Town of Cheswold v. Central Delaware Business Park

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
TOWN OF CHESWOLD, :
: C.A. NO. K13M-08-016 JJC
Petitioner : Consolidated Court of Chancery
: C.A. No. 1574-JJC
: In and For Kent County
v. :
:
CENTRAL DELAWARE BUSINESS :
PARK, a Delaware general partnership, :
:
Respondent. :
OPINION
Submitted: March 10, 2017
Decided: June 6, 2017
Max B. Walton, Esquire, CONNOLLY GALLAGHER, LLP, Newark, Delaware,
Attorney for the Petitioner.
Mark F. Dunkle, Esquire, PARKOWSKI, GUERKE & SWAYZE, P.A., Dover,
Delaware, Attorney for Defendant.
Clark, J.1
1
Sitting simultaneously as a Vice Chancellor by designation under Del. Const. art. IV, § 13(2)
for purposes of hearing this consolidated matter.
I. Introduction
These cross motions for summary judgment are before the Court because the
Town of Cheswold (hereinafter “Town”) seeks clarification of, or in the alternative
relief from, prior identical Stipulated Orders (hereinafter “Stipulated Orders”) of
the Superior Court and the Court of Chancery. In 2005, the Town and Central
Delaware Business Park (hereinafter “CDBP”) entered into a settlement agreement
approved by both the Superior Court and the Court of Chancery in Stipulated
Orders to resolve litigation over the Town’s Comprehensive Land Use Ordinance
(hereinafter “2005 Ordinance”). Pursuant to these stipulations, CDBP agreed to
drop its claims against the Town, and in exchange, the Town published certain
amendments to the 2005 Ordinance that preserved the M-1 zoning designation for
certain parcels of property located in the Central Delaware Business Park
(hereinafter “Business Park”). Furthermore, the Town agreed to process five
pending site plans and building permit applications and to approve four of those
five. The Town now seeks clarification regarding whether it is entitled, under
these Stipulated Orders, to change its zoning ordinance with regard to the Business
Park. In the alternative, it seeks relief from the Stipulated Orders to permit it to
make such amendments.
This matter involved two parallel suits in 2005, resolved by two parallel
orders. Accordingly, when the instant dispute arose, two parallel actions were
again filed in the Court of Chancery and Superior Court. The Court of Chancery
matter was consolidated into the Superior Court action after the presiding judicial
officer was designated by the Chief Justice pursuant to Delaware Constitution
Article IV, section 13(2) to serve as both Judge and as Vice Chancellor to resolve
the matter. For the reasons set forth herein, the Court finds that pursuant to the
Stipulated Orders of both courts, the claim recognizing CDBP’s vested rights in the
2
Business Park was finally resolved in 2005. Accordingly, the doctrine of res
judicata controls, and absent relief from those judgments, the Town is now barred
from relitigating the claim. Furthermore, the Town, on the present record, has not
met its burden to justify relief. As a consequence, CDBP’s rights vested in 2005
and remain so to present.
II. Background and Arguments of the Parties
In 1977, the Town adopted a zoning ordinance (hereinafter “1977
Ordinance”) establishing zoning districts within the Town including the M-1
Industrial District. The 1977 Ordinance set forth a rudimentary enumeration of
zoning districts with permitted and proscribed uses. Under this ordinance, the
Business Park was zoned as part of the M-1 Industrial District.
This ordinance governed land use in the Town until the Town adopted the
2005 Ordinance in an effort to modernize its zoning provisions. The 2005
Ordinance set forth a comprehensive framework for land use in the Town
including changes to zoning classifications as well as the permitted and proscribed
uses within the new zoning districts. Pursuant to the 2005 Ordinance, the
previously designated M-1 Industrial District was broken into two new zoning
districts designated as the I-1 Light Industrial and the I-2 Heavy Industrial zones.
Prior to the enactment of the 2005 Ordinance, the Town held a public
hearing. During that hearing, CDBP objected to the changes affecting the M-1
Industrial District, since it would affect its Business Park. CDBP proposed an
amendment, Article 5A, under which the Business Park would: (1) retain the M-1
zoning classification, and (2) continue to be governed by the 1977 Ordinance. At
the conclusion of the hearing, the Town Council allegedly adopted Article 5A,
meaning that the Business Park would remain zoned as M-1 Industrial. At that
3
point, CDBP understood that Article 5A would be incorporated into the 2005
Ordinance.
However, after the public hearing, the Town published the 2005 Ordinance
without the Article 5A amendment. Following the publication of the 2005
Ordinance without this provision, a dispute arose between the Town and CDBP
leading to CDBP filing a Superior Court action in 2005 seeking a writ of
mandamus. CDBP asked the court to compel the Town to publish and apply
Article 5A, as adopted. CDBP also simultaneously filed a parallel action in the
Court of Chancery seeking, inter alia, a declaration that CDBP’s rights in the
Business Park were vested prior to the adoption of the revised zoning ordinances.
Before either court rendered a decision, the parties submitted the Stipulated
Orders in an effort to resolve both actions. Pursuant to the settlement agreement
incorporated into these orders, the Town acknowledged that it had in fact
unanimously passed Article 5A on April 4, 2005. The Town confirmed that the
“entire [Business Park] property shall continue with M-1 Zoning and site
plan/building permit procedures under the 1977 Zoning Code.” 2 Furthermore, the
Town agreed to amend and republish the 2005 Ordinance reflecting the Business
Park’s designation as M-1 and subject to the plan and building permit procedures
under the 1977 Ordinance.3 The Town also agreed to process all of the pending
site plans and building permits under the 1977 Ordinance and issue approvals of
four of those five within 10 days of execution of the stipulations. 4
In compliance with the Stipulated Orders, the Town codified Article 5A in
the current Town Code. The net effect of the Stipulated Orders was the
2
Stipulated Orders.
3
Id.
4
Id.
4
recognition of CDBP’s vested rights in the Business Park. In exchange for the
Town recognizing CDBP’s vested rights and adopting Article 5A, CDBP
dismissed all claims against the Town.
The amendment the Town adopted pursuant to the consent decrees, which is
the focus of the instant dispute, is found in Article 5A of its current zoning
ordinances. It provides that
[i]t is necessary and desirable; as a matter of public policy, to
recognize vested property development rights in order to ensure
reasonable certainty, stability, and fairness in the land use planning
process and in order to stimulate economic growth . . . . The following
development plans satisfy the provisions of this Article 5A as vested
development plans: Record Plan of Central Delaware Business Park . .
. . A vested property right shall be deemed established with respect to
any lots, parcels or tract of land [subject to this zoning ordinance]. A
vested property development right, once established as provided in
this Article 5A, precludes any zoning or land use action by the Town
of Cheswold which would alter, impair, prevent, diminish, impose a
moratorium on development, or otherwise delay the development or
use of the property subject to this Article 5A, except with the written
consent of the owner of such land. 5
There is no question that this ordinance and its recognition of the “vested property
right” applied solely to CDBP.
However, in 2013, the Town began considering enacting a new zoning
ordinance that would affect CDBP’s rights under the Stipulated Orders. Namely,
the Town began considering downzoning the vacant, unsold lots within the
Business Park. Accordingly, it seeks clarification as to what the Stipulated Orders
require regarding legislative changes for land use and building construction matters
in the M-1 district. After the Town filed its action, both parties agreed to
5
CDBP Opening Brief Ex. 3 (Article 5A Amendment) (emphasis added).
5
simultaneously brief the issues and requested that the Court decide the matter
pursuant to cross-motions for summary judgment.
