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Diversified Holdings, LLP v. City of Suwanee

Supreme Court of Georgia

November 2, 2017

DIVERSIFIED HOLDINGS, LLP
v.
CITY OF SUWANEE CITY OF SUWANEE
v.
DIVERSIFIED HOLDINGS, LLP

          GRANT, Justice.

         This case presents a zoning dispute between the Appellant Diversified Holdings, LLP ("Diversified") and the City of Suwanee ("the City") regarding the status of 30 acres of undeveloped land located in the City ("Property"). We hold that because Diversified seeks review from an adjudicative decision made by a local government body acting in an administrative role, an application for discretionary appeal was required. Because Diversified did file an application for discretionary review, which we granted, we have jurisdiction over its appeal. On the merits of the issues presented, we affirm the trial court's decision that there was no error in denying Diversified's application to rezone the Property. But we clarify that the "substantially advances" standard that derives from constitutional due process guarantees has no place in an eminent domain or inverse condemnation proceeding. Consequently, where a landowner claims harm from a particular zoning classification, inverse condemnation is not an available remedy unless the landowner can meet the separate and distinct requirements for such a claim. Because we affirm the trial court's decision that the denial of Diversified's application was not arbitrary or capricious, we do not reach the City's contention on cross appeal that the trial court erred in concluding that Diversified showed a substantial detriment based on the value of the Property as currently zoned versus its value if rezoned.

         I.

         The Property is zoned for commercial use in accordance with the City's 2030 Comprehensive Plan. The City's comprehensive plan envisions that the Property will be used for high density, high intensity office space. Although the Property is in a largely commercial area, Diversified insists that for the past 26 years it has been unable to sell the Property as zoned, but has received multiple purchase offers contingent upon the Property being rezoned for multi-family use.[1] Consequently, Diversified sought to have the Property rezoned in that manner, claiming, among other things, that the existing zoning regulation was unconstitutional as applied to the Property. The City Council, on recommendation from the City's Planning Commission, denied Diversified's application to rezone the Property from commercial, C2 or C2A, to RM-8, which would have permitted multi-family use.[2]

         Diversified then filed suit in Gwinnett County Superior Court, alleging that the City's decision constituted an unconstitutional taking of the Property.[3]Diversified requested that the trial court enjoin the City from interfering with Diversified's use of the Property in the manner represented in its rezoning application. Diversified also requested that the court find and declare the City's acts in denying its rezoning application were "unlawful, irrational, a manifest abuse of discretion, a taking of property, unconstitutional, null, and void." Although Diversified sought an award of attorney's fees and litigation expenses, the complaint did not seek other damages.

         After a bench trial, the trial court made the following findings. Since 2012, Diversified has used a broker who undertook a marketing campaign to sell the Property. Although it has not had success marketing the Property as a commercial property, Diversified has received numerous inquiries from potential purchasers who are interested in developing the Property for multi-family use. Every contract that Diversified has entered into contained contingencies that required the City to rezone or grant a special use permit. Ultimately, none of those contracts closed. The parties agree that due to steep topography and streams, not all of the Property can be feasibly developed, and rezoning would permit Diversified to develop the most acreage possible. Indeed, the trial court concluded that the fair market value of the Property would increase tremendously if it were rezoned: As currently zoned, the Property has a fair market value between $600, 000 and $1.5 million; if rezoned for multifamily use, the Property would have a fair market value of approximately $5.9 million.

         The trial court found that Diversified carried its burden to show by clear and convincing evidence that the City's current zoning of the Property has caused Diversified a significant detriment. The trial court also found, however, that the current zoning is substantially related to the public health, safety, morality, and welfare, because the existing commercial zoning is compatible with surrounding commercial uses and is consistent with the City's comprehensive plan and economic development. The trial court concluded that the consistency of the existing zoning with the City's long-term planning goals demonstrates a substantial benefit to the public welfare. For example, in the trial court's view, the lack of sidewalks on the Property would pose an unreasonable and unsafe risk for persons who would reside in the proposed apartment development and there is a reasonable and valid concern that apartment dwellers would face a potential for increased nighttime crimes because the complex would be adjacent to a liquor store, two motels, and a Wal-Mart.

         In sum, the trial court found that Diversified had not carried its burden to show that the current zoning was not substantially related to public health, safety, and welfare. Accordingly, the trial court's order concluded that the City's determination that the current zoning regulation was not improper as applied to Diversified's property was not arbitrary, capricious, or without rational basis. The trial court specifically stated that the City's decision did not constitute an abuse of discretion and did not work an unconstitutional taking.

