IA Coal Mining Co. v. Monroe County, Iowa

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 00-2880SI
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Iowa Coal Mining Co., Inc., *
Star Coal Company, Inc., and *
James Huyser, *
*
Appellants, *
*
v. * On Appeal from the United
* States District Court
Monroe County, Iowa; Juanita L. * for the Southern District
Murphy; Monroe County Board * of Iowa.
of Adjustment; Arthur W. Sims, *
Member; Natalie Lathrop, Member; *
Joseph E. Pearson, Member; Robert *
Lee Putnam, Member; and William *
H. Yates, Member, *
*
Appellees. *
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Submitted: March 12, 2001
Filed: July 23, 2001
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Before RICHARD S. ARNOLD and MORRIS SHEPPARD ARNOLD, Circuit
Judges, and MONTGOMERY,1 District Judge.
___________
RICHARD S. ARNOLD, Circuit Judge.
1
The Hon. Ann D. Montgomery, United States District Judge for the District of
Minnesota, sitting by designation.
These consolidated cases involve a mining concern's efforts to combine a strip
mine and a solid-waste landfill on property it leased in Monroe County, Iowa. The
County opposed the landfilling operation and enacted zoning ordinances to prohibit this
use of the property. The parties litigated their dispute in the state courts for over ten
years, resulting in two decisions by the Iowa Supreme Court. Thereafter, the County
denied the mining concern's application for a certificate permitting landfilling as an
existing nonconforming use. In the actions underlying this appeal, the mining concern
claimed that the County's conduct violated its due-process and equal-protection rights,
constituted a taking without just compensation, and was illegal under state law. The
District Court2 entered summary judgment in favor of the County, and this appeal
followed. We affirm.
I.
Iowa Coal Mining Co., its wholly owned subsidiary, Star Mining Co., and its
sole shareholder, Jim Huyser (collectively referred to as Iowa Coal) leased several sites
in Monroe County for coal strip-mining. Two of these sites, designated as Star 6 (120
acres) and Star 14 (340 acres), were located in an A-2 district, a classification which
allowed both mining and landfilling as conditional uses.
In the mid-1980's, the decline of the price of coal and the rise in operation costs
made strip mining at these sites less and less economically feasible. Iowa Coal
determined that it could increase profitability by combining strip-mining and landfilling
at the same site. When these two operations are synchronized, special strip-mining
techniques are used to create the space for the landfill. These techniques are more
expensive than traditional methods of strip mining and are undertaken with the
2
The Hon. Charles R. Wolle, United States District Judge for the Southern
District of Iowa.
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anticipation that the additional costs would be more than offset by the profits from the
landfill.
In 1984, Iowa Coal obtained a landfill permit from the Iowa Department of
Natural Resources (DNR) for 10.3 acres of Star 6 and began using this site as a landfill
on a limited basis in conjunction with the strip mine. In 1987, Iowa Coal hired an
engineering firm to design and develop a plan for the operation of a large landfill at Star
14. When County officials learned of this plan, they made it clear that they were
opposed to locating a landfill at Star 14. Iowa Coal, however, continued with its plans
and expended significant time and money to prepare its request for a landfill permit
from the DNR. For example, water wells were drilled to monitor the groundwater.
Iowa Coal also expended resources to market its planned Star 14 landfill to potential
users.
Meanwhile, the County began developing a county-wide zoning ordinance that
would prohibit landfilling in an A-2 district. In January 1988, Iowa Coal submitted its
request to the DNR for the Star 14 landfill permit. The County was able to delay
issuance of the Star 14 landfilling permit by various contacts with the DNR. On May
12, 1988, one day before Iowa Coal obtained the permit from the DNR, the County
enacted its new comprehensive zoning ordinance, Ordinance No. 6, which did not
allow landfilling in an A-2 district. The ordinance did allow existing nonconforming
uses to continue, so long as they remained "otherwise lawful" and were not enlarged,
moved to any part of the land not occupied by the use on the effective date of the
ordinance, or abandoned for a period of six months. Ordinance No. 6, § 9 B.1-3.
