Virginia Real Estate, Land Use & Construction Law : Virginia Construction Lawyers & Attorneys : Bean Kinney & Korman Law Firm : VA Real Estate, Land Use & Zoning

We have finally reached the last of the five cases from December’s Case Watch with the Virginia Supreme Court’s recent decision in Advanced Towing Company, LLC, et al. v. Fairfax County Board of Supervisors, Record No. 091180.

Virginia Code Section 46.2-1232 (A) allows localities to regulate towing of trespassing vehicles by ordinance, but is silent on the mode or manner of how to carry out that authority. The last sentence of Section 46.2-1232 provides that if a vehicle is towed from one locality to another, the local ordinance of the locality from which the vehicle was towed governs, if that locality has an ordinance.

Fairfax County took advantage of its discretion to have an ordinance regulating the towing of cars, and passed Section 82-5-32, which contains the following language in Subsection (e):

Every site to which trespassing vehicles are towed shall comply with the following requirement: (1) A tow truck operator must tow each vehicle to a storage site located within the boundaries of Fairfax County….

Three towing companies – Advanced Towing in Arlington County, Roadrunner Wrecker in Loudoun County and King’s Towing in the City of Fairfax – got together to challenge Section 82-5-32 (e). The towing companies each had property management clients within Fairfax County, but Section 82-5-32 (e) exposed them to prosecution for towing vehicles to their storage lots outside of Fairfax County. The companies argued that Section 82-5-32 (e) unfairly discriminated against towing companies outside of Fairfax County and favored companies inside the county, with no rational basis for that discrimination. They also argued that the ordinance ran afoul of the Dillon Rule, exceeded the county’s authority under 46.2-1232.

Regarding the Equal Protection argument, the parties agreed that the ordinance did not involve a suspect classification or fundamental constitutional right, so the “rational basis” test applied. The towing companies argued that forcing them to store the cars in Fairfax County was irrational because their storage lots are located within five and a half miles of Fairfax County, and allowing them to tow vehicles to those lots would better serve the public. Fairfax County justified the territorial limitation by arguing that Section 82-5-32 had many provisions for safeguarding towed cars, such as nighttime illumination, fencing and posted signs. Under the last sentence of Virginia Code Section 46.2-1232 (A), if a car was taken from Fairfax County and towed to a different locality, Section 82-5-32 controlled, creating a regulatory nightmare for Fairfax County. The trial court and the Virginia Supreme Court agreed that Fairfax County’s argument provided a rational basis for the territorial limitations in Section 82-5-32.

Regarding the Dillon Rule argument, the towing companies argued that the ordinance went beyond the power conferred on the localities to regulate towing vehicles under Virginia Code Section 46.2-1232. The trial court and the Virginia Supreme Court once again sided with Fairfax County. The ordinance allows localities to permit vehicles to be towed outside their borders, but did not compel the localities to do so. Nothing else in Section 46.2-1232 mandated where vehicles are to be towed. The Court concluded that localities can exercise reasonable discretion in setting territorial limits regarding where towed vehicles may be stored without running afoul of the Dillon Rule.
 

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Part I – Builders Review of Purchase Agreement

           Virginia has experienced several years now of a declining residential real estate market, marked by periods of low sales, high inventory and declining prices. Note that recently the prices and inventory have stabilized, but certainly activity has slowed again now that the federal tax credits for homebuyers has expired. Given the current state of the residential real estate market, many buyers experience remorse and attempt to terminate their purchase agreements and receive a full refund of their deposit from the seller.

            Unfortunately for home builders, many of their "form" purchase agreements were drafted before the current downturn — at a time when sellers held all of the negotiating advantages — and the resulting agreements were so one-sided in favor of the sellers that some Virginia courts have held them to be unenforceable.   While there are many steps you can take to protect yourself in the event existing purchasers are insisting on a return of their deposit, it also would be prudent to take preventive steps now to make sure your form contracts fully comply with Virginia law to protect you going forward.

