## Honorable Paul A. Magnuson, Chief Judge, United States District Court for the 1 

## District of Minnesota.



# United States Court of Appeals FOR THE EIGHTH CIRCUIT

____________ No. 96-1873

____________ Northgate Homes, Inc., *
* Appellant, *
* Appeal from the United States v. * District Court for the
* District of Minnesota City of Dayton, a * municipal corporation, *
* Appellee. *

____________ Submitted: December 9, 1996 Filed: October 8, 1997

____________ Before McMILLIAN, JOHN R. GIBSON and MAGILL, Circuit Judges.

____________ McMILLIAN, Circuit Judge.

Nor thgate Homes, Inc. (Northgate), appeals from a final judgmen t entered in the United States District Court for the District of Minnesota 1 granting declaratory and injunctive relief to the City of Dayton (City ) upo n holding that Northgate’s sale, display, and storage of manufacture d homes on a particular parcel of land constitute an

## The distric t court also denied declaratory and injunctive relief to Northgate on 2 

## the identical issue. Northgate Homes, Inc. v. City of Dayton , No. 3-94-178, slip op. at 13 (D. Minn. Mar. 12, 1996).
The terms “manufac tured home” and “mobile home” are used interchangeably 3 

## herein.
-2- unlawful nonconforming use. Northgate Homes, Inc. v. City of Dayton , No. 2 3-94-178, slip op. at 13 (D. Minn. Mar. 12, 1996) (memorandum and orde r follow ing bench trial). For reversal, Northgate argues that the district court er red in: (1) granting the City’s request for a bench trial on th e partie s’ cross-claims, including claims for declaratory relief, id. (Feb. 2, 1996) ; (2) holding that Northgate’s use is an unlawful nonconformin g use, id. (Mar. 12, 1996); and (3) granting the City summary judgment o n Northg ate’s claims of equitable estoppel, breach of contract, due process violations, commerce clause violations, and an unlawful taki ng without just compensation, id. (Jan. 23, 1996) . Upon careful consideration and for the reasons discussed below, we affirm the judgment of the district court.

Jurisdiction was proper in the district court based upon 28 U.S.C

. § 1343. Jurisdiction on appeal is proper based upon 28 U.S. C. § 1291. The notice of appeal was timely filed under Rule 4(a) of the Federal Rules of Appellate Procedure.

I. BACKGROUND

North gate operates a retail business selling manufactured or mobile homes on the premises of a residential mobile h ome park called Dayton Park

3 (hereina fter “the Dayton Park property”) located in the City of Dayton , Minnesot a. Ben Dehn and George Hedlund originally developed the Dayto n Park pr operty in 1958, pursuant to a permit issued by the City. At tha t time, the zoning ordinance governing the establishment of mo bile home parks did not prohibit the sale of mobile homes on

## -3-

mobile ho me park property. Beginning in 1969, Dehn and Hedlund sold th e Dayton Park property to Kent Kjel lberg. Kjellberg thereafter incorporated Dayton Park, Inc.

In 19 73, the City passed Ordinance 73-5 and Ordinance 73-6. One of the numerous subdivisions of Ordinance 73-5 prohibits the sale, storage , or displa y of mobile homes on mobile home park premises. Ordinance 73- 6 inc ludes the zoning regulations for areas designated as “R-M” (referrin g to “residential-mobile”). Neither the sale, storage, nor di splay of mobile homes is a permitted or conditional use in an area zoned R-M. Se e Appellee’s Appendix at 138 (Ordinance No. 73-6).

In O ctober 1973, the City brought a suit in Minnesota state cour t against Da yton Park, Inc., for violating Ordinance 73-5. The parties t o that state court action stipulated and agreed that the City would issu e DaytonPark, Inc., a special use permit allowing it to continue its thencurre nt operations. Appellant’s Appendix at 207-12 (Defendant’s exhibi t 16 (stipu lation and agreement dated April 22, 1974)). The state cour t incorp orated the stipulation into an order directing the City to issue to DaytonPark, Inc., the special use permit. Id. at 206 (state court order dated April 30, 1974). In 1977, the State of Minnesota sued Dayton Park, Inc., in state court for violating Ordinance 73-5. The stat e court in that action held that the 1974 state c ourt order granted Dayton Park, Inc., the variances necessary to continue its operations as they exist ed on April 30, 1974.

