Wednesday, November 7, 2018

Cunningha v Bedford County -- Procedural Due Process

We have been reviewing the Cunningham v Bedford County case (copy found here) over the last several installments of this little zoning blog. We will continue today with a look at procedural due process.

The plaintiff also alleged a violation of procedural due process under both the US and Tennessee constitutions. The difficulty with this type of a claim is that there must be some constitutionally protected property interest that requires some degree of notice and opportunity to be heard. That property interest must be more than a unilateral expectation or an abstract need or desire, it must be a legitimate claim of entitlement created and defined by existing rules or understandings that come from some independent source such as Tennessee state law. The Court of Appeals concluded that here the plaintiff simply failed to demonstrate that he was entitled to have a zoning change and it was not therefore deprived of any procedural due process. He had no legitimate claim of entitlement to what is a discretionary decision by the local legislative body.

Once again, to a perhaps lesser extent in this instance, the decision turns on whether or not there was a rational basis for the failure to rezone the property. Having concluded that there was a rational basis for declining to change the zoning, there could not possibly be any claim of entitlement and as a result the procedural due process argument was doomed to failure.

I would go further and say that the procedural due process argument is somewhat difficult in the context of a zoning change. Perhaps if the zoning had been commercial and the County changed it to residential to the detriment of the owner, a procedural to process argument might have been more tenable. Under these circumstances though, it may be just too far a stretch. However, adding procedural and substantive due process claims to any case such as this is always worth considering and usually worth trying. Remember, that the local legislative body had cut off the plaintiff’s presentation of one of the hearings, and there were some allegations that at least the trial court found persuasive because of conflicts of interest by some members of the County commission.

Our next installment of this review of the Cunningham case will take a quick look at the alleged violations of substantive due process.

Monday, November 5, 2018

Cunningham v Bedford County -- Takings Law

The Cunningham case (copy found here) also involved allegations of a regulatory taking by overbroad zoning. The property was zoned residential; the plaintiff argued that it should be zoned commercial and that the residential zoning worked a taking of the land. The lower court concluded that there was no taking based on the Tennessee Supreme Court reasoning in Phillips v Montgomery County, 442 S.W. 3d 233 (Tenn. 2014). The Court of Appeals affirmed.

The plaintiff evidently relied upon the fact that the plaintiff had been led to believe that the property would easily be rezoned to commercial and thus had legitimate investment backed expectations for commercial use of the land. Furthermore, because at some points in the rezoning process, the applicant was not permitted to make a presentation and because there might have been some conflicts of interest among the County commissioners, the argument was that the character of the governmental action was inherently suspect and taking should've been found.

The difficulty here is that was forced to rely on the multifactor analysis found in 10 Central Transportation v New York, 438 US 104 (1978). There are some cases involving overbroad regulatory actions, that somewhat easily fit into the proper analysis. For example, a required dedication for subdivision that does not ameliorate some significant impact of the development is simply a take. See Nolan v California Coastal Commission, 483 US 825 (1987). Or, if there is a regulation which completely eliminates the potential economic use of the land, that may be a taking per se. See Lucas v South Carolina Coastal Council, 505 US 1003 (1992). And certainly, if there is a physical invasion, no matter how slight, that is also a taking of a more traditional kind.

But if the governmental actions do not fit into any of those categories, Penn Central must be applied. The difficulty is that unlike in the other categories, there is no set formula for determining when the Constitution requires that economic injuries caused by public action be compensated. Penn Central suggested a few factors to include:

The economic impact on the claimant,
the extent to which the regulation has interfered with distinct investment backed expectations
and the character or extent of the governmental action.

However, as I've mentioned, balancing these factors is not nearly so simple as the more distinctive total take categories mentioned above. As a result, if the plaintiff has to rely on Penn Central, it is often difficult to prevail.

And certainly, that was true in this case. The Court of Appeals pointed out that the plaintiff purchased the property knowing it was zoned for residential use. He did not choose to make his contract contingent upon obtaining zoning change. His first application for a zoning change was made before he actually bought the property. The Court of Appeals did not believe that there was a significant economic impact. He could have drafted the contract in order to make sure that he did not have to buy the property unless the zoning change was obtained. In addition, his investment backed expectations were hopeful. There is no binding commitment that the zoning would be changed. Finally the character of the governmental action was a zoning application which was denied on a rational basis. Thus there was no element of a regulatory taking.

