IN THE COURT OF APPEALS STATE OF ARIZONA DIVISION ONE ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Appeal from the Superior Court in Coconino County

Transcription

1 NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES. See Ariz. R. Supreme Court 111(c; ARCAP 28(c; Ariz. R. Crim. P IN THE COURT OF APPEALS STATE OF ARIZONA DIVISION ONE DB LAND HOLDINGS, L.L.C., a Utah limited liability company; DUANE BARNSON, an individual, Plaintiffs/Appellants/ Cross-Appellees, v. TOWN OF FREDONIA, ARIZONA, an Arizona municipal corporation; and DIXIE LEE JUDD, its Mayor; and TOM CORRIGAN, its Town Manager, Defendants/Appellees/ Cross-Appellants. 1 CA-CV DEPARTMENT C MEMORANDUM DECISION (Not for Publication Rule 28, Arizona Rules of Civil Appellate Procedure Appeal from the Superior Court in Coconino County Cause No. CV The Honorable A. Fred Newton, Judge AFFIRMED Law Office of William P. Ring, P.C. By William P. Ring Attorneys for Plaintiffs/Appellants/Cross-Appellees Mangum, Wall, Stoops & Warden, P.L.L.C. By Kenneth H. Brendel Steven B. Horton Attorneys for Defendants/Appellees/Cross-Appellants Flagstaff Flagstaff

2 W I N T H R O P, Judge 1 Plaintiffs/Appellants, DB Land Holdings, L.L.C. and Duane Barnson (collectively, DB Land Holdings, appeal the superior court s decision denying their request for special action relief. They asserted that Defendant/Appellee, Town of Fredonia ( Fredonia or the town, improperly imposed a moratorium on the issuance of building permits in the Shiprock Estates subdivision of Fredonia in violation of Arizona Revised Statutes ( A.R.S. section (2008 and improperly denied their application for a building permit. They sought an order from the court dissolving the moratorium and directing Fredonia to accept and process building permit applications for Shiprock Estates. For the following reasons, we affirm. FACTS AND PROCEDURAL HISTORY 2 In 1973, Sands Development Corporation ( Sands subdivided a parcel of property in Fredonia that came to be known as Shiprock Estates. A plat map of the subdivision was recorded at that time, which included a statement above the signatures of Fredonia s mayor and city recorder that the map had been presented to the city council on September 21, 1973, at which time this plat was approved and accepted. Over the years, Fredonia has reviewed construction plans and issued building permits for the construction of single family homes in Shiprock Estates. No fewer than eighteen single family homes 2

3 have been built in Shiprock Estates, for which Fredonia provides water and wastewater utility services, police and fire protection, and maintenance for one of its three main roads. 3 DB Land Holdings, L.L.C., is the current owner of twenty-six lots in Shiprock Estates. It purchased the properties from various individuals and Sands for the purpose of constructing homes for sale or reselling for custom home construction. 4 On January 22, 2008, Fredonia s town council held a meeting, at which members discussed issues concerning Sands and Shiprock Estates. Meeting minutes reflect that the Planning and Zoning Commission recommended that Sands be required to install all utilities to the lot lines before any additional building permits are issued. That commission also recommended improvements in street lighting, curbs and gutters, and streets, with the cost shared equally between Sands and Fredonia. The minutes noted that several council members had been working on the issue for quite some time. A council member expressed the belief that the original approval of the development was an approval to go forward, but that no final subdivision plan with engineered drawings had ever been approved. The town council unanimously agreed, subject to approval by Fredonia s attorney, to place a moratorium on building permits until engineered drawings of the water system, power, drainage and sewer can be 3

