The Town of Marana v. Aegis of Arizona, LLC.

IN THE COURT OF APPEALS
STATE OF ARIZONA
DIVISION TWO
AEGIS OF ARIZONA, L.L.C., an Arizona ) 2 CA-CV 2003-0057
limited liability corporation, ) DEPARTMENT B
)
Plaintiff/Appellee, ) OPINION
)
v. )
)
THE TOWN OF MARANA, a municipal )
corporation, )
)
Defendant/Appellant. )
)
APPEAL FROM THE SUPERIOR COURT OF PIMA COUNTY
Cause No. C20000299
Honorable Ted B. Borek, Judge
REVERSED AND REMANDED WITH DIRECTIONS
Law Office of George J. Feulner, P.C.
By George J. Feulner Tucson
Attorney for Plaintiff/Appellee
Irvine Law Firm, P.A.
By Thomas K. Irvine and Larry J. Wulkan Phoenix
Attorneys for Defendant/Appellant
P E L A N D E R, Presiding Judge.
¶1 Appellant/defendant the town of Marana appeals from a judgment, entered upon
a jury verdict, awarding appellee/plaintiff Aegis of Arizona, L.L.C., $428,199.00 on its
substantive due process and equal protection claims, which it had brought under 42 U.S.C. § 1983(hereafter § 1983). On appeal, Marana challenges the judgment on several grounds. Because we
agree with Marana that the trial court erred in sending Aegis’s constitutional claims to the jury,
we reverse and remand the case with directions to enter judgment in favor of Marana.
BACKGROUND
¶2 In reviewing a judgment based on a jury verdict, we view the evidence and all
reasonable inferences therefrom in the light most favorable to sustaining the judgment. Pioneer
Roofing Co. v. Mardian Constr. Co., 152 Ariz. 455, 462, 733 P.2d 652, 659 (App. 1986). In
1997, Dean Fetherling began researching the feasibility of forming a company that would treat and
dispose of medical waste using a “mobile medical waste treatment system[],” specifically, a
machine called the “JYD1500.”1 In late 1997 or early 1998, after satisfying himself that
processing medical waste would be profitable, Fetherling formed Aegis.2 In February 1998, Aegis
committed to buying the JYD1500 for $950,000. For purposes of giving Aegis exclusive rights
to conduct this type of medical waste disposal business in the state, the purchase agreement
provided that the machine’s seller would not sell similar equipment to anyone else in Arizona.
1
The business was unique in that employees would travel to hospitals and doctors’ and
dentists’ offices in the Tucson area and, using the JYD1500, sterilize and grind up certain types
of medical waste—such as syringes, rubber gloves, and bandages—at those locations so that it
could be disposed of there like any other non-medical-waste trash. Testimony at trial established
that disposing of medical waste in this fashion not only eliminates the risks involved in
transporting such waste to incinerators located in other parts of Arizona but also eliminates air
pollution caused by incinerating such medical waste, which is largely plastic material.
2
Fetherling formed Aegis rather than keeping the business in his name because he hoped
to give the business to his children to own and manage. He testified at trial that he “did not want
to own” Aegis.
2
¶3 The week after Aegis had committed to buy the JYD1500, Fetherling began looking
for a location to house and maintain the machine, process a small amount of medical waste, and
create office space for both Aegis and two Illinois businesses that he personally owned. Fetherling
intended to purchase the property in his and his wife’s names and then lease it to Aegis. Over the
course of the next six to seven months, Fetherling looked at approximately fifty different pieces
of property throughout the Tucson area in the hope of finding a location compatible with Aegis’s
business plan. He eventually decided to buy property located in Marana near Interstate 10 (the
Camino Martin property). That property was zoned under Marana’s Land Development Code
(MLDC) for heavy industrial (HI) use, which is the most permissive zoning category.
¶4 The purchase contract for the Camino Martin property provided for a sixty-day
“due diligence” period that allowed Fetherling to research information on the property, determine
whether Aegis could conduct its business there, and, if necessary, cancel the sale. During that
time period, Fetherling’s agents sought to meet with representatives of Marana to determine
whether the Camino Martin property’s current HI zoning classification was compatible with
Aegis’s business plan.
¶5 Sometime in December 1998, Fetherling’s agents (including his architect, William
Gansline) and Joel Shapiro, Marana’s then acting planning director, had a “pre[-]development plan
application meeting.” HI zoning under the MLDC did not expressly include medical waste
processing as a permitted use. Nonetheless, Shapiro told Fetherling’s agents that Aegis’s proposed
use was otherwise compatible with the Camino Martin property’s HI zoning, and that the proposed
use would be permitted on that property. As the planning director, Shapiro had the authority to
“permit any other uses which may be determined to be similar to those listed [in the MLDC for
3
HI property], in conformity with the intent and purpose of th[at] zone.”3 MLDC
§ 05.12.03(B)(9). If a proposed use is permitted within a certain zone, a landowner need not
apply for a conditional use permit (CUP).
¶6 According to Shapiro, he did not tell anyone at the December 1998 meeting that
his oral decision to permit Aegis’s proposed use was only preliminary or otherwise subject to
review or change. Following that meeting, on December 23, Fetherling finalized his purchase of
the Camino Martin property. And, in January 1999, Gansline submitted on Fetherling’s behalf
an “application for development/site plan review” to Marana.
¶7 In early February 1999, two months after Shapiro had told Fetherling’s agents that
Aegis’s proposed use of the property would be permitted, Marana received letters from both Mark
Ritter, who owned property adjacent to the Camino Martin property, and from various other home
and business owners in the area. The two letters voiced identical concerns about Aegis’s proposed
use. In response to those letters, Marana decided to place the issue on the agenda of its Planning
and Zoning Commission’s February 24 meeting as an informal “informational item.” Shapiro
testified that the purpose of discussing the issue at that meeting was to “strictly . . . provide the
public with information” about Aegis’s proposed use of the property, presumably because
compliance with the public hearing procedures typically involved with rezoning property or
issuing special use permits was not required. Before that meeting was held, the Arizona Daily Star
published an article entitled, “Medical-waste plant planned on NW side,” that described Aegis’s
3
Although MLDC § 05.12.03(B)(9) referred to the “Planning Administrator,” it is
undisputed that Shapiro held that position.
