Outdoor Systems, Inc. v. City of Mesa

• Decision Date: 15 October 1991
• Docket Number: No. CV-90-0198-CQ,CV-90-0198-CQ
• Citation: 169 Ariz. 301,819 P.2d 44
• Parties: OUTDOOR SYSTEMS, INC., an Arizona corporation; Milton Lee, Trustee for the Danny O. Lee Trust, Plaintiffs/Appellees/Appellants, v. CITY OF MESA, an Arizona municipal corporation, Defendant/Appellant/Appellee. WHITECO METROCOM, INC., an Indiana corporation, Plaintiff/Appellant, v. CITY OF TUCSON, an Arizona municipal corporation, Defendant/Appellee.
• Court: Arizona Supreme Court

Page 44

819 P.2d 44

169 Ariz. 301

OUTDOOR SYSTEMS, INC., an Arizona corporation; Milton Lee, Trustee for the Danny O. Lee Trust, Plaintiffs/Appellees/Appellants, v. CITY OF MESA, an Arizona municipal corporation, Defendant/Appellant/Appellee.

WHITECO METROCOM, INC., an Indiana corporation, Plaintiff/Appellant, v. CITY OF TUCSON, an Arizona municipal corporation, Defendant/Appellee.

No. CV-90-0198-CQ.

Supreme Court of Arizona, In Banc.

Oct. 15, 1991.

[169 Ariz. 302] Beus, Gilbert & Morrill by Martin A. Aronson, Mark C. Dangerfield, Phoenix, for Outdoor Systems, Inc. and Milton Lee.

Shelley, Turley, Swan & Bethea by J. LaMar Shelley, Mesa, for City of Mesa.

Lewis and Roca by John N. Iurino, Susan M. Freeman, Gary Dukarich, Tucson, for Whiteco Metrocom, Inc.

Bradford C. Detrick, City of Tucson Deputy Atty., and Gabroy, Rollman & Bosse, P.C. by John Gabroy, Lyle D. Aldridge, Tucson, for City of Tucson.

OPINION

CORCORAN, Justice.

The United States Court of Appeals for the Ninth Circuit, 902 F.2d 1579, 902 F.2d 1580, has certified to this court the following questions of law:

1. Does the City of Mesa sign code, in prohibiting all off-site billboards, exceed the authority delegated to the city by A.R.S. § 9-462.01(A)(2)?

2. Do the City of Mesa and City of Tucson sign codes, in requiring the removal of preexisting nonconforming billboards before a landowner may develop or change the use of the property on which the sign is located, impermissibly remove nonconforming uses without purchase or condemnation, in violation of A.R.S. § 9-462.02?

These questions raise difficult and important issues of state law for which there is no controlling authority, and their determination might obviate the need for the Ninth Circuit Court of Appeals to reach constitutional questions. Therefore, we accept jurisdiction pursuant to Ariz. Const. art. 6, § 5(6); A.R.S. § 12-1861; and rule 27(a), Rules of the Arizona Supreme Court.

For the reasons stated below, we answer both questions in the negative.

FACTS AND PROCEDURAL HISTORY

The questions certified to us originate in three separate appeals to the Ninth Circuit Court of Appeals challenging the validity of municipal ordinances regulating billboards. We will consider the facts relating to each appeal separately.

1. Outdoor Systems, Inc.

Outdoor Systems, Inc. (Outdoor) is an Arizona corporation that leases advertising space on its billboards located throughout the Phoenix metropolitan area, including the City of Mesa. Milton Lee is the trustee for the Danny O. Lee Trust (Trust and Outdoor are collectively referred to as Outdoor). The Trust owns certain property in Mesa and leases a portion of that property to Outdoor for use as a billboard site.

Mesa amended its sign code in 1986 to prohibit all "off site" ¹ signs or billboards. Mesa City Code § 4-4-4(B)(1)(e) (as amended 1986) ("Signs which are prohibited under this Code except as nonconforming uses, include: ... (e) Off site signs (billboards), as defined in Section 4-4-5"). By the terms of § 4-4-10(A)(1), any sign that is otherwise lawful, but does not conform to the city requirements at the time of the adoption of the ordinance or any amendment or extension thereto, "shall be deemed a nonconforming sign...." A nonconforming sign "shall not be altered, reerected, relocated or replaced unless it is brought in compliance with the requirements of the Code." § 4-4-10(C)(2). Upon adoption of the 1986 amendments, Outdoor's billboard became a legal nonconforming use. For an in-depth discussion on the law governing nonconforming uses, see Rotter v. Coconino County, 169 Ariz. 269, 818 P.2d 704 (Sup.Ct.1991).

After the enactment of the 1986 amendments to the Mesa code, the Trust applied to Mesa for a permit to construct a sports complex (including batting cages, trampolines, a video arcade, etc.) on the Trust property. Mesa refused to issue the permit unless Outdoor removed its nonconforming sign from the Trust property. Section 4-4-4(B)(2) of the amended code provides that "[a]ny construction permit which invokes Certificate of Occupancy requirements shall specify and require that any Prohibited Sign located within the boundaries of the development site authorized by said permit shall be removed." Mesa also refused to pay compensation for the destruction of Outdoor's billboard.