Iowa Coal applied for rezoning to accommodate its planned landfill and mining
operations at both sites. The County Board of Supervisors denied the request and Iowa
Coal filed a state-court action against the County for certiorari review and declaratory
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judgment, under Iowa Code § 335.18,3 claiming that Ordinance No. 6 was illegal and
deprived Iowa Coal of the only legitimate use of its property without providing just
compensation, and seeking damages. It is undisputed that no coal was ever removed
from, and no waste was ever deposited at, Star 14. The Court concluded that the
County exceeded its statutory authority in enacting Ordinance No. 6, and, following a
lengthy trial on damages, awarded Iowa Coal over $18 million for lost profits and
royalties. The Court did not address Iowa Coal's takings claims.
The Iowa Supreme Court reversed this decision. The Court first held that
Ordinance No. 6 was validly enacted. The Court next addressed the takings claims and
held with regard to Star 14, that the County did not "substantially deprive" Iowa Coal
of the use and enjoyment of this site because strip mining was still permitted there. The
Court reasoned as follows:
Iowa Coal's initial investment in Star 14 was not for the purpose of
developing a solid waste disposal site. Thus the majority of its resources
were already invested in expectation of strip mining. In fact, Iowa Coal's
own proof suggests that its capital investment in any landfill operation
would be minimized because of the similarity in equipment and essential
personnel involved in both industries. See Stone, 331 N.W.2d at 404
(where no material is placed on site and no construction work begun,
plaintiff's efforts and expenditures prior to rezoning not so substantial as
to create vested right in particular land use). It also appears that the cost
expended in planning and promoting this proposed landfill project
3
This section provides as follows:
Any person . . . aggrieved by any decision of the board of adjustment . . .
may present to a court of record a petition, duly verified, setting forth that
such decision is illegal, in whole or in part, specifying the grounds of the
illegality.
The court's review is by certiorari. Iowa Code §335.19 (2001).
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paralleled, rather than predated, the county's action, further weakening
Iowa Coal's claim.
Iowa Coal Mining Co. v. Monroe County, 494 N.W.2d 664, 671 (Iowa) (Iowa Coal
I), cert. denied, 508 U.S. 940 (1993). Thus, the Court concluded, there was no taking
of Star 14 upon which to base a damages award. The Court determined that Iowa
Coal's takings claim with regard to Star 6 failed for a different reason — it was not ripe
for adjudication because Iowa Coal had not exhausted administrative remedies by
attempting to take advantage of the existing-nonconforming-use provision of Ordinance
No. 6. Id. at 671-72.
On May 7, 1993, Iowa Coal filed another action against the County in the state
court. It sought declaratory judgment that Iowa Coal possessed nonconforming-use
rights for strip mining and landfilling at both Star 6 and Star 14, and that the sections
of Ordinance No. 6 and its materially identical successor, Ordinance No. 7, prohibiting
landfilling on these sites, were unconstitutional because they were arbitrary and
unreasonable. The complaint asked the Court to state what actions were necessary to
make the Star 6 takings claim ripe for adjudication. Iowa Coal also asserted a claim
for tortious interference with a contract between Iowa Coal and a waste operator for
deposit of waste material at Star 6.
The trial court again ruled in Iowa Coal's favor. It held that the Star 6 takings
claim was ripe because the ordinances provided no administrative remedy for
establishing a nonconforming use. Alternatively, the Court held that if the ordinance
could be read to provide an administrative remedy, the remedy was "fruitless and
inadequate." The Court also held that at the time the County adopted the ordinances,
mining and landfilling were existing nonconforming uses at both sites, that these uses
had not expired, and that adoption of the ordinances constituted a regulatory taking of
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Star 6. The Court awarded Iowa Coal approximately $3 million for a taking of Star 6
and $850,000 on the business-interference claim.
Once again, the Iowa Supreme Court reversed. The Court read the ordinances
as providing the following administrative remedy for establishing an existing
nonconforming use. Before land can be used for any purpose, including a
nonconforming one, the zoning administrator must issue a zoning certificate stating that
the use complies with the ordinance. The landowner must file a written application
with the zoning administrator for the certificate. If the zoning administrator refuses to
grant the certificate, the landowner may appeal to the five-member board of adjustment
created by the ordinance. Finally, Iowa Code §§ 335.18-25 allow a party aggrieved by
a decision of the board of adjustment to seek judicial relief by means of a petition for
certiorari. If the courts overturn a decision denying the certificate and thereby establish
the use, the exhaustion requirement would be met and a takings or inverse-
condemnation claim could be brought. Iowa Coal Mining Co. v. Monroe County, 555
N.W.2d 418, 435-36 (1996) (Iowa Coal II).
