Opinion
No. 2006-SC-000732-DG.
February 21, 2008.
On Review from Court of Appeals, Case Number 2005-Ca-000609, Fayette Circuit Court No. 02-CI-04119.
T. Bruce Simpson Jr., McBrayer, McGinnis, Leslie Kirkland, Lexington, KY, Counsel for Appellants.
Leslye M. Bowman, Director of Litigation, Lexington-Fayette Urban County, Department of Law, Lexington, KY, Andrea L. Weddle, Lexington-Fayette Urban County, Department of Law, Lexington, KY, Counsel for Appellees.
This is a planning and zoning case which involves the interaction between zoning regulations, subdivision regulations, preliminary subdivision plans or plats, final plats, and private property rights. We affirm the Court of Appeals' decision to affirm the trial court's denial of a subdivision plat which did not comply with current zoning and subdivision regulations.
In 1963, W.H. Sebastian began the development of Donewal Estates, now known as Spindletop Estates, in northern Fayette County. Although the property was outside of Lexington, the city and county participated jointly in planning and zoning matters with the Lexington-Fayette County Planning Commission, now the Lexington- Fayette Urban County Planning Commission, and together, with the other Appellees are hereinafter referred to as "P Z."
The Appellant, Don Sebastian, is the grandson of the original developer. The other Appellants, Sebastian-Voor Properties, LLC and Sebastian Properties II, LLC are apparently family owned entities. The Appellants are hereinafter jointly referred to as "Sebastian."
In February of 1963, P Z approved a preliminary development plan for 122 one-acre lots. This rural development was zoned A-1, which was an agricultural category that allowed single-family residential developments with a minimum of one-acre lots. The subdivision regulations in effect at that time required final plat approval to be obtained within 18 months of the preliminary development plan or preliminary plat approval. On November 21, 1963, a final plat was approved for 28 of said lots as Unit 1-A. On December 4, 1963, another 12 lots were given final plat approval as Unit 1-B. After 18 months, the preliminary plat expired on the remaining 82 lots. On November 20, 1966, P Z re-approved the preliminary development plan/preliminary plat for the remaining 82 lots. On December 15, 1966, another 19 lots were approved for recording in a final plat as Unit 1-C.
1962 Lexington Fayette County Subdivision Regulations § 32.161.
In 1966, our General Assembly rewrote Chapter 100 of the Kentucky Revised Statutes on "Planning and Zoning." Chapter 100 is the current enabling act for cities, counties, and urban-county governments.Grannis v. Schroder, 978 S.W.2d 328, 330 (Ky.App. 1997). In 1967, planning and zoning in Lexington and Fayette County also underwent extensive overall revisions. One result was the agricultural zone (A-1) was redesignated A-R, and the minimum residential lot size was established at 10 acres. Nevertheless, over the next 29 years, contrary to the then current subdivision regulations, P Z approved final plats in Spindletop Estates for 17 additional one-acre lots: 11 lots in 1977, 3 lots in 1989, and 3 lots in 1996. These later approvals involved only the approval of final subdivision plans or final plats for the 17 lots. P Z has not reapproved a preliminary subdivision plan or a preliminary plat for the remaining 59 acres since 1966.
These last three lots were first approved in 1992, and reapproved in both 1995 and in 1996.
In 2002, Sebastian applied for a preliminary subdivision plan for the remaining 59 acres, none of which have been improved yet. Following a hearing, P Z voted to deny approval because: the preliminary plan, reapproved in 1966, had long since expired and was not eligible for reapproval or an extension of its past approval; the plan did not meet the minimum lot size requirement of forty acres for the A-R zone; the lots did not meet minimum setback requirements for the A-R zone; and the lots did not qualify for septic tanks because they did not meet the minimum ten-acre size requirement.
Sebastian filed an appeal/original action in the Fayette Circuit Court contesting P Z's decision. Sebastian moved for partial summary judgment contending P Z was estopped from denying the request for reapproval of the preliminary subdivision plan because of the prior approvals given in the last 39 years, and because the prior approvals vested certain property rights in Sebastian. The circuit court disagreed and denied partial summary judgment. Sebastian appealed to the Court of Appeals, which decided in a published opinion that the doctrine of equitable estoppel may be invoked against a governmental entity only under exceptional circumstances, and that the circumstances of this case did not rise to the level of "exceptional circumstances." We granted discretionary review to discuss the property owner's rights in a parcel of land compared to the community's interest and how to define each.
