Metropolitan Development Com'n of Marion County v. I. Ching, Inc.

Decision Date28 March 1984
Docket NumberNo. 4-283A56,4-283A56
Citation460 N.E.2d 1236
PartiesThe METROPOLITAN DEVELOPMENT COMMISSION OF MARION COUNTY, Appellant (Plaintiff Below), v. I. CHING, INC., Appellee (Defendant Below).
CourtIndiana Appellate Court

Larry F. Whitham, Asst. Corp. Counsel, Indianapolis, for appellant.

William F. LeMond, LeMond, Carson, Yockey, Pehler & Caplin, Indianapolis, for appellee.

YOUNG, Judge.

The Metropolitan Development Commission of Marion County (the Commission) brought suit under Ind.Code 36-7-4-1015 (1982) to enjoin the defendant, I. Ching, Inc., from using its property in violation of the Marion County Dwelling District Zoning Ordinance. In its defense, I. Ching claimed that the zoning ordinance was unconstitutional as applied to its property. The trial court agreed and entered judgment in I. Ching's favor. The Commission appeals, claiming that the trial court erred in allowing I. Ching to raise this defense without exhausting its administrative remedies and that I. Ching failed to prove the ordinance was unconstitutional as applied.

We reverse.

The facts relevant to this appeal are as follows. In 1981, I. Ching purchased the real estate at issue here, a large commercial building on the north side of downtown Indianapolis. The zoning classification of this property is residential. Through the past fifty years, however, previous owners have secured variances to use the property as a garage, a taxi cab company, and (in the late 1950's) a bowling alley with a cocktail lounge. The building is unsuitable for residential use. Since the 1960's the neighborhood has suffered some deterioration. As a result, the bowling alley fell into disuse in the mid-70's, after which the adjoining cocktail lounge became the primary business. After purchasing this property I. Ching continued to operate it as a cocktail lounge and began work to install dining and entertainment facilities in what was formerly the bowling area. At this point, the Commission brought this suit for an injunction, alleging that I. Ching had not obtained an Improvement Location Permit and that the zoning ordinance did not allow the property to be used exclusively as a cocktail lounge or night club. At trial, I. Ching raised the defense that the zoning ordinance was unconstitutionally confiscatory, since it precluded any reasonable use of the property. In response, the Commission argued that this constitutional claim could not be raised in court until I. Ching had exhausted its administrative remedies by seeking a variance. The trial court ruled in favor of I. Ching, and this appeal ensues.

The pivotal issue in this case is whether I. Ching's failure to seek a variance precluded it in this enforcement action from raising the defense that the zoning ordinance left it no reasonable use for its property. It is well settled that a zoning ordinance that permanently "precludes [the landowner's] use of his property for any purpose to which it is reasonably adapted" is unconstitutional as a confiscation of property without just compensation. Metropolitan Board of Zoning Appeals v. Gateway Corp., (1971) 256 Ind. 326, 335, 268 N.E.2d 736, 742; Town of Homecroft v. Macbeth, (1958) 238 Ind. 57, 148 N.E.2d 563; Metropolitan Board of Zoning Appeals v. Sheehan Construction Co., (1974) 160 Ind.App. 520, 313 N.E.2d 78. It is equally well settled that landowners seeking to raise this issue must exhaust their administrative remedies by presenting the constitutional issue to the Board of Zoning Appeals before invoking the aid of the courts. City of East Chicago v. Sinclair Refining Co., (1953) 232 Ind. 295, 111 N.E.2d 459; English v. City of Carmel, (1978) 178 Ind.App. 140, 381 N.E.2d 540. 1

It remains unclear, however, whether this exhaustion requirement applies when the one asserting the ordinance's unconstitutionality is the defendant in a suit to enforce the ordinance, rather than a plaintiff seeking a declaratory judgment. A recent decision of this Court has indicated in dicta that the exhaustion requirement does apply against such defendants. Field v. Area Plan Comm'n, (1981) Ind.App., 421 N.E.2d 1132, 1138-39 n. 5. For the reasons that follow, we believe this decision states the law correctly. Thus, we agree with the Commission that I. Ching's failure to seek a variance precluded it in this enforcement action from challenging the constitutionality of the zoning ordinance as applied.

