Alpine Homes v. West Jordan

This opinion is subject to revision before final
publication in the Pacific Reporter
2017 UT 45
IN THE
SUPREME COURT OF THE STATE OF UTAH
ALPINE HOMES, INC., 1
Appellees,
v.
CITY OF WEST JORDAN,
Appellant.
No. 20140010
Filed August 10, 2017
On Appeal of Interlocutory Order
Third District, West Jordan
The Honorable Barry G. Lawrence
No. 20140010
Attorneys:
Bruce R. Baird, P. Matthew Muir,
Salt Lake City, for appellees
JeffreyRobinson, Robert Thorup, Stuart E. Williams,
Paul D. Dodd, West Jordan City, for appellant
JUSTICE DURHAM authored the opinion of the Court in which
CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE LEE,
JUSTICE HIMONAS, and JUDGE CONNORS joined.
Having recused himself, JUSTICE PEARCE does not participate herein;
DISTRICT COURT JUDGE DAVID M. CONNORS sat.
JUSTICE DURHAM, opinion of the Court:
INTRODUCTION
1 BUILDING DYNAMICS, INC., D.R. HORTON, INC., HAMLET HOMES CORP., HOLMES
HOMES, INC., HOME CENTER CONSTRUCTION CO., IVORY HOMES, LTD., LEON
PETERSON DEVELOPMENT CO., LIBERTY HOMES, INC., MCARTHUR HOMES, INC.,
RELIANCE HOMES, INC., RICHMOND AMERICAN HOMES OF UTAH, INC., and WESTVIEW
HOMES, LLC are also parties to this appeal.
ALPINE HOMES, INC. v. CITY OF WEST JORDAN
Opinion of the Court
¶1 In this case, several property developers allege that the City
of West Jordan violated statutory provisions that regulate how a
municipality may spend the impact fees collected from developers.
They claim that the city violated statutes requiring it to spend the
fees on specified categories of expenditures within six years. The
developers’ first claim for relief in the operative complaint is for a
declaratory judgment. The district court dismissed only the last
portion of that claim, which sought a declaratory judgment that
West Jordan must refund all or part of the impact fees to them.
Neither party addresses this claim on appeal, so we make no ruling
as to the declaratory judgment action. Nor does either party argue
against the district court’s dismissal of the developers’ sixth claim,
the request for attorney fees as a separate claim for relief. The
developers’ second through fifth claims for relief seek a refund of the
allegedly misspent or unspent impact fees either because of an
unconstitutional taking or as a claim in equity.
¶2 Our threshold concern is whether the developers have
standing to bring their claims. Standing is a question of subject
matter jurisdiction that “raise[s] fundamental questions regarding a
court’s basic authority over the dispute.” Brown v. Div. of Water
Rights of Dep’t of Nat. Res., 2010 UT 14, ¶ 13, 228 P.3d 747. This issue
can be raised sua sponte by the court. See State v. Tuttle, 780 P.2d 1203,
1207 (Utah 1989). “[T]he issue of subject matter jurisdiction is a
threshold issue, which can be raised at any time and must be
addressed before [turning to] the merits of other claims.” Am. W.
Bank Members, L.C. v. State, 2014 UT 49, ¶ 10, 342 P.3d 224 (alterations
in original) (citation omitted). Only if the developers have standing
do we turn to whether any of their claims survive a motion to
dismiss based on the merits.
¶3 The developers have standing to challenge the
constitutionality of the impact fees they were assessed. But the time
to challenge the relationship between the government’s demand for
property and the anticipated social costs of a proposed land use is at
the time the impact fees are exacted and is limited by statute to “one
year after the day on which the person or entity pays the impact fee.”
UTAH CODE § 11-36a-702(1)(c). The developers’ argument that their
claims against West Jordan for either allegedly failing to spend
impact fees within six years or spending the fees on impermissible
expenditures were not ripe until the six-year period elapsed is
inadequate to support a constitutional takings claim. The manner in
which a city spends impact fees does not affect the constitutionality
of the initial demand for fees. See Koontz v. St. Johns River Water
Mgmt Dist., 133 S. Ct. 2586 (2013). We hold that the developers have
failed to state a takings claim for which relief can be granted.
