Johnson v. City of Suffolk ( 2020 )

PRESENT: Lemons, C.J., Goodwyn, Mims, Powell, McCullough, and Chafin, JJ., and Millette,
S.J.
C. ROBERT JOHNSON, III, ET AL.
OPINION BY
v. Record No. 191563 JUSTICE STEPHEN R. McCULLOUGH
December 10, 2020
CITY OF SUFFOLK, ET AL.
FROM THE CIRCUIT COURT OF THE CITY OF SUFFOLK
Lawson Wayne Farmer, Judge
The petitioners lease oyster grounds from the Commonwealth for the purpose of raising
oysters in the Nansemond River. They filed an inverse condemnation claim against the City of
Suffolk and the Hampton Roads Sanitation District alleging that discharges from a sewer system
operated by the respondents polluted the waters in which they raise their oysters. The petitioners
alleged that the Virginia Department of Health’s Division of Shellfish Sanitation closed polluted
parts of the river to the harvesting of oysters, thereby “preventing the [p]etitioners from properly
managing and using their oyster ground leases, harvesting their oyster property, planting oysters,
and otherwise using and enjoying their property.” The respondents filed demurrers on various
grounds. The circuit court granted the respondents’ demurrers and dismissed the case. We
conclude the circuit court properly granted the demurrers and we, therefore, will affirm the
judgment below.
BACKGROUND
The petitioners, C. Robert Johnson, III, Lisa Lawson Johnson, Thomas A. Hazelwood,
Johnson and Sons Seafood, LLC, and Hazelwood Oyster Farms, Inc., hold leases to publicly
owned oyster-grounds in the Nansemond River. The City of Suffolk (“City”) and the Hampton
Roads Sanitation District (“Sanitation District”) “use, operate, and maintain sanitary sewer
systems to accommodate the needs of the City of Suffolk and the surrounding area.” In addition,
“[t]he City of Suffolk uses, operates, and maintains a storm water system to accommodate the
needs of the City of Suffolk and the surrounding area.”
The petitioners filed a declaratory judgment action against the City and the Sanitation
District in the Circuit Court for the City of Suffolk alleging that the respondents “purposefully
use, operate, and maintain the sanitary sewer systems and storm water system in a manner that
causes untreated sewage, waste water, and other items to enter the [p]etitioners’ property, taking
and damaging the property by, among other things, causing closures to [p]etitioners’ property
and preventing [p]etitioners from using their property.” “As a result of the [r]espondents’
purposeful acts and omissions, the Virginia Department of Health’s Division of Shellfish
Sanitation closed polluted parts of the river [to the] harvesting [of] oysters, preventing the
[p]etitioners from properly managing and using their oyster ground leases, harvesting their oyster
property, planting oysters, and otherwise using and enjoying their property.”
The complaint alleges that the City and the Sanitation District are legally obligated to
design and operate their sewer system in such a manner as to avoid discharges of pollutants. The
petitioners point to the 1960 Acts of Assembly, 1960 Va. Acts chap. 66, § 40 and to “an
Amended Consent Decree” between the Sanitation District and the United States and the
Commonwealth of Virginia, which addresses “unpermitted discharges of raw sewage from
[r]espondents’ sanitary sewer systems.” Moreover, according to the petitioners, “the State Water
Control Board of the Commonwealth of Virginia’s Department of Environmental Quality . . .
entered into a Consent Order with localities, including the City of Suffolk, to resolve ‘certain
violations of the State Water Control Law,’ including unauthorized discharges of untreated
sewage.”
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The City and the Sanitation District each filed demurrers, contending, on several grounds,
that the petitioners’ inverse condemnation action failed to state a legally viable claim. The
circuit court granted the demurrers and dismissed the petition, reasoning that “Darling v. City of
Newport News, 249 U.S. 540 (1919) bars recovery in inverse condemnation under the alleged
circumstances.” The petitioners appeal from this decision.
ANALYSIS
The petitioners assign the following error:
The trial court erroneously sustained the demurrers, because the
declaratory-judgment petition states a facially valid claim for
inverse condemnation, and:
A. The trial court erroneously based its ruling on federal caselaw
interpreting the United States Constitution, because the
oystermen’s claims are based on the Constitution of Virginia.
B. The trial court erroneously ruled that the City and [the
Sanitation District] have the right to pollute the Commonwealth’s
waters and that they need not pay just compensation to the
oystermen. In doing so, it relied on now-obsolete caselaw, and
erroneously applied that caselaw.
