Case Title: Sun Ridge Development, Inc. v. City of Cheyenne

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1990-02-20T00:00:00Z

Document:
Sun Ridge Development, Inc. v. City of Cheyenne1990 WY 20787 P.2d 583Case Number: 88-317Decided: 02/20/1990Supreme Court of Wyoming
SUN RIDGE DEVELOPMENT, 
INC., F/K/A CENTURY WEST, INC., 

A WYOMING CORPORATION, 

APPELLANT 
(PLAINTIFF),

v.

THE CITY OF CHEYENNE, A 
MUNICIPAL CORPORATION, 

APPELLEE 
(DEFENDANT).

Appeal from the District 
Court, Laramie County, Nicholas G. Kalokathis, J.

William D. 
Bagley, Cheyenne, for appellant.

John A. Sundahl 
of Godfrey and Sundahl, Cheyenne, for appellee.

LEHMAN, District 
Judge.

[¶1]      Sun Ridge 
Development, Inc. (Sun Ridge),1 f/k/a Century West, Inc., filed 
suit against the City of Cheyenne (City) in district court on September 24, 
1987, alleging, inter alia, an unconstitutional taking arising from the 
City's use of a building moratorium to regulate Sun Ridge's subdivision 
development, Crest Ridge.2 After a six-day bench trial, the 
court filed, on October 13, 1988, its "Findings of Fact and Conclusions of Law." 
The court found that the moratorium was a reasonable response in light of Sun 
Ridge's failure to submit design plans to address and correct the ongoing 
drainage problems created by the Crest Ridge development. The court also found 
that the subdivision regulations, which required Sun Ridge to submit the design 
plan, constituted a valid and legitimate exercise of the City's police 
power.

[¶2]      We 
affirm.

[¶3]      The parties 
present a number of issues for resolution.3 For purposes of this appeal, 
however, a single inquiry suffices: 

Whether the City's 
imposition of a construction moratorium to enforce its drainage regulations was 
a valid exercise of its police power.

For the reasons 
set forth below, we find that the City's actions promoted the general welfare of 
those residents affected by the drainage problems in a manner consistent with 
the basic notions supporting the exercise of its police power. Because we 
believe this case turns upon whether the City's use of its police power was 
proper, only those facts which are relevant to that inquiry are 
discussed.

[¶4]      In July of 1978, 
the City amended its subdivision regulations to establish drainage design 
standards to promote "the orderly development of land in the City * * *." 
Specifically, the regulations were intended to "insure that resulting changes 
[from development] in the quantity * * * of surface water drainage are not 
detrimental to the City * * *." The regulations governing "Land Development" 
placed

"[t]he primary 
responsibility for the planning, design and construction of drainage 
improvements required in conjunction with land development * * * in the person 
or party who is developing the land."

They stated in 
pertinent part:

"Historical flow patterns 
and runoff quantities shall be maintained in such a manner as to reasonably 
preserve the natural character and appearance of existing drainage ways, and to 
prevent property damage and physical changes of the type generally attributed to 
increases in runoff rate, volume, and velocity [due to] storm 
water."

In 
addition,

"Provisions shall be made 
in the planning and development of land to provide for the temporary and/or 
permanent storage of surface water runoff * * *. The cumulative effect shall be 
to preserve the existing [pre-development] flow characteristics."

The regulations 
also provided that "[d]uring the development of land, care shall be exercised by 
the Developer to preserve the quality of surface water runoff." The City adopted 
further amendments to its subdivision regulations in May of 1979 (1979 
regulations).4

[¶5]      The parties 
recognized that drainage problems existed in the Buffalo Ridge residential area 
when Sun Ridge applied for annexation of Crest Ridge on December 21, 1978. On 
February 26, 1979, Crest Ridge was annexed to the City. In an effort to 
alleviate the drainage problems, the City and Sun Ridge entered into an 
agreement on April 24, 1979 (1979 Agreement), to implement a drainage study 
(referred to by the parties as the Section 21 study) as a preliminary step 
toward creating an improvement district.5 

[¶6]      On August 27, 
1979, the City approved a plat for Crest Ridge Addition, Second Filing. Initial 
development consisted of 45 lots on the south edge of the Crest Ridge 
development which was immediately to the north of existing homes and located on 
the side of a steep slope.

