Cent. Motors Corp. v. Pepper Pike

[This opinion has been published in Ohio Official Reports at 73 Ohio St.3d 581.]

CENTRAL MOTORS CORPORATION, APPELLEE v. CITY OF PEPPER PIKE ET AL.,

APPELLANTS.

[Cite as Cent. Motors Corp. v. Pepper Pike, 1995-Ohio-289.]

Zoning—Pepper Pike zoning ordinance No. 1981-21 permitting townhouse units at

a maximum density of 2.5 units per acre constitutional.

(No. 94-375—Submitted May 23, 1995—Decided September 6, 1995.)

APPEAL from the Court of Appeals for Cuyahoga County, No. 64422.

__________________

{¶ 1} The twenty-one-year-old case before us concerns the constitutionality

of a zoning ordinance as applied to appellee’s property.

The Property

{¶ 2} Central Motors Corporation (“CMC”), appellee, is an Ohio

corporation owned by members of the Porter family. CMC owns approximately

one hundred fourteen undeveloped acres located in the southwest corner of the city

of Pepper Pike (“Pepper Pike”), appellant.

{¶ 3} In 1959, CMC purchased approximately two hundred acres of land

within the cities of Beachwood and Pepper Pike for approximately $2,500 per acre.

In 1962, the state of Ohio acquired 33.68 acres of the parcel by eminent domain for

the construction of I-271. Ohio paid CMC $212,987 for the acquisition. The six-

lane highway bisected CMC’s property leaving approximately one hundred

seventeen acres in Pepper Pike. The Cleveland Electric Illuminating Company, in

1977, appropriated two and one half acres of the property’s southwest corner to

install an electrical substation. The remaining one hundred fourteen acres,

however, have not undergone any development or improvement since 1959 and the

property does not have on-site storm sewers or sanitary sewers.

SUPREME COURT OF OHIO

{¶ 4} Rectangularly shaped, CMC’s property is bordered on the east by

Brainard Road, a two-lane residential street in Pepper Pike. Across from the

property on the east side of Brainard Road are eighteen single family homes on one

acre or greater lots. On the property’s west border is I-271 and high voltage

transmission lines and poles associated with the electrical substation. To the

property’s north is a narrow strip of undeveloped land abutting South Woodland

Road. Across South Woodland Road to the north is a new subdivision developed

for single-family residential homes on one-acre lots.

{¶ 5} On the south, the property abuts Woodmere Village and on that border

starting from the west is the I-271/Chagrin Boulevard interchange, a bank office

building, the Village Square Shopping Center and other commercial uses. The

parcel has no frontage on Chagrin Boulevard.

Zoning History

{¶ 6} In 1959, when CMC purchased it, the property was zoned for single-

family residential dwellings with a one-acre minimum lot requirement.

{¶ 7} In the early 1970’s, CMC proposed a planned unit development which

included high-rise office buildings, mid- and high-rise condominium/apartment

buildings and clustered townhouses. Pepper Pike refused to rezone. CMC then

amended its planned-unit-development proposal and requested that the property be

zoned for three different uses. CMC wanted its property rezoned to allow a campus

office park consisting of seven buildings on one third of the parcel at the

southwestern edge of the property. On another third of the parcel, north of the

proposed office park and abutting the interstate, CMC proposed zoning to allow

thirteen five-story condominium buildings consisting of three hundred ninety

condominium units total, or thirty units per building. The remaining area was to be

restricted to development of one hundred twenty townhouse units, arranged in

clusters.

2

January Term, 1995

{¶ 8} In 1981, several years after this case began, Pepper Pike’s city council

passed ordinance No. 1981-21, which rezoned the property from the detached

single-family zoning to townhouse cluster zoning with a maximum density of 2.5

units per acre. The electorate ratified the new zoning ordinance. The new zoning

ordinance restricted the use of the property to no more than four units per structure,

with a maximum height of thirty-five feet or two and one-half stories and a

minimum of thirty feet between each townhouse. That ordinance also mandated a

set back of one-hundred-fifty feet from South Woodland Road, Brainard Road and

I-271.

Case History

{¶ 9} In 1974, when Pepper Pike refused to rezone CMC’s property, CMC

sued for a declaration that Pepper Pike’s single family residential zoning of CMC’s

property was unconstitutional. From 1974 to the present, the case has been back

and forth between the trial court and the Cuyahoga County Court of Appeals on

numerous occasions.