At some point around the mid-1970s, Joel Dunn began sellin g manuf actured homes under the name Black Forest, Inc., from a nine-acr e sales lot located on the Dayton P ark property. The nine-acre parcel is in an area zoned R-M. In 1978, Dunnreincorporated Black Forest Homes, Inc., as Northgate Homes, Inc. On Augu st 3, 1990, Kathy Greenberg purchased all of Northgate’s stock and became its sole owner. Thereafter, Northgate’ s sale s volume, sales staff, and number of display homes exhibited on th e sales lot increased dramatically.

## -4- In a letter to Northgate dated January 14, 1992, an attorne y representing the City stated:

It has come to my attention that you have created a sales lot on your property with 20 plus manufacture d homes store d in the open area. . . . This is not a permitted use by Ci ty Ordinance. I have enclosed a copy of the Ordinance an d Zoning Map. Your property is zoned R-M. The use as a sales lot and storage of homes must be discontinued by March 1, 1992.

A copy of this ordinance will be sent to the City Attorney George Hof f for his information on this matter.

Upon receipt of this letter, Nor thgate did not discontinue its sales activities on the Dayton Park property. The City agreed not to enforce its
zo ning ordinances while Northgate applied for a zoning amendment or a co nditional use permit (CUP) that would permit its sales operation t o continue

. After a series of Dayton City Council meetings and publi c hearings, Northgate’s applicationwas denied on June 7, 1993. On February 7, 1994, the City sent Northgate a letter stating that Northgate had until March 8, 1994, to cease its mobile home sales operations on the Dayton Park property and to remove all evidence of the business.

Nort hgate filed a § 1983 claim against the City in state court and sought in junctive relief. The City removed the case to federal court

. Subse quently, Northgate filed an amended complaint seeking declarator y jud gment that Northgate’s mobile home sales business is a lawfu l nonconforming use of the Dayton P ark property. Northgate claimed that the City’s actions amounted to a taking of Northgate’s property interest in its business without just compensatio n, in violation of the Fifth Amendment of the Un ited States Constitution. Additionally, Northgate asserted du e process claims

## The district court declined to address the constitutionality of Ordinance 73- 5 4 

## because it found it unnecessary to consider any alleged violations of Ordinance 73-5 in disposing of the case. Slip op. at 4-5 n.1 (Mar. 12, 1996).
-5- und er the United States Constitution and the Minnesota constitution, a commer ce clause claim, a breach of contract claim, and an equitabl e estopp el claim. In its answer to Northgate’s amended complaint, the City asserted counterclaims seeking de claratory judgment that Northgate’s sales and stora ge of mobile homes on the Dayton Park property constituted a n unl awful nonconforming use of the property and requesting that Northgat e be enjoined from continuing its business operations at that site.
The City moved for summary judgm ent. The district court granted the City’s motion in part and dismiss ed most of Northgate’s claims. Remaining for trial were the parties’ cross-claims for declaratory and injunctiv e relief o n the nonconforming use issue. The City then filed a motion fo r a trial to the court, which the d istrict court granted. Following a bench tr ial, the district court rendered the following findings of fact an d
co nclusions of law: Ordinance 73-6 is constitutional and binding ; 4 Nor thgate’s sales operations within the nine-acre sales lot zoned R- M violate Ordinance 73-6; such sales operations were non-exist ent at the time Ord inance 73-6 became effective; and Northgate’s operations on the sale s lot th erefore constitute an unlawful nonconforming use. Accordingly, the district court permanently enjoin ed Northgate from operating its sales lot for the sale, display, or storage of manufactured homes in the area of the Dayton Par k property zoned R-M. In addition, the district court ordere d each party to pay its own costs and attorneys’ fees. This a ppeal followed.

## -6- II. DISCUSSION
Denial of jury trial

Nort hgate argues that the district court violated its Sevent h Amendm ent right to a jury trial by granting the City’s motion for a trial to the court. The district court granted the motion upon concluding that any right Northgate had to a jury trial was lost once Northgate’s commo n law damage s claims and § 1983 claims were dismissed on summary judgment , leaving only equitable claims for declaratory and injunctive relief.
Federal procedural law governs t he question of whether Northgate has a righ t to a jury trial on its claim for declaratory judgment. Simler v. Conner , 372 U.S. 221, 222 (1963) (per curiam). A litigant is no t necessaril ydeprived of a jury trial merely because it is a party to a declar atoryjudgment action. Id. at 223. Although the declarator y judgment procedure largely origin ated in equity, declaratory relief per se is neithe r legal nor equitable. The fact that a declaratory judgment i s sought neither restricts nor enla rges any right to a jury trial that would exist if the issue were to arise in a more traditional kind of action for affirm ative relief. Id. To determine whether there is a right to a jury trial in a declaratory judgment a ction, it is necessary first to determine the natu re of the action in which the issue would have arisen absent th e declar atory judgment procedure. In other words, if there would have been a right to a jury trial on the is sue had it arisen in an action other than one for declaratory judgment, the n there is a right to a jury trial in the declarator yjudgment action; conversely, there is no right to a trial b y jury if, absent the declaratory judgment procedure, the issue would hav e arisen in an equitable proceeding. Johnson v. Fidelity & Ca sualty Co. , 238 F.2 d 322 (8th Cir. 1956) ( Johnson ) (cited in Beacon Theaters, Inc. v