            Briefly listed here are the most commonly cited reasons used by disgruntled purchasers in their attempts to terminate their executed agreements, with suggested contract provisions for each of these scenarios.   Part I of this post will address lack of mutuality and provisions relating to the deposit, and Part II will address the Interstate Land Sales Act and other minor issues. Please feel free to contact me for a more detailed discussion of these important issues.

Lack of mutuality

            Many dissatisfied buyers argue they have the right to terminate their agreements with a full refund of their deposit because the signed agreement lacks “mutuality.” Mutuality, in this context, simply means that a valid contract requires promises and obligations from both buyer

and seller.  

            A buyer's typical remedy upon a default by a seller is to either sue for damages or ask for specific performance. This way, when developers attempt to limit buyers' remedies they run the risk of making the contract unenforceable. Developers need to be careful that their form purchase agreements don't go too far in taking away the rights of buyers and limiting any obligations on behalf of sellers.

             In fact, a Virginia court recently held a purchase agreement to be unenforceable for lack of mutuality because the buyer had no right to sue for specific performance. The buyer's sole remedy was a refund of the deposit. It is interesting to note that in its decision, the court suggests that the contract would have likely been deemed enforceable if it had provided for interest to be earned on the deposit.

            Some suggest that your form purchase agreement should not expressly limit the buyer's remedies after default by the seller. In Virginia, if a real estate contract is silent regarding the buyer's remedies, then the buyer has all of the remedies allowed under law including the right to sue for specific performance.

            For preconstruction sales, however, you should provide for specific performance only when the property is constructed. Also, as mentioned above, as an alternative you may want to consider providing for interest to be earned on the deposit.

Deposit as damages

            Your purchase agreement should make expressly clear that in the event of a default by a purchaser, the seller's right to retain the deposit is in the form of liquidated damages and not as any form of penalty. Damages considered to be a penalty will likely not be held to be enforceable.  We can offer suggested language for the provision dealing with seller's remedies after a default by purchaser. 

         We will continue this discussion in Part II next week.

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As we originally posted on April 30, EPA has issued notice that its recent lead paint regulations may be changing.  Specifically, EPA published a proposed rule on May 6 providing for clarifications and changes in clearance testing.  For commercial contractors thinking they were spared from worrying about lead paint regulation, EPA also issued an advance notice of proposed rule making on May 6 discussing extension of lead paint regulations into commercial and public buildings.

Those interested in commenting on the regulations should step up and do so rapidly.  In the case of the extension into commercial buildings, there is no specific rule proposed at this point so this process will likely take some time.  Nevertheless, the best chance to participate in shaping this discussion is to engage from the start.  Our friend Sean Lintow at SLS Construction continues to provide detailed commentary and has developed an extensive set of comments that may be of interest to contractors following the discussion,

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The blogs have been crackling for several weeks with reports and analysis of the LEED "challenge" process.  Chris Cheatham devoted a multiple part series to analyzing the challenge filed and ultimately rejected to the LEED Gold certification awarded to the Northland Pines High School in Wisconsin.  Shari Shapiro has discussed the same and included an interesting interview with the challengers discussing their reasoning for the protest.

Without getting too bogged down in the technical details of the Northland Pines case that are covered elsewhere, I would highlight a couple important takeaways from what we have learned from the Northland Pines challenge case:

1. Currently, anyone can file a challenge - there are no standing requirements whatsoever.  If anyone can file a challenge, the threat to projects, and to LEED, is that anyone will file a challenge.
2. There are very loose/limited guidelines or rules on procedure, hearings, document and information exchange and the like in the challenge process.  Look for a future revamping adding more clarity in the challenge process rules.
3. It appears that USGBC permitted Northland Pines to correct, amplify and update its submittals during the challenge process to demonstrate compliance with the prerequisites.  USGBC needs to make clear whether certification requires bright line compliance based on initial submittals and information, or whether they are more interested in allowing some wiggle room as long as the project meets the standards at the end of the finish line.  Failing to make this basic philosophical tenet clear is not fair to project participants, opens the process to future inconsistency during later challenges, and ultimately threatens the credibility (and thus potentially the viability) of the USGBC process.
4. Last point, which may be the biggest and has not really percolated as a point of focus: as currently conceived, the LEED challenge process adds another completely unpredictable line item expense to the process.  The challenge process may also add another angle of attack on projects for unhappy losers in bidding, neighborhood NIMBY uprisings, and competitors that may want at low cost and effort to financially damage their opponents.  At least courts have a theoretical sanctions approach to address complaints filed in bad faith.  USGBC should strongly consider adopting rules that require a USGBC member to certify the challenge as being in good faith, along with membership penalties or sanctions for individuals signing off on complaints that have zero merit.

