Croix Holdings, LLC v. City of Newport, A21-0630

CourtCourt of Appeals of Minnesota
Writing for the CourtGAÏTAS, Judge
PartiesCroix Holdings, LLC, Appellant, v. City of Newport, Respondent.
Docket NumberA21-0630
Decision Date20 December 2021

Croix Holdings, LLC, Appellant,

City of Newport, Respondent.

No. A21-0630

Court of Appeals of Minnesota

December 20, 2021

This opinion is nonprecedential except as provided by Minn. R. Civ. App. P. 136.01, subd. 1(c).

Washington County District Court File No. 82-CV-20-1548

Robert B. Bauer, Arthur J. Waldon, Dougherty, Molenda, Solfest, Hills & Bauer P.A., Apple Valley, Minnesota (for appellant)

Paul D. Reuvers, Susan M. Tindal, Andrew A. Wolf, Iverson Reuvers, Bloomington, Minnesota (for respondent)

Considered and decided by Smith, Tracy M., Presiding Judge; Slieter, Judge; and Gaïtas, Judge.


This appeal centers on a dispute between appellant Croix Holdings, LLC (Croix Holdings) and respondent City of Newport (the city) over the use of properties owned by Croix Holdings. After the city revoked a conditional use permit (CUP) for one property and ordered Croix Holdings to cease its nonconforming use of its other property, Croix


Holdings filed a declaratory-judgment action in the district court. The city moved for summary judgment, and the district court granted the city's motion. On appeal, Croix Holdings argues that the district court erred in granting the city's summary-judgment motion and abused its discretion in determining that email exchanges between city employees were protected by attorney-client privilege. We affirm.


Imperial Camper Sales (Imperial Camper), which opened in 1972 in Newport, sold pop-up campers. The original Imperial Camper property (original property) was located in the city's general business zoning district. Within that district, camper sales was an authorized use without a CUP. The zoning classification of the original property changed over the next decade, but Imperial Camper was allowed to continue selling campers because its business activity was a preexisting legal nonconforming use.

Over time, Imperial Camper expanded its sales area to an additional property, where camper sales were not allowed under the city's zoning ordinance without a CUP. It also expanded its business from pop-up campers and custom-built truck toppers to include pull-behind travel trailers and fifth-wheel trailers. Eventually, Imperial Camper applied for a CUP that would allow trailer sales on this additional property (CUP lot). The specific request was to "[p]ave & fence lot to secure trailers for display sale & storage."

In 1986, the Newport City Council approved the CUP. The CUP authorized "a retail sales operation on Lots 1 th 10, Block 17, Newport Park Addition, subject to the expiration


of the permit upon any change of ownership of the property or change of use of the property, and subject to annual review by the City."

Notwithstanding adverse changes to the city's zoning ordinances over the years, Imperial Camper continued to sell campers on the original property and the CUP lot. Those sales were authorized as a legal nonconforming use of the original property. And the CUP allowed Imperial Camper to continue its retail sales operation on the CUP lot "subject to . . . change of use of the property, and subject to annual review by the City."

In 2015, Croix Holdings purchased the original property and the CUP lot. It then leased these properties to tenants, including Imperial Camper.

In 2018, Croix Holdings began converting two existing buildings on the properties into car dealerships. Additionally, Croix Holdings purchased a vacant lot abutting the original property (A&W lot[2]). The following is an approximate rendering of the parcels owned by Croix Holdings.[3]

(Image Omitted)


The A&W lot was zoned as MX-4-a general mixed-use district. By the time Croix Holdings acquired the A&W lot, the original property and the CUP lot were also zoned MX-4 based on a zoning law that was enacted in 1994. The MX-4 classification expressly prohibits vehicle sales and service, and it prohibits vehicle storage without a CUP.

Throughout 2018 and 2019, residents filed grievances with the city about the properties, complaining about new activity that was occurring there. The grievances included residents' concerns about loud nighttime work on cars, general noise, and increases in traffic and trash.

In March 2019, Croix Holdings applied to rezone its properties as a B-2 Business Park District and sought a CUP for the original property, the CUP lot, and the A&W lot. The city planning commission unanimously recommended denial of Croix Holdings' requests to the council. Following this recommendation, Croix Holdings withdrew its rezoning request and CUP application.

