Court Opinion

ID: 852859
Source: CourtListenerOpinion
Date Created: 2013-03-02 01:23:14.336514+00
Date Added: 2024-06-11T13:22:04.602626
License: Public Domain

Attorneys for Appellant                            Attorneys for Appellees
Steven K. Emery                                    David B. Schilling
Holly M. Harvey                                    Bloomington, Indiana
Bloomington, Indiana
                                             Michael A. Mullett
                                             Indianapolis, Indiana

                                             Amicus Curiae
                                             Indiana Municipal Lawyers
                                             Association
                                             Karen L. Arland
                                             Indianapolis, Indiana
____________________________________________________________________________
__

                                   In the
                            Indiana Supreme Court
                      _________________________________

                            No. 07S01-0402-CV-53

 Story Bed & Breakfast, LLP,
                                             Appellant (Plaintiff below),

                                     v.

Brown County Area Plan
Commission,
                                             Appellee (Defendant below),

and

Patricia N. March,

                                             Appellee (Intervener-Defendant

                                                       below).
                      _________________________________

         Appeal from the Brown Circuit Court, No. 07C01-0104-CP-0116
                   The Honorable Judith A. Stewart, Judge
                      _________________________________

 On Petition To Transfer from the Indiana Court of Appeals, No. 07A01-0206-
                                   CV-201
                      _________________________________

                              December 16, 2004

Boehm, Justice.

      We  hold  that  covenants  imposed  by  the  Brown  County  Area  Plan
Commission as conditions for approval of  a  planned  unit  development  are
enforceable against a subsequent purchaser of property subject to the PUD.

                         Factual and Procedural Background

      The  property  involved  in  this   case   originally   consisted   of
approximately twenty-two acres containing a restaurant and mill in  an  area
zoned for commercial use,  and  a  number  of  houses  used  as  rental  and
boarding units in areas zoned for residential use.   In  1986,  Story  Group
Inc.  requested  the  Brown  County   Plan   Commission   and   the   County
Commissioners to designate over seven acres as a  Planned  Unit  Development
(PUD) to permit operation of a “bed and breakfast” which would  take  guests
by  reservation  only.[1]   After  a  hearing,  Story  Group  and  the  Plan
Commission met in a “work session” in which they discussed sixteen  proposed
restrictions on the property.  The Plan Commission’s “Primary  Approval”  on
June 24, 1986 recited that Story Group’s proposed plat “is  granted  primary
approval subject  to  the  following  conditions:   See  list  of  covenants
attached . . .”  The attached “covenants” listed  fourteen  provisions  from
the  work  session,  including  “(3)  No  outside  loud  speakers  or  audio
equipment will be  used  for  any  reason  what  so  ever  [sic],”  “(4)  No
overnight camping will be allowed within the PUD or in  any  of  it’s  [sic]
parking areas,” “(5) No excess noise or excess  lighting  shall  be  allowed
and all exterior lighting will be . . .  turned  off  at  10:00  p.m.,”  and
“(10) The owner agrees to obtain all  necessary  State  and  Local  permits,
inspections, approvals and license [sic].”  On September 23, 1986, the  Plan
Commission recommended secondary approval “subject to covenants as  approved
in Primary hearing.”  Subsequently, the Brown County Board of  Commissioners
unanimously approved the PUD “as submitted with covenants.”

      The PUD was modified in 1992 to include  the  entire  twenty-two  acre
tract of land, but retained  essentially  the  same  provisions.   The  Plan
Commission unanimously gave “primary” and “secondary” approval of  the  1992
application subject to four additional “conditions” and  “[s]ubject  to  the
previously approved covenants.”  The “covenants”  from  both  the  1986  and
1992 approvals were retained  in  the  Plan  Commission’s  office  and  were
available for inspection, but were never  recorded  in  the  office  of  the
county recorder.

      Story Group Inc. went into receivership on December 6,  1998,  and  on
that date Frank Mueller took possession of the Story Property.  Mueller  and
Rick Hofstetter, two individuals who had no affiliation  with  Story  Group,
Inc., have been operating the property in one form or  another  ever  since.
The  record  does  not  make  clear  Mueller’s  and   Hofstetter’s   initial
arrangement, but it is clear that Dubois County Bank,  a  mortgagee  of  the
Property, acquired title at a  sheriff’s  sale  on  February  14,  1999  and
deeded it  to  Mueller  on  May  18,  1999.   On  August  3,  1999,  Mueller
transferred the property  to  Story  B&B,  LLP  (“B&B”),  a  partnership  of
Hofstetter and Mueller.  Prior to the bank’s transfer  to  Mueller,  Mueller
and Hofstetter were aware that the property was designated a PUD,  but  were
apparently unaware  of  the  specific  requirements.[2]   No  one  from  B&B
contacted the Plan Commission’s office to inquire about the PUD or made  any
other effort to  discover  any  possible  conditions  attached  to  the  PUD
approval.

