(703) 369-4738

1
Feb
2023

New Water and Sewer Allocation Ordinance Does Not Constitute an Unconstitutional Taking 

Written by: Guy Jeffress

The recent case of PEM Entities LLC v. County of Franklin (2023 WL 105711), out of the United States Court of Appeals (the “Court”), reminds us that the imposition of new rules or restrictions by a local government, although onerous in their application, do not always constitute a diminution of a vested right or an unconstitutional taking. 

The cited case involved the development of a multi-phase, single-family residential community (the “Subdivision”) in Franklin County, North Carolina (the “County”). In 2005 the County approved a single-page “Preliminary Subdivision Plan” for the development (the “Plan”). Notes on the Plan indicated the development would be “served by Franklin County water and sewer to be installed by the developer.” In 2012 the appellant, PEM Entities LLC (“PEM”), acquired 150 acres of undeveloped land located within the Subdivision and subject to the Plan. In 2019 the County adopted a water and sewer allocation ordinance (the “Ordinance”) that established an application process for new water and sewer connections and capped water allotments for new developments. The new restrictions imposed by the Ordinance were not well received by the Subdivision developers, including PEM, who argued they were exempt from the restrictions due to the County’s approval of the Plan in 2005. In the same year, the County passed the Ordinance, PEM, and the other Subdivision developers entered into a settlement agreement with the County (the “Settlement”) in an attempt to resolve disputes involving road and water services. The terms and conditions of the Settlement included the following provision: “except as set forth in this [a]greement,” “[a]ny vested rights accorded to the [p]roperty under the [Plan] shall not be modified or supplemented by any subsequent action including ordinance, rule and/or regulation of [c]ounty.” 

In 2021, PEM sued the county in federal district court, alleging, in part, that the Ordinance effected an unconstitutional taking of PEM’s vested property right to receive water and sewer services under the Plan. The district court dismissed PEM’s complaint reasoning that neither the Plan nor the Settlement “create[s] a property interest for [PEM] in an unlimited right to water and sewer service,” and PEM “failed to demonstrate a concrete particularized injury for Article III standing” on its takings and due process claims. On appeal the Court, reviewing both U.S. Supreme Court concerning takings and due process claims, as well as North Carolina state law regarding vested rights based upon government approvals, found that neither the Plan nor the Settlement created a vested property right, and without a constitutionally protected property interest the “takings and associated due process claims fail as a matter of law.” 

In Virginia, in response to numerous cases concerning the vested rights of property owners, the legislature enacted Code Section 15.2-2307. 15.2-2307(B) sets forth various types of governmental acts which are deemed to be significant affirmative governmental acts allowing development of a specific project. The fifth such act in the list reads as follows: “(v) the governing body or its designated agent has approved a preliminary subdivision plat, site plan or plan of development for the landowner’s property and the applicant diligently pursues approval of the final plat or plan within a reasonable period of time under the circumstances.” Applying the quoted portion of the Virginia statute to the facts of the PEM case would most likely end in the same result, i.e., the preliminary plan was approved, however, according to the cited opinion PEM did not diligently pursue approval of a final plan. In fact, PEM acknowledged on the record that it never requested that Franklin County approve a final plan of subdivision. Additionally, in light of Virginia law, the extent to which the Plan vested PEM with future rights to unlimited water and sewer services is also questionable. 

Land use, zoning, and questions concerning vested property rights are often wrapped up in a complex web of state and local ordinances, prior case law, political change, constitutional rights, and local planning, permitting, and zoning processes. If you are facing land use, zoning, or approval issues with your project, contact the attorneys at Vanderpool, Frostick and Nishanian, P.C. for assistance. 


Call one of the attorneys at Vanderpool, Frostick & Nishanian, P.C., or email and let us see if we can assist you.

This blog post is not intended to provide legal advice or substitute for the advice of legal counsel with respect to specific facts and situations. See disclaimer

25
Jan
2023

Are You Keeping Proper Records?