The challenge process in theory may add an important element of credibility, verification and transparency to LEED certifications.  As it stands though, there are loose rules, no standing requirements, and one can easily file challenges even in bad faith without facing any impact.  If we start seeing a rash of such challenges, we may start also seeing a growing movement away from LEED certification due to increased unpredictability.  The current challenge structure presents some serious risks and issues moving forward and needs to be the subject of significant thought and retooling to avoid future problems.

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The area considered to be inclusive of Fort Myer Heights is basically the down-hill slope from Arlington's Courthouse Sector on the hill above of Route 50 north of Fort Myer, bounded to the north by Clarendon Boulevard and to the south by Route 50, Courthouse Road to the west and Pierce Street to the east.  What makes this area interesting, however, is the plan adopted by Arlington County to try and preserve the area's dwindling stock of aging garden-style apartments, which many find valuable from a historical perspective and others find valuable because of the affordability of these units (whether committed affordable units or as market affordable units).  The County has been unable to prevent the redevelopment of a number of sites in this area because planned densities are not sufficient to induce developers from entering special exception processes, and have instead chosen to move forward with by-right townhouse and condominium projects, effectively omitting the County from the redevelopment process.

In an effort to stem the flow of this trend, the County identified which blocks in the plan area had been assembled and when they were originally constructed to determine which sites were at the highest risk of redevelopment.  Recognizing the likelihood of being left out of the redevelopment process and the inability to preserve certain units without having to buy them, through the Fort Myer Heights North Plan, the County has attempted to incentivize certain strategic sites with higher densities in order to preserve the existing nature and affordability of the area.  To do this, the Concept Plan identifies the northern portion of the plan area as a Conservation Area and identifies the southern portion of the plan area as a Revitalization Area being "...a location for a strategic blend of conservation and redevelopment..."  Also, in case you are interested, the plan has prioritized which sites are the most historically important.

For sites in the Conservation Area, the idea is to not allow any additional density beyond what is allowed by-right, and instead to allow the transfer of development rights (or "TDRs") for historic preservation, affordable housing and open space purposes (for more on TDRs click here and here), pursuant to a series of specific formulas set forth in the plan.  Receiving Sites for TDRs may either be located within the Revitalization Area or outside of the plan area.  Note that there a number of ongoing, perpetual duties to maintain and rehabilitate historic buildings required to allow the transfer of density off of these sites.

Targeted redevelopment is permitted in the Revitalization Area, but to maintain the nature of the plan area it is limited to residential and neighborhood retail uses.  New construction may be permitted at targeted sites up to 3.24 FAR (and may exceed this cap under certain circumstances) through the County's unique 4.1 Site Plan process if the community benefits outlined in the plan are achieved (here's the Density Plan that sets forth the location of these sites) subject to certain height limitations.  Note, however, that the plan contemplates that as much as 20% of any transferred GFA could be required to be committed affordable housing.  It is unclear how this would be reconciled with a Receiving Site going through the 4.1 Site Plan process, which would still be subject to the County's Affordable Dwelling Unit Ordinance requirements.  In the Fort Myer Heights North Special District, it looks like these contributions will be expected to be cumulative.

Sound like a plan that is adequately incentivized?  By way of comparison, here's the massing for the existing conditions, the by-right scenario, and the 3.24 FAR scenario.

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There is big news in the world of Chinese drywall litigation.  First, various news sources including the Miami Herald reported a $2.5 million jury verdict on behalf of a homeowner couple against Banner Supply, the supplier of the drywall.  The verdict is reported to include not just loss of use of the home and repair costs, but also stigma damages for loss of value to the property.  The jury may have become inflamed by the supply company's actions after having been informed of complaints.  According to CBS4 in Miami:

According to documents entered into evidence, when Banner Supply notified its Chinese supplier about the complaints, the supplier replaced the distributor's inventory of Chinese-made drywall with American-made drywall. In return, Banner Supply allegedly signed a confidentiality agreement not to say anything about it to the government or its customers.