      Between December, 1998, and September, 1999, B&B  expended  more  than
$100,000 in improvements on the Story Property, including repairing  leaking
roofs, rotting floors, and electrical problems, removing lead  based  paint,
increasing cooler space in the  kitchen,  conversion  of  the  mill  on  the
property to a bar and grill, and construction of a wooden deck designed  for
dining, an outdoor public restroom and a storage addition to the  mill.   In
that process, beginning at least on May 3,  1999,  B&B  asked  Doug  Harden,
then acting Director and Building Inspector for  the  Plan  Commission,  for
assistance in securing permits from the State  to  construct  a  new  septic
field.  On May 4, 1999, Mueller applied for a building permit from the  Plan
Commission.  Joan Wright became director of the Plan Commission and  of  the
Brown County Area Board of Zoning Appeals at  some  point  between  May  and
September 1999.  According  to  her,  although  B&B  received  building  and
septic permits,  it  failed  to  obtain  “improvement  location  permits  or
certificates of occupancy for the bar and grill  or  for  the  outdoor  food
preparation facility.”

      In September, 1999, Wright sent B&B a copy  of  the  PUD  restrictions
under cover of a letter stating that the “PUD does not  permit  use  of  the
Mill building as a bar and grill.  It is designed as a shop/Office/B&B  unit
and any other use of the building violates the terms of the  PUD.   Further,
any use of or on the property which is not specified  in  the  PUD  violates
the conditions of approval.”  In May 2000, Wright advised B&B that  the  PUD
also  contained  prohibitions  against  “primitive  camping”  and  amplified
music.  At least since the spring of  2000,  B&B  has  hosted  a  number  of
events on the property throughout the  year  including  Story  Fest  in  the
spring and October Fest in the fall.  In 2000, Story Fest  drew  1,500-2,000
people and October Fest doubled that attendance.  These  festivals  involved
bringing in artists and musicians for a  day  of  music,  arts  and  crafts,
food, and  libations.   After  the  2000  Story  Fest  the  Plan  Commission
received  complaints  from  B&B’s  neighbors  that  the  festival   included
amplified music audible from neighboring properties, used a portion  of  the
grounds as an amphitheater, used a building designated as a  picnic  shelter
as a stage, and allowed overnight camping.

        In April 2001, B&B filed a Petition  for  Declaratory  Judgment  and
sought a preliminary injunction against the  Plan  Commission’s  enforcement
of the requirements of  the  PUD.   After  one  half  day  the  hearing  was
adjourned  without  resolution  due   to   the   court’s   other   scheduled
commitments.  In May 2001, a neighbor of the property, Patricia  March,  was
granted leave to intervene in the  dormant  lawsuit.   The  Plan  Commission
then  counterclaimed  for  declaratory  judgment  and  moved   for   summary
judgment.  B&B responded with its own  motion  for  summary  judgment.   The
parties’ contentions focused on the terms “conditions” and “commitments”  as
they appear in the  PUD  statutes  explained  below.   The  Plan  Commission
argued  that  the  Story  Property  was  subject  to  the  PUD,   that   the
restrictions in the PUD constituted valid “conditions,” and that B&B was  in
violation of these conditions.  B&B  asserted  that  the  restrictions  were
“commitments,” and  under  the  applicable  statute,  were  not  enforceable
against B&B because  they  were  not  recorded.   In  the  alternative,  B&B
contended that the Plan Commission was estopped from enforcing  the  PUD  by
reason of its grant of the building permit.

      In the meantime, in preparation for October Fest 2001,  B&B  spent  an
additional $250,000 on musicians, artists, and advertising.  In  an  attempt
to comply with the PUD covenants, B&B planned to end the  music  at  October
Fest 2001 at 9:50 p.m., place speakers  inside  the  barn  that  housed  the
stage,  provide  shuttle  service  to  alleviate  traffic  congestion,   add
security, and disallow overnight camping.  October Fest 2001 then  proceeded
without interference.

      After a December hearing on the cross motions  for  summary  judgment,
the trial court found that most  of  the  PUD  restrictions  at  issue  were
phrased as directives,  but  observed  that  some  others  were  phrased  as
“agreements” by the developer.[3]  The trial court ruled that at  least  the
restrictions framed as directives were “conditions” and  therefore  did  not
need to be recorded.  The trial court found that questions of fact  remained
as to what the Plan Commission  discovered  during  the  inspection  of  the
property pursuant to the issuance of the improvement location  permit,  what
B&B told the Plan Commission, and what representations, if  any,  were  made
by the Plan Commission at that time.  Accordingly, the trial court left  for
trial whether the Plan Commission was equitably estopped from enforcing  the
restrictions against outdoor food preparation and  use  of  the  mill  as  a
grill and tavern.  The trial court left for  trial  whether  the  conditions
were required  to  be  recorded  pursuant  to  the  Brown  County  ordinance
discussed below, whether  this  requirement  prohibits  enforcement  of  the
restrictions, and whether B&B has violated the PUD.  At  B&B’s  request  the
trial court certified  its  order  on  summary  judgment  for  interlocutory
appeal.