{¶ 10} The case was originally tried in 1976, prior to Pepper Pike’s rezoning

CMC’s property to townhouse use. After CMC presented its evidence and rested,

Pepper Pike moved for dismissal under Civ.R. 41(B)(2) which the trial court

granted. The court of appeals reversed the dismissal, holding that the trial court

erred because CMC demonstrated its right to relief by clearly removing the validity

of the single-family zoning classification beyond fair debate. Cent. Motors Corp.

v. Pepper Pike (1979), 63 Ohio App.2d 34, 13 O.O.3d 347, 409 N.E.2d 258.1

{¶ 11} The present appeal concerns the constitutionality of zoning

ordinance No. 1981-21 which permitted townhouse units at a maximum density of

1. Pepper Pike rezoned CMC’s property to townhouse use in 1981 and the trial court dismissed the

case as moot. The court of appeals reversed the trial court, finding that in the circumstances of this

case, the trial court abused its discretion by failing to allow CMC to amend its complaint. Cent.

Motors Corp. v. Pepper Pike (1983), 9 Ohio App.3d 18, 9 OBR 19, 457 N.E.2d 1178.

3

SUPREME COURT OF OHIO

2.5 units per acre. After a full trial concerning the 1981 zoning ordinance, the trial

court held that the low-density townhouse zoning as applied to CMC’s property

was unconstitutional. Having determined that Pepper Pike had rezoned the

property under the opportunity provided by Union Oil Co. of California v.

Worthington (1980), 62 Ohio St.2d 263, 16 O.O.3d 315, 405 N.E.2d 277, the trial

court found CMC’s proposed use, with some exceptions, to be reasonable and

ordered Pepper Pike to submit proposed zoning regulations permitting the court-

approved uses.2 After receiving the proposed zoning regulations, the trial court

appointed its own expert and entered judgment based on the court-appointed

expert’s recommendations. The court of appeals affirmed the trial court’s decision.

{¶ 12} The cause is before this court pursuant to the allowance of a

discretionary appeal.

__________

Thompson, Hine & Flory, David L. Parham and Karen E. Rubin, for

appellee.

Walter & Haverfield, Christopher L. Gibbon and R. Todd Hunt, for

appellants.

John E. Gotherman and Malcolm C. Douglas, urging reversal for amici

curiae, Ohio Municipal League and Ohio Municipal Attorneys Association.

Clarence D. Rogers; Zashin, Rich & Sutula and Robert I. Zashin, urging

reversal for amicus curiae, residents of the city of Pepper Pike.

__________

COOK, J.

2. Pepper Pike appealed at this time and the court of appeals dismissed that appeal for lack of a

final appealable order. Cent. Motors Corp. v. Pepper Pike (July 8, 1991), Cuyahoga App. No.

61398, unreported.

4

January Term, 1995

{¶ 13} In this case we are asked to determine whether Pepper Pike’s zoning

of CMC’s property is unconstitutional and whether Pepper Pike had used its one

opportunity to rezone to cure the constitutional defect, thereby allowing the judicial

rezoning of the property. We hold that the zoning ordinance is constitutional and,

thus, do not reach the issue of whether judicial rezoning was proper.

{¶ 14} Neither party contests the legal principles governing this case.

Rather, the dispute concerns the application of those principles to the specific facts

of this case. In analyzing the constitutionality of zoning ordinances, we necessarily

begin with the strong presumption that the ordinance is valid. Valley Auto Lease of

Chagrin Falls, Inc. v. Auburn Twp. Bd. of Zoning Appeals (1988), 38 Ohio St.3d

184, 185, 527 N.E.2d 825, 827; Franchise Developers, Inc. v. Cincinnati (1987),

30 Ohio St.3d 28, 32, 30 OBR 33, 36, 505 N.E.2d 966, 970; Hudson v. Albrecht,

Inc. (1984), 9 Ohio St.3d 69, 71, 9 OBR 273, 275, 458 N.E.2d 852, 855; Brown v.

Cleveland (1981), 66 Ohio St.2d 93, 95, 20 O.O.3d 88, 89, 420 N.E.2d 103, 105.

