MATERIAL SERVICE CORP. v. TOWN OF FITZHUGH

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MATERIAL SERVICE CORP. v. TOWN OF FITZHUGH

2015 OK CIV APP 13

343 P.3d 624

Case Number: 109966

Decided: 08/14/2014

Mandate Issued: 02/13/2015

DIVISION I

THE COURT OF CIVIL APPEALS OF THE STATE OF OKLAHOMA, DIVISION I

Cite as: 2015 OK CIV APP 13 , 343 P.3d 624

MATERIAL SERVICE CORPORATION, Plaintiff/Appellant,

v.

TOWN

OF FITZHUGH, Defendant/Appellee.

APPEAL FROM THE DISTRICT COURT OF

PONTOTOC COUNTY,

OKLAHOMA

HONORABLE TOM S. LANDRITH, TRIAL JUDGE

AFFIRMED

Elizabeth C. Nichols, Elizabeth C. Nichols, P.C., Edmond, Oklahoma, for

Plaintiff/Appellant,

Jason D. Christopher, Sweeney, Smith, Draper &

Christopher, P.L.L.C., Ada, Oklahoma, for Defendant/Appellee.

Wm. C. Hetherington, Jr., Vice-Chief Judge:

¶1 In the second appeal in the parties' zoning controversy, Plaintiff

Material Services Corporation (MSC) appeals the trial court's declaratory

judgment in favor of Defendant Town of Fitzhugh (Town), in Pontotoc County,

Oklahoma, entered after a non-jury trial over the validity of Town's new zoning

ordinance prohibiting MSC's proposed operation of a limestone quarry within the

corporate limits.

STANDARD OF REVIEW

¶2 Under the Declaratory Judgments Act, the determination of a competent

court is reviewable in the same manner as other judgments. 12 O.S. 2011 § 1654. "A suit for

declaratory judgment pursuant to § 1651 is neither strictly legal nor equitable,

but assumes the nature of the controversy at issue." Macy v. Oklahoma City

School Dist. No. 89 , 1998 OK

58, ¶ 11 , 961 P.2d 804,

807 .

¶3 The judgment on appeal is comprised of both findings of facts and

conclusions of law. 1 When a trial court's declaratory judgment order

decides a question of law, we review the decision under a de novo

standard, which requires review of the record to determine whether the trial

court erred . Cherokee Nation v. Nomura , 2007 OK 40, ¶ 11 , 160 P.3d 967, 972 . When a

proceeding under the Declaratory Judgment Act involves the determination of an

issue of fact, such issue must be tried and determined in the same manner as

issues of fact are tried and determined in other civil actions in the court in

which the proceeding is pending. 12

O.S.2011 §1656.

¶4 Proceedings in district court on appeals from Boards of Adjustment in

zoning matters are generally characterized as being equitable in nature. The

question on review of such cases is whether the judgment of the district court

is clearly contrary to the weight of the evidence. Triangle Fraternity v.

City of Norman ex rel. Board of Adjustment , 2002 OK 80, ¶ 11 , 63 P.3d 1 (citing Bankoff v.

Board of Adjustment of Wagoner County , 1994 OK 58 , 875 P.2d 1138 ).

¶5 Although this appeal is not brought from a district court's review of a

board's zoning decision, the nature of this declaratory judgment action,

i.e ., the validity of Town's zoning ordinance and whether it applies

retroactively to MSC's 2003 Mining Lease, is also equitable, and we will sustain

the trial court's ruling unless clearly contrary to the weight of the evidence.

Bankoff v. Board of Adjustment of Wagoner County , 1994 OK 58, ¶ 14 , 875 P.2d 1138, 1143 . In equitable

actions, this Court "presumes the district court's findings of fact are correct

and will not disturb such findings on appeal unless they are clearly contrary to

the weight of the evidence." Pine Island RV Resort, Inc. v. Resort

Management, Inc., 1996 OK 83 ,

¶ 18, 922 P.2d 609, 613 . Also the

credibility of witnesses and the weight and value of their testimony are

questions exclusively for the factfinder. Id . Finally, a correct judgment

will be affirmed, regardless of the reasons given, if it is sustainable on any

rational theory and the ultimate conclusion reached is legally correct.

Bankoff at ¶17 .

FACTUAL AND PROCEDURAL HISTORY

¶6 MSC is an Oklahoma corporation primarily in the business of crushing

limestone for highways and other construction, who has as its President and

manager, Larry Stewart. MSC is a wholly-owned subsidiary of Stewart Stone Inc.,

an Oklahoma corporation, a family business started in 1977 by Mr. Stewart's

grandfather and father.

