Friday, August 5, 2011

Exhaustion of Administrative Remedies

A question which comes up from time to time involves the issue of failure to exhaust administrative remedies in the context of nonconforming properties. The Tennessee Court of Appeals reaffirmed several previous cases requiring that the administrative remedies be exhausted before appealing to a court of law or equity in Ready Mix v Jefferson County (June 9, 2011). In this case, the plaintiff filed a declaratory judgment action alleging that it had a vested right to operate a quarry and that there was a pre-existing non-conforming use of the property for mining quarrying. The plaintiff alleged that the use was non-conforming under both the local ordinance and the Tennessee Non-Conforming Property Act, Tenn. Code Ann. § 13-7-208. The trial court found that the quarry was legally nonconforming and that there was no need to exhaust administrative remedies before filing the declaratory judgment.

On appeal, the Tennessee Court of Appeals reversed. Citing several cases from the appellate courts of Tennessee, the court concluded that at least as a matter of prudence, exhaustion of administrative remedies was required under Tennessee law so as to allow local officials to make an original decision concerning zoning controversies.

Certainly, the decision by the Court of Appeals is consistent with previous case law. However, under the circumstances relating to a non-conforming property, whether this line of cases is correct is open to question. Certainly, to the extent that the property owner relies on the local ordinance and its provisions relating to non-conforming properties, an appeal to the zoning board should be required before proceeding to court. The zoning board is empowered by the relevant statutes, in particular, Tenn. Code Ann. § 13-7-207 (1) to hear appeals where there may be an error in any order of the municipal zoning official.

Nevertheless, §13-7-208 is not an ordinance adopted pursuant to the enabling legislation, it is rather a part of the enabling legislation itself. Furthermore, it acts as a restriction upon the discretion of the local governmental officials. There is no indication anywhere that a local zoning board should be able to directly construe a provision of Tennessee state law such as this particular statute. Certainly, we don’t want different results in Nashville when construing this statute from the results obtained in Memphis when construing the same statute. Yet if local zoning boards are permitted to make those decisions, that’s exactly what we are asking to get. Inconsistent results.

Zoning boards don’t have the power or jurisdiction to construe Tennessee state law. They do have the power to construe the local zoning ordinance. But §208 is not part of the local zoning ordinance. It’s the Tennessee state statute and should be construed only by the courts of Tennessee.

For example, part of the statute requires that no expansion of a nonconforming property may be made if it creates a nuisance. Nuisance law is difficult enough when a trial judge is giving direct instructions to a jury; allowing a lay board to make decisions about what might be a nuisance seems totally inappropriate.

From my perspective, a declaratory judgment such as the one filed in this case should be allowed to proceed without exhausting administrative remedies because the state policy should be to allow Judges, not zoning boards, to construe Tennessee statutory provisions.

As I have mentioned above, at this point, it seems to me that the horse is out of the barn. Not only does the Ready Case itself rule against my argument, but there have been several others ruling similarly, and it’s unlikely now that any court would accept my argument.

However, attorneys representing property owners may switch to a different strategy. Instead of filing an action for declaratory judgment themselves, it may be far preferable to sit back and require the County to sue the property owner. Frankly, there are several advantages to this strategy. First, a court of law or equity will make the initial decision, not a board of zoning appeals. Second, an added benefit, is that the burden of proof will now be on the local government to prove a violation as opposed to placing the burden on the owner of the non-conforming property. Finally, the well-known rule of statutory construction, that zoning ordinances are to be strictly construed against the local government and in favor of the property owner is more likely to be enforced in accord of law as opposed to a board of zoning appeals.

In fact, when you consider that the property owner may ultimately get a better hearing in the court, there is often no incentive for the property owner to file suit on his own. Furthermore, it cast doubt on the efficacy of the doctrine of exhaustion of administrative remedies in the zoning context. If all the property owner has to do in order to get a hearing before a court of law is sit back and challenge the local government to sue in state court, there is often no reason to do otherwise. In fact, in these kinds of situations, I always make a judgment call as to whether I think I can more easily persuade the local board of zoning appeals of the correctness of my position versus how difficult it might be to persuade the local judge. These kinds of judgment calls have to be made on a case-by-case basis obviously, but frequently I find it easier to persuade a judge that I am correct.

One other thing is worthy of consideration here. Under the Tennessee Equal Access to Justice Act, Tenn. Code Ann. § 29-37-101 et seq., attorneys fees for a successful property owner may be recovered if the government acted arbitrarily capriciously. It is probably a little bit easier to recover the attorneys fees by demonstrating arbitrary action in the context of an appeal from a zoning board rather than an original action in state court. The reason for that is that in order to reverse decision of the zoning board, you must demonstrate that it acted arbitrarily and capriciously in any event. If you’ve already proven that, it’s easy for the court to award attorneys fees. In a direct enforcement action by the local government, the court may conclude that your client is not guilty of a zoning violation, but at the same time may not conclude that the local government acted arbitrarily and capriciously in bringing the enforcement action in the first place.

As you can see, the best strategy in these cases is often a judgment call by the attorney. A lot depends on who the members of the local zoning board might be, who local judge might be, the clarity of the factual situation and so forth. These are extremely interesting cases but also very complicated.

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