      The Court of Appeals concluded  that  it  was  impossible  to  draw  a
meaningful line  between  “conditions”  and  “commitments”  and  focused  on
whether B&B had reasonable notice of the land use restrictions.   Story  Bed
& Breakfast, LLP v. Brown County Area Plan  Comm’n,  789  N.E.2d  13,  17-18
(Ind.  Ct.  App.  2003).   The  Court  of  Appeals  held  that  placing  the
restrictions in the minutes of the plan committee meetings did  not  provide
B&B reasonable notice and therefore  the  restrictions  were  unenforceable.
Id. at 20.  Clarifying its  earlier  holding  on  rehearing,  the  Court  of
Appeals rejected the Plan Commission’s claim that  B&B’s  knowledge  of  the
PUD designation put B&B on inquiry notice  of  the  specific  terms  of  the
conditions.  Story Bed & Breakfast, LLP v. Brown County  Area  Plan  Comm’n,
794 N.E.2d 519, 523 (Ind. Ct. App. 2003).  We granted transfer.   Story  Bed
& Breakfast, LLP v. Brown County Area Plan  Comm’n,  812  N.E.2d  793  (Ind.
2004).

                        I.  Planned Unit Developments

      Traditional or “Euclidean” zoning, named  for  Village  of  Euclid  v.
Amber Realty Co., 272 U.S. 365 (1926),  divides  municipalities  into  rigid
districts.  Each district or zone is  dedicated  to  a  particular  purpose,
which appears on the municipality’s official zoning map and is  incorporated
into the local zoning regulations.  Under  these  early  ordinances,  anyone
could refer to the official zoning map and find the zone for  each  property
and the height, bulk, and use restrictions applicable in that zone.

      While this type of zoning has the advantage  of  predictability,  that
certainty comes at a price:  “Traditional  zoning  has  had  the  virtue  of
certainty and the handicap of rigidity.”  Town of  Schererville  v.  Vavrus,
180 Ind. App. 500, 505 n.1, 389 N.E.2d 346,  348  n.1  (1979).   Zoning  has
been criticized as producing “cookie  cutter”  developments  populated  with
structures nearly identical in style, setback, and lot size.   Frankland  v.
City of Lake Oswego, 517  P.2d  1042,  1047  (Or.  1973).   A  planned  unit
development (PUD) is a device  used  to  permit  amendment  of  an  existing
zoning ordinance for a designated property.  101A  C.J.S.  Zoning  and  Land
Planning § 42 at 157 (1979).  PUDs are designed to allow  municipalities  to
adopt “a flexible approach to zoning with the opportunity to  shift  density
to developable portions of a property or  to  mix  residential,  commercial,
and even industrial uses. . . .  [T]he  [PUD]  district,  once  established,
constitutes a separate zoning district in addition to the more  conventional
types of zoning districts.”  1 E. C. Yokley, Zoning Law and Practice  §  6-1
(4th ed. 2000).

      A.  Indiana Statutes Governing PUDs

       In  the  1970s,  local  legislative  bodies   began   including   PUD
regulations in local ordinances.  See generally Vavrus, 180 Ind.  App.  500,
389 N.E.2d 346.  The General Assembly first  addressed  PUDs  in  1982  when
section  713  was  added  to  the  statutes  governing  subdivisions.   That
section, since repealed, provided that local legislative bodies could  allow
PUDs which “may deviate in certain respects from  the  standards  prescribed
by the subdivision  control  ordinance.”   Ind.  Code  §  36-7-4-713  (1986)
(added by Acts 1982, P.L. 211, § 15).   Effective  September  1,  1986,  the
General  Assembly  included  PUDs  as   one   type   of   zoning   ordinance
classification.  I.C. § 36-7-4-601(d)(4).  Also in September  1986,  section
613 was added to the Code.  Section 613(a) provided that a “plan  commission
may permit or require the owner of a parcel of property to  make  a  written
commitment concerning the use  or  development  of  that  parcel.”   Section
613(b) provided that  “commitments”  must  be  recorded  in  order  to  bind
subsequent purchasers without actual knowledge.  In 1996,  section  713  was
replaced by the “1500 SERIES-PLANNED UNIT DEVELOPMENT.”  See I. C. § 36-7-4-
1500 et seq. (1997) (effective Jan. 1, 1996).  Section 1505(c)  states  “the
legislative body shall adopt and amend a PUD district ordinance in the  same
manner as a zone map change.”  The Code requires  the  legislative  body  to
provide written notice and a hearing on the proposal for a zone map  change.
 I.C. § 36-7-4-608.5.  If approved “[z]one maps  incorporated  by  reference
into the zoning ordinance are not required to be  printed  in  the  code  of
ordinances, book, or pamphlet printed  under  this  section,  but  the  plan
commission shall keep them available at its office for  public  inspection.”
I.C. § 36-7-4-610(c).  Therefore, a PUD approval need not be  recorded,  but
the plan commission  must  keep  it  available  at  its  office  for  public
inspection.   In  1996,  the  General  Assembly  limited  section   613   to
development plans, and added 615 governing PUD commitments.  Section  615(c)
provides “An unrecorded commitment is binding on a subsequent owner  of  the
parcel or a  person  acquiring  an  interest  in  the  parcel  only  if  the
subsequent owner or the person acquiring the interest has actual  notice  of
the commitment.”    Subsection 1512(a) provides that  the  legislative  body
of a unit, in adopting a district ordinance for a PUD, may:

      1)  Impose  reasonable  conditions  on   a   proposed   planned   unit
         development.
      2) Condition  issuance  of  an  improvement  location  permit  on  the
         furnishing  of  a  bond  or  a  satisfactorily  written   assurance
         guaranteeing the timely completion of a proposed public improvement
         in  a  planned  unit  development  or  serving   a   planned   unit
         development.
      3) Allow or require an owner  of  real  property  to  make  a  written
         commitment in the manner authorized under section  614  or  615  of
         this chapter.

Subsection 1512(b) provides that legislative body,  in  recommending  a  PUD
district ordinance, may:

      1) impose the conditions described in subsection  (a)(1)  and  (a)(2);
         and
      2) allow or require a written commitment as authorized  under  section
         614 or 615 of this chapter.[4]

The parties do not base any contention on the fact that the 1500 series  was
enacted and section 613 was repealed after the PUD approvals but before  B&B
acquired the property.

      The  Plan  Commission  acknowledges  that  section   615(c)   requires
recording of commitments, but  contends  that  unrecorded  “conditions”  may
nonetheless be binding on subsequent  purchasers  because  they  are  “other
land use restrictions created in accordance with law” which by  the  express
terms of section  613(c)  were  unaffected  by  section  613(b).   The  Plan
Commission also argues that section 1512 contemplates both “conditions”  and
“commitments” but only the latter are required to  be  done  “as  authorized
under section 614 or 615,” which requires recording to be effective  against
persons without actual knowledge.

      Section 613(c), now amended, provided  that  “This  section  does  not
affect the validity of  any  covenant,  easement,  equitable  servitude,  or
other land use restriction created in accordance with law.”  Section  921(e)
of the local planning and zoning sections of the Code deals with  variances.
 It provides that “[c]onditions imposed on the granting of an  exception,  a
use, or a variance are not subject to the rules applicable to  commitments.”
 I.C. § 36-7-4-921(e).  Both  parties  agree  that  if  a  legislative  body
imposes the restriction, it is a condition, but if it is  submitted  by  the
property owner to induce  rezoning,  it  is  a  commitment.   The  Court  of
Appeals found no intelligible distinction between these terms  and  declined
to attach any significance to them.  Story, 789 N.E.2d at 18.   We  conclude
that the legislative distinction between commitments and conditions must  be
given  effect.   In  short,  the  Court  of  Appeals  is  correct  that  the
distinction is murky, but the terms have been  given  meaning  in  practice,
and although it may be desirable, recording of conditions is  not  required.
Property being used  other  than  in  compliance  with  the  general  zoning
ordinance may be  subject  to  a  variance  or  PUD,  which  amounts  to  an
exception to the ordinance.  Citizens for Mt. Vernon v. City of Mt.  Vernon,
947 P.2d 1208, 1215 (Wash. 1997) (rezoning is the legal effect of  approving
a PUD); Madelker, Land Use Law §§ 9.24-9.30 (Lexis Law Pub. 1997) (a PUD  is
developed free from most  specific  zoning  regulations  and  usually  as  a
separate zoning district).  Whether the legislative body rezones  or  allows
a variance or PUD, “conditions” imposed on that action need not be  recorded
and thus require the purchaser  to  examine  the  records  of  the  relevant
agency to discover them.

      B.  The Story PUD

      On May 1, 1989, the Brown  County  Board  of  Commissioners  passed  a
zoning  ordinance  which  included  provisions  governing  PUDs.   In  1996,
Indiana Code section 36-7-4-1504 was enacted and expressly authorized  local
regulations for PUDs in general as long as they  meet  the  requirements  of
the 1500 Series—Planned Unit Development.  Under  that  statute,  the  Brown
County PUD ordinance was the “exclusive means for exercising zoning  control
over [PUDs]”.  I.C. § 36-7-4-1504(c).   All  parties  agree  that  the  1992
Story PUD approval was governed by the Brown County PUD  ordinance  and  the
subsequently  enacted  1500  Series.   The  Brown  County  Zoning  Ordinance
defines a Planned Unit Development as:

      [A] tract of land proposed to  be  developed  for  five  (5)  or  more
      residential,  commercial,  or  industrial  uses  or   structures,   or
      combinations thereof, (which includes any  multi-unit  structure  with
      five or more units the intended uses of which  are  identical),  which
      are planned and developed as a whole under single or  joint  ownership
      for the purpose of selling, leasing, renting or  conveying  individual
      lots, units, or structures in the future.