¶7 According to the record, parties' joint stipulated facts (JSF) adopted by

the trial court, and uncontroverted trial testimony relevant to the background

of this dispute, MSC "entered into a valid lease on January 3, 2003" with

Jeffery and Julia Luke, "owners of Section 22, Township 2 North, Range 5 East,

in Pontotoc County, for purposes of operating a mining quarry" (2003 Mining

Lease). 2 JSF

#2. According to Mr. Stewart, the "only property right MSC was granted was the

right to mine." 3

¶8 In April 2003, MSC employed Terry Fox from Triad Environmental to prepare

its Application for a mining permit for submission to the Oklahoma Department of

Mines (ODM), during which Fox determined there was no zoning affecting the 2003

Mining Lease. MSC "submitted its Application [for Non-Coal Permit] with ODM then

on June 25, 2003," which described certain property in the 2003 Mining Lease

(Fitzhugh Site). JSF # 3. Following ODM's required publications of notice,

"individuals objecting to MSC's Application requested an informal conference,"

held November 4, 2003, at which the objectors expressed their opposition to MSC

mining the site and their intent to pass zoning ordinances to prohibit the

mining. JSF # 6.

¶9 Mr. Stewart attended a town council meeting in February 2004 at which

interim zoning was discussed, announced MSC would protect its rights, including

the filing of a lawsuit against Town and its members. On February 10, 2004, MSC

filed a declaratory judgment against Town in Pontotoc County District Court

(Case No. C-04-121), 4 seeking to establish Town was not properly

incorporated in 1985 and lacked authority to enact zoning ordinances. The trial

court disagreed and granted Town's summary judgment motion, finding Town's

incorporation was valid, notice of such had been posted and duly published, and

there was no annexation. MSC moved for a new trial.

¶10 "On November 19, 2004, ODM issued a Notice of Departmental Decision," as

modified, granting MSC a mining permit which would become final in 30 days

unless timely written requests for a hearing were filed. JSF #9. "On

December 17, 2004, residents of [Town] requested a formal conference in the ODM

matter." JSF # 10.

¶11 "On December 27, 2004, the Town's Trustees voted on the First Zoning

Ordinance." JSF # 11. That Ordinance prohibited, inter alia , "any person,

firm or corporation . . .to establish, open up, commence or carry on any

commercial. . .quarry or surface mine within the corporate limits of [Town]."

The First Zoning Ordinance, published January 6, 2005, included a grandfather

clause for nonconforming uses as required by state law. 5 "There were no zoning restrictions in

[Town] prior to December 2004." JSF #1.

¶12 On January 10, 2005, Chuck Barton and other individuals filed an action

against MSC and its parent corporation, Stewart Stone, in Pontotoc County

District Court, (Case No. C-05-27), seeking a determination the First Zoning

Ordinance was valid and requesting a permanent injunction prohibiting MSC from

operating its proposed mine (Barton case). JSF #14. Eight days later in the ODM

administrative proceeding, counsel for the objecting parties "requested the ODM

Administrative Law Judge [ALJ] take judicial notice that there had been a valid

zoning passed on December 27, 2004, which prevented MSC from mining the

[Fitzhugh] Site." JSF # 15. "In accordance to OAC 460:10-9-4, ODM cannot issue a

mining permit which will violate a zoning statute." JSF #13.

¶13 On January 24, 2005, MSC filed a petition against Town and its five

Trustees in the Pontotoc County District Court (Case No. C-05-50), alleging,

inter alia , intentional interference with contract and with its

prospective business, an unconstitutional taking of its property interest, and a

declaratory judgment of the validity and application of the First Zoning

Ordinance. JSF #16.

¶14 "On February 6, 2005, Town's Trustees passed the Second Zoning Ordinance,

and it was published February 14, 2005." JSF#17. "The Second Zoning Ordinance

did not comply with publication requirements of the Open Meetings Act."

Id . On March 1, 2005, MSC filed a counter-claim in the Barton Case

(C-05-27), re-alleging its two intentional interference theories of recovery

against individual plaintiffs, which MSC later amended to include declaratory

judgment concerning the validity of both zoning ordinances. JSF #18.

¶15 A week before the formal hearing scheduled in the ODM administrative

proceeding concerning MSC's mining permit, MSC filed a motion on April 4, 2005,

seeking a stay of such proceeding until a decision on the validity of Town's

zoning ordinance in district court. Three days later, the ODM ALJ granted the

stay. 6

¶16 In May of 2005, MSC filed an appeal with the Supreme Court from the trial

court's April 2005 order denying MSC's motion for new trial in C-04-121

(challenge to Town's incorporation in 1985). Another division of the Court of

Civil Appeals (Case No. 102,081) affirmed the court's denial in October 2005 by

an unpublished opinion, finding MSC's challenge to Town's 1985 incorporation was

time-barred under 11 O.S.2001 §

2-107.