4
proposed use of the property and the controversy it had caused among some of the adjacent
landowners.
¶8 At the February 24 Planning and Zoning Commission meeting, Shapiro explained
the general nature of Aegis’s proposed use and the Camino Martin property’s current HI zoning.
He also expressed his view that the proposed use was permitted under that zoning category. An
Aegis representative made a presentation on the nature of Aegis’s business and answered questions
from the commission. Ritter also spoke at the meeting and expressed his concerns about Aegis’s
proposed use.
¶9 Several weeks later, in a letter dated March 16, Shapiro informed Fetherling that,
“[a]fter extensive consideration by staff, [and] in response to public concerns,” “it ha[d] been
determined” that Fetherling would be required to apply for and receive a CUP before his
development plan could be approved. In response, Fetherling submitted, in his own name, an
application for a CUP. Consistent with his earlier view that Aegis’s proposed use would be
permitted in the HI zone, Shapiro recommended that the Planning and Zoning Commission
approve Fetherling’s CUP application.
¶10 The commission considered the application at its April 28 meeting. The
commission’s staff recommended approval of the CUP application with conditions. An Aegis
representative spoke at the meeting and presented general information on Aegis’s business plan,
the JYD1500, and the type of medical waste processing Aegis hoped to conduct on the property.4
4
Fetherling testified that Aegis’s original business plan called for between fifteen and
twenty percent of Aegis’s business to involve processing medical waste on the Camino Martin
property. In hopes of appeasing those who opposed the CUP application, however, Aegis
representatives later stated that it would not process any waste on the property.
5
Ritter and another owner of adjacent property also spoke at the meeting and expressed their
opposition to the proposed use. The commission then unanimously denied Fetherling’s CUP
application.
¶11 Fetherling appealed the commission’s decision to Marana’s town council, pursuant
to MLDC § 10.10(G). At its May 18 meeting, the council voted unanimously to affirm the
commission’s denial of the CUP application.
¶12 Aegis then brought this action against Marana asserting, inter alia, a claim for
damages under § 1983 based on alleged deprivations of Aegis’s federal constitutional rights to
substantive due process and equal protection.5 Specifically, Aegis claimed that Marana had
violated its rights when, despite Shapiro’s initial assurance that the use was permitted and that no
CUP was required, it later required a CUP and then denied the CUP application. Marana moved
for summary judgment, arguing that Aegis lacked standing to bring the action, that Aegis had
failed to exhaust available administrative remedies because it did not appeal Marana’s March 16
decision requiring a CUP application, and, in any event, that the town council had acted within
its discretion in denying the CUP. Aegis later moved for partial summary judgment on the issue
of liability.
¶13 In ruling on those motions, the trial court first concluded that Aegis had standing
to bring this action. The court then denied Aegis’s motion and largely denied Marana’s motion
5
In its initial and amended complaints, Aegis also alleged claims for an “inverse temporary
taking,” state law equal protection violations, violations of A.R.S. § 9-462.01(C) (which relates
to conditional uses), tortious interference with contract, “supplying false information for guidance
in business transactions,” and “estoppel.” All of those claims eventually were dismissed and are
not at issue here. See ¶14, infra.
6
as well. As discussed in detail below, however, the trial court concluded that Aegis had failed to
exhaust available administrative remedies as to Marana’s decision to require a CUP. See ¶35,
infra. Accordingly, to that limited extent, the trial court granted Marana’s summary judgment
motion. The case then proceeded to trial.
¶14 After Aegis rested its case at trial, Marana moved for judgment as a matter of law
(JMOL) on all of Aegis’s claims. The trial court granted that motion as to all counts except
Aegis’s § 1983 due process and equal protection claims. Only those two claims were sent to the
jury.
¶15 On a special verdict form, the jury ultimately found that Marana had violated
Aegis’s right to both substantive due process and equal protection and awarded Aegis $428,199
in damages. Marana then moved for a new trial pursuant to Rule 59(a)(6) and (8), Ariz. R. Civ.
P., 16 A.R.S., Pt. 2, claiming “errors of law occurred at the trial and during the progress of this
action, and the judgment is contrary to law.” After entering its final judgment, the trial court
summarily denied Marana’s new trial motion. This appeal followed.
DISCUSSION
I. Standing
¶16 Marana first argues the trial court erred in determining that Aegis had standing to
bring this action. In ruling on Marana’s summary judgment motion, the trial court found that
Aegis had standing, stating, “Aegis has at least an equitable interest in the property and has
interest to fully develop the arguments.” Further, the trial court noted that Marana had “not been
misled by the naming of Fetherling for Aegis.” The question of whether a party has standing to
7
sue is a question of law, and we review the trial court’s standing determination de novo. See
Alliance Marana v. Groseclose, 191 Ariz. 287, 289, 955 P.2d 43, 45 (App. 1997).
¶17 Marana maintains that the trial court’s ruling was erroneous because “Aegis never
owned the Property, nor was [it] denied the CUP, [and] it must prove it was specially damaged
in order to have prosecuted this case.” Marana further argues that Aegis did not prove any such
special damages because “Aegis spent the bulk of its business start up money BEFORE Fetherling
ever purchased the Property. This means that Aegis’[s] decision to try to get into the bio-medical
waste business ha[d] nothing to do with Marana.”
