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Saturday, February 2, 2013

Some Uses Just Don't Belong: Land Use Law and "Caddyshack"

Introduction

The South Carolina Supreme Court recently issued Dunes West Golf Club v. Town of Mt. PleasantJustice Kittredge, writing for a unanimous court, (and in an opinion footnoted as heavily as a David Foster Wallace essay) affirmed the trial court's grant of summary judgment to the Town of Mt. Pleasant (Town).   Dunes West Golf Club (Dunes West) had challenged both a zoning change that prevented residential development on all golf courses in Mount Pleasant, as well as the Town's subsequent denial of Dunes West's request to rezone its golf course property in order to allow residential development.

Of course I, like other arrested adolescents of my vintage, can't even see or hear the word "golf", much less read an opinion about zoning and land use in and around golf courses, without conjuring up characters, images and quotes from the 1980 movie Caddyshack, and the friendly environs of the Bushwood Country Club. (This affectation has threatened to bleed over into the courtroom, as more than once I have fought the urge to say "Your honor, Your Honor.")
 
As a result, the following is what happens when the Bar meets Bushwood, takings meets Ty Webb, due process meets Danny Noonan, zoning meets D'Annunzio . . . you get the idea.  Let me make clear that in no way am I comparing any of the parties in this case to characters in the movie.  I don't know any of the people involved in these facts.

Background

"Cemeteries and golf courses are the worst uses of real estate."  Al Czervik.

The Town, no stranger to zoning controversies (see for example Ion v. Town of Mt. Pleasant), caught wind of a trend where golf courses were being converted into residential home sites. At the time, Dunes West and other developments were zoned as "planned development districts," a flexible designation that allowed golf courses that were part of larger developments to be converted to residential development without approval by the Town-- subject to limited setback and density requirements.   These planned development districts were first authorized as part of the South Carolina Local Government Comprehensive Planning Enabling Act of 1994 (the "Act").

The Town, through its planning commission,  proposed an ordinance (Ordinance) creating a new zoning district- the Conservation Recreation Open Space (CR-O)-- that would apply to all golf courses in the Town and prohibit uses inconsistent with that open space designation (e.g. residential development).

The Ordinance went through the process mandated by Section 6-29-760 of the Act and the Town Ordinances, including consideration by the planning commission and the Town Council, and was enacted over Dunes West's objection.  The Ordinance changed the zoning for all of the Dunes West property on or near its golf course (the "Golf Course Property") from DWPD to CR-O.  As a result, Dunes West could not develop the Golf Course Property without rezoning it, which would require consideration by the planning commission and approval by the Town.

Dunes West's Rezoning Requests


"[I]f I kill all the golfers, they'll lock me up and throw away the key."  Carl Spackler.

Dunes West, recognizing that only legal means could allow it to put more houses on the Golf Course Property, submitted two different zoning requests seeking designations permitting houses to be built near the golf course.  One of several alternatives considered by Dunes West (before and after the rezoning requests) involved demarcating certain "out-of-bounds" areas suitable for lots.


Out-of-bounds, of course, was where the Havercamps spent the balance of their afternoons while attempting to play the Bushwood course.

The rezoning requests "prompted spirited debate," and widespread opposition.  The planning commission, acting in its advisory capacity, recommended in both instances that the requests be denied based on the factors for a rezoning set out in the Town's development regulations.  Dunes West withdrew its first request prior to its consideration by the Town Council, and the Town Council denied the second request.

Dunes West then filed an action in state court alleging that the actions of the Town in rezoning the Golf Course Property to CR-O and denying Dunes West's rezoning requests were illegal. 

Dunes West's Claims

Equal Protection

"I think this place is restricted Wang, so don't tell 'em you're Jewish. Okay, fine." -Al Czervik.