The state Supreme Court rejected the holding that this remedy was fruitless.
"[A]ny bias or preconceived disposition the County may have had against Iowa Coal
did not relieve Iowa Coal of the requirement to pursue the zoning certificate remedy."
Id. at 436. Thus, the Court determined, Iowa Coal's takings claims were premature,
and the trial court lacked jurisdiction to hear them. The Supreme Court accordingly
remanded for dismissal of Iowa Coal's takings claim regarding Star 6 and its
nonconforming-use claim for Star 6 and Star 14.
The Court also ruled that its decision in Iowa Coal I did not preclude Iowa Coal's
claim that the nonconforming use of landfilling existed at Star 14, as well as at Star 6,
at the time the ordinances were passed. The Court noted that the relevant evidence on
the nonconforming-use claim would be whether Iowa Coal "was landfilling" at the sites
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at the time the County adopted the ordinances, and did not discontinue this use for the
time prescribed in the ordinances. Id. at 444.
Lastly, the Iowa Supreme Court affirmed the award of $850,000 to Iowa Coal
on the business-interference claim, holding that the evidence supported the finding "that
the County was bent on stopping all landfilling operations on the two sites, even if that
meant driving Iowa Coal out of business," and that interference with the contract in
question "was just one part of this overall scheme." Id. at 440.
In response to this decision, Iowa Coal filed applications for nonconforming- use
certificates for Star 6 and Star 14 on March 5, 1997, and May 23, 1997, respectively.
The application for Star 6 was granted on July 23, 1997. Thereafter, the zoning
administrator hired a private law firm for advice on how to handle the Star 14
application. While Iowa Coal repeatedly requested a ruling on the Star 14 application,
which it claimed was as complete as the Star 6 application, the law firm recommended
that procedures "be put in place" to give the zoning administrator "every opportunity
to fully investigate matters pertaining to the application" and that a full hearing be
scheduled with a court reporter present. Iowa Coal opposed these suggestions,
claiming the zoning administrator was stalling in hopes of delaying the decision long
enough to bankrupt Iowa Coal.
II.
This brings us to the two actions underlying this appeal. On August 20, 1998,
when the Star 14 application had been pending for over 15 months, Iowa Coal filed an
action in the District Court against the County, the zoning administrator in her
individual and official capacities, the board of adjustment, and the board's members in
their individual and official capacities. In Count I, brought under 42 U.S.C. § 1983,
Iowa Coal claimed that the delay in ruling on the Star 14 application for a
nonconforming-use certificate was unreasonable and violated Iowa Coal's due-process
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rights. Three counts were brought under state law for tortious interference with a
contract with a party wanting to use Star 14 as a waste-deposit site. Lastly the
complaint sought declaratory judgment that the defendants' inaction amounted to a
taking of the Star 14 site.
On October 31, 1998, while this action was pending, the zoning administrator
denied Iowa Coal's application for a nonconforming-use certificate for Star 14. The
administrator held that no evidence established that the funds expended by Iowa Coal
at Star 14 prior to May 13, 1998 (the date the DNR issued the Star 14 landfill permit),
were not "preliminary" or in connection with obtaining the permit, as opposed to for
"performing work of a substantial nature that actually changed the land or actually
operating or using the Star 14 site for combined coal mining and landfilling, or for
landfilling or coal mining."
Iowa Coal appealed the decision to the board of adjustment, and a hearing was
set. Iowa Coal was informed that trial-type procedures would be followed at the
hearing. Mr. Huyser appeared and made a formal statement objecting to the proposed
format for the hearing. He stated that such procedures were not authorized by the
ordinances, and had never been applied to any other zoning decision by the board.