¶18 “Generalizations about standing to sue are largely worthless as such.” Ass’n of
Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 151, 90 S. Ct. 827, 829, 25 L. Ed. 2d
184, 187 (1970). Nonetheless, some oft-repeated principles serve to guide the determination of
this issue. For example, to have standing, a plaintiff must have suffered “injury in fact, economic
or otherwise.” Id. at 152, 90 S. Ct. at 829, 25 L. Ed. 2d at 187. In addition, that injury must be
“distinct and palpable,” Sears v. Hull, 192 Ariz. 65, ¶16, 961 P.2d 1013, ¶16 (1998), such that
the plaintiff has a “‘personal stake in the outcome of the controversy.’” Warth v. Seldin, 422
U.S. 490, 498, 95 S. Ct. 2197, 2205, 45 L. Ed. 2d 343, 354 (1975), quoting Baker v. Carr, 369
U.S. 186, 204, 82 S. Ct. 691, 703, 7 L. Ed. 2d 663, 678 (1962).
¶19 In Arizona, “the question of standing . . . is not a constitutional mandate since we
have no counterpart to the ‘case or controversy’ requirement of the federal constitution.” Armory
Park Neighborhood Ass’n v. Episcopal Cmty. Servs., 148 Ariz. 1, 6, 712 P.2d 914, 919 (1985).
“Nonetheless, in addressing questions of standing, we are confronted with ‘questions of prudential
or judicial restraint,’ and will impose that restraint to insure that ‘the case is not moot and that the
8
issues will be fully developed by true adversaries.’” Blanchard v. Show Low Planning & Zoning
Comm’n, 196 Ariz. 114, ¶19, 993 P.2d 1078, ¶19 (App. 1999), quoting Armory Park, 148 Ariz.
at 6, 712 P.2d at 919 (citations omitted).
¶20 It is undisputed that Fetherling looked for, and eventually bought, property for the
sole purpose of leasing it to Aegis so that, under his children’s management, it could carry on its
business there. The record is clear that although Fetherling and Aegis were separate and distinct,
Fetherling had acted solely for Aegis’s benefit when he purchased the Camino Martin property and
eventually applied for a CUP. Indeed, on the CUP application, Fetherling stated that the use for
which he requested permission was “office, storage, and processing area for medical waste unit.”
Because the Camino Martin property had been bought only for Aegis’s use, Aegis was
injured—for purposes of determining standing—when Marana denied Fetherling’s CUP application
and, as a result, denied Aegis the ability to conduct its business on the Camino Martin property.
Based on this record, therefore, Aegis suffered distinct, palpable injury from, and had a personal
stake in the outcome of any litigation over, Marana’s denial of Fetherling’s CUP application. See
Warth; Sears.
¶21 The record is also clear that Marana knew that Fetherling essentially was acting as
Aegis’s agent when he applied for a CUP. For example, Marana addressed letters relating to the
CUP application to “Dean Fetherling, Aegis of Arizona, LLC,” and described the subject of one
of the letters as “Conditional Use Permit for Aegis of Arizona, LLC.” And, notices for and
minutes of the Planning and Zoning Commission’s February 24 and April 28 meetings and the
May 18 Town Council meeting all identify Aegis as the applicant for the CUP. Therefore, despite
Marana’s assertion that its knowledge that Fetherling was acting on Aegis’s behalf was
9
“immaterial,” the record shows that even Marana, at least implicitly, acknowledged that Aegis
was the real-party-in-interest as to the CUP application.
¶22 Thus, we agree with the trial court that Aegis had sufficient standing to bring this
lawsuit. The cases on which Marana relies do not alter our conclusion. In the Blanchard case and
Buckelew v. Town of Parker, 188 Ariz. 446, 937 P.2d 368 (App. 1996), property owners sued
to invalidate zoning decisions relating to nearby or adjacent property. In both cases, Division One
of this court noted that in order to have standing to challenge zoning decisions, a plaintiff must
have suffered particular injury, not just general economic or aesthetic losses. Blanchard, 196
Ariz. 114, ¶20, 993 P.2d 1078, ¶20; Buckelew, 188 Ariz. at 450-51, 937 P.2d at 372-73. In
those cases, however, the key question was whether the landowner-plaintiffs had been harmed by
zoning decisions relating to nearby property owned by other individuals.
¶23 Here, in contrast, although Fetherling held legal title to the Camino Martin
property, the sole reason he bought that property and applied for the CUP was to benefit Aegis.
The harm Aegis allegedly suffered as a result of Marana’s denial of the CUP application was more
than merely a generalized economic loss—as was the case in Blanchard, where some of the
plaintiffs argued that they had standing because they owned property in the town of Show Low,
or because of their taxpayer status. 196 Ariz. 114, ¶12, 993 P.2d 1078, ¶12. Rather, Aegis
suffered the particularized harm of being denied the ability to conduct its business on property that
specifically had been bought for its use.
¶24 Finally, we find misplaced Marana’s argument that by allowing Aegis to prosecute
this lawsuit, the trial court “allowed Fetherling and Aegis to merge” and “allowed Aegis to
recover for Fetherling’s damages.” On the contrary, once the trial court decided that Aegis had
10
standing, Marana’s arguments that Aegis improperly sought to recover damages solely incurred
by Fetherling were merely evidentiary in nature. Such evidentiary arguments are distinct from
the standing issue and, even if preserved below and raised on appeal, cannot support Marana’s
challenge to Aegis’s standing to bring this lawsuit.
