LD III LLC v. Mapleton City

• Decision Date: 19 March 2020
• Docket Number: No. 20190090-CA,20190090-CA
• Citation: 462 P.3d 816
• Parties: LD III LLC, Appellant, v. MAPLETON CITY, Appellee.
• Court: Utah Court of Appeals

462 P.3d 816

LD III LLC, Appellant,

v.MAPLETON CITY, Appellee.

No. 20190090-CA

Court of Appeals of Utah.

Filed March 19, 2020

Denver C. Snuffer Jr., Attorney for Appellant

Eric T. Johnson and Robert Alan Patterson, Attorneys for Appellee

Judge David N. Mortensen authored this Opinion, in which Judges Kate Appleby and Ryan M. Harris concurred.

Opinion

MORTENSEN, Judge:

¶1 Through the years, a tract of land (Property) in Mapleton, Utah, passed through various hands, eventually ending up in the possession of LD III, LLC (LDIII). When LDIII sought to develop the Property into 176 residential units, the Mapleton city council approved a modification of the applicable zoning ordinance. Mapleton citizens challenged the zoning change, however, and reversed it through a voter referendum. This prompted LDIII to seek a declaratory judgment in the district court, where LDIII lost on summary judgment. We affirm.

BACKGROUND¹

The Original Agreement

¶2 In 2003, Suburban Land Reserve, Inc. (Suburban) owned the Property, which at the time consisted of roughly 245 acres of undeveloped real estate on Mapleton’s east bench. Suburban thereafter entered into a development agreement (Original Agreement) with Mapleton, wherein Suburban conveyed about 76 acres of the Property to Mapleton. In exchange, Mapleton passed an ordinance zoning the remaining approximate 170 acres with a 136-residential-unit maximum density and a TDR-R overlay, meaning it was a receiving site for transferable development rights (TDRs).² Mapleton also granted 77 TDRs to Suburban.

¶3 As relevant to this appeal, the Original Agreement included the following provisions. Section 2 provided for the zone change of the two parts of the Property and for the conveyance of the TDRs to Suburban. Section 6 provided that "the Owner has a vested right to develop a maximum of one hundred thirty-six (136) single family residential units on individual lots." Section 10 stated in full:

10. Assignment of Agreement. Owner’s rights under this Agreement shall be personal to Owner and shall only run with the land so long as Owner or a company which is affiliated with or under common ownership and control of Owner shall own and be the Owner of the Property. In the event that Owner intends to sell the Property or any portion thereof to any other party, Owner shall advise City of such intention. Only upon the express prior written approval by the City, shall any rights of Owner with respect to the portion of the Property being sold be deemed transferred to the new owner thereof. City may withhold such approval in the exercise of its reasonable business judgment, based upon conditions that exist at the time of the transfer, the proposed transferee and the history of the development of the Project prior to such time.

Section 19 also dealt with the Property passing to another entity:

19. Successors and Assigns. This Agreement shall be binding on the successors and assigns of Owner. ... In the event of an approved sale or transfer of the Project, or any portion thereof, the seller or transferor and the buyer or transferee shall be jointly and severally liable for the performance of each of the obligations contained in this Agreement, unless ... [otherwise] approved by City. Alternatively, prior to such approved sale or transfer, Owner shall obtain from buyer or transferee a letter [meeting certain conditions].

Finally, Section 21 provided that "this Agreement or a memorandum providing public notice of the existence of this Agreement shall be recorded immediately as a covenant running with the Property herein described in order to put prospective purchasers or other interested parties on notice as to the terms and provisions hereof."

Transfer of the Property to the Preserve

¶4 Ultimately, Suburban did not develop the Property as planned. In December 2005, Suburban transferred the Property to another entity (Preserve). Pursuant to Section 10 of the Original Agreement, the Mapleton city council approved this transfer. Later on, at the request of the Preserve (LDIII’s predecessor in interest), the city council approved a change of the base zoning of the Property from A-2 with a TDR-R overlay to a base zone of PRC-4 without the TDR-R designation. The PRC-4 zone is a site-specific designation that, in this case, called for a planned residential community and the creation of a 92-unit density cap. See Mapleton, Utah, Mun. Code § 18.82D.110 (2007) ("The total density allowed in the Preserve at Mapleton PRC-4 zone is ninety-two (92) individual building lots and common area buildings. No new subdivision lots shall be permitted beyond those originally approved for the purpose of increasing this density.").³ Mapleton’s zoning maps reflected the changes. The changes were entirely in line with the Preserve’s request; indeed, the Preserve drafted the PRC-4 zone language.

