North Dakota county fights for zoning control over oil and gas development

Dunn County will ask the North Dakota Supreme Court to uphold its authority to apply zoning to oil and gas development.

The county decided to appeal a district court judge’s decision that the North Dakota Industrial Commission (NDIC) has sole jurisdiction over an oil waste treatment facility in the county.

The dispute started in 2013, when Environmental Driven Solutions sued the county for denying zoning for storage tanks on property adjacent to the treatment facility. EDS said state law gives NDIC authority that preempts local zoning. In this case, the NDIC had issued a permit for the treatment plant.  The district court agreed, saying that state law gives the commission control over drilling, all operations for oil and gas production, and, since 2013, the disposal of saltwater and oilfield wastes.

The North Dakota Attorney General filed in support of EDS’s case.

The full story is here, courtesy of the Bismark Tribune.

Plain language of right-of-way deeds grant easements

by Andrea Vaage

Sargent County Water Resource District v. Mathews
North Dakota Supreme Court, December 1, 2015

Paul Mathews sought to control land rented to him by Nancy Mathews and Phyllis Delahoyde. In response, The Sargent County Water Resource District filed for declaratory relief in November 2012 as the successor in interest to the Sargent County Board of Drain Commissioners. The Board obtained interest in the property through right-of-way deeds signed in 1917 and 1918.

At issue is whether the deed conveyed an easement or an estate in fee. The district court found the deeds granted fee title in property to the District. The Mathews appealed. The Mathews argued the right-of-way deeds from 1917 and 1918 unambiguously show an intent to convey easements for a right of way when read in plain language. In addition, if the deeds were ambiguous, the Mathews argued the district court interpretation of parol evidence is erroneous. When a deed is unambiguous, meaning of the deed is determined from the document itself. When it is found to be ambiguous, extrinsic evidence may be considered.

The deed reads, in part, that owners:

“grant, sell and convey, and forever release to the people of the County of Sargent, in the State of North Dakota, right of way for the laying out, construction and maintenance of a public drain, as the same may be located by the Board of Drain Commissioners, through said above described lands, being a strip of land . . . [described]. And we hereby release all claims to damages by reason of the laying out, construction and maintenance thereof through our said lands.”

The Court analyzed the deed to understand the grantor’s intent. The deed grants a “right of way” specifically for “construction and maintenance of a public drain” and does not convey an estate in fee. When the granting clause includes the phrase “right of way,” courts have found the deed usually conveys an easement. The Court found the deed was unambiguous and conveyed an easement when read in plain language.

The decision of the district court was reversed.

Assisted living facility properly determined to require an I-1 permit under IBC

by Hannah Dankbar

Hale v. City of Minot
North Dakota Supreme Court, August 25, 2015

Robert Hale began operating Somerset Court, an assisted living facility, in Minot, ND in the late 1990s. In September 2013 Hale applied for a building permit from the city to create a three-story, 70-room expansion of the facility. Under the International Building Code (IBC), which the City adopted in 2009 Hale applied for an I-1 permit which is for commercial/industrial uses. In December 2013 the City’s building official denied the application reporting that required documentation was not submitted. The question is whether the facility should be classified as an I-1 or R-2, a residential classification for apartments. An I-1 classification is required to submit more documentation and install more expensive wiring. Hale asserted he filed the application with an I-1 classification under protest so that foundation and other preliminary work could begin.  Hale appealed the denial to the Board of Appeals who upheld the City’s decision.

Hale argues that the City building official misinterpreted the IBC and was wrong to classify the Somerset expansion as an Institutional Group I-1 instead of a Residential Group R-2.

The IBC  provides what the “Group I-1” classification includes, stating in part:

This occupancy shall include buildings, structures or parts thereof housing more than 16 persons, on a 24-hour basis, who because of age, mental disability or other reasons, live in a supervised residential environment that provides personal care services. The occupants are capable of responding to an emergency situation without physical assistance from staff. This group shall include, but not be limited to, the following:

Alcohol and drug centers
Assisted living facilities
Congregate care facilities
Convalescent facilities
Group homes
Halfway houses
Residential board and care facilities
Social rehabilitation facilities  (Emphasis added.)

