Benson Mobile Home Community Prevails Against the City of Benson in Arizona Supreme Court on Zoning Issue

Good legal disputes are sometimes more entertaining than bad soap operas. Villains and heroes antagonize each other over ages, and, at the end, nobody is really sure what started the dispute in the first place. All involved are left yearning for a portal back to sunnier days when rancor was not so entrenched, so foreordained - but rather peaceably negotiable.

Such is the saga of Stagecoach Trails MHC, L.L.C. v. City of Benson. The Arizona Supreme Court's decision represents the climax of the story. The dispute started as follows.

 Some time prior to 2010, a property owner adjacent to Stagecoach Trails, a 55+ manufactured home community (MHC) in Benson, Arizona, complained about the size of a particular manufactured home (MH) within Stagecoach Trails. The ire of the great beast thus was provoked. When Stagecoach Trails, in 2010, applied for a permit to install a new MH on Lot 27 (not the original lot that prompted the neighbor's complaint), the City denied the permit because the City had decided all new MH installations should conform to the zoning code.

The Stagecoach Trails Manufactured Home Community in Benson, Arizona. The location of Lot 27, the lot in dispute in the legal battle, is not shown.

The City's interpretation offended the owner of Stagecoach Trails, who claimed the property had been used as a MHC since the 60s. Goodwill, if it ever existed between the City and the owner at all, surely was further strained when the Benson mayor attempted to work things out mano-a-mano only to have that conversation reportedly tape recorded for future use. 

The City thus denied Stagecoach Trails's application for a permit, and Stagecoach Trails brought suit after appealing the permit denial to the City's Board of Adjustment. The critical issue was whether the property as a whole was a nonconforming use immune from the City's application of the zoning code or whether, as the City contended, each MH lot was an individual nonconforming use. If the City's interpretation was correct, each lot would lose its nonconforming status when a manufactured home was removed from a lot. If Stagecoach Trails's interpretation was correct, as long as the entire property remained in use as a MHC, individual MH units could be switched in and out without affecting the nonconforming status of the overall property.

Why was the Arizona Supreme Court needed to weigh in on such a simple issue? It wasn't. By the time the case got to the Supreme Court, the kerfuffle over the nonconforming status of the property was a secondary issue because the Court of Appeals had determined Stagecoach Trails had not made the prerequisite exhaustion of its administrative remedies.

Before a court has jurisdiction over a permit dispute, the permit applicant must "exhaust" his or her "administrative remedies" - in essence, the applicant must follow the appeal process of the body from whom he or she is requesting a permit. The idea is that governing bodies must be allowed the opportunity to correct their mistakes before valuable judicial resources are spent resolving the issue. In practice, these Board of Adjustment appeals are Grand-Guignol masquerades 

During the time the matter was in Cochise County Superior Court, the City of Benson's zoning administrator had been busy. Once the City learned the superior court judge was not likely to see things the City's way (which, in the mind of the City Attorney, could only be the result of rank bias against the City), the zoning administrator issued multiple follow-up letters to Stagecoach Trails crafting various new reasons why Stagecoach Trails would never, ever receive a zoning permit. See video, at right. 

Stagecoach Trails's lawyers dutifully amended and refiled their court documents in response to each letter, but the Court of Appeals found that the new explanations from the zoning administrator required new appeals to the City of Benson Board of Adjustment in order for Stagecoach Trails to satisfy the "administrative exhaustion" requirement.

Enter the Supreme Court, which astutely holds that a governmental body does not have the power to create a never-ending process of review by continuing to modify its objections to a permit application. This levels the playing field somewhat for property owners because the opinion empowers common sense over bureaucratic nonsense. As long as a property owner makes a valid claim in the first instance that addresses every angle a city or county conjures up or could conjure up to deny a permit, the property owner need not mount futile attempts to reassert his or her claim successively each time the city or county evokes a new barrier.

The denouement is nearly as entertaining. After receiving the case back from the Supreme Court, the Court of Appeals, no doubt feeling upbraided, sent the matter back to the trial court for further findings rather than disposing of the case.

The City of Benson could possibly appeal again whatever final ruling the trial court makes, but: 1. The trial court already ruled in favor of Stagecoach Trails once, and 2. The city attorney responsible for the City of Benson's legal strategy has been relieved of his post.

Unfortunately for Stagecoach Trails, the Supreme Court agreed with the Court of Appeals that the City of Benson was not required to pay Stagecoach Trails's attorneys' fees, rumored to be close to $300,000. Congratulations to Mr. John Hinderaker, Ms. Kimberly Demarchi, and Mr. Jeffrey Sklar of Lewis and Roca LLP (now Lewis Roca ‎Rothgerber LLP), who represented Stagecoach Trails. Here's hoping you get paid for your good work.