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¶4 To the extent that the developers are seeking a remedy of a
refund of fees in equity for the asserted injury of illegally misspent
or unspent fees, they do not have standing. The city was authorized
by the Impact Fees Act to assess impact fees to offset the expected
costs of development in certain areas. See UTAH CODE §§ 11-36a-101
to -705. There is no injury to the developers by the authorized
assessment of impact fees that survive a takings challenge. We hold
that where the developers cannot establish an unconstitutional
demand for authorized impact fees at the time they were exacted,
they do not have standing to bring claims against West Jordan. As a
result, the courts do not have subject matter jurisdiction to hear a
claim in equity about whether the fees were misspent or unspent in
this case.
¶5 Because the developers have failed to state a takings claim
for which relief can be granted, and because they do not have
standing to bring a claim in equity, we reverse the district court’s
denial of the motion to dismiss.
BACKGROUND
¶6 West Jordan, like many municipalities, requires developers
to pay impact fees before the city approves a development project.
These impact fees are designed to defray the anticipated increase in
city expenditures caused by the proposed development. The impact
fees collected by West Jordan include fees associated with the
increased need for park services, roads, police protection, water
services, storm water infrastructure, and sewer services. The
legislature has enacted the Impact Fees Act, which regulates the
manner in which cities and other political subdivisions may asses
and spend impact fees. UTAH CODE §§ 11-36a-101 to -705.
¶7 In 2012, thirteen developers that had paid impact fees to
West Jordan between 2003 and 2006 filed this action. The operative
complaint claimed that the developers were entitled to a refund of
all or some of these fees under two broad theories. The developers
claimed that West Jordan violated the Impact Fees Act by failing to
spend or encumber all of the impact fees within six years, see id. § 11-
36a-602(2)(a), and by spending portions of the impact fees on
impermissible uses, see id. § 11-36a-602(1). 2 The developers argued
2 In determining whether a lawsuit survives a motion to dismiss,
“we assume that the factual allegations in the complaint are true and
we draw all reasonable inferences in the light most favorable to the
plaintiff.” Berneau v. Martino, 2009 UT 87, ¶ 3, 223 P.3d 1128 (citation
omitted).
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Opinion of the Court
that these violations constituted “a taking of private property for
public use without just compensation in violation of Article 1 Section
22 of the Utah Constitution and the Fifth and Fourteenth
Amendments to the U.S. Constitution.” The developers also asserted
an “equitable” right to reimbursement because West Jordan had
failed to comply with two provisions of the Impact Fees Act.
¶8 West Jordan filed a motion to dismiss these claims. It argued
that any failure to spend the impact fees in the manner prescribed by
the Act was not an unconstitutional taking of the developer’s private
property. West Jordan also argued that the Impact Fees Act did not
give the developers a private refund remedy for any failure to
comply with provisions regulating its use of the impact fees, and that
the developers had no equitable right to a refund.
¶9 The district court denied West Jordan’s motion to dismiss
the developers’ constitutional and equitable claims. This court
subsequently granted West Jordan’s petition to file an interlocutory
appeal from the district court’s order denying dismissal of these
claims. After hearing initial oral arguments on this case in October
2015, we remanded to the district court for the limited purpose of
determining if any of the developers owned any of the property at
issue in this action. The district court found that they had no
remaining ownership interest in the properties in question. We then
requested supplemental briefing on the question of the developers’
standing to bring this claim, and provided each party the
opportunity to present their cases at oral arguments in November
2016.
STANDARD OF REVIEW
¶10 Our standard of review for standing is “generally . . .
considered a ‘mixed question’ because it involves the application of a
legal standard to a particularized set of facts.” Utah Chapter of the
Sierra Club v. Utah Air Quality Bd., 2006 UT 74, ¶ 13, 148 P.3d 960. But
“the question of whether a given individual or association has
standing to request a particular relief is primarily a question of law.”
Kearns-Tribune Corp. v. Wilkinson, 946 P.2d 372, 373 (Utah 1997). We
review the “factual determinations made by a trial court with
deference.” Id. at 373–74. However, we afford “minimal discretion to
the trial court” on a “determination[] of whether a given set of facts
fits the legal requirements for standing.” Id. at 374.
¶11 We review the district court’s decision to dismiss de novo.
See Turner v. Staker & Parson Cos., 2012 UT 30, ¶ 7, 284 P.3d 600 (“A
ruling on a motion to dismiss presents a legal question that we
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review for correctness, affording no deference to the district court’s
decision.”).
