North Oaks v. Sarpal: “simple mistake” not enough for estoppel

About the only benefit of not posting for six months is that this post about the North Oaks v. Sarpal decision out of the Supreme Court today is just above the post made when the Court picked up the case in October.  Enjoy the convenience.

Today’s decision sets things right, to some degree.  The Court, without dissent, reverses the decisions of the trial court and Court of Appeals which barred North Oaks from enforcing setback requirements because a City employee mistakenly gave Dr. Sarpal an incorrect survey.  On the other hand, unlike the slash-and-burn opinions written last year, this opinion goes to great (and unnecessary, in my view) lengths to limit the import of this opinion.  Despite running through all of the past precedent that indicated a high standard for “wrongful conduct,” the Court here will only definitively say that “a simple mistake by a government official is not wrongful.”  Things which may not be “simple mistakes” are left to be determined another day – a footnote clarifies that the Court is NOT stating that “negligence” is enough to support estoppel, just that stuff that isn’t even “negligence” isn’t enough.  This reads like more of a backtrack than judicial restraint – the most recent Supreme Court precedent backing this decision states that “some degree of malfeasance” is required for conduct to be “wrongful.”  Why back down from that, or suggest that the standard might be lower?  It seems like the Court could at least back up that standard and still avoid the dread “exact definition” of a crucial term in a legal test devised by the Court itself.

Even in timid form, however, this opinion heads off the threatened re-write of another land-use doctrine.  It’s a good thing, too, because it doesn’t seem like any of us are going to stop making mistakes anytime soon.

Variance “Fix” Signed; Happy Days are Here Again

OK, that’s probably over-selling it.  But it is true that earlier this week the Legislature finished work on legislation to undo last summer’s Supreme Court decision and make zoning variances viable again, and the Governor signed the bill yesterday afternoon.  The new law is effective today.

The new law eliminates almost every difference that existed between the County variance law (MS 394.27, subd. 7) and the variance law used by cities and towns (MS 462.357, subd. 6).  Now everyone will use one standard, “practical difficulties,” defined this way:

“Practical difficulties” … means that the property owner proposes to use the property in a reasonable manner not permitted by the zoning ordinance; 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.

This law restores the common practice on variance that existed before the Krummenacher decision last July.  So, as of today, it is again worthwhile to consider a variance for a garage or an out-building – under Krummenacher, these could never happen because the property already had viable economic use in the form of the applicant’s house.

Cert Granted in North Oaks v. Sarpal

Yesterday, the Supreme Court agreed to hear the appeal of North Oaks v. Sarpal.  To refresh, this case started as North Oaks’ attempt to make a homeowner move a shed to comply with setbacks.  The trial court and the Court of Appeals blocked the City’s action, concluding that because the City (unwittingly) gave Sarpal a flawed property survey map and assured him it was correct, the City was barred from enforcing the correct setbacks.

In a previous post, I hoped that review would be granted, since this Court of Appeals opinion is way out of step with past precedent and current practice.  The doctrine at stake here is “equitable estoppel” – when does “fairness” require that an owner get a pass on a zoning violation?  Since 1980, it’s required “wrongful conduct” on the part of the government.  Subsequent interpretation, confirmed by the Supreme Court in 2006, pegged that phrase to mean “malfeasance,” i.e. somebody attempting to harm the owner.  In general, this is good policy; you shouldn’t get a variance from existing law through the mere bumbling of public officials.  This is especially true in the wake of Krummenacher A City planner has no power to change the zoning code intentionally, and the City Council can’t grant a variance short of a taking, so why should we allow these things to happen because the maps on file at the City are flawed, but nobody’s caught it yet?  If the city staff has maliciously set you up, then that’s different.  If you can prove that, you’ll possibly get a break (there are three other factors to meet first).

The current result in Sarpal eliminates “malfeasance,” and drops the bar down to “mistake.”  Or maybe, “confident mistake” since it’s the insistence of North Oaks planners that the survey map was correct that really seems to get the Courts’ attention (the trial court applied estoppel, the Court of Appeals decided that wasn’t erroneous or an abuse of discretion).  Now we wait to see if the Supreme Court remains consistent with its 2006 holding and reverses, or if another portion of land-use law gets substantially rewritten by the Court.