The oyster has played and continues to play a significant role “in the culture, history,
economy, and ecology of the Chesapeake Bay and its tidal waters.” Chesapeake Bay Foundation
amicus Br. at 1. Indeed, the word “Chesapeake” is derived from its Native American name
“Chesepioc” which means “great shellfish bay.” Id. at 4. There also is no denying that raising
oysters requires skill, patience, and backbreaking work. Over a century ago, in Darling v. City of
Newport News, 123 Va. 14 (1918), aff’d, 249 U.S. 540 (1919), we concluded that oyster farmers
could not recover in eminent domain for damages to their oysters caused by pollution from a
governmental entity. The petitioners urge us to revisit this ruling in light of significant changes
to laws designed to protect the environment.
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I. THE LIMITED NATURE OF THE PROPERTY INTEREST CONFERRED BY A LEASE OF
STATE-OWNED BOTTOMLANDS FOR THE PURPOSE OF RAISING OYSTERS FORECLOSES
RECOVERY IN AN INVERSE CONDEMNATION ACTION.
The United States Constitution provides that private property shall not “be taken for
public use, without just compensation.” U.S. Const. amend V. The Constitution of Virginia
similarly provides that “[n]o private property shall be damaged or taken for public use without
just compensation to the owner thereof.” Va. Const. art. I, § 11.
A threshold question in any takings case is whether the government action has affected a
property interest that is cognizable under the pertinent clauses of the United States and Virginia
constitutions. In other words, does the plaintiff have an interest that is recognized as a property
interest? American Pelagic Fishing Co., L.P. v. United States, 379 F.3d 1363, 1372 (Fed. Cir.
2004) (In a takings case, “as a threshold matter, the court must determine whether the claimant
has established a property interest for purposes of the Fifth Amendment.”). Property damage is
only compensable in inverse condemnation cases where it involves the “dislocation of a specific
right contained in the property owner’s bundle of property rights.” Byler v. Virginia Elec. &
Power Co., 284 Va. 501, 509 (2012). To state a claim, the property owner must allege that a
“right connected to the property is adversely affected by governmental action.” Livingston v.
Virginia Dep’t of Transp., 284 Va. 140, 157 (2012). Whether a taking has occurred is a question
of law that we review de novo on appeal. Ladd v. United States, 630 F.3d 1015, 1019 (Fed. Cir.
2010).
A “unilateral expectation or an abstract need is not a property interest entitled to
protection.” Webb’s Fabulous Pharms., Inc. v. Beckwith, 449 U.S. 155, 161 (1980). As the
United States Supreme Court has observed, “not all economic interests are ‘property rights’; only
those economic advantages are ‘rights’ which have the law back of them, and only when they are
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so recognized may courts compel others to forbear from interfering with them or to compensate
for their invasion.” Kaiser Aetna v. United States, 444 U.S. 164, 178 (1979) (quoting United
States v. Willow River Power Co., 324 U.S. 499, 502 (1945)).
“Property interests . . . are not created by the Constitution. Rather, they are created and
their dimensions are defined by existing rules or understandings that stem from an independent
source such as state law . . .” Board of Regents of State Colls. v. Roth, 408 U.S. 564, 577 (1972).
The parameters of a protected property interest, the sticks in the bundle of rights, are delimited
by the law that creates the interest, id. at 577-78, and by “existing rules or understandings” and
“background principles” derived from independent sources, such as state, federal, or common
law, Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1030 (1992).
This threshold inquiry is often quite simple to resolve, and is often uncontested, such as
when a property owner owns a fee simple interest in the land taken or damaged. Other property
interests, however, call for a more searching inquiry of the compensability of the interest
asserted. See, e.g., Colvin Cattle Co., Inc. v. United States, 468 F.3d 803, 805-06 (Fed. Cir.
2006) (assessing whether cancellation of a lease granting a rancher grazing rights under a federal
allotment constituted a taking).
We look to statutes, cases, and the leases at issue to elucidate the nature of a lessee’s
rights under an oyster lease of publicly owned bottomland. First, the Commonwealth has “title
to and dominion over subaqueous bottomland.” Virginia Marine Res. Comm’n v. Chincoteague
Inn, 287 Va. 371, 381 (2014); see also Code § 28.2-1200 (providing that the Commonwealth
retains ownership of “[a]ll the beds of the bays, rivers, creeks and the shores of the sea” within
its jurisdiction). “The state has succeeded to all the rights of both the Crown and Parliament of
England in the navigable waters within its limits, and in the soil under them.” Newport News
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Shipbuilding & Dry Dock Co. v. Jones, 105 Va. 503, 513 (1906). A lessee does not own the
bottomlands or have the right to control the waters that flow over them.
Second, the leases involved in this case do not themselves elucidate the property right at
stake. The leases describe the boundary of the leasehold and reference applicable statutes.
Therefore, we must look to the statutory scheme to determine the scope of the petitioners’ rights
under these leases. Code § 28.2-603 authorizes the Commissioner of the Virginia Marine
Resources Commission to lease public waterfront lands for the purpose of raising oysters.