While Bushwood is free to discriminate on whatever basis it sees fit because it is a private country club (See 42 U.S.C. Section 2000(e)), the Equal Protection Clause in the 14th Amendment prevents unreasonable discrimination by governmental bodies (federal, state and local).  A claim that a particular government action (usually a statute or ordinance) violates the right to equal protection is analyzed by a court based upon how the action classifies those it affects, as well as the particular right the plaintiff alleges to have been violated.  Accordingly, the level of analysis (scrutiny) a government action will receive incorporates those concepts.  In general, the more scrutiny a government action receives, the more likely it is to be struck down by a reviewing court.

Suspect Classes (Strict Scrutiny).  The government must show that the challenged classification serves a compelling state interest and that the classification is necessary to serve that interest.   Several classifications receiving this high scrutiny include race (Mr. Wang, Smoke Porterhouse) (see Loving v. Virginia), national origin (Maggie O'Hooligan, Sandy McFiddish) (see Korematsu v. United States), and religion (Bishop Fred Pickerling, Danny Noonan).

Quasi-suspect classes (Intermediate Scrutiny). The government must show that the challenged classification serves an important state interest and that the classification is at least substantially related to serving that interest.  Clark v. Jeter.  Classifications receiving this "middle-tier" scrutiny include gender (Judge Smails' niece Lacy, Mrs. Smails, and Mrs. Havercamp) and illegitimacy (debatedly Spaulding Smails).

All Other Classifications  (Simple or Rational Basis Scrutiny). If the classification does not implicate a suspect class or abridge a fundamental right, the rational basis test is used.  Denene v. City of Charleston.  The application of the rational basis test requires a court to determine 1) whether the law treats similarly situated entities differently; 2) if so, whether the legislative body has a rational basis for that disparate treatment; and 3) whether the disparate treatment bears a rational relationship to a legitimate government purpose.


Generally government legislation treating one group (not a suspect class) differently from another financially is valid as long as the government can show the distinction is rationally related to a legitimate purpose.  (See U.S. R.R.B. v. Fritz, upholding a statute maintaining "windfall" retirement benefits to some retirees but not others was valid because it accomplished the statute's purpose in helping to maintain retirement system).  Back to Bushwood, (and just for purposes of analogy), no one would begrudge the Club its right to draw distinctions between its members and its caddies (although it did so at its peril).  Look, I just wanted to work Caddy Day into the post, and who could blame me?

Dunes West pointed to another golf course development in the Town that had successfully rezoned from CR-O in order to undertake residential development, and claimed the Town had no rational basis to treat Dunes West differently. However, there were "significant differences" between the two petitions for rezoning, one of which is that the Dunes West proposal "caused multiple alternations to the areas of play," while the other proposal did little to alter areas of play. In other words, the Town had a rational basis to treat the two petitions differently.

Substantive Due Process

  "I'll slap an injunction on them so fast it will make their heads spin." Judge Elihu Smails

Due process rights (found in the 5th and 14th Amendments of the Constitution) prevent the government from denying you something or taking certain rights away from you without certain procedures taking place. And the concept of "substantive due process" prohibits government action that takes away certain established rights. In the zoning context a successful substantive due process claim requires a demonstration that the government action arbitrarily and capriciouly deprived someone of a property right recognized and protected by state law.  Sunset Cay, LLC v. City of Folly Beach

Perhaps the clearest example of such a protected property right is a "vested right." The South Carolina Vested Rights Act, beginning at S.C. Code Section 6-29-1510,  establishes a vested right to develop property when a site specific development plan is approved by a local government body.  In other words, if all of the conditions set out in the Vested Rights Act have been satisfied, a local government cannot prevent the property from being developed by attempting to rezone it or otherwise take that development right away.

Similarly, Czervik Construction had a vested right to build adjacent to Bushwood, presuming the proper zoning, development plan, and building permits had been obtained and approved. Therefore, any basis on which Judge Smails enjoined Czervik (perhaps an ordinance passed to prevent construction from going forward) would likely act as a denial of Czervik's due process rights (among other things).

Because Dunes West lacked any vested property right to develop the Golf Course Property, its substantive due process claim failed.