Interim Ordinance Escape Hatch Affirmed

Today, the Supreme Court affirms the prior decisions in Pawn America v. St. Louis Park, confirming that there still is a “right way” to dodge a controversial project.  A little over a year ago, the Court of Appeals released its opinion in this case on the same day it released Pigs R Us LLC v Compton Township.  I thought the cases paralleled each other: landowner applies for permit, intially gets permit, citizens raise Cain, city/town backtracks and looks for a way out.  Compton Township chose to hastily rewrite its ordinance to rule out swine facilities; St. Louis Park voted to commission a zoning study and adopt an interim ordinance blocking pawnshops.  Both governments were clearly taking evasive action to avoid granting a permit to an unpopular use, but St. Louis Park prevailed in court while Compton Township has been forced to grant the permit and likely pay damages.  When the Supreme Court granted cert to Pawn America last October, it raised concern that the interim-ordinance dodge would disappear.

Not to worry.  The central question posed by Pawn America was whether the Court would grab hold of the implied “good faith” requirement that’s always been read into the interim ordinance statute (courtesy of a Supreme Court decision on moratoria issued the same day the statute was adopted) to dig into the City’s “real” reason for throwing up an interim ordinance, or whether mechanical compliance with the statute will do.  Justice Barry Anderson removes the doubt (and the need to overrule any past cases) in a footnote:

We view good faith, in this context, as non-arbitrary and non-capricious actions of municipalities, and not as a heightened standard of behavior that city officials must meet in order to exercise authority under Minn. Stat. § 462.355, subd. 4(a).

So there you go.  An interim ordinance is just like any other ordinance – it will be reviewed for “whether the ordinance is reasonably related to the planning process and the public health, safety, and welfare, or whether it is unreasonable, arbitrary, or capricious.”  In other words, a very low bar.

All that’s left is whether the city “is conducting studies or has authorized a study to be conducted,” the prerequisite to adopting an interim ordinance.  St. Louis Park cut this as close as you can, putting the study authorization and the interim ordinance into the very same resolution for simultaneous adoption.  Justice Anderson (writing for a unanimous Court, by the way) shrugs and holds simultaneous adoption is OK.  I’m sure it helped that St. Louis Park quickly followed up and conducted the study, adopting new rules within 4 months, but this isn’t a part of the new rule.  Commission a planning or zoning study, and you’re clear to adopt an interim ordinance relating to the subject(s) of study – even in the same motion with the study authorization.  As long as there’s a rational basis for the study, the other contextual details – such as the application that brought the matter to the City’s attention – won’t matter.

Let’s note that the Court is on a tear lately with land use decisions that negate long-standing practices in the field, practices often backed by a fair amount of either pre-statute precedent (like this one) or Court of Appeals precedent.  DNR authority in shoreland areas, variances in general, 15.99 practice, and now interim ordinances.

Court of Appeals 08.24.10

A couple of cases of interest on the unpublished list today:

Dayspring Development, LLC v.  Little Canada:  A case on its third trip to the Court; this time, the Court holds that the LLC lacks standing to seek compensation for a regulatory taking that occurred between 2003 and 2005.  At the time of the taking, the principal officer of the LLC owned the property individually, only quitclaiming the property to the LLC after the City relented and granted a final plat and development agreement.  The Court determines that the interest in takings compensation is separate from the general ownership interest, and the transfer of property to the LLC failed to convey the right to takings compensation.  This is not the usual outcome for a regulatory takings case, but the Court felt that because the takings period was finite (ending with the plat approval), the right to compensation should be treated as a standard eminent-domain claim, accruing to the owner at the time of the taking, unless the interest is specifically conveyed.  The logic is simple enough, but don’t be surprised if the Supreme Court picks it up to chew over the need for a separate transfer of the right to compensation.

Otsego v. New River Hospital District:  What drives a judge to quote classic-rock standards in an opinion?  Read Judge Johnson’s concurrence in this case and decide for yourself.  I can’t decide whether it’s a stellar display of legal principle applying over personal opinion, or just a judge throwing a tantrum after being talked out of legislating from the bench.  The opinion certainly makes clear that launching an appeal when your only argument is “arbitrary and capricious” is normally a fool’s errand.  Where Judge Johnson loses me is that it’s not because of a weak legal standard or drafting problem in the Legislature; it’s the proper separation of powers in government that keeps the courts from playing Monday-morning quarterback with executive and legislative decisions.  In short, it’s a feature, not a bug.  This opinion should immediately go into the curriculum of high-school civics classes throughout the state.