Hale argued that his facility is an “independent” residential facility, rather than a “supervised” residential facility. Hale also argues that residents at Somerset do not receive “personal care services.” Somerset does provide: distribution of medicine, meals at an in-house restaurant, a 24-hour emergency call system and a transportation system. Hale argues that these services do not meet the definition of an assisted living facility as defined under North Dakota law of IBC.

However, Somerset provides services and charges rent beyond a standard apartment complex. The building permit application described the addition to an existing “assisted living facility”. Hale markets Somerset to the community as an assisted living facility. Hale also accepted the foundation permit with an I-1 classification. For these reasons, the Board found it appropriate for an I-1 classification and their decision is upheld.

Hale also argued that the City building official misinterpreted the intent and application of state law concerning the “sufficiency” of the documents that Hale submitted. The state law Hale referenced governs the registration of architects and defines the exemptions of when registration is not needed to create an architectural plan, including for “rental apartment units that do not exceed three stories in height…”

The law allows for the city to determine which plans a registered architect must prepare. Hale had plans drawn by an unlicensed design professional, and then later looked over by a licensed professional. The licensed professional would not stamp the drawings because that is against state law. The city wanted Hale to resubmit drawings that were prepared by a licensed professional. Because I-1 is the correct classification for the building, Hale is required by the law to provide drawings by a licensed architect.

Rezoning land along interstate to industrial was not impermissible spot zoning

by Gary Taylor

Dokter v. Burleigh County Board of County Commissioners
North Dakota Supreme Court, July 2, 2015

Dale Pahlke requested rezoning of a 311-acre tract of land in Menoken Township from agricultural to industrial use.  Pahlke’s land is located on the north side of Interstate 94 and on the west side of 145th Street NE, about 1 mile west of the Menoken interchange and just north of an interstate rest area. Except for the interstate corridor, the land is surrounded by property zoned for agricultural use. Mr. Pahlke intended to subdivide his land into five to ten acre lots. In 2009, the Dockters purchased land directly north of Pahlke’s land, and they operate a certified organic farm on their land. The Dockters opposed Pahlke’s application, claiming industrial use of the adjacent land could contaminate their fields and result in loss of certification of their organic farm.

The matter came before the Burleigh County Planning Commission.  The Burleigh County planning staff recommended denial of the application, and included in its report the following conclusions (among others):

  • The proposed zoning change is outside the area covered by the Bismarck-Mandan Regional Future Land Use Plan.
  • The proposed zoning change is not compatible with adjacent land uses. Adjacent land uses include agriculture and related agriculture uses to the north, south, east and west.
  • The proposed zoning change may adversely affect property in the vicinity. In particular, the proposed industrial land use may have an adverse impact on the surrounding agriculture-related uses.
  • The proposed zoning change is not consistent with the master plan, other adopted plans, policies and accepted planning practice.

Despite this recommendation the Planning Commission ultimately recommended approval of the application subject to conditions.  In its findings of fact the Planning Commission concluded (among other things):

  • Burleigh County is in need of large blocks of industrial-zoned property in order to promote reasonable economic growth.
  • The property is located adjacent to I-94, and is less than one mile west by frontage road to the Menoken interchange.
  • A large electrical transmission line bisects the property, making the property undesirable for residential or commercial use, which militates in favor of industrial use.
  • Menoken Township has industrial zoned property off the Menoken exit; all of the 64 acres of available industrial-zoned property located within Burleigh County’s zoning jurisdiction are located in Menoken Township.
  • The concerns of surrounding landowners with regard to traffic, noise, pollution, etc. will still be addressed in the subdivision and platting process….
  • The zoning change is not inconsistent with Burleigh County’s Comprehensive Plan [citing policies in the plan that favor locating industrial uses convenient to transportation facilities, and favor making adequate land supplies available for industrial use].