During the course of the briefing, the Town argued that the Stipulated
Orders did not preclude future Town councils from enacting zoning ordinance
which would affect the Business Park. Instead, the Town argued that the purpose
of the Stipulated Orders was to codify the changes to the 2005 Ordinance that the
Town Council adopted but never published. Further, the Town maintains that the
intent of the Stipulated Orders was to: (1) require the Town to publish Article 5A
which CDBP lobbied for and the Town Council passed; (2) make clear that
pending applications would be processed under the procedures applicable to the
1977 Ordinance; and (3) dismiss the pending actions in the Superior Court and in
the Court of Chancery. Therefore, the Town argues that CDBP had not acquired
perpetual vested rights in the 1977 Ordinance. The Town further argues that the
Town Council was not able to legally enter into a contract regarding its zoning
powers. The Town contends that an interpretation of the Stipulated Orders which
would prohibit future Town councils from enacting zoning legislation would
amount to illegal contract zoning and would impermissibly bind future councils.
The Town seeks a declaratory judgment stating that the 2005 Stipulated
Orders do not preclude it from considering and enacting legislative changes for
land use and building construction matters in the Business Park. In the alternative,
the Town seeks relief from the Stipulated Orders pursuant to Superior Court Civil
Rule 60 and the parallel Court of Chancery Rule 60 (hereinafter collectively “Rule
60”).
In contrast, CDBP views the Stipulated Orders and the enactment of Article
5A as recognizing CDBP’s vested rights. It argues that if the Town were to enact
new zoning legislation that interfered with CDBP’s ability to continue developing
6
the Business Park under the 1977 Ordinance, the Town would impair these vested
rights. It also opposes the Town’s contention that the 2005 agreement constituted
contract zoning and argues that the Town is not entitled to equitable relief.
The Court held oral argument on November 18, 2016 to consider these
issues. After oral argument, the Court identified an area of law that required
additional briefing. Namely, the Court requested supplemental briefing regarding
the potential applicability of res judicata and collateral estoppel since the
resolution in 2005 included stipulated parallel orders in the Court of Chancery and
the Superior Court.6 In CDBP’s supplemental brief, it raised two additional issues,
the doctrines of Repose and Laches. Thereafter, the Court permitted the Town to
respond to those two additional arguments. The following sets forth this Court’s
opinion regarding the parties’ rights and obligations under the 2005 Stipulated
Orders.
III. Legal Standards
Before the Court are cross-motions for summary judgment. In reviewing a
motion for summary judgment, “viewing the facts in the light most favorable to the
nonmoving party,” the moving party must demonstrate “that there are no material
issues of fact still in dispute and that the moving party is entitled to judgment as a
matter of law.” 7 The mere fact that both parties filed motions for summary
judgment “does not act per se as a concession that there is an absence of factual
6
Res judicata is also referred to as claim preclusion and collateral estoppel is referred to as issue
preclusion. Throughout the remainder of this opinion, the Court will reference these doctrines as
res judicata and collateral estoppel.
7
Burkhart v. Davies, 602 A.2d 56, 59 (Del. 1991).
7
issues.”8 However, “where the parties have not presented argument to the court
that there is an issue of material fact, the court shall deem the motion to be the
equivalent of a stipulation for decision on the merits based on the record submitted
with the motion.”9
The Town seeks a declaratory judgment in this matter declaring its rights in
light of the Stipulated Orders. Both courts have the jurisdiction to “declare rights,
status, and other legal relations whether or not further relief is or could be
claimed.”10 However, to entertain a declaratory judgment suit, there must be an
actual controversy.11 Therefore, this legislation enables courts to hear “declaratory
judgment actions where the alleged facts are such that a true dispute exists and
eventual litigation appears to be unavoidable.”12 Here, neither party disputes that
an actual controversy exists.
In the alternative to seeking a declaratory judgment that Article 5A is
unenforceable or that the Stipulated Orders do not prohibit amending the zoning
requirements applicable to the Business Park, the Town seeks relief from the two
Stipulated Orders pursuant to Rule 60(b). The language found in Rule 60(b) is
identical in both the Court of Chancery and the Superior Court Civil Rules and
allow relief for
(1) [m]istake, inadvertence, surprise, or excusable neglect; (2) newly
discovered evidence; (3) fraud (whether heretofore denominated
intrinsic or extrinsic), misrepresentation or other misconduct of an
8
United Vanguard Fund, Inc. v. TakeCare, Inc., 693 A.2d 1076, 1079 (Del. 1997).
9
Super. Ct. R. 56(h); Ct. Ch. R. 56(h).
10
10 Del. C. § 6501.
11
XI Specialty Ins. Co. v. WMI Liquidating Tr., 93 A.3d 1208, 1216–17 (Del. 2014).
12
Rollins Int’l Inc. v. Int’l Hydronics Corp., 303 A.2d 660, 662 (Del. 1973).
8
adverse party; (4) the judgment is void; (5) it is based has been
reversed or otherwise vacated, or it is no longer equitable that the
judgment should have prospective application; or (6) any other
reason justifying relief from the operation of the judgment. 13
IV. Discussion
For the following reasons, the Court finds that CDBP acquired vested rights
pursuant to the settlement agreement entered as stipulated judgments in 2005.
Therefore, the doctrine of res judicata governs this decision. Since CDBP was the
beneficiary of court orders in 2005 finding that its rights were vested, under the
vested rights doctrine, the Town cannot enact new legislation that will interfere
with CDBP’s vested rights in the Business Park.14 Despite the 2005 judgments, the
Town raised several arguments regarding why either the 2005 Ordinance was ultra
vires or in the alternative why it should not be applied prospectively. The Court
finds that these arguments are both (1) dispensed with by res judicata and (2)
independently are without merit. Therefore, the Stipulated Orders, as final
judgments, only permit the Town to validly request relief pursuant to Rule 60(b).
Based on the record before the Court, the Town is not entitled to such relief.
13
Ct. Ch. R. 60(b)(2); Super. Ct. R. 60(b)(2).
14
CDBP raised several additional arguments including, equitable estoppel, a Contracts Clause
violation, the doctrine of Laches, and the Statute of Repose, in an attempt to prevent the Town
from challenging the 2005 Stipulated Orders. Since the Court holds that the Stipulated Orders
fixed CDBP’s rights as vested in 2005 and those orders are entitled to the effect of res judicata,
the Court will not address CDBP’s additional arguments.
9
A. The Stipulated Orders recognized that CDBP acquired vested rights
and the doctrine of res judicata provides final resolution of that matter.
CDBP argues that it has perpetual vested rights in the Business Park, and
therefore, any changes in the Town’s zoning provision cannot affect its rights. It
maintains that the two parties entered the settlement agreement acknowledging
CDBP’s vested rights, and in return, it agreed to dismiss its suits against the Town.
CDBP argues that the settlement agreement’s primary purpose was to recognize its
vested rights.
In response, the Town argues that the 2005 Ordinance and the Stipulated
Orders did not create perpetual vested rights. Instead, according to the Town, the
plain language of the Stipulated Orders merely states that the 1977 Ordinance will
continue to apply to the Business Park. Additionally, the Town maintains that the
intent of the parties was not to create vested rights. Instead, the Town argues that
the intent of the parties was to require the Town to publish Article 5A, to process
pending site applications, and to dismiss the pending litigation. Therefore, the
Town argues that if the parties had intended these orders to create perpetual vested
rights, either or both orders would have expressly included such language. The
Town argues that the parties’ failure to include such language precludes this Court
from now finding perpetual vested rights. Moreover, the Town believes that it is
impossible to acquire perpetual vested rights pursuant to a zoning ordinance.
The Court recognizes the tension between the doctrine of vested rights and a
municipality’s need to enact zoning ordinances to benefit the public welfare.
While the Town asks this Court to find that CDBP does not have vested rights, the
Court declines to do so because the parties settled the vested rights issue in 2005.