II. Finality of Shapiro’s Initial Determination
¶25 Before addressing the rest of Marana’s arguments on the merits, we next consider
an issue Aegis raised below in motions for partial summary judgment and JMOL, and re-urges in
its answering brief, relating to Shapiro’s initial determination in December 1998. According to
Aegis, Shapiro had the sole authority to make, and in December 1998 did make, a final,
irreversible decision that Aegis’s proposed use was permitted under the Camino Martin property’s
HI zoning without the need for a CUP. The trial court rejected that argument, finding “no
evidence to support that the decision of the Planning Administrator was conclusively final or that
it could not be changed by the Planning Commission or Town Council.”6 We consider Aegis’s
challenge of that ruling here because we may affirm on any ground supported by the record and,
if Aegis’s argument is correct, it might obviate the need to address Marana’s arguments on the
issue of liability. See City of Tempe v. Outdoor Systems, Inc., 201 Ariz. 106, ¶14, 32 P.3d 31,
¶14 (App. 2001) (we may affirm even if trial court reached right result for wrong reason); Bothell
v. Two Point Acres, Inc., 192 Ariz. 313, ¶7, 965 P.2d 47, ¶7 (App. 1998) (“In order to avoid
piecemeal litigation, . . . we may consider the merits of plaintiffs’ cross-motion and direct entry
6
Aegis later moved for reconsideration of this ruling, and, during trial at the close of all
evidence, also orally moved for a “directed verdict” (JMOL) on this ground. The trial court
denied both of those motions.
11
of summary judgment in their favor if they are entitled to that as a matter of law and there are no
genuine issues of material fact precluding it.”).
¶26 As Marana correctly points out, Aegis did not file a cross-appeal. But Aegis did
not have to do so in order to challenge the foregoing ruling. See Ariz. R. Civ. App. P. 13(b)(3),
17B A.R.S. (“The brief of the appellee may, without need for a cross-appeal, include in the
statement of issues presented for review and in the argument any issue properly presented in the
superior court.”). Because Aegis unsuccessfully moved for summary judgment on this point, it
preserved the issue for appeal. We “may affirm the judgment based on any such grounds,” and
a cross-appeal is required only if Aegis sought to enlarge its rights under the judgment or lessen
Marana’s. Id.; see also Ariz. R. Civ. App. P. 13 State Bar Committee Note (Absent a cross-
appeal, we “may not alter the lower court’s judgment in a manner favorable to the appellee.”).
The facts relating to this issue are essentially undisputed, and our review of the trial court’s denial
of Aegis’s motions for partial summary judgment and JMOL is de novo. See Bothell, 192 Ariz.
313, ¶8, 965 P.2d 47, ¶8; see also Gemstar Ltd. v. Ernst & Young, 185 Ariz. 493, 505, 917 P.2d
222, 234 (1996).
¶27 In ruling on Aegis’s motion for partial summary judgment, the trial court accurately
characterized Aegis’s argument as follows:
The gravamen of [Aegis’s] claim in this case is that the
Planning Administrator made a final decision that the planned use
of the subject property was permitted. Nearly all counts of
[Aegis’s] complaint hinge on the proposed finality of this decision.
Indeed, [Aegis] seeks summary judgment on the very basis that the
Town of Marana failed to appeal the Planning Administrator’s
decision within the five-day period allowed for appeal. [Aegis’s]
12
argument is based on what [it] claims was the exclusive power and
duty of the administrator under MLDC § 02.04.01.7
The trial court then denied Aegis’s motion, stating that Aegis’s
citation to the duties of the Planning Administrator at MLDC
§ 02.04 do not support the absolute finality of the Administrator’s
decision. The MLDC identifies [the] Planning Administrator’s
duties . . . as to review applications, issue certificates, and assist the
Planning Commission. [Aegis] has not supported its argument that
an oral decision was final as a matter of law. . . . [And, Aegis’s]
argument that [Marana] should have appealed the Planning
Administrator’s oral decision is erroneous because there was no
such notice of such an event to begin the running of the five-day
appeal period.
¶28 As it did below, Aegis contends Shapiro’s initial decision—that Aegis’s proposed
use was permitted without the need for any CUP—became final when Marana failed to appeal that
decision within the time limit provided by the MLDC. See MLDC § 09.06.8 Aegis further argues
that by rejecting Shapiro’s initial decision, requiring an application for a CUP, and eventually
denying that application, Marana deprived Aegis of its “‘property right’” under the MLDC to “use
the property for the permitted use.” According to Aegis, “[t]he backdoor politics which led to
the requirement of a CUP in this case w[ere] illegal. The trial court should have ordered that
Marana was liable as a matter of law[] and submitted only the issue of damages to the jury.”
7
MLDC § 02.04.01 sets forth the Planning Administrator’s powers and duties, which
include “[e]nforc[ing] the zoning provisions of this code.” Aegis does not cite or rely on that
section on appeal.
8
The parties apparently agree that MLDC § 09.06, although not included in the record
before us, states, in pertinent part: “Any decision of the Planning and Zoning Administrator . . .
may be appealed to the Planning and Zoning Commission by filing written notice of such appeal
with the Town Clerk no more than five (5) working days after the rendering of any such decision
by the Planning and Zoning Administrator.”
13
¶29 We find no merit to Aegis’s argument, which is based primarily on Shapiro’s
testimony and the permissive authority granted to him under MLDC § 05.12.03(B)(9). See ¶5,
supra. Viewed in the light most favorable to sustaining the judgment, portions of Shapiro’s
testimony and some letters by Marana staff might support a finding or inference that he had
initially believed that his December 1998 oral decision was final. But we conclude as a matter of
law, as did the trial court, that it was not.
¶30 First, Aegis’s contention that Shapiro’s initial decision became final when Marana
failed to appeal it pursuant to MLDC § 09.06 is clearly untenable. The ordinance cannot
reasonably be construed to require Marana to “appeal” an oral decision of one its own employees.
See State v. Estrada, 201 Ariz. 247, ¶16, 34 P.3d 356, ¶16 (2001) (we cannot ascribe to a statute
or ordinance an interpretation that would lead to unreasonable result).