Harmsen v. Minneapolis: Notable for the return of a normal application of the Ridgewood estoppel analysis.  “Normal,” in the sense that affirmative misconduct – malfeasance – is required to prevent the enforcement of otherwise valid law.   Last month, in North Oaks v. Sarpal, a different three-judge panel seemed to throw that requirement overboard when it held that “erroneous government advice” was enough to satisfy the test (or at least was enough to back up a trial court judge who thought so).  It’s not at all clear how “erroneous advice” differs from any other mistake a planning department employee might make, but that’s now the central holding of a published Court of Appeals opinion.  The facts in Harmsen don’t set up a great conflict between the opinions, but it shows that the Sarpal decision needs to be harmonized, somehow, with the Ridgewood-KMart line of cases on wrongful conduct.  If “malfeasance” is not the standard, then the standard effectively becomes “Does the judge blame the city or the owner for the problem?” – especially if the decision is only reviewed for abuse of discretion.

The DNR Adjusts

In the last several months, the Supreme Court has eviscerated the DNR’s ability to directly manage shoreline property development.  The DNR had exercised review authority over shoreline variances and insisted that its agency rules overrode local ordinances, even when local ordinances had been DNR-approved.  Those powers have now vanished, and in March the DNR suggested that it was going to simply challenge “bad” local decisions in district court.

Today’s Star Tribune reports that the agency is following through on that plan.  As it turns out, for all the Court has done to limit the DNR this year, the Krummenacher variance decision will likely give the agency its mojo back.  The DNR has sued a township in western Minnesota to nullify a variance granted to allow a lake home within 15 feet of the shoreline.  The news story, and the Star Tribune’s prior reporting, makes clear just how much of a seismic shift the Krummenacher holding creates; local officials in the area estimate that 70% – 90% of variance requests are approved by local officials.  In the past, just about anybody who presented something out of line with zoning was simply advised to apply for a variance.  Again, if the use made sense (or at least didn’t offend anyone), the variance was easy to get as long as the “problem” arguably creating the need for a variance wasn’t the owner’s fault.  At this point, cities and towns should just stop suggesting that owners should seek variances, as the standard is now extremely difficult to satisfy.  That, and if it involves a shoreline, bluffline, or scenic area, the DNR will sue you for approving it.

No Written Reasons Needed to Meet 60-Day Rule

There’s been plenty of fodder for posts lately, but I’ll skip to the 60-day rule decision handed down yesterday by the Supreme Court since that closes the loop on a running discussion here.  I thought the Supreme Court might be looking at making a change in the “60-day rule,” and now it’s happened.  The Court of Appeals disposed of this case (Johnson v. Cook County) in a brief unpublished opinion last August that followed prior decisions requiring a local government to not only act upon a zoning request in 60 days, but also to adopt written findings within that time-frame if the request is denied.  The key portion of the statute (15.99, subd. 2(a)) is this:

Failure of an agency to deny a request within 60 days is approval of the request.  If an agency denies the request, it must state in writing the reasons for the denial at the time that it denies the request.

The logic behind the Court of Appeals’ ruling, and the prior cases supporting it, is that adopting written findings is an essential part of a “denial,” and the denial is ineffective unless those findings exist.  This is certainly good practice, as any board or council is foolish to take any adverse action without fully stating its reasons for doing so on the record.  Putting findings into a written resolution for a vote, particularly on zoning matters that have likely gone through staff review and a planning commission hearing, is simply common sense.  That said, the question remains whether doing so is mandatory to avoid automatic approval or is simply a good idea.

The Supreme Court now says, “just a good idea.”  It hinted in a 2007 decision, Hans Hagen Homes, that written findings might not be mandatory.  Of course, it’s unfortunate that the Court chose to write “denial is complete when a city votes to deny the application and adopts a written statement of its reasons for denial” (emphasis added), because that sure does makes it seem like the Supreme Court ratified the existing understanding of the Rule.  Only in a footnote in Hans Hagen did the Court leave its tip that this may not be, saying that the statute could be read more narrowly, but since nobody asked for that, the Court would “leave it for another day.”  Is it asking too much for opinion-writers to choose between declarative statements and hedges, or at least not to use both while discussing a single issue?

