Opinion
No. A06-1872.
Filed August 31, 2007.
Appeal from the District Court, Washington County District Court, File No. C9-06-1211.
Patrick B. Steinhoff, Howard A. Roston, Malkerson Gilliland Martin, LLP, US Bank Plaza South, Minneapolis, MN (for respondents).
Pierre N. Regnier, Susan Steffen Tice, Jardine, Logan O'Brien, PLLP, Eagle Point Boulevard, Suite, Lake Elmo, MN (for appellant).
Considered and decided by Willis, Presiding Judge; Toussaint, Chief Judge; and Randall, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2006).
UNPUBLISHED OPINION
Appellant city challenges the district court's grant of summary judgment to respondent landowners, arguing that (1) a writ of mandamus is an improper remedy to grant to landowners challenging the denial of a zoning variance; (2) the city's denial of respondents' variance application was not unreasonable, arbitrary, or capricious; (3) respondents' equal-protection claim fails as a matter of law because they are not similarly situated to other landowners who were granted variances; (4) no regulatory taking of respondents' lot occurred; and (5) the district court erred by not requiring respondents to join their neighbors as indispensable parties. We affirm in part, reverse in part, and remand.
FACTS
In 1995, respondents Glen and Wendy Hinz purchased a half-acre lot in the city of Lakeland, Minnesota. The lot is in an area of the city zoned R-1, single-family residential, with a minimum lot size of two and a half acres. Lakeland, Minn. Zoning Ordinance §§ 601.01, 602.01 (2001). This ordinance was in place when respondents purchased the lot. Respondents also own two adjacent lots.
In May 2003, respondents entered into a purchase agreement to sell the subject lot, and a contractor employed by the intended purchaser applied to the city for a variance from the minimum-lot-size requirement. The city granted the variance. Daniel and Leslie Rohricht, neighbors of respondents, then filed suit against respondents and the city, challenging the grant of the variance. The sale of the lot fell through. And the district court granted summary judgment to the neighbors on the ground that the record of the city's decision to grant the variance was inadequate.
In June 2004, respondents applied for a variance and submitted an affidavit that addressed the factors of the "undue-hardship" test and the deficiencies in the record, as identified by the district court, of the city's decision to grant the earlier variance application. The city responded with a request for further information, including a list of questions addressing primarily the factors of the undue-hardship test, and respondents supplied the requested information. The city's planning commission held a hearing and recommended to the city council that it grant the variance. The city council also held a hearing to consider respondents' application. It denied respondents' variance request in a four-page resolution.
On February 3, 2006, respondents filed a complaint and petition for writ of mandamus against the city, raising four counts: (1) declaratory judgment; (2) equal protection; (3) "writ of mandamus — variance approval"; and (4) "mandamus — inverse condemnation." Respondents and the city each moved for summary judgment, and the district court granted summary judgment to respondents. The district court made no findings and issued no memorandum. The district court's order simply states that "[t]here are no issues of material fact, and [respondents] are entitled to judgment as a matter of law." The order further directs the city to "immediately grant [respondents] the applied for variance," or, alternately, to "immediately commence a condemnation action to acquire the real property." The city appeals.
DECISION
On review of a grant of summary judgment, this court considers the record as a whole and, viewing the evidence in a light most favorable to the party against whom summary judgment was granted, determines whether there are any genuine issues of material fact and whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).
I.
The city argues that it was improper for the district court to issue a writ of mandamus ordering the city to grant respondents a variance, both because respondents had an adequate legal remedy in the form of a declaratory-judgment action and because discretionary acts are not subject to mandamus.
"Mandamus is an extraordinary legal remedy." State v. Pero, 590 N.W.2d 319, 323 (Minn. 1999). The two primary uses of mandamus are (1) to compel the performance of an official duty clearly imposed by law and (2) to compel the exercise of discretion when that exercise is required by law. See Minn. Stat. § 586.01 (2006); N. States Power Co. v. Minn. Metro. Council, 684 N.W.2d 485, 491 (Minn. 2004). But a writ of mandamus does not control the particular manner in which a duty is to be performed and does not dictate how discretion is to be exercised. See, e.g., State v. Davis, 592 N.W.2d 457, 459 (Minn. 1999). And a writ of mandamus "shall not issue in any case where there is a plain, speedy, and adequate remedy in the ordinary course of law." Minn. Stat. § 586.02 (2006).