. Westover , 359 U.S. 500, 504 (1959)); accord Owens-Illinois, Inc. v. Lak e Shore Land Co. , 610 F.2d 1185, 1189 (3d Cir. 1979).

## -7- In the pre sent case, we are of the opinion that Northgate’s claim , in the absence of the declaratory judgment procedure, would have arisen in an act ion to enjoin the City from enforcing its zoning ordinances. Thus, using the Johnson analysis, we conclude that Northgate is not entitled to
a jury trial because its claim would have been an equitable claim

. Moreo ver, a judgment in favor of Northgate on its declaratory judgmen t claim would have had the effect o f preventing, or enjoining, the City from enforcing the demand that Northga te cease its use of the nine-acre parcel, zoned R -M, for selling and storing mobile homes on the Dayton Par k property.

We are also of the opinion that the City, in the absence of th e declaratory judgment procedure, would at most have attemptedto enforce its
cease and desist order by seeking injunctive relief. On this point, w e dis agree with Northgate’s assertions that the City would have criminall y pros ecuted Northgate for violating the zoning ordinances and, thus , Nor thgate’s declaratory judgment action must be viewed as an “inverte d criminal prosecution” to which a jury right attaches under the Sixt h Amendment. The district court reasoned, and we agree, that there simpl y is no indication here that the City had any intention of criminall y prosec uting Northgate, notwithstanding the City’s efforts to criminall y prosecute other entities in the p ast for violating Ordinances 73-5 and 73- 6. Slip op. at 3 (Feb. 2, 1996). Prior to Northgate’s filing of th e present lawsuit, the City’s actions vis-a-vis Northgate were focuse d entire lyupon stopping Northgate’s current and future violations, no t punish ing Northgate’s past violations. Id. Thus, because the likelihood of an eventual criminal prosecution is at best purely specul ative, we agree with the district court’s holding that Northgate is not entitled to a jury trial based on its “inverted criminal prosecution” theory. Id.

We also reject Northgate’s arguments that it is entitled to a jury tri al because it requested attorneys’ fees and costs or because factua l issues are vigorously disputed. As the district court explained, eve n assuming that attorneys’ fees and costs could have been recovered in the present case (an assumption which the City disputes),

## -8-

Northg ate’s request for such fees and costs does not alter th e fundamentally equitable nature of its claim for declaratory judgment. See , e.g. , Doucas Volkswagen, Inc. v. Volkswagen of A merica, Inc. , 893 F. Supp. 15, 16 (E.D. Wis. 1995) (rejecting the plaintiff’s request for a jury tria l in a declaratory judg ment action and holding that plaintiff’s request for attorneys’ fees and costs did not alter the equi table nature of its action even though the underlying statute contained an attorneys’ fees provision) (citi ng FDIC v. Sanders , 785 F. Supp 528, 529 (W.D. Pa. 1992)). Nor i s Northgate entitled to a jury trial merely because of the intensity o f factual disputes. Insum, we hold that the district court did not err in the present case, und er either the Constitution or statutes of the United States, in granting the City’s request for a bench trial on the parties’ claims for declaratory and injunctive relief.
Disposition of nonconforming use issue on the merits

“A re sidential zoning ordinance may constitutionally prohibit th e creation of uses whic h are nonconforming, but existing nonconforming uses
mus t either be permitted to remain or be eliminated by use of eminen t domain.” County of Freeborn v. Claussen , 203 N. W.2d 323, 325 (Minn. 1972) (citing Hawkins v. Ta lbot , 80 N.W.2d 863 (Minn. 1957)). The law does not requir e that pre-existing nonconforming uses be allowed to expand o r enlarge. Id. Rather, to further the public policy interests underlying comprehensive zoning plans, the law disfavors th e expansion or enlargement of pre-existing nonconforming uses and instead favors the gradua l elimination of such uses through obsolescence, e xhaustion, or destruction. Id. The party seeking to continue a nonconformi ng use bears the burden of proving that an excep tion is warranted. See, e.g. , id. at 326 (in action by county to restrain property owner from constr ucting commercial building
on land zoned residential, property owner bore burden of proving tha t enforce ment of zoning ordinance violated property owner’s due proces s rights).

