Northgate Homes, Inc. v. City of Dayton, No. 96-1873

• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)
• Writing for the Court: Before McMILLIAN, JOHN R. GIBSON and MAGILL; McMILLIAN
• Citation: 126 F.3d 1095
• Parties: NORTHGATE HOMES, INC., Appellant, v. CITY OF DAYTON, a municipal corporation, Appellee.
• Decision Date: 08 October 1997
• Docket Number: No. 96-1873

Page 1095

126 F.3d 1095 NORTHGATE HOMES, INC., Appellant,
v.
CITY OF DAYTON, a municipal corporation, Appellee. No. 96-1873. United States Court of Appeals,
Eighth Circuit. Submitted Dec. 9, 1996.
Decided Oct. 8, 1997.

Page 1096

John F. Bonner III, Minneapolis, MN, argued (Bradley A. Kletscher, Minneapolis, MN, on the brief), for appellant.

John M. Baker, Minneapolis, MN, argued (Jessica S. Ware, Minneapolis, MN, on the brief), for appellee.

Before McMILLIAN, JOHN R. GIBSON and MAGILL, Circuit Judges.

McMILLIAN, Circuit Judge.

Northgate Homes, Inc. (Northgate), appeals from a final judgment entered in the United States District Court ¹ for the District

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of Minnesota granting declaratory and injunctive relief to the City of Dayton (City) upon holding that Northgate's sale, display, and storage of manufactured homes on a particular parcel of land constitute an unlawful nonconforming use. ² Northgate Homes, Inc. v. City of Dayton, No. 3-94-178, slip op. at 13 (D.Minn. Mar. 12, 1996) (memorandum and order following bench trial). For reversal, Northgate argues that the district court erred in: (1) granting the City's request for a bench trial on the parties' cross-claims, including claims for declaratory relief, id. (Feb. 2, 1996); (2) holding that Northgate's use is an unlawful nonconforming use, id. (Mar. 12, 1996); and (3) granting the City summary judgment on Northgate's claims of equitable estoppel, breach of contract, due process violations, commerce clause violations, and an unlawful taking without just compensation, id. (Jan. 23, 1996). Upon careful consideration and for the reasons discussed below, we affirm the judgment of the district court.

Jurisdiction was proper in the district court based upon 28 U.S.C. § 1343. Jurisdiction on appeal is proper based upon 28 U.S.C. § 1291. The notice of appeal was timely filed under Rule 4(a) of the Federal Rules of Appellate Procedure.

I. BACKGROUND

Northgate operates a retail business selling manufactured or mobile homes ³ on the premises of a residential mobile home park called Dayton Park (hereinafter "the Dayton Park property") located in the City of Dayton, Minnesota. Ben Dehn and George Hedlund originally developed the Dayton Park property in 1958, pursuant to a permit issued by the City. At that time, the zoning ordinance governing the establishment of mobile home parks did not prohibit the sale of mobile homes on mobile home park property. Beginning in 1969, Dehn and Hedlund sold the Dayton Park property to Kent Kjellberg. Kjellberg thereafter incorporated Dayton Park, Inc.

In 1973, the City passed Ordinance 73-5 and Ordinance 73-6. One of the numerous subdivisions of Ordinance 73-5 prohibits the sale, storage, or display of mobile homes on mobile home park premises. Ordinance 73-6 includes the zoning regulations for areas designated as "R-M" (referring to "residential-mobile"). Neither the sale, storage, nor display of mobile homes is a permitted or conditional use in an area zoned R-M. See Appellee's Appendix at 138 (Ordinance No. 73-6).