Written by: Guy Jeffress

The recent federal case of Renee Mason, DPM, v. Brian Mazzei, Et Al., 2023 WL 234777, out of the U.S. District Court for the Western District of Virginia, highlights the importance of adhering to proper record-keeping formalities, even if you are involved in the operating of closely held company. The case at hand involved a small professional corporation founded in 1995. After reviewing the evidence and holding a hearing on a motion for summary judgment, the court found that the lack of resolutions, consents, a properly kept share register, the failure to issue share certificates, and other conflicting evidence, including the testimony of Mason and Mazzei, made it difficult to determine the identity of the shareholders, or shareholder, of the corporation. To quote the opinion, “The record is unclear whether stock certificates were ever issued and whether the parties paid for their shares. . . The only stock certificate book in the record is full of blank certificates beginning at the certificate marked number 0. Mazzei testified that no money was ever paid for the stock. Mason testified that she believed the parties had paid for the stock . . .” Thus, there remained a genuine issue of material fact as to whether either or both the plaintiff Mason, and/or defendant Mazzei were in fact, shareholders. The inability of the court to make a determination will result in the further expenditure of time and money to determine something that could (and should) have been resolved years before. The everyday effort of operating a business can result in a situation where the preparation and maintenance of company records gets put on the back burner. If you have questions or concerns about record-keeping formalities for your own company, please contact the attorneys at Vanderpool, Frostick & Nishanian, P.C.


Call one of the attorneys at Vanderpool, Frostick & Nishanian, P.C., or email and let us see if we can assist you.

This blog post is not intended to provide legal advice or substitute for the advice of legal counsel with respect to specific facts and situations. See disclaimer

19
Jan
2023

Take Heed!

Written by: Guy Jeffress

Virtual currency exchange Bitzlato was identified as a “primary money laundering concern” in connection with Russian illicit finance.

Today (Jan 18, 2023) the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) issued an order that identifies the virtual currency exchange Bitzlato Limited (Bitzlato) as a “primary money laundering concern” in connection with Russian illicit finance and “advances the political and economic destabilization efforts of the Government of Russia.” The order is the first order issued pursuant to section 9714(a) of the Combating Russian Money Laundering Act and highlights the serious threat that businesses which facilitate and support Russian illicit finance pose to U.S. national security and the integrity of the U.S. financial sector. The order prohibits certain transmittals of funds involving Bitzlato by any covered financial institution.

News Release: https://www.fincen.gov/news/news-releases/fincen-identifies-virtual-currency-exchange-bitzlato-primary-money-laundering

Order: https://www.fincen.gov/sites/default/files/shared/Order_Bitzlato_FINAL%20508.pdf

FAQs: https://www.fincen.gov/sites/default/files/shared/FAQs_Bitzlato%20FINAL%20508.pdf


Call one of the attorneys at Vanderpool, Frostick & Nishanian, P.C., or email and let us see if we can assist you.

This blog post is not intended to provide legal advice or substitute for the advice of legal counsel with respect to specific facts and situations. See disclaimer

18
Jan
2023

Concept Of “Disguised,” Or “De Facto” Dividends Discussed In Recent Maryland Case.

Written by: Guy Jeffress

Edward MEKHAYA v. EASTLAND FOOD CORPORATION, et al., 2022 WL 17843057

Appellate Court of Maryland (formerly the Court of Special Appeals of Maryland)