¶17 On November 3, 2005, the trial court filed an order consolidating MSC's

Case No. C-05-50 with the Barton Case (C-05-27). 7 In January 2006, the Supreme Court

denied MSC's petition for certiorari in No. 102,081 (C-04-121), and mandate was

subsequently issued. On February 10, 2006, MSC filed a limited dismissal without

prejudice of all its theories of recovery alleged in the consolidated cases

except for its request for declaratory relief.

¶18 "On April 3, 2006, Town voted on and enacted its Third Zoning Ordinance."

JSF #22. On June 4, 2007, MSC requested a variance of the subject property at a

regular town meeting, which Town denied. JSF # 23 & 24. That same year MSC

filed two amended petitions and counterclaims to include, inter alia , 8 all the

theories of recovery it had previously dismissed. 9

¶19 For reasons not shown in the record, no action was taken by any party in

the consolidated cases between the end of 2008 through until July 19, 2010, when

the court's Pretrial Conference Order was filed. 10 The latter order lists only MSC's

inverse condemnation/taking theory and request for declaratory judgment over the

validity of Town's first two zoning ordinances, which MSC alleged were "fatally

flawed" pursuant to 11 O.S. 2001 §

43-104. 11

¶20 A year later, MSC and Town agreed to submit three questions to the court

for declaratory judgment, listed in the Pretrial Conference Order filed July 18,

2011:

1) Was the zoning enacted by the Town of Fitzhugh proper as it relates to

MSC as lessee?

2) Is MSC entitled to a non-conforming use designation pursuant to

Bankoff [ v. Board of Adjustment of Wagoner County , 1994 OK 58 , 875 P.2d 1138 ]?

3) Which party prevails in a balancing of the equities test in

Bankoff ?

¶21 At the declaratory judgment hearing held in August 2011 to decide the

same three questions, the trial court expressly adopted the parties' joint

stipulated facts attached to its last PTC Order. MSC called two witnesses, Larry

Stewart, and an employee of ODM, Brett Sholar. After MSC rested and the court

denied Town's demurrer to the evidence, Town called one witness, Joe Bradshaw, a

Town Trustee for over twenty years. Both parties submitted numerous exhibits the

court admitted into the record. Following closing statements, the parties were

ordered to prepare proposed findings of fact and conclusions of law by a set

date.

¶22 Relying on certain joint stipulated facts and trial testimony, the trial

court made numerous findings of facts and in the Judgment's final paragraph

expressly found:

[MSC] never received a mining permit for the Fitzhugh site, consequently

[MSC] never had a vested property right to mine at the Fitzhugh site.

The zoning ordinances for [Town] which in effect prohibited [MSC] from mining

at the Fitzhugh site are valid and did not take a vested property right of

[MSC]. (Emphasis added.)

The court then entered judgment in favor of Town and against MSC, whose

appeal followed. 12

ANALYSIS

¶23 Six of MSC's seven propositions in its Brief in Chief may be reduced to

two alternative arguments: 13 1) Town's Third Zoning Ordinance cannot be applied

retroactively to MSC because its mining lease is a constitutionally-protected

vested property right, and 2) even if the lease is not vested, it would be

inequitable to give effect to that zoning ordinance based on application of the

"balancing of equities test" adopted in Bankoff to the facts of this

case. Town correctly points out MSC has expressly conceded the validity of the

Third Zoning Ordinance.

¶24 To support MSC's position that its mining lease is a vested

property right entitled to constitutional protection, it cites to several

Oklahoma inverse condemnation cases, the first of which similarly involved the

lessee's intended use of a mining leasehold interest, 14 whereas the last two

clearly involved leasehold interests which uses thereof had existed

lawfully for many years. 15 "It is axiomatic that under ordinary circumstances

a zoning enactment cannot be applied retroactively to require destruction

of an existing structure or a substantial change in an existing lawful

use of property." (Emphasis added.) Bankoff v. Board of Adjustment

of Wagoner County , 1994 OK

58,¶ 8 , 875 P.2d 1138 .

However, none of the three cases addresses the specific issue raised in this

case - does MSC's mining lease constitute a vested property right such as would

prevent retroactive application of Town's subsequently-enacted zoning

ordinance.

¶25 MSC also relies on Oklahoma's long-observed definition of a "vested

right" as "the power to do certain actions or possess certain things

lawfully , and is substantially a property right . . . created by common law,

by statute, or by contract" and "when it has been once created, and has become

absolute, it is protected from the invasion of the Legislature by those

provisions in the Constitution which apply to such rights." Baker v. Oklahoma

Firefighters Pension and Retirement System , 1986 OK 8, ¶4 , 718 P.2d 348 .

¶26 Property rights "are created by common law, by statute, or by contract."

