Wright v Shelbyville BZA (II)

Yesterday, the Tennessee Court of Appeals released its opinion in Wright v Shelbyville Board of Zoning Appeals, the second time this case has been before the appellate court. The saga continues.

In the first iteration, the city had adopted a new zoning district (I-3) and all proposed quarries were to be located in that district. Unfortunately, wouldn’t you just know that the Wright property was located in an I-2 zoning district. The Wrights challenged the adoption of the new I-3 district and prevailed in the first case. The Court of Appeals found that the new zoning had not been adopted properly.

After the decision of the Court of Appeals, the Wrights requested that their application be considered under the existing (I-2) zoning. The city denied this request, and the Wrights appealed that decision to the Board of Zoning appeals which affirmed the denial. The city’s position evidently was that the ruling in the original trial court was res judicata, because the Wrights had failed to demonstrate that there was a vested right to have the original application considered under the original zoning rather than the I-3 zoning. This decision was affirmed by the trial court in the second case, although the court added that to the extent that the doctrine of res judicata was not available, the decision of the board of zoning appeals prohibiting consideration of the original application would otherwise be arbitrary and capricious.

The Tennessee Court of Appeals was certainly not impressed with the res judicata argument. The court began by saying that the law of vested rights has no relevance to the appeal. If the original argument in the first case was that the application was submitted before the I-3 was adopted, it doesn’t make any difference because the I-3 zoning was declared void in any event. There’s no vested rights argument to be made at this point because the zoning which purportedly took effect in fact never did.

The court summarized the law of vested rights:

The concept of a vested right in a zoning, which has long been recognized in Tennessee, allows property owners, who have acquired the requisite ‘vested’ interest under an existing zone, to use and develop the property pursuant to said zone even if a subsequent zoning ordinance is enacted.” Westchester Co., LLC v. Metro. Gov’t of Nashville and Davidson County, 2005 WL 3487804, at *3 (Tenn. Ct. App. December 20, 2005). Rights under an existing ordinance do not vest until substantial construction or substantial liabilities are incurred relating directly to construction. State of Tennessee, ex rel. SCA Chemical Waste Services v. Konigsberg, 636 S.W.2d 430, 437 (Tenn. 1982). In summary, a landowner who asserts a vested right to develop under a prior zoning ordinance must demonstrate good faith reliance on final prior government approval coupled with substantial expenditures or liabilities incurred that relate directly to construction.

But the court emphasized that this doctrine is not applicable under the circumstances here. The challenged law was found to be void and therefore the doctrine of vested rights was simply not necessary to protect the interests of the plaintiffs.

The Wrights were entitled to have their application considered under the only zoning in place at the time of their application. There was no “prior” zoning, no subsequent (2004) amendment, and no need for the Wrights to assert the vested rights theory. The Wrights’ property remained zoned I-2, a category that allowed quarries as a conditional use.

As a result, the Court of Appeals reversed the conclusion of the trial court concerning that issue. However, with regard to the trial court’s alternative finding, that the board of zoning appeals did act arbitrarily and capriciously, the court upheld that decision. In this part of the case, evidently the city argued that the original application was not still pending. The court thought otherwise.

The application was originally submitted in 2004, but when the zoning change took place, the plaintiff simply asked that the application be removed from the agenda and specifically asked that the application remain pending. There was no time limit in the zoning ordinance within which such applications had to be heard. The city never notified the plaintiff that they had to proceed on the application. And the delay was occasioned by the appeal which was successful in striking down the original zoning change. The plaintiffs asked on numerous times to have the application considered on its merits but were denied.

Finally, the zoning board also argued that because the plaintiff updated their application in 2010 that this operated to invalidate the original application. The court concluded that updating the application after a significant delay was perfectly reasonable given the circumstances in this case.

The court addressed two final issues, the remedy and attorneys fees. With regard to the issue of attorneys fees, the Court of Appeals remanded the case for consideration by the trial court. Since below the plaintiffs had been unsuccessful, but that issue has now been reversed, the Court of Appeals indicated that attorneys fees would be appropriate.

With regard to the issue of remedy, the concern was whether to remand to the board of zoning appeals or simply have the court order that the permit be issued. Ultimately, the court felt that under the common law writ of certiorari the most appropriate remedy was to remand.

The court however did go into a discussion of the differences between conditional use permits and variances. To my knowledge, this is the first time I’ve seen this in a case here in Tennessee. I think the objective was to make sure that the zoning board understood that their discretion was not limitless, and to suggest that they needed to tread carefully in considering whether to deny this permit.

Here’s the courts language which I think is instructive generally on the issue of special exceptions and conditional use permits.

A special exception, unlike a variance, is not an exception to a zoning ordinance. Instead, it is a use that is expressly permitted. “Special exception” is clearly a misnomer. Since the use is specifically provided for in the ordinance as one to be permitted where the conditions legislatively prescribed are found, no exception to the ordinance is being made. The use permitted by approval of the board of adjustment, the legislative body, the planning board, or the “zoning administrator,” as the case may be, contingent on meeting the standards and conditions set forth in the ordinance, is more correctly termed a “conditional use.” This is, in fact, the term which is used in some statutes.
3 Rathkopf’s THE LAW OF ZONING AND PLANNING § 61:9 (4th ed.) (emphasis added). 

A conditional use or special exception allows a landowner to put his property to a use which the ordinance expressly permits. It requires only a finding that the conditions stated in the ordinance have been met. “The inclusion of the particular use in the ordinance as one that is permitted under certain conditions, is equivalent to a legislative finding that the prescribed use is one which is in harmony with the other uses permitted in the district. Id. Where the legislative body has authorized a use by special exception or conditional use, courts will presume that such use serves the public interest when located in the district where it is authorized. Classification of a use as one that is permitted as a special exception constitutes a legislative finding that the use accords with the general zoning plan, is in harmony with, or will not adversely affect, the surrounding neighborhood, and meets a public need. 

Tennessee law follows these generally applicable principles. In fact, state statutes recognize the difference between a variance and a use permitted under certain conditions. Tennessee Code Annotated § 13-7-207 sets out the powers of boards of zoning appeals. Subsection (3) authorizes such boards to grant a variance from strict application of zoning regulations where exceptional difficulties to, or undue hardship upon, the property owner would otherwise result. On the other hand, subsection (2) authorizes a board of zoning appeals to “[h]ear and decide, in accordance with the provisions of any such ordinance, requests for special exceptions.” (Citations omitted).

Although the facts in this case are somewhat obscure, the opinion by the Court of Appeals is very instructive. Not only does it give a thumbnail sketch of the doctrine of vested rights, but for the first time in the state of Tennessee, we have an appellate court discussing the distinctions between variances and conditional use permits. It’s a very useful opinion and will no doubt figure prominently as land use planning cases continue to be decided here in Tennessee.