This verdict is well in excess of the total of the $2.6 million verdict awarded to seven Virginia families by a New Orleans federal judge in April.  In the New Orleans case, Virginia Lawyer's Weekly reported last week that the Chinese drywall manufacturer finally entered an appearance in the New Orleans case ... to file a notice of appeal of the $2.6 million verdict.  We will await the legal arguments with interest, but absent a pretty significant service of process problem, it seems pretty hard to appeal a verdict after the case is over.  That train has seemingly left the station, although there are plenty of other claims pending in the overall class action in New Orleans and elsewhere.  Even an appearance by the Chinese entity may provide some hope of a ability to recover some measure of compensation as opposed to getting a judgment against a judgment-proof entity.

Finding defendants with deep pockets is critical to claimants as the coverage posture on these claims appears quite shaky.  Per Virginia Lawyer's Weekly, a Norfolk federal judge recently ruled that there is no coverage under home owner' policies for such losses.  As we previously discussed, another Norfolk federal judge previously ruled that a builder had failed to state a claim for coverage under its liability policies.  That case is still pending with leave to amend having been granted, pending amended claims having been filed, and the parties still in the briefing stages of another round of motions to dismiss.

These cases continue to attract commentary and interest, and we have commented on them with some frequency.  In the words of one longtime friend and insurance defense/coverage guru I know well, "These case dwarf anything we have seen before in the construction industry products liability arena.  There are literally millions of implicated defendants and parties."  Even with insurance coverage hurdles and questions of collection of judgments abounding, we can expect this topic to continue echoing for years rather than weeks or months.

Image by Matt Callow

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Back in December, I discussed the Florida Supreme Court’s decision in Stop the Beach Renourishment, and guessed that the United States Supreme Court would affirm the Florida court’s decision, but duck the novel constitutional question of whether there could be a “judicial taking.” I ended up being a little more than half right. The United States Supreme Court did affirm 8-0, but were hardly unanimous about what to do with the concept of a “judicial taking.”

Justice Scalia, writing for Justices Thomas, Roberts and Alito, concluded that there could be such a thing as a “judicial taking” “if a court declares that what was once an established right of private property no longer exists.” However, they concluded that the Florida Supreme Court’s decision did nothing to abolish property rights. Instead, the decision merely clarified that the property rights were not implicated by the project due to the doctrine of avulsion. Basically, Florida law allowed the State to fill in its own seabed, and the State still owned the suddenly exposed land, even though the State itself caused the avulsion.

As I thought would be the case, the other four justices did not want to reach the issue of whether there could be a “judicial taking.” Justices Kennedy and Sotomayor concluded that the “judicial taking” analysis was unnecessary because the Florida decision did not terminate property rights. They suggested that if a true “judicial taking” case were to come along, the Court could tackle the issue then, and should perhaps look to the Due Process Clause.

Justices Breyer and Ginsburg agreed that there was no taking, but felt it was “better left to another day” to determine the issues of when a federal court could review whether a state court decision amounted to a taking, and if so, what the proper test would be. Unlike Justices Kennedy and Sotomayor, Justices Breyer and Ginsburg did not hint at what kind of analysis they might use.

So the question becomes – what impact will this case have on cleaning up after the BP oil spill crisis? Perhaps there was no better time than now to re-affirm the government’s right to protect our beaches.
 

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While I LOVE trying cases, my clients usually detest court cases and do their best to avoid litigation.  Forming appropriate entities, drafting tight contracts, and ensuring proper documentation are all critical risk management strategies ... but I would say they all come a distant second.  The number one way to avoid problems is to avoid problem projects and problem customers.

What am I talking about?  You have had that moment of your "spider sense tingling" during your initial project meeting with an owner, that fleeting precognition that this owner will be a problem.  We have all had the sense that someone is unreasonable, has wildly unreasonable expectations, is highly combative, or cannot make up their minds.  These personality traits can doom your project success before it begins.  Listen to that little voice and avoid those situations.

