Iowa Coal Min. Co., Inc. v. Monroe County

• Decision Date: 23 October 1996
• Docket Number: No. 95-198,95-198
• Citation: 555 N.W.2d 418
• Parties: IOWA COAL MINING CO., INC., Star Coal Mining Co., Inc., and Jim Huyser, Appellees, v. MONROE COUNTY, Iowa, Appellant.
• Court: Iowa Supreme Court

Page 418

555 N.W.2d 418

IOWA COAL MINING CO., INC., Star Coal Mining Co., Inc., and Jim Huyser, Appellees, v. MONROE COUNTY, Iowa, Appellant.

No. 95-198.

Supreme Court of Iowa.

Oct. 23, 1996.

Rehearing Denied Nov. 18, 1996.

Lee H. Gaudineer, Jr., and H. Loraine Wallace of Austin, Gaudineer, Austin, Salmons, Swanson & Hopkins, Des Moines, and William S. Owens, County Attorney, for appellant.

R. Jeffrey Lewis, Joseph G. Van Winkle, and S.P. DeVolder of Lewis, Webster, Johnson, Van Winkle & DeVolder, Des Moines, for appellees Iowa Coal and Star Coal.

Randall C. Stravers and James Q. Blomgren of Pothoven, Blomgren & Stravers, Oskaloosa, for appellee Huyser.

Considered by McGIVERIN, C.J., and CARTER, LAVORATO, SNELL, and ANDREASEN, JJ.

LAVORATO, Justice.

The plaintiffs in this case are a coal mining company, its parent company, and the sole stockholder of the parent company. The defendant is the county in which the coal mining operation is located. The county passed a county-wide zoning ordinance that affected the use of two sites (Star 6 and Star 14) belonging to the coal mining company. The coal mining company intended to use the sites as a combined coal mining and landfilling operation. The county's adoption of the ordinance led to a lawsuit between the parties that eventually came before our court on the county's appeal. See Iowa Coal Mining Co. v. Monroe County, 494 N.W.2d 664 (Iowa) (Iowa Coal I ), cert. denied, 508 U.S. 940, 113 S.Ct. 2415, 124 L.Ed.2d 638 (1993).

In Iowa Coal I, we concluded as to Star 14 the ordinance (1) was validly enacted, (2) was a valid exercise of the county's police power, and (3) did not effect a regulatory taking of the site. As to Star 6, we concluded the takings claim arising from the enactment of the ordinance was not ripe for adjudication. We therefore reversed and remanded this claim for dismissal as premature.

The plaintiffs then brought the present action after the county passed a new but almost identical zoning ordinance. The plaintiffs again alleged a regulatory takings claim regarding Star 6. The plaintiffs also alleged (1) there were nonconforming uses for landfilling at both sites and (2) the county tortiously interfered with the companies' prospective contractual relationships regarding Star 6. The district court awarded damages on the takings claim and the tortious interference claim.

The county appeals, raising numerous issues. We reverse and remand for dismissal of the takings claims regarding Star 6. On remand, the district court shall vacate the judgments it rendered on the takings claim. We likewise reverse and remand for dismissal of the claims regarding the nonconforming use status for the two sites. We affirm the award on the tortious interference claim.

I. Background Facts.

Iowa Coal Mining Company and Star Coal Mining Company are corporations with their principal place of business in Monroe County, Iowa (County). Iowa Coal Mining Company is the sole shareholder of Star Coal Mining Company. James Huyser is the president and sole shareholder of Iowa Coal Mining Company. Hereinafter, unless otherwise indicated and for convenience, we collectively refer to James Huyser, Iowa Coal Mining Company, and Star Coal Mining Company as Iowa Coal.

Iowa Coal originally engaged in coal strip mining. It holds leases on three relevant properties in the County: (1) Star 6, (2) Star 14, and (3) Star 15. Huyser is the lessee on all three leases, but he assigned the leases to Iowa Coal in return for royalty payments.

Iowa Coal became interested in landfilling in 1984 and obtained a sanitary landfilling permit from the Iowa Department of Natural Resources (IDNR) for 10.3 acres of Star 6. The Star 6 site contains 120 acres. On May 13, 1988, Iowa Coal received a comparable permit for the Star 14 site. Apparently adding landfilling to a coal strip mining operation is relatively easy because both operations require essentially the same equipment. Iowa Coal already possessed all the equipment necessary for landfilling, except for a trash compactor.

Between 1984 and 1987, Iowa Coal expended lots of time and money to prepare Star 6 and Star 14 for landfilling. Iowa Coal engaged in the following prelandfilling activities at both sites: (1) lease negotiation and execution, (2) advance royalty and lease payments, (3) employment of a consultant and development of site plans, (4) installation of monitoring wells and drill holes, (5) completion of the IDNR permit processes, (6) market plans and contract negotiations, and (7) other necessary and essential activities for landfilling operations.