The city argues first that mandamus is an improper remedy here because respondents had available the "plain and adequate statutory remedy" of a declaratory-judgment action. We agree. The Minnesota Supreme Court recently directed that "the proper procedure for reviewing a city's decision in a zoning matter generally will be a declaratory judgment action." Mendota Golf, LLP v. City of Mendota Heights, 708 N.W.2d 162, 178 (Minn. 2006).
As respondents point out, in granting summary judgment to them generally, the district court not only issued a writ of mandamus but also granted summary judgment on respondents' declaratory-judgment action. But this supports the city's argument that declaratory judgment was an adequate remedy that was available to respondents and that mandamus was therefore improper as a means of compelling the city to grant respondents' variance.
The city also argues that mandamus to compel the grant of the variance is improper because denying respondents' variance application was a discretionary act by the city, and such discretionary acts are not subject to mandamus. We agree that mandamus is generally not an appropriate remedy in a review of the exercise of legislative discretion in municipal zoning matters. Id. "[M]andamus does not lie for mere error in the exercise of discretion." Zion Evangelical Lutheran Church of Detroit Lakes v. City of Detroit Lakes, 221 Minn. 55, 58, 21 N.W.2d 203, 205 (1945).
Because mandamus is not appropriately used to dictate the manner in which a city's discretion should be exercised, to the extent that the district court issued a writ ordering the city to grant respondents a variance, it was in error. Respondents' argument that mandamus was appropriate because the city had a "`plain duty' to approve respondents' variance application" is without merit. The city may have had a plain duty to exercise its discretion in addressing the application, but it had no plain duty to exercise its discretion to reach a particular conclusion. 4 Edward H. Ziegler Jr., Arden H. Rathkopf Daren A. Rathkopf, Rathkopf's The Law of Zoning and Planning, § 64:6 (4th ed. 1997 Supp. 2001) (explaining that "[t]he clear legal duty to act which evokes a right to mandamus" does not arise with respect to an act that "principally involves the exercise of judgment and discretion"). The district court erred as a matter of law when it issued a writ of mandamus to direct the city to grant respondents' variance, and we reverse that portion of the district court's order.
The district court also issued a writ, in the alternative, to order the city to commence condemnation proceedings to acquire the lot. And "[a]ctions for inverse condemnation may appropriately be brought by writ of mandamus." N. States Power, 684 N.W.2d at 491. We conclude below that summary judgment for respondents was inappropriately granted on their inverse-condemnation claim on the ground that there are genuine issues of material fact regarding whether a taking occurred. Therefore, we also reverse the district court's issuance of a writ of mandamus ordering the city to commence condemnation proceedings, and we remand on that issue.
II.
We turn next to the district court's review of the city council's decision to deny respondents a variance. Although the district court did not specifically mention respondents' declaratory-judgment or equal-protection claims in its order granting them summary judgment, because it concluded that there are no issues of material fact and granted summary judgment on respondents' motion in its entirety, we proceed under the assumption that it granted summary judgment to respondents on each of their claims. The city argues that to the extent that the district court granted summary judgment to respondents on their declaratory-judgment claim, it erred because the city's denial of respondents' variance application was not unreasonable, arbitrary, or capricious. Respondents argue that the city's denial of their variance application had no rational basis and that the district court appropriately granted them summary judgment.
Although rebuttable, there is a strong presumption that a city's actions are proper. Arcadia Dev. Corp. v. City of Bloomington, 267 Minn. 221, 226, 125 N.W.2d 846, 850 (1964). Zoning decisions of a municipal body that require judgment and discretion are reviewed to determine whether the municipal body acted arbitrarily, capriciously, or unreasonably, and whether the evidence reasonably supports the decision made. Id. at n. 5.
A local zoning authority has broad discretion in denying variances. Kismet Investors, Inc., v. County of Benton, 617 N.W.2d 85, 90 (Minn.App. 2000), review denied (Minn. Nov. 15, 2000). This court reviews a local zoning authority's exercise of its discretion to determine whether there was a rational basis for the decision. Mendota Golf, LLP, 708 N.W.2d at 179. The fact that we may have arrived at a different conclusion does not invalidate the judgment of a local zoning authority if it acted in good faith and within the broad discretion accorded it by statutes and the relevant ordinances. See VanLandschoot v. City of Mendota Heights, 336 N.W.2d 503, 509 (Minn. 1983).
A city council acting as a municipal board of appeals and adjustments has the power to hear requests for variances from the literal provisions of [an] ordinance in instances where . . . strict enforcement would cause undue hardship because of circumstances unique to the individual property under consideration, and to grant such variances only when it is demonstrated that such actions will be in keeping with the spirit and intent of the ordinance.
