Michael B. Geisler Vs. City Council Of The City Of Cedar Falls, Iowa

IN THE SUPREME COURT OF IOWA
No. 102/07–0474
Filed July 10, 2009
MICHAEL B. GEISLER,
Appellant,
vs.
CITY COUNCIL OF THE CITY OF CEDAR FALLS, IOWA,
Appellee.
________________________________________________________________________
Appeal from the Iowa District Court for Black Hawk County,
Todd A. Geer (motion to dismiss) and Kellyann M. Lekar (motion for
summary judgment), Judges.
Property owner challenges the district court’s dismissal of one
claim and grant of summary judgment in favor of the Cedar Falls City
Council on another claim alleged in his petition for writ of certiorari.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
D. Raymond Walton of Beecher Law Offices, Waterloo, for
appellant.
Susan Bernau Staudt, Cedar Falls, for appellee.
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BAKER, Justice.
This appeal arises out of a petition for writ of certiorari filed by the
appellant, Michael Geisler, against the appellee, the City Council of
Cedar Falls. Geisler challenged the district court’s dismissal of his
claims that the City (hereinafter referred to as “the City”) acted illegally in
denying his proposed site plan for the development of real estate in the
College Hill Neighborhood Overlay Zoning District (hereinafter referred to
as “the Overlay District”) and its subsequent enactment of a six-month
moratorium on development in the Overlay District. The district court
dismissed Geisler’s claim that the moratorium was illegal on a motion to
dismiss. Subsequently, on a motion for summary judgment, the court
dismissed his remaining claim that the City acted illegally in denying
approval of Geisler’s site plan for the project because the ordinance that
ultimately prohibited the project was under discussion at the time of
Geisler’s initial application.
The City has asserted that its issuance of the moratorium was a
legislative function, and therefore, it is not reviewable by a writ of
certiorari because certiorari review is only available when the lower
tribunal is acting in a quasi-judicial capacity. We find the City’s
adoption of a moratorium is a legislative function and, therefore, not
reviewable. We also find that the district court applied incorrect law in
determining whether the City illegally denied Geisler’s site plan and failed
to consider whether the change in zoning was done in bad faith.
Because the district court erred in granting summary judgment based
upon an incorrect standard, we reverse and remand for further
proceedings consistent with this opinion.
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I. Background Facts and Prior Proceedings.
In 2004, Geisler purchased real estate located in the Overlay
District of Cedar Falls, Iowa, for the purpose of developing an eight-unit
apartment complex. In May of 2005, he submitted a site plan for re-
development of the land to the Cedar Falls Planning and Zoning
Commission. At the Commission’s May 18, 2005, meeting, city planner
Martin Ryan stated that the site plan met all the basic ordinance
requirements. However, there was a large amount of resident opposition
to the proposed development, and the Commission voted to deny
approval of Geisler’s site plan.
The regular Cedar Falls City Council meeting was held on May 23,
2005. At the meeting, the Council considered Geisler’s proposed site
plan. Several Overlay District residents expressed concerns about the
plan, including the increase in traffic it would generate and the
detrimental effect to single-family homes in the area. The Council denied
the site plan under Cedar Falls City Ordinance No. 29–160(f) because it
was “inconsistent with the character of the neighborhood due to
architectural design . . . [and was] not of comparable scale and character
in relation to adjoining properties.” Under the ordinance in effect in May
of 2005, the Council had the discretion to determine whether the site
plan was compatible with surrounding buildings.
At the May 23, 2005, meeting, a motion also passed to discuss a
temporary moratorium to study the issue of multi-family unit
construction in the Overlay District. At the next City Council meeting on
June 13, 2005, the City Council passed a resolution imposing a
moratorium on all development or construction of multi-family housing
in the Overlay District.
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Also on this date, Geisler submitted a revised site plan to the City
Department of Development. It was not processed in time to be
discussed at the meeting. Later, on July 11, 2005, a city official refused
to consider Geisler’s revised site plan, effectively denying the project.
After further study of a proposed zoning amendment, the City Council
passed a resolution on December 12, 2005, down-zoning the Overlay
District, prohibiting all development or construction of multi-family
housing. Geisler did not resubmit the site plan after the enactment of
the ordinance.
On June 22, 2005, Geisler filed a petition for writ of certiorari in
the district court alleging that the City acted illegally by denying his site
plan and subsequently passing the moratorium on development in the
Overlay District. The petition stated these were illegal acts and an
unconstitutional taking of his property for public use without just
compensation. On July 25, 2005, the City filed a motion to dismiss
Geisler’s petition for lack of subject matter jurisdiction.