[¶7]      Shortly after the 
Second Filing, Sun Ridge began to develop Crest Ridge. By early September, 1980, 
the natural vegetation had been stripped off the initial development of 45 lots. 
The effect of the excavation was to worsen the drainage problems in and 
immediately below Crest Ridge. Beginning in the fall of 1980, excessive amounts 
of water, dirt, and silt flowed off the Crest Ridge addition causing repeated 
and severe flooding into the homes and lots immediately below the subdivision. 
Downstream residents, the unhappy recipients of Crest Ridge's drainage problems, 
lodged numerous complaints with the City and Sun Ridge. The continuing erosion 
required the City to participate in repeated and expensive clean-up efforts. 
Temporary measures to control the erosion were also initiated (e.g., Sun Ridge 
constructed diversion dikes from hay bales).

[¶8]      By July of 1981, 
it was evident that the majority of property owners believed that the cost for 
solving the drainage problems should not be placed upon them, and if the 
proposed improvement district were put to a vote, they would not support it. The 
improvement district which was the subject of the 1979 Agreement never 
materialized. Meanwhile a homeowner's group, known as the Northeast Cheyenne 
Protective Association, had asked the City to place a moratorium on further 
development in Crest Ridge until the drainage issue had been satisfactorily 
resolved.

[¶9]      On August 24, 
1981, the matter came before the City Council. A moratorium on all further 
activity was rejected by the City, and instead, development was restricted to 
paving and seeding until October 1, 1981. The terms of the moratorium provided 
that, for a period of 37 days, no further building permits were to be issued for 
the Crest Ridge subdivision. The City believed that a moratorium would be a 
reasonable way to address Sun Ridge's failure to implement a plan to correct the 
Crest Ridge drainage problem and its adverse effect on the downstream residents' 
general welfare.

[¶10]            
Realizing that the improvement district was no longer a viable option 
because the residents were against the $1500 lot assessment it would cost to 
implement the district,6 the City asked Sun Ridge to comply 
with the 1979 drainage regulations and submit a detailed drainage plan. Relying 
upon the language of the 1979 Agreement,7 Sun Ridge responded that it had 
satisfied all subdivision regulations concerning drainage when it agreed to 
participate in the proposed improvement district, and therefore, it need not 
submit a drainage plan. In other words, the only condition the City had imposed 
on Sun Ridge for the re-plat of Crest Ridge was the 1979 Agreement to 
participate in the improvement district; and after the approval of the re-plat 
on August 27, 1979, no additional conditions (specifically, the 1979 drainage 
regulations) could be imposed.

[¶11]   The City's position was that Sun 
Ridge knew, when it executed the 1979 Agreement, that it would have a continuing 
responsibility to address the runoff created by the Crest Ridge development 
regardless of whether the proposed improvement district was created. According 
to the City, the improvement district would be used as a means to finance the 
construction and implementation of drainage facilities; however, the creation of 
the district would not relieve Sun Ridge of its obligation to comply with the 
1979 drainage regulations.

[¶12]            
Negotiations to resolve the Crest Ridge issue, through letters and 
meetings from January 1982 to February 1984, were continually derailed by Sun 
Ridge's insistence that its obligation to comply with applicable drainage 
regulations ended with the collapse of the improvement district. Finally on 
February 27, 1984, the parties reached an agreement which acknowledged that "[a] 
difference of interpretation has existed regarding [Sun Ridge's] obligations for 
drainage control under the previously executed agreement dated April 1979, [1979 
Agreement] between City and [Sun Ridge]." The February 1984 agreement also 
provided that Sun Ridge would contribute financially in the construction of 
drainage improvements for the Crest Ridge area, and thereby, satisfy the City's 
drainage requirements.

[¶13]   Sun Ridge claims that, 
notwithstanding the February 27, 1984 agreement, the City continued to restrict 
development until June 6, 1986, when development was allowed to resume. The 
record, however, offers no clues on why Sun Ridge, if its claim was true, waited 
until September 24, 1987, to file suit against the City. It is also not clear 
why Sun Ridge chose not to seek a variance from the regulations or pursue an 
appeal from any of the adverse decisions it now alleges occurred.8

[¶14]   After a bench trial conducted on 
September 26-30 and October 4, 1988, the court filed its "Findings of Fact and 
Conclusions of Law" on October 13, 1988. The court concluded that Sun Ridge's 
claim of an unconstitutional taking must fail because the moratorium was a 
reasonable exercise of the City's police power. The court's conclusion was 
based, in part, on its finding that:

"The moratorium addressed 
a serious problem at hand which required correction; to wit: flooding and 
property damage and potential health hazards to citizens of the City associated 
by inadequate drainage control facilities on Crest Ridge addition, and the 
moratorium was a logical way to address such problem until the drainage 
corrections were proposed, accepted, and implemented."

