Opinion ID: 2010991
Heading Depth: 1
Heading Rank: 9

Heading: In Appeal of ZBA Decision Landowner is Necessary Party

Text: Although our analysis could end at this point, we nonetheless address the second argument of the appellants/respondents-below, that the Superior Court committed reversible error when it denied the ZBA's motion to dismiss for failure to join PDI as an indispensable party. We address this issue to clarify the procedural requirements for perfecting an appeal to the Superior Court in cases of this kind. The Superior Court concluded that the landowner was not a necessary party to the appeal, and to the extent that the landowner had an interest in the appeal, CCS could represent its interests. Specifically, the Superior Court determined that PDI was not a necessary party because it was not a party to the ZBA proceeding. The Superior Court reasoned that the variance application listed only CCS as the applicant, and that PDI did not participate in the ZBA hearing and was not mentioned in the ZBA's written decision. The Superior Court concluded: To the extent PDI has an interest in these proceedings, it would be well-represented by CCS. The appellants assert that: the failure to join an indispensable party to an appeal is fatal to the jurisdiction of the court; [86] `[c]learly, a property owner whose interests are impacted by a ruling is an affected party' and therefore indispensable; [87] and as the owner of Gibraltar, PDI is an indispensable party, not timely named in the appeal to the Superior Court. The appellees/petitioners-below argue that PDI was not intended as a party on appeal and that CCS was the only unnamed but intended party. The appellees claim that they were appealing from an administrative decision that referred only to the applicant, CCS, and did not mention PDI. They further contend that even if PDI had an interest in the administrative proceedings, the Superior Court correctly concluded that PDI was not a necessary party because to the extent PDI has an interest in these proceedings, it would be well-represented by CCS. They assert that PDI was content throughout to have the fight carried by the developer-proponent and that PDI has no unique arguments to make that were not presented by CCS. This Court reviews the Superior Court's denial of a motion to dismiss de novo. [88] We conclude that the Superior Court erred when it determined that PDI is not a necessary party. As we held in Hackett v. Board of Adjustment of Rehoboth Beach and now reaffirm, the owner of land that is the subject of a decision of a municipal board of adjustment is a necessary party that must be joined in an appeal of that decision. [89] It is well-settled that all parties to the litigation, who would be directly affected by a ruling on the merits of an appeal, should be made party to the appellate proceedings. [90] This policy is reflected by Superior Court Civil Rule 19(a), which relevantly provides: A person ... shall be joined as a party in the action if (1) in the person's absence complete relief cannot be accorded among those already parties, or (2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may (i) as a practical matter impair or impede the person's ability to protect that interest. [91] In Hackett, the petitioners filed a petition for a writ of certiorari in the Superior Court pursuant to section 328, challenging the decision of the Rehoboth Beach Board of Adjustment to issue a building permit to the Sands Hotel. [92] The petitioners named only the Board of Adjustment in the caption of their appeal and in the praecipe. They did not name the Sands in the caption and did not list the Sands as a party in the body of the petition. [93] The petitioners mailed copies of the appeal to several parties, including the attorney who represented the Sands at the hearing before the Board of Adjustment. [94] The attorney received the copy of the appeal within the thirty-day appeal period but did not tell the Sands about the appeal until after the thirty-day period had expired. [95] In Hackett, the Superior Court concluded that it was inappropriate to permit the petitioners to correct the caption, because the petitioners had given no indication that they intended the Sands to be a party to the appeal. [96] The petitioners had not directed the Prothonotary to send notice to the Sands as required by Superior Court Civil Rule 72(c) and the Sands was not asked to participate in any proceedings related to the appeal. [97] We affirmed the Superior Court's dismissal of the appeal because the certiorari petitioners failed to name the landowner an indispensable party to an appeal from a decision of the board of adjustment. [98] In Hackett, we held that [a] property owner whose interests are impacted by a ruling of a board of adjustment is an affected party. We also held that a petitioner for a certiorari appeal must comply with certain pleading requirements, such as notice to a party affected by the administrative ruling, either directly or through a designated agent. [99] Accordingly, the landowner is an indispensable party to an appeal from a decision of the board of adjustment that affects the landowner's property. [100] In this case, the petitioners-below failed to name PDIthe owner of Gibraltaras a party to the appeal. They now assert that they did not intend to name PDI as a party. We conclude that the Superior Court erred when it determined that PDI is not a necessary party to the appeal. As the landowner, PDI's interests are directly affected by the appeal of the ZBA's decision. Contrary to the Superior Court's finding, PDI was a party to the ZBA proceeding. The variance application has separate fields for the variance applicant and the property owner. The application lists PDI as the property owner. In addition, PDI participated in the hearing before the ZBA by providing extensive testimony. PDI Board Member