Arnell v. SALT LAKE COUNTY BD. OF ADJUST.

• Decision Date: 07 April 2005
• Docket Number: No. 20040409-CA.,20040409-CA.
• Parties: Jason P. ARNELL, Plaintiff and Appellant, v. SALT LAKE COUNTY BOARD OF ADJUSTMENT, Salt Lake County, and Truman G. Madsen, Defendants and Appellees.
• Court: Utah Court of Appeals

112 P.3d 1214

2005 UT App 165

Jason P. ARNELL, Plaintiff and Appellant, v. SALT LAKE COUNTY BOARD OF ADJUSTMENT, Salt Lake County, and Truman G. Madsen, Defendants and Appellees.

No. 20040409-CA.

Court of Appeals of Utah.

April 7, 2005.

David E. West, Salt Lake City, for Appellant.

Donald H. Hansen, Salt Lake City, and Barnard N. Madsen, Provo, for Appellees.

Before BILLINGS, Presiding Judge, GREENWOOD, and JACKSON, JJ.

OPINION

GREENWOOD, Judge:

¶ 1 Plaintiff Jason P. Arnell asserts that he is entitled to just compensation from Defendants Salt Lake County Board of Adjustment (the Board) and Salt Lake County (the County)¹ (collectively referred to as the County) under federal takings jurisprudence. Alternatively, Plaintiff argues that he is entitled to rescind his land purchase contract with Defendant Truman G. Madsen (Madsen). The trial court granted summary judgment in favor of all Defendants and denied Plaintiff's motion for summary judgment against Defendants. We reverse and remand the trial court's decision as to the County, and affirm the trial court's decision in favor of Madsen and against Plaintiff.

BACKGROUND

¶ 2 On May 4, 1999, Plaintiff, a general contractor, purchased an undeveloped real estate lot (Lot 13) in the Forest Hills Subdivision near Brighton, Utah, from Madsen for $95,000, for the purpose of constructing a canyon residence. Madsen conveyed Lot 13 to Plaintiff by warranty deed. Based on his experience, and because there were residences on surrounding lots, Plaintiff believed he could build a residence on Lot 13. Madsen, for his part, also believed that structures could be built on Lot 13 because it was taxed at a continually increasing assessed value, and the tax notices identified the property as "secondary residence or commercial land." However, before the transaction, neither party investigated whether any building restrictions affecting Lot 13 existed.

¶ 3 Upon filing for a building permit, Plaintiff discovered that, in August 1997, the County enacted an ordinance (Slope Ordinance) that prohibits development of property located on slopes greater than 30% within the "Foothills and Canyons Overlay Zone" (FCOZ).² Forest Glen Subdivision, including Lot 13, is located within the FCOZ. Lot 13 contains an average slope grade that exceeds 40%, with some portions above 50%.

¶ 4 At the time of purchase, neither Plaintiff nor Madsen knew about the Slope Ordinance.³ After learning of the Slope Ordinance, Plaintiff applied for and was denied a variance by the Board. The Board determined that Lot 13 exceeded the slope requirement, and that Plaintiff had not provided sufficient information to qualify for a variance.

¶ 5 Plaintiff then filed a takings relief petition (the Petition) with the Salt Lake County Commission (the Commission) under Salt Lake County Ordinance 19.93.030 (Takings Ordinance), enacted pursuant to Utah Code section 17-27-102. See Utah Code Ann. § 17-27-102 (2001). The Takings Ordinance provides a procedure for obtaining relief where a taking of property has occurred. Pursuant to the Takings Ordinance, the Commission made a preliminary determination that a taking may have occurred. The Commission appointed a hearing officer to conduct a hearing to determine whether a taking had occurred and to make recommendations to the County.

¶ 6 The hearing officer considered evidence from both Plaintiff and the County. Plaintiff's evidence consisted of his own opinion that the market value of Lot 13 unaffected by the Slope Ordinance was $95,000, that it was worthless with the application of the Slope Ordinance, and that building a residence was the only viable use for Lot 13. Plaintiff also provided conclusory expert testimony from his architect and a soil engineer that construction on Lot 13 was feasible. The County cursorily disputed Plaintiff's valuation evidence. However, the crux of the County's argument before the hearing officer—and later before the Commission, the trial court, and now on appeal—was that the County never disputed the feasibility of building on Lot 13 per se, only that it wanted Plaintiff to provide site-specific geotechnical and engineering studies proving the feasibility, rather than mere conclusory expert opinions.

