Blue Jay Realty Trust v. City of Franklin

• Decision Date: 13 December 1989
• Docket Number: No. 89-011,89-011
• Citation: 132 N.H. 502,567 A.2d 188
• Parties: BLUE JAY REALTY TRUST v. CITY OF FRANKLIN.
• Court: New Hampshire Supreme Court

Page 188

567 A.2d 188

132 N.H. 502

BLUE JAY REALTY TRUST v. CITY OF FRANKLIN.

No. 89-011.

Supreme Court of New Hampshire.

Dec. 13, 1989.

Gallagher, Callahan & Gartrell P.A., Concord (Michael R. Callahan, on the brief, and Steven J. McAuliffe, orally), for plaintiff.

Upton, Sanders & Smith, Concord (Russell F. Hilliard, on the brief and orally), for defendant.

SOUTER, Justice.

The plaintiff has petitioned for declaratory judgment and injunctive relief, challenging the validity of 1987 amendments to the defendant's zoning ordinance, and has sought compensation under the State and National Constitutions for either a temporary or permanent taking said to have resulted therefrom. The Superior Court (Mayland H. Morse, Jr., Esq., Master; M. Flynn, J.) cited the plaintiff's failure to comply with RSA 677:2, :3 and :4 and failure to exhaust administrative remedies in granting the defendant's motion to dismiss. Although we affirm the dismissal of the federal taking claims, without prejudice, we otherwise reverse.

The following allegations contained in the petition are taken as true for purposes of the motion to dismiss. See Collectramatic v. Kentucky Fried Chicken Corp., 127 N.H. 318, 320, 499 A.2d 999, 1000 (1985). In October 1986, principals of the plaintiff, Blue Jay Realty Trust, began negotiating for the purchase of a 150-acre tract located in the city of Franklin, and informed certain officials of the defendant city of Blue Jay's interest in using the land for residential building. Under the zoning ordinance then in effect, a maximum of 360 residential units could have been placed on the tract. In December 1986, Blue Jay executed a contract to buy the property, and in January 1987, Blue Jay's representatives met with city officials, who confirmed that the land was zoned as Blue Jay understood and was not the subject of any contemplated amendments to the zoning ordinance. In March 1987, Blue Jay took conveyance of 85 of the 150 acres, the balance of which remains subject to the 1986 contract.

Blue Jay then sought approval from the city planning board to subdivide the 85 acres. Soon thereafter, at an informational hearing held in the course of the board's meeting in June, 1987, someone speaking for the board indicated that the land would probably be rezoned to reduce the permitted density of development. Blue Jay was subsequently advised that its application was incomplete and therefore ineligible for consideration at July's planning board meeting. Although the city manager represented that some indication of the areas thought to be incomplete would be forthcoming, none was ever given.

In the meantime the city council received a proposal to amend the ordinance to increase minimum lot sizes from one-half to two-and-one-half acres in an area in which Blue Jay's land was the largest tract, and the planning board amended its subdivision regulations to conform to the zoning changes so proposed. By the end of July, relations between the parties had deteriorated so far that the city manager directed that Blue Jay's subdivision application be denied and charged Blue Jay with dishonesty and deception in trying to circumvent the planning board's procedures. The parties nevertheless attempted to negotiate a resolution of their dispute, though to no avail, and in September the city council adopted a zoning amendment covering an area that included Blue Jay's parcel. The revision increased the minimum lot size to an acre-and-a-half, eliminated cluster development except by special exception, and made other changes that need not be canvassed here. The result was to reduce the buildable capacity of Blue Jay's land from 360 units to approximately 63.

In February 1988, Blue Jay filed a petition seeking declaratory judgment, injunctive relief and assessment of damages, combining legal, equitable, State, and federal claims. Although its petition listed four counts, one count referred only to the form of relief requested rather than the theory of entitlement to the relief sought, and within other counts more than one theory of relief seems to have been pleaded. Among those theories, we discern challenges to the validity of the amendments as inconsistent with the city's master plan; as lacking support in objective criteria; as ultra vires; as intended to halt development; as directed against Blue Jay; as frustrating reasonable, investment-backed expectations; and as denying federal due process and State and federal equal protection. Blue Jay sought a declaration of the amendment's invalidity and an injunction enjoining its enforcement. The petition claimed further that a temporary or permanent taking of, or interference with, property rights had resulted.