Minn. Stat. § 462.357, subd. 6(2) (2006). "Undue hardship" means that the property "cannot be put to a reasonable use if used under conditions allowed by the official controls, the plight of the landowner is due to circumstances unique to the property not created by the landowner, and the variance, if granted, will not alter the essential character of the locality." Id. But "[e]conomic considerations alone shall not constitute an undue hardship if reasonable use for the property exists under the terms of the ordinance." Id. A landowner applying for a variance has the burden of showing that the variance is justified. Kismet Investors, Inc., 617 N.W.2d at 90.
Under the first "hardship factor," the city argues that respondents failed to show that the lot cannot be put to a reasonable use without a variance from the lot-size requirement. In response to the city council's request for information regarding possible uses for the lot, respondents stated that they are "not aware of any use for the property" and that the "most appropriate use is to grant the variance." The city council concluded that the lot can be used for "nonresidential development with permissive uses being forests, recreational uses, tennis, baseball, gardens, parks, playgrounds, [and] wildlife reserve."
Respondents argue that the city council's proposed uses for the lot are not reasonable and further argue that Rowell v. City of Moorhead requires the conclusion that the city council acted unreasonably in denying their variance application. Rowell v. City of Moorhead, 446 N.W.2d 917 (Minn.App. 1989), review denied (Minn. Dec. 15, 1989). Rowell concluded that the "undue hardship" provision "is clearly intended to allow cities the flexibility to grant variances in cases where the constitution does not compel it" and that the first part of the test requires "a showing that the property owner would like to use the property in a reasonable manner that is prohibited by the ordinance," not a showing that "the land cannot be put to any reasonable use without the variance." Id. at 922(emphasis added). The city council's action here does not conflict with Rowell. Although respondents are correct that Rowell provides that a landowner must only "propose a reasonable use," Rowell still gives the city the discretion to determine reasonableness, provided that the evidence supports the city's decision.
Under the second undue-hardship factor, the plight of the landowner must be due to circumstances unique to the property and not created by the landowner. Minn. Stat. § 462.357, subd. 6 (2006). Respondents submitted to the city council several arguments for the proposition that the lot is unique, including its location adjacent to the neighboring city of Lakeland Shores, an elementary school, and the Rohrichts, who are unwilling to purchase the lot; the fact that it is land-locked; and its many trees. Respondents assert that the city council used respondents' knowledge of the claimed hardship condition when they bought the lot as its basis for concluding that there are no "unique circumstances" here, but such an assertion is inaccurate. The city council did note that respondents had knowledge of the lot's insufficient size when they bought it, but the city council concluded separately that respondents have "not demonstrated any unique circumstances to the lot itself which would justify a variance from the City's R-1 district requirements to make this lot buildable."
The city argues that, under the third factor, respondents have not established that granting the variance "will not alter the essential character of the locality." Id. It asserts that the essential character of the locality will be altered because the three neighboring lots within the city of Lakeland (as opposed to the adjacent municipality of Lakeland Shores) are more than two and a half acres. Respondents argue that granting their variance would not alter the essential character of the area, noting that many other lots in the immediate vicinity are smaller than the required two and a half acres. But the legislature has granted municipalities the authority to enact zoning ordinances to regulate, among other things, "the size of yards and other open spaces [and] the density and distribution of population[.]" Minn. Stat. § 462.357, subd. 1 (2006). And granting respondents the requested variance would negatively affect each of these considerations in the city's municipal planning as they are reflected in the city's zoning ordinance. Indeed, the purpose of the ordinance from which respondents seek a variance is "to provide low density residential areas in rapidly developing rural settings." Lakeland, Minn. Zoning Ordinance § 601.01.
Respondents also argue that "area" variances "do not alter the essential character of a locality as a matter of law" in Minnesota, citing Mohler v. City of St. Louis Park, 643 N.W.2d 623, 632 (Minn.App. 2002), review denied (Minn. July 16, 2002). Respondents claim that the city council's conclusion is therefore legally insufficient. This court did note in Mohler that a "nonuse or area variance does not change the character of the zoned district." Id. (quotation omitted). But we also determined in Mohler that although the challenged variance there was a nonuse variance, the structure involved violated the "spirit and intent" of the ordinance, so that the variance was improperly granted. Id.