Id . In this case, MSC's property rights were created by the 2003 Mining

Lease. A "lease is a contract between the lessor and lessee . . . .[that]

becomes a grant of an estate in real property when it takes effect in

possession ." Ferguson v. District Court of Oklahoma County , 1975 OK 167, ¶ 6 , 544 P.2d 498, 499 . During a lease,

"the lessee holds an outstanding leasehold in the premises which for all

practical purposes is equivalent to absolute ownership . The estate of the

lessor during such time is limited to his reversionary interest which ripens

into perfect title at the expiration of the lease." (Citations omitted.)

Id.

¶27 We agree a leasehold interest is generally a valuable property interest

which in Oklahoma, if taken by inverse condemnation, the lessee has a right to

share in the award, absent an agreement to the contrary with the lessor.

State ex rel. Oklahoma Capitol Improvement Authority v. United States Beef

Corp ., 2002 OK CIV APP 81, ¶

6 , 52 P.3d 1052, 1054 . However, "rights are vested when the present or

prospective right to enjoyment has become the property of some particular person

as a present interest." Randolph v. Board of Regents of Oklahoma

Colleges , 1982 OK 75, ¶ 7 , 648 P.2d 825, 827 .

" Contrarily , rights are contingent when they are only to come into

existence on an event or condition which may not happen or be performed until

some other event may prevent vesting." (Emphasis added.) Id .

¶28 At the declaratory hearing, Mr. Stewart, affirmed the parties' joint

stipulation by testifying "the only right he had in the mining lease was the

right to mine or quarry rock ." 16 In Oklahoma, "the existing applicable law is part

of every contract as if it were expressly referred to or incorporated within the

agreement." Welty v. Martinaire of Oklahoma, Inc ., 1994 OK 10, ¶ 11 , 867 P.2d 1273, 1276 . "A state may

impose statutory limits on the right to contract where the limitation is a

reasonable exercise of its police power, and in such case the statute is an

implied part of the contract, with obligations subject to the prohibitions in

the statute." Id .

¶29 Pursuant to Oklahoma's Mining Lands Reclamation Act (the Act), 45 O.S. 2001 § 724(A), the version

in effect when the 2003 Mining Lease was executed in 2003, "it shall be

unlawful for any operator to engage in any mining operations in this

state without first obtaining a permit . . . from the Oklahoma Department

of Mines for each separate mining operation." (Emphasis added.) The public

policy of the Act, provides, inter alia , for the reclamation and

conservation of land subjected to surface disturbance by mining, preservation of

natural resources, to prevent erosion, and to protect and promote the health,

safety and general welfare of the people of this state. 45 O.S. 2001 §722.

¶30 MSC, as owner and operator of numerous limestone mines throughout

Oklahoma for many years and with extensive predominantly successful experience

with the ODM permit process, does not dispute the Act's mandatory permit is a

reasonable exercise of this state's police powers. However, MSC's claim to a

vested property right fails to consider the result of § 724(A) being an

implied part of its 2003 Mining Lease - its right to mine granted by that

lease "will only come into existence upon an event or condition which may not

happen," in other words, it is contingent on MSC obtaining the

statutorily-required permit from ODM.

¶31 As the record and trial testimony reveals, ODM's Notice of Department

Decision (Notice) approved MSC's application for the mandated § 724(A) permit

"as modified," which expressly detailed four "conditions" applicable to the 2003

Mining Lease. Also relevant is the Notice's provision that "any person with an

interest may request a formal hearing . . . [which] must be filed with [ODM] in

writing within thirty (30) days of receipt of this notice. If no request is

received, the decision of the [ODM] will become final." Thus, MSC's right to

receive the permit was clearly contingent on several conditions or events, one

of which the record demonstrates undisputedly occurred in this case,

i.e ., the timely filing of a written request for a formal hearing by

those objecting to the Notice.

¶32 It is also stipulated by the parties that five days prior to the formal

hearing scheduled in April 2005, the ODM permit proceeding was stayed at MSC's

request. Although MSC's witness, Mr. Scolar, confirmed he had never witnessed

during his nine and one-half years at ODM a denial of a permit after ODM's

initial recommendation to grant one and a formal hearing, he later admitted that

new issues may be raised at the formal hearing on ODM's decision, and therefore

obtaining the permit was not guaranteed. As a result, we agree the trial court

correctly concluded MSC, without having obtained a permit to mine, never had a

vested right to mine . Cf . Gonzales v. City of Oklahoma

City , 2010 OK CIV APP 62 , 238 P.3d 954 and Miller v.

Gonzales , 2010 OK CIV APP

56 , 239 P.3d 163 (both

holding a constitutionally protected vested right does not arise from one's mere

pursuit of a license and engaging in an effort to satisfy all applicable

requirements for licensure).

