Northpointe Plaza v. City of Rochester

• Decision Date: 22 February 1991
• Docket Number: No. C3-89-1851,C3-89-1851
• Parties: NORTHPOINTE PLAZA, a Minnesota partnership consisting of Jon K. Finstrom and John A. Klopp, Jr., Appellant, v. CITY OF ROCHESTER, Respondent.
• Court: Minnesota Supreme Court

Page 686

465 N.W.2d 686

NORTHPOINTE PLAZA, a Minnesota partnership consisting of Jon K. Finstrom and John A. Klopp, Jr., Appellant, v. CITY OF ROCHESTER, Respondent.

No. C3-89-1851.

Supreme Court of Minnesota.

Feb. 22, 1991.

Syllabus by the Court

1. Respondent's arbitrary conduct in denying appellant's conditional use permit was not sufficiently "egregious," "irrational" or "extraordinary" to support a federal substantive due process claim under 42 U.S.C. Sec. 1983.

2. Appellant's motion to strike portions of respondent's brief was untimely filed and otherwise mooted by the decision in this case.

Thomas B. Humphrey Jr., Andrew J. Mitchell, Larkin, Hoffman, Daly & Lindgren, Ltd., Bloomington, Robert G. Suk, Rochester, for appellant.

Fredrick S. Suhler Jr., Rochester City Atty., Rochester, for respondent.

Heard, considered and decided by the court en banc.

YETKA, Justice.

This case comes before us on an appeal from a decision of the court of appeals which affirmed a trial court decision denying appellant damages allegedly suffered by appellant when the City of Rochester denied a conditional use permit (CUP) for its property. Appellant's action was based on an alleged violation by the city of appellant's due process rights under 42 U.S.C Sec. 1983. We affirm both the trial court and the court of appeals.

A brief statement of facts is necessary. On June 24, 1985, appellant, Northgate Plaza, a partnership consisting of Jon Finstrom and John Klopp, Jr., had arranged a tentative sale of a parcel of property to Ashland Oil, Inc., contingent on respondent, City of Rochester, granting to Superamerica, a subsidiary of Ashland Oil, a CUP to build a gas station and convenience store on the property. At the time the parties entered the agreement, the property was zoned as B1-b (neighborhood business) classification. In order to construct an "automotive service" on the B1-b site, the parties had to obtain a CUP pursuant to Rochester Code of Ordinance (R.C.O.) 61.301. This ordinance provides that a CUP shall not issue unless the Rochester Planning and Zoning Commission determines that:

a. The proposed use will not be detrimental to or endanger the public health, safety, convenience, or general welfare;

b. The proposed use will not be injurious to the use and enjoyment of other property in the neighborhood and will not significantly diminish or impair the values of such property;

c. The proposed use will not impede the normal and orderly development and improvements of the surrounding property;

d. Adequate utilities, parking, drainage, and other necessary facilities will be provided;

e. Adequate ingress and egress will be provided to minimize traffic congestion in the public streets;

f. The traffic generated by the proposed use can be safely accommodated on existing or planned street systems;

g. Adequate measures have been taken or proposed to prevent or control offensive odor, fumes, dust, noise, vibration, or lighting which would otherwise disturb the use of neighboring property; and

h. The applicant for the conditional use will agree to such limitations or conditions as may be deemed appropriate by the approving body, including, but not limited to, such matters as location, construction, maintenance, landscaping, operation, and duration.

R.C.O. 61.301.

The planning and zoning commission denied Superamerica's CUP request in November 1985, but the zoning board of appeals reversed and granted it in December 1985. Neighborhood residents opposed the granting of the CUP. A resident appealed the board's decision to the common council, which reversed the board and denied the CUP in January 1986. The council's expressed basis for denying the CUP for the project was applicant's failure to satisfy conditions (a) through (e) of R.C.O. 61.301.

The major objections to Superamerica's CUP were traffic concerns and the unsuitability of the project to the neighborhood. The only evidence before the council supporting the traffic concerns arising from the project was a letter from Roy Larson, a district engineer for the Minnesota Department of Transportation. Mr. Larson was not a qualified expert as he admitted that his agency "had no direct involvement" with the property in question. He also had a direct conflict of interest in the case as he was a member of the residential opposition group, 37th Street Neighbors' Association; was a property owner in the affected area; and even signed petitions opposing Superamerica's CUP. On the other hand, respondent submitted two reports from a traffic consultant whom the city had previously used on other projects and who concluded that the project would not have a significant impact on traffic and would present no safety concerns. The Olmsted County Consolidated Planning Department staff report also found the application in compliance with R.C.O. 61.301 and, subject to several conditions later agreed to by Superamerica, recommended approval of the application. The council accepted Larson's opinion that traffic problems were presented by the project and completely mischaracterized the planning department's staff report as being opposed to the CUP's while dismissing Superamerica's consultant's contrary reports as based on faulty assumptions that proposed intersection improvements had already been made and that increased ingress and egress would not disrupt traffic.