In 2005, the parties decided to forego litigation and instead entered into a
settlement agreement. Both courts then approved the settlement in the form of
10
consent orders. Despite the Town’s argument to the contrary, these consent orders
acknowledged that CDBP acquired vested rights. Accordingly, the claim
regarding CDBP’s vested rights was determined in 2005.
Since the courts decided this issue in 2005, the Court must determine
whether either the doctrine of res judicata or collateral estoppel require this Court
to acknowledge CDBP’s vested rights. At the outset, the Court notes that the
doctrine of collateral estoppel is not applicable in the case at hand. It
independently does not bar the Town from rearguing the issue of vested rights.15
The United States Supreme Court, however, has recognized the distinction
between applying res judicata and collateral estoppel to consent agreements.16
Based on the separate focus of these two doctrines, the Court noted that “consent
agreements ordinarily are intended to preclude any further litigation on the claim
presented but are not intended to preclude further litigation on any of the issues
presented.”17 This is because one of the elements of collateral estoppel requires a
court to first reach the merits regarding an issue to be actually decided and
essential to the decision. 18 In other words, the doctrine of collateral estoppel does
not apply to consent agreements because a consent judgment does not reach the
15
See Arizona v. California, 530 U.S. 392, 414 (2000) (citing 18 Charles Alan Wright, Arthur R.
Miller & Edward H. Cooper, Federal Practice and Procedure § 4443 (2d ed. 1981) (stating that
consent orders do not ordinarily support the application of collateral estoppel)).
16
Id.
17
Id. (emphasis added).
18
United States v. Int’l Building Co., 345 U.S. 502, 506 (1953); Arizona, 530 U.S. at 414 (stating
that a consent judgment is not an actual adjudication and therefore the elements of collateral
estoppel are not met).
11
merits of factual sub-issues, and therefore, sub-issues are not actually litigated and
essential to the determination. 19
The elements of res judicata, however, do not require the court to reach the
merits of a case.20 Therefore, res judicata may separately bar the Town’s
argument if its elements are satisfied. 21 Here, CDBP’s original claims sought two
principal remedies involving two claims. In the Court of Chancery, it sought a
declaration that its rights in the Business Park were vested. In the Superior Court,
it sought a writ of mandamus requiring the Town to publish and apply an
ordinance that it had enacted.
The purpose of the res judicata doctrine is to “provide a definite end to
litigation, prevent vexatious litigation, and promote judicial economy.” 22 In order
to accomplish this purpose, Delaware has adopted a five part test to determine
whether res judicata will bar a subsequent claim. 23 Res judicata will bar a claim
where:
(1) the original court had jurisdiction over the subject matter and the
parties; (2) the parties to the original action were the same as those
parties, or in privity, in the case at bar; (3) the original cause of action
or the issues decided was the same as the case at bar; (4) the issues in
the prior action must have been decided adversely to the appellants in
the case at bar; and (5) the decree in the prior action was a final
decree.24
19
Int’l Building Co., 345 U.S. at 506.
20
Id.21
Id.22
La Point v. AmerisourceBergen Corp., 970 A.2d 185, 191 (Del. 2009).
23
Dover Historical Soc’y, Inc. v. City of Dover Planning Comm’n, 902 A.2d 1084, 1092 (Del.
2006).
24
Id.12
Here, the Town does not question whether the Superior Court and the Court
of Chancery in 2005 had jurisdiction to enter these Stipulated Orders.
Additionally, it is uncontested that the parties are the same in the present litigation
as they were in 2005. The Town and CDBP were the only two parties involved in
the 2005 litigation and are the only parties involved in this dispute.
However, the parties disagree on whether the remaining elements of res
judicata are met. The Town argues that the courts in 2005 never decided that
CDBP obtained a vested property right and that the courts merely declared that
development of the Business Park would continue under the 1977 Ordinance. In
this regard, the Town argues that the courts did not consider the issue of vested
rights in 2005.
While the Stipulated Orders, themselves, do not specifically state that CDBP
acquired vested rights, they require the Town to “amend and republish the New
Zoning Code to include Article 5A as unanimously passed on April 4, 2005.”25
Accordingly, both the Superior Court and Court of Chancery orders incorporated
by reference the provisions in Article 5A recognizing vested rights.26 The
Stipulated Orders clearly identify by reference Article 5A, 27 and it is clear that the
25
CDBP’s Opening Brief Ex. 2 and Ex. 4.
26
The Delaware Supreme Court has recognized that a court order can incorporate by reference
other documents. See Harvey & Harvey, Inc. v. Knotts, Inc., 620 A.2d 857, 1993 WL 22032, at
*1 (Del. Jan. 26, 1993) (Table) (holding that the court order under review failed to incorporate
by reference a transcript); see also State v. Felton, 2016 WL 3568523, at *10 (Del. Super. Ct.
June 22, 2016) (finding that a judicial decision regarding probable cause can incorporate by
reference prior judicial decisions in terms of probable cause for a warrant). Therefore, Article
5A can be incorporated by reference into the 2005 court orders if the procedure for incorporation
is met. In deciding whether the Stipulated Orders incorporated Article 5A by reference, the
Court will construe it essentially as it would a contract. Samost v. Samost, 641 Fed.Appx. 123,
125 (3d Cir. 2016) (citing United States v. ITT Cont’l Baking Co., 420 U.S. 223, 236–37 (1975)).
27
Star States Dev. Co. v. CLK, Inc., 1994 WL 233954, at *4 (Del. Super. Ct. May 10, 1994).
13
parties intended this provision to be incorporated by reference. 28 Therefore,
Article 5A is treated as if it were contained within the four-corners of the
Stipulated Orders.29
Furthermore, when interpreting consent orders, rules of contract
interpretation apply. 30 Accordingly, in terms of stipulated judgments and consent
orders, courts look to extrinsic evidence for interpretation only when ambiguity
exists.31 However, “frequently the circumstances surrounding [the consent
decree’s] formation will be relevant to its meaning.” 32 Here, the circumstances
surrounding the formation of the consent decrees confirms that the parties, and
thereby the courts, intended to resolve the claims by recognizing CDBP’s vested
rights in the Business Park.
The ordinance adopted by the Town that authorized the settlement is a
compelling piece of evidence relevant to the intent of the parties. Namely, it
provided that the “Town’s position is basically in agreement with vested rights”
and then continues by exempting only issues that are not relevant to the case at
28
Id. (analyzing Realty Growth Inv’rs v. Council of Unit Owners, 453 A.2d 450, 454 (Del.
1982)).
29
See Incorporation by Reference, Black’s Law Dictionary (10th ed. 2014) (“[a] method of
making a secondary document part of a primary document by including in the primary document
a statement that the secondary document should be treated as if it were contained within the
primary one”).
30
E.g., ITT Cont’l Baking Co., 420 U.S. at 238; Harris v. City of Phila., 47 F.3d 1333, 1337 (3d
Cir. 1995).
31
E.g., United States v. State of New Jersey, 194 F.3d 426, 430 (3d Cir. 1999); Fox v. U.S. Dep’t
of Hous. and Urban Dev., 680 F.2d 315, 319 (3d Cir. 1982).
32
Fox, 680 F.2d at 319; see also ITT Cont’l Baking Co., 420 U.S. at 238 (stating that when
enforcing a consent decree, a court can rely on certain aids of construction including “the
circumstances surrounding the formation of a consent order”).
