The Supreme Court of Virginia has overturned and sent back to the Alexandria Circuit Court a case involving a two-year-old dispute about whether the city could allow a restaurant to set tables along a public alley that has been used by members of a private club to get to and from their parking lot.

The justices said that the reasoning the Circuit Court used to deny the city was based on an inappropriate older decision and that Judge John McGrath should have ruled on the merits of the case. The state’s high court did not, however, rule on the underlying issue: Can the city allow private use of a public alley when another private organization claims a long-standing easement?

The restaurant, Virtue Feed and Grain, was granted a special-use permit by the city several years ago to build an outdoor dining deck across half of the 30-foot-wide Wales Alley. The Old Dominion Boat Club said its easement, originally created in 1789 and acquired by the boat club in 1935, barred that construction. While the case was being litigated, the restaurant was allowed to set up tables daily on the surface of the alley.

“We were disappointed, of course,” said Miles Holzman, the boat club’s president. “We had property rights taken away from us without any due process or adjudication. We’ve never given away that easement. [The city] took it by fiat . . . and [the city] wasn’t taking them away for public use, they were taking them away to give to another commercial entity.”

Both the boat club and the city had asked the Supreme Court to make a final ruling on the issue, but the majority declined to do so. Chief Justice Cynthia Kinser wrote a partial dissent, arguing that sending the case back to the Circuit Court was “a waste of judicial resources” when the issues have been argued extensively.

Historical feed house signage adorns the exterior of Virtue Feed & Grain in July 2011 in Alexandria. (Amanda Voisard/THE WASHINGTON POST)

The dispute is part of a larger struggle between the city and the boat club over public access and redevelopment of the waterfront. The city and club have been quietly negotiating how to incorporate the club’s property at the foot of King Street and its adjacent parking lot into the waterfront redevelopment plan that the City Council passed in January. Holzman noted that “the city has dodged the issue of eminent domain,” but there’s a statewide ballot measure in November that would stiffen Virginia’s eminent-domain statutes.

Since all three local Circuit Court judges had recused themselves from the case and it was heard by a traveling judge, it’s not yet known when the case will be heard again at the Circuit Court, said Christopher Spera, an assistant city attorney.