After initially voting 3-2 to reject the recommendation of the Planning Commission, the County Board of Commissioners reconsidered and voted to approve the rezoning request.  The Dockers appealed to district court but lost, then initiated this appeal to the North Dakota Supreme Court

The Dockters argue the County Commissioners’ decision to rezone the land constituted impermissible spot zoning. They claimed spot zoning cannot be used to favor one landowner or to offer special privileges not enjoyed by neighboring property. They argue characteristics of spot zoning were established in this case, because the rezoned industrial land is different from prevailing agricultural uses in the area, the rezoned land constitutes a small geographical area compared to the surrounding 22,241 acres of land zoned for agricultural use in Menoken Township, the rezoned land benefits one owner and not the greater community, and the rezoned use is inconsistent with Burleigh County’s comprehensive land use plan.

The North Dakota Supreme Court disagreed.  Although Pahlke may individually benefit from the zoning change, there was evidence the County Commissioners’ decision benefited Burleigh County as a whole. Tthe director of business development for the Bismarck-Mandan Development Association testified in district court that Burleigh County needed large blocks of property for affordable industrial development and the size of this parcel and its proximity to the interstate could help satisfy that need and bolster economic development. The record supports economic benefits to the community as a whole for the general welfare of the community. “Moreover, this tract of land consists of 311 acres, which was proposed to be divided into five to ten acre lots if the zoning application was approved, which also militates against a claim that the rezoning change involves an individual lot singled out for discrimination, or different treatment.”  The Court concluded that a reasonable basis for the County Commissioners’ decision existed, and that the rezoning did not constitute illegal spot zoning.

The Dockters also argued that the County Commissioners’ decision was inconsistent with the Burleigh County land use plan. The Court, however, cited the same land use plan goals identified by the Planning commission:  “promot[ing] the quality growth of manufacturing and industrial uses,” and  “encourag[ing] industry to locate in planned manufacturing and industrial parks” which “should be located convenient to transportation facilities.” The Court found it “obvious that to meet those goals some land needs to be rezoned to industrial uses.”

The district court’s decision in favor of the County Commissioners was affirmed.


Doctrine of necessity can immunize local governments from takings claims, but maybe not in this case

by Hannah Dankbar

Irwin v. City of Minot
North Dakota Supreme Court, March 24, 2015

Robert and Donna Irwin own 8.12 acres in Ward County, North Dakota. In 2011 the Souris River was flooding part of Ward County, which resulted in the City of Minot deciding to construct emergency earthen dikes along municipal streets. The City hired a contractor to gather clay to build a dike from Darrell Sedevie, the Irwins’ neighbor. The City contracted with Sedevie for removal of the clay, and paid sixty-five cents per cubic yard for 20,000 cubic yards of clay. The contractors entered the Irwins’ land to access the Sedevie property, removed an undetermined amount of clay and topsoil from both the Sedevie and Irwin properties, and used the materials to construct the emergency dike. Damage to the Irwins’ property included destruction of a cement slab, barn, damage to a fence, and destruction of native prairie grassland. The City did not contract, obtain permission, or pay compensation to the Irwins for removal of the clay from their property.

The Irwins filed a complaint of inverse condemnation against the City, citing Article I Section 16 of the North Dakota Constitution (the state Constitution’s Takings Clause). The Irwins argued that the City took deliberate action to remove soil and damage the property, the clay was removed for public use, the removal of the clay was the proximate cause of the damage to their property, and any defense that the City was acting under its police power or is protected from suit through sovereign immunity is inapplicable. The City moved for summary judgment to dismiss the claim. The City argued that the contractor’s removal of the clay was an exercise of its police power to act in a sudden emergency and did not constitute a taking under eminent domain. The City also argued it was not authorized to compensate the Irwins as a matter of law in exercising its police powers, and is statutorily immune from liability for damages resulting from the contractor’s actions.  The District Court found that the City acted under its police power authority during an emergency and not under its eminent domain authority, and therefore was not responsible for compensating the Irwins.