The difficulty I have is once again rooted in the conclusion that there was a rational basis for this decision. Both the planning official for the county, Chris White, and Lisa Keylon, an urban planner by training and education, indicated clearly that this area was prime commercial land and that the entire area ultimately would be rezoned to commercial. It may be that it was too soon to take the zoning in that direction, but it's unclear from the discussion of the facts by the Court of Appeals.

Assuming for example that there is not a rational basis for residential zoning at that location, that would lead to a conclusion of a regulatory taking and compensation paid by the local government.

But once again, this case gives the practicing bar a good idea of how strong a case you must have in order to prevail. Even with County representatives testifying that the land was prime commercial land, the Court of Appeals found a rational basis for the current zoning and ruled in favor of the county.

Thursday, November 1, 2018

Cunningham v Bedford County -- Justification for Zoning Changes

Returning to this recent and very interesting case concerning zoning changes (a copy of which can be found here), keep in mind that challenging any legislative enactment is a difficult task. The Court of Appeals in Cunningham, cited many of the leading cases in the state, including Fallin v Knox County Board of Commissioners, 656 S.W. 2d 338 (Tenn. 1983), for the proposition that local legislative bodies are given broad discretion in enacting or amending zoning ordinances.

When the act of a local governmental body is legislative, judicial review is limited to whether any rational basis exists for the legislative action and, if the issue is fairly debatable, it must be permitted to stand as valid legislation.

McCallen v City of Memphis, 786 SW 2d 633, 640 (Tenn. 1990).

The applicant argued that the opposition of nearby residents did not provide a basis on which the commission could lawfully refuse to rezone his property. Frankly, I agree with this point. It is not for the nearby residents to show a basis for a decision. From my perspective it takes the testimony of an expert witness, usually a land planner, to discuss whether a particular zoning classification on a particular property is rationally related to a legitimate governmental objective. Certainly, the residence may, at a public hearing, expressed their opinions. But those opinions are not well-informed and although they may have a political impact, have little or no impact on a judge making a final decision about the sustainability of the decision of the local legislative body.

Unfortunately, the cases relied upon by the applicant here were not legislative cases but rather administrative cases with a different standard of proof. The court easily blew through those, basically finding that neither of those cases was apposite to the facts presented here.

Interestingly, from my perspective, the Court of Appeals, sites an old favorite case of mine, Day v City of Decherd, 1998 WL 684533 (Tenn. App. 1990). In that case, Judge Cantrell, speaking for the Court of Appeals, noted that “legislative classifications in a zoning law are valid of any possible reason can be conceived to justify them.” And in an interesting comment on our political system:

Legislators, however, do what legislators two: they listen to their constituents; they test the wind; they try to please as many people as possible, consistent with the Constitution and a good conscience. And they are not to be condemned for doing so. That is their job.

Indeed, the Day case is somewhat similar. The owner there asked for a zoning change from residential to commercial as well, and ultimately did not have the votes to have it pass. There is one distinctive difference however, in the Day case, an urban planner, advise the planning commission that he had reservations about zoning this particular property commercial given other plans for that area of the city. As a result, there was an expert witness, so to speak, who provided some slim but necessary insight into the land use planning process and a reason to deny the zoning request.

In the Cunningham case on the other hand, the opposite appears to be true. Lisa Keylon, an urban planner by training and education, testified that this land was prime for commercial use. She testified that she thought the property should be rezoned to commercial. Now of course, in the absence of testimony by the plaintiff, a court must assume that most zoning enactments are valid. However, I feel certain that the plaintiff in this case adduced some proof, from an urban planner or otherwise, about the invalidity of the ordinance. At that point it seems to me that the burden should shift to the local legislative body to produce its own proof. Further, it appears that the County planners themselves testified the other way, that is, that the zoning change should be granted. Again, the Court of Appeals decision does not comment about this important testimony. The court focused solely on the adjacent neighbor and his opposition. But from my perspective, the neighbors' testimony, standing alone, in the face of expert proof from the plaintiff (if there was any) would insufficient to win the case for the local government. And since the planners from the local government itself seem to agree with the plaintiff’s position, that makes the plaintiff’s case even stronger.

The Court of Appeals relied on the neighbor’s testimony at the public hearing as providing a rational basis. It’s not clear to me that that is entirely appropriate. I think that if the plaintiff presented an expert who concluded that the zoning change was appropriate and had a rational basis, and furthermore that the existing zoning which was residential, had no rational basis, then the local legislative body should have been required to change the zoning.