¶5 After obtaining the zoning change it requested, the Preserve executed a promissory note in favor of LDIII. In 2008, LDIII foreclosed on the Property, which still was zoned as PRC-4 with a cap of 92 units, and obtained ownership. Mapleton did not approve of the transfer of ownership of the Property to LDIII, however, either before or after the foreclosure. And LDIII does not contend that it ever obtained written approval of the transfer of ownership.

¶6 In 2017, many years after acquiring the Property, LDIII contracted with another company to develop it. The development company sought approval from Mapleton for a 176-unit development on the Property. In June 2017, the Mapleton city council acceded to the development company’s request and modified the zoning designation of the Property to include a TDR-R overlay and a maximum of 169 units. However, shortly thereafter, Mapleton citizens challenged the Property’s rezoning through a voter referendum. The referendum received the required votes to invalidate the zoning change, and therefore the Property ultimately did not obtain a change in its base zoning, unit-density cap, or TDR-R overlay status.

¶7 LDIII then sought a declaratory judgment from the district court regarding whether pertinent zoning ordinances or the Original Agreement allowed the development plan. LDIII also argued that the referendum was invalid. Mapleton opposed LDIII’s lawsuit and asked the district court to dismiss it on summary judgment. The district court granted Mapleton’s motion and dismissed LDIII’s lawsuit.

¶8 LDIII appeals.

ISSUE AND STANDARD OF REVIEW

¶9 LDIII contends that the district court erred in granting summary judgment to Mapleton. To support this position, LDIII first argues that it benefits from the zoning "density entitlement" set forth in the Original Agreement, claiming that the zoning rights afforded to Suburban in the Original Agreement ran with the land. LDIII alternatively claims that there is an ambiguity as to whether the rights run with the land. LDIII also argues that even if it did not receive its desired zoning through contractual or property rights, it did through Mapleton city council’s 2017 decision to rezone the Property, and it claims that those rights still exist because the referendum overriding that decision was invalid.⁴

¶10 "An appellate court reviews a [district] court’s legal conclusions and ultimate grant or denial of summary judgment for correctness," giving no deference to the district court’s legal conclusions. Jordan Constr., Inc. v. Federal Nat’l Mortgage Ass’n , 2017 UT 28, ¶ 24, 408 P.3d 296 (cleaned up). Summary judgment is appropriate "only when, viewing all facts and reasonable inferences therefrom in the light most favorable to the nonmoving party, there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law." Morra v. Grand County , 2010 UT 21, ¶ 12, 230 P.3d 1022 (cleaned up); see also Utah R. Civ. P. 56(a). We therefore review the district court’s grant of summary judgment to Mapleton for correctness.

ANALYSIS

¶11 LDIII searches for a legal means to increase its developmental density rights through either the Original Agreement or through the 2017 rezoning of the Property and a claimed invalidity of the voter referendum. We address these issues in turn.

I. The Original Agreement

¶12 The district court ruled that any rights under the Original Agreement "did not survive [LDIII’s] foreclosure proceedings." We agree. "As with any contract, we determine what the parties have agreed upon by looking first to the plain language within the four corners of the document." Peterson & Simpson v. IHC Health Services, Inc. , 2009 UT 54, ¶ 13, 217 P.3d 716. "When interpreting the plain language, we look for a reading that harmonizes the provisions and avoids rendering any provision meaningless." Id. (cleaned up). "Harmonizing conflicting or apparently ambiguous contract language before concluding that provisions are actually ambiguous is an important step in the hierarchy of rules for contract interpretation." Gillmor v. Macey , 2005 UT App 351, ¶ 19, 121 P.3d 57. "When the contract provisions are clear and complete, the meaning of the contract can appropriately be resolved by the court on summary judgment." Basic Research, LLC v. Admiral Ins. Co. , 2013 UT 6, ¶ 5, 297 P.3d 578 (cleaned up); see also McEwan v. Mountain Land Support Corp. , 2005 UT App 240, ¶ 16, 116 P.3d 955 ("If language within the four corners of the contract is unambiguous, the parties’ intentions are determined from the plain meaning of the contractual language, and the contract may be interpreted as a matter of law." (cleaned up)).

¶13 Having applied these fundamental steps in our review of the Original Agreement, we conclude that the Original Agreement did not confer zoning rights to LDIII, and the rights enjoyed by Suburban and the Preserve did not run with the land to LDIII. For a covenant to run with the land, as opposed to being a personal covenant, four elements must be met: "(1) the covenant must touch and concern the land affected by the covenant, (2) the...