4 brought in and a subdivision approved by Planning and Zoning, and Town Council. The next day, Fredonia s town manager contacted Barnson, the registered agent for DB Land Holdings, L.L.C., and advised him that the council had declared a moratorium on construction at Shiprock Estates. 5 Barnson spoke at another town council meeting on February 21, 2008, and asked what improvements were required. Members of the council explained that Sands had been asked several times to submit engineered drawings of power, water, sewer, and drainage but never did so. The council further declared that it would meet to set minimum requirements for improvements based on the subdivision regulations. 6 On June 24, 2008, Barnson requested a building permit for construction of a home on a lot within Shiprock Estates. Fredonia refused to consider the requested permit. 7 On July 30, 2008, DB Land Holdings filed a Complaint in Special Action for mandamus and a Petition for Order to Show Cause against Fredonia, its mayor, and its town manager. The complaint alleged that Fredonia and its officials had breached their official duties by placing a moratorium on the issuance of building permits at Shiprock Estates without following the statutory requirements of A.R.S Citing Rule 3, Ariz. R.P. Spec. Act., the complaint contended that, by imposing a moratorium without complying with 9-4

5 463.06, Fredonia and its officials had acted in excess of their jurisdiction and legal authority, taken an arbitrary and capricious position, and wantonly abused their official discretion. The complaint further argued that, by refusing to accept Barnson s application for a building permit, Fredonia and its officials had failed to exercise the discretion they had a duty to exercise as a matter of law. For relief, the complaint sought an order dissolving the moratorium and directing the town manager to accept DB Land Holdings building permit applications for every lot it owns in the Shiprock Estates and to timely process them. 8 In answering the complaint and responding to the petition for order to show cause, Fredonia conceded that the declaration of a moratorium was improper and ineffective as a matter of law under the statute, but affirmatively asserted that it was not necessary to declare a development moratorium to decline building permits in Shiprock Estates because Shiprock Estates was not a lawful subdivision and, even if it were, DB Land Holdings had no vested right to develop its properties in violation of Fredonia s subdivision regulations. Fredonia attached town council meeting minutes from 1973 and 1986 that reflected consideration of plans for the Shiprock Estates subdivision for road improvements and waterline construction to be performed by the developer. Fredonia also attached a letter 5

6 dated August 20, 2008, from its civil engineer, Marvin Wilson, who described problems associated with the lack of an approved drainage plan, including poorly defined drainage swales, the absence of culverts at intersections, and driveways blocking drainage swales. The letter noted that the absence of a drainage plan created the risk of flooding, damage to infrastructure, and environmental hazards adverse to the health and safety of residents. 9 At the Order to Show Cause hearing, Fredonia s attorney argued that no moratorium had been declared because the action by the town council had been taken subject to his approval, and he had not approved the action. He further argued that the statute did not apply because, by its own terms, A.R.S did not apply to the denial or delay of permits because they were inconsistent with applicable statutes, rules, zoning, or other ordinances. See A.R.S (I(3. Fredonia s counsel explained that the issuance of the building permits would violate of the Fredonia Subdivision Regulations, which provides that no building permit could be issued unless there has been full compliance with the provisions of this chapter by the owner or prior owners of the property to be improved. He further explained that the town council was concerned with the condition of roads, the condition of drainage, and the lack of streetlights. Counsel argued that, 6

7 despite the recording of the plat with the signatures of the mayor and city recorder, the minutes of the town council meeting in which the plat was accepted did not demonstrate any action by the council approving the subdivision, and that, regardless whether the plat was approved, DB Land Holdings had no vested right to develop property in violation of any subdivision regulations. 10 Wilson testified that developing an area increases the number of surfaces impervious to water, increasing the runoff. He further testified that an examination of one lot indicated the soil in the area was collapsible soil that water could compress and cause to lose mass, and that it would be inappropriate and could be reckless to proceed with developing the subdivision without a drainage plan. He also testified that the town council did not have his report when it decided on January 22, 2008, to stop issuing permits in the subdivision. 11 DB Land Holdings argued that any concerns regarding improvements were the responsibility of Fredonia because the subdivision had long ago been approved and the roads dedicated to the town. 12 The court found as follows: 1. The City s moratorium on the issuance of new building permits approved on January 22, 2008 was not in compliance with A.R.S and is therefore invalid as a reason for denying Plaintiffs building permits. 7