I recall one case in particular from very early in my legal career.  A very esteemed architect (who will recognize this story!) took a project as a favor for a couple he knew socially.  His wife expressly warned him before the contract was signed that they knew the couple was difficult and would be a problem.  The architect said, "I ignored her, I knew I could handle it."  Years later, a successful court victory under his belt, the architect told me that his new permanent rule was always to listen to his wife when she said not to take a client.

Even if your project does not result in litigation, dealing with problem customers is a time sink that erodes all your profit margin, creates headaches and stress, and dilutes your focus from profitable and enjoyable work.  And that is the best case scenario.  The worst case is those personality quirks drag you and your company into protracted, expensive, and avoidable litigation.  Save your margins, avoid these people and spend your time doing what you love, not hate!

Image by davide.tarasconi

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Winding down our update of the first round of Case Watch opinions, the Virginia Supreme Court has finally released its long awaited decision in Tir Conaill Properties, L.C. v. 2401 Wilson, LLC, Record Number 090855. Although the opinion is quite short at only three pages, it is chock full of warnings to the unwary litigator.

This case involved a commercial lease dispute between Tir Conaill Properties, L.C., the tenant, and 2401 Wilson, LLC, the landlord. The day before trial, 2401 Wilson filed a pre-trial memorandum, arguing for the first time that Tir Conaill’s complaint should be dismissed because it failed to file a certificate for transacting business under an assumed name as required by Virginia Code Section 59.1-69 (A).

Section 59.1-69 (A) requires entities conducting business under a fictitious name to file a certificate with the name of the entity, the entity’s address, the fictitious name and the date of certificate of registration or authority to transact business in the court clerk’s office of the county or city where the entity transacts business. Under Section 59.1-76, an entity that fails to file the Section 59.1-69 (A) certificate cannot maintain a law suit unless and until the certificate has been filed.

Tir Conaill responded by arguing that it was in compliance, pointing to a certificate filed by “Tirconaill Properties LLC” stating that it was conducting business in the name of “Kitty O’Shea’s.” But on the morning of trial, the trial court granted 2401 Wilson’s motion to dismiss, rejecting the argument that “Tir Conaill Properties, L.C.” and “Tirconaill Properties, LLC” were in essence the same entities.

The Virginia Supreme Court affirmed, pointing out that Tir Conaill's only argument was that the certificate it produced purportedly complied with Section 59.1-69 (A).   The Court noted specifically that Tir Conaill did not request a continuance to have time to file the required certificate or argue that it was prejudiced by 2401 Wilson’s decision to raise this argument so late in the game.

A final issue raised in this case was the trial court’s use of deposition testimony to decide the Section 59.1-69 (A) argument. Although Virginia litigators would love to have more direction from the Court on the pre-trial use of depositions, the Court sidestepped the issue. Instead, the Court found that Tir Conaill waived this argument by failing to object to the trial court’s use of deposition testimony in deciding the Section 59.1-69 (A) issue.

Here are the lessons to take from this opinion.

1. First, be consistent! In every lease, contract, pleading and other document, include both the entity’s corporate name and fictitious name. Make sure the corporate name matches exactly what you have on record with the State Corporation Commission, and don’t assume that a name is “close enough.”
2. Second, if you have or represent a business that uses a fictitious name, take the time to make sure you have filed certificates in each jurisdiction where your entity conducts business. And if you find yourself filing suit on behalf of the business, do one final check to make sure that certificate has been filed!
3. Third, object, object, object! Be aware that the appellate courts are always on the lookout for procedural default and waiver.

Only one more opinion to go to finish out last year’s Case Watch! Stay posted for the outcome of Advance Towing Co., LLC, et al. v. Fairfax County Board of Supervisors.

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A recent decision from the US Court of Appeals for the Fourth Circuit should be sending cold chills up and down developers' spines regarding complaints under the Americans with Disabilities Act (ADA) and Fair Housing Act (FHA).  The case, Equal Rights Center and Archstone v. Niles Bolton Associates, basically ruled that a developer was not entitled to recover its claims against the architect for a failure of a multi-family project to meet ADA and FHA requirements.