ANALYSIS
¶12 The standing of the developers to bring the claims raised in
this case is a threshold question. We address separately the standing
for the takings claims and the claims for equitable relief. As to the
takings claims, we conclude that the developers do have
constitutional and statutory standing to bring claims for a taking,
and therefore we assess this claim on its merits. We ultimately
conclude that the takings claims were not filed timely and are no
longer available as a remedy. We thus reverse the ruling of the
district court and direct dismissal of the takings claims.
¶13 Regarding the claims for relief based in equity, we conclude
that there is no statutorily granted standing, so the developers must
establish standing according to Utah case law. Because a refund of
the impact fees the developers incurred will not redress the parties
that would actually be injured by the city’s alleged misspent or
unspent impact fees, the developers fail to establish standing for
these claims. We therefore will not address this issue on the merits.
Again, we reverse the district court and direct dismissal of the claims
in equity.
I. THE TAKINGS CLAIMS
¶14 The developers had a statutorily granted “standing to file a
declaratory judgment action challenging the validity of an impact
fee.” UTAH CODE § 11-36a-701(1). However, this right is “[s]ubject to
the time limitations described in Section 11-36a-702 and procedures
set forth in Section 11-36a-703.” Id. § 11-36a-701(3)(a). Section 11-36a-
702(1)(c) limits actions brought challenging the validity of an impact
fee to “one year after the day on which the person or entity pays the
impact fee.” Had the developers brought a challenge to the impact
fee within this time frame, they would be able to seek “a refund of
the difference between what the [developers] paid as an impact fee
and the amount the impact fee should have been if it had been
correctly calculated.” Id. § 11-36a-701(3)(c). The developers did not
challenge the impact fee within this period, and therefore their
standing to file this action under Utah Code section 11-36a-701 is
barred.
¶15 The developers also argue that their “constitutional rights
. . . have been violated by the City’s unlawful expenditure and
retention of impact fees” under the takings clauses of the Utah and
U.S. constitutions, and that this cause of action was not ripe until the
six years allowed by statute for the city to spend or encumber the
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Opinion of the Court
fees had passed. See id. § 11-36a-602. They make two basic
arguments under the federal takings clause. First, they assert that
any violation of the Impact Fees Act on the part of West Jordan also
constitutes a per se violation of the takings clause. Second, they
argue that the city’s failure to spend all of the impact fees on
statutorily mandated expenditures within six years violates the
unconstitutional conditions doctrine applied in Koontz v. St. Johns
River Water Management District, 133 S. Ct. 2586 (2013). Both of these
arguments fail.
A. The Utah Constitution’s Takings Clause
¶16 Both the U.S. Constitution and the Utah Constitution
protect private property against uncompensated governmental
takings. U.S. CONST. AMEND. V (“[P]rivate property [shall not] be
taken for public use, without just compensation.”); UTAH CONST. art.
I, § 22 (“Private property shall not be taken or damaged for public
use without just compensation.”). Although the Utah clause is
similar to the federal clause, “we do not presume that federal court
interpretations of federal Constitutional provisions control the
meaning of identical provisions in the Utah Constitution.” State v.
Briggs, 2008 UT 83, ¶ 24, 199 P.3d 935. Indeed, we have noted that
the Utah Constitution extends protection above that of the U.S.
Constitution for damage to private property. See UTAH CONST. art. I,
§ 22; Utah Dep’t of Transp. v. Admiral Beverage Corp., 2011 UT 62, ¶ 20,
275 P.3d 208. Thus, the “state constitutional provision [is] broader
than its federal counterpart.” Bingham v. Roosevelt City Corp., 2010
UT 37, ¶ 13, 235 P.3d 730.
¶17 But this court generally does not engage in a state
constitutional analysis absent adequate briefing. “[C]ursory
references to the state constitution within arguments otherwise
dedicated to a federal constitutional claim are inadequate” to raise a
state constitutional issue. State v. Worwood, 2007 UT 47, ¶ 18, 164
P.3d 397. The developers cite the takings clause of the Utah
Constitution in their briefing, but they do not undertake an
independent analysis of the language of the Utah provision, cite
authority interpreting it, or otherwise present an independent
rationale for a takings violation as a matter of state law. See id.
(listing several methods of adequately briefing a state constitutional
argument). Absent such briefing, we decline to conduct an
independent analysis of the Utah takings clause.