[¶15]   It was the court's opinion, after 
reviewing the evidence, that the "serious problem" with drainage was due to the 
Crest Ridge development. There had been a significant increase in the runoff 
rate, volume and velocity of water, and this increase caused the peak rate of 
flow after development to exceed the peak rate of flow before development. The 
result was that the downstream residents suffered serious and significant 
flooding, siltation, and erosion.

[¶16]   The court found, based in part on 
the testimony of Frank J. Trelease, a hydrologist and engineer, that Sun Ridge 
should have known that the development of Crest Ridge would result in a 
significant increase in runoff and potential drainage problems if corrective 
measures were not included as part of the development. He testified that in 
April of 1979, as a consultant, he performed calculations site-specific to Crest 
Ridge that revealed a significant increase in runoff if the proposed development 
occurred. The calculations revealed that south of the ridge line (the south 
drainage) the rate of flow and the volume of flow would increase by as much as 
three times that of pre-development conditions.

[¶17]   The court decided that the 1979 
subdivision regulations constituted a valid and legitimate exercise of the 
police power because they encouraged compatible development and promoted the 
public health, safety, morale, and general welfare of the residents. The 
regulations also substantially advanced the City's interests in a rational, 
logical, and appropriate manner. In short, the court found that enforcement of 
the regulations was directly connected to the public's safety. The court also 
noted that the subdivision regulations were properly implemented under the 
Wyoming Statutes.

[¶18]   The court found that the 1979 
Agreement did not eliminate Sun Ridge's obligation to comply with the applicable 
drainage regulations. Specifically the court found that under the regulations, 
it was the developer's responsibility to prepare and submit to the City Engineer 
a final drainage plan to control erosion and runoff before beginning 
construction. The court then chronicled ten different violations of the 
subdivision regulations by Sun Ridge:

"(a) The plaintiff [Sun 
Ridge] never submitted drainage plans which would accommodate the increased 
runoff and detain it on site.

"(b) The plaintiff never 
provided calculations concerning historical flow patterns and runoff 
quantities.

"(c) The plaintiff never 
submitted a drainage plan which addressed runoff rate, volume, velocity, 
diversion, and concentrations of storm water.

"(d) The plaintiff did 
not propose or implement surface water storage areas.

"(e) The plaintiff did 
not provide adequate temporary or permanent siltation ponds or dams, nor did it 
prevent soil from being carried off [the] development area by runoff 
waters.

"(f) The plaintiff did 
not develop or implement drainage facilities such that the peak rate of storm 
water discharge that occurred at the downstream boundary discharge points, after 
completion of the project, would not exceed the peak rate of storm water 
discharge that would occur from the undeveloped land or existing conditions, at 
the same discharged locations, for an event equal to the 50 year frequency 
storm.

"(g) The plaintiff did 
not provide adequate surface water runoff collection systems such as grass 
drainage swales, improved and surfaced drainage ditches, or 
culverts.

"(h) The plaintiff did 
not provide for adequate drainage grading for individual lots.

"(i) The plaintiff did 
not implement permanent quality controls to deal with permanent erosion and 
sedimentation control measures.

"(j) The developer did 
not submit a preliminary drainage plan required by the subdivision regulations 
or submit a final plan."

[¶19]            
Relying upon these violations, the court reasoned that "[t]he health, 
welfare and safety of the inhabitants and residents of the City demanded 
protection from flooding, siltation, wind, and water erosion from the Crest 
Ridge subdivision." Accordingly, the court found that the

"moratorium imposed upon 
building permits was an appropriate and reasonable response to ongoing drainage 
problems and the refusal on the part of the developer to submit plans to correct 
the drainage problems. It was further appropriate in light of the developer's 
refusal to implement on-site storage facilities. The subdivision regulations 
prohibit development until plans to correct drainage flows are submitted and 
approved. The Court further finds that the moratorium substantially advanced a 
legitimate governmental interest by a rational means. The subdivision 
regulations prohibited continued development without compliance with such 
regulations. The defendant [City] was faced with no other options or choices to 
address the problem in the absence of a moratorium in light of the plaintiff's 
refusal to address and correct the drainage problems associated with his 
development."

[¶20]   The court, in response to Sun 
Ridge's argument that all applicable drainage regulations for annexation had 
been fulfilled per the 1979 Agreement, ruled that the language of the 1979 
Agreement was ambiguous.9 The court found that,

"on the one hand, it 
seems to say to [Sun Ridge] that the drainage regulations have been met if the 
proposed district were to fail; while, on the other hand, it requires that 
further development would be subject to existing regulations and development 
codes."

The court then 
went on to rule that Sun Ridge's "interpretation is not reasonable because it 
would allow the City to declare that the development code had been met when in 
fact it had not been met." The court reasoned that "[t]his [would be] tantamount 
to the City surrendering its enforcement power." In other words, according to 
the court, under Sun Ridge's interpretation the citizens would have no voice in 
the decision to allow the development to adversely impact their 
lands.