## -9- In the present case, the area which Northgate uses as its sales lot is zon ed R-M (residential-mobile), a zoning designation which does no t permit the sale, storage, or display of mobile homes for commercia l purposes. Therefore, in order to prevail, North gate was required to prove tha t its predecessor was using the same sales lot to sell, store, an d display mo bile homes at the time Ordinance 73-6 became effective. A t trial, Northgate maintained that, at the time Ordinance 73-6 becam e effective, Northgate’s predecessors, Dayton Park , Inc. (owned and operated by Kent Kjellberg) and Black Forest Homes, Inc. (owned and operated by Joe l Dunn), were engaged in selling, storing, and displaying mobile homes on th e Dayton Park property at the same location and wi thin the same geographical area as that from whi ch Northgate presently operates its retail business. However , based upon the evidence adduced at trial, the district cour t sp ecifically found that no business operation similar to Northgate’ s existed at the same l ocation at the time Ordinance 73-6 went into effect. On appe al, Northgate specifically challenges this finding. Northgat e summarizes its argument on this issue as follows:

The Dis trict Court’s findings are clearly erroneous for two reasons. First, the testimony at trial demonstrated that Northgate’s Sales Lot was used for the display , stor age and sale of manufactured homes prior to th e enac tment of the City’s ordinances prohibiting such a use. S econd, the evidence which the Court relied on is either inconclusive or in one case, nonexistent.

Brief for Appellant at 29.

We review the district court’s findings of fact for clear error

. Fed. R. Civ. P. 52(a). In the present case, the district court provided
a d etailed summary of the evidence upon which it relied in making it s factual f indings. See slip op. at 5-11 (Mar. 12, 1996). Northgat e presented the testimony of three individuals to show that its

## -10-

current sales lot, the nine-acre parcel on the Dayton Park property, was used for the sale, display, and storage of mobil e homes prior to August 1, 1973. Kjellberg, whose deposition testimony was admitted into evidence, stated that he displayed manufactured homes on t he entire nine-acre parcel in the early 1970s. Two other witnesses also te stified that they remember seeing mobile homes displayed on that nine-acre parcel as early as 1971 or 1972. By contrast, h owever, the Dayton City Administrator testified that she nev er saw manufactured or mobile homes displayed on the nine-acr e parcel during the 1970s.
In addition, numerous aerial photographs of the Dayton Park property
were introduced into evidence at trial. The City introduced photographs which were taken on: November 9, 1971; November 1, 1975; May 13, 1978 ; November 18, 1979; April 5, 1980; April 10, 1985; and May 3, 1989

. Defendant’s exhibits 6, 17, 18, 19, 21, 24, and 29. Northgate submitted aerial photographs ta ken on May 8, 1960, and April 23, 1962. Plaintiff’s exhibits 191 and 190. The pre-1985 photographs show that manufacture d homes were not displayed anywhere on the nine-ac re parcel at the times the photographs were taken. In fact, the photographs suggest that no mobile homes were displayed on that parcel until 1989. Moreover, in a 197 1 photograph, approxima tely half of that parcel appears to be occupied by a soft ball diamond. Defendant’s exhibit 6. The softball diamond als o appears at the same location in the 1975 and the 1978 photographs, bu t apparently was not in use at those times. Defen dant’s exhibits 17 and 18. Contra ryto Northgate’s assertion that the photographs only show th e condition of the sales lot in the late fall or the early spring, whe n mobile home inventories are at their lowest levels, Kathy Greenber g testi fied that the number of display homes on Northgate’s sales lot i s usually a t its peak from March through November or December -- a perio d which incl udes the dates on which most of the photographs were taken

. Kjellberg testified in his deposition that, on the rare occasions whe n there would be no inventory, such circumstances would probably last no mor e than a week. Based u pon the evidence, the district court reasoned: “[i]t
seems highly unlikely that so many photo[graph]s would show no manufacture d homes on

## -11-

Northgate’s current sales lot if the property we re being used regularly to display mobile homes, as Northgate claims.” Slip op. at 9 (Mar. 12, 1996)