B. The U.S. Constitution’s Takings Clause
¶18 The takings clause of the U.S. Constitution is applied against
the States through the Fourteenth Amendment. There are two broad
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categories of takings under Supreme Court jurisprudence: physical
takings and regulatory takings.3 See B.A.M. Dev., L.L.C. v. Salt Lake
Cty (B.A.M. I), 2006 UT 2, ¶¶ 32–33, 128 P.3d 1161. Each category
uses a different analysis for determining whether a government
action rises to the level of a taking requiring just compensation.
Physical takings are per se takings and must be compensated no
matter how minimal the impact on the property owner. Loretto v.
Teleprompter Manhattan CATV Corp., 458 U.S. 419, 434–35 (1982). “A
taking’s a taking no matter how small.” E. Brigham Daniels (citing
DR. SUESS, HORTON HEARS A WHO! (1954)). On the other hand,
“regulatory takings do not always trigger an obligation to
compensate the property owner.” B.A.M. I, 2006 UT 2, ¶ 33. If a
regulation is “so onerous that its effect is tantamount to a direct
appropriation or ouster . . . [it] may be compensable.” Lingle v.
Chevron U.S.A., Inc. 544 U.S. 528, 537 (2005). Regulatory takings are
evaluated by “engaging in essentially ad hoc, factual inquiries” with
reference to “several factors—such as economic impact of the
regulation, its interference with reasonable investment-backed
expectations, and the character of the government action.” B.A.M. I,
2006 UT 2, ¶ 33 (quoting MacDonald, Sommer & Frates v. Yolo Cty.,
477 U.S. 340, 349 (1986)).
¶19 Development exactions share characteristics of both physical
and regulatory takings. “Exactions are conditions imposed by
governmental entities on developers for the issuance of a building
permit or subdivision plat approval.” B.A.M. I, 2006 UT 2, ¶ 34.
These exactions can be in the form of mandatory land dedications or
monetary obligations. Whether an exaction is unconstitutional
depends on if it “has inherited more features from its physical or
regulatory takings progenitor.” Id. ¶ 35.
¶20 The U.S. Supreme Court has held that development
exactions must have an “essential nexus” with “rough
proportionality” to the public burdens that the development will
impose on government. In Nollan v. California Coastal Commission,
483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994),
the Supreme Court examined situations where the government
3 “As its name implies, a physical taking occurs when a
governmental entity physically invades or occupies private property
as a result of which the property is made available for use by
others.” B.A.M. Dev., L.L.C. v. Salt Lake Cty. (B.A.M. I), 2006 UT 2,
¶ 32, 128 P.3d 1161. “Regulatory takings, by contrast, occur when a
governmental entity intrudes to limit the use of private property
while not physically seizing it.” Id. ¶ 33.
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Opinion of the Court
conditioned the approval of a permit to develop property on the
property owner’s uncompensated transfer of a real property right to
the government. Nollan, 483 U.S. at 828 (development rights
conditioned upon grant of a public easement along a beach); Dolan,
512 U.S. at 379–80 (development rights conditioned upon
dedications of land for storm drainage and a pedestrian/bicycle
pathway). The government gave the property owners a choice:
either waive their constitutional right to just compensation for the
taking of real property rights or have their land-use permit denied.
Nollan and Dolan held that placing such a condition on the grant of a
land-use permit violates the takings clause unless the government
can show both an “essential nexus” and “rough proportionality”
between the social costs of the proposed development and the real
property interest exacted by the government to ameliorate those
social costs. Dolan, 512 U.S. at 386, 391.
¶21 Until relatively recently, the Supreme Court applied this
essential nexus and rough proportionality test only where the
government demanded a real property right in exchange for a land-
use permit. But in Koontz, the Court examined a fact pattern in
which the government essentially demanded money in exchange for
a land-use permit. 133 S. Ct. at 2593. In that case, a government
agency conditioned a permit to develop a parcel of property
containing wetlands upon the landowner’s agreement to fund
conservation projects on separate, government-owned wetlands. Id.
The landowner refused to comply with this condition and sued the
government agency, arguing that the Nollan-Dolan test should be
applied to determine the constitutionality of a monetary exaction for
a land-use permit. Id.
¶22 In evaluating the landowner’s claim, the Court first
emphasized that the Nollan-Dolan line of cases is based upon the
“unconstitutional conditions doctrine.” Id. at 2594. This doctrine
“vindicates the Constitution’s enumerated rights by preventing the
government from coercing people into giving them up.” Id. It
permits challenges under the takings clause even where the
government has not seized private property, but instead has
conditioned a government benefit upon acquiescence to an
uncompensated taking of private property.