In a first for Maryland, the Appellate Court of Maryland, relying on persuasive authority from other jurisdictions, paved the way for the recognition of claims of shareholder oppression based upon the payment of “de facto” or “disguised” dividends. In 2000, Appellant, Edward Mekhaya, was hired by Eastland Food Corporation (the “Corporation”) and eventually rose to the position of Vice President of Operations. In 2008, Mekhaya received ownership interest in the Corporation in the form of 28% of its stock. In addition to holding the officer position, Mekhaya was a director of the corporation. In September 2017, a new president was elected by the board of directors over the objections of Mekhaya. In October 2018 Mekhaya was not re-elected to the board of directors, and a few days later his employment with the Corporation was terminated. He remained a 28% shareholder of the Corporation. In his lawsuit, filed in 2021, Mekhaya alleged shareholder oppression, i.e., that Corporation management, instead of declaring a dividend, awarded themselves large bonuses which were in fact “disguised” dividends, which had the effect of rendering Mekhaya’s block of shares worthless. At the trial level, the court granted summary judgment to the Corporation, finding that Mekhaya failed to state a claim for shareholder oppression. The appellate court relying in part on the concept of “de facto” or “disguised” dividends reversed the trial court noting that the question, rather, “is whether Mekhaya’s complaint, on its face, alleged facts sufficient to establish that his expectations as a shareholder were reasonable (when viewed through an objective lends) and that Appellees defeated substantially one or more of those expectations.”


Call one of the attorneys at Vanderpool, Frostick & Nishanian, P.C., or email and let us see if we can assist you.

This blog post is not intended to provide legal advice or substitute for the advice of legal counsel with respect to specific facts and situations. See disclaimer

19
Dec
2022

2022 Legal Elite

Vanderpool, Frostick & Nishanian, P.C. is honored and proud to announce that 11 of its attorneys have been selected by the Virginia Business Magazine as 2022 Legal Elite. Virginia Business Magazine recognizes each year the leading attorneys in Virginia by practice area. We congratulate our selected attorneys for their great achievement.

V. Rick Nishanian
V. Rick Nishanian
Kristina Keech Spitler
Kristina Keech Spitler
Martin Crim
Martin Crim
Michael R. Vanderpool
Michael R. Vanderpool
Randolph D. Frostick
Randolph D. Frostick
Lisa Shea
Robert Zelnick
Christopher Collins
Christopher Collins
Olaun Simmons
Olaun Simmons
Tyler Blaser, Associate
Tyler Blaser
Monica Munin, Associate
Monica Munin
1
Sep
2022

Prince William County’s Pathway to the 2040 Comprehensive Plan: One Step Closer

Written by: Olaun Simmons, Esq.

The Prince William County Board of Supervisors have been working diligently to finalize the 2040 Comprehensive Plan. When it is adopted by the Board of County Supervisors, the 2040 Comprehensive Plan will help guide future land use and development for properties in Prince William County.  

The most recent draft of the Land Use Chapter of the 2040 Comprehensive Plan was issued in August 2022. The goal of the Land Use Chapter is to provide an official statement of the County’s vision for land use and to provide the aspirational goals for the County’s future development and growth.

Additionally, the “Pathway to 2040 Proposed Long-Range Use Interactive Map” provides information regarding the proposed long-range use designations for properties within the County including primary and secondary uses, compatible zoning districts, and density designations.

If you have questions related to the draft 2040 Comprehensive Plan and the ways in which it may affect your rezoning application, special use permit application, or the desired use of your property, please contact me at (703) 369-4738 or osimmons@vfnlaw.com.


This blog post is not intended to provide legal advice or substitute for the advice of legal counsel with respect to specific facts and situations. See disclaimer

17
Aug
2022

The Mixed Use District  – A Flexible Approach to Use and Density

Written by: Olaun Simmons, Esq.

In 2021, Prince William County adopted a new zoning district entitled “Mixed Use District (MXD).” The new Mixed Use District seeks to provide a thoughtful approach to development because it allows for flexible land development, promotes
transit-oriented development, and encourages a mix of residential and commercial uses in a single zoning designation. Under the MXD umbrella, there are three tailored mixed-use zoning designations that provide specific details and guidance regarding allowable uses and density.