The Story Group’s 1986 request to rezone the Story Property  as  a  PUD  was
resisted by Brown County residents who were concerned about noise,  traffic,
and change of the character of their  community.   Balancing  against  these
concerns was the written description  of  the  layout  and  concept  of  the
proposed Story Property PUD submitted by the Story Group including that:

      The principle [sic] focus in the past and  for  the  future,  is  less
      people in Story not more.  If the petitioners were  limited  to  their
      present resources the emphasis would have to  be  to  build  a  volume
      business  in  the  restaurant  thus  increasing  traffic.   With   the
      projected development the objectives will be to  require  reservations
      for dinner and  overnight  guests  and  constructing  fewer  yet  more
      comfortable and exclusive lodging units.  Fewer people are  easier  to
      control.

Similarly, in the course of a May 27, 1986 public hearing on  Story  Group’s
request for PUD designation, Story Group presented the Plan Commission  with
a second written description of the layout  and  concept  of  the  requested
PUD, including the following passage:

      A principle [sic] objective in this development is to  focus  on  more
      exclusive and sophisticated services for fewer people rather than, for
      example, opening the restaurant and gift shop to  as  many  people  as
      advertising can bring in.  Current  and  projected  policy,  also,  is
      “reservation only” for dinner and overnight guests, again reducing the
      number of people in Story at any given time.

      To preserve this tranquil atmosphere, the  Plan  Commission  chose  to
impose covenants  documented  in  its  “Primary  Approval  of  Planned  Unit
Development,” dated June 24, 1986.  The Plan Commission kept  this  document
along with all others relating to the Story Property’s  PUD  designation  in
its office.  The Board of Commissioners kept  its  copy  of  the  Story  PUD
documents in the County Auditor’s office.   In  1992,  the  Plan  Commission
recommended approval of a  second  PUD  which  retained  most  restrictions,
eliminated a few not relevant here, and added some  others,  including  that
the deck would remain unroofed and have no food service.   Again,  the  Plan
Commission document referred to these as “conditions.”   These,  like  their
1986 predecessors, were unrecorded but were retained in the Plan  Commission
office.

      C.  The Legal Status of the Story Restrictions

      All agree that the Story Property is a PUD,  that  its  approval  with
covenants was designed  to  protect  adjacent  properties,  and  that  these
restrictions applied to the property  in  the  hands  of  Story  Group,  its
original developers.  The issue is whether B&B is also  bound  by  the  same
covenants.  The trial court granted summary judgment to the Plan  Commission
and against B&B on the question whether these covenants applied to B&B as  a
successor of Story Group.

      B&B argues that summary judgment is improper because the status of the
restrictions  turns  on  a  disputed  question  of  fact.    Some   of   the
restrictions use the term “agree,” which B&B contends implies  an  agreement
existed.  B&B argues that this implies that all  of  the  restrictions  were
part of a “commitment” made by Story Group and therefore  were  required  to
be recorded to be effective against subsequent purchasers.  The trial  court
agreed as to some of the restrictions, but found as a  matter  of  law  that
nine of them, including numbers 3, 4, and 5 were conditions.

      Neither case law nor the  statute  provides  a  definition  of  either
“condition” or “commitment.”  The Plan Commission  asserts  that  the  trial
court properly concluded  that  at  least  nine  of  the  restrictions  were
“conditions” imposed by the county pursuant to Indiana Code section  36-7-4-
1512(b)(1) rather than “commitments” tendered by the landowner  pursuant  to
Indiana Code section 36-7-4-1512(b)(2).  The approvals do  not  contain  the
term “commitments.”  Moreover, the  1986  Plan  Commission  approval  itself
states that the PUD is granted “subject to the following conditions,” as  do
the minutes of the Plan  Commission  meeting  in  which  the  1992  PUD  was
approved.  The character of the restrictions does not  turn  solely  on  the
label  that  the  Plan  Commission  chooses  to  place  on  them.   However,
restrictions number 1, 3, 4, 5, 6, 8, 11 and 12 are  phrased  as  directives
not as agreements, and the Plan Commission treated  them  as  conditions  of
approval that could be  enforced  against  subsequent  owners  even  if  not
recorded.  The Plan Commission thus drew two legal conclusions:   First,  it
was permissible to have enforceable conditions without recording them,  and,
second, that these restrictions were in that category.   Two  amici  curiae,
the Indiana Association of Cities and Towns and  Indiana  Municipal  Lawyers
Association,  without  supporting  evidence,  state  that  the  practice  of
imposing conditions on PUD  approvals  is  widespread.   The  administrative
construction of the agency’s  own  documents  and  statute  is  entitled  to
weight.  Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467  U.S.
837 (1984); Healthscript, Inc. v. State, 770 N.E.2d  810,  814  (Ind.  2002)
(noting the scholarly debate over Chevron’s  application  to  administrative
statutes that are criminally enforceable); LTV Steel  Co.  v.  Griffin,  730
N.E.2d 1251, 1257 (Ind.  2000)  (“An  interpretation  of  a  statute  by  an
administrative agency charged with the duty  of  enforcing  the  statute  is
entitled to great weight, unless this interpretation would  be  inconsistent
with the statute itself.”).  The wisdom of  distinguishing  conditions  from
commitments in this respect is a matter for the legislature.   We  conclude,
as the trial court did that, the Indiana  statutes  governing  PUDs  do  not
require that conditions attached to approval of a PUD  be  recorded  in  the
recorder’s office to be effective against subsequent purchasers as  long  as
the conditions are available as public records.  Rather,  they  are  in  the
nature of zoning ordinances  which  are  effective  against  the  public  at
large.

