Aegis of Arizona, LLC v. Town of Marana

• Decision Date: 17 December 2003
• Docket Number: No. 2 CA-CV 2003-0057.,2 CA-CV 2003-0057.
• Citation: 206 Ariz. 557,81 P.3d 1016
• Parties: AEGIS OF ARIZONA, L.L.C., an Arizona limited liability corporation, Plaintiff/Appellee, v. THE TOWN OF MARANA, a municipal corporation, Defendant/Appellant.
• Court: Arizona Court of Appeals

81 P.3d 1016

206 Ariz. 557

AEGIS OF ARIZONA, L.L.C., an Arizona limited liability corporation, Plaintiff/Appellee, v. THE TOWN OF MARANA, a municipal corporation, Defendant/Appellant.

No. -0057.

Court of Appeals of Arizona, Division 2, Department B.

December 17, 2003.

As Corrected December 22, 2003.

Law Office of George J. Feulner, P.C., By George J. Feulner, Tucson, for Plaintiff/Appellee.

Irvine Law Firm, P.A., By Thomas K. Irvine and Larry J. Wulkan, Phoenix, for Defendant/Appellant.

OPINION

PELANDER, Presiding J.

¶ 1 Appellant/defendant the town of Marana appeals from a judgment, entered upon a jury verdict, awarding appellee/plaintiff Aegis of Arizona, L.L.C., $428,199.00 on its substantive due process and equal protection claims, which it had brought under 42 U.S.C. § 1983 (hereafter § 1983). On appeal, Marana challenges the judgment on several grounds. Because we agree with Marana that the trial court erred in sending Aegis's constitutional claims to the jury, we reverse and remand the case with directions to enter judgment in favor of Marana.

BACKGROUND

¶ 2 In reviewing a judgment based on a jury verdict, we view the evidence and all reasonable inferences therefrom in the light most favorable to sustaining the judgment. Pioneer Roofing Co. v. Mardian Constr. Co., 152 Ariz. 455, 462, 733 P.2d 652, 659 (App.1986). In 1997, Dean Fetherling began researching the feasibility of forming a company that would treat and dispose of medical waste using a "mobile medical waste treatment system[ ]," specifically, a machine called the "JYD1500."¹ In late 1997 or early 1998, after satisfying himself that processing medical waste would be profitable, Fetherling formed Aegis.² In February 1998, Aegis committed to buying the JYD1500 for $950,000. For purposes of giving Aegis exclusive rights to conduct this type of medical waste disposal business in the state, the purchase agreement provided that the machine's seller would not sell similar equipment to anyone else in Arizona.

¶ 3 The week after Aegis had committed to buy the JYD 1500, Fetherling began looking for a location to house and maintain the machine, process a small amount of medical waste, and create office space for both Aegis and two Illinois businesses that he personally owned. Fetherling intended to purchase the property in his and his wife's names and then lease it to Aegis. Over the course of the next six to seven months, Fetherling looked at approximately fifty different pieces of property throughout the Tucson area in the hope of finding a location compatible with Aegis's business plan. He eventually decided to buy property located in Marana near Interstate 10 (the Camino Martin property). That property was zoned under Marana's Land Development Code (MLDC) for heavy industrial (HI) use, which is the most permissive zoning category.

¶ 4 The purchase contract for the Camino Martin property provided for a sixty-day "due diligence" period that allowed Fetherling to research information on the property, determine whether Aegis could conduct its business there, and, if necessary, cancel the sale. During that time period, Fetherling's agents sought to meet with representatives of Marana to determine whether the Camino Martin property's current HI zoning classification was compatible with Aegis's business plan.

¶ 5 Sometime in December 1998, Fetherling's agents (including his architect, William Gansline) and Joel Shapiro, Marana's then acting planning director, had a "pre[-]development plan application meeting." HI zoning under the MLDC did not expressly include medical waste processing as a permitted use. Nonetheless, Shapiro told Fetherling's agents that Aegis's proposed use was otherwise compatible with the Camino Martin property's HI zoning, and that the proposed use would be permitted on that property. As the planning director, Shapiro had the authority to "permit any other uses which may be determined to be similar to those listed [in the MLDC for HI property], in conformity with the intent and purpose of th[at] zone."³ MLDC § 05.12.03(B)(9). If a proposed use is permitted within a certain zone, a landowner need not apply for a conditional use permit (CUP).

¶ 6 According to Shapiro, he did not tell anyone at the December 1998 meeting that his oral decision to permit Aegis's proposed use was only preliminary or otherwise subject to review or change. Following that meeting, on December 23, Fetherling finalized his purchase of the Camino Martin property. And, in January 1999, Gansline submitted on Fetherling's behalf an "application for development/site plan review" to Marana.