Mixed Use District-Neighborhood (T-2)

The Mixed Use District-Neighborhood (MXD-N) is intended for smaller-scale mixed-use developments that are surrounded by lower-density residential areas, as well as in neighborhood corridors, or at the edges of town centers. The MXD-N allows for by-right uses such as single-family detached homes, craft breweries, and coffee shops; secondary uses such as child-care facilities and farmer’s markets, and special uses such as kennels and indoor shooting ranges. In terms of density, the MXD-N has a Transect 2 designation which allows for a residential density of 0 – 4 du/acre and non-residential density of 0 – 0.23 FAR.

Mixed Use District-Community Zoning District (T-3 and T-4)

The Mixed Use District-Community Zoning District (MXD-C) is intended to encourage a diversification of uses, including residential, commercial, and civic uses. The MXD-C is intended for a variety of sites and in smaller mixed-use areas that are well served by transit. The MXD-C allows for by-right uses such as distilleries, hotels, and religious institutions; secondary uses such as attached single-family dwellings and farmer’s markets; and special uses such as bed and breakfasts, retail stores, and restaurants. In terms of density, the MXD-C allow for more density than the MXD-N. The MXD-C has two transect designations: T-3 and T-4. Transect 3 allows for a residential density of 4 – 12 du/acre and non-residential density of up to 0.57 FAR, and Transect 4 allows for a residential density of 8 – 24 du/acre and non-residential density of up to 0.1.38 FAR.

Mixed Use District – Urban Zoning District (T-5 and T-6)

Finally, the Mixed Use District – Urban Zoning District (MXD-U) is intended to encourage the development or redevelopment of mixed-use centers that combine new or existing retail development with a variety of housing, offices, studios, live-work space, civic buildings, and other complementary uses arranged in a cohesive, compact, and walkable environment. The MXD-U zone must be located along existing or planned high-capacity multi-modal transportation corridors. The MXD-U allows for by-right uses such as assisted living facilities, multi-family dwellings, and hotels; special uses such as attached single-family dwellings on lots in excess of one acre; and special uses such as restaurants and self-storage centers.  In terms of the allowable density, the MXD-U allows for the most density. The MXD-U has two transect designations: T-5 and T-6. Transect 5 allows for a residential density of 20 – 50 du/acre and non-residential density of up to 2.30 FAR, and Transect 6 allows for a residential density of 50 -100 du/acre and non-residential density of up to 3.0 FAR.

The new MXD zoning designation is designed to provide developers with the flexibility needed to obtain the desired mix of commercial and residential uses and density on the site. The flexibility provided by the MXD will also be useful for developers who are seeking to revitalize aging properties within Prince William County.


This blog post is not intended to provide legal advice or substitute for the advice of legal counsel with respect to specific facts and situations. See disclaimer

9
Aug
2022

The Importance of A Guaranty.

Written by: Guy Jeffress

The decision of the Supreme Court of Virginia in Grayson v. Westwood Buildings L.P., 300 Va. 25, 859 S.E.2d 651 (2021) highlights the need to confirm a tenant’s financial ability to pay the rent during the term of a lease and obtain personal guaranties regarding the same.

The facts of the cited case are complex but can be briefly summarized as follows: Landlord obtained judgments for unpaid rent against tenants. Landlord, upon finding that the tenants and their principals had engaged in a number of transactions that left the tenant entities all but insolvent, filed suit against both tenants and other parties claiming, in part, that the defendants engaged in a series of fraudulent conveyances and sham transactions designed to avoid the judgments. The trial court found in favor of landlord making each of the remaining defendants jointly and severally liable for unpaid rent, awarding the landlord attorney fees, and imposing sanctions. On appeal, however, the Supreme Court of Virginia reversed the trial court, vacated the judgments, and entered the opinion as final judgment. The court noted that the “badges of fraud” relied upon by the trial court to support its findings “did not apply here.” The opinion also noted that the landlord failed to perfect landlord’s security interest in tenant’s inventory and other assets (as landlord was permitted under the terms and conditions of the lease) and did not obtain a signed personal guaranty from principals of the tenants.

