May 2014 Updates

The Arizona Supreme Court handed private property owners a victory in City of Phoenix v. Garretson:

“Consistent with our prior cases, we hold that a property owner is entitled to compensation if the government either completely eliminates or substantially impairs the owner’s access to an abutting road and thereby causes the property’s fair market value to decrease. As noted above, however, a landowner who claims or establishes only substantial impairment is not entitled to compensation unless the remaining access is unreasonably circuitous.”

— City of Phoenix v. Garretson, Arizona Supreme Court

View fullsize

The Arizona Supreme Court

Arizona law is now crystal clear regarding the complete destruction of access. Before Garretson, lawyers for condemnors had argued that complete destruction of one access point was non-compensable if the property retained other, non-circuitous, and reasonable access to the road network. Garretson prevents condemning authorities from eliminating one point of access completely for a property to a certain road without paying for any devaluation that occurs to the property as a result. 

The facts of Garretson were first related in this space here. And, as suggested here, the Supreme Court essentially affirmed the Court of Appeals, albeit while substituting a Supreme Court opinion for the written opinion of the lower court.

View fullsize

Government lawyers are never nice to anybody.

Attribution: http://xkcd.com/1332/ Under Creative Commons Attribution NonCommercial 2.5 License 

There are three great things about the ruling. First, superior courts, where trial of these cases occurs, now have a clear statement of the law upon which they can base their rulings.

Second, private property owners are entitled to compensation for access restrictions, which most people intuitively perceive as decreasing the value of real estate. (Whether or not this perception is true is sure to be hotly contested.)

Finally, private property owners now are able to bring into being the parade of horribles surely elucidated in the briefs the city and those aligned with the city submitted to the Supreme Court. The fear of the city and those aligned with it, expressed in those briefs, was surely that lawyers defending property owners would push to extend a favorable ruling to try to capture compensation for every destruction of access in a way that would threaten the very existence of a free society as we know it.

This is known as a "slippery slope" argument (see right), and the city and its minions were, to some extent, correct. For instance, I believe this ruling gives rise to a claim for just compensation when temporary complete destruction of access occurs during construction of improvements even if the access will be re-opened once construction is complete. Temporary complete destruction of access occurs frequently. 

Congratulations again to Dale Zeitlin on giving us a great case with which to go forward once more unto the breach. 

January 2014 Updates - Unpacking Arizona Supreme Court Discretionary Review

The Arizona Supreme Court has granted the petition to review the City of Phoenix v. Garretson decision of the Arizona Court of Appeals, Division One. Southern Arizona Public Works discussed the appellate decision here. The supreme court will hear oral argument in the case on January 22, 2014.

What does the supreme court's decision mean? In Arizona, civil litigants generally do not have an absolute right to supreme court review. The Supreme Court of Arizona may exercise its discretion to grant a petition for review, but does so infrequently in civil cases. In the court's 2012 fiscal year (July 1, 2012, through July 1, 2013), it received 313 civil petitions for review and granted only 12 petitions, or 3.8%.

The conclusion most lawyers draw from the discretionary nature of supreme court review and the court's limited exercise of it is the court grants petitions for review primarily when it wishes to correct an error at the appellate level, which would bode unwell for the Garretson decision and those who support the decision's reasoning and outcome. However, most lawyers would admit the supreme court sometimes grants review if it wishes to clarify the law by affirming the reasoning of the appellate court and elevating that reasoning into a supreme court opinion. 

How likely is it that the Arizona Supreme Court granted review in Garretson simply to affirm the court of appeals?

The answer is: unlikely, but more likely than you might think, depending on how you interpret the data. In the last 16 years, the Arizona Supreme Court has granted 247 petitions to review civil cases and has affirmed the appellate court only 36 times, or 14.5% of the time. Here is a breakdown:

Arizona Supreme Court Petition for Review Affirmances 1998-2013

However, during the four full years of Rebecca White Berch's term as Chief Justice, the court affirmed 30-40% of the civil cases the court elected to review. This graph demonstrates the trend:

View fullsize

Arizona Supreme Court Petition for Review Results 1998-2013

The trend line demonstrates a change in attitude over time from the Zlaket court to the Berch court. The reasons for this trend are best left to (probably pointless -- but amusing) speculation, but there is a clear, data-based suggestion the current court looks more favorably upon elevating appellate decisions to become the law of the land. Further, the chances of affirmance in Garretson may be more likely than this analysis shows because this data does not account for partial affirmances. A case partially vacated with regards to, say an award of attorneys' fees, was not coded as "affirmed," even though the court may have affirmed the salient portion of the appellate court's analysis.

It is correct to say the supreme court's decision to grant the petition for review in Garretson is a victory for the petitioner. It would be incorrect to assume, however, the outcome in the supreme court is assured. Good luck to the lawyers arguing the case on January 22nd - Mr. Ayers for the City of Phoenix and Mr. Zeitlin for Garretson. But a little more luck to Mr. Zeitlin. 

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.

View fullsize

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.

View fullsize

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.