Extortionate demands for property in the land-use
permitting context run afoul of the Takings Clause not
because they take property but because they
impermissibly burden the right not to have property
taken without just compensation. As in other
unconstitutional conditions cases in which someone
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refuses to cede a constitutional right in the face of
coercive pressure, the impermissible denial of a
governmental benefit is a constitutionally cognizable
injury.
Id. at 2596. Thus, it is the constitutionality of the government-
imposed condition that is at issue under a Nollan-Dolan claim, not a
consummated taking of private property that triggers a categorical
right to compensation.
¶23 The Court then examined whether the Nollan-Dolan test
must be applied when the government requires a property owner to
spend money as a precondition to the approval of a land-use permit.
Id. at 2598–2602. In so doing, the Court had to decide how the
unconstitutional conditions doctrine in the Nollan-Dolan line of cases
intersects with the holding of Eastern Enterprises v. Apfel, 524 U.S.
498, 540 (1998), that the imposition of a general obligation to pay
money does not trigger the just compensation requirement of the
takings clause. 4
¶24 Distinguishing Eastern Enterprises, the Koontz Court held
“that so-called ‘monetary exactions’ must satisfy the nexus and
rough proportionality requirements of Nollan and Dolan.” Id. at
2599. The Court expressed concern that if the Nollan-Dolan test did
not apply to monetary exactions, “it would be very easy for land-use
permitting officials to evade the limitations of Nollan and Dolan.” Id.
The Court further reasoned that the holding of Eastern Enterprises
did not apply in the specific context of land-use exactions because
where the government conditions a development permit upon the
payment of money, there is a “direct link between the government’s
demand and a specific parcel of real property.” Id. at 2600. Thus, a
demand for money in exchange for a land-use permit is an
unconstitutional condition under the takings clause unless the
government can show an essential nexus and rough proportionality
between the amount of money requested and the social costs of the
proposed development.
4 Although cash is personal property, a majority of the U.S.
Supreme Court held in Eastern Enterprises that the government may
impose a financial obligation without triggering the takings clause’s
just compensation requirement. 524 U.S. at 540 (Kennedy, J.,
concurring in judgment and dissenting in part); id. at 554–55 (Breyer,
J., dissenting opinion joined by three other justices).
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C. The Developers’ Taking Clause Claims
¶25 The developers first assert that “the Impact Fees Act
establishes rules governing the City’s charging, collection, use and
retention of impact fees which ensure that those activities remain
consistent with Constitutional ‘takings’ requirements.” From this
premise, the developers argue that any violation of the Act also
violates the U.S. Constitution. But this attempt to constitutionalize
all the provisions of the Impact Fees Act fails. Even if we were to
accept the developers’ dubious assertion that the only purpose of
each of the provisions of the Act is to codify the essential protections
guaranteed by the takings clause, the Utah Legislature does not
establish the bounds of the protections afforded by the U.S.
Constitution. It is the duty of the judicial branch of government to
interpret the Constitution. See Marbury v. Madison, 5 U.S. (1 Cranch)
137, 178–80 (1803). A constitutional claim must be evaluated
through an analysis of the text of the relevant provision along with
binding case law interpreting the provision. We therefore reject the
developers’ argument that a violation of the Impact Fees Act is a per
se violation of the takings clause. See Tooele Assocs. Ltd. P’ship v.
Tooele City Corp., 2011 UT 04, ¶ 28, 247 P.3d 371 (“Whether the City
is in violation of the [Uniform Fiscal Procedures] Act has no bearing
on whether the City’s . . . fee is constitutional.”).
¶26 Next, the developers argue that because West Jordan
allegedly failed to spend some of the impact fees it collected within
six years and spent some of the fees on statutorily prohibited
expenditures, the city violated their rights under the takings clause.
Notably, the developers make no claim—either below or to this
court—that West Jordan’s demands for impact fees constituted
unconstitutional conditions at the time the demands were made
because the fee lacked either an essential nexus or rough
proportionality to the anticipated social costs of the proposed
development. Rather, the developers argue that the manner in
which the city later spent the impact fees ran afoul of Koontz and the
Nollan-Dolan analysis.