¶33 Our analysis does not end with affirming the express part of the court's

judgment in light of MSC's alternative argument, i.e , even if it does not

have a vested property right, it prevails under Bankoff's balancing of equities

test. Importantly here, the Court in Bankoff first recognized that "a

property owner does not have a vested interest or right in the

continuation of an existing zoning classification so that his mere hope of

developing the land in a particular way in the future will not be protected

against later zoning amendments." However, the Court then stated:

Circumstances may occur, however, which will give rise to judicial

recognition of a property interest sufficient to protect the owner's

intended use from the reach of an otherwise applicable amendment to the

zoning classification. In drawing that line between a landowner's hope for

the contemplated future development of his land and an interest which

the courts will recognize as vested and therefore protected, several

judicial tests have evolved.

Bankoff at ¶ 8 . (Emphasis added)

¶34 The Bankoff Court then considered two balancing of equities tests,

the first described as being used by "most courts":

While a landowner will not be immune from a zoning change if he has

done nothing more than obtain a permit from the licensing authority , he

will be protected if he has made substantial expenditures in reliance

thereon , or has committed himself to his substantial disadvantage in

reliance on the permit or zoning provisions before the amendment went into

effect , even though no construction has begun. (Emphasis added.) 1994 OK 58, ¶

9 .

"Other courts," according to Bankoff , "without rejecting the general

rule recognizing vested interests, have also established a 'balance of equities'

test as an alternative means of weighing and determining the respective

interests of the property owner and zoning authority." Id ., ¶ 10.

¶35 "Under both tests," the Bankoff Court explained that the courts

consider: 1) "the good faith of the landowner," 2) "the substantiality of the

landowner's reliance on the existing zoning," 3) "the landowner has made

substantial expenditures or committed himself to a substantial disadvantage in

reliance thereon"; and 4) "the conduct of the licensing board," i.e .,

whether the enacted zoning change was the result of maliciousness or if it was

intended and directed toward the particular landowner and his intended use.

Id ., ¶ 11.

¶36 Although recognizing some jurisdictions apply the existing zoning law at

the time of the landowner's application when "there is evidence of bad faith,

delaying tactics, prejudice or reliance," the Court in Bankoff declined

to decide whether the Commission had acted in bad faith, and instead decided

"the equities require finding that the [zoning] amendment did not apply to

Bankoff [the landowner] and his intended use of the property." Id ., ¶

14.

¶37 The Court in Bankoff similarly eliminated the need to decide whether the

landowner's lessee, BFI, had a vested right to use the property as a

landfill, holding "for even without such finding of a vested right, equitable

considerations lead us to affirm the trial court's judgment in favor of BFI."

Those equitable considerations were:

[The landowner] had done everything legally required of him. The state

had approved the proposal. The trial court had determined that the Board

should have issued the [conditional-use] permit. The Health Department

had issued its permit. A substantial amount of money ($800,000.00)

had been spent on the project . But for the statutory automatic stay

imposed by reason of the appeal , the landfill would have been in

actual use . (Emphasis added.) 1994 OK 58, ¶

15 .

MSC contends the trial court's ruling disregards both its vested property

right in the 2003 Mining Lease and the Bankoff Court's last "but for"

consideration. Like the landowner and lessee in Bankoff , MSC also

contends it also spent substantial expenditures toward its Business Plan in

reliance on Fitzhugh's zoning laws as they existed in 2003 and it acted in good

faith at all times, unlike Town, which admitted acts of bad faith, e.g .,

its intent in creating the zoning ordinance was to prevent MSC from mining.

Despite admitting "several key distinctions" between Bankoff and the

instant case," 17 MSC nevertheless contends it prevails under the

balancing of equities test.

¶38 Assuming, without deciding, that Bankoff 's balancing test is

applicable here, 18 we disagree based on the joint stipulations and

the trial testimony that the equities here require finding Town's zoning

ordinances do not apply to MSC. Despite MSC's alleged substantial expenditures

($349,178.54), argued in reliance on Town's existing zoning in 2003, the trial

court heard abundant conflicting testimony. MSC admitted execution of the 2003

Mining Lease in Pontotoc County accomplished part of its business plan created

in 2000 to build a portable rock crusher that could be transported between two

different quarries. At the time MSC obtained the 2003 Mining Lease in Pontotoc

County, it had already had a mining lease in Seminole County and had made

substantial monetary investments in building the portable rock crusher at its

plant in Pawnee. The trial court made numerous findings of fact, which MSC does

not challenge on appeal, regarding 1) the timing and amount of MSC's

expenditures on building the portable rock crusher years prior to finding and/or

executing the 2003 Mining Lease, during which negotiations MSC admits it first

was told by the Lukes there were no zoning restrictions for their property, and

2) of its continued expenditures after MSC first learned the lease was inside

Town's corporate limits in April 2003 and became aware in November 2003 of the

intent of Town's leaders to enact zoning to prohibit mining within its corporate

limits. Therefore the court's implied finding MSC's substantial expenditures

were not made in reliance on Town's lack of zoning ordinances is not

clearly contrary to the weight of the evidence.

