Dowd Grain Co. v. Cnty. of Sarpy

• Court: Nebraska Supreme Court
• Writing for the Court: Cassel, J.
• Citation: Dowd Grain Co. v. Cnty. of Sarpy, 867 N.W.2d 599 (Neb. 2015)
• Decision Date: 14 August 2015
• Docket Number: No. S–14–611,S–14–611
• Parties: Dowd Grain Company, Inc., a Nebraska Corporation, appellant, v. County of Sarpy, a corporate body politic, appellee.

867 N.W.2d 599

Dowd Grain Company, Inc., a Nebraska Corporation, appellant

v.County of Sarpy, a corporate body politic, appellee.

No. S–14–611

Supreme Court of Nebraska.

Filed August 14, 2015

Terry J. Grennan, of Cassem, Tierney, Adams, Gotch & Douglas, Omaha, and Duane J. Dowd for appellant.

L. Kenneth Polikov, Sarpy County Attorney, and Michael A. Smith, Papillion, for appellee.

Heavican, C.J., Connolly, Stephan, Miller–Lerman, and Cassel, JJ.

Syllabus by the Court

1. Constitutional Law: Ordinances.The constitutionality of an ordinance presents a question of law.

2. Judgments: Appeal and Error.An appellate court independently reviews questions of law decided by a lower court.

3. Zoning: Ordinances: Presumptions: Proof.The validity of a zoning ordinance will be presumed in the absence of clear and satisfactory evidence to the contrary.

4. Constitutional Law: Zoning: Ordinances: Proof.The burden of demonstrating a constitutional defect in a zoning ordinance rests with the challenger.

5. Municipal Corporations: Zoning: Ordinances: Proof.To successfully challenge the validity of a zoning ordinance, the party challenging must prove that the conditions imposed by the city in adopting the zoning ordinance were unreasonable, discriminatory, or arbitrary, and that the regulation bears no relationship to the purpose sought to be accomplished by the ordinance.

6. Zoning: Legislature.Where the validity of the legislative classification for zoning purposes is fairly debatable, the legislative judgment must be allowed to control.

7. Special Legislation.The focus of the prohibition against special legislation is the prevention of legislation which arbitrarily benefits or grants special favors to a specific class. A legislative act constitutes special legislation if it either (1) creates an arbitrary and unreasonable method of classification or (2) creates a permanently closed class.

8. Special Legislation.A special legislation analysis focuses on a legislative body's purpose in creating a challenged class and asks if there is a substantial difference of circumstances to suggest the expediency of diverse legislation.

9. Constitutional Law: Statutes: Special Legislation.When the Legislature confers privileges on a class arbitrarily selected from many who are standing in the same relation to the privileges, without reasonable distinction or substantial difference, then the statute in question has resulted in the kind of improper discrimination prohibited by the Nebraska Constitution.

10. Special Legislation: Public Policy.To be valid, a legislative classification must rest upon some reason of public policy, some substantial difference in circumstances, which would naturally suggest the justice or expediency of diverse legislation regarding the objects to be classified.

11. Special Legislation.The Legislature has the power to enact special legislation where the subject or matters sought to be remedied could not be properly remedied by a general law and where the Legislature has a reasonable basis for the enactment of the law.

12. Special Legislation.Legislative classifications must be real and not illusive; they cannot be based on distinctions without a substantial difference. The distinctive treatment must bear some reasonable relation to the legitimate objectives and purposes of the legislative act. The question is always whether the things or persons classified by the act form by themselves a proper and legitimate class concerning the purpose of the act.

13. Special Legislation: Words and Phrases.A closed class is one that limits application of the law to a present condition, and leaves no room or opportunity for an increase in the numbers of the class by future growth or development.

14. Special Legislation.Generally, a class of property owners in a certain geographic area cannot form a closed class.

15. Statutes: Special Legislation.In determining whether a statute legitimately classifies, a court must consider the actual probability that others will come under the act's operation. If the prospect is merely theoretical, and not probable, the act is special legislation.

Cassel, J.

I. INTRODUCTION

The County of Sarpy revised an overlay zoning ordinance to exempt properties platted before the effective date of the original ordinance. An owner of nonexempt property sought a judgment declaring the exemption unconstitutional as special legislation. The owner now appeals from a judgment for the county. Because the exemption did not create a closed class and its application was not arbitrary or unreasonable, we affirm the judgment.