¶27 We conclude that none of West Jordan’s alleged violations of
the Impact Fees Act implicate the unconstitutional conditions
doctrine described in the Nollan-Dolan line of cases. Nollan, Dolan,
and their progeny do not directly enforce the just compensation
requirement for a consummated taking of private property. Rather,
this line of cases evaluates the constitutionality of conditioning the
grant of a land-use permit upon a landowner’s uncompensated
transfer of private property to the government. Koontz, 133 S. Ct. at
2594–95. Thus, it is the government’s demand for property—
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whether it be real property rights or an obligation to spend money—
in exchange for the permit that is subject to evaluation under the
Nollan-Dolan test. The proper analysis is whether there is a nexus
and rough proportionality between the property demanded and the
projected social costs of the proposed development. Id. at 2595
(“Nollan and Dolan . . . allow[] the government to condition approval
of a permit on the dedication of property to the public so long as
there is a ‘nexus’ and ‘rough proportionality’ between the property
that the government demands and the social costs of the applicant’s
proposal.” (citations omitted)); Dolan, 512 U.S. at 388 (“The second
part of our analysis requires us to determine whether the degree of
the exactions demanded by the city’s permit conditions bears the
required relationship to the projected impact of petitioner’s
proposed development.”).
¶28 In the context of a city’s demand for impact fees in exchange
for a land-use permit, the applicant may challenge the fee by
asserting that it lacks either an essential nexus or rough
proportionality to the anticipated external impacts of the proposed
development. See Koontz, 133 S. Ct. at 2595, 2603. The key inquiry is
whether the condition imposed by the government is constitutional.
The demand for property is either permissible or forbidden under
the takings clause at the time the demand is made based upon an
evaluation of the “projected impact of [the] proposed development.”
Dolan, 512 U.S. at 388; see Koontz, 133 S. Ct. 2586.
¶29 The developers’ allegations here that West Jordan either
failed to spend impact fees within six years or spent the fees on
impermissible expenditures are inadequate to support a takings
claim. It does not matter that these claims would not be ripe until
the six-year period for spending them elapsed. The manner in which
a city spends impact fees does not affect the constitutionality of the
initial demand for fees, which is the focus of the Koontz monetary
exactions analysis. That the fees were not spent within six years
does not affect the analysis of whether there was a nexus or whether
the impact fees were roughly proportional at the time they were
exacted. The developers may not expect to be the beneficiaries of
any unspent funds after six years, just as the city cannot
retroactively demand payment from the developers for
expenditures that exceed the impact fees revenue for necessary
improvements. The developers have not cited any cases that have
applied a Nollan-Dolan analysis to a municipality’s expenditure of
impact fees. And because this analysis examines the relationship
between the government’s demand for property and the anticipated
social costs of a proposed land use, there is no logical basis for this
court to expand the application of the Nollan-Dolan test to a time
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frame other than when the impact fees were exacted. Thus the
developers have failed to state a takings claim for which relief can
be granted.
II. THE EQUITY CLAIMS
¶30 Absent statutorily granted standing, a party must establish
standing as defined by Utah case law to bring an action in Utah
courts. As both Jenkins v. Swan, 675 P.2d 1145 (Utah 1983), and Utah
Chapter of the Sierra Club v. Utah Air Quality Board, 2006 UT 74, 148
P.3d 960, have made clear, the standing requirement in Utah is a
protection of separation of powers that prevents the judiciary from
“entertain[ing] generalized grievances that are more appropriately
directed to the legislative and executive branches of the state
government,” Jenkins, 675 P.2d at 1149. See Id. at 1148–50; Sierra Club,
2006 UT 74, ¶¶ 11–12, 17.
Inherent in the tripartite allocation of governmental
powers is the historical and pragmatic conviction that
particular disputes are most amenable to resolution in
particular forums. The requirement that a plaintiff have
a personal stake in the outcome of a dispute is intended
to confine the courts to a role consistent with the
separation of powers, and to limit the jurisdiction of
the courts to those disputes which are most efficiently
and effectively resolved through the judicial process.
Jenkins, 675 P.2d at 1149. The judicial branch uses the standing
doctrine to ensure that “[a]n overstepping of appropriate restraints
on judicial review” does not occur. Id. at 1150.