8 2. Shiprock Estates is a legal subdivision In this case substantial evidence exists that Plaintiffs application for building permits were [sic] denied because they were not in compliance with the subdivision s regulations passed in Dawe v. City of Scottsdale, 119 Ariz. 486[, 581 P.2d 1136] (1978. These regulations apply to Plaintiff. The facts do not support a finding of estoppel. For all these reasons, Plaintiffs do have other plain, speedy and adequate remedies available to them. Lastly, although Shiprock is a lawful subdivision, Plaintiffs do not have legal entitlement to building permits until such time as they comply with the reasonable development standards set forth in the Defendant s subdivision regulations. Issuing building permits would jeopardize the public health, safety and welfare if they violated the subdivision regulations. 13 DB Land Holdings filed a timely notice of appeal. Fredonia filed a cross-appeal from the court s determination that Shiprock Estates is a legal subdivision. We have jurisdiction pursuant to A.R.S (B (2003 and Rule 8(a, Ariz. R.P. Spec. Act. I. Standing ANALYSIS 14 As an initial matter, Fredonia argues that DB Land Holdings lacks standing to bring this appeal. Subsection (A of A.R.S (1998 provides as follows: A foreign limited liability company transacting business in this state shall not maintain an action, suit or proceeding in a court of this state 8

9 until it has obtained a certificate of registration to transact business. Fredonia argues that DB Land Holdings was not registered to transact business in Arizona when its complaint and appeal were filed. 15 After Fredonia raised this argument, however, DB Land Holdings registered with the Arizona Corporation Commission. We conclude, therefore, that DB Land Holdings has cured any defect regarding its standing to maintain this appeal. See Danka Funding, L.L.C. v. Page, Scrantom, Sprouse, Tucker & Ford, P.C., 21 F. Supp. 2d 465, 473 (D.N.J (interpreting a statute similar in pertinent part to Arizona s and finding that the failure to register before filing an action does not require dismissal if the company corrects the deficiency during the proceedings. II. The Merits 16 When a non-statutory special action is initiated in superior court and then appealed, we must first determine if the superior court accepted jurisdiction; if the superior court did so and ruled on the merits, we determine whether the court abused its discretion in granting or denying relief. Files v. Bernal, 200 Ariz. 64, 65, 2, 22 P.3d 57, 58 (App. 2001; Bilagody v. Thorneycroft, 125 Ariz. 88, 92, 607 P.2d 965, 969 (App The superior court abuses its discretion if the record fails to provide substantial support for its decision or 9

10 the court commits an error of law in reaching the decision. Bilagody, 125 Ariz. at 92, 607 P.2d at 969. We will uphold the denial of relief for any valid reason. Carrington v. Ariz. Corp. Comm n, 199 Ariz. 303, 305, 6, 18 P.3d 97, 99 (App Although it did not specifically state so, the superior court apparently accepted special action jurisdiction because it ruled on the merits, finding partially in favor of DB Land Holdings, but ultimately denying special action relief. We therefore consider whether the court abused its discretion. 18 DB Land Holdings argues that Fredonia was required to comply with A.R.S before enacting a moratorium on the issuance of building permits. It contends that, by finding Fredonia had not complied with the statute and Shiprock Estates was a valid subdivision, the court made the necessary findings to grant relief but erred in misconstru[ing] the statute to allow the June 22, 2008[] moratorium to survive by other ad-hoc means. Fredonia, however, makes the additional argument that A.R.S does not apply because the statute itself provides an exception. Statutory interpretation is an issue of law that we consider de novo. State Comp. Fund v. Superior Court (EnerGCorp, Inc., 190 Ariz. 371, , 948 P.2d 499, (App

11 19 Subsection (A of precludes a city or town from adopting a moratorium on construction or land development unless the city or town follows specific procedures set forth in the statute. The town must provide thirty days notice of a public hearing to consider adoption of the moratorium, make written findings justifying the need for the moratorium, and hold a public hearing on adoption of the moratorium and the findings supporting the moratorium. A.R.S (A. A moratorium on rural land, as with Shiprock Estates, is justified only by a demonstration of compelling need for other public facilities... based on reasonably available information. A.R.S (C. The town must include the following findings: (a That application of existing development ordinances or regulations and other applicable law is inadequate to prevent irrevocable public harm from development in affected geographical areas. (b Stating the reasons that alternative methods of achieving the objectives of the moratorium are unsatisfactory. (c That the moratorium is sufficiently limited to ensure that lots or parcels outside the affected geographical areas are not unreasonably restricted by the adoption of the moratorium. (d That the city or town proposing the moratorium has developed a work plan and time schedule for achieving the objectives of the moratorium. A.R.S (C(2. A moratorium on construction or land development, however, does not include denial or delay of 11

