Michael B. Geisler Vs. City Council Of The City Of Cedar Falls, Iowa

Citation: Not availableDocket: 102/07–0474

Court: Supreme Court of Iowa; July 10, 2009; Iowa; State Supreme Court

Original Court Document: View Document

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Michael B. Geisler appealed the Iowa District Court's dismissal of one claim and the grant of summary judgment on another regarding the Cedar Falls City Council's actions related to his proposed real estate development in the College Hill Neighborhood Overlay Zoning District. The district court dismissed Geisler’s claim that the City acted illegally in denying his site plan and later enacted a six-month moratorium on developments in the Overlay District. The City contended that the moratorium was a legislative function, thus exempt from certiorari review, which is applicable only in quasi-judicial contexts. The Supreme Court affirmed the dismissal of the moratorium claim but reversed the summary judgment concerning the site plan denial, finding that the district court applied incorrect legal standards and did not assess whether the zoning change was made in bad faith. The background details reveal that Geisler purchased the property in 2004, submitted a site plan in 2005 that received initial approval from a city planner but was ultimately denied due to resident opposition and concerns over neighborhood compatibility. Subsequently, a temporary moratorium was imposed to further evaluate multi-family housing in the Overlay District. The Supreme Court remanded the case for further proceedings consistent with its opinion.

Geisler submitted a revised site plan to the City Department of Development, which was not processed in time for a meeting. On July 11, 2005, a city official denied consideration of the revised site plan, effectively rejecting the project. Subsequently, on December 12, 2005, the City Council enacted a resolution down-zoning the Overlay District, banning the development of multi-family housing. Geisler did not resubmit his site plan following the ordinance's enactment. On June 22, 2005, he filed a petition for writ of certiorari in district court, claiming the City acted illegally by denying his site plan and imposing a moratorium on development, asserting these actions constituted an unconstitutional taking of his property without just compensation. 

The City moved to dismiss Geisler’s petition for lack of subject matter jurisdiction, and on February 6, 2006, the court partially granted the motion. It overruled the motion regarding the denial of the site plan, stating that the record did not sufficiently show the City intended to impose a moratorium when denying it. However, the court upheld the City’s authority to impose the moratorium. The City later sought summary judgment on the remaining claim, which was granted, as the ordinance prohibiting the project was under discussion when Geisler submitted his initial site plan.

Geisler appealed the decision. The appeal's scope is governed by the rules for certiorari proceedings, and the court reviews motions to dismiss for errors at law. A motion to dismiss can be granted if the plaintiff does not state a valid claim, and the court must view facts favorably to the plaintiff. The legality of the moratorium is contested, with the City arguing that certiorari is an inappropriate remedy and that the moratorium is a legislative action, while Geisler contends it is a judicial function and claims the imposition was illegal.

The district court's decision to grant the motion to dismiss was based on the finding that the City acted within its legislative authority when issuing a development moratorium. Geisler did not challenge the procedural validity of the moratorium under Iowa Code section 414.4 or the City’s zoning ordinance in his resistance to the motion, leading the court to refrain from addressing this unraised issue. The only matter before the court was whether enacting a moratorium is a legislative function and whether Geisler could challenge the City's authority to impose it. A writ of certiorari is not applicable for actions taken by the City in its legislative capacity, as established by precedents emphasizing the separation of powers and the legislative function's role in establishing broad societal policies. The moratorium was deemed a traditional legislative function aiding municipal planning, enabling the City to maintain the status quo while reviewing zoning needs. Discontent with the City’s legislative decisions can only be addressed through electoral review.

Additionally, Geisler's challenge regarding the denial of his site plan was impacted by changes in the Overlay District's zoning ordinance. The district court granted summary judgment to the City by applying the pending ordinance rule, concluding that the site plan was denied because of an ongoing amendment process in the zoning ordinance that was relevant to the moratorium. The court found the denial appropriate under the new ordinance that prohibited multi-family housing, raising the question of whether the application of the pending ordinance rule was appropriate in Geisler's case.

A reviewing or appellate court must base its decision on the zoning law as it stands at the time of the court's ruling, as established in U.S. Cellular Corp. v. Bd. of Adjustment. The district court erred by applying the minority pending ordinance rule, which asserts that the rights of parties are governed by the ordinance in effect at the time of application, instead of the new zoning ordinance enacted on December 12, 2005. Two exceptions to the general rule exist: (1) a developer may gain vested rights through substantial expenditures made before a zoning change, provided those expenditures are lawful; and (2) a new ordinance will not apply if officials acted in bad faith by denying or delaying approval to alter the zoning ordinance to obstruct development. 

Vested rights can only be established if the property owner made significant lawful expenditures before the zoning change. In this case, Geisler did not hold vested rights because no building permit was issued prior to Cedar Falls' rezoning action. The bad-faith exception requires proof of an illegal denial with an improper purpose; past case law illustrates that illegality arises if a decision lacks statutory support, substantial evidence, or is arbitrary. In the U.S. Cellular case, bad faith was found where the Board denied a request for a cell tower and then rezoned the area to prohibit its construction.

In Perkins v. Bd. of Supervisors, the court identified that U.S. Cellular's application was denied without legal justification despite meeting all requirements of the existing ordinance. The Board's reasons for denial were not based on the applicable ordinance at the time or the subsequently enacted ordinance, and they misrepresented facts regarding the denial and the ordinance change. This led to the conclusion that the Board's actions were "patently illegal." For a denial to be deemed in bad faith, it must stem from an improper purpose, as illustrated by U.S. Cellular's case where the Board aimed to delay the application to allow for a new ordinance prohibiting the requested use. Other jurisdictions have recognized various forms of bad faith, including actions taken to disadvantage political opponents or protect competing businesses. Courts have also identified bad faith when zoning changes appear arbitrary or designed solely to block a lawful use. The district court's reliance on the pending ordinance rule was incorrect; it should have assessed whether the denial of the site plan was made in bad faith. The case is remanded for the district court to evaluate this issue further, with the possibility of additional evidence being presented. The court affirmed the legislative nature of the City’s moratorium, reversed the summary judgment on Geisler’s site plan denial due to incorrect legal application, and ordered a remand for further proceedings.