Bear in mind, it’s very possible to have two or more zoning classifications which meet the rational basis test. For example, in this case, perhaps this property, from an urban zoning standpoint, could reasonably be used for residential or commercial purpose. If that’s the case then the local legislative body has the choice of either one. But without knowing more, it is difficult to reach a final conclusion concerning this issue as it regards this particular set of facts. However, the rational basis with regard to a zoning change cannot simply be provided by a neighbor. Either, the plaintiff fails to present expert proof, in which case the presumption of validity controls and the local government wins. Or, alternatively, if the plaintiff presents expert proof tending to show that there is no rational basis for the current zoning and that commercial zoning would have a rational basis, then either the local government must present its own expert and the court makes a decision between the two experts, or if the local government presents no expert proof, then the plaintiff should prevail.

However, our courts here in Tennessee have been very reluctant to even go that far and this decision in Cunningham is certainly consistent with other decisions where expert proof has been presented by the plaintiff, none from the local government, and yet somehow the local government nonetheless prevails. See for example, Family Golf v Metro Nashville, 964 S.W. 2d 264 (Tenn. App. 1997) (perm. app. denied April 6, 1998).

The point here is to recognize the difficulty of challenging a zoning change. Very few of those challenges are successful.

One final note: The Court of Appeals analyzed the denial of the zoning request as one section of its analysis, and then in another section analyzed the claims associated with substantive due process. From my perspective, those two sections could easily be combined. The basic challenge to a zoning change is really pursuant to substantive due process. The “fairly debatable rational basis test” arises out of substantive due process. In fact, the “fairly debatable” rule was applied in the first US Supreme Court case, Euclid v Ambler Realty, 272 US 365 (1926) (“If the validity of the legislative classification for zoning purposes be fairly debatable, the legislative judgment must be allowed to control.”). Over the years, the analysis has perhaps become more sophisticated with differing standards for fundamental rights and suspect classifications, but the basic test was laid down in Euclid almost 100 years ago.

Wednesday, October 31, 2018

Cunningham v Bedford County -- Intro

This case, decided at the end of October, is an illustration of the difficulties involved in defeating the local government regarding any kind of a zoning change. Whether the local government has granted the zoning change and the neighbors challenge the change, or deny the change and the applicant challenges the decision, it is very difficult for the losing party to successfully challenge the decision of the local government. It is once again one of those instances where fighting city hall is difficult to do.

Over the next couple of days, I will discuss this case. Today I will simply look at the factual background and procedural history as recited by the Tennessee Court of Appeals. You can find a copy of the case here.

The property involved in this case was zoned residential and the owner tried unsuccessfully several times to have the property rezoned for commercial use. This case arises out of his efforts to obtain a zoning change to commercial use filed in May 2013.

The court indicates that the Planning Commission recommended the zoning change from residential to commercial. However, at the next meeting of the local legislative body, while there was a motion and second to approve the rezoning, it failed to pass.

Nevertheless, the application was placed on the agenda for a subsequent meeting of the local legislative body and a public hearing was held as part of that meeting. The applicant and his attorney spoke in favor of the application and a resident of a local subdivision, located adjacent to the property, spoke against it. For one reason or another, there was a motion made to defer consideration of the zoning change and remand to the Planning Commission.

It’s unclear whether the case ever went back to the Planning Commission. The opinion does not indicate any further action by the Planning Commission. However, at the next meeting of the local legislative body, the application was again considered, and a motion was made to approve and seconded, but the motion failed. Neither Mr. Cunningham nor his attorney was given the opportunity to speak prior to the vote.

The failure to approve the requested zoning change was challenged by filing a declaratory judgment action in Chancery Court. Notice that in challenging a zoning change, the appropriate manner of doing so is by way of a declaratory judgment. In many other instances, on an appeal from the planning commission, on appeal from the board of zoning appeals, and on appeal from certain kinds of special zoning techniques from the local legislative body, the proper method is to file a petition for writ of certiorari. But where the local legislative body considers a straight zoning change, say from residential to commercial as in this case, the appropriate manner of challenging the decision is by way of declaratory judgment.

The plaintiff alleged that the denial of the zoning change was arbitrary, capricious and illegal and that there was no rational or justifiable basis for the decision of the local legislative body. The complaint also alleged violations of the applicant’s due process and equal protection rights and that the failure to grant a zoning change rendered the county liable for inverse condemnation/regulatory taking of the property.

