Posted by: Patricia Salkin | July 29, 2013

10th Circuit Court of Appeals Rejects Landowner’s Takings and Due Process Claims that Ordinance Restricting Manufactured Homes Violated Constitutional Rights

Roger Schanzenbach sought to install mobile manufactured homes on two properties he owned in LaBarge, Wyoming. Though initially granted a building permit for one of the properties, the permit was revoked two weeks later, around the same time the Town enacted an ordinance which included a provision banning the installation of any manufactured homes older than 10 years at the time of the permit application (both of Schanzenbach’s homes were more than 10 years old). In response, Schanzenbach applied for a building permit, variance and conditional-use permit to install the homes. All these applications were rejected by the Town.

The Town and the Mayor (Diane Sakai) sent a letter to Schanzenbach after the permit was revoked and applications were denied advising the Plaintiff that because his unit would be the only singlewide trailer on the block, the Town had to revoke to permit in order to protect property values of current homeowners. After the denial of his building permit, variance and conditional-use permit applications, Schanzenbach filed suit in the United States District Court for the District of Wyoming against the Town of LaBarge, Mayor Sakai and four other members of the Town Council. Schanzenbach alleged that (1)the revocation of his building permit without compensation was an unconstitutional taking; (2) that by adopting the Ordinance with the 10-year rule, the Town violated his constitutional rights under the Commerce Clause, Fourteenth Amendment and the Privileges and Immunities Clause; (3) that ordinance was preempted by the Manufactured Housing Act and; (4) the Town intentionally interfered with economic relations with the prospective renters of the manufactured homes.

The District Court granted summary judgment in favor of the Defendants, holding that Schanzenbach could not prevail on his takings claim or due-process claim because under Wyoming Law he had acquired no vested property interest in the building permit. The Court also held that the ordinance did not place an excessive burden on interstate commerce and did not violate the Fourteenth Amendment’s Privileges and Immunities Clause because it did not discriminate against nonresidents and was applied evenhandedly. Additionally, the Court ruled the 10-year rule was not preempted by the Manufactured Housing Act because the rule related only the aesthetic quality of the community and preservation of property values, which have nothing to do with safety or construction. Schanzenbach appealed to Tenth Circuit’s Court of Appeals.

On appeal, Schanzenbach argued that (1) the District Court erred in holding he had no vested property right in the building permit; (2) the Court erred in holding the Manufactured Housing Act does not preempt the 10-year rule; (3) the Town lacked authority under State law to enact the 10-year rule and; (4) the Court erred in awarding attorney fees.

The Court begins by analyzing the Takings claim and holds that it cannot be addressed on the merits because it is not ripe since there has been no final decision on the application for the variance and because the Plaintiff had not sought just compensation through the available state procedures. The Court said that Schanzenbach failed to follow Wyoming law by not filing an inverse-condemnation action in State court against a defendant that has the power of eminent domain. The Court states that filing an inverse-condemnation action against the Town is the appropriate next step, and a takings claim cannot be substantiated until all state procedures have been exhausted.

Turing to the due process claim, the Court first analyzes whether it is ripe to be decided on the merits. Distinguishing the due process claim from the takings claim, the Court says that because the due process claim relates to the denial of an opportunity to argue against revocation, and does not relate to the taking of property, the claim is ripe to be decided on the merits. Nonetheless, the Court affirms the District Court’s ruling that no violation of due process had occurred because in Wyoming the owner of a building permit (or similar approval) has no property right in the permitted use until he has relied to his detriment on the permit. Schanzenbach admitted that in the two weeks he had the permit he made no expenditures in reliance on the permit.

In addressing the 10-year rule and whether it was preempted by the Manufactured Housing Act, the Court dismissed Schanzenbach’s argument, referencing a companion case on the subject brought by Schanzenbach the same day. The Court also found Schanzenbach’s claim that LaBarge had no authority to enact the 10-year rule to be meritless. Schanzenbach had argued that municipal authority granted by the State Legislature to regulate land does not extend to the 10-year rule because it is not expressly mentioned. The Court rejected this argument pointing to the general and generic nature of the statute which gives the municipalities powers that shall be liberally construed for the purpose of giving the largest measure of self-government to the cities and towns. The omission of the ability to enact a rule such as the 10-year rule did not mean the legislature had forbidden it, instead the Court finds the 10-year rule is precisely the type of regulation the legislature could not foresee but wanted to delegate to authority to enact anyway.

Schanzenbach v. Town of La Barge, 706 F.3d 1277 (10th Cir.,2/7/ 2013).

The opinion can be accessed at: http://www.ca10.uscourts.gov/opinions/12/12-8014.pdf


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