ADA and FHA claims have a long history at this point, particularly since the 1991 passage of the ADA.  After a huge wave of litigation, often spawned in the arena design and construction area, ADA claims seemed to die down for a while.  We have heard and seen ADA and FHA complaints have a huge spike over the last several years, in particular with large scale multi-family developers.  (The anecdotal word was that testers and advocacy groups were proceeding alphabetically, so those in Z's may not have heard this yet).

Owner/developers understandably attempt to lean on their design consultants for advice and direction in this arena.  Many include broad form requirements for certifications of compliance from their design professionals accompanied by equally broad indemnification provisions if something goes wrong.  In the Archstone case, Archstone faced a number of complaints on 71 buildings, including 15 buildings designed by Niles Bolton.  Archstone settled those issues and then sought to recover expenses associated with the consent decree from its architect.  Archstone's claims included express indemnity, implied indemnity, breach of contract, and negligence.

During three years of litigation and discovery, Archstone resisted disclosing how it allocated the consent decree repairs and expenses across the various properties.  Archstone claimed it had no such duty and was entitled to recover all expenses for the 15 Niles Bolton buildings from teh architect based on its indemnification style claims.  The court agreed and granted Archstone a protective order from having to disclose that information.

That resistance may have been a big mistake.  The trial court held, and the appeals court ultimately agreed, that permitting pure indemnification under any theory was "antithetical to the purposes of the FHA and ADA".  According to the court, allowing indemnification would permit Archstone to shift its entire responsibility for federal violations and undermine the preventative aspects of ADA and FHA.  As the court stated:

Allowing an owner to completely insulate itself from liability for an ADA and FHA violation through contract diminishes its incentive to ensure compliance with discrimination laws.  If a developer of apartment housing, who concededly has a non-delegable duty to comply with the ADA and FHA, can be indemnified under state law for its ADA and FHA violations, then the developer will not be accountable for discriminatory practices in building apartment housing. 

As such, federal law preempted not only the pure indemnification claims, but also even the state law breach of contract and negligence claims of Archstone because it sought to recovery all costs and expenses.

This may be a case of Archstone going to far by asking for the whole nut.  It is tempting to do so at least in the alternative, but by asking for only 100% of the claim and not including a request for damages directly caused by proven negligence, Archstone may have unwittingly taken a big risk.  That risk appears compounded by its resistance to producing allocation information along with the likely credibility gap that disclosure may be demonstrated.

We can take a few lessons away moving forward:

1. You still want to include certification and indemnification provisions in the contracts if you are the owner/developer; consider tying the indemnification clauses to damages caused by the negligence of the designer.
2. Be wary of asking for too much, it can blow up in your face.
3. Be wary of resisting discovery, such a position can ultimately box your case into a position of unexpected weakness.  Far better to just product all the documents and fight the case in the well on all the facts than to try and get cute and end up getting burned.
4. In ADA and FHA cases, include claims that are tied to specifically demonstrated negligence as opposed to a straight pass-through of all claims.
5. Understand that if you are resolving and negotiating claims with one set of claimants, passing through claims to third parties may prove tougher than you think.

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We are very pleased to have another colleague writing for us today.  Jon Kinney is a highly regarded land use and real estate law expert with our firm.  Jon brings us commentary on changes coming to Arlington County's planning for the East Falls Church area in Northern Virginia.

In anticipation of the opening of Metro’s Silver Line, the Arlington County Board established the East Falls Church Planning Task Force to consider key planning issues in East Falls Church, including height and density, land uses, urban design, affordable housing, transportation improvements, open space and environmental sustainability in the East Falls Church area.  The East Falls Church Planning Task Force completed its comprehensive review of the East Falls Church study area this week and forwarded its recommendations to the Arlington County Planning Commission and the Arlington County Board which are both scheduled to take up the issue in a few weeks.