12 permits or authorizations because they are inconsistent with applicable statutes, rules, zoning or other ordinances. A.R.S (I(3. Section of Fredonia s subdivision regulations provides, No building permit shall be issued by the public works director unless there has been full compliance with the provisions of this chapter by the owner or prior owners of the property to be improved. Among the provisions of Fredonia s subdivision regulations are specific standards for roadways, curbs, and a drainage system, and a requirement that engineering plans for the installation of street, sewer, electric, and water utilities be submitted to the public works director by the subdivider. See Fredonia Subdiv. Regs , , , , In essence, prohibits the issuance of a building permit in a subdivision that does not meet the requirements of the regulations. 20 The superior court found substantial evidence that DB Land Holdings permit request was denied because it was not in compliance with Fredonia s subdivision regulations. DB Land Holdings argues that Fredonia made no determination that its application was inconsistent with the regulations and in fact never even accepted the application for review. It was undisputed, however, that the application was for a permit to construct a home on a lot in Shiprock Estates. Fredonia s town council had determined that construction in that subdivision 12

13 should be halted because of inadequate infrastructure. The record includes minutes of town council meetings indicating that engineered plans for the infrastructure of Shiprock Estates were never submitted to the town. The town council specifically noted the need to install utilities to lot lines, construct adequate lighted roadways, and develop engineered drawings of the water, power, drainage, and sewer systems. 1 Because these deficiencies demonstrate noncompliance with the regulations, and because the regulations prohibit the issuance of building permits in the absence of full compliance, the issuance of a building permit would be inconsistent with Fredonia Subdivision Regulation Although the town council characterized its action as imposing a moratorium on building, in effect, it 1 The court also heard evidence, at least with respect to water drainage, that the absence of an approved drainage plan raised concerns regarding flooding, damage to existing infrastructure, erosion, and environmental hazards, which were a potential danger to the health and safety of the community. DB Land Holdings argues that this evidence is unpersuasive and ineffective because the testimony and the witness s report were not before the town council when it declared its moratorium on January 22, We note that the transcript of the show cause hearing reflects no objection by DB Land Holdings to the testimony. Nevertheless, the testimony was improper. A trial de novo is not available for a special action; the superior court is limited to the existing record. Robertson v. Superior Court, 136 Ariz. 440, 442, 666 P.2d 540, 542 (App However, in this case, that testimony provided additional information about a concern already raised in the minutes of the town council that was part of the record. Those minutes support the court s decision. 13

14 determined to enforce the existing prohibition on construction in a substandard, incomplete subdivision. 21 DB Land Holdings argues that it is a builder and not a subdivider. Section , however, applies when the owner or prior owners have not fully complied with the subdivision regulations. The section does not distinguish between subdividers, builders, and owners. Obviously, Sands, the original subdivider, which failed to submit plans and install infrastructure under the regulations, was a prior owner. Thus, applies, and A.R.S does not apply. 22 DB Land Holdings also argues that the superior court erred in concluding pursuant to Dawe that the subdivision regulations applied to DB Land Holdings. Fredonia argues that, under Dawe, the subdivision regulations apply because DB Land Holdings possesses no vested right to build on its properties. 23 In Dawe, a subdivider recorded a subdivision plat with lots of a maximum 10,000 square feet. 119 Ariz. at 487, 581 P.2d at Several years later, Scottsdale annexed an area that included the subdivision. Id. Scottsdale s zoning permitted a minimum lot size of 35,000 square feet in the annexed area. Id. The property remained undeveloped for many years. Id. Successors in interest to the original subdividers filed an action seeking a declaration that Scottsdale s ordinance, adopted after recording of the plat, did not affect 14