and Chair of the Gibraltar Redevelopment Committee Rebecca Sheppard testified on behalf of PDI about the history of Gibraltar, PDI's acquisition of the property, Gibraltar's current condition, PDI's efforts to find an adaptive reuse for the property, and the hardships PDI would suffer without the use variance. The ZBA's written decision refers to PDI as the property owner multiple times, emphasizes the hardships that Sheppard testified about, and bases seven of the ten reasons for granting the variance on testimony from Sheppard and facts unique to Gibraltar. Accordingly, PDI is a necessary party. In this case, PDI did not receive notice of the appeal. Goddess did not send a note with the petition attached to PDI. The praecipe did not name PDI. In fact, the Superior Court did not find that PDI received notice. Instead, it found that CCS received notice and CCS could represent PDI's interests in the appeal. We conclude, however, that the Superior Court erred when it determined that PDI's interests would be well-represented by CCS. When the property owner and the variance applicant are distinct entities, their interests cannot be presumed to be aligned. In Southern New Castle County Alliance v. New Castle County, the Court of Chancery recognized that the record owner of properties affected by a record plan approval and the equitable owners/potential developers do not necessarily have the same interests. [101] The court explained that [a] challenge to the approval of the record plan may affect the developers (the equitable owners) and the record owners of property in different ways, depending upon their respective interests in the development. Those interests are typically defined by contract, and will vary from case to case. [102] In Southern New Castle County Alliance, the Court of Chancery considered whether the record owners of properties affected by the record plan approval were indispensable parties to an action challenging the plan. [103] The action named only the equitable owners of the property (i.e., the buyers-to-be). [104] The plaintiffs argued that because the buyers-to-be ... are the equitable owners of the property, their interests are identical to those of the record owners. [105] Therefore, the plaintiffs argued, the record owners were not indispensable parties because their interests would be adequately protected by the equitable owners. [106] The Court of Chancery disagreed, stating that the plaintiffs' argument rested on an implicit presumption that the interests of the record and equitable owners of .... to-be-developed property will invariably be identical. [107] The Court of Chancery stated that the plaintiffs' presumption was factually and legally unsupported. [108] The court explained that [i]f any presumption is appropriate, it is that the interests of the record owner and the equitable owner of property are not identical, and in that case, the plaintiffs failed to make a specific showing to the contrary. [109] Therefore, the court concluded that the record owners of the property were indispensable parties to the action under Court of Chancery Rule 19. [110] Similarly, in this case, PDI and CCS have unique interests in upholding the variance. PDI is the current record owner of Gibraltar. CCS, the potential developer, is the equitable owner. [111] PDI's interests in upholding the variance remain even if CCS abandons the project, because PDI will have to find a new developer for Gibraltar. In addition, the Superior Court made a factual finding directly affecting PDI's interests when it stated that PDI created the conservation easement and was therefore precluded from claiming hardship. As the appellants correctly assert, [t]hat finding led the court to bar PDI (CCS and apparently all subsequent purchasers) from ever obtaining variance relief from the ZBA and plainly impedes PDI's property rights. Furthermore, as the potential developer and equitable owner, CCS cannot adequately represent PDI's interests. Contrary to the appellees' assertion, PDI's conduct cannot be construed as evidence that CCS and PDI have identical interests. PDI's decision not to participate in the briefing on the motion to dismiss could just as easily be construed as a tactical decision to avoid a finding that they had intervened in the appeal, precluding a claim they were indispensable. [112] PDI's filing in the Superior Court that it joins and adopts the facts and arguments made by CCS [in its answering brief to the motion to dismiss] ... as if made by PDI simply indicates that PDI asserted the same arguments as CCS asserted in its answering brief with regard to the ZBA's motion to dismiss for failure to name PDI or CCS as parties to the appeal. It does not indicate an intent to have CCS carry the fight for PDI throughout the administrative proceedings and appeal process. In conclusion, the Superior Court erred when it determined that PDI was not a necessary party and that its interests in the appeal could be adequately represented by CCS. As the owner of Gibraltar, PDI is an indispensable party to the appeal of the decision of the ZBA affecting Gibraltar. PDI did not receive notice of the appeal. In addition, the appellees/petitioners-below stated that PDI was not an intended party to the appeal, precluding an assertion that PDI was omitted from the appeal by mistake for purposes of the relation-back requirements of Superior Court Civil Rule 15(c). Although appellees' counsel erred by not naming CCS and PDI as parties to the Superior Court certiorari appeal, it is understandable why he was misled into naming only the ZBA. The official Superior Court form (erroneously) prescribes that very approach, and nothing in Superior Court Civil Rule 72 indicates the contrary or provides any useful guidance. The Superior Court should amend its Rule 72 and the counterpart official form to conform with our opinion in this case.