Budget Inn of Daphne, Inc. v. City of Daphne

• Decision Date: 15 December 2000
• Citation: 789 So.2d 154
• Parties: BUDGET INN OF DAPHNE, INC. v. CITY OF DAPHNE and The Planning Commission of the City of Daphne.
• Court: Alabama Supreme Court

789 So.2d 154

BUDGET INN OF DAPHNE, INC. v. CITY OF DAPHNE and The Planning Commission of the City of Daphne.

1991251.

Supreme Court of Alabama.

December 15, 2000.

David E. Hudgens of Armbrecht, Jackson, DeMouy, Crowe, Holmes & Reeves, L.L.C., Mobile, for appellant.

Kevin F. Masterson and Nancy H. Lard of Janecky Newell, P.C., Mobile; and Jay M. Ross and Brandy M. Osborne of Ross & Jordan, Mobile, for appellees.

LYONS, Justice.

The plaintiff, Budget Inn of Daphne, Inc. ("Budget Inn"), appeals from a summary judgment entered for the defendants City of Daphne and the Planning Commission of the City of Daphne (collectively, "Daphne"). We reverse and remand.

I. Factual Background

This is a zoning case. Daphne adopted a "Land Use and Development Ordinance" in 1987. The following year, Daphne annexed the property on which Budget Inn operates a motel. The parties agree that the sign at the Budget Inn motel was a legal sign when the ordinance became applicable to the Budget Inn property, even though the sign did not conform to the height and size requirements imposed by the ordinance. Thus, it was considered a "legal-nonconforming" sign. Daphne amended various sections of its zoning ordinance in 1994. Included in the changes was the addition of § 10.722, which read:

"Where a change in 1) use of property, 2) occupancy, 3) ownership regardless of name change, 4) change in name regardless of ownership, 5) location, 6) the alteration of a sign in any manner, the altered or changed sign shall be in conformance with the requirements of this Ordinance and shall lose its eligibility for characterization as a `Legal Nonconforming Sign' under Section 10.728."

The ordinance further requires that if a sign loses its "legal-nonconforming" status then the owner of the sign must remove it or bring it into compliance within 180 days. § 10.729.

In November 1996, Chase Manhattan Bank (formerly known as Chemical Bank) became the owner of the motel property, through foreclosure. A hotel-management company received a business license from Daphne and continued to operate the property as a motel. One year later, Budget Inn of Daphne, Inc., purchased the property. In December 1997, Daphne notified Budget Inn that the city considered the sign on the property to be a nonconforming sign and considered that the change in ownership of the property terminated the "grandfathering" of the sign and its "legal-nonconforming" status.

Budget Inn sued Daphne in the United States District Court for the Southern District of Alabama, alleging various theories challenging the constitutionality of the ordinance. The court dismissed the action for a lack of "ripeness," i.e., on the basis that the action was premature. Budget Inn later filed this present action in the Baldwin Circuit Court. That court granted Daphne's motion for summary judgment and denied Budget Inn's cross motion for summary judgment. Budget Inn appeals from the resulting final judgment.

II. Jurisdictional Issues

Daphne argues that the Baldwin Circuit Court did not have jurisdiction to hear the case because, it claims, Budget Inn had administrative remedies it had not pursued. Specifically, Daphne argues that Budget Inn had not applied for a variance from the Board of Zoning Adjustment, but rather had rushed to the courthouse, contrary to the applicable law, which Daphne says requires Budget Inn to first exhaust its administrative remedies.

It is well settled in Alabama that the general principle of "exhaustion of administrative remedies" applies to zoning matters. City of Gadsden v. Entrekin, 387 So.2d 829, 833 (Ala.1980) (holding that "one must exhaust his remedies in a zoning matter before entering a court of law."); Watson v. Norris, 283 Ala. 380, 217 So.2d 246 (1968). However, exhaustion of administrative remedies is a judicially imposed prudential limitation, not an issue of subject-matter jurisdiction. Furthermore, we recognize certain exceptions exist to the general rule of exhaustion of administrative remedies:

"The doctrine does not apply when (1) the question raised is one of interpretation of a statute, (2) the action raises only questions of law and not matters requiring administrative discretion or an administrative finding of fact, (3) the exhaustion of administrative remedies would be futile and/or the available remedy is inadequate, or (4) where there is the threat of irreparable injury."

Ex parte Lake Forest Property Owners' Ass'n, 603 So.2d 1045, 1046-47 (Ala.1992) (citing City of Gadsden v. Entrekin, supra).