The Task Force recommendations include:

• Mixed use development. The Task Force is encouraging a balance between residential, retail, office and hotel uses in East Falls Church. Building heights are generally limited to four to six stories with the exception of the site immediately next to the Metro station where nine stories are permitted provided heights are maintained at four stories along Washington Boulevard.
• Transition to surrounding single family area. Future development should be designed to respond to the existence of single family and townhouse neighborhoods in the immediate area.
• Open Spaces. The Task Force recommendations include creating a new public space at the heart of East Falls Church at Lee Highway on the western side of Route 66 and a large pedestrian plaza as part of any development of the Metro station site.
• Bicycle and Pedestrian connections to the Metro. An important element of the work of the Task Force was enhancing the pedestrian and bicycle network to the Metro station. East Falls Church is one of the most heavily used bicycle-oriented Metro stations and efforts were made to meet current and future bicycle demand.
• Elimination of commuter parking. An import aspect of the Task Force’s recommendation is the elimination of commuter parking in any future development of the Metro station site.

The Task Force also made decisions regarding affordable housing, quality architectural design and more efficient use of transit at the Metro rail station.  The actual heights and densities in the plan differ only slightly from the existing Arlington County Land Use Plan; in a few cases the recommendation provide less height and/or density than currently permitted.

An important feature of the Plan is an attempt to create a western pedestrian Metro rail entrance in order to bridge the gap in the community caused by the construction of I-66. The Task Force is proposing four separate options to provide pedestrian access from the west side of I-66 to an expanded Metro platform in the middle of I-66  (please see graphic below). The cost associated with this proposal may delay it’s implementation at least until the redevelopment of the Metro site.

Representation of both the Virginia Department of Transportation (VDOT) and Metro were on the Task Force. VDOT indicated that it has no plans to sell and/or ground lease its land next to the Metro station. Because VDOT owns most of the land located at the East Falls Church Metro station, no major development can occur on this site without their agreement.

Copies of the East Falls Church Task Force recommendations are available on the County’s website.

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For the first time since we started the blog, I have gotten stuck in place unable to write.  Like everyone, I have watched the oil spewing into the gulf with horror, frustration and a sense of the inevitability of this type of disaster when dealing with extraction and transportation of oil.

I will leave the judgments and politics to other blogs, but I agree with what Paul Anater's remarks at Kitchen and Residential Design: the oil spill is a mirror.  We can all point fingers at BP and gripe about regulations or lack of enforcement, but at base level it is our collective hunger for disposable and other products that helps create this disaster.  It is our car based transportation and related land use planning to helps drive demand.  As Paul Anater said so eloquently:

My spending habits and my need for speed and convenience created the whole mess. Every time I buy a dollar bottle of shampoo or a $4 T-shirt I give my consent to the whole system. I vote with my money and so does everybody else. Calling for the head of Tony Hayward, BP's Chief Executive, won't stop any of this. It won't clean up the Gulf and it won't stop the world's dependence on (artificially) cheap oil. Boycotting BP won't help either. The Deepwater Horizon disaster is their fault and their problem, of that there can be no doubt. But this disaster could have happened at any offshore platform anywhere in the world. 

Not all is bleak.  We have the ability to make choices that can aggregate to significant change.  There are signs this may be happening on a generational level.  Per Richard Florida and Nate Silver, we may finally be seeing a generational shift in automobile driving habits.  Locally, we Montgomery County Maryland passing a carbon and energy tax and Arlington Virginia considering adopting a long range comprehensive energy plan.

Shifting gears, we need clear direction on energy policy at a federal level as well.  Local efforts to bolster energy performance by the City of Albequrque have already been challenged on the basis that federal regulations preempt the ability of states and localities to create their own regulations.  Shari Shapiro reported last week that Washington State's building code is now facing a similar preemption challenge.  If we are going to move past the dominance of fossil fuels, it is going to take comprehensive land use planning, appropriate energy efficiency regulation and improvements, and each of us collectively making decisions that push towards reduced energy usage in the future.

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It’s no secret that Virginia law usually sides with the landlord more than the tenant. It’s also no secret that Virginia courts tend to let cases go to the jury more than other jurisdictions. So what happens when a Virginia tenant brings claims of misrepresentation and negligent repairs against his landlord?