In North Dakota, when the state takes or damages private property without first compensating the owner through eminent domain, the property owner has to take the initiative by raising a claim of inverse condemnation. To establish an inverse condemnation claim, a property owner must prove a public entity took or damaged the owner’s property for a public use and the public use was the proximate cause of the takings or damages.  Under common law, however, a public entity can exercise a taking without compensating the owner when acting under police powers.  The “doctrine of necessity” operates to protect states from liability “when there is an imminent danger and an actual emergency giving rise to actual necessity.” Under North Dakota legal doctrine, “[t]he State or the municipality may, in the exercise of police power, exact of property owners uncompensated submission of their property in the protection of public health, safety, or morals, but such use or injury of private property under the police power is uncompensated in this State only where such power is exercised to meet sudden emergencies.”

In this instance, the record included evidence that before the flood the City contracted with property owners for clay to construct the dikes, and also that clay was available at other locations around the city.  Reviewing the evidence in the light most favorable to the party opposing the motion, a question of fact exists as to whether the imminent danger facing the City gave rise to an actual necessity to take the Irwins’ property. In this case, the North Dakota Supreme Court determined that the district court erred in ordering summary judgment.

Defendants ‘good deeds’ not a defense to nuisance action

by Hannah Dankbar and Gary Taylor

Flynn v. Hurley
North Dakota Supreme Court, March 24, 2015

The Flynns have lived on their property in East Fairview since 1999. This is a small-unincorporated village on the border of North Dakota and Montana. In 2007 Hurley Enterprises, which is owned by Vess Hurley, began operating an oil field service company on the property next to the Flynns. Hurley used the property to store large equipment and to dump sewage. The Flynns noticed an increase in truck traffic, dust, noise, diesel, smoke, lights and sewage odor.

The Flynns filed a complaint against the company claiming that the activity constituted a public and private nuisance. After a trial at district court it was determined that there was no private or public nuisance.  The Flynns claimed that the district court erred by allowing evidence about the reputation and good deeds of the company and the owner, and that this evidence was irrelevant to the nuisance question. The district court included in its opinion several quotes of witnesses speaking to the character of the company and of the owner, such as how he funds students to go on trips and plows snow in the town.

Section 828 of the Second Restatement of Torts (1977), states;

“In determining the utility of conduct that causes an intentional invasion of another’s interest in the use and enjoyment of land, the following factors are important:
(a) the social value that the law attaches to the primary purpose of the conduct;
(b) the suitability of the conduct to the character of the locality; and
(c) the impracticability of preventing or avoiding the invasion.”

The relevant conduct in a nuisance action thus is not the value of the “good deeds” of the defendant in the community, but rather the value to society of the invasive actions that allegedly are a nuisance. The testimony that the Flynns objected to is irrelevant to the nuisance question because it did not “tend to prove or disprove any fact in issue.”

The Flynns also argued that district court erred in instructing the jury on the immunity afforded nuisance defendants.  The court gave the jury the following instruction:

Nothing which is done or maintained under the express authority of a statute, law, or action of a governing body shall be deemed a nuisance. This protection is lost if the authority given is exceeded or is exercised in a negligent or unreasonable manner.”

Hurley Enterprises explained to the jury how they obtained approval from the necessary boards on issues related to zoning and sewage. Hurley Enterprises argued that since they obtained approval, their actions cannot be a nuisance; however, the North Dakota Supreme Court determined that the instruction misstated the law and was not supported with evidence and should not have been included. First, North Dakota zoning statutes do not expressly or by implication authorize the actions of Hurley Enterprises alleged to be a nuisance. Second, the instruction suggested that any action of a governing body could immunize the individual creating the nuisance, whether or not such action is authorized by statute. East Fairview has a three-member sewer board, which is a nonprofit entity that met informally and infrequently. One or more members of the sewer board gave Hurley Enterprises permission to dump sewage into the manhole near the property line with the Flynns. This was beyond the scope of authority of the sewer board, and so cannot be relied upon to immunize Hurley Enterprises from nuisance liability.