Anyway, the Court follows through on the hint buried in its 2007 footnote, and decides that written findings are not mandatory to avoid an automatic 60-day approval.  Justice Dietzen, writing for the Court, separates the sentences of 15.99, sub 2 into component parts: a “time deadline,” a “penalty provision”, and a “written-reasons requirement.”  From there, the implications are obvious; the “penalty provision” only references the “time deadline,” and thus the “written-reasons requirement” has no direct penalty, making it directory instead of mandatory.  This makes sense as an abstract reading of the statute, but I’m disappointed that the Court completely avoids a discussion of the logic that supported the contrary reading – that written findings were necessary to “complete” a denial.  In that reading, the “written-reasons” sentence is not a standalone requirement, but a clarification of the basic requirement to “approve or deny” requests within 60 days.  This is a perfectly plausible reading, backed by past precedents, and as I noted above, good and competent practice.  I won’t lie; this decision is a relief to county and city attorneys and makes compliance with the 60-day rule much, much simpler.  I just think that when a court knows it’s taking the law in a new direction, it has to put in the effort to not just explain its logic, but explain why it’s rejecting the logic of previous decisions.

Again, it remains best practice to have written findings ready to go if a board or a council might deny a zoning request, even after this opinion.  Justice Dietzen notes as much in the home stretch of the opinion, reminding the audience that if a decision is made without findings or identified factual support, it will likely be overturned in court.  This decision simply frees a board or council to state its reasons verbally at a meeting while moving the denial of a request (or in making a vote against approval), and having those reasons transcribed at a later date.

Court of Appeals 07.13.10

with assistance from Caitlin Cragg

The Court released an opinion in Hebert v. City of Fifty Lakes on Tuesday, marking the second time the case has come up for appellate review.  It also for now marks the second round of the City winning the case on motions in District Court and then losing in appellate court.  The key facts: the properties at issue here were registered as Torrens properties in 1953; the City platted a 66-foot roadway abutting the properties in 1954; the road was rebuilt in 1971, but the rebuilders went about 30 to 50 feet outside of the platted right-of-way onto these Torrens properties.  The current owners of the properties sued in 2005 for a declaration that the road encroached on their properties and seeking money damages for the trespass.

Last round, the Supreme Court ultimately held that the public use and maintenance of a road was not a “de facto” taking that limiting affected landowners to a 15-year statute of limitations (which would have run in 1969 or 1986, depending on the stretch of road complained about).  This week, the Court of Appeals pushes further, holding that the “user statute” – which allows cities and towns to own roadways after 6 years of continuous use and maintenance as a public highway – is a form of adverse possession, and therefore is not effective against registered (Torrens) property.  For all of my complaints about judicial opinion-writing lately, the analysis in this one is superb.  It would have been easy enough, and maybe sufficient, to parse some language and conclude, “that looks like adverse possession.”  Instead, Judge Worke reaches back over 100 years to tie together the major decisions interpreting the user statute, demonstrating that the Court’s conclusion is in line with the consistent interpretation of this statute over many years.  The immediate result of this holding is that Fifty Lakes has no title to the “off-course” portion of this road; the City must start eminent-domain proceedings to acquire the right-of-way.  The case is remanded back to District Court, but given the stakes, it seems a given that this will go to the Supreme Court before the City backs down on its claim to title.

Also released this week is the opinion in Zweber v. Scott County, in which the Court sends a subdivision plat back to Scott County with an order to approve the plat.  The County denied the subdivision for perceived failure to meet “interconnectivity” standards for the proposed street network.  On first read, this had potential to be a very disturbing case – requiring streets that connect and doing away with cul-de-sacs is a major part of current land-use planning.  While I think this opinion is a little ridiculous in phrasing its objection (“the ordinance doesn’t specify how many connections are needed to be “interconnected”), the basic problem is that the ordinance fails to define what “interconnected” means in this context.  If a halfway-reasonable definition had been provided, the outcome may have been different.    While ordinance definitions occasionally seem like overkill (and sometimes are), there are still many places where the local ordinance definition completely determines the outcome of a case – accessory uses are a good example.  End result: this subdivision gets approved, and Scott County gets to work on an amendment to fix this hole in its ordinance.

Variance Law Clarified By Supreme Court

The Court released its opinion in Krummenacher v. Minnetonka, which now turns out to be a landmark opinion on land-use variances, rather than a case about nonconforming uses.  Chief Justice Gildea wrote the unanimous opinion. 

The fireworks start on page 11, when J. Gildea picks up the meaning of the phrase, “the property in question cannot be put to reasonable use if used under conditions allowed by official controls.”  Background: for at least the past 20 years, cities (and for that matter, courts) have taken that phrase to mean that the proposed use is reasonable but blocked by the zoning code.  Short of something truly nutty, this is always the case, and the analysis moves on to whether the problem is or is not the landowner’s fault, or whether the proposal will “alter the character” of the area.  The City of Minnetonka analyzed the request along these lines, and the Court of Appeals approved.