Four score and two years ago, the United States Supreme Court decided that individual property rights in land were not absolute, that the state and/or communities could exercise their police powers and regulate land use and zoning if the regulations were reasonably related "to the public health, safety, morals, or general welfare." Village of Euclid v. Ambler Realty Co., 272 U.S. 365, 395, 47 S. Ct. 114, 121, 71 L Ed. 303 (1926). As mentioned above, in 1966, the Kentucky General Assembly passed comprehensive planning and zoning statutes compiled in Chapter 100 of the Kentucky Revised Statues. KRS 100.201, 100.203, and 100.207 are enabling legislation for cities, counties, and urban-county governments to consider and adopt land use regulations (zoning), exempting parcels of five or more acres used for agricultural purposes, which includes a dwelling. KRS 100.203(4); KRS 100.111(2). However, the agricultural exemption excludes residential building developments. KRS 100.111(2). And, even agricultural uses are subject to regulations on setbacks, use of flood plains, mobile homes, and certain commercial horse uses, like riding stables. KRS 100.203(4).
This "agricultural supremacy clause" (KRS 100.203(4)) does not simply make a farm a legal nonconforming use but takes it outside the zoning ordinances' jurisdiction, although not outside the master or comprehensive plan. That is an important distinction because by exempting agricultural land from application of the zoning ordinance, the provisions of KRS 100.203, which deals with changes in nonconforming uses, do not apply. A community can still plan, even develop, a comprehensive or master plan, and go so far as to adopt a zoning map including all the property in its jurisdiction, whether used for agriculture or not. However, as long as the land is used for agricultural purposes, the adopted zoning regulations (except for the [four] exceptions above) do not apply or attach to the property. Zoning ordinances frequently include agricultural zones in both the text and the map. The ordinance covering Schroder's property . . . is typical and includes agricultural activities, including a single family farm residence, as a permitted principal use. Technically, it is not necessary to list these uses because of the agricultural supremacy clause, but as a practical matter, it makes the zoning ordinance easier to read and all inclusive.
Agricultural zones . . . typically include some nonagricultural uses as principal permitted uses, such as hospitals, day cares, and churches. Some nonagricultural uses are listed as conditional uses in the A-1U zone, like recreational facilities, slaughterhouses, feedlots, and home occupations.]d These uses, also being nonagricultural in the sense that they are not typical farming operations, are subject to the BOA's approval which may be given subject to certain conditions as the BOA did in Schroder's case. See KRS 100.237.
Grannis, 978 S.W.2d at 330.
For a discussion of agricultural uses and changes therein, seeGrannis, 978 S.W.2d at 330-31.
KRS 100.273 authorizes cities, counties, and/or urban-county governments to adopt regulations for subdividing land, that is a division for other than agricultural purposes not involving a new street. See KRS 100.111(22). Chapter 100 of the KRS distinguishes between land use regulations (zoning), which involves the use of land, and subdivision regulations, which involves the ownership of land.City of Louisville Bd. of Zoning Adjustment v. Gailor, 920 S.W.2d 887, 888-89 (Ky.App. 1996). Any authorized political subdivision that wants to adopt zoning regulations and subdivision regulations must comply with Chapter 100. "When the state has preempted a field, the city must follow that scheme or refrain from planning." Bellefonte Land, Inc. v. Bellefonte, 864 S.W.2d 315, 317 (Ky.App. 1993). See also Creative Displays, Inc. v. City of Florence, 602 S.W.2d 682 (Ky. 1980); City of Lakeside Park v. Quinn, 672 S.W.2d. 666 (Ky. 1984); and Daviess County v. Snvder, 556 S.W.2d 688 (Ky. 1977), for requiring compliance with Chapter 100 of the KRS in adopting land use regulations and subdivision regulations. To the extent that the A-R zone involved here contains a minimum lot size of 40 acres for agricultural uses, it runs afoul of KRS 100.203(4), which sets the minimum agricultural parcel at five acres and cannot be enforced above five acres. In our case, Sebastian is asking for one-acre residential lots and for a residential development. Residential developments of less than five acres are not agricultural uses. Without a one-acre residential zoning or without the agricultural supremacy clause of KRS 100.203(4), (which exempts agricultural uses of five or more acres), Sebastian has no grounds for his development in an A-R zone. His remedy is to seek a zone map amendment or a text amendment. KRS 100.211.