¶31 Second, MLDC § 05.12.03(B)(9) merely authorized Shapiro to “permit any other
uses which may be determined to be similar to those [expressly permitted HI uses] listed above,
in conformity with the intent and purpose of this zone.” (Emphasis added.) That section did not
specify the person or body by whom that determination was to be made. And, contrary to Aegis’s
argument, that section did not give Shapiro the exclusive, unfettered authority to make a final,
unreviewable determination that a non-listed but arguably similar use would be permitted in an HI
zone.9 If Shapiro had had such authority, the MLDC section that specifically prescribed the
9
We also note that MLDC § 05.12.03(D), labeled “Conditional Uses,” authorized the
Planning Administrator to “permit any other use which may be similar to those [expressly
permitted HI uses] listed above, in conformity with the intent and purpose of this zone, and not
more obnoxious or detrimental to the public health, safety, welfare or to other uses permitted in
this zone.” (Emphasis added.) Despite the similarity in language between that section and MLDC
§ 05.12.03(B)(9), Aegis does not contend that Shapiro had the sole, unfettered authority to
14
Planning Administrator’s powers and duties presumably would have so stated, but it did not. See
MLDC § 02.04.01. In addition, MLDC § 02.04 provides a general description of the Planning
Administrator’s job and states that he or she “shall, under the direction of the Town Manager, be
the primary administrative official for the administration of this code.” (Emphasis added.) That
section also supports the conclusion that any decision Shapiro made was subject to review and, as
the trial court ruled, not “conclusively final.”
¶32 Third, the state zoning enabling act also supports that conclusion. Because cities
and towns derive their zoning power from the state enabling act, their local zoning ordinances
must comply and be consistent with that act. See Motel 6 Operating Ltd. P’ship v. City of
Flagstaff, 195 Ariz. 569, ¶8, 991 P.2d 272, ¶8 (App. 1999); cf. City of Tucson v. Whiteco
Metrocom, Inc., 194 Ariz. 390, ¶10, 983 P.2d 759, ¶10 (App. 1999) (“The City’s power to enact
zoning ordinances derives exclusively from the state.”). Under A.R.S. § 9-462(A)(1), the board
of adjustment is “the official body designated by local ordinance to hear and decide applications
for variances from the terms of the zoning ordinance and appeals from the decision of the zoning
administrator.” Section 9-462.01(A)(3), A.R.S., further states that only the city’s “legislative
body” may “[r]egulate . . . the intensity of land use.” Conversely, the enabling act limits the
zoning administrator’s authority to “enforcement of the zoning ordinance.” § 9-462(A)(4).
Therefore, although MLDC § 05.12.03(B)(9), viewed in isolation, appears quite broad, when
viewed in light of the foregoing enabling statutes and other provisions in the MLDC, it did not
consider the factors set forth in § 05.12.03(D) or to make a final, unreviewable determination on
whether conditional uses would be permitted in an HI zone, without any need to follow the specific
procedures relating to conditional use permits prescribed in MLDC § 10.10.
15
grant Shapiro exclusive or final authority to ultimately decide whether certain uses were permitted
within a particular zone. See Bateman v. City of West Bountiful, 89 F.3d 704, 707 (10th Cir.
1996) (Under Utah’s Municipal Land Use Code, which largely mirrors Arizona’s, “the board of
adjustment has the authority to make a final determination regarding [plaintiff’s] property.”); cf.
Murphy v. Town of Chino Valley, 163 Ariz. 571, 572, 789 P.2d 1072, 1073 (App. 1989) (board
of adjustment required CUP application after zoning administrator declared use was permitted).
¶33 In sum, we agree with the trial court that Shapiro’s initial decision that Aegis’s
proposed use was permitted in the HI zone without the need for a CUP was not, as a matter of
law, final. Accordingly, we decline Aegis’s invitation to affirm the judgment on that basis.
III. Denial of Marana’s JMOL Motion
¶34 We next turn to Marana’s various arguments that the trial court erred in denying
its motion for JMOL. Based on several grounds, Marana contends the trial court erred by failing
to grant that motion on Aegis’s due process and equal protection claims. Although Marana only
appealed from the judgment, we nevertheless review the trial court’s ruling on Marana’s JMOL
motion. See A.R.S. § 12-2102(A) (“Upon appeal from a final judgment, [we] shall review any
intermediate orders involving the merits of the action and necessarily affecting the judgment, and
all orders and rulings assigned as error, whether a motion for a new trial was made or not.”). In
reviewing that ruling, we view the evidence and all reasonable inferences therefrom in the light
most favorable to the party opposing the motion, here, Aegis. See Monaco v. Healthpartners of
S. Ariz., 196 Ariz. 299, ¶6, 995 P.2d 735, ¶6 (App. 1999). And, we review a trial court’s grant
or denial of JMOL de novo. Id.16
A. Exhaustion of Remedies
¶35 As noted in ¶12 above, before trial Marana moved for summary judgment on, inter
alia, the ground that Aegis had failed to exhaust available administrative remedies when it did not
appeal the March 16 decision that a CUP would be required. In ruling on that motion, the trial
court agreed, stating,
[t]he proper course would [have been] for [Aegis] timely to
make its argument to the Planning Commission or Board of
Adjustments, that is the Marana Town Council, pursuant to A.R.S.
§ 9-462.06, and MLDC [§]§ 09.06 and 02.03.02. There is no
factual question that [Aegis] did not make such an appeal within five
days of the March 16, 1999 letter requiring the CUP. That letter
put [Aegis] on notice that the administrator’s decision was different
than [Aegis] had thought. Thus, this Court concludes that [Aegis]
has failed to exhaust administrative remedies as to this issue.
The trial court went on to note that both the Planning and Zoning Commission and Marana’s Town
Council had addressed Fetherling’s CUP application on its merits. Thus, the trial court
concluded, “issues relating to [Aegis’s] CUP application [and subsequent denial] have been
exhausted, but issues related to the finality of the Planning Administrator’s decision have not been
exhausted.” Accordingly, the trial court granted partial summary judgment in favor of Marana
on its contention that Aegis had not exhausted available administrative remedies as to the March
16 decision to require the CUP.
