Amcon Corp. v. City of Eagan, O-J

• Decision Date: 20 April 1984
• Docket Number: O-J,No. CO-83-935,CO-83-935
• Court: Minnesota Supreme Court
• Parties: AMCON CORPORATION andSporting Goods Company, Appellants, v. CITY OF EAGAN, Defendant and Third-Party Plaintiff, Respondent.

Page 66

348 N.W.2d 66

AMCON CORPORATION and O-J Sporting Goods Company Appellants, v. CITY OF EAGAN, Defendant and Third-Party Plaintiff Respondent.

No. CO-83-935.

Supreme Court of Minnesota.

April 20, 1984.

Syllabus by the Court

1. Landowner's application for rezoning from agricultural did not specify categories being requested. But Eagan City Council had notice plaintiffs wished an underlying roadside business designation in addition to the planned development zoning granted. City council clearly evidenced its refusal to grant both designations. Therefore, issue was properly before the district court.

2. District court's holding that underlying rezoning was not required by the city ordinance effectively determined appellants' right to acquire both designations. Issue was thus properly before this court on appeal.

3. Where planned development ordinance was ambiguous as to whether underlying rezoning was required and city's comprehensive plan indicated roadside business zoning for plaintiffs' property and city advanced no reasons for denying underlying reclassification, such denial was arbitrary and capricious.

Luther M. Stalland, Minneapolis, for appellants.

Paul H. Hauge, Eagan, for respondent.

Considered and decided by the court en banc without oral argument.

AMDAHL, Chief Justice.

Plaintiffs appeal from an order and a judgment of dismissal entered on May 17, 1983, by the Dakota County District Court after having heard arguments of counsel and reviewed affidavits, files, records, and proceedings generated by plaintiffs' efforts to obtain rezoning of their property by defendant, City of Eagan (city).

The procedural development of this case has been exceedingly protracted and complex, but a recital of its history is essential to understanding the current postures of the parties. The original application for rezoning filed by Amcon Corporation and O-J Sporting Goods Company on September 23, 1981, was denied by the city on August 3, 1982. Plaintiffs then commenced an action in Dakota County District Court for declaratory relief or, in the alternative, damages in the amount of $5,000,000 for an unconstitutional taking.

The city commenced third-party proceedings against the State of Minnesota, Department of Transportation, Commissioner of Transportation (hereafter MnDOT), and the Metropolitan Airports Commission (hereafter MAC), alleging that various omissions by these agencies had placed the city in a position of potential liability and that these agencies were therefore required to indemnify the city for any damages assessed against it.

By order of February 11, 1983, the trial court granted the motions of third-party defendants to dismiss the third-party complaints for failure to state a claim upon which relief could be granted. ¹ The motion for summary judgment on behalf of the city was denied in the same order.

The Eagan City Council subsequently agreed on March 1, 1983, to grant a planned development (PD) zoning classification to plaintiffs, but plaintiffs contended that an underlying roadside business (RB) classification was a necessary concomitant to the supplementary PD zoning. After a hearing held on March 3, 1983, the trial court concluded that RB zoning is not necessary to effectuate PD zoning and that, because plaintiffs had not requested RB zoning prior to the declaratory judgment action, the issue was not properly before the court. The action was dismissed. Plaintiffs appeal from the lower court's denial of their request for a court order requiring the initiation of RB zoning for plaintiffs' land.

We conclude that the question as to whether planned development zoning requires a concomitant underlying rezoning is properly before this court on appeal. EAGAN, MINN. Code Sec. 11.20, subd. 8 (1983) (hereinafter cited as Code) is ambiguous as to whether planned development zoning should be granted only when supplementary to an underlying classification. Because we conclude that on both policy and factual grounds this is the better rule, we reverse and remand to the district court to direct the city council to accomplish an underlying reclassification.

Plaintiff O-J Sporting Goods is an Illinois corporation qualified to do business in Minnesota and is the owner of 20 acres in the city of Eagan. Plaintiff Amcon Corporation is a Wisconsin corporation also qualified as a foreign corporation to do business in Minnesota. Plaintiffs plan a joint venture to develop the property, originally zoned as agricultural (A), into a high-rise hotel-office building complex. Their application for rezoning provided for two multistory office buildings and a 225-room hotel at a projected cost of between $30 and $40 million dollars.