Separately, in May 2019, the city informed Croix Holdings "that it had decided to formally review the CUP associated with the CUP property and other zoning issues with Croix Holdings' property" and ordered Croix Holdings to submit a site plan[4] one week


before a public planning-commission hearing to be held on June 6, 2019. Croix Holdings submitted a site plan, but it was deficient because it was not to scale and did not accurately show the number of parking spaces that the property designated for existing and proposed dealers. The site plan also did not illustrate the required setbacks from property lines. Although the city notified Croix Holdings about the problems with the site plan, Croix Holdings did not correct the deficiencies before the public hearing.

The June 6 public hearing was attended by the city planner, the city attorney, and Croix Holdings' counsel, among others. At that hearing, the mayor and planning commission moved to (1) "send a formal request to [Driver and Vehicle Services (DVS)] for [a] compliance review of the entire Croix Holdings site;" (2) set a public hearing for August 1, 2019, to review the CUP and zoning-compliance review of the property; and (3) "discuss a moratorium on new vehicle sales and multiple dealer lots for June 25, 2019."

Days later, the city informed Croix Holdings in writing of zoning-compliance issues on the properties. These issues pertained to parking requirements, fence requirements, exterior storage and screening, and nuisance concerns. Because Croix Holdings' first site plan had been deficient, the city requested a new site plan. Croix Holdings submitted its new site plan eight days late and acknowledged that it was only "about 90% complete."

After additional public hearings, the city gave Croix Holdings 60 days to comply with the existing CUP and zoning-ordinance requirements. The city ordered Croix Holdings to discontinue all car sales occurring on the properties and threatened to schedule


a public hearing to consider revocation of the existing CUP if the property was not brought into compliance.

Approximately two weeks before the compliance deadline, the city emailed Croix Holdings a request to cease and desist continued violations of the CUP and zoning-ordinance requirements. Two days after the deadline, city staff visited the property and took photos, which showed that Croix Holdings still housed many junked cars on the property.

The city held another public hearing in February 2020. At that hearing, the council unanimously decided:

That the Conditional Use Permit for Retail Sales (outdoor) issued by the city on February 6, 1986 for the [CUP] property . . . shall be revoked. That the nonconforming use of the [original] property . . . for automobile sales that was abandoned for more than one year beginning in 1996 shall cease and the effective date of the order is May 31, 2020

In April 2020, Croix Holdings initiated a declaratory-judgment action in district court. Croix Holdings challenged the city's zoning decisions and alleged that the city's actions constituted an unconstitutional taking of property and tortious interference with contracts. Both parties moved for summary judgment.

In support of their cross-motions for summary judgment, the parties submitted evidence to the district court regarding the history of car sales on the original property and the CUP lot. Croix Holdings attempted to demonstrate that automobile sales had been permitted on the property in the past. It provided declarations and deposition testimony that several people purchased three cars and a motorcycle from Imperial Campers, without specifying when these purchases occurred. The city submitted aerial photographs of the


properties taken at different points in time between 1969 and 2017. In these photographs, no cars are visible in the sales lots.

Croix Holdings also sought to introduce two emails it obtained pursuant to the Minnesota Government Data Practices Act (MGDPA). See Minn. Stat. §§ 13.01-.99 (2020). In the emails-which were addressed to multiple people, including the city attorney-city officials expressed their opinions regarding zoning issues and sought the city attorney's advice. The city argued that the emails were protected by attorney-client privilege and moved the district court to exclude them on that basis.

The district court concluded that both emails were protected by attorney-client privilege and denied Croix Holdings' request to include them in the summary-judgment record. And the district court granted the city's motion for summary judgment.

Croix Holdings appeals.


On appeal, Croix Holdings argues that the city's zoning decisions were unreasonable, that the district court erred in granting the city's motion for summary judgment on Croix Holdings' claims of unconstitutional taking of property and tortious interference with contracts, and that the district court erred in excluding Croix Holdings' proffered emails on the ground of attorney-client privilege. We address each of these arguments in turn.

I. The city's zoning decisions were not unreasonable.

Croix Holdings first challenges the city's zoning decisions. It contends that the city and the district court erred in concluding that car dealerships were not a...

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