A 51-space parking lot fronting West Clay Street is at the heart of the legal dispute. (BizSense file photos)
In an attempt to free up its Scott’s Addition real estate for redevelopment, a D.C.-based firm is questioning a Richmond judge’s ruling.
Dalian Development is asking Richmond Circuit Judge Richard B. Campbell to reconsider part of the ruling he handed down last month that could preclude a Dalian-owned parking lot at 3210 W. Marshall St. from being developed until 2040.
The 51-spot parking lot is leased to Hem + Spire, a North Carolina firm that owns a mixed-use complex across the street at 1300 MacTavish Ave. Dalian is looking to redevelop the lot, which is part of the 2.6-acre former Party Perfect complex that it bought in 2018, but Hem + Spire’s lease on the lot runs through 2030.
In a lawsuit filed in 2022, Dalian claimed it told Hem + Spire that it would terminate the lease at the end of its current term. Hem + Spire claimed that the lease wording technically gives it the right to renew in perpetuity, ostensibly allowing it to lease the lot forever.
Last month the judge ruled on the case and said that while the lease isn’t a perpetual one, Hem + Spire does have the right to a second 10-year term that would run from 2031-2040.
It’s unclear whether Hem + Spire would pursue that renewal option. Dalian now is asking the judge to reconsider his ruling to speed up its redevelopment timeline. The company previously expressed its intent to redevelop the site into a multifamily residential project.
In an April 9 court filing, Dalian’s attorneys argued that the court “misinterpreted the key opinion on which it based its ruling that (Hem + Spire) is entitled to a second renewal term” and requested that the court “declare that the lease will terminate at the end of the first renewal term on December 31, 2030.”
Dalian made the request via a Motion for Limited Reconsideration, a relatively rare type of filing in which a party asks a court to reconsider part of a ruling it’s made.
Dalian acknowledges the rarity of its request in the filing, writing that it “recognizes that motions of reconsideration are strongly disfavored” and that “it is with some trepidation that (Dalian) files this motion.”
The lot has been locked up in recent weeks.
Hem + Spire promptly filed its opposition to Dalian’s request.
“Prolonging this civil action to re-litigate decided issues is unnecessary, and unfair to (Hem + Spire), which rightfully seeks finality of the longstanding dispute,” Hem + Spire argued in its response.
Hem + Spire suggests that rather than tie up the Circuit Court, Dalian can take its case to the Court of Appeals of Virginia.
“(Dalian’s) post-judgment motions are silent on the fact that it can avail itself of the appellate process,” it writes. “(Dalian) is free to take its arguments to the Court of Appeals, if it so chooses.”
As of press time, no decision had been made by the court regarding Dalian’s motion for reconsideration, nor has the matter been brought to the Court of Appeals.
Dalian, through its attorneys Alec Boyd, Allison Klena, Robert Vieth and John Walk of Hirschler, declined to comment. Hem + Spire is represented by Christian & Barton’s Roman Lifson, David Lacy and Grayson Cassada, none of whom responded to requests for comment by press time.
Legal questions aside, it would just be nice for this land to be something that would contribute to the city and surrounding community. Some housing, a few businesses, even a temporary green space would be nice. Something that would produce rather than be aggressively empty space in a neighborhood that has been quickly developing. No less on a parcel that is two blocks from a rapid transit stop. Some transit-oriented development would be appropriate as we have seen how well it’s working along this corridor.
That’s great …. as long as you’re not the residents or businesses who leased spaced in that building based on the availability of those parking spaces. I frequently wonder how frequently the commenter who point out the availability of rapid transit take Richmond’s bus service themselves
giving myself a down arrow for my terrible typing and proofreading
Without seeing the language of the lease, not being an attorney and only being an armchair observer, I can’t wrap my head around exactly HOW an entity leasing property from a property owner can prevent said owner from developing the land as they see fit. Landlords terminate leases all the time, and it’s not like Dalian is pulling the pavement out from underneath Hem + Spire, telling them they have to leave tomorrow. The current lease doesn’t expire for another 5 1/2 years – and Dalian is notifying them NOW that they do not plan to renew in 2030. Dalian… Read more »
you answered your own question in the 1st sentence – the lease obviously grants Hem & Spire a contractual right to the parking lot and includes a right of renewal. Sure landlords and tenants can terminate leases “all the time” but if they don’t do it in conformity with the lease terms they usually get sued. The fact that the area has likely blown up even more since the leases were signed and the owner now thinks he could make more developing the land doesn’t undo the contract. They entered into a contract because they thought the terms were favorable.… Read more »
Thanks, Craig, for the clarity on this. 🙂👍 That makes sense.
This court case seems to neglect the property owner’s rights given the 5+ year notice for not renewing the lease. Finding 51 parking spaces in the area will be tough, but forcing a property owner to keep an underutilized piece of land for 15+ years is absurd. I agree with Dan and Peter.
This is a contract dispute, and the only thing that matters are the terms of the contract. If the contract is legal, than no, you can’t terminate early because you thought of a better, more lucrative use. When people terminate early, it’s usually because there is a payout for doing so.
They don’t want to terminate early, they want to terminate at the end of the term, in 5 1/2 years
yes and that would be fine but the contract they signed gave a right of renewal. Again, they signed it freely and now want a better deal. This isn’t the NFL where the player can hold out for better terms.
Yet another example of legalistic red tape that is contributing to the nationwide housing shortage.
Here’s a point. Raise the rent on the leased property. It might appear as retaliation but it’s legal. I’m sure you have a 30 day clause that states the rent can be raised. I’m no attorney but a PM. I don’t know what your lease says but most of them have a clause as to if the property was to be sold. There is another option. Sell it. I’d love to see the lease.