In October 1973, the City brought a suit in Minnesota state court against Dayton Park, Inc., for violating Ordinance 73-5. The parties to that state court action stipulated and agreed that the City would issue Dayton Park, Inc., a special use permit allowing it to continue its then-current operations. Appellant's Appendix at 207-12 (Defendant's exhibit 16 (stipulation and agreement dated April 22, 1974)). The state court incorporated the stipulation into an order directing the City to issue to Dayton Park, Inc., the special use permit. Id. at 206 (state court order dated April 30, 1974). In 1977, the State of Minnesota sued Dayton Park, Inc., in state court for violating Ordinance 73-5. The state court in that action held that the 1974 state court order granted Dayton Park, Inc., the variances necessary to continue its operations as they existed on April 30, 1974.

At some point around the mid-1970s, Joel Dunn began selling manufactured homes under the name Black Forest, Inc., from a nine-acre sales lot located on the Dayton Park property. The nine-acre parcel is in an area zoned R-M. In 1978, Dunn reincorporated Black Forest Homes, Inc., as Northgate Homes, Inc. On August 3, 1990, Kathy Greenberg purchased all of Northgate's stock and became its sole owner. Thereafter, Northgate's sales volume, sales staff, and number of display homes exhibited on the sales lot increased dramatically.

In a letter to Northgate dated January 14, 1992, an attorney representing the City stated:

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It has come to my attention that you have created a sales lot on your property with 20 plus manufactured homes stored in the open area.... This is not a permitted use by City Ordinance. I have enclosed a copy of the Ordinance and Zoning Map. Your property is zoned R-M.

The use as a sales lot and storage of homes must be discontinued by March 1, 1992.

A copy of this ordinance will be sent to the City Attorney George Hoff for his information on this matter.

Upon receipt of this letter, Northgate did not discontinue its sales activities on the Dayton Park property. The City agreed not to enforce its zoning ordinances while Northgate applied for a zoning amendment or a conditional use permit (CUP) that would permit its sales operation to continue. After a series of Dayton City Council meetings and public hearings, Northgate's application was denied on June 7, 1993. On February 7, 1994, the City sent Northgate a letter stating that Northgate had until March 8, 1994, to cease its mobile home sales operations on the Dayton Park property and to remove all evidence of the business.

Northgate filed a § 1983 claim against the City in state court and sought injunctive relief. The City removed the case to federal court. Subsequently, Northgate filed an amended complaint seeking declaratory judgment that Northgate's mobile home sales business is a lawful nonconforming use of the Dayton Park property. Northgate claimed that the City's actions amounted to a taking of Northgate's property interest in its business without just compensation, in violation of the Fifth Amendment of the United States Constitution. Additionally, Northgate asserted due process claims under the United States Constitution and the Minnesota constitution, a commerce clause claim, a breach of contract claim, and an equitable estoppel claim. In its answer to Northgate's amended complaint, the City asserted counterclaims seeking declaratory judgment that Northgate's sales and storage of mobile homes on the Dayton Park property constituted an unlawful nonconforming use of the property and requesting that Northgate be enjoined from continuing its business operations at that site.

The City moved for summary judgment. The district court granted the City's motion in part and dismissed most of Northgate's claims. Remaining for trial were the parties' cross-claims for declaratory and injunctive relief on the nonconforming use issue. The City then filed a motion for a trial to the court, which the district court granted. Following a bench trial, the district court rendered the following findings of fact and conclusions of law: Ordinance 73-6 is constitutional and binding ⁴; Northgate's sales operations within the nine-acre sales lot zoned R-M violate Ordinance 73-6; such sales operations were non-existent at the time Ordinance 73-6 became effective; and Northgate's operations on the sales lot therefore constitute an unlawful nonconforming use. Accordingly, the district court permanently enjoined Northgate from operating its sales lot for the sale, display, or storage of manufactured homes in the area of the Dayton Park property zoned R-M. In addition, the district court ordered each party to pay its own costs and attorneys' fees. This appeal followed.

II. DISCUSSION

Denial of jury trial

Northgate argues that the district court violated its Seventh Amendment right to a jury trial by granting the City's motion for a trial to the court. The district court granted the motion upon concluding that any right Northgate had to a jury trial was lost once Northgate's common law damages claims and § 1983 claims were dismissed on summary...