The Flynns argued that these mistakes (and others not reviewed in this brief) allow for a new trial. The North Dakota Supreme Court agreed that Flynn’s substantive rights were violated and that there should be a new trial.

ND Attorney General: Junk ordinance not “zoning” to allow for use in extraterritorial zoning area

by Gary Taylor

North Dakota Attorney General Letter Opinion 2014-L-6 (March 13, 2014)

N.D.C.C. § 40-06-01(2) provides that the governing body of a municipality has general police power jurisdiction “[i]n and over all places within one-half mile . . . of the municipal limits for the purpose of enforcing health ordinances and regulations, and police regulations and ordinances adopted to promote the peace, order, safety, and general welfare of the municipality.” A city is also authorized to apply its zoning and subdivision regulations up to four miles beyond the city limits, depending upon the population of the city.

The city of Grand Forks’ extraterritorial zoning jurisdiction extends to four miles beyond the city limits.  In 1978, the North Dakota Supreme Court determined that a city has complete zoning control in this extraterritorial zoning area; however, since state law changes in 2009, the city and the county now exercise joint jurisdiction within the two to four mile area. The city of Grand Forks and Grand Forks County have signed a zoning and subdivision agreement which provides that the “[c]ity shall be responsible for all zoning and subdivision administration, activities and regulation for areas within the 2 mile area beyond the city limits.”  Grand Forks County has argued that the city’s nuisance ordinances regulating the accumulation of junk may be treated as zoning ordinances pursuant to the city’s general authority to regulate land and thus be enforced in the city’s extraterritorial zoning area.  The North Dakota Attorney General (AG), however, disagrees.

The AG looked to the North Dakota Supreme Court case of Jamestown v. Tahran, involving ordinances of the city of Jamestown that prohibited the storage or accumulation of trash, rubbish, junk, junk automobiles, or abandoned vehicles on any private property. The court rejected the argument that the ordinance constituted a zoning ordinance, stating, “[t]he plain language of the ordinance . . . indicates it is a criminal ordinance generally applicable throughout the City . . . and not a zoning ordinance.”  Similarly, the AG considers the plain language of the city of Grand Fork’s ordinances regarding the accumulation of junk to indicate they are criminal ordinances and not zoning ordinances.

The AG also noted that because the city’s junk ordinances are not zoning ordinances, there is no limitation on the county’s ability to enforce its own junk ordinances within the extraterritorial area in question.


Another North Dakota mineral rights case brought on by fracking

by Gary Taylor

Reep v. State
(North Dakota Supreme Court, December 26, 1014)

Several owners of land next to navigable waters in North Dakota (the “Reep owners”) sued the State, the North Dakota Board of University and School Lands, and the North Dakota Trust Lands Commissioner (“State”), seeking a declaration that the Reep upland owners own the mineral interests under the shore zone of the navigable waters.  The State responded that its title to the beds of navigable waters continues to extend, as it did at the moment of statehood, from high watermark to high watermark under the equal footing doctrine.

N.D.C.C. § 47-01-15 provides:  “Except when the grant under which the land is held indicates a different intent, the owner of the upland, when it borders on a navigable lake or stream, takes to the edge of the lake or stream at low watermark. All navigable rivers shall remain and be deemed public highways. In all cases when the opposite banks of any stream not navigable belong to different persons, the stream and the bed thereof shall become common to both.”