Furthermore, Mr. Huyser complained, it was unfair for the County to be both the only
party opposing issuance of the certificate and the decision-maker on Iowa Coal's
application. Mr. Huyser argued that the zoning administrator's October 1998 decision
was a sham, as the information submitted by Iowa Coal to support its application was
not reviewed.
Two boxes of documents were introduced into evidence as Exhibits A and B on
Iowa Coal's behalf. The County then introduced into evidence numerous documents,
and the hearing was concluded. On January 4, 1999, the board denied Iowa Coal's
appeal by adopting verbatim the extensive proposed findings of fact and conclusions
of law submitted by the zoning administrator, including the finding that "the evidence
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submitted by Iowa Coal did not establish that any use was made of the 'Star 14 Site' for
combination coal mining and landfilling or landfilling," or that any such use was lawful,
prior to the issuance of the permit from the IDNR one day after Ordinance No. 6 was
enacted.
Iowa Coal then filed its second action in the District Court. Counts I - III were
brought under 42 U.S.C. § 1983, claiming that both the 19-month delay in ruling on the
Star 14 application and the ultimate denial of the certificate were arbitrary and for a
malicious purpose, in violation of Iowa Coal's due-process and equal-protection rights,
and constituted an unconstitutional taking without just compensation. Count IV was
a claim under Iowa Code § 335.18 for certiorari review of the board's decision denying
the certificate. Iowa Coal's two actions were consolidated, and the County moved for
summary judgment on all claims.
III.
The District Court granted the County's motion for summary judgment. The
Court first considered the certiorari claim challenging the decision of the board of
adjustment to deny the use certificate for Star 14. The District Court held that both the
zoning administrator and the board of adjustment properly analyzed Iowa Coal's
application under the guidelines set forth in Iowa Coal II. The Court concluded that the
holding that there was no evidence presented that Iowa Coal was "landfilling" on the
dates in question was "well-grounded" in light of the evidence that no waste was ever
deposited at Star 14.
The District Court then turned to Iowa Coal's other claims and held as follows:
Plaintiffs essentially abandoned their constitutional and tort claims by
choosing not to present evidence at the hearing before the Board.
Whether this is deemed abandonment, failure to exhaust remedies, or
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estoppel by issue and claim preclusion, this court holds that the Board's
decision forecloses plaintiffs from pursuing their constitutional and tort
claims against the Board and its members.
In support of this conclusion, the Court cited several cases holding that a state
administrative decision may have later preclusive effect in a federal court. The Court
went on to hold that Iowa Coal's due-process claim failed because the zoning decision
was not "truly irrational," and that the equal-protection claim failed because the record
did not support a conclusion that Iowa Coal was treated differently from other
similarly-situated property owners, if there were any.
IV.
On appeal, Iowa Coal argues that the County defendants' motion for summary
judgment in the certiorari proceeding was not properly supported, and that the District
Court erred in applying a deferential standard of review to the board's decision, as
opposed to the traditional summary-judgment standard. On the merits of the certiorari
issue, Iowa Coal argues that the board and District Court erred in applying an "actual
use" standard to determine whether Iowa Coal had a vested right to landfill at Star 14.
The correct standard, Iowa Coal argues, is a "substantial expenditures" test, and the
evidence establishes that Iowa Coal met this test. Iowa Coal also argues that the
board's decision does not preclude its federal claims, and that the District Court erred
granting summary judgment on those claims.
The County's main argument for affirmance is that there is no evidence in the
record that Iowa Coal "was landfilling" at Star 14 before the ordinances were adopted.
The County argues that the focus should be on whether actual landfilling took place on
the site. The County also argues that the board of adjustment's findings have preclusive
effect on the nonconforming-use issue as well as on the federal constitutional issues.
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V.
We cannot agree that the board's decision precludes any of Iowa Coal's claims.
Judicial review of the board's decision is an integral part of the administrative remedy
itself, and is provided for by Iowa Code § 335.18. Nor do we believe that any claims
have been abandoned. We review de novo the District Court's application of state law,
predicting how the highest court in the forum state would resolve the issues. Clark v.
Kellogg Co., 205 F.3d 1079, 1082 (8th Cir. 2000). We also review a grant of summary
judgment de novo and apply the same standard as applied by the District Court.