      D.  Bona Fide Purchaser

      Apart from whether unrecorded PUD conditions are  enforceable  against
bona fide purchasers, B&B was not a bona fide purchaser without notice.   In
order to qualify as a bona fide purchaser, one must purchase in good  faith,
for valuable consideration, and without notice of the outstanding rights  of
others.  John v. Hatfield, 84 Ind. 75, 81-82  (1882).   The  law  recognizes
both constructive and actual notice.  Altman v.  Circle  City  Glass  Corp.,
484 N.E.2d 1296, 1298 (Ind. Ct. App.  1985);  Keybank  Nat’l  Ass’n  v.  NBD
Bank, 699 N.E.2d 322, 327 (Ind. Ct. App. 1998).  It is undisputed  that  B&B
had actual notice that the Story Property was zoned  as  a  PUD  before  the
property was purchased.  Furthermore, it is undisputed that  the  conditions
were properly included as an element of the PUD approval.   Property  owners
are charged with knowledge of ordinances that affect  their  property.   See
Texaco, Inc. v. Short, 454 U.S. 516 (1982); Bd. of Zoning Appeals v.  Leisz,
702 N.E.2d 1026, 1030  (Ind.  1998);  Advisory  Bd.  of  Zoning  Appeals  of
Hammond v. Found. for Comprehensive Mental Health, Inc.,  497  N.E.2d  1089,
1093 (Ind. Ct. App. 1986); Mitchell v. Chernecki,  593  P.2d  1163,  1165-66
(Or. 1979).  The creation of a PUD is a legislative act and  PUD  provisions
are zoning ordinances.  South Creek Assoc. v.  Bixby  &  Assoc.,,  781  P.2d
1027, 1032  (Colo.  1989)  (“A  PUD  enabling  ordinance  is  a  legislative
enactment.  A PUD plan adopted and approved pursuant to  such  an  ordinance
constitutes a form of rezoning for the  area  included  within  the  PUD.”);
Levitt Homes, Inc. v. Old Farm Homeowners’ Ass’n, 444 N.E.2d 194, 202  (Ill.
App. Ct. 1982) (PUDs  allow  greater  flexibility  in  development  than  is
available under general zoning ordinances); Nesbit v. City  of  Albuquerque,
575 P.2d 1340, 1343 (N.M. 1977) (approval of PUD plan constitutes  a  zoning
restriction); State ex rel. Comm. for the Referendum of Ordinance No.  3844-
02 v. Norris, 792 N.E.2d 186, 190-91 (Ohio 2003) (approval of the  PUD  plat
was a legislative act because the specific zoning restrictions  in  the  PUD
area were only upon approval of the plat); Peachtree Dev. Co. v.  Paul,  423
N.E.2d 1087, 1092 (Ohio 1981) (both the creation  and  implementation  of  a
PUD are legislative acts because  they  are  the  functional  equivalent  of
traditional legislative zoning); Erb v. Common Council of Eugene,  539  P.2d
1125,  1127  (Or.  Ct.  App.  1975)  (PUDs  are  “included  in  many  zoning
ordinances because they present a method of achieving flexibility”);  In  re
Stowe Club Highlands, 668 A.2d 1271, 1275 (Vt. 1995) (PUDs merge zoning  and
subdivision requirements).

      In Bixby, a developer gained approval of  a  PUD  which,  among  other
things, provided guidelines for the use of a parking lot within a  developed
area.  781 P.2d at 1028.   The  PUD  was  not  recorded  in  the  recorder’s
office.  However, a subdivision agreement recorded in the recorder’s  office
stated, “development of this subdivision is controlled by an approved  [PUD]
approved by the Planning Board.”  Id.  A subsequent purchaser of a  shopping
center within the PUD area argued  that  it  was  not  subject  to  the  PUD
guidelines because it did not have  actual  knowledge  of  the  PUD  or  its
guidelines before it purchased the property.   The  Colorado  Supreme  Court
held that because the “PUD  plans  have  their  source  in  public  approval
processes prescribed in legislative enabling enactments” they did  not  need
to be recorded in order to be enforceable against a subsequent purchaser  of
land within the PUD.  Id. at 1032.  “Because the PUD plan is  equivalent  to
a rezoning provision approved pursuant to the public process  prescribed  by
Boulder’s PUD ordinance, subsequent purchasers as well as other  members  of
the public are bound by the plan provisions.”  Id. at 1033.  In  this  case,
B&B had actual knowledge  that  the  Story  Property  was  a  PUD.   B&B  is
therefore charged with knowledge of the unrecorded restrictions in the PUD.