         Out of an abundance of caution, Diversified then filed both a direct appeal and an application for discretionary appeal from the trial court's order. The City filed a cross appeal. This Court granted Diversified's application for discretionary appeal and posed a single question: Is a party seeking to appeal a superior court's ruling on an inverse condemnation claim required to file a discretionary application if that claim is based on a local board's zoning decision? In addition to answering that question by asserting that direct appeal is lawful, Diversified contends that (1) the trial court erred in determining that the Property's current zoning is substantially related to public health, safety, and welfare, and (2) the trial court erred in concluding that the City had demonstrated a justification for the current zoning that is reasonably related to the public interest. In its cross appeal, the City contends that the trial court erred in determining that Diversified showed a significant detriment based on the Property's value as currently zoned when compared to its value if rezoned.

         II.

         We turn first to the question of jurisdiction and appellate procedure that was presented to the parties, that is, whether a party seeking to appeal a superior court's ruling on an inverse condemnation claim is required to file a discretionary application when that claim is based on a local board's zoning decision.[4] The trial court's order affirming the City's denial of Diversified application for rezoning is a final order; we are not hindered by any interlocutory appeal questions. OCGA § 5-6-34 (a) (1). Generally, final orders are subject to direct appeal. Nevertheless, here and for any "final order, " OCGA § 5-6-34 (a) (1) directs that we consider whether that order is subject to the discretionary application procedure outlined in OCGA § 5-6-35 (a) (1).

         That provision requires an application for a certain class of cases:

Appeals from decisions of the superior courts reviewing decisions of the State Board of Workers' Compensation, the State Board of Education, auditors, state and local administrative agencies, and lower courts by certiorari or de novo proceedings; provided, however, that this provision shall not apply to decisions of the Public Service Commission and probate courts and to cases involving ad valorem taxes and condemnations.

         We recently reiterated that boards of commissioners are acting as administrative agencies under OCGA § 5-6-35 (a) (1) when they are "performing a function that is 'the equivalent of the function of an administrative agency.'" Schumacher v. City of Roswell, 301 Ga. 635, 635 (803 S.E.2d 66) (2017) (quoting Swafford v. Dade County Bd. of Commrs., 266 Ga. 646, 647 (469 S.E.2d 666) (1996)); Bentley v. Chastain, 242 Ga. 348, 349 (249 S.E.2d 38) (1978) (characterizing a Board of Zoning Appeals as an administrative agency with both quasi-legislative and quasi-judicial duties, which include determining "whether the factual situation of a given individual's property warrants relief from the general zoning ordinance under the standards set out by the delegating authority."). And we have explained that the discretionary application procedure applies to adjudicative or quasi-judicial decisions by local administrative agencies. See State v. Int'l Keystone Knights of the Ku Klux Klan, Inc., 299 Ga. 392, 402 (788 S.E.2d 455) (2016) ("Both the text and immediate context of OCGA § 5-6-35 (a) (1) indicate that a 'decision, ' as it is used with reference to administrative agencies, is a determination of an adjudicative nature.").

         As the opinion in International Knights recognized, '"the line between legislative and adjudicative is not always easy to draw.'" Id. at 401 (quoting LC&S, Inc. v. Warren Cnty. Area Plan Comm., 244 F.3d 601, 603 (7th Cir. 2001)). And generally speaking, while

[a]dministrative determinations of a legislative nature are prospective in application, general in application, and often marked by a general factual inquiry that is not specific to the unique character, activities or circumstances of any particular person, . . . [d]eterminations of an adjudicative nature, on the other hand, are immediate in application, specific in application, and commonly involve an assessment of facts about the parties and their activities, businesses, and properties.

Int'l Knights, 299 Ga. at 401 (internal punctuation and citations omitted).

