# MATERIAL SERVICE CORP. v. TOWN OF FITZHUGH

> Court of Civil Appeals of Oklahoma · August 14, 2014 · 343 P.3d 624

URL: https://www.frixlaw.com/law-library/cases/2832454

## Case

- **Court:** Court of Civil Appeals of Oklahoma
- **Decided:** August 14, 2014
- **Citations:** 343 P.3d 624; 2015 OK CIV APP 13
- **Precedential status:** Published
- **Opinion:** Opinion
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

OSCN Found Document: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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/2832454. Public record. Not legal advice.