We note that the party challenging the validity of a zoning classification bears, at

all stages of the proceedings, the burden of demonstrating that the provision is

unconstitutional. Ketchel v. Bainbridge Twp. (1990), 52 Ohio St.3d 239, 557

N.E.2d 779; Valley Auto, supra; Mayfield-Dorsh, Inc. v. S. Euclid (1981), 68 Ohio

St.2d 156, 157, 22 O.O.3d 388, 429 N.E.2d 159, 160.

{¶ 15} In reviewing the trial court’s decision to invalidate Pepper Pike’s

zoning ordinance, we are guided by the principle that judgments supported by

competent, credible evidence going to all the material elements of the case must

not be reversed as being against the manifest weight of the evidence. C.E. Morris

Co. v. Foley Constr. Co. (1978), 54 Ohio St.2d 279, 8 O.O.3d 261, 376 N.E.2d

578, syllabus. If the evidence is susceptible to more than one interpretation, we

must give it the interpretation consistent with the trial court’s judgment. See

Seasons Coal Co. v. Cleveland (1984), 10 Ohio St.3d 77, 10 OBR 408, 461 N.E.2d

1273.

5

SUPREME COURT OF OHIO

{¶ 16} Recently, this court reaffirmed the well-established standard of

review that in order to invalidate a zoning ordinance on constitutional grounds, the

party attacking the regulation must establish, beyond fair debate, that the zoning

classification denies the owner an economically viable use of the zoned property

and that the zoning classification fails to advance a legitimate governmental

interest. Gerijo, Inc. v. Fairfield (1994), 70 Ohio St.3d 223, 638 N.E.2d 533,

syllabus. This court has stated that there is little difference between the “beyond

fair debate” standard and the “beyond a reasonable doubt” standard. Karches v.

Cincinnati (1988), 38 Ohio St.3d 12, 19, 526 N.E.2d 1350, 1357, fn. 7. “A court

may substitute its judgment for that of the local governing body only when a

municipality exercises its zoning power in an arbitrary, confiscatory or

unreasonable manner which violates constitutional guaranties.” Gerijo at 226, 638

N.E.2d at 536. “*** [T]he court can not usurp the legislative function by

substituting its judgment for that of the council. Municipal governing bodies are

better qualified, because of their knowledge of the situation, to act upon these

matters than are the courts. *** The legislative, not the judicial, authority is

charged with the duty of determining the wisdom of zoning regulations, and the

judicial judgment is not to be substituted for the legislative judgment in any case in

which the issue or matter is fairly debatable.” Willott v. Beachwood (1964), 175

Ohio St. 557, 560, 26 O.O.2d 249, 251, 197 N.E.2d 201, 203-204.

{¶ 17} Applying the two-pronged test reannounced in Gerijo to this case,

we begin with the issue of whether Pepper Pike’s zoning ordinance failed to

advance a legitimate government interest. Pepper Pike maintains that zoning

ordinance No. 1981-21 advanced its interest of retaining the residential character

of the property, the neighborhood and the community. CMC contends the zoning

does not advance a legitimate government interest because Pepper Pike does not

have a comprehensive master plan, CMC’s property is unique and increased traffic

alone cannot justify a governmental interest.

6

January Term, 1995

{¶ 18} This court has consistently recognized that a municipality may

properly exercise its zoning authority to preserve the character of designated areas

in order to promote the overall quality of life within the city’s boundaries. Gerijo,

at 228, 638 N.E.2d at 538; Franchise Developers, 30 Ohio St.3d at 33, 30 OBR at

37, 505 N.E.2d at 971; and Hudson, 9 Ohio St.3d at 73, 9 OBR at 276, 458 N.E.2d

at 856. Further, while traffic considerations may not always be sufficient, in and

of themselves, to justify a particular zoning ordinance, this court has held several

times that a “city may lawfully regulate [safety hazards] pursuant to its police

powers: protection of pedestrians and drivers, elimination of traffic congestion and

reduction of air and noise pollution.” Brown, 66 Ohio St.2d at 96, 20 O.O.3d at 90,

420 N.E.2d 106; Leslie v. Toledo (1981), 66 Ohio St.2d 488, 491, 20 O.O.3d 406,

408, 423 N.E.2d 123, 125.