14
hand.33 Although this Court finds that Article 5A was incorporated into the
Stipulated Orders, if it was not incorporated, the Court would look to it as evidence
of the circumstances surrounding the formation of the consent decrees. It
expressly provided that “[a] vested property right shall be deemed established with
respect to any lot, parcel or tract of land [of the Business Park].”34 Article 5A also
included language that specifically acknowledges vested rights for “parcels or
tracts of land created by development plans previously approved by the Town . . .
under the Zoning Ordinance in effect prior to the adoption of this Ordinance and
where such development plans were recorded in the land records of Kent County
prior to the adoption of this Ordinance.”35 Article 5A also specifically
acknowledges that CDBP satisfies this provision and recognizes CDBP’s vested
rights.36 Finally, in reviewing the circumstances surrounding the consent decrees,
the settlement related correspondence between the two parties’ attorneys leaves no
other reasonable conclusion than that the agreement intended to recognize CDBP’s
vested rights.37
Since both the Superior Court and the Court of Chancery issued Stipulated
Orders acknowledging CDBP’s vested rights, it follows that the courts decided the
issue of vested rights adversely to the Town. Additionally, the original courts had
jurisdiction over the matter, the parties are the same, and the original cause of
action is the same. The final element of res judicata requires a final court order,
which is present here in the form of the Stipulated Orders. The Stipulated Orders,
33
CDBP’s Opening Brief Ex. 3. (Resolution of Sept. 19, 2015)
34
Id.35
CDBP’s Opening Brief Ex. 3 (Article 5A Amendment).
36
Id.37
CDBP’s Opening Brief Ex. 3 (parties’ correspondence).
15
even though entered as consent decrees, are entitled to res judicata and accordingly
bar subsequent suits based upon the same claim. 38
The Town seeks to avoid application of res judicata by arguing that these
are not the same claims because the relief sought in 2005 involved a declaratory
judgment claim and a writ of mandamus action that directly addressed the nature of
CDBP’s rights. The Town argues that those suits are different from the current
dispute because the Town currently seeks clarification of the orders or alternatively
relief from judgment. The Town, however, brought this suit seeking to avoid
continued recognition of CDBP’s vested rights. CDBP, in the Court of Chancery
suit in 2005, sought and obtained a stipulated order declaring that CDBP did in fact
have such rights. The type of relief sought in 2005 by CDBP and the type of relief
sought now by the Town seeking a declaration that the prior orders are illegal or
unenforceable does not represent a change in the underlying claim.
In another attempt to avoid the doctrine of res judicata, the Town argues that
the Stipulated Orders were not a final resolution of the case because those orders
did not state that the suits were dismissed with prejudice. Since the courts did not
specify that the suits were dismissed with prejudice, under parallel Court Rules
41,39 the Town argues that the Stipulated Orders were not final decrees thus
making res judicata inapplicable. However, it is well recognized that when the
parties to a suit consent to dismissal and the court approves that dismissal, the
38
See Ezzes v. Ackerman, 234 A.2d 444, 445 (Del. 1967) (stating that both a judgment after trial
on the merits or after a court approved settlement agreement are entitled to have the binding
effect of res judicata and bar subsequent suits); NTC Grp., Inc. v. West Point-Pepperell, Inc.,
1990 WL 143842, at *3 (Del. Ch. Oct. 17, 1990) (stating that “consent decrees are given the
same effect as a final judgment after full litigation on the merits, and therefore res judicata has
been applied to them”).
39
Ct. Ch. R. 41(a)(1)(ii); Super. Ct. Civ. R. 41(a)(1)(II) (“[u]nless otherwise stated in the notice
of dismissal or stipulation, the dismissal is without prejudice”).
16
resulting consent decree constitutes a final judgment by the court.40 Therefore, the
fact that the Stipulated Orders did not state that the courts were dismissing the
referenced litigation with prejudice does not change the fact that these were final
decrees entitled to res judicata.
Finally, the Town seeks to avoid the effects of res judicata by arguing that a
court cannot enforce an illegality, and Article 5A amounts to an illegality. The
Town argues (1) that the courts, it, and CDBP illegally settled the 2005 claims
because the Stipulated Orders bound future councils, and (2) that the agreement
separately amounted to illegal contract zoning. These means to avoid the
continued application of the Stipulated Orders are also precluded by the doctrine of
res judicata.
First, there is certainly a presumption that the courts in 2005 would not have
entered into the Stipulated Orders incorporating the settlement agreement between
the two parties had such an agreement been illegal. Namely, a finding of the legal
ability of the Town to enter into such an agreement was a prerequisite to each court
entering its Stipulated Order. Delaware courts have determined that an issue that is
not expressly decided by a court in the course of issuing a judgment or decree is
still entitled to the effect of res judicata if that issue was “necessarily determined
thereby because [it was] essential to the validity of the judgment or decree
entered.”41 As the ability of the Town to enter into this agreement was essential to
40
Ezzes, 234 A.2d at 445; NTC Grp., Inc. v. West Point-Pepperell, Inc., 1990 WL 177497, at *3
(Del. Ch. Oct. 2, 1990); 47 Am. Jur. 2d Judgments § 523 (2017); 50 C.J.S. Judgments § 974
(2017).
41
Equity Corp. v. Groves, 53 A.2d 505, 509 (Del. Ch. 1947). Other jurisdictions have reached a
similar conclusion. See Studio Art Theatre of Evansville, Inc. v. City of Evansville, 76 F.3d 128,
131 (7th Cir. 1996) (holding that “[a] necessary implicit finding by the state court, coupled with
language that indicates awareness of the issues, is sufficient to preclude relitigation).
17
the validity of the judgment, the Town’s arguments that this agreement amounted
to binding future legislatures and illegal contract zoning are precluded by the
doctrine of res judicata.42
Second, the Town would not be entitled to challenge its ability to enter into
such an agreement to avoid the doctrine of res judicata. The Delaware Supreme
Court has held that the doctrine of res judicata bars a later challenge even to the
original court’s jurisdiction.43 While arguing that a settlement agreement
amounted to an illegality is in a somewhat different context than a challenge to a
court’s subject matter jurisdiction, it is indicative of the weight a court should give
a final judgment. As challenging the illegality of a contract and challenging
subject matter jurisdiction are typically arguments a party can raise at any time,
absent Rule 60 relief, the Town cannot avoid the effect of the 2005 judgments
based on a claim that this agreement amounted to an illegality.
The Town previously had the ability to fully litigate this issue had it so
chosen. Despite that ability, with the assistance of counsel, the Town recognized
the benefits of entering into a settlement agreement after evaluating its chances of
success. Both parties entered into this agreement after considering the
repercussions of such an agreement. In this regard, application of this doctrine
benefitted all involved to some degree. Namely, in 2005, both parties were
postured to fully litigate the issue of whether CDBP had vested rights. 44 There is
42
The remaining elements of res judicata are satisfied as set forth above.
43
See Shearin v. Mother AUMP Church, 755 A.2d 390, 2000 WL 975117, at *1 (Del. June 12,
2000) (Table) (stating that although generally a party can raise the argument of a lack of subject
matter jurisdiction at any time, when a court enters a final judgment, such an argument is barred
by the doctrine of res judicata).
44
Had the parties wished to litigate this matter in 2005, it would have required a court to weigh
certain factors including “the nature, extent and degree of the public interest to be served by the
ordinance amendment on the one hand and, on the other hand, the nature extent and degree of the
18
no question that the Court of Chancery could have issued a final binding decision,
after trial on the merits, finding that CDBP’s rights were vested. Instead however,
the Town was able to conserve its resources by entering into the settlement
agreement in 2005, which resolved all litigation in this matter. To allow this issue
to be revisited would cause the perverse result of forcing parties to always litigate
actions such as this to a final trial on the merits. Such an approach would be
inconsistent with both judicial economy and respecting the resources of the
litigants.
Accordingly, the Court must respect the finality that the settlement
agreement and the 2005 Stipulated Orders provided. 45 It is clear that the parties
extensively thought through these issues and agreed upon this specific mechanism
to resolve the dispute.46 Additionally, two Delaware courts, acknowledging the
ability of the Town to enter this agreement, approved the settlement agreement.