The city responded with a motion to dismiss "on the ground that the plaintiff has failed to comply with the provisions of RSA 677:2, :3, :4, regarding appeals from zoning decisions, and is therefore barred from doing so by way of this untimely Petition." RSA 677:2 (Supp.1988) allows "the selectmen, any party to the action or proceedings, or any person directly affected thereby [20 days to] apply for a rehearing" with respect to "any order or decision of the zoning board of adjustment, or any decision of the local legislative body or a board of appeals in regard to its zoning." See RSA 672:8, I (where appropriate, "local legislative body" refers to city council). So far as it concerns this case, RSA 677:3, I (Supp.1988) provides generally that the grounds for relief specified in a rehearing petition limit the issues that may be raised on further appeal. RSA 677:4 provides that any person aggrieved by an order or decision of the zoning board of adjustment (ZBA) or local legislative body may appeal to the superior court within thirty days of the official recording of the action complained of.

Blue Jay objected to the city's motion to dismiss, with the argument that the "Doctrine of Exhaustion of Remedies and the citation of RSA 677:2, :3 and :4 have no applicability to the cause of action as set forth in [its] Petition." The matter was assigned to a master for hearing.

The master recommended the motion be granted for what we understand to be two independent reasons. He reasoned that RSA 677:2 et seq. limit the opportunity to mount a direct attack on the validity of a zoning provision, by imposing time limitations and mandatory administrative prerequisites, neither of which Blue Jay claims to have complied with. The master also cited Blue Jay's failure to seek a variance or exception from the requirements of the ordinance, either of which might afford Blue Jay sufficient relief to end the controversy. The trial court adopted the master's recommendations, leading to this appeal.

A threshold question, which we raise on our own motion, is the extent to which we should engage in a more detailed examination of Blue Jay's various claims for relief in deciding whether and to what extent the trial court ruled erroneously. In moving to dismiss generally, the city assumed no such breakdown of specific claims was necessary. To a large degree the master accepted this view, and we will do the same, to the extent of treating the claims as falling into two generic categories: that the amendment is invalid, and (as a complement or alternative) that compensation is required with respect to some period of time on a theory, either of compensable taking of property interests, or of federal due process independent of the fifth amendment requirement of just compensation.

The taking and due process compensation claims lend themselves to expeditious treatment, and we consider them first. Although the master's report did not expressly rely on Williamson Planning Commission v. Hamilton Bank, 473 U.S. 172, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985), we read this case as authority for dismissing the federal claims, the one based on the fifth amendment's just compensation guarantee enforceable against the States under the fourteenth amendment, see Chicago, Burlington etc. R'd v. Chicago, 166 U.S. 226, 241, 17 S.Ct. 581, 586, 41 L.Ed. 979 (1897), and the other resting simply on the due process clause of the fourteenth amendment, see Williamson, supra 473 U.S. at 197, 105 S.Ct. at 3122. Williamson held that in an action predicated on a zoning restriction and brought under 42 U.S.C. § 1983 neither a just compensation nor a due process claim is ripe for adjudication until the plaintiff property owner has sought and been denied a variance to use the land in the manner desired, Williamson, supra at 191, 199, 105 S.Ct. at 3118-19, 3123. The Court held further that no claim for just compensation is stated under the fifth amendment without alleging that the landowner sought and was denied compensation as a remedy under State law, id. at 195, 105 S.Ct. at 3121. Since we assume that Blue Jay intended to rely on 42 U.S.C. § 1983 as the jurisdictional basis for its federal compensation claims, and since it has fulfilled neither of Williamson 's conditions, dismissal was appropriate, though without prejudice, of course.

We assume that the master relied on the first of Williamson 's reasons in dismissing the State taking claim as well, since RSA 677:2 (Supp.1988) and :4 have no ostensible application to that claim, dealing as they do with challenges, inter alia, to zoning enactments as distinguished from claims for compensation resulting from the applicability of such enactments. The city, in any event, would have us apply a Williamson requirement to exhaust administrative remedies before entertaining a claim for compensated taking, and urges us to affirm the dismissal of the State taking claim on this ground. We, however, believe it would be premature to rule on this issue here. Our prior cases recognizing that zoning regulation can effect a compensable taking under part I, article 12, starting with Burrows v. City of Keene, 121 N.H. 590, 432 A.2d 15 (1981), impose no such requirement, and while we do not mean...