The objections expressed by the residents were: traffic congestion; size of the project; its desirability as a "neighborhood business"; its proposed 24-hour-a-day operation; increased noise levels; and decrease in nearby residential property values. No experts were used to substantiate the residents' objections. Relying on the neighborhood's concerns, the council cited the "purpose" of the B1-b zoning classification found in R.C.O. 65.202 ¹ to deny Superamerica's CUP, concluding that the project, as neither "required" nor "desirable," did not fit within this purpose.

After the common council denied the CUP in January 1986, Ashland Oil declined to buy the property, for which they had offered to pay $355,000. Appellant found another potential purchaser who agreed to a price of $312,500. The trial court found that in June 1986, within 6 months of Superamerica's CUP denial, the planning and zoning commission granted a CUP allowing the new owner to build "not only a gas station/convenience store on the site, but a shopping center as well." This use had the potential of producing more traffic than Superamerica's proposed use. In fact, appellant's expert offered uncontroverted testimony that the existing development generates approximately 50 percent more traffic at peak hours than was estimated for the Superamerica proposal. The sale of the land to the new owner was closed in September 1986, and by the time of trial in December 1988, the "Rochester Convenience Center" had been built, complete with a PDQ gas station/convenience store, a restaurant with drive-through windows, a child care center, a dry cleaner, a chiropractor's office, a video rental store and two other retail establishments. The local residents apparently preferred the strip mall arrangement because they did not oppose the second application.

Appellant filed a complaint on December 24, 1987, consisting of seven causes of action, but by the close of trial, the existing theories of recovery were: (1) claims under 42 U.S.C. Sec. 1983 alleging violations of procedural and substantive due process and equal protection rights; (2) a claim for tortious interference with contract; and (3) a claim for attorney fees pursuant to 42 U.S.C. Sec. 1988. The Olmsted County District Court originally held that appellant was entitled to recover $65,081.33 in damages solely on the ground that the city's "arbitrary" denial of a CUP for appellant's property was a violation of appellant's right to substantive due process and was actionable under 42 U.S.C. Sec. 1983 and awarded $31,140 in attorney fees and $1,876.44 in costs and disbursements pursuant to 42 U.S.C. Sec. 1988. In a post-trial motion, respondent moved for amended findings or a new trial principally because the Minnesota federal district court, Queen Anne Courts v. City of Lakeville, 726 F.Supp. 733 (D.Minn.1989), had held in the interim that arbitrary zoning decisions are not violations of substantive due process rights under 42 U.S.C. Sec. 1983. The Olmsted County District Court, believing this federal decision to be controlling, amended its original conclusions of law and judgment to hold that appellant should not recover from respondent, for the city's conduct was not one of the "egregious and extraordinary cases" which, under Queen Anne, implicates rights of the appellant guaranteed and protected by the United States Constitution.

The court of appeals, in affirming the lower court, found that the bases of the respondent's denial of the CUP--"traffic concerns" and "neighborhood opposition"--were "arbitrary," Northpointe Plaza v. City of Rochester, 457 N.W.2d 398, 401 (Minn.App.1990), and concluded that, while the court was not bound by Queen Anne, id. at 403, the "public policy of having state courts refrain from recognizing constitutional causes of action which the federal courts have denied" encouraged adherence to Queen Anne. Id. Thus, the court of appeals followed Queen Anne in holding that a zoning decision which results in an arbitrary denial of a CUP does not rise to the level of a substantive due process violation. Id. at 404. This appeal followed. Appellant has since moved to strike respondent's effort first raised on appeal to contest the trial judge's findings that the city acted arbitrarily.

The issue raised on appeal is whether the City of Rochester's denial of Superamerica's application for a CUP constitutes a violation of appellant's constitutional right to substantive due process under 42 U.S.C. Sec. 1983.

Whether a substantive due process claim may arise from a denial of a zoning permit is a...