In Sales v. Kecoughtan Housing Company, Ltd. et al., Judge Lerner of the City of Hampton Circuit Court stopped the tenant in his tracks by sustaining the landlord’s demurrer. The Virginia Supreme Court recently reversed, sending the case back to the trial court.

Mr. Sales entered into a rental agreement with Kecoughtan Housing Company, which hired Mr. Abbitt to manage the apartments where Sales lived. After several months, Sales told Abbitt that there was mold in his apartment and asked to have the mold repaired. Abbitt, as Kecoughtan’s agent, went into the apartment to make the repairs, but actually only painted over the mold. Afterwards, Abbitt told Sales that the mold had been fixed and that the apartment was fine. Sales kept living in the apartment and continued to pay rent. A few months later, mold started growing in Sales’ eyes and infested and destroyed his personal property. Sales then sued Kecoughtan and Abbitt for defective repair, fraud and constructive fraud.

As to the negligent repair claim, Kecoughtan and Abbitt argued that they had no duty to make repairs, and that there was no showing that Abbitt’s repairs created any danger that caused Sales’ injury. The Virginia Supreme Court rejected these arguments, resting on the fact that although a landlord has no common law duty to make repairs after delivering possession of the premises to the tenant, once the landlord undertakes the repairs and enters the premises, the landlord must use reasonable care to make those repairs.

As to Sales’ actual and constructive fraud claims, Kecoughtan and Abbitt argued that the representations that the mold had been repaired and that the apartment was habitable were matters of opinion, not statements of fact. The Court rejected this argument as well, finding that the representations were statements of the apartment’s present quality or character, constituting statements of fact rather than mere opinions.

The lesson to be learned is – finish what you start. To all of the landlords and property managers out there, when a tenant asks you to make a repair, find out exactly what you are getting yourself into before you agree to go inside!
 

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In this Part II, we continue the discussion of Subordination, Non-Disturbance and Attornment Agreements, and suggest ways tenants can protect themselves in the current marketplace.

In past more landlord-friendly markets, landlords strongly resisted giving anything but large tenants (perhaps those leasing 25,000 square feet or more) with excellent financials an executed Subordination, Non-Disturbance and Attornment Agreement at lease execution. Mid-size tenants may have instead received assurances that landlords would use commercially reasonable efforts to obtain an SNDA post-execution on the lender’s standard form, and smaller tenants would get nothing other than the automatic subordination provision in the lease. Now, however, not providing an SNDA for even the small tenant taking a few thousand square feet can often be a deal killer. As discussed above, provided its lender would agree to an SNDA, the landlord does not have a strong argument either way. The landlord’s main complaint is the extra time and cost of negotiation and the administrative hassle of facilitating the SNDA between lender and tenant. The landlord should be aware of its lender’s position on SNDAs and the applicable provisions of its loan agreement before receiving the request from tenant. To make sure this will not be a material issue during lease negotiations, and to save transactional time and costs, it is prudent to set forth the agreement regarding the SNDA in the Letter of Intent, especially if the prospective tenant is concerned about the landlord’s financial position.

One caveat for tenants: you must give close scrutiny to the initial draft of the SDNA supplied by the lender. Many form SNDAs amend the lease to take rights away from tenant to the lender’s benefit. So while the non- disturbance section of the SNDA is a great benefit to the tenant, other provisions can be problematic if not deleted.

Other than SNDAs, tenants also should consider other forms of protection if they are concerned about the financial footing of their landlord. The landlord has a duty to perform maintenance on the building and, in many cases, is obligated to build expensive tenant improvements. To mitigate the risk of a landlord not being able to fund tenant improvement costs, the tenant could demand security for the tenant improvements cost such as an acceptable letter of credit, or the tenant and landlord could agree to deposit the tenant improvement budget in an escrow account so that the funds will be available even if the landlord were to become insolvent. With respect to general maintenance obligations that the landlord fails to perform, a very strong creditworthy tenant could ask for certain off-set rights, allowing the tenant to perform building repair and maintenance themselves and deduct it from rental payments to the landlord.

In today’s economic climate, tenants would be wise to take advantage of these tools to protect themselves.

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