See Kelly v. Cook, 899 S.W.2d 517, 518-19 (Ky.App. 1995) for some justifications for subdivision regulations.
With an ever-expanding population, an increase in urbanization, and the division of farms into residential tracts, our General Assembly recognized the need for an easier way to divide and convey land. Their solution was subdivision regulations, which would change dramatically and forever conveyance law involving most divisions of land of less than five acres.
Id.
Under KRS 100.273, in our urban-county government's jurisdiction, the planning commission recommends the subdivision regulations which must be adopted by the legislative body. In some political subdivisions, the planning commission adopts the subdivision regulations after the legislative body adopts certain elements of the comprehensive or master plan for the jurisdiction. Even those counties that do not have planning commissions can adopt subdivision regulations through the fiscal court.See KRS 100.273(2).
Subdivision plats are approved by the planning commission as a ministerial function to insure compliance with the subdivision regulations. KRS 100.277; KRS 100.281(1); Snvder v. Owensboro, 528 S.W.2d 663 (Ky. 1975); Kelly, 899 S.W.2d at 519.
KRS 100.281 authorizes subdivision regulations to contain a procedure for the submission and approval of preliminary, as well as final, plats. A preliminary plat is a working document, whereas the final plat is the finished product which has been accepted by the planning commission and is to be recorded KRS 100.281(1) provides for the recording of final plats only, and for a good reason. Only when the plat becomes final are the parties' rights and expectations fixed. Until a plat becomes final, it cannot be recorded and lots cannot be sold. KRS 100.277.
So what good is a preliminary plat if it is nonbinding? A preliminary plat is a tentative plan which the developer submits to the planning commission for review and acceptance. The planning commission either accepts it or places conditions and changes on the proposal. When both parties agree on all the specifications, reservations, conditions, etc., then there exists a blueprint for a final plat. If the subdivision is built according to the blueprint, or a performance bond is posted, a final plat will be approved and recorded. Only upon final approval by the planning commission does a public or private entity acquire rights in an offer of dedication made on the plat. See KRS 100.285(3)(b). . . .
Henry Fischer Builder, Inc. v. Maqee, 957 S.W.2d 303, 305 (Ky.App. 1997) (citations omitted).
In this case, P Z would not approve Sebastian's new preliminary plat because it was for one-acre residential lots. Under KRS 100.281(3), subdivision regulations must consider the proposed land use and corresponding lot size. A residential zone allowing one-acre lots would require a proposed subdivision plat to have at least one-acre lots. Sebastian's proposed development of residential one-acre lots does not fit into the current zoning, nor does it fit into an agricultural exemption to the zoning ordinance. Therefore, P Z could not approve a subdivision preliminary plat that conflicts with the current zoning or the current agricultural exemption.
Sebastian argued before the trial court, the Court of Appeals, and this Court that regardless of the current zoning and subdivision regulations, P Z should be equitably estopped from denying the proposed last preliminary plat because of its thirty years of prior approvals of the residential developments in Spindletop Estates. We disagree. While it is true that equitable estoppel can be invoked against a governmental entity in unique circumstances, the trial court must find that exceptional and extraordinary equities are involved to warrant a finding of estoppel. Weiand v. Bd. of Trs. of Kentuckv Ret. Svs., 25 S.W.3d 88, 91 (Ky. 2000). Estoppel is a question of fact to be determined by the circumstances of each case. k ± at 91-92 (citations omitted).
The essential elements of equitable estoppel are[:] (1) conduct which amounts to a false representation or concealment of material facts, or, at least, which is calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2) the intention, or at least the expectation, that such conduct shall be acted upon by, or influence, the other party or other persons; and (3) knowledge, actual or constructive, of the real facts. And, broadly speaking, as related to the party claiming the estoppel, the essential elements are (1) lack of knowledge and of the means of knowledge of the truth as to the facts in question; (2) reliance, in good faith, upon the conduct or statements of the party to be estopped; and (3) action or inaction based thereon of such a character as to change the position or status of the party claiming the estoppel, to his injury, detriment, or prejudice.
Id. at 91 (quoting Electric and Water Plant Bd. of Frankfort v. Suburban Acres Dev., Inc., 513 S.W.2d 489, 491 (Ky. 1974)).
The trial court examined the history of transactions between the parties in determining whether equitable estoppel should apply. The trial court found:
Certainly this lengthy history does constitute an unusual relationship between the developer of a particular parcel and the local governing entity. It is unusual because the developer has taken nearly 40 years to begin developing the remaining 43 lots from the original Preliminary Plan. It is unusual that the Commission would so often act without application of pertinent regulations and plan requirements. Since 1967, the Commission approved and filed record plats when there was no valid Preliminary Plan nor a Final Plan.