The State argues N.D.C.C. § 47-01-15 does not convey or grant public resources; rather, the statute is a rule of construction for conveyances of riparian land and clarifies the extent of a grantor’s conveyance to the grantee except when the grant under which the land is held indicates a different intent. The State argues the equal footing doctrine and the anti-gift clause prohibit construing N.D.C.C. § 47-01-15 as a State grant of the mineral interests under the shore zone to private entities. The upland owners countered that the State’s public trust and equal footing obligations relate to the public’s use of waters for “navigating, boating, fishing, fowling and like public uses” and do not relate to the proprietary privileges of ownership of subsurface mineral interests under the shore zone.

The Court looked first to history.

Before North Dakota was admitted to the Union, the United States held the beds of navigable waters in the Dakota Territory from high watermark to high watermark in trust for the future state.  Upon admission to the Union, North Dakota was entitled to sovereign ownership of the beds of navigable waters from high watermark to high watermark under the equal footing doctrine.  Upon entering the Union on equal footing with the established States, the “rights of riparian or littoral proprietors in the soil below high water mark of navigable waters [were] governed by the local laws.”  North Dakota could “resign to the riparian proprietor rights which properly belong to [it] in [its] sovereign capacity,” and was free to allocate property interests in the beds of navigable waters below the ordinary high watermark. However, North Dakota could not totally abdicate its interest to private parties because it held that interest, by virtue of its sovereignty, in trust for the public.

In a prior case the Court said N.D.C.C. § 47-01-15 did not grant an upland owner or the State absolute ownership of the shore zone and emphasized neither party’s interest in the shore zone was absolute. The word “takes” in that statute was ambiguous and the Court construed the statutory language as a rule of construction for determining the boundary for grants of land next to navigable waters.  The Court agreed with the State’s position that the State owned the mineral interests under the shore zone to the ordinary high watermark under the equal footing doctrine at the moment of statehood in 1889 and its ownership was thereafter governed by State law, including the anti-gift clause of N.D. Const. art. X, § 18, which precluded the state from allocating or gifting its mineral interests under the shore zone to an upland owner . N.D. Const. art. X, § 18,  currently provides:

The state, any county or city may make internal improvements and may engage in any industry, enterprise or business, not prohibited by article XX of the constitution, but neither the state nor any political subdivision thereof shall otherwise loan or give its credit or make donations to or in aid of any individual, association or corporation except for reasonable support of the poor, nor subscribe to or become the owner of capital stock in any association or corporation.

The court concluded N.D.C.C. § 47-01-15 does not convey or allocate the State’s equal footing interest in minerals under the shore zone, which the State owned at the moment of statehood in 1889, to upland landowners on navigable waters in North Dakota. Under the rule of construction for determining boundaries in N.D.C.C. § 47-01-15, however, if the State contractually grants or conveys parts of its equal footing interests to upland owners by deed, subject to the restrictions of the public trust doctrine, and except when the deed provides otherwise, the grantee takes the State’s full interest to the low watermark.


Appellant in rezoning denial cannot turn appeal into inverse condemnation action

by Gary Taylor

Dahm v. Stark County Board of County Commissioners
(North Dakota Supreme Court, December 19, 2013)

Richard Dahm submitted an application to the County Board for a rezoning to change his property designation from agricultural to residential. Dahm also sought approval of a preliminary plat called Duck Creek Estates, a 99 lot residential subdivision to “provide a rural living environment in a quasi-urban setting . . . .” The land is two miles west of the Dickinson city limits, and located in between Interstate-94 to the north and Highway 10 to the south. The property is adjacent to a previously platted subdivision called Maryville Subdivision.  Two public hearings were held before the Planning and Zoning Commission. At the first hearing, the city/county planner recommended denial based on several alleged deficiencies, including: Dahm did not specify which residential district he wanted to rezone his property to; there was no contract with adjacent land owners ensuring access to Highway 10; the application did not indicate whether road and access widths would meet or exceed Stark County regulations; the application did not indicate what type of bridge would overpass Duck Creek; the application did not delineate the location of wetlands or flood plains or include a flood plain analysis and environmental study; development could result in “pinching” the water flow of Duck Creek; and no potable water was available at the site. The planner also found the application was inconsistent with the Stark County Comprehensive Plan.