Here, although respondents sought a nonuse variance, the city council had a rational basis for its determination that respondents did not establish that the lot is unique or that the lot could not be put to a reasonable use without a variance. Further, as the city council noted, at the time respondents sought the variance, they owned two adjacent lots on which they had built a home. Their primary purpose in seeking a variance for the subject property was to sell it, as they attempted to do in 2003. "Economic considerations alone shall not constitute a hardship if a reasonable use for the property exists under the terms of the ordinance." Id. The city council reasonably determined that respondents sought the variance only to sell the lot to a purchaser who wanted to build a home on it — in other words, for economic purposes — and the city council proposed reasonable alternative uses that are permissible under the ordinance.
Based on our review of the record and given the deference that this court must give to a city's denial of a zoning variance, we conclude as a matter of law that the city council's denial of respondents' variance application was not unreasonable, arbitrary, or capricious, and we reverse the district court's grant of summary judgment on respondents' declaratory-judgment claim.
III.
Like respondents' declaratory-judgment claim, the district court did not specifically mention respondents' equal-protection claim in its order granting summary judgment, but we proceed under the assumption that it granted summary judgment on this claim also. The city argues that to the extent that the district court granted summary judgment to respondents on their equal-protection claim, it erred as a matter of law.
"A zoning ordinance must operate uniformly on those similarly situated." Northwestern Coll. v. City of Arden Hills, 281 N.W.2d 865, 869 (Minn. 1979). To conclude that a landowner has been denied equal protection with respect to a zoning variance, a court must also conclude that any landowners who were treated differently from the landowner claiming an equal-protection violation were similarly situated to that landowner. State by Spannaus v. Lutsen Resorts, Inc., 310 N.W.2d 495, 497 (Minn. 1981).
The city asserts that respondents' equal-protection claim must fail because they are not similarly situated to other landowners who have been granted a variance from the lot-size ordinance. The other landowners' properties, the city asserts, are dissimilar to respondents' property because they are located in a "different zoning overlay district," they are all larger than respondents' property, and they all had "existing residences and structures."
Respondents argue that they are similarly situated to the four landowners in the city who were granted variances in the only way that is relevant: like the other landowners, respondents sought a variance from the minimum-lot-size requirement of the ordinance; but unlike the other landowners, they were denied a variance. Respondents claim that because they are similarly situated to the other landowners, the city acted unlawfully when it "applied a different standard of approval" to respondents' application, requiring them to provide information and documentation that the other landowners were not required to provide.
We disagree that having sought a variance for a nonconforming lot is the only characteristic relevant to respondents' equal-protection claim. The landowners who were granted variances sought them to rebuild or add on to existing homes, not to build additional homes. And their lots are larger than respondents' lot. Respondents, on the other hand, sought a variance so they could sell the lot to a purchaser who would build a home on the lot. Particularly given the stated purpose of the lot-size ordinance, which is "to provide low density residential areas in rapidly developing rural settings," the differences between respondents' lot and the other landowners' lots were relevant to the city council's review of respondents' variance application. Identical treatment was not required.
Respondents are not similarly situated to the other landowners who were granted variances from the lot-size ordinance. Their equal-protection claim therefore fails as a matter of law, and to the extent that the district court granted summary judgment on that claim to respondents, we reverse.
IV.
The city argues that because no regulatory taking of the property occurred, the district court erred by granting summary judgment to respondents on their inverse-condemnation action and issuing a writ of mandamus ordering the city to commence condemnation proceedings.
The United States and Minnesota constitutions prohibit governments from taking private property by condemnation without providing just compensation for the property. U.S. Const. amend. V ("nor shall private property be taken for public use, without just compensation"); Minn. Const. art. I, § 13 ("Private property shall not be taken, destroyed or damaged for public use without just compensation."). Although government may regulate private property, "if regulation goes too far it will be recognized as a taking." Pa. Coal Co. v. Mahon, 260 U.S. 393, 415, 43 S. Ct. 158, 160 (1922). The United States Supreme Court has recognized two distinct classes of regulatory takings: (1) categorical takings, in which the regulation "denies all economically beneficial or productive use of land" under Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1015, 112 S. Ct. 2886, 2893 (1992); and (2) case-specific takings, which involve consideration of the economic impact of the regulation, the interference with reasonable investment-backed expectations, and the character of the regulation. Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104, 124, 98 S. Ct. 2646, 2659 (1978). When a taking has occurred and just compensation has not been paid, a writ of mandamus is an appropriate remedy. N. States Power, 684 N.W.2d at 491.