On February 6, 2006, the district court issued an order overruling
in part and granting in part the City’s motion to dismiss. The trial court
overruled the City’s motion with regard to denial of the site plan because
the record was not sufficient to conclude the City denied the plan
because it intended to impose a moratorium on development. The court
granted the City’s motion as to Geisler’s claim that the City acted illegally
in imposing the moratorium, ruling the City was within its legislative
authority to do so. Subsequently, the City filed a motion for summary
judgment on the remaining claim, which the court granted because the
December 2005 ordinance that prohibited the project was under
discussion at the time Geisler submitted his initial site plan in May
2005. Geisler appeals.
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II. Scope of Review.
Our review of the judgment entered by the district court in a
certiorari proceeding is governed by the rules applicable to appeals in
ordinary actions. Iowa R. Civ. P. 1.1412.
The moratorium issue comes to us from the district court’s grant of
a motion to dismiss. A court can grant a motion to dismiss if the plaintiff
fails to state a claim upon which any relief may be granted. Iowa R. Civ.
P. 1.421(1)(f). On appeal, we review a district court’s ruling on a motion
to dismiss for correction of errors at law. See Iowa R. App. P. 6.907
(2009); see also Mlynarik v. Bergantzel, 675 N.W.2d 584, 586 (Iowa
2004). A court cannot consider factual allegations contained in the
motion or the documents attached to the motion. Berger v. Gen. United
Group, Inc., 268 N.W.2d 630, 634 (Iowa 1978). The court must ignore
these facts, except those of which the court may take judicial notice.
Winneshiek Mut. Ins. Ass’n v. Roach, 257 Iowa 354, 365, 132 N.W.2d
436, 443 (1965). In determining whether to grant the motion to dismiss,
a court views the well-pled facts of the petition “in the light most
favorable to the plaintiff with doubts resolved in that party’s favor.”
Haupt v. Miller, 514 N.W.2d 905, 911 (Iowa 1994). The purpose of the
motion is to test the legal sufficiency of the petition. Berger, 268 N.W.2d
at 634.
The issue of whether the City illegally denied Geisler’s site plan
comes to us on appeal from a ruling on a motion for summary judgment.
Summary judgment is appropriate when there is no genuine
issue of material fact and the moving party is entitled to
judgment as a matter of law. The burden is on the moving
party to establish there is no genuine issue of material fact,
and the facts must be viewed in the light most favorable to
the nonmoving party.
Rodda v. Vermeer Mfg., 734 N.W.2d 480, 483 (Iowa 2007).
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III. Merits.
A. Legality of Moratorium. The City claimed that a writ of
certiorari is an improper remedy for challenging the moratorium, as the
district court lacked subject matter jurisdiction over the legislative
actions of the Cedar Falls City Council. The City contended that the
issuance of a moratorium is a legislative function. Geisler disputed that
a moratorium is a legislative function, asserting that it is a judicial
function. He also asserted that the City acted illegally in imposing the
moratorium.
In granting the motion to dismiss, the district court noted that the
City “was within its legislative authority and discretion in issuing its
development moratorium.” In his resistance to the City’s motion to
dismiss, Geisler did not raise, and the court did not rule on his current
claim, that in passing the moratorium, the City failed to follow
procedures required by Iowa Code section 414.4 and the City’s zoning
ordinance. Because Geisler failed to raise this issue in his resistance, we
do not address this claim. See State v. McCright, 569 N.W.2d 605, 607
(Iowa 1997) (“Issues not raised before the district court, including
constitutional issues, cannot be raised for the first time on appeal.”). We
are, therefore, confronted only with the issue of whether the enactment
of a moratorium is a legislative function and Geisler’s challenge to the
City’s authority to enact the moratorium.
A writ of certiorari will not lie against the City if it was exercising a
legislative function at the time it enacted the moratorium; such actions
are not reviewable by the courts. Stream v. Gordy, 716 N.W.2d 187, 191
(Iowa 2006). This rule arises from the traditional separation of powers
between the three branches of government. “The chief characteristic of
the legislative function is the determination of broad policies or principles
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for the conduct of society’s affairs.” Goodell v. Humboldt County, 575
N.W.2d 486, 493 (Iowa 1998). We have long held that an amendment of
a zoning ordinance is a legislative function. Boomhower v. Cerro Gordo
County Bd. of Adjustment, 163 N.W.2d 75, 77 (Iowa 1968).
In enacting the moratorium until a revised zoning ordinance could
be reviewed, the City was performing a traditional legislative function.