The Supreme Court, on the other hand, decides that “put to reasonable use” is a very tough standard, one that should only be met when absolutely necessary to avoid a regulatory taking.  Justice Gildea eventually gets around to a fairly compelling justification for this holding: comparing “undue hardship” as it’s been understood to operate with our precedent on “practical difficulties,” which is supposed to be a more lenient standard.  Using the prevailing interpretation of “reasonable use,” she demonstrates that “undue hardship” has somehow become the easier standard to meet, and concludes that this cannot stand with the prior Supreme Court decisions on “practical difficulties” (the “undue hardship” cases have to this point been Court of Appeals decisions). 

I say, “eventually,” because for some reason the opinion tries to insist that the “plain language of the statute” requires a different finding.  Justice Gildea accuses the Court of Appeals of “rewriting the statute” (something that must be set as an AutoComplete phrase for her at this point) for following conventional wisdom and past precedent in the matter.  The “plain language” argument is horribly misplaced here.  The near quarter-century of contrary interpretation (without much controversy, either) is one fact that, at the very least, should destroy any notion that the language is “unambiguous.”  More troublesome, though, is that in decreeing a “plain meaning” for the statute, Justice Gildea herself rewrites the statute.  The statute reads: “put to reasonable use.”  The City, following conventional wisdom and precedent, applies the phrase as “put to a reasonable use.”  The challenger here insists that it should be “put to any reasonable use.”  That’s the whole debate – which modifier should be plugged in between “to” and “reasonable” to apply the statute to some facts?  You can, and Justice Gildea does, make a compelling contextual argument that “put to any reasonable use” is the right answer, but to insist that your conclusion is the “plain meaning of the statute” in this situation is just wrong.  If this is “strict constructionism,” then strict constructionism has no meaning.  We have settled methods for interpreting statutes, and they should be used when there is ambiguity, instead of doing partial analysis and then propping that up by declaring “plain meaning.”

So this case now goes back to Minnetonka for review under the variance standards as declared by the Court.  My question at the outset, and especially now, is: why did this get here?  Why is this application (to expand a non-conforming garage) going through variance?  As the Court made clear in the first half of its opinion, cities have the power to allow the expansion of nonconforming uses.  Moreover, cities can use any critieria they like in deciding whether to approve such an expansion – the sole requirement is to pass an ordinance allowing expansion, and describing how such permission can be obtained.  Minnetonka chose to use its variance procedure to consider these requests.  However, there is absolutely no reason that this must be tied to a variance procedure; to me, using variance considerations here make no sense.    The property is already nonconforming, thus is already at variance with the terms of the zoning code.  So from what, exactly, is the expansion request varying?  Under this Krummenacher decision, variance is now just an escape hatch used to avoid regulatory taking – which is exactly what nonconforming use doctrine is in the first place. 

My thought is that Minnetonka can moot this case, or at least make its life much easier at the re-consideration, by amending its ordinance to provide for a separate procedure to consider expansion of a nonconforming use or building.

Another Appellate Loss for DNR

By Daniel J. Cragg

The Court of Appeals held on Tuesday in Swenson v. Holstein that Minnesota’s game and fish laws do not preclude the carcasses of wild animals that die naturally from becoming private property, delivering yet another appellate court loss to the DNR.

In his complaint, the plaintiff alleged that he found a dead bear on his property, which he then took to a taxidermist.  The plaintiff gave notice to the DNR of the find, and the DNR then seized the carcass without any judicial process.  The plaintiff made claims against DNR officials in their individual and official capacities, sought a declaratory judgment that he owns the carcass, and for conversion (damages for the value of the carcass), replevin (an order directing the return of the carcass to the plaintiff), due process violations under 42 U.S. C. § 1983, and a Fifth Amendment Takings claim.

The Court of Appeals reached its conclusion on statutory construction grounds, reasoning that the game and fish laws only apply to “wild animals,” and the term “wild animals” is defined as “all living creatures…”.  Since a bear carcass is not a living creature, it was not covered by the game and fish statute, and under common law principles, a private person could perfect ownership by taking possession of such a carcass.

The Court of Appeals reversed and remanded the case back to the District Court.  The plaintiff must still prove that the bear died of natural causes in order to win his case.