CONCLUSION

¶39 We therefore determine as a matter of law, MSC did not have a matured

vested property right to mine rock. It had lease contract rights only as and

between MSC and its lessor. Secondly, the trial court correctly applied the

Bankoff equitable balancing test, took testimony and weighed the evidence

in favor of Town. This determination is not against the weight of the evidence

heard by this trial court, and we AFFIRM .

JOPLIN, P.J., and BUETTNER, J., concur.

FOOTNOTES

1 We

expressly reject MSC's seventh proposition alleging the judgment on appeal does

not comply with 12 O.S. 2011 §

611.

2 We note

the joint stipulation's description of the Lukes as owners of "Section 22"

conflicts with the actual description in the Lease as "Section 11" and as being

approximately "200 acres more or less." MSC's Application for Permit To Engage

in Non-Coal Mining also refers to "Section 11."

3 MSC's

exhibit marked as "Exhibit No. 4," which Mr. Stewart testified was the lease

agreement between MSC and Jeffrey and Julia Luke, signed January 3, 2003, was

offered without any objection and admitted by the court at p. 12 of the trial

transcript. However, instead of the 1/03/03 Lease, the only "Exhibit No. 4"

included in the two exhibit binders transmitted to this Court is titled "Minutes

for 10-6-2003." Although MSC lists the 2003 Mining Lease as an exhibit in three

different motions in the record, only the first and last pages of the lease

(marked as two consecutively-numbered pages) are attached to each motion. There

is no explanation in the record for what appears to be an intentional removal of

three of the five-page lease. The record shows no dispute between the parties

over the precise rights granted to MSC by the 2003 Mining Lease. Because the

parties' stipulation of the specific rights granted thereby are quoted in MSC's

brief with record cite to Mr. Stewart's trial testimony re-affirming the "joint

stipulation", which fact is again not challenged in Town's Answer Brief, we

accept these uncontroverted admissions in the parties' briefs as material

supplementing the record. Deffenbaugh v. Hudson , 1990 OK 37, ¶4 , 791 P.2d 84, 85 .

4 This

opinion was not included in the record although the judgment on appeal includes

findings regarding C-04-121. Appellate courts can take judicial notice of its

own records in litigation interconnected with an appeal before it. House of

Realty, Inc. v. City of Midwest City , 2004 OK 97, n. 1 , 109 P.3d 314 .

5 In

pertinent part, 11 O.S. 2001 §

44-107.1(A) states "[t]he

lawful conforming use of a building, structure or premises as such existed at

the time of the adoption and recording of any ordinance affecting it, may be

continued, although such use does not conform with the provisions of such

ordinance" and "the municipality may provide for the termination of lawful

nonconforming uses either by specifying the period or periods within which such

use shall be required to cease. . ." Part II of First Zoning Ordinance and its

two successors, in relevant part, similarly provides "[a]ny existing

non-conforming use, as of the time this ordinance is enacted, may continue for a

period not to exceed five years, unless some longer period may be shown by the

owner to be required to reasonably amortize the actual investment in such

activity as of the time this ordinance is enacted" and "[i]n no event, shall

such longer period of amortization exceed ten (10) years from the date of this

ordinance."

6

Pursuant to the Order Granting Applicant's Motion to Stay, the Objectors and

Town, who were ordered to respond to MSC's Motion to Stay, each "stipulated that

the Motion to Stay should be granted." R. p. 745. After striking the trial, the

order states "[t]his case is stayed pending a final determination in three cases

pending in the District Court of Ponotoc County in which issues pertinent to

the instant case may be decided: Case No. C-05-27; C-05-50; and C-04-121.

When these matters are concluded, counsel are directed to file a Motion to Lift

Stay and advise whether the application is withdrawn or whether the case should

be reset for trial."

7 The

court expressly found after review of the records in the two cases that "both

cases involve the validity and/or enforceability of a zoning of [Town], and

related claims. Many, if not all, of the same facts and legal issues are

involved in each of the two cases." He then found "the interests of justice and

judicial economy will be served if the two cases are consolidated for purposes

of pretrial proceedings (including discovery) and for trial."

8 An

appeal from Town's denial of its variance was added as MSC's Fifth Cause of

Action in its Second Amended Petition & Counterclaim filed July 18, 2007.

Over the next year, MSC's request for district court review of Town's denial was

neither raised nor argued in the parties' subsequently-filed motions to dismiss

and motions for summary judgment. However, in MSC's Response & Objections to

Town's summary judgment motion, MSC reaffirmed that "[s]ince the time of [the

latter motion], MSC has amended its causes of action" and listed as the first of

three, "the zoning ordinances were unreasonable, arbitrary or constitutes an

unequal exercise of police powers and reversal of the order as it applies to

MSC. " The affirmed judgment on appeal necessarily disposes of that cause of

action.

