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TD Rehoboth LLC v. Sussex County Council

Court of Chancery of Delaware

August 11, 2017


          Date Submitted: July 12, 2017

          Richard A. Forsten, Esquire and Gerard M. Clodomir, Esquire of Saul Ewing LLP, Wilmington, Delaware, Attorneys for Plaintiffs.

          David N. Rutt, Esquire of Moore & Rutt, P.A., Georgetown, Delaware, Attorney for Defendant.

          Robert V. Witsil, Jr., Esquire of Robert V. Witsil, Jr., P.A., Georgetown, Delaware, Attorney for Intervenor-Defendants.


          SLIGHTS, Vice Chancellor.

         Plaintiffs, TD Rehoboth LLC and Overbrook Acres, LLC, ask this Court to enjoin enforcement of, and declare invalid, the decision of the Sussex County Council ("Council") to deny TD Rehoboth's application to rezone for commercial development approximately 114 acres of farm property legally owned by Overbrook and equitably owned by TD Rehoboth (the "Rezoning Application"). Council rejected the Rezoning Application by a vote of 4-1.

         The scope of this Court's decision, of course, is limited to the issues raised by the parties-in particular, whether Council created a sufficient record for the Court to review and whether the decisions of certain members of Council, as articulated on the record at a meeting of Council, were arbitrary and capricious. What is not at issue here is whether the Rezoning Application is proper. That is to say the Court has not been asked to opine, and has not considered, whether the Rezoning Application is valid on the merits or, secondarily, whether Council should approve or deny it.

         The parties have filed cross-motions for summary judgment. After carefully reviewing the record and the parties' submissions, I conclude that the record relating to the vote cast by one member of Council is inadequate to allow for any meaningful review of that vote or the deliberative process that supported it. As for the vote of another member of Council, I conclude that it reflected an arbitrary and capricious process because the alleged harm identified by the councilmember as a basis for denying the Rezoning Application preexisted the filing of the application and, therefore, bore no relationship to it. The two votes at issue here are important because, if cast in the other direction (in favor of the Rezoning Application), the outcome of Council's decision on the application would have been different.[1]Accordingly, the Rezoning Application must be re-submitted to Council for another vote. That vote will be what it will be. And so long as the record of the vote is adequate to allow for meaningful review, and the vote itself is not the product of arbitrary or capricious decision-making, the results of the vote, whatever they are, will stand.

         I. BACKGROUND

         The facts are drawn from the parties' pleadings and the evidence gathered in appendices to the parties' briefs submitted in connection with their cross-motions for summary judgment.[2]

         A. Parties and Relevant Non-Parties

         Plaintiff, TD Rehoboth, is a Delaware limited liability company that is the equitable owner of 114.4821 acres , District 2-35, Map 23.000, Parcel 1.00, Broadkill Hundred, Sussex County, located on the northeast side of Route One (Coastal Highway) across from Route 88 (Cave Neck Road) (the "Property"). Plaintiff, Overbrook Acres, is a Delaware limited liability company and the legal owner of the Property. Together, TD Rehoboth and Overbrook shall be referred to as the "Owners."

         Council is the governing body of Sussex County, a political subdivision of the State of Delaware. It is charged with responsibility for reviewing and ultimately approving (or not) applications for rezoning in connection with properties that lie in areas within Sussex County that are outside of the jurisdiction of other zoning authorities.

         Intervenors, Rich Borrasso, John D. Vincent, Judy A. Vincent, Kenneth Hopkins, Susan Hopkins, Susabar Limited Liability Partnership, Richard Holtkamp, and Jeffrey Stone (collectively, "Intervenors"), are landowners who own property located adjacent to or near the Property. They were active participants in the public hearing process and objected to the proposed rezoning of the Property.