¶36 The record reflects, and both parties acknowledged at oral argument, that the
practical effect of that ruling was, at best, unclear during trial. Based on the trial court’s
exhaustion of remedies ruling, Marana consistently urged below that the court should preclude any
evidence of Shapiro’s initial determination and Marana’s later decision to require a CUP.
Although the trial court ruled before opening statements that Aegis “would be limited in that
17
regard, as set forth on the record,”10 during trial the evidence to which Marana had objected was
admitted. Only at the end of trial did the trial court clearly rule that Aegis’s failure to exhaust
administrative remedies would not preclude its § 1983 claims. And the trial court then denied
Marana’s proposed jury instructions that would have required the jurors to disregard any evidence
of Marana’s decision to require a CUP application from Aegis.
¶37 On appeal, Marana does not specifically assert any evidentiary or instructional
error. Rather, it contends the trial court’s “exhaustion ruling, as a matter of law, absolutely
precluded Aegis’[s] 42 U.S.C. § 1983 claims.” Marana also argues that “when the trial court
ruled that Aegis failed to exhaust its administrative remedies by not appealing the Town’s final
administrative decision to require a CUP, the law of the case was that the Town’s determination
was legal. Thus, Aegis was precluded from challenging the CUP requirement at trial.”
¶38 Generally, a party must exhaust administrative remedies before appealing to the
courts. See Minor v. Cochise County, 125 Ariz. 170, 172, 608 P.2d 309, 311 (1980). As Aegis
correctly notes, however, the United States Supreme Court has stated “there is no requirement that
a plaintiff exhaust administrative remedies before bringing a § 1983 action.” Williamson County
Regional Planning Comm’n v. Hamilton Bank of Johnson City, 473 U.S. 172, 192, 105 S. Ct.
3108, 3119, 87 L. Ed. 2d 126, 142 (1985); see also Zeigler v. Kirschner, 162 Ariz. 77, 83, 781
P.2d 54, 60 (App. 1989). But, the Supreme Court also has observed that “[t]he question whether
administrative remedies must be exhausted is conceptually distinct . . . from the question whether
10
The record contains the trial court’s minute entry but not the pertinent reporter’s
transcript relating to this ruling.
18
an administrative action must be final before it is judicially reviewable.” Williamson, 473 U.S.
at 192, 105 S. Ct. at 3119, 87 L. Ed. 2d at 142. Specifically,
[w]hile the policies underlying the two concepts often overlap, the
finality requirement is concerned with whether the initial
decisionmaker has arrived at a definitive position on the issue that
inflicts an actual, concrete injury; the exhaustion requirement
generally refers to administrative and judicial procedures by which
an injured party may seek review of an adverse decision and obtain
a remedy if the decision is found to be unlawful or otherwise
inappropriate.
Id. at 193, 105 S. Ct. at 3120, 87 L. Ed. 2d at 142-43.
¶39 Thus, although exhaustion of available administrative remedies is not required in
order to bring claims under § 1983, a decision must be final in order for it to be reviewable by a
court in the context of a claim brought pursuant to that statute. If a decision does not
“conclusively determine” an issue but, rather, “leaves open the possibility” that the decision is
subject to change, then it is not final or ripe for review and cannot support a § 1983 claim. Id.
at 193-94, 105 S. Ct. at 3120, 87 L. Ed. 2d at 143.
¶40 Here, the issue of the finality of Shapiro’s initial, oral decision—that Aegis did not
need a CUP—was raised by Aegis below and in its answering brief. And, in ¶¶29-33 above, we
upheld the trial court’s ruling that that decision, under the MLDC and state enabling statutes, was
neither “conclusively final” nor unchangeable. Likewise, the later, written decision of Marana
staff to require Aegis to apply for a CUP, memorialized in Shapiro’s March 16 letter to
Fetherling, also was not final; Aegis could and should have sought a final determination on that
issue by the Planning and Zoning Commission or the Town Council. Such review would have
19
resulted in a conclusive determination whether Aegis would be required to apply for a CUP and
would have enabled Aegis to properly seek judicial review of the CUP requirement.
¶41 In sum, neither Shapiro’s initial determination that Aegis’s proposed use was
permitted and that no CUP was required, nor the later decision of Marana staff that a CUP would
be required, were final, conclusive determinations. Given the lack of finality of those decisions,
they were not ripe for judicial review. Although the trial court expressed its view during trial that
evidence relating to the CUP requirement “go[es] to the issue of whether or not [the denial of the
CUP was] arbitrary and capricious,” we disagree. The propriety of the decision to require that
Aegis apply for a CUP and the propriety of the ultimate decision on the merits of that CUP
application are separate and distinct issues. Evidence relating to Shapiro’s initial determination
and Marana’s subsequent decision to require a CUP was irrelevant to the Planning and Zoning
Commission’s denial of the CUP application on its merits.
¶42 The only issue that was ripe for trial was whether the facts surrounding Marana’s
denial of the CUP application supported Aegis’s claims for violations of its substantive due process
and equal protection rights. For several reasons, neither of those claims should have been
submitted to the jury.