Rather than making a formal recommendation to the County Board, the Zoning Commission continued the hearing to allow Dahm to revise his application. Dahm submitted additional information, including a letter responding to the deficiencies, a development narrative, an application package addendum, and proposed zoning maps. The Southwestern District Health Unit also submitted a letter stating that Dahm’s plans for a sewer system were satisfactory. Prior to the second public hearing, the city/county planner again recommended denying Dahm’s application based on several deficiencies, including: the lack of a traffic impact analysis; road access did not meet Stark County standards; the application did not include the location of wetlands and flood plains; the absence of a flood plain elevation study to ascertain whether the project met the requirements of the National Flood Insurance Program and state law; the absence of a field wetland delineation for use during U.S. Army Corps of Engineers 404 Permit Process; no potable water; and that the application was inconsistent with the Stark County Comprehensive Plan.

At the second public hearing, Dahm’s attorney stated that an adjacent landowner agreed to provide highway access, on the condition that the adjacent owner’s property could also be re-zoned. Dahm’s attorney also claimed traffic density would be about 925 vehicles per day. Members of the neighboring Maryville subdivision voiced their opposition to the application based on concern over traffic and dust control. The planner also spoke in opposition to the application. Members of the Planning and Zoning Commission reiterated their trepidation about traffic access points, increased traffic density, and the lack of a study concerning the wetlands and flood plains. Based on these concerns, the Zoning Commission voted 8-0 to recommend a denial of the zoning amendment request.  The County Board adopted the recommendation of the Zoning Commission and denied Dahm’s request by a vote of 5-0. In voting to deny the application the County Board also included a provision that Dahm could not appear before the County Board for six months.

Dahm appealed the County Board’s decision to the district court and also sought to introduce evidence of similar zoning requests that had been previously approved by the County Board. The court denied Dahm’s motion to submit additional evidence and affirmed the County Board’s decision to deny the application for zoning change.  Dahm appealed to the North Dakota Supreme Court.

The Court first noted that in framing its zoning decisions, the Zoning Committee and County Board looked to the Stark County Comprehensive Plan, a growth management policy amended in 2010 based on the county’s rapid growth in the agricultural and energy sectors. In its official recommendation, the Zoning Commission stated “there continues to be concerns with density, traffic, and sewer and water issues for residential development of the property.” Additionally, the Zoning Commission determined the application was inconsistent with at least four goals of the Comprehensive Plan related to compatibility of environmental characteristics of the site, adequacy of sewer and water services, the preservation of open spaces and natural resources, and the prohibition against locating development away from paved roads. The Court concluded that the procedure followed by the county “characterizes an exercise of discretion” that is “the product of a rational mental process by which the facts and the law relied upon are considered together . . . .”

Dahm also argued that when a subdivision plat addresses all issues listed in a county’s subdivision regulations it becomes the “mandatory duty” of the zoning authority to approve a subdivision plat.  The Court disagreed, stating that “The board shall consider all other relevant facts and determine whether the public interest will be served by the subdivision. . . . If it finds that the proposed plat does not make appropriate provisions, or that the public use and interest will not be served . . . then the board of county commissioners shall disapprove the proposed plat.”  The Zoning Commission and the County Board did take into account such factors as open spaces, drainage, streets, water supplies, and waste disposal, in addition to other considerations, in denying the application. Because it found Dahm’s application was at odds with the Comprehensive Plan, it was under no duty to approve the request.