We note initially that some courts view the doctrine of exhaustion as "wholly misapplied" where it is invoked not against a plaintiff, but against the defendant in an enforcement action. United States v. McCrillis, (1st Cir.1952) 200 F.2d 884, 885; Smith v. United States, (1st Cir.1952) 199 F.2d 377; see Clinkenbeard v. United States, (1874) 88 U.S. (21 Wall.) 65, 22 L.Ed. 477. The better rule, however, seems to be that, although the doctrine of exhaustion should be applied carefully in such cases to avoid harsh results, McKart v. United States, (1969) 395 U.S. 185, 197, 89 S.Ct. 1657, 1664, 23 L.Ed.2d 194, the rule is as applicable to defendants as it is to plaintiffs. La Verne Co-op. Citrus Ass'n v. United States, (9th Cir.1944) 143 F.2d 415; United States v. LaFroscia, (S.D.N.Y.1973) 354 F.Supp. 1338, aff'd, 485 F.2d 457; Ulman v. United States, (1977) 558 F.2d 1, 214 Ct.Cl. 308; Town of Garner v. Weston, (1965) 263 N.C. 487, 139 S.E.2d 642; Township of Honey Brook v. Alenovitz, (1968) 430 Pa. 614, 243 A.2d 330. The rationale is that the considerations of administrative autonomy supporting the doctrine of exhaustion are equally persuasive whether it is applied to a plaintiff or a defendant. La Verne Co-op., supra. Based on these cases, we believe that the doctrine of exhaustion may properly be applied against the defendant in a suit to enforce an administrative rule or order.

Consistent with this general rule, numerous courts have held that where, as here, administrative relief is available from allegedly unconstitutional zoning restrictions, the alleged unconstitutionality generally may not be raised as a defense by one who has failed to seek such relief. County of Pine v. State, (1979) Minn., 280 N.W.2d 625; People v. Calvar Corp., (1941) 286 N.Y. 419, 36 N.E.2d 644; City of Elizabeth City v. LFM Enterprises, Inc., (1980) 48 N.C.App. 408, 269 S.E.2d 260; Township of Honey Brook v. Alenovitz, (1968) 430 Pa. 614, 243 A.2d 330; Provo City v. Claudin, (1936) 91 Utah 60, 63 P.2d 570; 3 A. RATHKOPF & D. RATHKOPF, THE LAW OF ZONING AND PLANNING Sec. 45.04 (4th ed. 1983).

It is true that some courts have held that the defendant in an enforcement suit may challenge the zoning law's validity without exhausting administrative remedies. These decisions rest on the theory that exhaustion would be futile in such a case, either because the administrative agency is powerless to decide the constitutionality of the laws it enforces, United States v. Kissinger, (3d Cir.1958) 250 F.2d 940, Yakima County Clean Air Authority v. Glascam Builders, Inc., (1975) 85 Wash.2d 255, 534 P.2d 33, or because, by seeking enforcement, the agency has shown it believes the law is valid. Board of County Commissioners v. Goldenrod Corp., (1979) 43 Colo.App. 221, 601 P.2d 360; County of Lake v. MacNeal, (1962) 24 Ill.2d 253, 181 N.E.2d 85; Johnson's Island, Inc. v. Board of Township Trustees, (1982) 69 Ohio St.2d 241, 431 N.E.2d 672.

Under Indiana law, however, it would not be futile for a landowner to present a constitutional issue to the Board of Zoning Appeals. The Board clearly has the power to rule on a claim that the zoning ordinance is unconstitutional as applied. Metropolitan Board of Zoning Appeals v. Gateway Corp., (1971) 256 Ind. 326, 268 N.E.2d 736. Indeed, a primary function of the Board's power to grant variances is to provide an "escape hatch" to prevent the zoning ordinances from being confiscatory and thus unconstitutional. Strange v. Board of Zoning Appeals, (1981) Ind.App., 428 N.E.2d 1328, 1331. Furthermore, under Indiana law, actions to enforce the zoning laws are brought not by the Board but, as here, by the Metropolitan Development Commission, an entirely distinct body. Ind.Code 36-7-4-1014 (1982). Thus, the filing of an enforcement action by the Commission in no way indicates that the Board of Zoning Appeals believes the ordinance being enforced is valid. For these reasons, exhaustion of administrative remedies is not a futile act in cases such as this one, and the decisions cited above holding exhaustion is not required are inapplicable.

Having decided that the doctrine of exhaustion generally applies to cases such as this one, we must now determine whether the trial court's decision to let I. Ching present its constitutional defense was justified by some exception to the general exhaustion requirement. Such exceptions are most often made where recourse to the administrative agency would be futile or would cause irreparable harm, Bowen v. Sonnenburg, (1980) Ind.App., 411 N.E.2d 390, 403, or where the only issue is a purely legal one such as the facial validity of a statute. Id.; Wilson v. Review Board of the Indiana Employment Security Division, (1979) 270 Ind. 302, 305, 385 N.E.2d 438, 441, cert. denied, 444 U.S. 874, 100 S.Ct. 155, 62 L.Ed.2d 101. We do not, however, apply the rule mechanistically. Rather, in deciding whether exhaustion of administrative remedies should be required in a given case, we consider the reasons underlying the rule:

... the character of the question presented and the competency of the administrative agency to answer that question; the avoidance of premature interruption of the administrative process in recognition of the interest of the agency in developing a factual record upon which to exercise its discretion and apply its expertise without the threat of litigious interference; the interest in permitting an agency to correct its own errors, a process by which unnecessary judicial proceedings are obviated; and the avoidance of deliberate...

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