         An adjudicative decision can be quasi-judicial in nature and is characterized by proceedings that inquire into the facts and circumstances of the party (or parties) appearing before the decision maker.[5] Id. (citing RR Vill. Ass'n, Inc. v. Denver Sewer Corp., 826 F.2d 1197, 1204 (2d Cir. 1987) ("The test for determining whether official action is adjudicative or legislative focuses on the function performed by the decisionmaker.")). Generally, an adjudicative decision operates to address a specific dispute or determine rights and obligations of a particular party or parties. The resulting decision seeks to establish those rights and obligations or otherwise resolve the dispute, and is immediate in application. A legislative decision, on the other hand, is usually marked by a general inquiry, often not limited to the facts and circumstances of specific people or properties, which results in a rule of law or course of policy that will apply in the future. Id. at 402 (citing Prentis v. Atl. Coast Line Co., 211 U.S. 210, 226 (29 S.Ct. 67, 53 L.Ed. 150) (1908) ("Legislation, on the other hand, looks to the future and changes existing conditions by making a new rule, to be applied thereafter to all or some part of those subject to its power.")).

         Years before we focused on the distinction between adjudicative, legislative, and executive decisions in the context of OCGA § 5-6-35 (a), this Court announced that "all zoning cases appealed either to the Court of Appeals or the Supreme Court of Georgia must . . . come by application." Trend Dev. Corp. v. Douglas Cty., 259 Ga. 425, 426 (383 S.E.2d 123) (1989). And in Rubin, we reiterated that all appeals in zoning cases require an application. O.S. Advertising Co. of Georgia, Inc. v. Rubin, 267 Ga. 723, 725 (482 S.E.2d 295) (1997). Like this case, Trend was an appeal of a superior court decision rejecting a landowner's argument that a zoning regulation should not apply to a particular piece of property. Trend, 259 Ga. at 426. And in the decades since that case was decided, Trend's mandate that "all zoning cases" must be appealed through the discretionary process has been consistently followed by this Court and the Court of Appeals in numerous cases challenging the application of a zoning ordinance to a particular piece of property. See, e.g., Hamryka v. City of Dawsonville, 291 Ga. 124 (728 S.E.2d 197) (2012) ("Appellants [challenging the rezoning of a neighbor's property] then were able to obtain review in the superior court of the issues they raised or could have raised before the administrative agency. Appellants therefore already had the opportunity to be heard by two tribunals-a local administrative agency and a superior court-and now ask this appellate court to consider the administrative decision yet again."); Jervey v. City of Marietta, 274 Ga. 754 (559 S.E.2d 457) (2002) (discretionary application granted to consider appeal from denial of application to rezone); Powell v. City of Snellville, 275 Ga. 207 (563 S.E.2d 860) (2002) (dismissing direct appeal and granting application for discretionary review of refusal to rezone property); City of Atlanta v. Tap Assocs., 273 Ga. 681 (544 S.E.2d 433) (2001) (concluding, after granting discretionary application to appeal denial of rezoning, that "legislative judgment" of zoning ordinance must be allowed to control where petitioner had not met its burden); Cobb Cty. v. McColister, 261 Ga. 876 (413 S.E.2d 441) (1992) (denial of application to rezone property requires application for discretionary review under Trend); Waffle House v. DeKalb Cty., 261 Ga. 324 (406 S.E.2d 477) (1991); Delta Cascade Partners, II v. Fulton Cty., 260 Ga. 99 (390 S.E.2d 45) (1990) (appeal from superior court's judgment upholding denial of zoning request requires discretionary application).

         Recently, in Schumacher, we determined that certain challenges to the exercise of legislative power do not fit within Trend's definition of "zoning cases, " although we noted that Trend itself involved the sort of individualized determination that we would generally consider a "decision" under the discretionary application statute. Schumacher, 301 Ga. at 635 (citing Int'l Knights, supra). In doing so, we further clarified the contours of our zoning jurisprudence by establishing that a "zoning case, " refers to "a case involving a 'decision' by an 'administrative agenc[y]' dealing with the zoning or allowed use of a particular parcel of land." Id.

         Schumacher found that "a stand-alone lawsuit challenging an ordinance as facially invalid-unconnected to any individualized determination about a particular parcel-is not a 'zoning case'." Id. But an appeal from a superior court order reviewing a local government decision denying an application to rezone a specific property differs from an appeal from a lawsuit that challenges the enactment of a code of development or zoning code. See id. (contrasting lawsuits challenging the legislative decision underlying the enactment of a development code with suits seeking individualized zoning-related relief). These distinctions are relevant. The enactment of a development or zoning code is, quintessentially, a legislative action that is prospective in application. Id. In contrast, an application to rezone a particular parcel like the application involved here involves an individualized determination based on the character and circumstances of that particular parcel of land. A landowner's challenge that seeks recognition that a zoning ordinance is unlawful with respect to a particular parcel of land thus is the type of individualized application of ...


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