These two courts are presumed to have evaluated the legality of this agreement and
concluded that it was a valid manner in which to dispose of the suit. Therefore, as
all the elements of res judicata are met in this case, the Town cannot now argue
that the Stipulated Orders did not recognize CDBP’s vested rights.
Furthermore, not only does the doctrine of res judicata bar the Town from
challenging CDBP’s vested rights, but the similar law of the case doctrine also
developer’s reliance on the state of the ordinance under which he has proceeded . . . .” In re
244.5 Acres of Land, 808 A.2d 753, 757–58 (Del. 2002). The final analysis for vested rights
requires a “good faith reliance on existing standards.” Id. at 758. The factors involved are
highly factual in nature and, in the context of a zoning case, would take substantial resources on
the part of all parties to take to trial.
45
See Asten, Inc. v. Wangner Sys. Corp., 1999 WL 803965, at *1 (Del. Ch. Sept. 23, 1999)
(stating that courts should encourage settlement agreements and respect that expectation of
finality).
46
CDBP’s Opening Brief Ex. 5.
19
precludes the Town from doing so. The law of the case doctrine “prohibits courts
from revisiting issues previously decided, with the intent to promote ‘efficiency,
finality, stability and respect for the judicial system.’” 47 Under this doctrine, “[t]he
law of the case is established when a specific legal principle is applied to an issue
presented by facts which remain constant throughout the subsequent course of the
same litigation.” 48 The law of the case is established when a trial court enters a
final decision regarding the issues decided.49
Directly related to the case at hand, the law of the case doctrine can also
apply when a trial court’s final decision is in the form of a consent judgment. 50
However, in order for this doctrine to apply in this context, the court must actually
decide an issue.51 This typically requires the parties to fully brief the issue and for
the court to squarely decide it.52 However, the “actually decided” element is also
met when a court decides an issue “implicitly or by necessary inference from the
disposition.”53 Importantly, a court will not apply this doctrine if there is a change
47
State v. Wright, 131 A.3d 310, 321 (Del. 2016) (quoting Cede & Co. v. Technicolor, Inc., 884
A.2d 26, 39 (Del. 2005)).
48
Id. (quoting Hoskins v. State, 102 A.3d 724, 729 (Del. 2014)).
49
Id.50
See Cty. of Suffolk v. Stone & Webster Eng’g Corp., 106 F.3d 1112, 1117 (2d Cir. 1997)
(applying the law of the case doctrine to a settlement agreement approved by a district court’s
consent decree).
51
Wright, 131 A.3d at 321.
52
Id.53
Id. (quoting Hanover Ins. Co. v. Am. Eng’g Co., 105 F.3d 306, 403 (6th Cir. 2013)).
20
in circumstances, the prior decision is clearly wrong, or the prior decision produces
an injustice. 54
Here, the Court of Chancery and the Superior Court decided the issue of
vested rights in 2005 when they entered their judgments. The fact that it was in the
form of a consent judgment does not alter this fact. 55 Therefore, the courts’
decisions in 2005 that CDBP obtained vested rights are the law of the case unless
one of the exceptions to this doctrine applies. Here, there is no indication that the
courts’ decisions in 2005 were clearly wrong. With the consent of the parties, the
courts’ Stipulated Orders made an unambiguous factual finding that CDBP had
acquired vested rights. Furthermore, for the same reasons discussed infra
regarding Rule 60(b) relief, the Town has not established that there is a change of
circumstances from 2005 to now that would justify not applying this doctrine.
Accordingly, the law of the case doctrine applies and precludes the Town’s
arguments regarding vested rights.
Alternatively, the Town argues that even if CDBP acquired vested rights,
that right could not remain perpetually vested. The Delaware courts, however,
have not imposed a time restriction on how long vested rights remain vested. This
argument that vested rights can grow stale arises from the analysis of the Delaware
Supreme Court in In re 244.5 Acres of Land.56 Namely, the Court included in its
analysis regarding vested rights, the fact that the developer did not delay in its
efforts to obtain the necessary approvals.57 From that language the Court of
54
Id. at 322.
55
See Stone & Webster Eng’g Corp., 106 F.3d at 1117 (applying the law of the case doctrine to a
settlement agreement approved by a district court’s consent decree).
56
808 A.2d 753, 757 (Del. 2002).
57
Id.21
Chancery, in Salem Church v. New Castle County, extrapolated that a developer’s
“delay may defeat a vested rights claim.” 58 In the case at hand, the Town seeks to
further extend that logic by arguing that CDBP should no longer retain its vested
rights because after more than eleven years it has not completed the Business Park
or sold all of its lots.
Delaware law, however, does not extend this premise to the extent advanced
by the Town. The issue of delay in both the Delaware Supreme Court and the
Delaware Court of Chancery cases factored into the initial determination of
whether the developer obtained vested rights.59 The existence of a delay was not
used to argue that once a developer acquired vested rights, a delay could lead to
divesting the developer of that right. Here, the courts in 2005 determined that
CDBP acquired vested rights, and therefore, a delay in development is irrelevant.
Additionally, as the Delaware Supreme Court had the opportunity to declare
that vested rights are not perpetually vested but declined to do so, this court will
not impose such a restriction. 60 Instead, this Court finds that vested rights remain
perpetually vested. The very nature of vested rights requires this conclusion.
Vested means that a person or property has acquired a right for the present and
future, and that right is absolute.61 The nature of the doctrine of vested rights also
counsels against imposing a time limitation. The doctrine recognizes that, after a
certain point, it would be inequitable to allow legislatures or town councils to
58
Salem Church (Del.) Assocs. v. New Castle Cty., 2006 WL 2873745, at *11 (Del. Ch. Oct. 6,
2006).
59
In re 244.5 Acres of Land, 808 A.2d at 757–58; Salem Church (Del.) Assocs., 2006 WL
2873745, at *11.
60
See generally In re 244.5 Acres of Land, 808 A.2d at 757–58 (acknowledging vested rights but
not imposing a time limitation on that right).
61
Vested, Black’s Law Dictionary (10th ed. 2014).
22
change the law affecting the property. The passage of a period of time does not
make it any more equitable to change the nature of the right after a party has relied
upon it. Therefore, CDBP’s rights remain vested, and this Court will not impose
an expiration on that right. This doctrine prohibits the Town from taking any
legislative action that would interfere with CDBP’s vested rights.62
B. The Town’s arguments that (1) it could not legally enter into such an
agreement because it impermissibly bound future Town councils and
that (2) its actions amounted to illegal contract zoning are unavailing.
The Town also seeks to avoid the continued application of the 2005
Stipulated Orders by arguing that the Court cannot interpret those documents to
provide CDBP perpetual vested rights because that would impermissibly prohibit
future Town councils from ever changing zoning ordinances. In so arguing, the
Town advances the general rule that legislative actions are not binding on
successor legislative bodies in a way that would limit a future town government’s
legislative discretion. The Town maintains that if the Stipulated Orders are
interpreted to provide CDBP with perpetual vested rights, the Court could not
enforce the Stipulated Orders because that would constitute an illegality. 63
CDBP counters that the Town Council was free to enter into this contract
that created legal obligations which future councils would be required to follow. It
argues that the Stipulated Orders provide for perpetual vested property rights, and
therefore, the contractual promises continue to bind subsequent Town councils.
62
16B Am. Jur. 2d Constitutional Law § 746 (2009).
63
The Town also argues that the 2005 Stipulated Orders cannot forever preclude future
legislative changes because such relief could not have been achieved through the mandamus
action filed in 2005. However, this argument does not recognize the parallel action in the Court
of Chancery seeking declaratory relief that CDBP obtained vested rights. Therefore, the Court
finds no merit in the Town’s argument that the courts in 2005 had no power to grant such relief.