Summary judgment is appropriate if the evidence, viewed in the light most favorable
to the nonmoving party, demonstrates that there is no genuine issue of material fact and
that the moving party is entitled to judgment as a matter of law. Id.; Fed. R. Civ. P.
56(c).
A.
We first consider the certiorari claim challenging the legality of the board of
adjustment's decision. Iowa Code § 335.21 provides that the hearing before the court
in such a proceeding shall be de novo. The Iowa Supreme Court has interpreted this
language as follows:
In a certiorari proceeding in a zoning case the district court finds the facts
anew on the record made in the certiorari proceeding. That record will
include the return to the writ and any additional evidence which may have
been offered by the parties. However, the district court is not free to
decide the case anew. Illegality of the challenged board action is
established by reason of the court's findings of fact if they do not provide
substantial support for the board's decision. If the district court's findings
of fact leave the reasonableness of the board's action open to a fair
difference of opinion, the court may not substitute its decision for that of
the board.
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Fox v. Polk County Board of Supervisors, Polk County, Iowa, 569 N.W.2d 503, 506
(Iowa 1997) (emphasis omitted) (citation omitted); see also Ackman v. Board of
Adjustment for Black Hawk County, 596 N.W.2d 96, 100 (Iowa 1999); Quality
Refrigerated Servs., Inc. v. City of Spencer, 586 N.W.2d 202, 207 (Iowa 1998)
("[z]oning decisions are entitled to a strong presumption of validity").
We believe that the Iowa Supreme Court would reach the same decision as did
the District Court here — that the board's action in denying an existing nonconforming-
use certificate for landfilling at Star 14 was reasonable. As the parties recognize, the
key issue is whether Iowa Coal's activities at Star 14 prior to the effective date of
Ordinance No. 6 gave it a vested right in the previous zoning classification. In Stone
v. City of Wilton, 331 N.W.2d 398 (Iowa 1983), the Iowa Supreme Court explained
that the standard for determining whether a party has acquired such a right is a flexible
one. "It depends on the type of the project, its location, ultimate cost, and principally
the amount accomplished under conformity. Each case must be decided on its own
merits, taking these elements into consideration." Id. at 403 (quoted case omitted).
Here, the Iowa II opinion itself sets forth the rule of decision: was Iowa Coal
landfilling before the disputed ordinance took effect? The answer is indisputably no.
Iowa Coal and the County were engaged in a battle of time, with Iowa Coal trying to
get a landfill permit and begin depositing waste at Star 14 before the County rezoned
A-2 districts, and the County trying to get the rezoning enacted before Iowa Coal
established the site as a landfill. We simply cannot say that it was unreasonable for the
board to find that Iowa Coal lost this race.
B.
We agree with the District Court that summary judgment was appropriate on
Iowa Coal's § 1983 claims. The fact that the ordinances deprived Iowa Coal of the
most beneficial use of the property it leased does not render the rezoning an
unconstitutional taking. See Village of Euclid v. Ambler Realty Co., 272 U.S. 365
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(1926) (75% diminution in value caused by zoning law did not constitute a taking);
Scott v. City of Sioux City, Iowa, 736 F.2d 1207, 1217 (8th Cir. 1984), cert. denied,
471 U.S. 1003 (1985) (zoning ordinance which limited commercial development on
certain land and thereby diminished land's value did not effect a taking).
The actions of the County or its officials were not "truly irrational," the level of
conduct necessary to support a substantive-due-process claim in this context. See
WMX Tech., Inc. v. Gasconade County, Mo., 105 F.3d 1195, 1199 n.4 (8th Cir. 1997);
Chesterfield Dev. Corp. v. City of Chesterfield, 963 F.2d 1102, 1105 (8th Cir. 1992).
While there may be cases where land-use decisions are "so corrupted by the personal
motives of local government officials that due process rights are implicated,"
Bituminous Materials, Inc. v. Rice County, Minn., 126 F.3d 1068, 1071 (8th Cir.
1997), this is not such a case. There is no evidence that the zoning officials here were
motivated by any consideration other than the public welfare. Iowa Coal has also not
shown that it was treated differently from other similarly situated landfill operators in
an A-2 district. Thus its equal protection claim fails. See id. at 1071-72.
Accordingly, we affirm.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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