[¶21]   The court also noted that the City 
Engineer executed the 1979 Agreement without the City's approval. The City 
Engineer was not authorized to surrender the City's enforcement power, nor was 
that his intention. The court believed that even the City could not "surrender 
by contract its obligation to enforce the drainage regulations particularly when 
the health and safety of its citizens [were] involved." The court concluded 
that

"the most reasonable 
interpretation which can be placed upon the language * * * require[s] [Sun 
Ridge] to conform to the drainage regulations while undertaking development 
within Section 21 after the drainage district failed to come into 
being."

[¶22]   When reviewing a decision under a 
sufficiency of the evidence standard,

"we uphold the judgment 
if there is evidence to support it, and in so doing we look only to the evidence 
submitted by the prevailing party and give to it every favorable inference which 
may be drawn therefrom, without considering any contrary evidence." Smithco 
Eng'g, Inc. v. Int'l Fabricators, Inc., 775 P.2d 1011, 1015 (Wyo. 
1989).

In this 
instance, there is sufficient evidence to uphold the trial court's finding that 
no taking occurred when the City, acting pursuant to its police power, placed a 
temporary moratorium on Sun Ridge's continued development of Crest 
Ridge.

[¶23]   We stated in Cheyenne Airport Bd. 
v. Rogers, 707 P.2d 717 (Wyo. 1985), that the police power is the "government's 
ability to regulate private activities and property usage without compensation 
as a means of promoting and protecting the public health, safety, morals and 
general welfare." Id. at 726. We have also recognized that the "[p]olice powers 
are an essential attribute of the state as sovereign and cannot be bargained or 
contracted away." State Highway Commission v. Sheridan-Johnson Rural 
Electrification Ass'n, 784 P.2d 588 (Wyo. 1989). The United States Supreme Court 
acknowledged that the issue of whether a compensable taking has occurred may be 
avoided if the governmental land use regulation at issue was undertaken for 
safety reasons. First English Evangelical Lutheran Church of Glendale v. County 
of Los Angeles, California, 482 U.S. 304, 311-15, 107 S. Ct. 2378, 2384-85, 96 L. Ed. 2d 250 (1987).

[¶24]   For a city's use of its police 
power to be valid, the matter must, first, be a proper subject of regulation. 
See Cheyenne Airport Bd., 707 P.2d  at 727. Drainage problems due to development, 
and the safety hazards they create for the public, are unquestionably proper 
subjects of regulation. Sun Ridge does not dispute that the City has a right to 
impose drainage regulations in order to insure that developments do not create 
drainage concerns. Sun Ridge argues, instead, that the 1979 drainage regulations 
are not applicable to it because of the 1979 Agreement to participate in the 
improvement district. The trial court addressed Sun Ridge's argument when it 
found that the 1979 Agreement was ambiguous and that the interpretation the City 
advocated was the correct one.

[¶25]   The means the City uses to 
implement the drainage regulations must be reasonable. See id. The court found 
that the City had properly enacted its 1979 regulations. The court also found 
that the City had no choice, due to Sun Ridge's noncompliance with the 
applicable regulations, but to impose a moratorium. We find nothing 
objectionable with the City's reasonable use of a moratorium to protect and 
promote the public's general welfare. In short, the City's power to enact valid 
regulations must, also, include the power to enforce those 
regulations.

[¶26]   When a developer's noncompliance 
with drainage regulations jeopardizes the public's safety, a city's use of its 
police power - if reasonable - to enforce those regulations does not constitute 
a regulatory taking for which compensation is due. Sun Ridge's development of 
Crest Ridge created severe drainage problems for downstream residents. The City 
informed Sun Ridge that it needed to submit a drainage plan to address these 
problems. Sun Ridge, however, continued to insist that it was not required to 
comply with the 1979 drainage regulations. Given Sun Ridge's refusal to comply 
with applicable drainage regulations, the City was justified in imposing a 
moratorium restricting development to paving and seeding. The City's use of a 
moratorium to enforce its valid regulations is a reasonable exercise of its 
police power. See Estate of Scott v. Victoria County, 778 S.W.2d 585 (Tex. Ct. 
App. 1989) wherein the Texas court upheld, against an attack by developers, 
Victoria County's use of its police power to impose a moratorium on further 
issuance of sewer permits.