9 MSC

realleged in both amended petitions its separate causes of action for

intentional interference of contract and with prospective business. We note for

the record there is no dismissal of MSC's tort claims in the appellate record or

listed on the appearance docket. However, MSC expressly stated in its Response

and Objection to Defendant's Motion for Summary Judgment filed October 11, 2010,

that "[s]ince the filing of Defendant's [latter motion] MSC has amended its

causes of action," to the following: the ordinances are unreasonable and

arbitrary (see fn. 8), MSC has a vested property right, and inverse

condemnation. MSC then conceded "[a]ccordingly, this renders Town's motion for

summary judgment moot" as to its first three propositions "as these are all

related to argument for claims of torts." Because MSC's response contains

citations to legal authority as well as argument, it is in substance a brief and

will be treated as such for purposes of supplementing the record. Casey v.

Casey , 2005 OK 13, ¶ 13, n.

2 , 109 P.3d 345 .

10 MSC

claims in the "Statement of Facts" in its Brief in Chief that "by July 19, 2010,

the Court had determined the issues within the consolidated cases were to be

bifurcated for trial. Initially the Court would determine the validity of the

zoning changes and depending on the outcome subsequently determine the remaining

issues in the consolidated case for trial purposes." The footnote to this

statement explains, "Although there was not a specific order to this effect, the

First Pre-trial Conference Order filed on July 19, 2010, only listed MSC and the

Town of Fitzhugh as parties to the case."

11 MSC

raised in its Petition in Error the court's failure to find the first two zoning

ordinances were "fatally flawed" and "were void" and also that he "improperly

allowed for all of the ordinances to be retroactively applied to [MSC]." Because

MSC failed to brief those alleged errors, such issues are deemed waived.

Okla.Sup.Ct.R.1.11(k)(1).

12 In

its Answer Brief, Town contends, without record citation, that MSC "dismissed

all counts that would have required a jury trial and instead decided to proceed

under a theory of declaratory judgment and equity." MSC does not dispute that

contention in its Reply Brief, which is confirmed by the record, i.e .,

MSC eliminated its "inverse condemnation/ unconstitutional taking" theory of

recovery in the final PTC Order filed July 18, 2011, in which its lists two

"theories of recovery," i.e. , "determination the first two zoning

ordinances are 'fatally flawed' pursuant to 11 O.S. § 43-104" and "MSC is a

non-conforming use if zoning ordinance is found to be proper" and for its

"Damages/relief sought," declaratory judgment and attorney fees. Nevertheless,

the affirmed judgment on appeal, by implication, disposes of that theory of

recovery.

13 Six

of MSC's propositions allege: 1) Town's enactment of its zoning ordinance in

2006 cannot be retroactively applied to MSC; 2) its mining lease is a vested

property right protected under Art. II, §24, of the Oklahoma Constitution; 3)

Bankoff applies to MSC; 4) MSC prevails under balancing of equities test

applied by Bankoff ; 5) MSC incurred substantial expenditures upon

reliance of the zoning laws as they existed in 2003; and 6) Town's admitted acts

of bad faith must be considered. See fn. 1 for this Court's rejection of MSC's

seventh proposition.

14

See Material Service Corporation v. Rogers County Commissioners , 2006 OK CIV APP 52 , 136 P.2d 1063

(summary adjudication order reversed because the issue whether the county's

annexation and zoning ordinances substantially impaired the plaintiff's mining

lease was one of fact for the finder in a trial on the merits). We assume from

the limited facts in that case and claim for economic damages for "being

prohibited from mining the subject property for 3 years", that the plaintiff's

proposed use of mining its leasehold interest never came to fruition,

resulting in its allegation that the county's zoning and land use regulations

constituted an "unconstitutional taking" of such interest. Although MSC

originally plead the latter theory in this case, it was deleted from the

Pretrial Conference Order filed July 18, 2011, which expressly limited MSC to

declaratory relief.

15

Wilkerson v. City of Pauls Valley, Oklahoma , 2001 OK CIV APP 66 , 24 P.3d 872 (plaintiff, who had

operated a mobile home park under a lease of land located in a flood plain long

before the city adopted flood prevention ordinances for years before the

enactment of zoning, had a vested right consisting of a continual nonconforming

use of an existing mobile home park but no vested right to replace trailers or

install new ones absent compliance with those ordinances); Perkins

Whistlestop, Inc. v. State ex rel. Dept. of Transportation , 1998 OK CIV APP 7, ¶ 10 , 954 P.2d 1251, 1254 (leasehold owner

of one acre tract had standing to sue the state since "[a] leasehold interest

may be subject to a taking and the leaseholder may have a cause of action in

inverse condemnation.")

16

While mining is the all-encompassing term, extracting hard rock is commonly

referred to in the industry as "quarrying." See Sierra Club v. County of

Sonoma , 6 Cal.App.4th 1307, 1313-1314 , 8 Cal.Rptr.2d 473 (1992).