         B. The Rezoning Application

         TD Rehoboth applied for the rezoning of the Property from its current zoning of AR-1 (Agricultural Residential) to CR-1 (Commercial Residential) with plans to construct an 850, 000 square foot commercial shopping center.[3] The Sussex County Planning and Zoning Commission (the "Commission") held a public hearing to address the Rezoning Application on April 23, 2015.[4] Thereafter, on June 11, 2015, by a vote of 3-2, the Commission recommended that Council approve the Rezoning Application.[5]

         Council held its first public hearing on the Rezoning Application on June 2, 2015.[6] The themes advanced by counsel for the Owners during this meeting included that the Rezoning was consistent with Sussex County's Comprehensive Plan; the Property is located in an area the Comprehensive Plan designates as a "growth zone"; the Property is located along an area of Route One where several other commercial properties have already been developed; the Property is in an area that the State has designated as "Investment Level 3" where growth is anticipated; there are no environmental issues associated with the development of the Property; and the Owners would contribute $8 million to a Route One overpass project at the site of the Property that had been long planned by DelDOT.[7]

         Several members of the community spoke out against the Rezoning Application. One area of complaint particularly relevant to this dispute focused on whether the development of a large commercial complex on the Property would negatively affect the ability of surrounding farmers to engage in effective aerial crop-dusting on their properties.[8] In this regard, Council received a letter from a local crop-duster, Jeffrey A. Chorman, who stated that the rezoning would make the rendering of his services to the surrounding farms far more difficult.[9] According to Chorman, Federal Aviation Administration ("FAA") regulations would preclude him from crop-dusting the fields adjacent to the Property if it were rezoned to CR-1 because the area would likely then be deemed "congested."[10] While the FAA can waive enforcement of this rule, Chorman stated that the Philadelphia office of the FAA will not grant waivers to fly over "congested" areas unless there is a public health emergency.[11]

         In response to prompting by Council for more information on the impact of the Rezoning Application on crop-dusting, Jannelle Cornwell, the Planning & Zoning Manager for the Sussex County Planning Department, wrote a memorandum to Council, dated August 11, 2015, in which she explained her understanding of the FAA restrictions:

The FAA allows aircraft to go below 500' above the surface and closer than 500' to people and structures when spraying for agricultural purposes if the spraying and aircraft does not create a hazard. The FAA rules state that no person may conduct an agricultural aircraft operation over a congested area unless operated at altitudes required for proper[] accomplishment of the agricultural operation and approval from the governing body, notice to the public and an operation plan submitted and approved by the FAA Flight Standards District Office. The FAA rules do not define congested area and do not indicate what the safe distance is for operation within a congested area.

         James A. Fuqua, Jr., Esquire, an attorney who represented the Owners throughout the rezoning process, submitted a letter to Council, dated September 1, 2015, in which he also addressed the crop-dusting issue:

Over 'congested areas' an aircraft may operate at altitudes required for the accomplishment of the Agricultural Aircraft Operation provided, 1) written approval is obtained from the local governing body, 2) notice of the operation is given to the public and 3) a plan of the operation is submitted to and approved by the FAA local office.
As noted in [Cornwell's] memorandum, the FAA Regulations do not define 'congested areas' and such a determination must be made by the FAA inspectors on a case by case basis. . . . Under FAA Regulations even only two or three homes in an area with thirty homes in the general vicinity is a 'congested' area. . . . While it is true that the development of a shopping center on the site would most likely qualify as a 'congested' area for FAA purposes, it must be more importantly noted that any commercial or residential improvement to the site, including a currently permitted AR-1 subdivision would also result in a 'congested' designation.
In summary, any commercial or residential development of the applicant's site would result in it being considered a 'congested' area. However, aerial spraying can still occur either as authorized by Section 137.51, by the use of helicopter spraying or by avoiding directly flying over the area.[12]

         C. Council's Decision

         The vote on the Rezoning Application was delayed until April 12, 2016.[13] All five members of Council were present and voted at the meeting.[14] As required, each Council member stated his or her position on the record before casting a vote.

         Councilwoman Deaver spoke first and voted "no" on the Rezoning Application.[15] She cited numerous reasons in support of her vote against the change in zoning, including that: commercial zoning of the Property would be inconsistent with the character of the surrounding area; the Property is located in an environmentally sensitive area; the size of the parcel to be rezoned would pose infrastructure challenges; the public had expressed valid concerns about increased traffic in the area; the CR-1 zoning would potentially allow for other (and even more inappropriate) uses of the Property; and, ultimately, "[the rezoning] doesn't really promote the health, safety, morale, convenience, order, prosperity or welfare of the present or future residents of Sussex County as we have in Section 6904, Title 9 of the Delaware Code."[16]

         Councilman Cole followed. He began his remarks by stating that he would also be voting no. As grounds for his vote, he expressly adopted the fourteen reasons that one of the members of the Commission had previously laid out in his public remarks before voting to reject the Rezoning.[17] He noted, in addition, that he did not believe there was a large enough population base to support the proposed commercial use, that there were traffic concerns and that it is "not good zoning to place your highest and most commercial, your intense commercial districts, next to your lowest density ag[ricultural] districts. They're not compatible uses."[18]

         Councilman Arlett spoke next and voted in favor of the Rezoning Application. That vote, and the bases for it, have not been addressed by the parties.