One who raises only questions of law need not exhaust administrative remedies, and one challenging the constitutionality of a zoning ordinance is raising a question of law. A zoning board of adjustment or other such administrative agency cannot entertain a constitutional challenge and would be without authority or power to make a determinative ruling on such a challenge. See City of Homewood v. Caffee, 400 So.2d 375, 378 (Ala.1981); Reed v. City of Hoover, 695 So.2d 34, 36 (Ala.Civ. App.1996); Beaird v. City of Hokes Bluff, 595 So.2d 903, 904 (Ala.Civ.App.1992). This is not to suggest that every party with a zoning dispute can transform it into a constitutional question and thereby bypass the established administrative process. However, when the administrative body is without power to redress the harm complained of, then we cannot require the complaining party to participate in a futile process. In the present case, the parties agree upon all of the relevant facts. The only substantive matter in dispute is the constitutionality of certain provisions of Daphne's zoning ordinance. This is purely a matter of law; thus, jurisdiction properly lies in the courts and the defense of failure to exhaust administrative remedies does not apply.

Daphne also asks this Court to declare that Budget Inn's claim is "unripe," i.e., not presently justiciable, under the justiciability principles enunciated in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985). However, Williamson is inapposite to this case. In Williamson, the Supreme Court held that a property owner could not bring a claim in a federal court for a violation of the Just Compensation Clause of the United States Constitution until the property owner had followed state procedures for redress and redress had been denied. Id. at 195, 105 S.Ct. 3108. Williamson does not apply to the present case, because Budget Inn presents a claim that Daphne's zoning ordinance is facially unconstitutional.

III. Validity of the Zoning Ordinance

This Court recognizes that a municipality may establish a comprehensive land-use plan and effectuate that plan through a scheme of comprehensive zoning regulations. This Court affords deference to a municipal zoning ordinance, which is the product of a municipality's legislative function, and will review it only to determine if it is arbitrary or capricious. See Homewood Citizens Ass'n v. City of Homewood, 548 So.2d 142, 143 (Ala.1989); Swann v. Board of Zoning Adjustment of Jefferson County, 459 So.2d 896, 899 (Ala. Civ.App.1984) (holding that "local authorities may not, under the guise of legislative power, impose restrictions that arbitrarily and capriciously inhibit the use of private property or the pursuit of lawful activities") (quoting City of Birmingham v. Morris, 396 So.2d 53, 55 (Ala.1981)). This standard of review reflects the majority view that zoning matters are essentially local in nature and are best addressed at a local level. Homewood Citizens Ass'n v. City of Homewood, 548 So.2d at 143. However, this deferential standard of review does not make this Court oblivious to constitutional concerns.

"[T]he presumption of a zoning ordinance's validity must be tempered by the Court's appreciation of the fact that zoning involves governmental restrictions upon a property owner's constitutionally guaranteed right to use his or her property, unfettered by governmental restrictions, except where the use violates any law, the use creates a nuisance, or the owner violates any covenant, restriction or easement."

PA Northwestern Distrib., Inc. v. Zoning Hearing Bd. of the Township of Moon, 526 Pa. 186, 191, 584 A.2d 1372, 1374 (1991) (emphasis in original). See, also, Marris v. City of Cedarburg, 176 Wis.2d 14, 33-34, 498 N.W.2d 842, 850 (1993) (holding that courts must balance interests of property owners with those of municipality).

The parties agree that Budget Inn's sign was, at least initially, a legal-nonconforming use, grandfathered under the zoning ordinance. However, after the most recent change in ownership of the motel facilities, Daphne claimed the sign lost its "legal-nonconforming" status, citing the provision of the ordinance stating that a sign will lose that status upon a change in "ownership regardless of name change" or "change in name regardless of ownership." § 10.722.

We find these provisions in Daphne's ordinance arbitrary and capricious. This Court has acknowledged that a municipality, acting through a zoning ordinance, may pursue the objective of reducing gradually, and then eventually eliminating entirely, certain uses of property within certain areas. See City of Foley v. McLeod, 709 So.2d 471, 473 (Ala. 1998); Moore v. Pettus, 260 Ala. 616, 627, 71 So.2d 814, 823 (1954). The reason a municipality enacts a zoning ordinance pursuant to a comprehensive plan is to create a planned consistency in land-use patterns. However, an existing nonconforming use is a vested property right that a zoning ordinance may not abrogate except under limited circumstances. The general rule is that a mere change in legal ownership or operating name is not one of those circumstances.

"The right to maintain a nonconforming use does not depend upon ownership or tenancy of the land on which the use is situated. It is not personal to the current owner or tenant but attaches to the land itself.

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