trial.
While the City’s contention is facially compelling, we need
not address whether sovereign immunity applies to this theory of
liability for the sufficient reason that Carmichael’s own
evidence contradicts its allegation that it was denied a hearing
before the City Council because of the actions, improper or
otherwise, of the City’s officials. See Massie v. Firmstone,
134 Va. 450, 462, 114 S.E. 652, 656 (1922). The record is clear
that Carmichael never complied with the procedures for obtaining
a formal decision concerning the curb cut designated in its site
plan from the City planning office. To the contrary, the record
shows that Carmichael’s engineers sought only to have the
informal opinion offered at the “preapplication conference”
reviewed by the City Council. There is no mechanism provided in
the City’s ordinances for such a review. Moreover, since
Carmichael failed to file the appropriate site plan and pay the
required fee, it is self-evident that there was no formal action
by the planning office upon which the City Council could have
ruled.
10
During oral argument, counsel for Carmichael contended that
submission of the appropriate site plan for a formal decision
would have been redundant since the planning officials had
already indicated that the plan, as reviewed in the informal
conference, would not be approved. However, there is nothing
redundant about following the procedures required by law.
Carmichael was cognizant of the necessary procedures and cannot
be heard to complain that it was denied a hearing before the
City Council when it failed to follow the procedures required to
obtain that hearing.
Finally we address the City’s contention that its offer to
purchase the property was a governmental act protected by
sovereign immunity. Although at trial Carmichael conceded, and
the jury was instructed, that the City’s offer to purchase the
property was not per se improper since the contingent provision
for approval of the curb cut in Carmichael’s contract with the
SPCA had not occurred, Carmichael contends that the City’s
purpose in denying approval of that curb cut was to facilitate
the City’s acquisition of the property and, thus, that the offer
to purchase the property constituted tortious interference.
Unquestionably, when a locality acquires real estate for a
valid governmental purpose, whether by contract or condemnation,
that act is governmental in nature. Carmichael contends,
however, that in this instance, the City acquired the property
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for a strictly proprietary purpose. Carmichael noted at trial,
for example, that the property was assessed at almost twice the
proposed purchase price and, thus, the City might have been
motivated by a desire for profit.
We agree that the City’s policy of acquiring by contract
and then reselling or leasing “troublesome parcels” has a
proprietary aspect. However, that policy also has an aspect
that is a governmental function. The facts developed at trial
showed that the principal purpose of that policy is to resolve,
efficiently and without resort to litigation, disputes over the
proposed use of vacant land within the City in order to control
and direct development consistent with the City’s public safety
concerns of vehicular traffic impacted by that development.
In addition, the record further undercuts Carmichael’s
contention that the City was motivated solely by a proprietary
interest in acquiring the property. First, it is undisputed
that the City was willing to resell the property to Carmichael
at the same price for which it was acquired, providing only that
Carmichael should accept the limitation that there would be no
curb cut on General Booth Boulevard. Second, the City’s
motivation in originally deeding the property to the SPCA and
then subsequently reacquiring it was consistent with the City’s
stated purpose to benefit the charitable purposes of the SPCA
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that benefited the City and its citizens, which is an
appropriate act for a local government. See Code § 15.2-953(A).
In short, while there was a proprietary aspect to the
City’s act of acquiring the property, we are of opinion that on
the facts of this case the overriding factor in the City’s
action was a governmental function to benefit the welfare and
safety of the public. Thus, we hold that the City’s actions
were shielded by sovereign immunity and could not constitute
tortious interference with Carmichael’s contract with the SPCA.
CONCLUSION
For these reasons, we will reverse the judgment of the
trial court and enter final judgment for the City.
Reversed and final judgment.
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