[¶27]   The court found that the moratorium 
lasted only 37 days. Sun Ridge argues on appeal that it lasted 2 1/2 years. The 
record indicates, however, that Sun Ridge was not in compliance with the 1979 
drainage regulations until, at least, the February 27, 1984 agreement.10 During this period of interminable 
delay, the quality of life for the downstream residents was declining. Based 
upon Sun Ridge's recalcitrance (it essentially ignored an obvious drainage 
problem), we find nothing objectionable about the City's reasonable use of a 
moratorium, even if it extended beyond 37 days, to enforce regulations designed 
to promote the public's general welfare.11

[¶28]            
Affirmed.

FOOTNOTES

1 Sun Ridge is the 
successor in interest to Century West, Inc.

2 Crest Ridge encompassed 
127.12 acres of unimproved land when the City annexed it on February 26, 
1979.

3 Sun Ridge lists the 
following issues:

"1. Was the City's 
initial moratorium reasonable as to the north parcel and as to the south 
parcel?

"2. Was the length of the 
moratorium as to either the north or south parcel excessive and 
unreasonable?

"3. Did the moratorium 
frustrate Plaintiff's investment backed expectations?

"4. What was the length 
of the moratorium?

"5. Was there an 
applicable drainage standard, and, if so, was it violated?

"6. Were the actions of 
the City a valid exercise of its police power? And if it was, does that relieve 
the City of liability to one who has been subjected to a taking?"

The 
City responds with its own restatement of the issues:

"1. Whether Approval of a 
Plat or Re-plat Deprives A Governing Body of the Right to Require Compliance 
With Its Subdivision Regulations Concerning Drainage?

"2. Whether Appellant's 
Claims For Breach of Contract, Promissory Estoppel, Implied Contract and Inverse 
Condemnation are Barred By Its Failure to File A Claim?

"3. Whether The 37 Day 
Moratorium on Building Permits Issued by The City of Cheyenne Amounts To An 
Unconstitutional Temporary Taking of Appellant's Property?

"4. Whether Appellant's 
Claims Are Barred For Failure to Exhaust Administrative Remedies?"

4 The 1979 regulations 
adopted the 1978 drainage design standards. Consequently, the developer's 
obligation to comply with the 1978 drainage design standards was not altered by 
the 1979 regulations. For purposes of clarity, the 1979 drainage regulations 
will be cited to in the remainder of this opinion.

5 The district, if 
implemented through a vote of the residents, was intended to solve storm 
drainage problems in the developed or developing areas adjacent to the Crest 
Ridge area and also involving Crest Ridge. It would have financed the drainage 
controls by assessing each lot in the Section 21 area an equal 
amount.

After the proposed 
improvement district was discarded as an option, see infra p. 586, certain 
language contained in the 1979 Agreement and the differing interpretations of 
it, specifically the last paragraph of III.D. pp. 66-67, triggered a dispute 
between the parties vis-a-vis their respective obligations. The 1979 Agreement 
provided, in part, that:

"Having concluded that 
the improvement district should not or cannot be created, the City agrees that * 
* * [Sun Ridge has] satisfied all possible obligations that can be imposed upon 
them to provide for drainage improvements within drainage improvement district 
area. The City, therefore, agrees that it shall not deny the development of 
properties within Section 21 on the basis of inadequate drainage facilities and 
that * * * [Sun Ridge] may continue the development of properties within Section 
21 subject to the existing regulations of City ordinances and development 
codes."

Sun 
Ridge argued that the terms of the 1979 Agreement absolved it of any further 
compliance with subdivision regulations concerning drainage, if the proposed 
district failed to materialize. The City argued that Sun Ridge's compliance with 
the 1979 drainage regulations was not contingent on the creation of an 
improvement district. In other words, Sun Ridge's obligation to deal with the 
runoff from Crest Ridge existed regardless of whether the district was approved 
or not approved. See infra p. 586.

The 
court noted that the 1979 Agreement was not prepared by representatives of the 
City, was not submitted to the City Attorney for review, and was not submitted 
to the City Council for approval.

6 See supra note 
5.

7 See supra note 
5.

8 See infra note 
11.

9 See note 5 
supra.

10 See supra pp. 
586-87.

11 Sun Ridge also alleges 
that, notwithstanding the parties' February 1984 agreement, a "cloud" continued 
over the Crest Ridge development until June 6, 1986. Sun Ridge, however, waited 
until September 24, 1987, to file suit. If Sun Ridge believed that the 1979 
regulations were not applicable or that the City was reneging on its February 
1984 agreement, it should have - at an early date - either entered into serious 
negotiations with the City to resolve the issue or challenged the regulations in 
court. Cf. First English, 482 U.S.  at 307-09, 107 S. Ct.  at 2382 (the plaintiffs 
filed suit a month after the moratorium was enacted).