15 the validity of the subdivision plan or the owners right to develop the property, and further seeking an order compelling Scottsdale to issue construction permits. Id. The superior court found in favor of Scottsdale, and the property owners appealed. Id. 24 The Arizona Supreme Court considered whether the appellants have... a vested right to develop substandard lots with the City of Scottsdale because of the recording of their plat. Id. Quoting Sherman-Colonial Realty Corp. v. Goldsmith, 230 A.2d 568, 572 (Conn. 1967, our supreme court stated, The mere filing of maps for the subdivision of a parcel of real estate does not necessarily immunize the subject property from the operative effect of subsequent subdivision regulations. Dawe, 119 Ariz. at 487, 581 P.2d at The court noted that whether a subdivider may continue to develop a subdivision as planned despite changes in rules and regulations is subject to the same considerations that determine vested rights under a building permit. Id. at 488, 581 P.2d at 1138 (citation omitted. The court further noted that where an individual possesses a building permit but has not completed substantial work on the construction, that individual has no vested right to complete construction if the property is rezoned and the permit revoked. Id. The court concluded that the filing of the plat did not immunize the property owners from subsequent regulations 15

16 where they had no vested right to build. See id. at , 581 P.2d at In this case, DB Land Holdings affirmatively states that it has never claimed a vested right to develop its property. On this record, DB Land Holdings has no vested right. The establishment of a vested right to build regardless of subsequent zoning changes generally requires the prior issuance of a permit and the physical construction of substantial improvements made in reliance on that permit. See Verner v. Redman, 77 Ariz. 310, 315, 271 P.2d 468, 471 (1954; Fid. Nat l Title Ins. Co. v. Pima County, 171 Ariz. 427, 429, 831 P.2d 426, 428 (App. 1992; Burroughs v. Town of Paradise Valley, 150 Ariz. 570, 571, 724 P.2d 1239, 1240 (App DB Land Holdings would have no right to build in violation of the regulations, even if the regulations had been enacted after it had purchased its property. It has obtained no permit and done no construction. But DB Land Holdings purchased its property in Shiprock Estates in 2006, years after Fredonia s subdivision regulations were enacted in It had the opportunity to consider the regulations and the circumstances surrounding the subdivision before its purchase. Fredonia is within its power to enforce its regulations, and we find no abuse of discretion by the superior court in denying special action relief to DB Land Holdings. 16

17 III. Fredonia s Cross-Appeal 26 Fredonia has filed a cross-appeal challenging the superior court s determination that Shiprock Estates is a lawful subdivision. Fredonia has expressly asserted that it seeks review of the issue only if this court does not sustain the superior court s denial of special action relief. Because we affirm the superior court s ruling, we do not address the crossappeal. IV. DB Land Holdings Requests for Costs and Attorneys Fees 27 Finally, DB Land Holdings argues that the superior court erred in failing to award it costs and attorneys fees pursuant to A.R.S (2003 and (2003, and Rule 21, ARCAP. DB Land Holdings also requests costs and attorneys fees on appeal pursuant to the same authorities. DB Land Holdings was not the ultimate prevailing party in the superior court and is not the prevailing party on appeal. Further, ARCAP 21 is a procedural rule that does not provide a substantive basis for an award of attorneys fees. See Tilley v. Delci, 220 Ariz. 233, 239, 19, 204 P.3d 1082, 1088 (App (citation omitted. Consequently, we find that the superior court did not err in declining to award DB Land Holdings its costs and attorneys fees, and we deny its request for costs and attorneys fees on appeal. 17

18 CONCLUSION 28 We affirm the superior court s denial of special action relief. We find that A.R.S does not apply here, where the issuance of permits for construction in a subdivision not in compliance with the town s subdivision regulations would violate those regulations. Accordingly, Fredonia is entitled to enforce its subdivision regulations. DB Land Holdings requests for costs and attorneys fees are denied. We award Fredonia its costs on appeal upon compliance with ARCAP 21. /S/ LAWRENCE F. WINTHROP, Judge CONCURRING: /S/ PETER B. SWANN, Presiding Judge /S/ MICHAEL J. BROWN, Judge 18