County officials made it clear that they are opposed to the concept of combining strip mining and landfilling. On May 12, 1988--one day before Iowa Coal obtained the landfilling permit for Star 14--the County enacted ordinance 6. Ordinance 6 is a county-wide ordinance aimed at curtailing--and ultimately extinguishing--all nonconforming uses in existence at its adoption. Not surprisingly, ordinance 6 designated coal mining and landfilling nonconforming uses.

The original draft of ordinance 6 allowed both landfilling and mining as conditional uses in A-1 and A-2 agricultural districts. Star 6 and Star 14 are located in an A-2 district.

Later the County revised the draft. The revised draft permitted mining--but not landfilling--as a conditional use in A-1 and A-2 agricultural districts. The revised draft permitted landfilling--but not mining--as a conditional use on I-2 (heavy industrial) land. These changes meant that Iowa Coal could continue strip mining but could not combine the operation with a landfill. The County eventually enacted this revised draft into law.

After the County adopted ordinance 6, the conflict between the parties began to escalate. The harder Iowa Coal tried to keep its business afloat, the harder the County tried to sink it. For example, the County had historically granted Iowa Coal permission to mine through a County road. On the pretext that such a practice would damage county roads, the County rescinded the permission on February 19, 1988. In the fall of 1988, the County denied Iowa Coal's application to rezone its property. In addition--largely because of the County's actions--Iowa Coal lost landfilling business from sources inside and outside of Iowa.

The differences between Iowa Coal and the County arising from ordinance 6 led to Iowa Coal I. In Iowa Coal I, Iowa Coal filed suit in district court challenging the validity of ordinance 6. The suit sought relief by way of certiorari and declaratory judgment. Iowa Coal alleged the illegality of ordinance 6, claimed the ordinance deprived Iowa Coal of the only legitimate use of its property without providing just compensation, and sought damages. The district court concluded that the County violated Iowa Code section 358A.5 (1987) because it failed to develop an independent planning document before enacting ordinance 6. The court awarded damages of $10,319,526 to Iowa Coal and $5,047,972 to Huyser for lost lease royalties.

Following the County's appeal, we came to the following conclusions. First, section 358A.5 does not mandate an independent planning document before enacting a zoning ordinance, and the district court erred in invalidating ordinance 6 on that ground. Iowa Coal I, 494 N.W.2d at 671.

Iowa Coal also urged affirmance on the grounds that an unconstitutional taking had occurred. Id. Iowa Coal asserted that the County's enactment of ordinance 6 denied Iowa Coal the only legitimate use of its property. Id. As a result, Iowa Coal claimed, it was forced to shut down, causing it substantial and irreparable damage. Id. at 670. The district court had not addressed the takings claim, but we did so on the familiar principle that a party may attempt to save a judgment in its favor on any ground asserted in the district court. Id. at 668. After considering this claim, we reached our second conclusion: ordinance 6 was a valid exercise of the County's police power that did not effect a regulatory taking of Star 14. Id. at 671.

Last, we did not reach the takings claim arising from Star 6 because this claim was not ripe for adjudication. We explained:

Iowa Coal's claim for the Star 6 site fails for a different reason. As noted earlier in this opinion, Iowa Coal held a valid state permit to accept certain wastes at Star 6, and was using the mine as a landfill on a limited basis before the enactment of ordinance 6. The ordinance expressly allows existing nonconforming uses to continue. The record reveals, however, that Iowa Coal never sought to take advantage of this section of the ordinance.

Unless a claimant exhausts available state remedies, a court is without jurisdiction to entertain a claim that the economic viability of the property has been substantially impaired by the zoning ordinance. Iowa Coal's claim as it pertains to Star 6 was not ripe for adjudication. Accordingly, we reverse and remand this claim for dismissal as premature.

Iowa Coal I, 494 N.W.2d at 671-72 (citation omitted).

On August 7, 1990, the County replaced ordinance 6 with ordinance 7. Ordinance 7 is identical to ordinance 6 in all material respects. Ordinance 7 came about because the County incorrectly guessed this court would affirm the district court's ruling in Iowa Coal I. (Our decision in Iowa Coal I came down in 1993.) As we mentioned, the district court had ruled that the County violated Iowa Code section 358A.5 because it failed to adopt a comprehensive plan prior to the enactment of ordinance 6. Both ordinances remain on the books.

During the litigation, Iowa Coal's latest landfilling permits for Star 6 and Star 14 expired. Iowa Coal submitted a renewal application to the IDNR before its last permit for Star 6 expired on January 5, 1990. Iowa Coal also submitted a renewal application to the IDNR for Star 14 before that permit expired in 1991.

In June 1990 Iowa Coal agreed with George Ide and Associates to convey Star...