A. Standing and the Equity Claims
¶31 Developers have no statutorily granted right to an
“equitable” reimbursement in this case and must therefore satisfy the
common law requirements for standing. “At the pleading stage of
litigation, plaintiffs may satisfy our standing requirements . . . so
long as the complaint contains adequate factual context to satisfy our
notice pleading requirements.” Brown v. Div. of Water Rights of Dep’t
of Nat. Res., 2010 UT 14, ¶ 21, 228 P.3d 747. The notice pleading
requirement is governed by rule 8 of the Utah Rules of Civil
Procedure, which requires a claim to “contain a short and
plain . . . statement of the claim showing that the party is entitled to
relief.” 5 UTAH R. CIV. P. 8(a). Further, rule 17 of the Utah Rules of
5 “An original claim, counterclaim, cross-claim or third-party
claim must contain a short and plain: (1) statement of the claim
(continued . . .)
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Civil Procedure requires that “[e]very action . . . be prosecuted in the
name of the real party in interest.” UTAH R. CIV. P. 17(a). Pursuant to
these rules and our case law, plaintiffs can establish standing by
showing either through the traditional test, or, failing that, through
the alternative test, that they are a real party in interest who is
entitled to relief. See Brown, 2010 UT 14, ¶ 21; Utah Chapter of the
Sierra Club, 2006 UT 74, ¶ 18.
¶32 Because an ability to prove standing may depend on facts
that get explored during the discovery process, we do not hold
plaintiffs to a high standard of proof to meet the standing
requirement at the early stages of litigation. Here, the issue of
standing is being reviewed in an appeal from a motion to dismiss
brought prior to discovery. Accordingly, the developers’ standing
will be considered as though all allegations in their complaint, and
all reasonable inferences drawn from those allegations, are taken as
true.
¶33 In this case, even assuming all allegations in the developers’
complaint and reasonable inferences drawn from them are true,
there is still an insufficient factual basis in the record to show that
the developers have standing for a claim in equity. There is no
showing that the developers have sustained an injury that has a
direct effect on them or that is suitably resolved by the courts. They
have failed to establish standing through the traditional standing
test. As the developers have not argued alternative standing, we do
not address it in this opinion.
1. Traditional Standing
¶34 The traditional test, sometimes called the “distinct and
palpable injury” requirement, assesses whether a “party has ‘a real
and personal interest in the dispute.’” Utah Chapter of the Sierra Club,
2006 UT 74, ¶¶ 19–20 (citation omitted). To show standing, a “party
must allege that it has suffered or will ‘suffer[ ] some distinct and
palpable injury that gives [it] a personal stake in the outcome of the
legal dispute.’” Id. ¶¶ 19 (alterations in original) (citation omitted).
This test involves a three-step inquiry to determine whether a
distinct and palpable injury exists:
(continued. . .)
showing that the party is entitled to relief; and (2) demand for
judgment for specified relief.” UTAH R. CIV. P. 8(a).
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ALPINE HOMES, INC. v. CITY OF WEST JORDAN
Opinion of the Court
(1) “the party must assert that it has been or will be
‘adversely affected by the [challenged] actions’”;
(2) “the party must allege a causal relationship
‘between the injury to the party, the [challenged]
actions and the relief requested’”; and
(3) “the relief requested must be ‘substantially
likely to redress the injury claimed.’”
Id. (alterations in original) (citations omitted). This inquiry is
conjunctive. In other words, each step must be demonstrated in
order to confirm standing. A party must “satisf[y] all three . . .
criteria” id. ¶ 20 to establish that it “ha[s] the incentive to ‘fully
develop[ ] all the material factual and legal issues in an effort to
convince the court that the relief requested will redress the claimed
injury.’” Id. ¶ 20 (second alteration in original) (citation omitted).
¶35 The developers have identified two theories under which
they might have suffered a legal injury: (1) they could have retained
contractual rights with the home purchasers to a refund of the
impact fees if found excessive or (2) the purchase prices of the homes
they sold did not compensate them for the impact fee.
¶36 The developers have suggested that they could have entered
into a contractual agreement with the lot purchasers wherein they
retained the rights to a refund of impact fees should there be such a
refund. Even assuming that a refund of the impact fees to any party
was a possibility, there is no factual evidence in the record or the
briefs to support the theory that the developers retained these rights
through a contract. Counsel for the developers conceded during oral
argument that it would be highly improbable for such contracts to
exist, and their existence would obviously be known to the
developers as contractual parties. As this theory leads only to a mere
possibility and not a reasonable probability that such a contract
exists, this court will not consider it a sufficient allegation to
establish standing. See Brown, 2010 UT 14, ¶ 19.