Brown v. Crawford County, 960 F.2d 1002, 1012 (11th Cir. 1992);
Jackson Ct. Condos., Inc. v. City of New Orleans, 874 F.2d 1070, 1076
(5th Cir. 1989). A moratorium aids a governing body in performing the
legislative task of municipal planning. See Schafer v. City of New
Orleans, 743 F.2d 1086, 1090 (5th Cir. 1984) (“Interim development
controls such as this moratorium have been found to play an important
role in municipal planning. They aid in ‘bridging the gap between
planning and its implementation into legal measures.’ They may, as
here, be used to preserve the status quo while study of the area and its
needs is completed. This moratorium on land use serves a significant
public purpose.” (quoting 3 Patrick J. Rohan, Zoning and Land Use
Controls § 22.01, at 22–2 (1984))).
To the extent Geisler disagrees with the City’s exercise of this
legislative function, his recourse is “review by the electorate at the next
election.” Stream, 716 N.W.2d at 192. We hold a writ of certiorari will
not lie to review the action of the City in imposing the moratorium
because it was exercising a legislative function.
B. Legality of Site Plan Denial. In his original petition, Geisler
also challenged the City’s denial of his proposed site plan. There was a
change in the Overlay District’s zoning ordinance from the time Geisler
submitted his project and it was denied in May of 2005, to the time the
City’s refusal to approve his site plan was reviewed by the district court.
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The district court granted summary judgment to the City on Geisler’s
claim that the City illegally denied his site plan. In granting the City’s
motion for summary judgment, the district court applied what has been
referred to as the pending ordinance rule concluding that “at the time the
site plan was denied there was pending concern, discussion and
intention to amend the zoning ordinance and the site plan was denied for
reasons that fueled the moratorium and zoning changes.” Because the
district court believed there was a pending ordinance at the time of
Geisler’s application, the court applied the new ordinance in effect at the
time of the court’s decision, which ordinance prohibited multi-family
housing, and found the City’s denial was appropriate. We must
determine whether the district court was correct in applying the pending
ordinance rule to Geisler’s claim. Contrary to the pending ordinance rule
applied by the district court, we have adopted the rule that “ ‘a reviewing
or appellate court must decide a case based on the zoning law as it exists
at the time of the court’s decision.’ ” U.S. Cellular Corp. v. Bd. of
Adjustment, 589 N.W.2d 712, 717 (Iowa 1999) (quoting Edward H.
Zeigler, Rathkopf’s The Law of Zoning and Planning § 26.02[2][a], at 26–3
to 26–4 (4th ed. 1996)). We do not retreat from that position. 1
Under the rule adopted in U.S. Cellular, the district court should
have applied the new zoning ordinance that was passed on December 12,
2005, in determining the legality of the City’s denial of Geisler’s site plan,
unless an exception to this rule applied.
1It appears the district court applied the minority view that the rights of the
parties are governed by the ordinance in effect at the time of application, so a later
amendment of the ordinance does not apply on appeal, unless at the time the
application was filed a zoning change was pending. See Arden H. Rathkopf et al., 3
Rathkopf’s The Law of Zoning and Planning §§ 37:7-8, at 37-11 to 37-12 (2004). This
exception is known as the pending ordinance rule. Id. § 37:8, at 37-12. We rejected the
minority view in U.S.Cellular, 589 N.W.2d at 718.
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We have recognized two exceptions to the rule that the reviewing
court applies the law in effect at the time of its review. Id. at 718. First,
a developer may acquire a vested right because of substantial
expenditures made in reliance on the previously existing ordinance,
thereby precluding application of the new ordinance. Id. Second, a
reviewing court will not apply a new ordinance if officials acted in bad
faith by denying or delaying approval of a properly submitted and
conforming site plan in order to alter a zoning ordinance to bar the
prospective development. Id. at 717.
We have previously discussed the substantial expenditure
exception. In Quality Refrigerated Services Inc. v. City of Spencer, 586
N.W.2d 202 (Iowa 1998), we noted that an affected landowner may
acquire vested rights under certain circumstances:
The only vested right that a property owner may acquire is
the right to complete the development of his property in
accordance with his plans as of the effective date of the new
ordinance. . . .
To determine whether a property owner has acquired a
vested right, we engage in a two-part analysis: (1) did the
property owner make substantial expenditures toward the
use in question prior to the zoning change; and (2) were the
expenditures made by the property owner lawful.
Quality Refrigerated Servs., 586 N.W.2d at 206 (emphasis added)
(citations omitted); see also Keller v. City of Council Bluffs, 246 Iowa 202,
212–13, 66 N.W.2d 113, 119 (1954). We held that without the required
building permit, the landowner’s expenditures were illegal and, therefore,
could not be relied upon to acquire a vested right. Quality Refrigerated
Servs., 586 N.W.2d at 207.
At the point when Cedar Falls rezoned Geisler’s property,
effectively stopping the project, no building permit had been issued.