¶ 7 Notwithstanding that all findings by the hearing officer were in Plaintiff's favor, the hearing officer recommended that the Petition be denied because Plaintiff had no standing since he acquired Lot 13 after the Slope Ordinance was enacted.⁴

¶ 8 The County delayed action on the recommendation, in part to provide Plaintiff with further opportunity to provide site-specific data proving the feasibility of building a residence. Plaintiff did not provide the requested studies, arguing that they were too costly, especially because the studies would not assure County approval or his ability to build. ¶ 9 On June 28, 2001, subsequent to the hearing officer's recommendation, the United States Supreme Court decided Palazzolo v. Rhode Island, 533 U.S. 606, 121 S.Ct. 2448, 150 L.Ed.2d 592 (2001). Palazzolo held, in part, that a takings claim "is not barred by the mere fact that title was acquired after the effective date of the state-imposed restriction." Id. at 630, 121 S.Ct. 2448. In so holding, the Court noted:

Were we to accept [a contrary] rule, the postenactment transfer of title would absolve the State of its obligation to defend any action restricting land use, no matter how extreme or unreasonable. A State would be allowed, in effect, to put an expiration date on the Takings Clause. This ought not to be the rule. Future generations, too, have a right to challenge unreasonable limitations on the use and value of land.

Id. at 627, 121 S.Ct. 2448. Accordingly, Plaintiff did not lack standing merely because he acquired title to Lot 13 after enactment of the Slope Ordinance. Consequently, the hearing officer provided a copy of this case to both the County and Plaintiff, noting that "it is clear that the Palazzolo case overrules my recommended decision."

¶ 10 Plaintiff appealed to the Salt Lake County Council (the Council).⁵ The Council received no evidence, but heard legal arguments regarding the effect of Palazzolo, and voted 5-3 to deny Plaintiff's Petition for compensation or a building permit. The Council's Findings of Fact and Conclusions of Law list a variety of reasons for the denial, including: general problems with building on steep mountainous terrain; that Plaintiff did not show a right of access to downhill sewer lines or water; that the Slope Ordinance is necessary to protect the health, safety, and welfare of the Plaintiff and the general public; and that the effect of "granting an exception to, or compensating, [Plaintiff] might be that the County is obligated to grant similar relief to other lot owners similarly situated ... effectively rescinding residential building restrictions."⁶

¶ 11 Plaintiff subsequently filed a complaint in district court alleging, among other claims not relevant to this appeal, that the County's actions constituted a taking of all "economically viable use of his property" and seeking damages for the reasonable value of his property—$95,000—under the Takings Clauses of the United States and Utah Constitutions. See U.S. Const. amend. V; Utah Const. art. I, § 22. Plaintiff also sought rescission of the purchase contract for Lot 13 with Madsen on the grounds of mutual mistake, breach of warranty deed, and breach of the implied warranty of fitness.

¶ 12 All parties moved for summary judgment on all claims. The trial court granted the County's and Madsen's motions for summary judgment against Plaintiff, and denied Plaintiff's motion for summary judgment. Regarding the County, the trial court determined that Plaintiff had standing, but that Plaintiff's takings claim "is not necessarily ripe," and, in any case, because "[P]laintiff cannot demonstrate that the ordinance in question is depriving him of any economically viable use for his property, there has been no takings under Penn Central Transportation Co. v. City of New York, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978)." With regard to Madsen, the trial court determined that there was no breach of warranty deed "because the warranty deed at issue failed to contain a covenant warranty against government building restrictions. Furthermore, a government building restriction is not an `encumbrance'"; that "Utah does not recognize a claim for breach of implied warranty of habitability"; and that the doctrine of mutual mistake of fact requires a mistake as to an existing fact and "[t]he County's refusal to grant a variance was a future act not an existing fact."

ISSUES AND STANDARD OF REVIEW

¶ 13 Plaintiff argues that he is entitled to just compensation under the Fifth Amendment to the U.S. Constitution⁷ for a regulatory taking because (1) his claim is ripe for adjudication, and (2) the regulation has deprived him of all economically viable use of his property. The County responds that Plaintiff is not entitled to just compensation because a variance from the Slope Ordinance was possible, but Plaintiff failed to allow the County to exercise its discretion by failing to provide the requested site-specific engineering and geotechnical data proving that building on Lot 13 was feasible.⁸

¶ 14 Plaintiff argues against Madsen that he is entitled to rescind the purchase contract for Lot 13 on the grounds of (1) mutual mistake of fact, (2) breach of the covenant against encumbrances, and (3) breach of the implied warranty of fitness.

¶ 15 "Summary judgment is appropriate only if `there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law.'" Diamond B-Y Ranches v. Tooele County, 2004 UT App 135, ¶ 13, 91 P.3d 841

(omission in original) (quoting Utah R. Civ. P. 56(c)), cert. denied,

98 P.3d 1177 (Utah 2004). "When reviewing a grant of summary judgment, we view all facts and reasonable...