Stagecoach Trails MHC, L.L.C. v. City of Benson

• Decision Date: 05 March 2013
• Docket Number: No. CV–12–0241–PR.,CV–12–0241–PR.
• Citation: 231 Ariz. 366,295 P.3d 943,655 Ariz. Adv. Rep. 26
• Parties: STAGECOACH TRAILS MHC, L.L.C., Plaintiff/Appellee, v. CITY OF BENSON, a municipal corporation; City of Benson Board of Adjustment, a body politic; and Brad Hamilton, Zoning Administrator for the City of Benson, Defendants/Appellants.
• Court: Arizona Supreme Court

231 Ariz. 366

295 P.3d 943

655 Ariz. Adv. Rep. 26

STAGECOACH TRAILS MHC, L.L.C., Plaintiff/Appellee,

v.CITY OF BENSON, a municipal corporation; City of Benson Board of Adjustment, a body politic; and Brad Hamilton, Zoning Administrator for the City of Benson, Defendants/Appellants.

No. CV–12–0241–PR.

Supreme Court of Arizona, En Banc.

March 5, 2013.

Lewis and Roca LLP By John C. Hinderaker, Kimberly A. Demarchi, Jeffrey L. Sklar, Tucson, Attorneys for Stagecoach Trails MHC, L.L.C.

Sims Murray By Jeffrey T. Murray, Kristin M. Mackin, Phoenix, Attorneys for City of Benson, City of Benson Board of Adjustment, and Brad Hamilton.

League of Arizona Cities and Towns By Joni L. Hoffman and Sorensen Law, PLLC By Lesli Sorensen, Phoenix, Attorneys for Amicus Curiae League of Arizona Cities and Towns.

OPINION

BALES, Vice Chief Justice.

¶ 1 This case involves Stagecoach Trails MHC, L.L.C.'s quest for a permit to install a new home in its manufactured home park after a space became vacant. A key issue is whether the entire park, or only an individual space therein, is a nonconforming use, exempt under A.R.S. § 9–462.02(A) from complying with provisions of the City of Benson's zoning code. The trial court ruled that the entire park is a nonconforming use, but the court of appeals declined to address that issue, ruling that the trial court lacked jurisdiction over certain claims because they had not been administratively exhausted.

¶ 2 We hold that the trial court properly exercised jurisdiction. Accordingly, we vacate the opinion of the court of appeals and remand to that court to consider, among any other issues, whether the park as a whole or an individual space is the nonconforming use. We also hold that Stagecoach is not entitled to an award of attorney fees under A.R.S. § 12–2030 because this is not a mandamus action.

I.

¶ 3 Stagecoach operates a 50–space manufactured home park in Benson. In 1998, the City amended § 16 of the Benson Zoning Regulations to increase the size and setback requirements for spaces within manufactured home parks. The City did not initially apply the amendments to existing parks, but it notified park operators in 2009 that it would begin enforcing the requirements when individual homes were replaced.

¶ 4 Municipal zoning regulations are subject to A.R.S. § 9–462.02(A), which provides that “[n]othing in [such regulations] shall affect existing property or the right to its continued use for the purpose used at the time the ... regulation takes effect, nor to any reasonable repairs or alterations in buildings or property used for such existing purpose.” The right to continue a nonconforminguse, however, does not authorize a different use inconsistent with zoning regulations. Outdoor Sys., Inc. v. City of Mesa, 169 Ariz. 301, 308, 819 P.2d 44, 51 (1991); Patricia E. Salkin, 2 American Law of Zoning § 12.36 (5th ed.2012).

¶ 5 In January 2010, Stagecoach applied for a permit to install a manufactured home on space 27 after the space became vacant. The City's zoning administrator denied the application, asking Stagecoach to show that the home would comply with amended § 16 because, under § 18 of the City's zoning regulations, a new building must conform to existing regulations when it replaces a building that was a nonconforming use. The zoning administrator directed Stagecoach to show, among other things, that the new manufactured home would meet setback requirements applicable to lots in an R–3 District and have two improved parking spaces. (Apart from § 16, the City's zoning code in § 7 identifies requirements for areas designated as R–3 Residential Districts.)

¶ 6 Stagecoach appealed the permit denial to the City's Board of Adjustment (“BOA”), arguing that the entire park is a nonconforming use under § 9–462.02(A) and that it was entitled to replace an individual home without relinquishing the nonconforming-use status. Rejecting this argument, the BOA agreed with the City that the particular space was the nonconforming use and affirmed the zoning administrator's denial of the permit.

¶ 7 Stagecoach then filed a two-count special action in superior court. Count I asked the court to declare the amended § 16 invalid, to direct the zoning administrator to process or grant the permit without applying that section, and to award Stagecoach its attorney fees and costs under § 12–2030. Count II appealed the BOA's decision under A.R.S. § 9–462.06(K), arguing that even if the amendments to § 16 were valid, the regulation did not apply because the park was a nonconforming use under § 9–462.02(A) and § 18 of the Benson zoning regulations.

