DE Supreme Court Holds Stipulated Orders Did Not Prohibit the Town from Enacting Future Ordinances Affecting the Subject Property

This post was authored by Matthew Loeser, Esq.

Central Delaware Business Park owned nineteen lots in a planned industrial park in the Town of Cheswold. In 2005, the Town proposed an amended ordinance changing zoning classifications, under which the Business Park’s property would have been separated into two new zones: I–1 Light Industrial and I–2 Heavy Industrial. Business Park objected to the 2005 Ordinance, claiming it would “cause an immediate financial hardship” by impairing five pending purchase agreements, affect the existing property owner’s present uses, and interfere with the development plan under the 1977 zoning. Business Park proposed an amendment to the 2005 Ordinance, Article 5A, which would allow it to retain the M–1 Industrial zoning under the 1977 zoning code. The Town agreed to adopt Article 5A, but when the Town published the 2005 Ordinance, Article 5A was not included. The Business Park filed suit in Superior Court seeking a writ of mandamus to compel the Town to publish Article 5A, which resulted in each party filing essentially identical stipulated orders.

Under the stipulated orders, the Business Park agreed to withdraw its claims, and the Town agreed to allow the Business Park to “continue with M–1 Zoning and site plans/building procedures under the 1977 Zoning Code”; to approve all the Business Park’s “pending site plan and building permit applications”; and to amend the 2005 Ordinance to include Article 5A. Eight years later, the Town considered enacting a new ordinance affecting the Business Park’s remaining six lots. Acting, sua sponte,  the Superior Court raised res judicata as a possible bar to the Town’s request for relief, and held that the Town’s claims were “dispensed with by res judicata” and the law of the case doctrine since the Business Park acquired vested rights pursuant to the settlement agreement.

On appeal, the Town claimed that the stipulated orders only required the Town to adopt the 2005 Ordinance with Article 5A included and to process the Business Park’s pending applications under the 1977 Ordinance. Conversely, Business Park argued that the stipulated orders incorporated Article 5A and established for all time the Business Park’s rights to be subject only to the 1977 M–1 Industrial zoning. As such, the court found that the Superior Court was faced with an interpretive dispute and not a res judicata question.

The court also found that the stipulated orders did not incorporate by reference the substance of Article 5A. In the settlement agreement, Article 5A was referred to only as part of the Town’s obligation to republish the 2005 ordinance with Article 5A. Specifically, it stated the Town “shall amend and republish the New Zoning Code to include Article 5A as unanimously passed on April 4, 2005.” The court found that because the substance of Article 5A was not referenced, its vested rights statements were “irrelevant for all other purposes” and were not substantively incorporated into the stipulated orders. Moreover, although the Town agreed that the Business Park property would “continue” with the 1977 zoning classification as of 2005, that commitment was not expressly stated to bind the Town over a decade later for all time and under all circumstances. Because the stipulated orders were found to be unambiguous, the Superior Court erred in looking to Article 5A as extrinsic evidence of the parties’ intent.

Cheswold v Central Delaware Business Park, 2018 WL 2748372 (DE 6/8/2018)