{¶ 19} The evidence presented on behalf of Pepper Pike at trial indicates

that after seven years of court involvement, the city rezoned CMC’s property from

single-family residential dwellings with a one-acre minimum lot requirement to

townhouse cluster zoning with a maximum density of 2.5 units per acre. With this

ordinance, Pepper Pike attempted to balance the competing interests of CMC and

the other residents of Pepper Pike. One of Pepper Pike’s objectives, as seen in its

1990 zoning map, was to restrict commercial development to the Chagrin

Boulevard corridor and to keep Brainard Road a residential road. Zoning ordinance

No. 1981-21 served to buffer the single-family homes from the intensive

commercial and office development along Chagrin Boulevard.

{¶ 20} CMC’s property was unique because it was one of the last

undeveloped properties in Pepper Pike and abuts other political subdivisions and

commercial uses. By zoning the property for a higher density of units and

clustering of those units, Pepper Pike provided the necessary flexibility for

development of the property, addressed the impact of the outside influences on the

property, and maintained the residential character of the neighborhood and

7

SUPREME COURT OF OHIO

community. According to one of Pepper Pike’s experts, development of the

property as zoned by Pepper Pike would maintain the residential character of

Pepper Pike’s neighborhoods on Brainard Road and be compatible with the other

single-family homes adjoining the property while providing the flexibility of higher

density, larger set backs, and wooded space, to buffer the adverse influences of the

Village Square Shopping Center on the south and I-271 on the west.

{¶ 21} As to the adverse influences surrounding CMC’s property, Pepper

Pike’s expert testified that the best way to separate incompatible uses such as retail

or an interstate highway from residential development is to solve the problem at the

site. “I find in my current experience that probably the best way when you have

something that you are trying to separate from one use to the other, the best thing

to do is to solve it right at the place, put in the necessary separations, screening and

buffering and then go right into the development that you probably ought to have

on that site in the first place.” By combining mounding, fencing and natually

wooded space, the adverse influences could be diminished. Other developments in

Cuyahoga County where barriers had been erected along freeways and behind

commercial areas have successful expensive single-family residential

developments.

{¶ 22} While a townhouse development would add 1,716 cars per day to

Brainard Road, a two-lane, residential road, Pepper Pike demonstrated that the

proposed commercial development would add 17,295 cars per day. Eighteen

single-family homes were located on Brainard Road across from the property at

issue.

{¶ 23} In finding that zoning ordinance No. 1981-21 did not advance a

legitimate government interest, the trial court focused on the unique character of

the property and the lack of a comprehensive master plan or “serious planning

considerations.” In discussing the particular government interests advanced, the

common pleas court only addressed the issue of traffic concerns and concluded that

8

January Term, 1995

those concerns, in this case, were insufficient to justify the zoning ordinance. On

this issue, the court of appeals compared zoning ordinance No. 1981-21 with the

CMC’s proposed uses and concluded that CMC’s proposed zoning “better

promotes” Pepper Pike’s desire to use CMC’s property as a buffer between

commercial and residential areas than does zoning ordinance No. 1981-21, and that

the use of the property as a buffer was illusory because the townhouses would not

have any buffer themselves. We disagree. Pepper Pike presented credible evidence

to support the transitional use of zoning CMC’s property for 2.5 units-per-acre

density townhouse use.

{¶ 24} While both the trial court and the court of appeals correctly stated

the law, both misapplied their pronouncement to the facts of the case. Whether

CMC’s proposed zoning might “better” advance the stated governmental interest

does not address the issue of whether zoning ordinance No. 1981-21 advances a

legitimate government interest. Likewise, whether the traffic concerns were

substantially advanced by the zoning does not address whether any other legitimate

government interest existed. “The judgment of the judiciary is not to be substituted

for that of the legislature when an issue is fairly debatable so that reasonable minds

may differ.” Gerijo, at 229, 638 N.E.2d at 538.

{¶ 25} We will not substitute our opinion for that of the legislative entity

when the evidence presented clearly contradicts a finding that zoning ordinance No.

1981-21 was arbitrary or that it failed to substantially advance a legitimate

government interest. Pepper Pike demonstrated that its zoning ordinance

implemented a coherent land-use policy derived from a rational consideration of

the needs of the community as a whole. We, therefore, hold that CMC failed to

demonstrate beyond fair debate that zoning ordinance No. 1981-21 did not

substantially advance Pepper Pike’s legitimate governmental interest in protecting

and maintaining the residential character of the property, neighborhood and

community.