¶ 8 After Stagecoach sued, the City acknowledged that the amendments to § 16 had not been properly adopted. The zoning administrator then sent Stagecoach a letter in July 2010 stating that the permit application had been reconsidered without regard to the amended § 16 and was being denied because the site plan did not, among other things, show that space 27 would conform to the setback requirements for the R–3 District.

¶ 9 The City filed a motion asking the trial court to declare Count I moot because, regardless of the validity of the amended § 16, the City would not issue the permit. The court denied the motion and, instead, granted partial summary judgment to Stagecoach, ruling that the 1998 amendments to § 16 were void. Stagecoach then filed a supplemental special action complaint challenging the reasons for denial outlined in the City's July 2010 letter and asking the court to direct the zoning administrator to issue the permit.

¶ 10 The City issued another letter to Stagecoach in September 2010, again explaining that space 27 did not comply with the City's zoning requirements for an R–3 District. With regard to the denial of the permit, the September 2010 letter was identical to the January 2010 letter except the September letter (1) did not refer to size requirements for individual spaces imposed by the amended § 16, (2) explained how R–3 setback requirements should be measured, and (3) required Stagecoach to identify one improved parking space instead of two. Stagecoach filed a second supplemental special action complaint challenging the permit denial in the September 2010 letter.

¶ 11 The trial court denied the City's motions to dismiss the supplemental special action complaints. It ruled that the BOA had considered not only the application of amended § 16, but also whether Stagecoach had a right to place a new manufactured home on space 27 as a nonconforming use. Accordingly, the trial court ruled that Stagecoach had properly exhausted its administrative remedies and was not required to bring the issues raised in the zoning administrator's two additional letters before the BOA. The court ordered the City to issue the permit, characterizing the order as equitable relief in the nature of mandamus, and awarded attorney fees and costs to Stagecoach.

¶ 12 The City appealed. The court of appeals reversed the trial court's denial of the City's motion to dismiss the two supplemental special action claims, its grant of mandamus relief, and its award of attorney fees. Stagecoach Trails MHC, L.L.C. v. City of Benson, 229 Ariz. 536, 543 ¶ 27, 278 P.3d 314, 321 (App.2012). Noting that judicial review of BOA decisions is limited to the record before the board at the time of its decision, seeA.R.S. § 9–462.06(K), the court of appeals stated that the BOA had not considered whether space 27 would have been a legal use before the adoption of the amended § 16. Stagecoach, 229 Ariz. at 539–40 ¶¶ 15, 17–18, 278 P.3d at 317–18. It therefore held that the trial court did not have jurisdiction to consider the letters of July and September 2010 outlining additional reasons for denying the permit because those issues had not been administratively exhausted under § 9–462.06. Id. at 540–41 ¶ 19, 287 P.3d at 318–19. Because Stagecoach had not obtained relief in the nature of mandamus, the court of appeals also held that the trial court erred in granting mandamus relief and awarding attorney fees under A.R.S. § 12–2030. Id. at 542 ¶¶ 23–24, 287 P.3d at 320.

¶ 13 We granted Stagecoach's petition for review to address the exhaustion requirement and the recovery of fees under § 12–2030. We have jurisdiction under Article 6, Section 5(3) of the Arizona Constitution and A.R.S. 12120.24.

II.

¶ 14 A party must exhaust available administrative remedies “before appealing to the courts.” Minor v. Cochise Cnty., 125 Ariz. 170, 172, 608 P.2d 309, 311 (1980). Consistent with this principle, trial courts generally lack jurisdiction to review challenges to a zoning administrator's decision that have not been appealed to the board of adjustment. See, e.g., Neal v. City of Kingman, 169 Ariz. 133, 136, 817 P.2d 937, 940 (1991) (holding that under § 9–462.06, a trial court can only review claims litigated before the board of adjustment and may not review additional claims not raised before the board); Sw. Soil Remediation, Inc. v. City of Tucson, 201 Ariz. 438, 442 ¶ 16, 36 P.3d 1208, 1212 (App.2001) (holding that trial court lacked jurisdiction over claims in supplemental complaint seeking to challenge zoning administrator's decision without first appealing to board of adjustment). The court of appeals relied on this rule to conclude that the trial court lacked jurisdiction to review the zoning administrator's denial of a permit in the July and September 2010 letters. Stagecoach, 229 Ariz. at 540 ¶¶ 17–18, 278 P.3d at 318.

¶ 15 We agree with the trial court that Stagecoach was not required to appeal again to the BOA after the zoning administrator reaffirmed his earlier denial of a permit. The parties, although differing on many issues, have consistently recognized that a key issue is whether the entire park or instead an individual space is the nonconforming use. Stagecoach has never argued that the new manufactured home on space 27 will comply with the R–3 setback requirements or any...