Arbitrary and Capricious Rezoning


 "Don't Count That.  I was interfered with . . .winter rules."- Judge Smails

Governmental bodies enjoy a great deal of deference with respect to the legislative decisions they make.  A court will not overturn a zoning decision unless it is "arbitrary and capricious."  In practical terms, this means a zoning decision will not be reversed unless there is no legitimate basis to support it-- and the decisionmaker wholly ignores the applicable rules (a zoning ordinance's requirements, purposes, or other objective standards) in reaching a decision.  As examples, issuing a ruling that is not based on an ordinance's specific criteria is arbitrary (Peterson Outdoor Advertising v. City of Myrtle Beach), as is a decision based solely on the fears of local residents (Bannum v. City of Columbia).

Dunes West claimed that the zoning boundaries used by the Town in rezoning were too broad and arbitrary.  However, as discussed above the plan applied to all golf courses in the Town, and using tax map parcels as boundaries serve the assessment purposes in the CR-O ordinance.

Takings


The 5th Amendment of the Constitution also prohibits private property from being taken for public use without just compensation.  Dunes West claimed that the downzoning of the property constituted an unlawful taking of its property.

Relevant Parcel 


"Well, we're waiting . . ."  -Judge Smails

In order for a court to determine what property might have been taken, the plaintiff must show that "relevant parcel" of land.  Dunes West claimed that the "relevant parcel" was not the entire 256 acres of the Golf Course Property, but instead the "discrete portion" it wanted to develop.  In response, Justice Kittredge pointed out that "[t]he obstacle Appellant presents here concerning its 'discrete portion' argument is that we cannot tell what that portion is."  In fact, Dunes West presented varying acreage amounts throughout the course of the case (and before the lawsuit), and its brief to the Supreme Court contained inconsistent acreage representations.

Because no "discrete portion" of the Golf Course Property could be properly identified, the Supreme Court did not have to encounter the "conceptual black hole" of relevant parcel analysis or concepts like "piecemealing" and "conceptual severance" associated with it.

Categorical Taking.  

As described in Lucas v. South Carolina Coastal Council (which involved property just across the Isle of Palms Connector from the Town), a categorical or per se  taking occurs when 1) a permanent physical invasion of property takes place, or 2) where a regulation "denies all economically beneficial or productive use of land." A governmental action requiring  public access to the Marina where Judge Smails kept The Flying WASP would be a physical invasion (See Kaiser Aetna v. United States), while a long delay in considering a fill permit sought by Bushwood followed by a denial of that permit might represent the latter type of claim. (See Resource Investments, Inc. v. U.S.).

The CR-O ordinance involved no physical invasion, and Dunes West maintained "economically beneficial uses" following its passage, as demonstrated by the positive cash flow created by the golf course. 

Penn Central Balancing Test

If the governmental action denies something less than all economically viable use, the court applies the factors set out in Penn Central Transportation Co. v. New York City: 1) the character of the government action; 2) the economic impact of the regulation on the claimant; and 3) the extent to which the regulation has interfered with distinct investment-backed expectations.


Unreasonable delay in considering and granting Ty Webb's request to rezone property as commercial for the purposes of building another lumber yard (since he has lost track of the other two) might constitute a Penn Central taking. Byrd v. City of Hartsville.

Applying this framework to the Town's actions, 1) the CR-O ordinance took none of Dunes West's property; 2) the Golf Course Property "retained significant value following the rezoning"; and 3) use of the Golf Course Property as a golf course was Dunes West's "primary expectation," since that is the only use to which it had ever been put, and the CR-O ordinance perpetuated that use rather than extinguishing it. 

Conclusion

"You'll Get Nothing and Like It."- Judge Smails to his nephew, Spaulding
 
None of Dunes West's claims against the Town were successful.  However, Dunes West has petitioned the Supreme Court for rehearing, at least keeping the possibility alive that the case could continue.  If it does, however, rest assured there will be no subsequent post based on CaddyShack II.