There were four days of hearings before the trial court although the Court of Appeals does not indicate much by way of what testimony was adduced. The trial court ultimately found that:

– the decision of the local legislative body was arbitrary and capricious,
– the plaintiffs due process rights were violated,
– there was no regulatory taking,
– no violation of the sunshine law and
– the members of the local legislative body were acting within the scope of their authority in                   carrying out their duties.

The court ordered that the property be rezoned from residential to commercial, and awarded damages in the amount of $75,600 plus interest and attorneys fees in the amount of $10,000.

The plaintiff appealed seeking lost profits other damages and also asking that the trial court decision finding no regulatory taking be reversed. The defendants for their part, raised an additional issue as to whether or not the decision to deny the zoning change was arbitrary and capricious and violation of the plaintiff’s due process rights.

This case gives us an excellent opportunity to discuss not only the perils and pitfalls of challenging a local governmental decision concerning zoning changes, but also the various theories which might be used by a plaintiff to challenge such a decision. Since the Court of Appeals ultimately concludes that the trial court was incorrect in finding any violation of the law whatsoever, it also demonstrates how difficult it is to prevail under the circumstances.

We will take a look at the basic issues concerning zoning changes next time, discuss regulatory takings at a future date and then finally look at the procedural and substantive due process issues after that.

Friday, July 27, 2018

Administrative Search Warrants

In a case which I think is the first of its kind, the Tennessee Court of Appeals recently addressed the validity of administrative search warrants issued pursuant to the Tennessee State Building Code Act, Tenn. Code Ann. §68-120-117, and upholds the validity of the warrants against attack.

Let's quickly mention that this all began in the '60s, when there was a debate at the highest level regarding the constitutionality of administrative search warrants. Towards the end of the '50s and the early '60s, the US Supreme Court had concluded that administrative search warrants, those necessary to enforce the housing and building codes, did not have to comply with the constitutional imperative of search warrants.

That changed with the decision in Camara v Municipal Court, 387 US 523, 18 L. Ed. 2d 930, 87 S Ct 1727 (1967).  The issue in that case was an attempted warrantless entry and search of an apartment by two housing code inspectors. The owner of the apartment steadfastly refused to allow entry, and he was ultimately cited under a San Francisco ordinance which made it illegal to deny entry. He was prosecuted under that ordinance, found guilty, and the case was ultimately heard by the US Supreme Court.

The issue before the court was whether or not a warrant was necessary to conduct the inspection over the objection of the property owner. The conclusion by the Supreme Court was that indeed a search warrant was necessary, reversing the earlier decisions. Of course, from the standpoint of enforcing the building and housing codes, this is a nonstarter: ordinarily, the codes inspector can't see inside the house, has no authority to enter the house (without a warrant), and thus if you need to know what's in the house before you can get the warrant, and can't be in the house without a warrant, then it becomes extremely difficult to enforce the provisions of the building and housing codes.

The Supreme Court however wasn't finished: it held that probable cause for a search warrant in codes cases is not the same as that which is necessary in a criminal case. Rather than demonstrating a reasonable belief that a crime has been committed, the codes inspector needs only show reasonable legislative or administrative standards for conducting an area inspection and some indication that those are satisfied with regard to a particular building, such as (1) the passage of time since the last inspection; (2) the nature of the use of the building; or (3) the conditions of the general area in which the property is located. This is obviously a much less imposing standard for probable cause than in a criminal case.

On the same day, the court decided See v City of Seattle, 387 US 541 (1967) which involved a fire code inspection of a locked commercial warehouse. Once again, the court upheld the requirement of a search warrant, but with the more limited nature of probable cause now applicable in a codes case.

Finally, let's take a look at a more current decision. In Jacob v West Bloomfield, (6th Cir. 2008) the plaintiff alleged that the codes official entered his property without a warrant to inspect for codes violation. He sued under the federal civil rights statute for a violation of the fourth amendment. The zoning official had received a complaint about the plaintiff's property and upon investigation discovered inoperable vehicles and scrap material in the yard. Misdemeanor charges were filed against Mr. Jacob and he ultimately pled guilty. The Township agreed as part of the plea arrangement that the defendant would have 14 days to clean up the property and if not cleaned up Mr. Jacob would be sentenced to 30 days in jail.

In order to carry out the agreement, the zoning official entered the property on October 15 and 18th without a warrant but at the request of the prosecuting attorney. The inspector found that the violation had not been remedied and Mr. Jacob wound up in jail.