The purpose of this article is not to undertake a deep dive in the law of fraudulent conveyances but to illustrate some basic strategies a landlord could use to avoid an outcome similar to that in the above-referenced case.

First, as regards landlord lien rights we have noticed that many landlords are quick to negotiate their lien rights away. The lien right is a powerful remedy to landlord. If a tenant objects because the rights of a lender or lessor of equipment are primary, offer to subordinate landlord’s lien rights to that of the primary lien holder until such time as the primary lien is satisfied or extinguished. It is better to be in a subordinated position than to waive the lien rights altogether.

Second, obtain personal guaranties from tenant principals and their spouses. Under Virginia law guaranty agreements must be independent agreements that are supported by separate consideration. The terms and conditions of a guaranty should also include certain waivers including a waiver of the application of certain Virginia statutes. The absence of said waivers could delay or jeopardize a landlord’s recourse against the named guarantor.

Third, when vetting a tenant, a landlord should undertake sufficient due diligence to accurately determine the tenant’s management structure and its credit worthiness. Additionally, the landlord should try to keep tabs on a tenant’s financial condition throughout the term of the lease by including language in the lease that allows the landlord to request, from time to time, financial disclosures from a tenant which are (preferably) audited or certified as true and correct by a principal of the tenant.

Fourth, we advise letting one of our lease attorneys review letters of intent prior to sending them to prospective tenants. Our financing and lease attorneys frequently notice issues in letters of intent that put the landlord on its hind legs before the first draft of the lease is even circulated.

Fifth, do not negotiate against yourself and offer concessions the tenant does not ask for, and do not give into the frequent lament of tenant brokers, “it’s not market” without substantial and verifiable data to back it up.

Recent changes in the economy and lender practices are prompting building owners to review their lease forms. If you are feeling challenged by current circumstances or have not reviewed your lease forms in the last few years consider having the lease attorneys at Vanderpool, Frostick & Nishanian, P.C., review your lease and lease-related documents.

Call one of the attorneys at Vanderpool, Frostick & Nishanian, P.C., or email and let us see if we can assist you.

This blog post is not intended to provide legal advice or substitute for the advice of legal counsel with respect to specific facts and situations. See disclaimer

25
May
2022

Community Meeting with American Legion Post 114

Written by: Olaun Simmons

VF&N’s Olaun Simmons attended a community meeting with American Legion Post 114 and People, Inc. to discuss the revitalization of the historic American Legion Post building and the development of duplexes on Prince William Street in Manassas, Virginia.

If you have any questions on how VF&N can assist you, please feel free to reach out by way of phone or email Olaun Simmons.

This blog post is not intended to provide legal advice or substitute for the advice of legal counsel with respect to specific facts and situations. See disclaimer

16
May
2022

Abandoned Permits

Written by: Guy Jeffress

On April 25, 2022, Prince William County Development Services, Building Development Division, issued Policy 1.03 entitled Abandoned Building Permits and Applications, and is in the process of auditing and revoking “abandoned” permit applications and issued permits. In general, an issued permit may be revoked if work on the site authorized by the permit is not commenced within six months after the issuance of a permit, or if the authorized work on the site is suspended or abandoned for a period of six months after the permit is issued; however, permits issued for plumbing, electrical and mechanical work shall not be revoked if the building permit is still in effect.

If current events including supply chain disruptions have delayed your project be sure to check the status of your permit applications and permits. The full policy along with a process flow chart can be seen below and found here https://www.pwcva.gov/department/building-development-division/abandoned-building-permits-applications.

Call one of the attorneys at Vanderpool, Frostick & Nishanian, P.C., or email and let us see if we can assist you.

This blog post is not intended to provide legal advice or substitute for the advice of legal counsel with respect to specific facts and situations. See disclaimer