         Councilman Wilson spoke next. He began his remarks by stating that he would lay out "both sides on this thing."[19] He then proceeded to provide several reasons why one might vote in favor of the Rezoning Application, noting that Councilwoman Deaver had already provided reasons to vote against it.[20] What follows, at least as appears in the cold record, are Councilman Wilson's internal deliberations spoken aloud for all to hear. Unfortunately, his deliberations wandered at times into memories of his family and of Sussex County in days gone by. As all parties agreed at the oral argument on the motion, the remarks are difficult to follow. At the conclusion of his prolix remarks, in the midst of his apparent attempt to state "both sides" of the issue, Councilman Wilson abruptly concluded by stating "Right now, I'm in favor of denial."[21] He offered no bases for his vote.

         Councilman Vincent was the last member of Council to speak. He cast his vote as "no" on the Rezoning Application.[22] While Councilman Vincent made a faint reference at the outset of his remarks to the comments made by Councilmembers Cole and Deaver when they voted against the Rezoning Application, the majority of his statement was directed towards the potential impact the Rezoning Application could have on the surrounding farmers and their ability to crop-dust.[23] Specifically, he stated:

one of the things that I guess struck me a lot was, I am certainly a person that believes in property rights. I think we all have property rights. But I will also tell you that I don't think my property rights should affect yours and that what I do on my land should not negatively affect what you do on your land. So, what struck me, I guess, out of all this maybe the most, maybe not quite the most, but if you were here at the public hearing and you heard a record read into from a cropduster [sic] in the area and it says that this property could be deemed a congested area by FAA Regulations. And I will tell you, if you go and read, there are no drop down boxes FAA Regulations as to what's going to be congested, what's not going to be congested. The person comes down, they look at it, and they make a decision. You might like it, you might not like it. Federal regulations limit the method and general use of aerial spraying over congested areas which will have an adverse impact on neighboring farms' ability to effectively farm their land in a manner consistent with current practices. The definition of congested area is not clearly defined. There is no set numbers of houses or stores or specific activity that triggers the determination. However, in Mr. Fuqua's memo who answered back the FAA regulations it says: It is true that the development of a shopping center on a site would most likely qualify as a congested area.
I don't think it's fair for me to vote to approve something that could have an effect on the farmers around there and what they could do with their property; and that would say that they maybe couldn't grow certain crops or those kind of things, and I think that's wrong. So, for those reasons, I'd say that I would be a no vote.[24]

         With the final vote cast, the Rezoning Application was denied 4-1.[25]

         D. Procedural Posture

         TD Rehoboth and Overbrook filed their Verified Complaint for Permanent Injunction and Declaratory Judgment against Council on June 8, 2016. The motion to intervene filed by Intervenors was granted on August 29, 2016. The parties filed their cross-motions for summary judgment soon after.

         II. ANALYSIS

         The cross-motions for summary judgment require the Court to determine whether the statement provided by Councilman Wilson setting forth the bases for his vote is adequate to allow for judicial review and whether Councilman Vincent's "no" vote was arbitrary and capricious. The standards governing the cross-motions and the review of Council decisions on zoning applications are well-settled.

         A. Standard of Review on Cross-Motions for Summary Judgment

Under Court of Chancery Rule 56(h),
when the parties have filed cross-motions for summary judgment and, as here, have not argued that there is an issue of fact material to the disposition of either motion, 'the Court shall deem the motions to be the equivalent of a stipulation for decision on the merits based on the record submitted with the motions.' Thus, the usual standard of drawing inferences in favor of the nonmoving party does not apply.[26]

         The parties agree that the record on the cross-motions is fixed. There is no ...

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