The inspections done to establish the original violation were not an issue because the defendant had pled guilty. By doing so, the defendant waived any question about those inspections. But the Sixth Circuit held that the remaining inspections had not been agreed to and that they were unlawful under the terms of the Fourth amendment to the federal constitution. While the zoning official argued that the inspections were much less intrusive than a criminal search, done by an unarmed officer, during the day, and were not subject to the Fourth amendment, the court simply did not accept that line of argument based on Camara and See. The Sixth Circuit upheld the decision of the lower court that the zoning official was not entitled to immunity and ultimately the court awarded money damages against the zoning official.

After the decision in Camara, the Tennessee General Assembly despite numerous requests, did not take up the issue of administrative search warrants for several decades. In fact, legislation was not passed until 2003. It is now codified at Tenn. Code Ann. §68-120-117. Subsection (b) provides:
In the event that a building official is denied permission to make an inspection and a warrant is required by the Constitution of the United States or the state of Tennessee to perform such inspection, a building official may obtain an administrative inspection warrant in accordance with the procedures outlined in this section.
The term "building official" is defined to mean any local government building official certified under state law, acting in their capacity as an official of any municipality or county in an attempt to enforce the ordinances or codes of the local government. Tenn. Code Ann. §68-120-117 (a) (2).

The warrant may issue upon affidavit filed by the building code official demonstrating that his or her agency has the statutory authority to conduct the inspection and demonstrating probable cause. However, the statute particularly notes that probable cause under the terms of this section of the code is not the same standard as used in obtaining criminal search warrants. The statute specifically states that probable cause can be based upon a showing that:

  1. Previous inspection section violations of the law in the present inspection is necessary to determine whether those violations have been abated (remember the Jacob case from the Sixth Circuit);
  2. Complaints have been received from persons who have personal knowledge of violations of the law;
  3. The inspection is to be made pursuant to an administrative plan containing neutral criteria supporting the need for an inspection (routine periodic inspections under the housing code)
  4. Any other showing consistent with constitutional standards for probable cause in administrative inspections
The affidavit also must demonstrate that the inspection is reasonable and not intended to arbitrarily harass the persons or businesses involved. Of course, the areas and items to be inspected must be accurately described and that must be within the statutory inspection authority of the building code official. Finally, the purpose of the inspection is not criminal in nature and the agency is not seeking sanctions against the person for refusing entry.

All warrants issued pursuant to §117 must include:

  1. The name of the agency and building code official requesting a warrant
  2. The statutory or regulatory authority for the inspection
  3. The names of the building code official or officials authorized to conduct the administrative inspection
  4. A reasonable description of the property and items to be inspected
  5. A brief description of the purposes for the inspection
  6. And any other requirement or particularity required by the constitutions of the United States and the state of Tennessee regarding in ministry of inspections
All warrants must be executed within 10 days and anyone who willfully refuses to permit an inspection, or obstructs the inspection or aids in the obstruction of the inspection commits a Class C misdemeanor.

At the same time, anyone who believes the inspection was unlawful may move to suppress any evidence before the agency and if the inspection was unlawful the evidence must be suppressed and not considered in the proceeding.

In the Levitt case, the plaintiff first argued that this was a general warrant which is not recognized under Tennessee law. The court quickly pointed out that while such an objection in criminal procedure would be well taken, the statutory process set out here was much different, and the information necessary to obtain the warrant was much less. Essentially, if the inspection is part of a routine periodic inspection, or based on complaints showing a potential violation, or any other constitutionally appropriate inspection, which would include, under the Camara and See cases general deterioration in the area in which the building is located.

Levitt objected to the affidavits upon which the search warrant was based for several reasons, including a failure to identify the agency, and the specific description of the property to be searched. The court found no merit in these arguments.

So far as I know, this is the first case in Tennessee to really address the issue of administrative search warrants at the appellate court level. This case should be highlighted by local government attorneys and local government codes officials. For the first time since the adoption of the statute, we now have case law specifically concluding that the statutory requirements are reasonable and in fulfilling those requirements, codes officials no longer have to rely on consent for entry onto property.

I'll close here with the admonition that I put in my Legal Handbook for Tennessee Codes Officials at page 64. No inspections without a warrant or permission! Every codes official should understand that prior to doing any inspection, he or she should ask the owner or occupant for permission to do the inspection, and if permission is not granted, then obtain an administrative search warrant. If permission is given, make sure to note in the inspection report, who gave the permission, the date and time of the permission as well as the inspection, and the relationship of the person who gave permission to the property.