B. Substantive Due Process
¶43 Marana argues that “the trial court erred by denying [its JMOL motion] as to the
due process claim” because “Aegis’[s] primary complaint was that the Town’s Planning
Commission and Town Council were improperly swayed by negative press coverage and
neighborhood opposition in denying the CUP” and because Aegis “failed to present sufficient facts
to support a jury finding of liability on this claim.” In reviewing this issue, we first note that “the
20
granting or the refusal to grant rezoning by special use permit is a legislative function of the Town
Council subject to limited review by this Court.” Bartolomeo v. Town of Paradise Valley, 129
Ariz. 409, 416, 631 P.2d 564, 571 (App. 1981). And, “[w]hen we review the action of a board
of adjustment on appeal, we determine only if there is some credible evidence to support the
board’s ruling.” Burroughs v. Town of Paradise Valley, 150 Ariz. 570, 573, 724 P.2d 1239,
1242 (App. 1986). We also note that the doctrine of substantive due process is “to be applied with
‘caution and restraint.’” Wallace v. Casa Grande Union High Sch. Dist. No. 82 Bd. of Governors,
184 Ariz. 419, 430, 909 P.2d 486, 497 (App. 1995), quoting Moore v. East Cleveland, 431 U.S.
494, 502, 97 S. Ct. 1932, 1937, 52 L. Ed. 2d 531, 539 (1977).
¶44 “A threshold requirement to a substantive or procedural due process claim is the
plaintiff’s showing of a liberty or property interest protected by the Constitution.”
Wedges/Ledges of California, Inc. v. City of Phoenix, 24 F.3d 56, 62 (9th Cir. 1994). “A
protected property interest is present where an individual has a reasonable expectation of
entitlement deriving from ‘existing rules or understandings that stem from an independent source
such as state law.’” Id., quoting Bd. of Regents v. Roth, 408 U.S. 564, 577, 92 S. Ct. 2701,
2709, 33 L. Ed. 2d 548, 561 (1972).
¶45 Again, because only Marana’s final decision denying the CUP application was
subject to review in connection with Aegis’s substantive due process claim, it is clear that Aegis
could not have had a “reasonable expectation of entitlement” to have the CUP application granted.
Although Shapiro supported the CUP application and recommended its approval, no evidence in
the record shows that anyone on either the Planning and Zoning Commission or town council had
told Aegis that the CUP application would be approved. Thus, once the application for the CUP
21
was submitted, Aegis was subject to the inherently unpredictable and often politicized process of
seeking permission from a local legislative body to conduct certain activity on a piece of property.
In short, Aegis had no protected property interest in having its CUP application granted.
¶46 Moreover, even if we assume, arguendo, that Aegis did have a protectable interest
in the granting of the CUP, its substantive due process claim still fails. After determining that a
party has a protectable property interest, the issue becomes, in the context of a § 1983 suit,
whether any deprivation of that interest resulted from an abuse of governmental power of sufficient
degree to be deemed a constitutional violation. See Greenbriar, Ltd. v. City of Alabaster, 881
F.2d 1570, 1577 (11th Cir. 1989). In order to show a substantive due process violation, the abuse
of governmental power must be one that “shocks the conscience.” United Artists Theatre Circuit,
Inc. v. Township of Warrington, 316 F.3d 392, 401 (3rd Cir. 2003) (holding that in the land-use
context, substantive due process is violated only when government action “shocks the
conscience”); cf. County of Sacramento v. Lewis, 523 U.S. 833, 118 S. Ct. 1708, 140 L. Ed. 2d
1043 (1998) (in context of search and seizure, substantive due process is violated only when the
government’s action shocks the conscience in a constitutional sense); Eller Media Co. v. City of
Tucson, 198 Ariz. 127, ¶6, 7 P.3d 136, ¶6 (App. 2000) (noting that substantive due process
“precludes government conduct that shocks the conscience”); Martin v. Reinstein, 195 Ariz. 293,
¶66, 987 P.2d 779, ¶66 (App. 1999) (applying “shocks the conscience” standard in context of
substantive due process claim challenging application of Sexually Violent Persons Act).
¶47 Aegis argues the record supports the jury’s finding that Marana had violated its
substantive due process rights because “[t]he evidence showed that neither neighborhood
opposition nor concern for health and safety has anything to do with what Marana did. Aegis was
22
politically railroaded by an illegal decision which served only one purpose, and that was to avoid
the false and irresponsible media criticism of Marana.” Aegis further contends that “[d]enying
a property use for political reasons is a violation of substantive due process.” On both points, we
disagree.
¶48 The record shows that Marana put the issue of Aegis’s proposed use on the agenda
of its Planning and Zoning Commission’s February 24 meeting in response to letters written by
nearby property owners. Furthermore, the record shows that some of those property owners were
at that meeting and voiced their concerns about the proposed use. People also expressed
opposition to Aegis’s proposed use at the April 28 Planning and Zoning Commission and May 18
Town Council meetings. There is no evidence in the record showing that Marana required the
CUP solely because of the newspaper article concerning Aegis’s proposed business. Even if it
did, however, our conclusion would remain the same.
¶49 The law is clear that listening to public opposition to proposed land uses is part of
the legislative process of rezoning. Indeed, “nothing is more common in zoning disputes than
selfish opposition to zoning changes. The Constitution does not forbid government to yield to
such opposition; it does not outlaw the characteristic operations of democratic . . . governments,
operations which are permeated by pressure from special interests.” Coniston Corp. v. Village
of Hoffman Estates, 844 F.2d 461, 467 (7th Cir. 1988); see also Christian Gospel Church v. San
Francisco, 896 F.2d 1221, 1225 (9th Cir. 1990) (“neighborhood opposition to the granting of a
conditional use permit is not unlawful and should be considered by the Planning Commission”);
Creative Environments, Inc. v. Estabrook, 680 F.2d 822, 832 (1st Cir. 1982) (“that town officials
are motivated by parochial views of local interests which work against plaintiffs’ plan and which
23
may contravene state subdivision laws” does not state a claim of denial of substantive due
process).
¶50 Even assuming all the evidence of Shapiro’s initial determination and the subsequent
decision of Marana staff to require a CUP was properly admitted, Aegis’s constitutional claims
relating to Marana’s denial of the CUP fail as a matter of law. Courts repeatedly have held that
a complaining landowner’s substantive due process and equal protection rights are not violated
even when a municipality acts in violation of state or local law, in bad faith, and/or beyond its
jurisdiction. See Chesterfield Dev. Corp. v. City of Chesterfield, 963 F.2d 1102, 1104 (8th Cir.