9

SUPREME COURT OF OHIO

{¶ 26} Continuing our analysis under the two-part test, we next consider

whether zoning ordinance No. 1981-21 deprived CMC of an economically viable

use. Id. at syllabus; Columbia Oldsmobile, Inc. v. Montgomery (1990), 56 Ohio

St.3d 60, 564 N.E.2d 455. A zoning ordinance denies a property owner an

economically viable use if it denies an owner all uses except those which are highly

unlikely or practically impossible under the circumstances. Gerijo, at 228, 638

N.E.2d at 537-538.

{¶ 27} Both the trial and appellate courts focused on the most viable use of

the property and not on whether the zoning ordinance allowed for a viable use. The

court of appeals stated “that the most productive use of the land from an economic

standpoint for both parties would be to allow the proposed use rather than the

existing all-townhouse zoning.” Whether this statement is correct or not, the

judiciary is not to substitute its judgment for that of the legislative body. In this

case, Pepper Pike had increased the density of the units allowed on CMC’s property

from the original one unit per acre to 2.5 units per acre.

{¶ 28} Preliminarily, we note that both courts, while acknowledging

diminution in value alone is insufficient to invalidate an existing zoning ordinance,

based their rulings, in part, upon the determination that under that zoning, CMC

would suffer a ninety percent diminution in the value of the portion of the property

proposed for office use. To arrive at this conclusion, the courts compared CMC’s

undeveloped property to developed commercial property located in Beachwood

selling for $300,000 to $500,000 per acre.3 The proper comparison for the

diminution in value would have been the difference in the value of the property as

zoned, $14,900 per acre or $1.7 million according to CMC’s expert or $32,500 or

$3.7 million according to Pepper Pike’s expert, and the value of the property as

3. While the court of appeals noted that the lack of on-site development on the CMC property would

affect the diminution in value, the court failed to reach any substantive conclusion about the actual

diminution in value in this case.

10

January Term, 1995

proposed to be zoned, $34,210 per acre or $3.9 million according to CMC’s expert.

Thus, the disparity in value is not as significant as either court stated because of the

failure to account for the difference between developed and undeveloped land.

{¶ 29} The trial court found that zoning ordinance No. 1981-21 deprived

CMC of an economically feasible use of its land because the low density of 2.5

units per acre precluded the recovery of the up-front cost of bringing sanitary

sewers to the site. Pepper Pike argues that the trial court erroneously included all

the development costs when reviewing one of Pepper Pike’s expert’s figures. We

agree.

{¶ 30} Pepper Pike’s expert, a developer, testified that a successful

townhouse development in accordance with zoning ordinance No. 1981-21 could

be built with a fifteen percent profit on capital risked for townhouses in the range

of $250,000 to $300,000. In order to provide that development, the developer

testified that he could improve the land for a profit if he could purchase the property

at $70,000 to $75,000 per acre. He assumed that the purchase price included the

off-site improvements for sanitary treatment and a barrier for the attenuation of

sound from I-271. The value of the land plus the costs of a sound barrier and off-

site sewage treatment, according to the parties’ other experts, ranged from $30,824

to $61,819 per acre. Thus, the costs were well below the price the developer would

be willing to pay for the land.

{¶ 31} In comparing the developer’s testimony with that of other experts,

the trial court used all the development costs, which it found to be approximately

$86,000 per acre. The court of appeals recognized this error in its recitation of the

facts, but in its analysis erroneously used both the on-site and off-site improvement

costs to determine that the property costs and the improvement costs precluded the

development of this property. Without the trial court’s and court of appeals’

reliance on the erroneous statement of Pepper Pike’s expert testimony, CMC did

11

SUPREME COURT OF OHIO

not meet its burden of proving beyond fair debate the lack of an economically viable

use of its property.

{¶ 32} The judgment of the court of appeals is reversed.

Judgment reversed.

MOYER, C.J., DOUGLAS, RESNICK AND F.E. SWEENEY, JJ., CONCUR.

WRIGHT, J., CONCURS IN JUDGMENT ONLY.

PFEIFER, J., DISSENTS.

__________________

WRIGHT, J., concurring in judgment only.