II. BACKGROUND

1. March 9, 2004, Ordinance

On March 9, 2004, the Sarpy County Board of Commissioners supplemented the Sarpy County zoning ordinances by adopting an overlay district zoning ordinance (overlay ordinance). In effect, the overlay ordinance imposed additional regulations on land along a specified road corridor. These regulations included design guidelines.

The original overlay ordinance applied only to future developments. It stated that “[t]he design guidelines are applicable for new development proposals within the area of application including plats, zoning changes or site plan review.”

The Nebraska Court of Appeals considered a challenge to the applicability of the original overlay ordinance.¹ The court held that building permits constituted “ ‘new development proposals' ”² under the plain language of the ordinance. The court further reasoned that an administrative replat and a site development plan filed after March 9, 2004, were new development proposals to which the design guidelines applied.

2. 2007 Revision

In May 2007, the Sarpy County Board of Commissioners adopted a resolution amending the overlay ordinance. The revised ordinance contained a subsection designated “33.3 Project Application and Exceptions” (exemption), which stated that the overlay ordinance applied, in part, to the following:

33.3.1 Any new development requiring a building permit built on land within the boundaries of the HC Highway Corridor Overlay District after the effective date of this Ordinance, except any land that was platted prior to March 9, 2004; provided however, that land within the boundaries of the HC Highway Corridor Overlay District that was zoned other than agricultural prior to March 9, 2004[,] that was part of a Phased Development shall also be excepted.

(a) Replats, lot line adjustments, and lot consolidations of such platted properties shall remain excepted.

(b) Phased Developments shall m[e]an property that was, at a minimum, preliminary platted and at least a part of the property within the preliminary plat was final platted.

Thus, under the exemption, any land platted prior to March 9, 2004, did not have to comply with the design guidelines contained in the overlay ordinance.

3. Pleadings

Dowd Grain Company, Inc. (Dowd Grain), brought a declaratory judgment action against the county, claiming that the exemption was unconstitutional. Dowd Grain alleged that it owned real property subject to the overlay ordinance but not qualifying for the exemption. It claimed that its property was similarly situated to the exempted property. And it asserted that the exemption created special privileges and immunities in favor of the class of real property exempted from enforcement of the overlay ordinance, in violation of Neb. Const. art. III, § 18. Dowd Grain sought a declaration that the exemption was unconstitutional.

The county filed a responsive pleading. It alleged that the property exempted from the overlay ordinance formed a legitimate class. The exemption, it claimed, served a legitimate governmental purpose. This purpose was to “protect[ ] from harm property owners who have substantially changed position in good-faith reliance upon existing zoning by incurring substantial expenses related to construction and by incurring financial obligations to third parties.”

4. Evidence at Trial

Several matters were undisputed at trial:

• Properties located within the overlay district that were not platted prior to March 9, 2004, could not be added to the class created by the exemption.

• The exemption's language prevented expansion of the exempt geographic area.

• Dowd Grain spent over $500,000 grading and preparing its property for development.

Other evidence focused on the effect of failing to exempt properties already under development. The district court received into evidence a partial transcript of a May 8, 2007, meeting of the county's board of commissioners. This meeting addressed the then-proposed amendments to the overlay ordinance.

At this meeting, several business representatives testified regarding the potential adverse effects. One representative stated that the proposed amendment to the overlay ordinance was consistent with the representations made to and relied upon by that business. An attorney for a different business stated that imposition of restrictions on land that had been purchased and planned for a number of years would undermine the business' ability to grow as it intended. And an attorney speaking on behalf of a partnership that was currently in the process of building in the affected area testified that the partnership would suffer damages if the county board voted against the “grandfathering clause.” The attorney explained that the partnership had already laid the footings for its building and placed steel framework and that if the grand-fathering language was stricken, the partnership would have to redo that work at a cost of about $1 million.

5. District Court's Judgment

The district court entered judgment in favor of the county. Although other legal issues were raised before the district court, Dowd Grain assigns error only to the court's determination regarding its special legislation claim.

In determining whether the exemption constituted special legislation, the court first considered whether the ordinance created a closed class. The court noted that any replats would change the number of parcels and that any class...