The city argues that no taking occurred here, in part because the property was "unbuildable" when respondents bought it. The city cites Myron v. City of Plymouth, 562 N.W.2d 21, 23-24 (Minn.App. 1997), aff'd mem., 581 N.W.2d 815 (Minn. 1998), which affirmed summary judgment for the City of Plymouth on the appellant's takings claim based on the fact that the appellant knew that the property was subject to a zoning restriction when he purchased it. But after oral argument was heard here, the supreme court overruled Myron, holding that the fact that a property owner knew when he purchased property that it was subject to regulation does not automatically defeat a takings claim. Wensmann Realty, Inc. v. City of Eagan, 734 N.W.2d 623, 638 (Minn. 2007); see also Palazzolo v. Rhode Island, 533 U.S. 606, 630, 121 S. Ct. 2448, 2464 (2001) (holding that a takings claim is not barred by the mere fact that title is acquired after the effective date of a state-imposed regulation). Respondents' takings claim is therefore not barred by the fact that the zoning ordinance existed when they purchased the property.
The supreme court has made clear that in categorical takings claims under Lucas, "the deprivation of all economically beneficial uses means `a complete elimination of value.'" Wensmann Realty, Inc., 734 N.W.2d at 633 n. 6(quoting Lucas, 505 U.S. at 1019-20 n. 8, 112 S. Ct. at 2895 n. 8). The city argues that no categorical taking occurred because respondents retain recreational and agricultural uses of the property, retain the right to exclude others, and retain the right to alienate the land. Respondents argue that "there simply cannot be an economically viable non-residential use for a landlocked, 1/2-acre parcel of land in the middle of a fully developed residential neighborhood" and that there is, therefore, a categorical taking under Lucas.
We agree with the city and with the city council's determination that the lot retains some value, despite the denial of respondents' variance application. Although they cannot use the lot to build a residence or sell the lot for that purpose, they can use the lot for a variety of recreational activities. We conclude as a matter of law that, based on the record here, there has not been a categorical taking under Lucas because there has not been "a complete elimination of value." Lucas, 505 U.S. at 1019-20 n. 8, 112 S. Ct. at 2895 n. 8.
But we must still determine whether there are any genuine issues of material fact regarding whether there has been a case-specific taking under Penn Central. The city argues that no taking occurred under Penn Central, either, because there was no economic impact attributable to the city, there were no legitimate investment-backed expectations because respondents knew of the regulation when they purchased the property, and the character of the regulation is consistent with the city's comprehensive plan, which designates the area as large-lot development. Respondents do not address the Penn Central factors and assert only that a categorical taking occurred.
A takings analysis often involves factual issues that make summary judgment inappropriate. Arcadia Dev. Corp. v. City of Bloomington, 552 N.W.2d 281, 285 (Minn.App. 1996), review denied (Minn. Oct. 29, 1996). On the record before us, we cannot determine as a matter of law whether a taking occurred here. Genuine issues of material fact remain, and summary judgment was therefore inappropriately granted on respondents' inverse-condemnation claim. We reverse the district court's issuance of a writ of mandamus ordering the city to commence condemnation proceedings and reverse any grant of a declaratory judgment in respondents' favor and remand to the district court for resolution of respondents' inverse-condemnation claim.
V.
The city argues that the district court erred by not requiring respondents to join as parties to this action respondents' neighbors, the Rohrichts, under Minnesota Rule of Civil Procedure 19.01 and Minn. Stat. § 555.11 (2006). The district court did not address this issue, either, in its order granting summary judgment to respondents, but, again, because it granted respondents' motion in its entirety, we proceed under the assumption that the district court ruled in respondents' favor on this issue.
Rule 19.01 requires that a person be joined as a party if he "claims an interest relating to the subject matter of the action" and if not joining him will leave a party "subject to a substantial risk of double, multiple, or otherwise inconsistent obligations." And section 555.11 provides that "[w]hen declaratory relief is sought, all persons shall be made parties who have or claim any interest which would be affected by the declaration."
The city contends that the Rohrichts "claim an interest relating to the subject matter of this action" and are, therefore, necessary parties because if respondents prevail here, the Rohrichts' victory in the 2003-04 suit will "ring hollow."
Respondents argue that neither rule 19.01 nor section 555.11 requires the Rohrichts to be joined as parties because the Rohrichts do not have a legally cognizable interest in the subject property. We agree. Zoning ordinances do not create property rights in neighboring landowners. Mohler, 643 N.W.2d at 635-36. And if the Rohrichts were deemed necessary parties, all neighboring landowners who may be affected by the variance would also have to be joined. As respondents assert, neighbors may be interested in the outcome of this suit but that does not create in them a legally recognized interest such that failing to join them is fatal to respondents' claims. The district court did not err by declining to require respondents to join the Rohrichts as parties, and we affirm its implied ruling on the issue.