{¶ 33} Although I agree with the reversal of the judgment of the court of

appeals, I disagree with the majority’s continued use of a conjunctive test, which

this court expressly adopted in Gerijo, Inc. v. Fairfield (1994), 70 Ohio St.3d 223,

638 N.E.2d 533, syllabus. In adopting and following the conjunctive test, this court

has drifted away from the specific constitutional provisions that govern zoning

ordinances and has abandoned the proper constitutional principles, as announced

by the United States Supreme Court. As discussed below, requiring any party who

challenges the constitutionality of a zoning ordinance to prove, beyond fair debate,

both that the ordinance deprives him of an economically viable use and that it fails

to advance a legitimate governmental interest effectively strips individuals of rights

guaranteed by the United States Constitution.

{¶ 34} A party who challenges the constitutionality of a municipal zoning

ordinance normally asserts that the ordinance violates the Due Process Clause of

the Fourteenth Amendment and/or the Takings Clause of the Fifth Amendment,

applicable to states and their political subdivisions through the Fourteenth

Amendment. However, today’s opinion, like our other recent cases concerning the

constitutionality of zoning laws, does not identify the specific constitutional

provision(s) that it is interpreting. As such, I will articulate the proper constitutional

analysis under both provisions.

12

January Term, 1995

{¶ 35} In applying the Takings Clause, the United States Supreme Court

has adopted a disjunctive test, which provides individuals with greater protections

from governmental interferences with their property than the majority’s

conjunctive test. A zoning ordinance effects a taking of property without just

compensation in contravention of the Fifth and Fourteenth Amendments if it “‘does

not substantially advance legitimate state interests or denies an owner economically

viable use of his land.’” (Emphasis omitted in part.) Lucas v. S. Carolina Coastal

Council (1992), 505 U.S. ___, ___, 112 S.Ct. 2886, 2894, 120 L.Ed.2d 798, 813

(quoting Agins v. Tiburon [1980], 447 U.S. 255, 260, 100 S.Ct. 2138, 2141, 65

L.Ed.2d 106, 112).

{¶ 36} With regard to the Due Process Clause of the Fourteenth

Amendment, the United States Supreme Court has held that a zoning ordinance

deprives an owner of his property without due process of law if it is “clearly

arbitrary and unreasonable, having no substantial relation to the public health,

safety, morals, or general welfare.” Euclid v. Ambler Realty Co. (1926), 272 U.S.

365, 395, 47 S.Ct. 114, 121, 71 L.Ed. 303, 314; see, also, Nectow v. Cambridge

(1927), 277 U.S. 183, 187-188, 48 S.Ct. 447, 448, 72 L.Ed. 842, 844. As is readily

apparent, an unreasonable ordinance that fails to advance a legitimate governmental

interest violates the Due Process Clause, as interpreted in Euclid, but is deemed

constitutional under the majority’s conjunctive test, unless the ordinance also

deprives the owner of all economically viable use of the property.

{¶ 37} Although states may afford individuals greater rights than those

afforded under the federal Constitution, states cannot deprive individuals of rights

that are guaranteed by the federal Constitution. Because the majority’s conjunctive

test does not provide individuals with the full protections afforded by the federal

Constitution, it is, itself, unconstitutional. When reviewing the constitutionality of

zoning ordinances, this court should abandon the conjunctive test and follow the

13

SUPREME COURT OF OHIO

proper legal standards under the Takings Clause and/or the Due Process Clause, as

articulated by the United States Supreme Court.

__________________

PFEIFER, J., dissenting.

{¶ 38} While I agree with Justice Wright’s conclusion that a disjunctive test

should be applied when evaluating the constitutionality of zoning regulations, the

findings of fact and conclusions of law of the trial court should remain undisturbed.

{¶ 39} The trial court found that the zoning scheme was unconstitutional

because it was arbitrary, confiscatory, unreasonable and did not bear a substantial

relationship to the public health, safety, morals and general welfare. As its rationale

for its zoning plan, the city claims that there is a need for a transitional buffer

between residential and commercial properties. Using the property for low-density

townhouses does little to further the city’s objectives. The city’s proposed use of

the property is purely residential. A scheme which gradually shifts the use of

property from commercial to residential would acheive a result consistent with the

city’s rationale, and was precisely the remedy crafted by the trial court. I

accordingly dissent.

__________________

14