Merit Decision: Property Owners Win Zoning Tussle with Village. Boice v. Ottawa Hills.

Update: read what happened on remand in this case here.

On November 7, 2013, the Supreme Court of Ohio handed down a merit decision in Boice v. Ottawa Hills, 2013-Ohio-4769.  It is hard to say exactly what the issue is in this case.  And the case has no syllabus. While the case was accepted as a regulatory-takings case, the majority in this 4-3 decision clearly think the Boices got hosed, and decided to rectify that. The majority opinion written by Justice O’Neill, for himself and Justices Pfeifer, O’Donnell, and Kennedy, essentially holds that the government treated the Boices unfairly in refusing to grant them a variance for the vacant lot that is the subject of this meandering lawsuit. Justice Lanzinger wrote the dissent for herself, Chief Justice O’Connor, and Justice French. The dissent is a painstaking and at times painful slog through the actual procedure and standards of review that should govern a zoning appeal. The case was argued March 12, 2013.

Case Background

The facts are well covered in the opinion.

Willis and Annette Boice bought two lots in Ottawa Hills (the Village) in 1974. One of the lots was vacant; the other had a house on it. The lot with the house, where the Boices lived for thirty years, was 57,000 square feet. The vacant lot was 33,000 square feet. (When originally platted in 1926, the lots were 46,000 and 44,000 square feet, but were adjusted with Village approval before the Boices bought them. This becomes significant later.)

In 1974, the minimum buildable lot size in the Village was 15,000 square feet. In 1978, the Village amended its zoning code to increase the buildable lot size to 35,000 square feet. The new ordinance included a grandfathering provision for existing lawful uses of property.

In 2004, the Boices sold their house. They sought approval from the village manager to have the vacant lot declared a buildable lot so they could sell it as well. The village manager denied their request because of the lot size.

Procedural Posture, Round One

The Boices appealed the village manager’s decision to the Ottawa Hills Zoning Commission, also seeking a variance.  Both were denied. They then took their case to the Lucas County Court of Common Pleas, which affirmed the decision of the zoning commission, upholding the zoning amendment, finding there was no taking, and that the denial of the variance was supported by the record.  In Round One, the Sixth District Court of Appeals reversed, finding that the trial court had applied the wrong standard in evaluating the regulatory takings claim. The case was remanded to the trial court for a determination of whether a partial regulatory taking had occurred.

Round Two

On remand, the trial court concluded that no partial regulatory taking had occurred, because the Boices never took any steps to build on the vacant lot, so they had never acquired a vested right to use the land as a buildable lot.

The Sixth District Court of Appeals  affirmed.

Recap

Simply put, the zoning commission, the trial court, and the appeals court all concluded the Village had correctly denied the Boices’ request for a variance.

Read the oral argument preview of this case here and the analysis of that argument here.

Key Precedent

Standard of Review of an Administrative Appeal

The standard of review for a trial court in reviewing an administrative appeal is whether the administrative order is unconstitutional, illegal, arbitrary, capricious, unreasonable, or unsupported by the preponderance of substantial, reliable, and probative evidence in the record.

It gets narrower at the appellate level—the trial court decision is reviewed only on questions of law to determine if the trial court abused its discretion in finding that the administrative order was supported by reliable, probative, and substantial evidence.

 Kisil v. Sandusky, 12 Ohio St.3d 30 (1984)(the standard for granting a variance for area requirements is a lesser standard than that required for a use variance. For the former, the applicant need only show practical difficulties; for the latter unnecessary hardship.)

Duncan v. Mansfield, 23 Ohio St. 3d 83 (1986) (sets forth factors to be considered in determining whether a property owner seeking an area variance has encountered practical difficulties.)

Penn Central Trans. v. New York City 438 U.S. 104 (1978) (determination of a regulatory taking requires analysis of the economic impact of the regulation on the plaintiff, the extent to which the regulation has interfered with distinct investment-backed expectations, and the character of the governmental action).