17 In

Bankoff : 1) the application of the landowner and lessee was for a

conditional use permit (CUP) to operate a landfill, 2) the money spent toward

the operation was in reliance on the county's allowance of a landfill operated

by BFI across the street from the proposed landfill, 3) the county board denied

the landowner's CUP application, 4) the landowner appealed the denial to the

district court, who determined the board's decision was arbitrary and

capricious, 5) during the board's appeal of that ruling to the Supreme Court,

the state health department issued the permit to operate the landfill to the

lessee and less than 20 days later, the county amended the zoning ordinances

which, if applicable, effectively rendered moot the CUP application and

subsequent proceedings, and 6) the lessee then filed declaratory judgment suit

challenging the validity of the amended zoning ordinance in district court. The

two cases were then consolidated for trial purposes.

18 The

Bankoff Court expressly limited its decision "as a narrowly-construed

exception based strictly on equitable considerations given the facts peculiar to

this case." Id ., 1994 OK

58, ¶ 16 .

Citationizer © Summary of Documents Citing This Document

Cite

Name

Level

None Found.

Citationizer: Table of Authority

Cite

Name

Level

Oklahoma Court of Civil Appeals Cases

Cite Name Level

1998 OK CIV APP 7 , 954 P.2d 1251 , 9 OBJ 517, PERKINS WHISTLESTOP, INC. v. STATE ex rel. DEPT. OF TRANSPORTATION Discussed

2001 OK CIV APP 66 , 24 P.3d 872 , 72 OBJ 1878, WILKERSON v. CITY OF PAULS VALLEY, OKLAHOMA Discussed

2002 OK CIV APP 81 , 52 P.3d 1053 , STATE v. UNITED STATES BEEF CORP. Cited

2006 OK CIV APP 52 , 136 P.3d 1063 , MATERIAL SERVICE CORP. v. ROGERS COUNTY COMMISSIONERS Cited

2010 OK CIV APP 56 , 239 P.3d 163 , MILLER v. GONZALES Discussed

2010 OK CIV APP 62 , 238 P.3d 954 , GONZALES v. STATE Discussed

Oklahoma Supreme Court Cases

Cite Name Level

1990 OK 37 , 791 P.2d 84 , 61 OBJ 1018, Deffenbaugh v. Hudson Discussed

1994 OK 10 , 867 P.2d 1273 , 65 OBJ 457, Welty v. Martinaire of Oklahoma, Inc. Discussed

1994 OK 58 , 875 P.2d 1138 , 65 OBJ 1829, Bankoff v. Board of Adjustment of Wagoner County Discussed at Length

2002 OK 80 , 63 P.3d 1 , TRIANGLE FRATERNITY v. CITY OF NORMAN ex rel. NORMAN BOARD OF ADJUSTMENT Discussed

2004 OK 97 , 109 P.3d 314 , HOUSE OF REALTY, INC. v. CITY OF MIDWEST CITY Discussed

2005 OK 13 , 109 P.3d 345 , CASEY v. CASEY Discussed

2007 OK 40 , 160 P.3d 967 , CHEROKEE NATION v. NOMURA Discussed

1996 OK 83 , 922 P.2d 609 , 67 OBJ 2332, Pine Island RV Resort, Inc. v. Resort Management, Inc. Discussed

1975 OK 167 , 544 P.2d 498 , FERGUSON v. DISTRICT COURT OF OKLAHOMA COUNTY Discussed

1982 OK 75 , 648 P.2d 825 , Randolph v. Board of Regents of Oklahoma Colleges Discussed

1998 OK 58 , 961 P.2d 804 , 69 OBJ 2254, MACY v. OKLAHOMA CITY SCHOOL DIST. NO. 89 Discussed

1986 OK 8 , 718 P.2d 348 , 57 OBJ 783, Baker v. Oklahoma Firefighters Pension and Retirement System Discussed

Title 11. Cities and Towns

Cite Name Level

11 O.S. 2 -107, Effect of Incorporation - Filing - Judicial Notice - Challenges Cited

11 O.S. 43 -104, Notice and Public Hearing of Proposed Regulation, Restriction, or Boundary - Detoxification Facility Notice Requirements Discussed

11 O.S. 44 -107.1, Lawful Nonconforming Use of Building, Structure or Premises - Regulations and Restrictions Affecting Termination of Nonconforming Uses - Construction of Section Discussed

Title 12. Civil Procedure

Cite Name Level

12 O.S. 611 , Statement of Findings and Conclusions of Law Cited

12 O.S. 1654 , Determination to Have Effect of Final Judgment - Reviewable as Other Judgments Cited

12 O.S. 1656 , Issues of Fact Cited

Title 45. Mines and Mining

Cite Name Level

45 O.S. 724 , Permits - Applications - Bond Cited

45 O.S. 722 , Declaration of Policy Cited