23
Both parties look to Glassco v. County Council of Sussex County64 to
support their propositions. In Glassco, the Court of Chancery confronted a
moratorium that included language that the provision would remain in effect until
acceptable plans were submitted to the County Council.65 The court, in dicta,
voiced concerns regarding this language and wrote that the County Council did not
have the authority to bind future council’s ability to remove the moratorium. 66 The
court also declared that “Council has no power by ordinance to create legal
obligations that restrict the future exercise of statutorily created discretion.” 67 On
the other hand, in a footnote, that court acknowledged a council’s ability to enter
contracts that create legal obligations which future councils must respect.68 It is
this language that CDBP relies on to support its position.
The arguably offending portion of Article 5A that is relevant to this inquiry
provides that
[a] vested property development right, once established as provided in
this Article 5A, precludes any zoning or land use action by the Town
of Cheswold which would alter, impair, prevent, diminish, impose a
moratorium on development, or otherwise delay the development or
use of the property subject to this Article 5A, except with the written
consent of the owner of such land. 69
The Court recognizes that this language directly impacts the ability of future
councils to modify this zoning ordinance as to CDBP.
64
1993 WL 50287 (Del. Ch. Feb. 19, 1993).
65
Id. at *4.
66
Id. at *5.
67
Id.
68
Id. at *5 n.7 (stating that “Council may, of course, by contract create legal obligations to others
that must be respected by future Councils”).
69
CDBP’s Opening Brief Ex. 3.
24
For the reasons discussed supra, res judicata bars this argument and is
dispositive of the matter. However, independently, even if it did not, the Town
would not be entitled to its requested relief on this basis. It is an accurate general
statement of the law that one legislative body cannot bind the discretion of future
legislative bodies.70 However, when interpreting the terms of a stipulated order,
general rules of contract interpretation also apply.71 Accordingly, even if including
this provision amounted to an ultra vires act, the Town would still not be entitled
to the relief it is seeking because “[a]n invalid term of an otherwise valid contract,
if severable, will not defeat the contract.” 72 Instead, the portion of the settlement
agreement that amounted to an ultra vires provision would be properly severed in
this case, leaving the remainder of the agreement enforceable. Namely, the
provisions in the incorporated Article 5A that separately and expressly recognized
CDBP’s vested rights would not be rendered invalid if another severable portion of
the ordinance included an illegal provision.
In order for a court to sever a portion of an agreement, it must first
determine whether the parties intended the agreement to be severable. 73 The Court
must make this determination based on the “terms and subject matter of the
contract, together with any pertinent explanatory circumstances.” 74 One manner in
70
Ohio Life Ins. & Tr. Co. v. Debolt, 57 U.S. 416, 431 (1853); Glassco, 1993 WL 50287, at *5.
71
E.g., United States v. ITT Cont’l Baking Co., 420 U.S. 223, 238 (1975); Harris v. City of
Phila., 47 F.3d 1333, 1337 (3d Cir. 1995).
72
Hildreth v. Castle Dental Ctrs., Inc., 939 A.2d 1281, 1283–84 (Del. 2007); VICI Racing, LLC
v. T-Mobile USA, Inc., 763 F.3d 273, 284 (3d Cir. 2014).
73
Orenstein v. Kahn, 119 A. 444, 445 (Del. 1922); see also Tracey v. Franklin, 67 A.2d 56, 61
(Del. 1949) (stating that “[w]hether or not the terms of a contract are severable is purely a
question of the intent of the parties”)
74
Orenstein, 119 A. at 445; Abercrombie v. Davis, 123 A.2d 893, 901 (Del. Ch. 1956); Equitable
Tr. Co. v. Del. Tr. Co., 54 A.2d 733, 738 (Del. Ch. 1947).
25
which parties can express their intent to have an agreement be severable is through
the inclusion of a severability clause. 75 However, the settlement agreement here
did not have such a provision. Therefore, this Court must determine whether the
parties intended the agreement to be divisible without such an express indication.
As this is a summary judgment proceeding, the Court will first look to the terms
and subject matter of the agreement before turning to additional materials the
parties provided. 76
Here, the overarching purpose of the agreement and resultant adoption of
Article 5A was for the Town to recognize CDBP’s vested rights and for CDBP to
dismiss its suit against the Town. The settlement agreement, without the allegedly
overreaching portion of Article 5A, still accomplished both parties’ objective.
Namely, absent this potentially suspect provision, the agreement recognized
CDBP’s vested rights. Once a party obtains such a right, the doctrine of vested
rights protects it against legislative interference. 77 Moreover, the agreement,
without this provision, still ended the litigation for the Town.
While it is clear to this Court that the parties intended the settlement
agreement to be divisible and therefore the provision stating that future Town
75
VICI Racing LLC, 763 F.3d at 285 (citing Doe v. Cedars Acad., LLC, 2010 WL 5825343, at *4
(Del. Super. Ct. Oct. 27, 2010)).
76
See Abercrombie, 123 A.2d at 901 (stating that the court would look to the terms and subject
matter before any of the facts and circumstances shown in the papers filed because it was a
motion for summary judgment).
77
See State v. Raley, 1991 WL 18114, at *3 (Del. Super. Ct. Feb. 8, 1991) (stating that the vested
rights doctrine prohibits the enactment of a government regulation or legislation that interferes
with the person’s intended use of the land as a violation of due process); David G. Heeter,
Zoning Estoppel: Application of the Principles of Equitable Estoppel and Vested Rights to
Zoning Disputes, 1971 Urb. L. Ann 63, 64–65 (1971) (explaining that once someone acquires
vested rights, the legislature cannot interfere with that right); Vested-Rights Doctrine, Black’s
Law Dictionary (10th ed. 2014) (stating that once a right has vested by a social compact or by a
court’s judgment, the legislature cannot interfere with that right).
26
councils cannot interfere with vested rights could be severed, the Court still must
determine if the remaining agreement amounts to a validly enforceable
agreement.78 In order to be an enforceable contract after a court severs a provision,
the consideration must remain in effect. 79 Additionally, the terms of the remaining
agreement must be sufficiently definite. 80
The consideration for the settlement agreement at issue was that the Town
would adopt Article 5A recognizing CDBP’s vested rights in exchange for CDBP
dismissing its litigation against the Town. This consideration remains even after
the Court severs the provision at issue. Moreover, the remaining terms of the
agreement recognizing CDBP’s vested rights are sufficiently definite to enforce the
contract. The agreement could not provide for this more expressly. Namely,
Article 5A B. a. provides, without the severed language from Article 5A B. c., that
“[a] vested property right [for CDBP in the Business Park”] shall be deemed
established.” Accordingly, even if one provision of the contract amounted to an
ultra vires act on the part of the Town, it would be appropriate for this Court to
sever the offending provision and continue to enforce the remaining settlement
agreement.81
78
See VICI Racing, LLC, 763 F.3d at 285 (stating that once a court determines a provision is
severable, it must then ensure that the remaining provisions are an enforceable contract).
79
Weed v. Lyons Petroleum Co., 294 F. 725, 731 (D. Del. 1923).
80
VICI Racing, LLC, 763 F.3d at 285.
81
Not only would the court sever the language in the settlement agreement, analyzing Article 5A
purely as an ordinance and not as an incorporated term of the Stipulated Orders, would similarly
warrant severance. Because a municipal ordinance has a presumption of validity and every
effort should be made to indulge in favor of the ordinance’s validity, such an action would be
appropriate to ensure the legality of Article 5A. See Tate v. Miles, 503 A.2d 187, 191 (Del.
