Wednesday, November 7, 2018

Cunningham 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.