      The Plan Commission’s and Brown County Commissioners’ records relating
to the Story PUD approval are public  records  open  to  public  inspection.
I.C. §§ 5-14-3-2, 5-14-3-3  (1983).   B&B  never  attempted  to  view  these
records, and B&B conceded in the trial court that it had  no  evidence  that
the Story PUD approval conditions were not available for inspection  in  the
Plan Commission or Brown County Commissioner offices.  B&B,  with  knowledge
that the property was a PUD, and charged with  knowledge  that  “conditions”
had been or could have been imposed and might not be of  record,  failed  to
examine the publicly available records.  B&B’s actual knowledge of  the  PUD
approval put B&B on inquiry notice of the use and development conditions.

                     II.  Brown County Zoning Ordinance

      B&B’s primary contention is that the  restrictions  contained  in  the
PUD are not “conditions”  and  therefore  are  not  enforceable  against  it
because it purchased  the  property  without  knowledge  or  notice  of  the
restrictions.  However, the trial court  sua  sponte  raised  the  issue  of
whether the Brown County Zoning Ordinance required that  the  conditions  be
recorded and denied complete summary judgment because “  .  .  .  sufficient
ambiguities exist to require evidence at trial on the meaning of the  zoning
ordinance.”

      Interpretation of a zoning ordinance is a  question  of  law.   Metro.
Dev. Comm’n v. Pinnacle Media, L.L.C., 811 N.E.2d 404, 411  (Ind.  Ct.  App.
2004).  The ordinary rules of statutory construction apply  in  interpreting
the language of a  zoning  ordinance.   The  trial  court  identified  three
potential ambiguities in section 21 of the Brown  County  Zoning  Ordinance.
First, the ordinance defines  “plat”  as  a  “map  or  chart  that  shows  a
division of land and is intended to be filed for record.”  Section 21(C)  of
the ordinance states  that  the  procedure  for  approval  of  a  PUD  shall
generally conform to the procedure for  a  major  subdivision  but  the  PUD
procedures should be interpreted to “either supersede or  [be  in  addition]
to the requirements for a  Major  Subdivision.”   Section  14(B)(9)  of  the
ordinance addressing the procedures for approval  of  a  major  subdivision,
requires a copy of the approved “plat” to be recorded in the office  of  the
Brown County Recorder.  The  Plan  Commission  and  March  argue  that  this
language  does  not  require  the  recording  of  the  Story  PUD  and   its
conditions.  In their view, only if the PUD and its conditions are  intended
to be used  as  a  secondary  plat  for  subdivision  purposes  must  it  be
recorded.  In this case, the only  approvals  sought  or  granted  were  PUD
zoning and site plan approvals.  Platting  or  re-platting  for  subdivision
purposes was neither  proposed  nor  approved.   Once  again,  the  agency’s
construction of its own ordinance is entitled to deference.

      The second alleged source of ambiguity is that section 21(C)(2)(3)  of
the ordinance provides that the Plan Commission “may impose  any  reasonable
conditions upon its approval, including the recording  of  covenants.”   The
Plan  Commission  contends  even  if  this  provision  imposes  a  recording
requirement, it does not make the effectiveness of the condition  contingent
on recording.  We agree with the  trial  court  that  the  meaning  of  this
ordinance  is  unclear.   Specifically,  it  may  be  read  to  imply   that
“covenants” must be recorded.  However, as the Plan Commission observes,  it
does not say that in so many words, and can be taken to mean only  that  the
Commission may in its discretion require recording of covenants.

      Last,  section  21(C)(3)(1)(a)  of  the  ordinance  states  that   the
requirement that  “approval of  a  detailed  site  plan  shall  be  obtained
within one year after approval of the Primary  Plat”  applies  only  to  the
“‘Approved Detailed  Planned  Unit  Development”  and  “final  platting  for
recording purposes of all or  an  appropriate  part  of  the  [PUD]  may  be
undertaken in  sections  or  phases  at  a  later  time.”   Whether  section
21(C)(3)(1) makes PUD approval  and  platting  for  recording  purposes  two
different processes  is  also  unclear.   “When  the  legislature  enacts  a
statute in derogation of the  common  law,  this  Court  presumes  that  the
legislature is aware of the common law, and does  not  intend  to  make  any
change therein beyond what  it  declares  either  in  express  terms  or  by
unmistakable implication.”  Dunson v. Dunson, 769 N.E.2d  1120,  1124  (Ind.
2002).  PUD ordinances, being in derogation of common law  property  rights,
should, whenever ambiguous, be construed in favor  of  the  property  owner.
T.W. Thom Constr. v. City of Jeffersonville, 721 N.E.2d 319, 325  (Ind.  Ct.
App. 1999) (“[A]s a general rule, zoning ordinances limit the  free  use  of
property, are  in  derogation  of  the  common  law  and  must  be  strictly
construed.  But this rule  cannot  override  the  specific  language  of  an
otherwise valid and unambiguous ordinance.”).