1986) (stating that there is a presumption of validity when a municipality enacts a zoning
provision); 6 Eugene McQuillin, The Law of Municipal Corporations §20:6 (3d. ed. 2007)
(noting that judicial respect for the other branches of government requires a presumption of
27
Additionally, to the extent that the Town argues that any recognition of
vested rights in the zoning context impermissibly binds future Town councils from
exercising their police powers, such an argument is unpersuasive. While the very
nature of the vested rights doctrine limits actions future councils can take with
regard to property rights, Delaware Courts are willing to recognize vested rights in
the zoning context.82 Accordingly, as the courts in 2005 determined that CDBP
acquired vested rights, recognition of such a right does not impermissibly bind
future Town councils.
The Town’s second argument is that the agreement constituted illegal
contract zoning, and therefore, the Court cannot enforce the Stipulated Orders.
The Town argues that it could not legally enter into a contract that limited its
authority to enact zoning legislation, as zoning authority is an essential police
power. At oral argument, the Town argued that it was incapable of entering into
this contract because it required the Town to perform a legislative act that requires
a public process. According to the Town’s argument, as the Stipulated Orders
required the Town to partake in illegal actions, the Court cannot enforce that
illegality. Therefore, the Town argues that the Stipulated Orders are void.
CDBP counters that the Town’s power to zone can be curtailed when the
property owner has achieved vested rights. According to CDBP, these vested
validity for municipally enacted ordinances); see also Tanner v. Tuscaloosa Cty. Com’n, 594
So.2d 1207, 1209 (Ala. 1992) (stating that when reviewing a municipal ordinance, a court must
make every effort to find in favor of its validity); 6 Eugene McQuillin, The Law of Municipal
Corporations §20:6 (3d. ed. 2007). Moreover, enforcement of this provision without this
paragraph would not contravene or even affect the municipality’s intent of recognizing CDBP’s
vested rights. Newark Landlord Ass’n v. City of Newark, 2003 WL 22724663, at *4 (Del. Ch.
Nov. 17, 2003) (stating that a court will not sever an invalid provision if doing so contravenes
the intent of the legislature). Additionally, the amendment, after the paragraph is severed, is
capable of enforcement. Farmers for Fairness v. Kent Cty., 940 A.2d 947, 962 (Del. Ch. 2008).
82
In re 244.5 Acres of Land, 808 A.2d 753 (Del. 2002).
28
rights make the property owner immune from future changes to the zoning
ordinances. Moreover, CDBP argues that Article 5A, which allowed the Business
Park to continue its operations under the 1977 Ordinance, was not a private
agreement between the Town and CDBP. Instead, the agreement was reached
during a Town Council meeting where CDBP presented its position and the Town
agreed to recognize the CDBP’s rights publicly. It was duly passed by the Town
Council. Therefore, CDBP maintains that this was not an instance of contract
zoning and instead was a validly adopted zoning ordinance.
The seminal case in Delaware addressing contract zoning is Harman v.
Buckson.83 There, a developer sought to build townhomes, and when the town’s
Planning Commission frustrated the developer’s original plans, the developer
threatened to litigate whether the town validly enacted the original zoning
ordinance. 84 In order to avoid litigation, the town entered into an agreement with
the developer.85 That agreement permitted the developer to build the townhomes,
but the building plan was substantially different from the one the Town Council
had previously approved. 86 A third party then brought suit challenging the validity
of the agreement and asked the court to find that the initial zoning ordinance was
properly enacted. 87
Despite the developer’s argument that the agreement “was an appropriate
exercise of [the town’s] inherent authority to compromise claims against it,” the
83
467 A.2d 694 (Del. Ch. 1983).
84
Id. at 696.
85
Id.86
Id.87
Id.29
court determined that the agreement constituted illegal contract zoning. 88 The
court in Harman set forth the manner in which towns are required to enact zoning
ordinances and determined that this contract did not adhere to the statutory manner
in which such legislation is required. 89 The court determined that this contract
“bargained away part of its zoning power to a private citizen which the town did
not have the authority to do.” 90 The court admonished the agreement as being for
the benefit of one private landowner whereas zoning is “an exercise of the police
power to serve the common good and general welfare.” 91 The court went on to
state that this legislative function cannot be “curtailed by bargain or its exercise
controlled by the considerations which enter into the law of contracts.” 92
In another Delaware decision, the Court of Chancery held that an agreement
between a developer and municipality to rezone is per se illegal.93 While it is clear
that a town cannot enter into a contract with a private entity which strips the
government of its zoning power, the agreement at issue here is not of a nature that
constitutes illegal contract zoning. Here, the nature of the agreement and the
circumstances surrounding its enactment are factually dissimilar from the
agreement that the court examined in Harman.
Namely, CDBP went before the Town Council when the 2005 Ordinance
was under consideration. During that public meeting after receiving the Town
citizens’ input, the Town agreed to include the amendment which acknowledged
88
Id. at 699.
89
Id.90
Id.91
Id.92
Id. at 699–700.
93
Wilm. Sixth Dist. Comm. v. Pettinaro Enters., 1988 WL 116496, at *3 (Del. Ch. Oct. 27,
1988).
30
CDBP’s vested rights. The Town made the decision to acknowledge this zoning
publicly in a forum that allowed for other Town citizens to voice their concerns.
Despite the Town’s agreement to acknowledge CDBP’s vested rights to continue
developing the Business Park under the 1977 Ordinance, for an undisclosed reason,
the Town did not include the amendment when it published the new zoning
ordinances. Not publishing a validly enacted ordinance, generated CDBP’s
Superior Court and Court of Chancery actions. The Stipulated Orders recognized
the same. Also, the litigation of a claim regarding vested rights is not seeking an
order supporting contract zoning. Stipulated Orders issued by the courts resolving
such litigation also cannot be considered contract zoning.
This agreement was not strictly a private agreement between the Town and
the developer. The public was initially able to weigh in on this provision and
many expressed their support for it.94 Moreover, this agreement is not for the sole
benefit of a single Town resident. While it acknowledges a single resident’s vested
rights, the provision is in furtherance of the Town’s police powers because the
Town recognized that acknowledging these rights was for the public benefit. The
Town anticipated that by recognizing these vested rights, the development of the
Business Park would be in the entire Town’s best interest for purposes such as job
creation. Accordingly, this agreement did not constitute an illegality that would
require this Court to refuse to enforce the 2005 Stipulated Orders.
C. On the record before the Court, the Town is unable to satisfy the
requirements entitling it to Rule 60 relief.
The Town seeks, in the alternative, relief from the judgments of the Court of
Chancery and Superior Court pursuant to Rule 60. The Town argues that
94
CDBP Opening Brief Ex. 1 at 6.
31
continued application of the 2005 Stipulated Orders would be contrary to settled
law and would endanger the public health, safety, and welfare. Specifically, the
Town argues that the 1977 Ordinance lacks provisions pertaining to sidewalks,
parking lots, drainage, building permits, building standards, construction standards,
fire hydrants, sprinkler systems, or other safety systems. 95 According to the Town,
given the lack of public welfare provisions in the 1977 Ordinance, it would be
inequitable to allow this ordinance to stand. Therefore, the Town seeks relief from
the Stipulated Orders in order to enact a new zoning ordinance applicable to CDBP
that better addresses the public need.
The Town additionally argues that the parties have fulfilled the purpose and
intent of the Stipulated Orders. In furtherance of this argument, the Town
acknowledges that it published Article 5A, and it processed and approved, as
agreed upon, four of the five then pending applications. The Town argues that
because the parties fulfilled the intent of the Stipulated Orders, the prejudice to the
Town in the continued enforcement of the Stipulated Orders outweighs any
prejudice to title holders within the Business Park. Therefore, according to the
Town, it should be allowed to enact new zoning ordinances for the Business Park
to update the current ordinance that lacks several key public welfare provisions.