¶ 7 In early February 1999, two months after Shapiro had told Fetherling's agents that Aegis's proposed use of the property would be permitted, Marana received letters from both Mark Ritter, who owned property adjacent to the Camino Martin property, and from various other home and business owners in the area. The two letters voiced identical concerns about Aegis's proposed use. In response to those letters, Marana decided to place the issue on the agenda of its Planning and Zoning Commission's February 24 meeting as an informal "informational item." Shapiro testified that the purpose of discussing the issue at that meeting was to "strictly... provide the public with information" about Aegis's proposed use of the property, presumably because compliance with the public hearing procedures typically involved with rezoning property or issuing special use permits was not required. Before that meeting was held, the Arizona Daily Star published an article entitled, "Medical-waste plant planned on NW side," that described Aegis's proposed use of the property and the controversy it had caused among some of the adjacent landowners.

¶ 8 At the February 24 Planning and Zoning Commission meeting, Shapiro explained the general nature of Aegis's proposed use and the Camino Martin property's current HI zoning. He also expressed his view that the proposed use was permitted under that zoning category. An Aegis representative made a presentation on the nature of Aegis's business and answered questions from the commission. Ritter also spoke at the meeting and expressed his concerns about Aegis's proposed use.

¶ 9 Several weeks later, in a letter dated March 16, Shapiro informed Fetherling that, "[a]fter extensive consideration by staff, [and] in response to public concerns," "it ha[d] been determined" that Fetherling would be required to apply for and receive a CUP before his development plan could be approved. In response, Fetherling submitted, in his own name, an application for a CUP. Consistent with his earlier view that Aegis's proposed use would be permitted in the HI zone, Shapiro recommended that the Planning and Zoning Commission approve Fetherling's CUP application.

¶ 10 The commission considered the application at its April 28 meeting. The commission's staff recommended approval of the CUP application with conditions. An Aegis representative spoke at the meeting and presented general information on Aegis's business plan, the JYD1500, and the type of medical waste processing Aegis hoped to conduct on the property.⁴ Ritter and another owner of adjacent property also spoke at the meeting and expressed their opposition to the proposed use. The commission then unanimously denied Fetherling's CUP application.

¶ 11 Fetherling appealed the commission's decision to Marana's town council, pursuant to MLDC § 10.10(G). At its May 18 meeting, the council voted unanimously to affirm the commission's denial of the CUP application. ¶ 12 Aegis then brought this action against Marana asserting, inter alia, a claim for damages under § 1983 based on alleged deprivations of Aegis's federal constitutional rights to substantive due process and equal protection.⁵ Specifically, Aegis claimed that Marana had violated its rights when, despite Shapiro's initial assurance that the use was permitted and that no CUP was required, it later required a CUP and then denied the CUP application. Marana moved for summary judgment, arguing that Aegis lacked standing to bring the action, that Aegis had failed to exhaust available administrative remedies because it did not appeal Marana's March 16 decision requiring a CUP application, and, in any event, that the town council had acted within its discretion in denying the CUP. Aegis later moved for partial summary judgment on the issue of liability.

¶ 13 In ruling on those motions, the trial court first concluded that Aegis had standing to bring this action. The court then denied Aegis's motion and largely denied Marana's motion as well. As discussed in detail below, however, the trial court concluded that Aegis had failed to exhaust available administrative remedies as to Marana's decision to require a CUP. See ¶ 35, infra. Accordingly, to that limited extent, the trial court granted Marana's summary judgment motion. The case then proceeded to trial.

¶ 14 After Aegis rested its case at trial, Marana moved for judgment as a matter of law (JMOL) on all of Aegis's claims. The trial court granted that motion as to all counts except Aegis's § 1983 due process and equal protection claims. Only those two claims were sent to the jury.

¶ 15 On a special verdict form, the jury ultimately found that Marana had violated Aegis's right to both substantive due process and equal protection and awarded Aegis $428,199 in damages. Marana then moved for a new trial pursuant to Rule 59(a)(6) and (8), Ariz. R. Civ. P., 16 A.R.S., Pt. 2, claiming "errors of law occurred at the trial and during the progress of this action, and the judgment is contrary to law." After entering its final judgment, the trial court summarily denied Marana's new trial motion. This appeal followed.

DISCUSSION

I. Standing

¶ 16 Marana first argues the trial court erred in determining that Aegis had standing to bring this action. In ruling on Marana's summary judgment motion, the trial court found that...