Because only expenditures made pursuant to a validly-issued permit will
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support the vested rights exception, U.S. Cellular, 589 N.W.2d at 718,
Geisler had acquired no vested rights and cannot rely upon this
exception.
We also discussed the bad-faith exception in U.S. Cellular. The
Board of Adjustment for the City of Des Moines denied U.S. Cellular’s
request to construct a cell phone tower in an area that permitted such
use but required a special permit. Id. at 714. After the site plan’s denial,
the Board rezoned the area to prohibit the requested use. Id. at 715 n.2.
This court affirmed the ruling of the district court finding bad faith on
behalf of the Board. Id. at 718–19. To find bad faith, we required
illegality of the denial 2 coupled with an improper purpose. Id.In the context of a zoning decision, “ ‘[a]n illegality is established if
the board has not acted in accordance with a statute; if its decision was
not supported by substantial evidence; or if its actions were
unreasonable, arbitrary, or capricious.’ ” Perkins v. Bd. of Supervisors,
636 N.W.2d 58, 64 (Iowa 2001) (quoting Norland v. Worth County
Compensation Bd., 323 N.W.2d 251, 253 (Iowa 1982)). In U.S. Cellular,
we found that the application was denied without any legal justification
even though it met all of the requirements of the then existing ordinance.
U.S. Cellular, 589 N.W.2d at 718–19. We specifically noted that the
Board’s professed reasons for denial were not based on either the
ordinance in effect at the time of application or the ordinance that was
subsequently passed. Id. at 718. Further, the Board misrepresented
both the facts allegedly supporting the application’s original denial and
2If there were valid grounds for denial of the application, for example, the
proposed site plan did not comply with the ordinance requirements, then there would
be no factual basis for finding a bad-faith denial even if the denial also happened to
further the decisionmaker’s subjective desire to prevent the proposed use.
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the facts allegedly supporting the change in ordinance. Id. Under those
circumstances, we found the Board’s actions “patently illegal.” Id.Of course, not every erroneous denial of a permit is done in bad
faith. The decisionmaker must act with an improper purpose for the
denial to be in bad faith. See id. at 717. The Board’s improper purpose
in U.S. Cellular was illegally denying the application to produce a delay
thereby giving the Board time “to enact the new ordinance prohibiting
the requested use.” Id. at 719.
Other states have discussed the issue of what constitutes an
improper purpose in finding bad faith. Certain examples are clear, such
as punishing a political opponent or denying a barber shop license to
protect the decisionmaker’s competing shop. Brady v. Town of
Colchester, 863 F.2d 205, 216 (2d Cir. 1988); Wilkerson v. Johnson, 699
F.2d 325, 328–29 (6th Cir. 1983). Other examples are less clear. In New
Jersey, the court found bad faith because, after concluding the change in
the zoning ordinance seemed to bear no relation to public health, safety,
morals, or general welfare and was arbitrary, it found the change was
“for no other purpose than to preclude a use which for seventeen years
has been lawful.” Brown v. Terhune, 18 A.2d 73, 74 (N.J. 1941).
Courts have also found bad faith when municipalities attempt “to
zone out a use” or stop a particular project. State ex. rel. Humble Oil &
Refining Co. v. Wahner, 130 N.W.2d 304, 311 (Wis. 1964). In Humble Oil,
this conclusion was based upon the fact that “town officials were trying
to keep one jump ahead of Humble and were attempting to change the
rules after they had been hailed into court” by Humble. Id. From these
cases, it can be discerned that an improper purpose exists when a zoning
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authority adopts a new zoning regulation designed to frustrate a
particular applicant’s plans for development. 3
We find that the district court erred in relying on the pending
ordinance rule rather than applying the legal principles set out in U.S.
Cellular. Because the district court did not consider whether the site
plan denial was done in bad faith, we remand the issue of bad faith to
the district court to determine whether the City illegally denied the site
plan and whether an improper purpose existed. We note that the court
has the ability to take additional evidence on this issue. See Iowa R. Civ.
P. 1.1410.
IV. Disposition.
We conclude that the City’s adoption of a moratorium is a
legislative function and, therefore, not reviewable. We also find that the
district court erred in awarding summary judgment on the denial of
Geisler’s site plan because the district court applied incorrect law in
determining whether the City illegally denied Geisler’s site plan and failed
to consider whether the denial was done in bad faith. We therefore
remand this case for further proceedings consistent with this opinion.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
3Unlike the above situations where bad faith was found when the governing
body sought to change the rules in response to a particular request, the result may be
different where a zoning change is already being contemplated before the particular
request is made. The fact that a zoning amendment is pending or under study may be
a factor in determining the existence of bad faith. Kittery Retail Ventures, LLC v. Town
of Kittery, 856 A.2d 1183, 1192–93 (Me. 2004).