¶37 Nor can the developers establish standing under the
compensation theory. As we noted in Bradshaw v. Wilkinson Water
Co., “[r]eal estate development is a speculative enterprise.” 2004 UT
38, ¶ 17, 94 P.3d 242. The real estate market is subject to the
fluctuations of the economy, and the profit margin will largely be
determined on the market conditions at the time of sale. Whether the
impact fees were recouped in the sale of the lots is immaterial to
establishing standing. The impact fees, if constitutional at the time of
exaction, are part of the price of doing business in real estate
development, and developers assume the risk that they might not be
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Cite as: 2017 UT 45
Opinion of the Court
recouped when individual lots are sold. To suffer a legal injury,
there must be a violation of a legal right, and the developers have no
legal right to recoup impact fees from lot or home purchasers. Here,
West Jordan lawfully exercised its police powers to impose an
impact fee on the developers. “[I]f the owner [of a property] through
a lawful exercise of [police] power suffers inconvenience, injury, or a
loss, it is regarded as damnum absque injuria.” Colman v. Utah State
Land Bd., 795 P.2d 622, 628 (Utah 1990) (citation omitted). The
developers do not argue that there was a constitutional violation in
the assessment of the impact fees, and without a violation of a legal
right when the fees were collected, there is no compensable loss to
the developers.
2. Traditional Standing Not Established
¶38 The developers have failed to establish standing under the
traditional standing test. The only expectation the developers could
reasonably have for paying the constitutionally levied impact fees
was approval for their development, which they received. After the
payment of the impact fees, the residents of West Jordan retain the
interest in having those fees used as designed, not the developers.
Any injury from misuse of impact fees would be to the residents,
either from being underserviced or from increased taxes to cover
costs of additional development that should be paid from the impact
fees. We express no opinion here on the nature of any such injury or
on what, if any, remedies for it might exist. But the relief requested
by the developers—the refund of any unspent or misspent impact
fees—would not redress the true parties in interest.
B. Separation of Powers
¶39 Our standing requirement helps to ensure that the judiciary
does not exceed the constitutional limits on judicial power.
“[J]udicial power to determine the validity of executive or legislative
action” can be invoked only when a “claimant [can] show that he has
sustained or is immediately in danger of sustaining a direct injury as
a result of that action.” Baird v. State, 574 P.2d 713, 717 (Utah 1978).
To grant standing to a litigant, who cannot
distinguish himself from all citizens, would be a
significant inroad on the representative form of
government, and cast the courts in the role of
supervising the coordinate branches of government. It
would convert the judiciary into an open forum for the
resolution of political and ideological disputes about
the performance of government.
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ALPINE HOMES, INC. v. CITY OF WEST JORDAN
Opinion of the Court
Id. It is the judiciary’s role to interpret statutes and to ensure their
constitutionality. See Marbury v. Madison, 5 U.S. (1 Cranch) 137
(1803); Matheson v. Ferry, 641 P.2d 674 (Utah 1982). It is not the
judiciary’s role to augment existing statutes to satisfy private parties
in matters of public interest, nor to enforce statutes where no judicial
remedy for private parties is anticipated or provided for in the
statute. These roles are the primary domain of the legislative and
executive branches.
¶40 As the developers noted in arguments before the district
court, the issue at hand can be addressed in the legislature. “[T]he
airing of generalized grievances and the vindication of public rights
are properly addressed to the legislature, a forum where
freewheeling debate on broad issues of public policy is in order.”
Jenkins, 675 P.2d at 1149–50. If the developers want the right to a
refund of unspent impact fees, or if they want an enforcement
provision, or if they do not like the ways that impact fees are
calculated or may be expended, they can seek legislative
modification of the statute. The appropriate remedy for the
developers is not an action brought before the judiciary, but an
appeal to the legislature. Moreover, execution and enforcement of
the law is primarily under the purview of the executive branch. The
Impact Fees Act allows developers to object to impact fees within
certain parameters. See UTAH CODE §§ 11-36a-701 to -705. If no
objection is made and adjudicated at the time the impact fees were
assessed as provided by statute, the claim can no longer be brought
by the developers.
CONCLUSION
¶41 The developers have failed to state a takings claim for which
relief can be granted. The developers lack standing to bring their
claims in equity. That lack of standing denies the judiciary subject
matter jurisdiction over the developers’ claims in equity. We reverse
the denial of the motion to dismiss on both the takings claims and
the claims in equity and remand to the district court for dismissal of
these claims.
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