Under the circumstances of this case, where both the Superior Court and the
Court of Chancery entered Stipulated Orders, the only manner in which the Town
may obtain relief is through Rule 60. On motion, Rule 60(b) provides relief from a
judgment or order for
95
To illustrate this point, the Town points to the fact that there are no local environmental laws,
no storm water management, no building permit standards that apply to the Business Park, no
drainage provisions, no erosion and sediment control standards, no trees, no building height
requirement, and no open space requirement.
32
(1) [m]istake, inadvertence, surprise, or excusable neglect; (2) newly
discovered evidence; (3) fraud (whether heretofore denominated
intrinsic or extrinsic), misrepresentation or other misconduct of an
adverse party; (4) the judgment is void; (5) it is based has been
reversed or otherwise vacated, or it is no longer equitable that the
judgment should have prospective application; or (6) any other reason
justifying relief from the operation of the judgment. 96
In examining a motion for relief pursuant to Rule 60(b), the Court is guided
by the two significant values that this provision implicates: ensuring the integrity
of the judicial process and the finality of judgments. 97 Given the significant
interest in preserving the finality of judgments, “Rule 60(b) motions are not to be
taken lightly or easily granted.” 98 Here, the Town argues that it is entitled to relief
pursuant to Rule 60(b)(5) and (6). Under Rule 60(b)(5), for a court to grant relief,
the party must show that “the judgment, if permitted to stand, will cause a manifest
injustice to the moving party.”99 Under Rule 60(b)(6), a court will only grant relief
if there are extraordinary circumstances. 100 Relief under this provision is rare
because the extraordinary circumstances test is a demanding standard that requires
evidence of extreme hardship. 101
Here, the Town is not entitled to relief pursuant to Rule 60(b)(5) or (6).
Relief pursuant to paragraph (b)(5) would be available if the Stipulated Orders
amounted to manifest injustice to the Town and, more importantly, its citizens if
96
Ct. Ch. R. 60(b)(2); Super. Ct. R. 60(b)(2).
97
MCA, Inc. v. Matsushita Elec. Indus. Co., 785 A.2d 625, 634 (Del. 2001).
98
Id. at 635.
99
High River Ltd. P’ship v. Forest Labs., Inc., 2013 WL 492555, at *7 (Del. Ch. Feb. 5, 2013);
Nakahara v. the NS 1991 Am. Tr., 718 A.2d 518, 520 (Del. Ch. 1998).
100
Nakahara, 718 A.2d at 520.
101
High River Ltd. P’ship, 2013 WL 492555, at *9.
33
left unchanged. Significant, unanticipated changes to the factual circumstances
following the enactment of a court’s final judgment or order can be sufficient to
constitute manifest injustice. 102 However, after a review of the record before the
Court, the Town has not identified any concrete change in circumstances following
the enactment of Article 5A in 2005. Moreover, although the Court has the power
to declare the rights of the parties, without comparative proposed ordinances or a
more specific proposal from the Town, for the Court to do so would amount to
issuance of an advisory opinion for the Town Council. Based on the lack of
evidence put forth by the Town, it is unable to satisfy its burden of establishing
manifest injustice. The Court further declines to provide a blanket advisory
opinion setting parameters for future ordinances. Such an opinion would interfere
with the legislative discretion of the Town’s legislative body, and at the same time
could also inappropriately infringe on the property rights of CDBP.
Relief pursuant to paragraph (b)(6) would be available if continued
enforcement of the Stipulated Orders amounted to extreme hardship. Conceivably,
the Town’s inability to regulate the Business Park in order to protect the safety of
its citizens could also amount to extraordinary circumstances warranting relief
under paragraph (b)(6). It is important for municipalities to maintain the ability to
enact zoning ordinances for the general welfare of the entire town. 103 Therefore, if
the Town could show that the 1977 Ordinance does not contain necessary
provisions to protect the health and safety of the public and if the Town can show
that an updated zoning provision is the only avenue through which to address
modern safety concerns, the Town could conceivably establish that it is entitled to
Rule 60(b)(6) relief. However, the record before the Court does not establish
102
Id. at *7.
103
E.g., Shellburne, Inc. v. Roberts, 224 A.2d 250, 253 (Del. 1966).
34
extreme hardship. In its Petition, the Town merely relies upon conclusory
statements that the 1977 Ordinance does not contain certain safety provisions. The
Town has neither identified in its briefing nor made available in the evidentiary
record before the Court, evidence that a lack of these provisions has created a
danger to or has damaged the health and safety of the Town.
Moreover, the Town has not sufficiently shown that the 1977 Ordinance
leaves gaps in safety legislation and no other avenue is available to provide such
protection. 104 While the Town made conclusory statements to that effect,
conclusory statements are insufficient to satisfy its burden. Where the Town has
not provided concrete evidence that the 1977 Ordinance has created unsafe
conditions and reference a proposed a new ordinance, the Court is unable to
provide the guidance it seeks. Additional factual information, such as a proposed
comparative ordinance coupled with evidence of unsafe conditions instead of
conclusory statements, would be necessary for the Court to determine whether
allowing the 2005 Stipulated Orders to stand would create a manifest injustice or
an extraordinary circumstance.
Furthermore, the Town’s argument that the intent of the Stipulated Orders is
complete, and therefore, it should be entitled to relief, is unavailing. Even if this
factored into the analysis for Rule 60 relief, it would not weigh in favor of granting
the Town its requested relief. The predominate purpose of the settlement
agreement was to acknowledge CDBP’s vested rights. Since the Business Park has
not yet developed its remaining vacant lots, the purpose is not complete.
Therefore, the intent of the parties in entering the settlement agreement has not
104
Notably, CDBP conceded at oral argument that the Town could potentially enact an updated
version of the International Building Code that would apply to the Business Park to address its
safety concerns. It is clear that the Town has not considered alternative options to addressing
such health and safety concerns.
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been achieved, and this would not weigh in favor of granting the Town its
requested relief.
Evidence of record that would be necessary to sustain a Rule 60(b) challenge
would include the evidence of the alleged hardship placed on the Town by the
Stipulated Orders. However, the record cited by the parties in their briefs, and the
documents the parties submitted in addition to those briefs, do not provide
evidence meeting the Town’s burden. While the Court recognizes the Town’s
need to enact ordinances for the benefit of its citizens, the Town has not
established, based on the record before the Court, that it is entitled to Rule 60
relief. CDBP maintains vested property rights and the Town has not justified a
proper basis to receive relief from a judgment recognizing the Business Park’s
vested rights. Therefore, based on the record before the Court here, the Town’s
request for relief pursuant to Rule 60 is denied, without prejudice.
V. Conclusion
For the reasons set forth above, CDBP is entitled to summary judgment.
The Town and CDBP had the ability to enter into this agreement and did so
legally. The settlement agreement acknowledged that CDBP acquired vested
rights in developing the property pursuant to the 1977 Ordinance, and the courts
subsequently approved that agreement. The doctrine of res judicata bars the Town
from arguing otherwise.
There was an actual controversy sufficient for issuance of a declaratory
judgment, but the scope of the declaration cannot be made as broadly as the Town
requests. Such a broad declaration would exceed the scope of what is actually in
controversy. Because of a lack of specific proposals and evidence of record
regarding changes in circumstances, the Court is unable to issue a declaration
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providing what would essentially be an advisory opinion regarding the parameters
for future ordinances and land use restrictions.
Therefore, the Court declares that the Town cannot alter the application of
its zoning ordinances to CDBP in ways that would interfere with CDBP’s vested
rights. On the record before the Court, the Town has not justified that it is
warranted relief from the 2005 Stipulated Orders.
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