Akron v. Chapman, 160 Ohio St. 382 (1953) (A nonconforming use means a use “* * * which existed at the time of the passage of the zoning ordinance and continued thereafter without interruption and without material change)

Boices’ Propositions of Law in this Case

The plaintiffs put forth two propositions of law in this case.  The first was a total regulatory takings claim. This was the second- “The pre-existing vested rights in property exist independent of a landowner’s intent to personally exercise those rights.” I’m not sure exactly what that means, but the majority re-characterized it as a “grandfathering-in claim,” and found it dispositive of the appeal.   Justice O’Neill had jumped on that notion immediately at oral argument, asking counsel for the Boices what had happened to the “grandfathering-in” claim. The plaintiffs contended the issue had “gotten lost.” The Village argued it was never raised. The majority decided the case on this basis, and did no Penn Central regulatory takings analysis at all.

Practical Difficulties in Seeking Area Variance

The majority set forth each of the pertinent factors listed in Duncan, and applied them to the facts of this case:

1. Is there any beneficial use without the variance? (a: Almost none. Those interested in buying it would be limited to adjoining owners).

2.  Is the variance substantial? (a:No. Just a paltry 2000 square feet)

3. Will the essential character of the neighborhood be changed if the variance is granted? (a:No. Many other homes were built on less than 35,000 square feet.)

4. Would the variance adversely affect the delivery of governmental services? (a: It would have no effect on this whatsoever.)

5. Did the owner buy the property with knowledge of the zoning restriction? (a:When the owners bought it, it was a buildable lot.)

6. Can the owner’s predicament be addressed some other way? (a:No.)

7. Would the spirit and intent behind the zoning requirement be observed and substantial justice done by granting the variance? (a: This is open to debate, but this is just one factor in a non-exhaustive list.)

Looking at the factors together, the majority concluded they weigh far more heavily in favor of granting the variance than against.

The “Three Pillars” Requiring Reversal

The three key facts that stuck in the craw of the majority were the fact that there were other houses platted in the same section of Ottawa Hills in 1926 that were built on lots smaller than 35,000 square feet after the 1978 zoning amendments, the seeming pettiness of dickering over 2000 square feet, and the failure to grandfather-in the Boices’ vacant lot.

Thus, the three pillars supporting reversal of the court of appeals are the fact that the property should have been grandfathered in, the de minimus difference in the square footage requirement involved, and disparate treatment of other village residents.  All the other property owners who applied for permission to build on smaller lots after the 1978 zoning ordinance change were given permission. Treating this lot differently was arbitrary.

Some Philosophy from Justice O’Neill

“If we were to accept the village’s argument that until construction has begun on a lot, the lot has no legal “use,” and the property owner can have no expectations about the future use of the property, landowners in Ohio would hold title to vacant land at their own peril subject to governmental regulations that can change overnight. This result would eliminate the constitutional protections that people must be afforded with respect to their own private property,” wrote O’Neill.

Majority Conclusion

The court of appeals abused its discretion in upholding the decision of the Court of Common Pleas. The case is reversed and remanded.  That should be an interesting event.

The Dissent: Are We in the Same Case?

Justice Lanzinger began her dissent by noting that the majority “sidestepped well-established principles for determining when a regulatory taking occurs and when vested rights exist.” In a polite understatement, she noted that the Boices had “not been consistent in their positions.” You can say that again.  The oral argument was also all over the place.  In short, the dissent finds that the disparate treatment, de minimus difference in lot size and total regulatory takings claims were never properly raised by the Boices, and thus were waived. Elsewhere, she added “the convoluted and conflicting arguments in this case should not be the foundation upon which a drastic change in zoning law is made.”

Procedure, Procedure, Procedure!