Lessees have the right to occupy the oyster bed “for the purpose of planting or propagating
oysters.” See Code § 28.2-603 (“. . . the beds of the bays, rivers, and creeks and shores of the
sea . . . may be occupied for the purpose of planting or propagating oysters . . . and may be
leased by the Commissioner upon the receipt of a proper application”). Rent is set at $1.50 per
acre. Code § 28.2-612. 1
The Code authorizes relief from rent payments if “any natural or man-made condition
arises which precludes satisfactory culture of oysters in that area.” Code § 28.2-627.
Furthermore, the State Health Commissioner is authorized to “analyze the water and bottom
sediment in and adjacent to the crustacea, finfish, or shellfish growing areas for evidence of
pollution, and he may survey the sanitary conditions and pollution hazards adjacent to shellfish
growing areas.” Code § 28.2-803. The State Health Commissioner can condemn areas where
pollution renders the shellfish in the area unfit for market. Code § 28.2-807. The right to harvest
the oysters is further limited by statute. The oysters can be harvested only if the sanitary
conditions permit harvesting. See Code §§ 28.2-804 through -807.
1
In addition to rent, there are fees associated with an application to obtain or transfer a
lease, the applicant must pay the costs of a survey to obtain the lease, and lease holders must also
pay renewal fees. See Code §§ 28.2-608, -625.
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Third, case law provides additional guidance concerning the lessee’s right. “Shellfish
leases, which are grants in derogation of the common or public right, are strictly construed
against the lessee. ‘Nothing passes except what is granted specifically or by necessary
implication.’” Working Waterman’s Ass’n v. Seafood Harvesters, Inc., 227 Va. 101, 111 (1984)
(citing Darling, 123 Va. at 18). The lessee “does not take a fee simple title, nor can he use the
property for any other purpose except for that stated in the statute, and hence every other right
theretofore in the public is preserved.” Id. (citing Darling, 123 Va. at 19). The lease confers a
right to use the leased bottomlands and to exclude others. Power v. Tazewells, 66 Va. (25 Gratt.)
786, 789 (1875).
In Darling, we addressed a claim that is virtually indistinguishable from the petitioners’
claim here: an oyster farmer sought compensation for damage to his oysters caused by
discharges from the sewer system of the City of Newport News. 123 Va. at 16. We held that the
damage to the oysters was not compensable. Id. at 21. We pointed to the limited right of an
oyster farmer who holds a lease to grow oysters over public land, describing the right as follows:
the lease is made only “for the purpose of planting and propagating
oysters thereon,” and it is for this purpose alone that the planter is
authorized to use and occupy such ground, that is to say, that while
any citizen might have taken oysters therefrom before the grant,
afterwards he only may do so, and all others are excluded from
either planting or taking oysters from such ground during his term.
This marks the limit of his right, for there is nothing to indicate
that any other public or private right is withdrawn, limited, or
curtailed.
Id. at 18-19. This Court further noted the countervailing right of a municipal corporation
“situated on an arm of the sea, adjacent to tidal waters . . . to use such waters for the purpose of
carrying off its refuse and sewage to the sea, so long as such use does not create a public
nuisance.” Id. at 17.
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 The United States Supreme Court affirmed. Darling, 249 U.S. at 544. The Court
reasoned that there was no taking under the Fifth Amendment because the lease owner leased the
oyster grounds subject to “the risk of the pollution of the water.” Id. at 543.
The petitioners correctly point out that environmental law is far more robust now than it
was in 1918. A range of state and federal laws, as well as, in this instance, consent decrees,
impose extensive restrictions on the operation of sewer systems and any discharges they may
make. Indeed, since 1918 the Constitution of Virginia has been amended to state that the policy
of the Commonwealth is to provide the people of Virginia with clean water and air. See Va.
Const. art. XI. 2
Environmental protections certainly have changed a great deal in the years since we
decided Darling. None of the sources cited by the petitioners, however, expand the scope of the
property rights the petitioners obtained when they were granted a lease to plant oysters on state-
owned bottomland.
The statutes and case law governing oyster leases lead to several conclusions. First, the
petitioners’ leases confer on them the right to physically occupy state-owned bottomland and to
exclude others. Code § 28.2-618; Power, 66 Va. (25 Gratt.) at 789. The respondents did not
interfere with the petitioners’ rights to be on the leased lands. Second, the leases confer on the
2
Article XI, § 1 provides:
To the end that the people have clean air, pure water, and the use
and enjoyment for recreation of adequate public lands, waters, and
other natural resources, it shall be the policy of the Commonwealth
to conserve, develop, and utilize its natural resources, its public
lands . . . . Further, it shall be the Commonwealth’s policy to
protect its atmosphere, lands, and waters from pollution,
impairment, or destruction, for the benefit, enjoyment, and general
welfare of the people of the Commonwealth.