.
The di strict court also found compelling the language of th e stipulation which was incorporated into the stat e court order disposing of the 1974 lawsuit brought by the City against Dayton Park, Inc. (Kjellberg’ s corporation) for violations of Ordinance 73-5. The stipulatio n specificallydistinguishes the subdivisions of Ordinance 73-5 with which Dayton Park, Inc., wa s in compliance from those subdivisions of Ordinance 73-5 with which Dayto n Park, Inc., was not in compliance, for purposes of granting a variance for the pre-existing nonconf orming uses. Notably, the subdivision of Ordinance 73-5 which prohibits the sale or storage of mobil e homes on mobile home park premises is found in the list of subdivision s with which Dayton Park, Inc., was deemed to be i n compliance. Defendant’s exhibit 16. The dist rict court thus concluded that “[t]he most plausible inference to be drawnfrom the stipulation is that the City and Kjellberg both understood in April 1974, when the stipulat ion was signed, that sales
or storage activities were not taking place on the Dayton Park premises, including Northgate’s current sales lot.” Slip op. at 10 (Mar. 12, 1996).

We hol d that the evidence discussed above, along with additiona l eviden ce discussed in the district court’s memorandum and order , demonstrates that the evidence presented by Northgate was at the very leas t contradicted by evidence presented by the City and certainly not conclusiv e on the issue of whether mobile homes were being displayed and sold o n Northgate’s current sales lot at the time Ordina nce 73-6 went into effect. As the district court observed, whereas the City provided the court with tangible, physical, and documentary evidence of non-use, Northgate provide d only testimonial evidence to the contrary. Id. at 12. Notably, Northgate
reco gnizes on appeal that the determination of factual issues in th e present case necessarily involved “an analysis of the credibility of the witnesses and the evaluation of direct and circumstantial evidence.” Brie f for Appellant at 22. When a trial court’s findi ngs of fact are based upon its decision to credit the testimony of a witness or witnesses, each

## -12-

of whom has told a coherent and facially plausible story which is no t cont radicted by extrinsic evidence, the trial court’s findings, unles s in ternallyinconsistent, can “virtually never” be clearly erroneous

. Anderson v. City of Bessemer City , 470 U.S. 564, 575 (1985). Similarly, “[w]here there are two permissible views of the evidence, the factfinder’s choice be tween them cannot be clearly erroneous.” Id. at 574; see als o Stanton v. Larry Fowler Trucking, Inc. , 52 F.3d 723, 729 (8th Cir. 1995) (“[w]e are bound by the district court’s assessment of the witnesses ’ credib ilityand its determination of the weight of their testimony”)

. Beari ng these standards in mind, we defer to the district court’ s ass essment of the witnesses’ credibility and the inferences to be draw n from the evidence andhold that the district court did not clearly err in finding that Northgat e’s predecessors did not use the nine-acre sales lot for retail sales operations prior to the effecti ve date of Ordinance 73-6.

We also find no merit to the legal arguments advanced by Northgate to cha llenge the district court’s disposition of the nonconforming us e issue. Northgate primarily contends that the district court erred i n fa iling to recognize that a pre-existing use that is seasonal o r fluctuating is nevertheless sufficient to establ ish its lawfulness even to the extent that it may later become year-round or continuous. Brief for Appellant at 27-29 (citing Morin v. Board of Appeals , 227 N.E.2d 466 (Mass

. 1967)). In the present case, it is abundantly clear that the distric t court simply concluded that the retail sales operations conducted b y Northgate’s predecessors on the nine-acre sales lot did not commence until after the effective date of Ordinance 73-6. See slip op. at 1, 6-11 (Mar. 12, 1996). Therefore, Northgate’s argument is misplaced.
In sum, we hold that the district court did not err in holding that Northgate’s mobile home retail sales operations, which are conducted in an
area of the Dayton Park property zoned R-M, constitute an unlawfu l nonconforming use.

## See SLS P artnership v. City of Apple Valley , 511 N.W.2d 738, 743 (Minn

. 5 

## 1994) (hol ding that city could not be estopped from enforcing area and setbac k requirements set forth in one of its ordinances, even if property owner detrimentall y relied on city’s prior conduct).
-13- III. CONCLUSION

For the reasons discussed above, we affirm the district court’s gran t of the Ci ty’s request for a bench trial and affirm the district court’ s disposition of the parties’ claims for declaratory and injunctive relief
on the no nconforming use issue. In addition, we have considered all o f Northgate’s remaining arguments, including the arguments that: the City’s zoning ordinances are unconstitutional; the City is equitably estopped fro m enfor cing its ordinances after failing to do so for many years ; and th e 5 district court erred in granting summary judgment on Northgate’s takings claim, due process claims, commerce clause claim, and breach of contract claim. Upon careful review of the record, the district court’s orders, an d the pa rties’ briefs and oral arguments on appeal, we are of the fir m con viction that none of those arguments has sufficient merit to warran t further discussion.
The judgment of the district court is affirmed.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.