Likewise, developers are held to know what is required of them. A developer cannot shift his own burden of proper documentation to a Commission that fails to hold him accountable. The rules and regulations are public record. Here, the developers were charged with knowing their Preliminary Plan was deemed disapproved.
The delay in developing a large portion of this property certainly creates a foreseeable possibility that zoning, regulations or attitudes may change over a 39-year period. If an adverse ruling were not foreseeable, what would be the point in asking the Commission to reapprove a Preliminary Plan? The Commission cannot be required to act as a rubber stamp if it is to have any viability as a government entity. Within its ministerial function, it must act based on the legally binding factors it must apply, and cannot act arbitrarily. Bobinchuck v. Levitch, Ky., 380 S.W.2d 233 (1964).
. . . .
. . . The Commission did allow subsequent development of 39 other lots over a 30-year period, but was not required to do so at any time, and was not authorized to do so under its governing ordinances. A logical case can be made that the 39 lots were more closely related to the improvements made by the developer than the remaining 43 (See Plaintiffs' Exhibit 1.) and thus more likely to have been approved without need to review an Improvement Plan or Final Plan. Nonetheless, improper approval of the 39 lots cannot be the basis to require approval of the Preliminary Plan by this Commission, as no administrative body can be required to ratify an unauthorized act.
. . . The remaining 43 lots had never legitimately come before the Commission to actually be developed until September 2002
It is also a difficult argument for the Plaintiffs to sustain that they have in some way detrimentally relied on the prior actions of the Commission. This property has been developed at the discretion of the Sebastians, and at their own pace. The investment in the development to date does service the existing lots, and while it would also link with the proposed 43 lots, is justifiable for the properties it presently serves. The developed property has produced profit for the developer. Changes in land use and government regulation are foreseeable. The makeup of the Commission changes over time, and it is reasonable to expect that opinions may differ over how rules apply. The Plaintiffs' land is not being taken from them, and it retains alternative uses though not as profitable. Additionally, the Plaintiffs had their own duty to ensure that their beliefs about their rights to develop in a certain way were correct.
Judicial review of an agency decision is limited to the determination of whether the decision was arbitrary, i.e., whether the action was taken in excess of granted powers, whether affected parties were afforded procedural due process, and whether decisions were supported by substantial evidence.American Beauty Homes Corp. v. Louisville and Jefferson County Planning and Zoning Commission, 379 S.W.2d 450, 456 (Ky. 1964). Issues of law involving an administrative agency decision will be reviewed on a de novo basis. Aubrey v. Office of Attorney General, 994 S.W.2d 516 (Ky.App. 1998). The findings of a trial court sitting without a jury will not be set aside unless clearly erroneous. Weiand, 25 S.W.3d at 92 (citing Lawson v. Loid, 896 S.W.2d 1, 3 (Ky. 1995); CR52.01). The Fayette Circuit Court here was acting as both a reviewing court in denying the request for plat approval, and a factfinding court on the issue of whether equitable estoppel should apply against P Z. We agree with the trial court that the Commission's decision to deny the remaining subdivision plan was not arbitrary and was supported by substantial evidence. Upon review of the court's findings of fact on equitable estoppel, we cannot say its findings were clearly erroneous. Sebastian's argument is basically that P Z did not enforce the regulation in the past and should not be allowed to now. This reasoning was recently rejected in a similar case involving regulations,St. Luke Hosps., Inc. v. Commonwealth, 186 S.W.3d 746, 751 (Ky.App. 2005), wherein the court cited with approval, "[A] public officer[']s failure to correctly administer the law does not prevent a more diligent and efficient officer[']s proper administration of the law, as [a]n erroneous interpretation of the law will not be perpetuated." (Quoting Natural Res, and Envtl. Prot. Cabinet v. Kentucky Harlan Coal Co., Inc., 870 S.W.2d 421, 427 (Ky.App. 1993)). Hence, the court correctly determined that equitable estoppel was not applicable in this case.
For the foregoing reasons, the Court of Appeals' decision affirming the trial court is hereby affirmed.
All sitting, except Noble, J.
Lambert, C.J.; Cunningham, Minton, and Scott, JJ., concur. Abramson, J., concurs in result only.