Justice Lanzinger reviewed the lengthy procedural posture of the case. Important here is that the original remand from the court of appeals was to determine whether a regulatory taking had occurred.  When the trial court ruled that it had not, and the Boices again appealed, they raised six assignments of error, which included claims of disparate treatment and a grandfathered-in claim.  They never raised a de minimus argument.  In the second appeal, the Sixth District held that the disparate-treatment assignment of error was beyond the scope of its remand order, so the trial court did not err in failing to address it. The appeals court also rejected the grandfathering-in claim because the Boices never used the lot as a buildable lot and they never requested a variance or a non-conforming use in 1978 when the zoning changed.

The Issues Properly Before the Court in this Case

Justice Lanzinger chided the majority for re-deciding whether a variance should have been granted in this case when that was not the issue on appeal. The issue before the high court was whether the denial of the variance effecting a regulatory taking.  Then she drilled a hole in all three pillars.

Those Three Pillars are Made of Sand

The dissent believes that all three pillars supporting the majority decision rest on arguments that were either waived on appeal or properly dealt with by the court of appeals.

Pillar One: Grandfathering-In: Would that there were a House Upon my Lot!

The Boices cannot have this property grandfathered in because there was no existing nonconforming use to be grandfathered in. What was grandfathered in the 1978 zoning ordinance was a pre-existing lawful use of a property, meaning what already existed at the time of amendment, not what the owners wished existed or intended to build in the future.  Justice Lanzinger chides the majority for changing the understanding of “non-conforming use” to “expected future non-conforming use.” “The ability to build upon a lot is a mere expectation of a use-it is not a use in and of itself, ” she wrote.  The trial court thus correctly found that the Boices had not established an existing non-conforming use that could have been grandfathered under the ordinance.

Pillar Two: De Minimus Difference in Lot Size

This issue was neither raised below nor in either proposition of law before the high court.

Pillar Three: Disparate Treatment

This issue wasn’t raised until the second appeal of the case, was expressly not addressed in the appeals court because it was beyond the scope of the remand order, and was not further appealed. “It is curious that the majority would base its decision upon an issue that the court of appeals explicitly refused to address and that was not appealed,” Lanzinger wrote.

There Was No Regulatory Taking in this Case.

Well now, on to address the issue the dissent sees as properly before the Court—was there a total regulatory taking in this case? The dissent says no both on procedural grounds and on the merits.

The reason the court of appeals originally sent this case back to the trial court was to consider a partial, not a total, regulatory taking under Penn Central and progeny. The trial court found no partial regulatory taking had occurred.  Justice Lanzinger found that the Boices never alleged a total regulatory taking until asserting it as its first proposition of law in the Supreme Court, and thus, it was waived.

But the dissent went on to look at the merits of the regulatory-takings issue (which the dissent notes the majority simply ignored), finding that the Boices had failed to establish either a partial or a total regulatory taking under  Penn Central and progeny, both state and federal.

Case Syllabus

None. In this case that is probably a blessing.

Concluding Observations

At the very end of his oral argument, the attorney for the Boices said, “just say the variance should have been granted and the case can be over.”  That is exactly what happened, although at some cost.

As I said in my post after watching the argument and will say again, this case was a complete mess. I wrote at the time “what was particularly striking about this (plaintiffs’) argument was that despite the fact that the case was accepted for review as a regulatory taking case, plaintiffs’ counsel did not discuss or analyze what was required by Penn Central, or how this case fit into the Penn Central framework.” I also noted that the plaintiffs did not seem to have proved either a partial or total regulatory taking. All of this got reflected in the dissent.

At argument, a majority of the justices really seemed to think the Boices had been wronged, and at the time, it seemed that way to me, too. Justice O’Neill in particular emphatically stated his feelings that the property should either have been grandfathered-in or given a variance.  It is clear that the Boices were wronged, but whether that was by the Village or by their lawyers or by their own inactions is up for debate.

The majority was trying to right a wrong, and there is some basic decency in its ruling, but as I have studied this, I think in doing so it wronged the Village, trampled on the strict procedures of zoning appeals, and called into question some fundamental principles of existing zoning law.  Since this decision came out, I’ve been hearing shrieks from lawyers who practice in this field.  I invite a discussion on this.

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