Outdoor filed suit in federal district court in Arizona challenging Mesa's refusal to issue permits for the proposed sports complex. ² On cross-motions for summary judgment, the district court held that Mesa could not constitutionally require the removal of Outdoor's nonconforming billboard as a condition for granting the construction permit for the sports complex. The district court, however, rejected Outdoor's first amendment arguments and its claim that the Mesa sign code exceeds the zoning authority conveyed by the enabling act, A.R.S. § 9-462.01(A)(2). The court did not rule on Outdoor's claim that the code permitted the termination of a preexisting nonconforming use without compensation, in violation of § 9-462.02.

Mesa appealed the district court's ruling on the "takings" claim, while Outdoor cross-appealed the district court's other findings. After briefing and oral argument, the Ninth Circuit Court of Appeals certified the two questions before us today. The Court of Appeals did not certify the constitutional issues raised in either appeal.

2. Whiteco Metrocom, Inc.

Whiteco Metrocom, Inc. is a lessor of advertising space on billboards located in the City of Tucson. Like Outdoor, Whiteco leases small areas of land from property owners, erects billboards on the leased parcels, and then leases the billboard space to customers.

In 1985, Tucson enacted a sign code regulating the permissible size, location, and height of signs. The code also classified signs as either "on-site" or "off-site." An "off-site" sign is one that relates "to a business, activity, use, or service conducted off the site or to a product not sold on the site." Tucson City Code § 3-39(3) (as amended 1985) (defining billboards). See also Tucson City Code § 3-6(15) (an "on-site" sign is one that advertises or identifies a use or activity which occurs on the same premises as the sign). The code permits "off-site" signs only within certain zoning classifications. Tucson City Code § 3-39(3)(6) (listing prohibited locations). The code also requires nonconforming billboards existing before the code enactment in 1985 to be removed in a variety of circumstances, including the development of any previously undeveloped billboard site. Specifically, § 3-39(3)(6)(b), the so-called "vacant lot" provision, provides that "[b]illboards are prohibited on any developed property. Any existing billboard must be removed before a Certificate of Occupancy will be issued for a development on a previously undeveloped parcel...."

Claiming that Tucson's "vacant lot" provision forced it to remove more than 20 billboards, Whiteco filed suit in federal district court seeking to avoid additional billboard removals. Both Whiteco and Tucson filed motions for summary judgment. The district court held that the Tucson ordinance violated Whiteco's first amendment rights, but rejected Whiteco's claim that the ordinance exceeds the authority granted by A.R.S. § 9-462.02. Following an amendment to the Tucson ordinance granting additional protection for noncommercial speech, Tucson filed a second motion for summary judgment. The district court modified its earlier decision and granted judgment for Tucson on all claims.

Whiteco appealed, and the Ninth Circuit Court of Appeals certified to this court Whiteco's question concerning § 9-462.02. The Court of Appeals joined Whiteco's claim with the same statutory question certified from the appeal filed by Outdoor.

DISCUSSION

1. A.R.S. § 9-462.01(A)(2)

Mesa does not dispute that Outdoor's billboard constitutes a legal nonconforming use. The parties also agree that a municipality's zoning authority derives from the state zoning enabling act, commonly referred to as the Urban Environment Management Act (UEMA), A.R.S. §§ 9-461 and -462. Circle K Corp. v. City of Mesa, 166 Ariz. 464, 467, 803 P.2d 457, 460 (App.1990), citing City of Scottsdale v. Superior Court, 103 Ariz. 204, 207, 439 P.2d 290, 293 (1968). The first question we must answer is whether Mesa's sign code, which prohibits all off-site billboards, exceeds the city's authority granted by the UEMA. Section 9-462.01(A) of that act provides:

[T]he legislative body of any municipality by ordinance may in order to protect and promote the public health, safety and general welfare:

....

2. Regulate signs and billboards.

3. Regulate location, height, bulk, number of stories and size of buildings and structures, the size and use of lots, yards, courts and other open spaces, the percentage of a lot which may be occupied by a building or structure, access to incident solar energy and the intensity of land use.

We begin by noting that once the UEMA grants zoning authority to a city, such power "must be exercised within the limits and in the manner prescribed in the grant and not otherwise." City of Scottsdale v. Scottsdale Associated Merchants, Inc., 120 Ariz. 4, 5, 583 P.2d 891, 892 (1978) (hereinafter Associated Merchants ). For this reason, and also because zoning enactments exist in derogation of property rights, courts must strictly construe zoning ordinances. Id. We have also recognized, however, that zoning enactments constitute legislative action. As such, they are generally "cloaked with a presumption of validity." City of Tempe v. Rasor, 24 Ariz.App. 118, 119, 536 P.2d 239, 240 (1975). See also Transamerica Title Ins. Co. v. City of Tucson, 23 Ariz.App. 385, 387, 533 P.2d 693, 695 (1975).

Here, Outdoor argues that Mesa's power to "regulate" billboards under the UEMA does not encompass the power to "prohibit" off-site billboards, just as the power given a state agency to regulate a professional or business...