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petitioners the right to physical possession and harvesting of the oysters raised on the leased
grounds, to the exclusion of other possible claimants. See Town of Cape Charles v. Ballard
Bros. Fish Co., Inc., 200 Va. 667, 673 (1959). The respondents did not remove or physically
destroy the oysters themselves. Third, there is a distinction between the water bottoms and the
water itself. The petitioners do not own or control the waters that pass over the leased oyster
grounds. Fourth, nothing under the governing statutes and case law or the leases themselves
confers or presupposes a right to grow oysters in conditions free of pollution or guarantee a
lessee a commercially viable oyster lease. To the contrary, the governing statutes contemplate
the condemnation of polluted growing areas and oysters when sanitary conditions render the
oysters unhealthy for human consumption. See Code §§ 28.2-804 through -807. The statutes
further contemplate an abatement of rent if oyster grounds become polluted, Code § 28.2-627,
and allow for the possibility of harvesting and “relaying” of oysters to cleaner grounds, see Code
§§ 28.2-800, -811.
Pollution from various sources has plagued oyster growers for more than a century. A
lessee who is granted a lease under Code § 28.2-603 and related statutes assumes the risk that the
waters surrounding the leased grounds will be insufficiently pure to permit the direct harvest of
shellfish from them. The limited rights the petitioners acquire when leasing state-owned
bottomlands dooms their takings claim. The respondents did not interfere with the limited
property rights the petitioners have under the leases and, therefore, their takings claim fails as a
matter of law. 3
3
The petitioners fault the circuit court for citing and relying on federal law, rather than
Virginia law. The federal cases the circuit court cited, however, reference applicable state
constitutional provisions or cases. Consequently, we can discern no ground for reversal on that
basis.
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II. PRIOR TAKINGS CASES DEALING WITH DIFFERENT PROPERTY INTERESTS DO NOT
CONTROL OUR DISPOSITION OF A TAKINGS CLAIM INVOLVING A LEASE OF STATE-
OWNED BOTTOMLANDS.
The petitioners rely on a number of cases in support of their position: AGCS Marine Ins.
Co. v. Arlington Cty., 293 Va. 469 (2017); Livingston, 284 Va. 140; and Hampton Rds.
Sanitation Dist. v. McDonnell, 234 Va. 235 (1987). In AGCS, the insurer for a grocery store
sought to recoup insurance payments made when sewage overflows damaged the inventory of
the grocery store. 293 Va. at 473-74. We concluded that such overflows constituted a public
use, the personal property that was damaged as a result was recoverable, and the trial court erred
in declining to grant the insurer leave to amend. Id. at 486-96. In Livingston, the Virginia
Department of Transportation failed to maintain a relocated stream and instead “elected to use”
nearby residential developments as “makeshift storage sites for excess stormwater.” 284 Va. at
159. We concluded that the improvements at issue constituted a public use, and that the damage
to the plaintiff’s personal property was compensable. Id. at 160. Finally, in McDonnell, we
rebuffed a number of challenges to an award for damage to private property when a bypass
valve, operating as designed, poured excess sewage onto an adjacent landowner’s property. 234
Va. at 241-42. Arguments advanced by the Commonwealth included a claim that sovereign
immunity barred recovery, that the statute of limitations applied, and that the plaintiff had failed
to prove his damages with sufficient particularity. Id. at 238-42. None of those cases involved
an oyster lease under Code § 28.2-603 and the limited rights conferred by such a lease. In
addition, the landowners in those cases had a right to exclude floodwaters or sewage from their
property. The lessees here have no right to control the water that flows over their oysters. The
nature of the property right at stake here differs from the property right at issue in Livingston,
AGCS, and McDonnell, and it compels a different outcome.
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The petitioners also rely on Ballard Bros. Fish Co., 200 Va. 667. In that case, we held
that the physical destruction or physical removal of the oysters due to a dredging operation did
invade a property right conferred by a state lease, and was, therefore, compensable. Id. at 673.
Lessees have a right to prevent others from physically taking or destroying their oysters or oyster
beds. The right to avoid physical confiscation or destruction of the oysters, however, differs
from an asserted right to raise them in favorable environmental conditions. That right was not at
issue in Ballard, and it is not included in the rights conferred by the leases in this case.
CONCLUSION
We will affirm the judgment of the circuit court. 4
Affirmed.
4
The briefs raise the possibility of other avenues of redress, such as trespass or nuisance,
or other forms of non-compensatory relief, like the citizen suit provisions of the Clean Water
Act. 33 U.S.C. § 1365. We express no opinion on the viability vel non of alternative avenues for
relief.
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