Plaintiffs claim their rezoning application was a request for a change from agricultural to planned development with an underlying roadside business classification in case the planned development was not granted. The city claims that no application for roadside business was ever received and that the initial request was only for a PD designation. The applications themselves, both the original and the reapplication of May 7, 1982, are silent as to which classification was requested. Plaintiffs contend that the zoning ordinance requires an underlying commercial zoning of RB with an overlaying PD zoning but that the staff personnel of the city incorrectly advised plaintiffs not to pursue a roadside business designation.

The city declares that the issue of roadside business zoning did not arise until a week before the hearing on the declaratory judgment action and that all the proceedings to date have dealt solely with planned development.

Code Sec. 11.20, subd. 8 (1983) describes the purpose and intent of the planned development district as being--

[S]upplementary to all other zoning districts contained in this ordinance, the purpose of which is to encourage, under appropriate circumstances, a more creative, varied and efficient use of residential land in Eagan township. Where such supplementary zoning is approved it shall be deemed supplementary and superimposed over the basic zoning of the property under consideration * * *.

(emphasis added). Applicants for PD zoning must submit a detailed "preliminary plan with data, drawings, exhibits, plans, specifications, time projections * * * financial information and any other materials that the Advisory Planning Committee and/or the Board of Supervisors shall deem necessary and appropriate * * *." The Advisory Planning Committee then reviews the applications to determine if the PD will

(a) better adapt itself to its physical and esthetic [sic] setting and that of surrounding lands than does development of the underlying zoning district; (b) be feasible for the owner and developer economically to complete according to proposed plans; and (c) benefit the community at large to a greater degree than would development of the underlying zoning district.

(emphasis added). No building permit will be issued without approval of the PD application. Upon approval and prior to construction the applicant must submit detailed final plans. If the PD zoning is approved but the application fails to comply with the approved plans, as determined upon an annual review, the superimposed planned development zoning will be revoked and "the land area within the planned development shall automatically revert to its prior basic zoning classification." Eagan City Code Sec. 11.20, subd. 8. (emphasis added).

Code Sec. 11.20, subd. 3(a)(b) (1975) describes the permitted, conditional, and accessory uses of a parcel that is zoned agricultural. These basically include only agricultural pursuits and residential dwellings with no provision for any commercial activity that is not agriculturally related.

The permitted conditional and accessory uses within a roadside business district include a motel or hotel but apparently do not allow the construction of a multistory office complex. ²

A comprehensive guide plan has been adopted by the city. The accompanying maps approved by the city council on January 22, 1974, and in February 1980 designate plaintiffs' property as roadside business.

The comprehensive guide plan states that it is--

[M]eant to serve as a guide and as such, should possess a degree of flexibility * * *. Deviations, however, should not be justified solely on the grounds that the comprehensive plan is only a guide and is meant to be flexible. Where deviations are proposed by developers and others, the burden of proof * * * should be the responsibility of the person or persons proposing the revision.

Plaintiffs argue that to be consistent with its comprehensive plan the city must grant the underlying RB designation. The city claims that its code contains no such requirement.

Both parties agree that the language of the planned development zoning ordinance Code Sec. 11.20, subd. 8 (1983), which refers to "underlying" districts, "original" districts, and "basic" districts is undefined and ambiguous. ³ Prior history and the intent of the drafters is therefore relevant to ascertain the true meaning of the statute. The city cites a proposal in 1970 which defined "original" districts as a district "other than a planned development district" and concludes, citing to the ordinance, that "[b]asic zoning is the zoning in existence at the time that the planned development application is submitted." But Code Sec. 11.20, subd. 8 (1983) contains no such definition.

The city insists that it has never granted new underlying classifications where PD zoning has been granted. Plaintiffs, on the other hand, present affidavits and depositions of persons who were involved with the drafting of the ordinance at issue. John Voss is a city planner who has worked for three Twin Cities municipalities and is now an independent consultant for the city. According to Voss, originally all of the land in the city was classified as A, agricultural, a zoning that was intended as a...