1991) (To state claim of violation of substantive due process, “the plaintiff must allege something
more than that the government decision was arbitrary, capricious, or in violation of state law”;
“[a]n example would be attempting to apply a zoning ordinance only to persons whose names
begin with a letter in the first half of the alphabet.”); PFZ Properties, Inc. v. Rodriguez, 928 F.2d
28, 32 (1st Cir. 1991) (“without more,” even if Puerto Rico “engaged in delaying tactics” or acted
outside its jurisdiction, plaintiff could not state claims of violations of due process and equal
protection); Coniston Corp., 844 F.2d at 467 (“Something more is necessary than dissatisfaction
with the rejection of a site plan to turn a zoning case into a federal case; and it should go without
saying that the something more cannot be merely a violation of state (or local) law.”); Chiplin
Enters., Inc. v. City of Lebanon, 712 F.2d 1524, 1528 (1st Cir. 1983) (“A mere bad faith refusal
to follow state law in such local administrative matters does not amount to a deprivation of due
process.”); Creative Environments, 680 F.2d at 833 (violation of state law, without more, cannot
support claim of substantive due process violation; plaintiff must show “fundamental procedural
irregularity, racial animus, or the like”).
24
¶51 The cases on which Aegis relies in support of its assertion that “[d]enying a
property use for political reasons is a violation of substantive due process,” are inapplicable. In
Brady v. Town of Colchester, 863 F.2d 205, 216 (2d Cir. 1988), evidence suggested that zoning
was denied because of “indefensible reasons such as political animas.” In Bello v. Walker, 840
F.2d 1124 (3rd Cir. 1988), evidence suggested that the permit application was denied because the
applicant had publically opposed one council member’s bid for reelection. In addition, Bello has
been overruled. See United Artists Theatre Circuit, 316 F.3d at 394. Similarly, in Scott v.
Greenville County, 716 F.2d 1409 (4th Cir. 1983), evidence suggested that denial of the permit
was based on racial considerations, and other evidence clearly showed that the permit denial was
directed personally at the applicant. In contrast, the record here contains no evidence that denial
of the CUP was based on any such impermissible personal, political, or racial considerations.
¶52 In sum, because it did not have a protected property interest in the granting of the
CUP, Aegis’s claim of substantive due process fails and should not have been sent to the jury.
Moreover, even if Aegis did have such an interest, Marana, by considering public opposition to
the proposed use, did not unconstitutionally deprive it of that interest. The trial court erred in
denying Marana’s JMOL motion on Aegis’s substantive due process claim.
C. Equal Protection
¶53 Marana also asserts “the trial court erred by denying [its JMOL motion] as to the
equal protection claim” because “Aegis failed to show a single instance where a similarly situated
applicant was treated differently by the Town from the way it was treated.” Moreover, Marana
argues, “[e]ven if there was a similarly situated class, the Town did not act arbitrarily or
capriciously” in denying the CUP.
25
¶54 To establish an equal protection violation, a party must establish two facts. First,
the party must show that it was treated differently than other people in the same “similarly
situated” class. Christian Gospel Church, 896 F.2d at 1225. Second, when, as here, that
disparate treatment does not “trammel[] fundamental personal rights or implicate[] a suspect
classification,” the party needs to show that the classification bears no rational relation to a
legitimate state interest. Lockary v. Kayfetz, 917 F.2d 1150, 1155 (9th Cir. 1990); see also State
v. Nguyen, 185 Ariz. 151, 153, 912 P.2d 1380, 1382 (App. 1996).
¶55 The record does not reflect that Marana treated Aegis differently than other
applicants for CUPs. No evidence established, nor does Aegis allege, that Marana had failed to
follow applicable procedures in considering and denying the CUP application. The record shows
that Aegis’s proposed use generated significant public controversy within Marana, that Marana
held duly noticed public hearings on the CUP application, and that Marana denied the application
after considering all evidence for and against the CUP. The record does not show that Aegis was
treated differently than any other developer seeking to conduct a controversial business within the
town’s borders.
¶56 Secondly, even if Marana had somehow treated Aegis differently in denying the
CUP, the record shows that Marana had rational reasons for its decision. For example, although
the Camino Martin property had HI zoning, Marana nonetheless had a legitimate interest in
listening to its citizens and limiting the uses that occur in that zone. Indeed, although HI is the
most permissive zone, there are some uses expressly prohibited in that zone. See MLDC
§ 05.12.03(E). Furthermore, the record shows that Aegis was unable to answer questions
concerning how it was going to dispose of waste water generated by the JYD1500 as it processed
26
medical waste and whether the disposing of the JYD1500’s waste water was going to be permitted
by Pima County.
¶57 Therefore, as with Aegis’s substantive due process claim, Aegis failed to establish
facts upon which relief could be granted on its equal protection claim. Marana was entitled to
JMOL on that claim, and the trial court erred in sending it to the jury.11
DISPOSITION
¶58 The trial court erred in denying Marana’s motion for JMOL on Aegis’s substantive
due process and equal protection claims. Accordingly, the trial court’s judgment is reversed and
the case is remanded with directions to enter judgment in favor of Marana. Aegis’s request for
fees incurred on appeal is denied.
_______________________________________
JOHN PELANDER, Presiding Judge
CONCURRING:
_______________________________________
PHILIP G. ESPINOSA, Chief Judge
_______________________________________
PETER J. ECKERSTROM, Judge
11
In light of our conclusion that neither of Aegis’s constitutional claims should have been
sent to the jury, we need not address Marana’s various challenges to Aegis’s evidence of lost
profits during trial.
27