Finally, Dahm argued the six-month restriction from appearing before the County Board was not only arbitrary, capricious, and unreasonable, it was also unconstitutional because a new ordinance (increasing minimum lot sizes from 7,000 square feet to 5 acres) was passed during the six-month prohibition period.  Because Dahm purchased the property in reliance on the original ordinance and subdivision regulations, the County Board’s denial deprived Dahm of all reasonable use of the property.  The Court stated that the moving party in a denial of a change in zoning request cannot turn his appeal into an inverse condemnation action, and declined to address Dahm’s claim of an unconstitutional taking of his property. It found that the decision to implement a six-month appearance restriction was also not arbitrary, capricious, or unreasonable.  The Board noted that Dahm had presented the Duck Creek Estates project three months in a row without adequately resolving the issues of roads, sewage, water, and population density. As the district court reasoned, “the time and effort expended by the Stark County Zoning Board, the City and County Planner, and by the Stark County Commission persuades the Court that there was no violation of Stark County’s authority and obligation to regulate land use . . . by their decision to impose the six month prohibition.” Given the repeated attempts to re-zone and the failure to make the requisite adjustments, it was not unreasonable for the County Board to implement a six-month wait period.

Covenants on homeowners in PUD are lawful and binding

by Gary Taylor

Wheeler v. Southport Seven PUD
(North Dakota Supreme Court, September 28, 2012)

In August 1997, the Southport Development Limited Liability Company filed an amended declaration for the Southport Development PUD Project I in south Bismarck.  The amended declaration states “[n]o portion of the subject project may be removed from the project by vacation or partition, except by the unanimous consent of all record title owners of all of the PUD lots and the holders of all mortgages which constitute mortgage liens upon the subject PUD lots and tracts.” The amended declaration also provides for a Southport association of owners, with each unit owner deemed a member of the association.

In September 2005, Wheeler purchased a home in Southport by warranty deed.   In 2005 and 2006, Wheeler paid Southport fees, dues, and assessments, including fees for snow removal and lawn care. Wheeler, however, was not satisfied with either the snow removal or the lawn care provided by Southport, and in about 2006, she sent a letter to the Southport association, indicating she no longer wanted, and would not pay for, snow removal or lawn care. Wheeler paid for snow removal on one occasion in 2007. In 2007, the Southport association initially filed a lien against Wheeler’s property for unpaid assessments, but later withdrew the lien because of a failure to send notice to Wheeler by certified mail. In 2008, Southport filed another lien on her property after notice was given by certified mail. That lien later was released when Wheeler paid funds into escrow.  In 2009, Wheeler commenced this action against Southport seeking relief from the imposition of dues, fines, and liens filed by Southport against her property and seeking damages for slander to title. Southport answered and counterclaimed for unpaid assessments. The district court ruled that Wheeler was obligated to pay assessments set by the association because her lot was within Southport PUD Project I and awarded Southport a judgment for $2,124.22. Wheeler appealed.

The North Dakota Supreme Court observed that a planned unit development or PUD is a specialized form of zoning ordinance.  Although zoning ordinances are not the same as restrictive covenants running with the land and binding subsequent purchasers, the court explained there is little real difference:

A covenant is a contract and an ordinance isn’t–though a PUD is very close to being a covenant because . . . it is the product of a deal between a developer and a municipality. No matter; a zoning ordinance has the same effect as a covenant because, unless worded to bind only the current owner, it limits the use of the land by whoever owns it, not just whoever owned it when the ordinance was enacted. . . . [A] zoning variance creates a restriction that runs with the land, just like a covenant; and there is no relevant difference between a variance and a PUD.

“As a matter of law, covenants for payment of annual assessments for operation of property owners associations are covenants running with the land,” which “may be enforced by subsequent assignees or successors in title to the original parties.” Deed restrictions and covenants are vital to the existence and viability of PUDs, and “if clearly established by proper instruments, are favored by definite public policy.”  The Court ruled that Wheeler could not opt out of payment of Southport’s annual assessments.  The Court also dismissed Wheeler’s claim that the amended declaration is a “contract of adhesion and contains oppressive and unconscionable terms, and that, as interpreted by the association and the district court, there is no enforcement of the duty on the part of Southport to provide any services.”  The Court reiterated that Wheeler’s obligations to Southport are imposed by the covenants running with the land and she is bound by the amended declaration’s relevant provisions by the purchase of her property within the development.





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