      We agree with the trial court that the ordinance is  less  than  clear
whether conditions, if imposed, are to be recorded.   However,  in  view  of
the resolution of the notice issue in Part I.D, that issue is  not  material
in this case.  At most the ordinance recording requirement is  necessary  to
give notice of the conditions to third parties, and it is not  necessary  to
make the condition effective as to the  original  applicant  or  those  with
notice.  B&B had actual notice of the PUD designation, and therefore was  on
inquiry notice of the specific terms of  the  conditions.   The  County  may
wish to amend its  ordinance,  or  routinely  record  PUD  designations  and
conditions  to  avoid  these  issues  in  the  future,  but  the   ambiguity
identified by the trial court and failure to meet  a  recording  requirement
under the ordinance is immaterial in this case.

                          III.  Equitable Estoppel

      B&B argues that since it applied for  and  received  permits  for  the
development of the Story Property and has expended a large sum of  money  on
improvements that the government is now  estopped  from  enforcing  the  PUD
conditions.

      The party claiming equitable estoppel  must  show  its  “(1)  lack  of
knowledge and of the means of knowledge as to the  facts  in  question,  (2)
reliance upon the conduct of  the  party  estopped,  and  (3)  action  based
thereon of such a character as to change his position prejudicially.”   City
of Crown Point v. Lake County, 510  N.E.2d  684,  687  (Ind.  1987).   As  a
general rule, equitable estoppel will not  be  applied against  governmental
authorities.  Id.  Our courts have been “hesitant to allow  an  estoppel  in
those cases where the party claiming to have been ignorant of the facts  had
access to the correct information.”  Cablevision of Chicago v.  Colby  Cable
Corp., 417 N.E.2d 348, 355 (Ind. Ct. App. 1981).   The  State  will  not  be
estopped  in  the  absence  of  clear  evidence   that   its   agents   made
representations upon which the party  asserting  estoppel  relied.   Indiana
Dep’t of Envtl. Mgmt. v. Conard, 614 N.E.2d 916, 921 (Ind. 1993).   However,
“estoppel  may  be  appropriate  where  the  party  asserting  estoppel  has
detrimentally relied on the governmental entity’s affirmative  assertion  or
on its silence where there was a duty to speak.”  Equicor Dev. v. Westfield-
Washington Township, 758 N.E.2d 34, 39 (Ind.  2001).   In  Equicor,  Equicor
sought approval of a plat,  and  the  Plan  Commission  when  reviewing  the
application made suggestions in the plat, but was silent as to  any  parking
issue.  Subsequently, the Plan Commission at the last  moment  attempted  to
deny the plat because of a formal defect based on the failure  to  designate
certain parking spaces even though adjacent parking was in  fact  in  place.
This Court held that estoppel was appropriate because  the  Plan  Commission
failed to object timely to the designate spaces.  Id. at 39-40.

      The party claiming estoppel has the burden to show all facts necessary
to establish it.  Conard, 614 N.E.2d at 921; Johnson v.  Payne,  549  N.E.2d
48, 53 (Ind. Ct. App. 1990).  B&B, as  the  proponent,  has  the  burden  of
establishing estoppel and has not met either the first or second element  of
this claim.  As discussed in Part I.D., B&B did have actual  notice  of  the
PUD designation and was therefore on inquiry notice of  possible  conditions
imposed on the approval.  Thus, B&B’s estoppel  argument  relies  solely  on
the Plan Commission’s actions in reviewing and  issuing  a  building  permit
and its approval of a septic system.  B&B contends that its application  for
the building permit detailed its intent to convert the Story  Property  into
a bar and grill.  Taking these facts in a light most favorable to  B&B,  B&B
fails to show that the government made  misrepresentations  upon  which  B&B
detrimentally relied.  B&B does  not  claim  affirmative  statement  to  the
effect that the PUD imposed no conditions, and claims  no  reliance  on  any
express statements by the  Plan  Commission  officer.   The  addition  of  a
septic system was not inconsistent with the Story PUD  plan,  and  the  Plan
Commission’s approval of the permit without questioning the  intent  to  use
the property as a bar and grill does not relieve B&B of its  duty  to  abide
by the conditions contained in the PUD.  One cannot estop the  local  zoning
authority from enforcing a specific prohibition (for example no loud  music)
by relying on a generalized objective (authority knew of B&B’s intention  to
operate a bar and grill) listed in an application  for  a  permit  (building
and septic tank approval).

                                 Conclusion

      The PUD conditions are valid and enforceable against  B&B  because  it
had actual notice of the PUD designation and was on inquiry  notice  of  the
conditions.   The  Plan  Commission  is  not  estopped  from  enforcing  the
conditions.  This case is remanded for further proceedings  consistent  with
this opinion.

Shepard, C.J., and Dickson, Sullivan, and Rucker, JJ. concur.
-----------------------
[1] Prior to the 1986 PUD application, according to the Plan Commission
minutes, Story Group’s use of the property was without licensing and in
violation of the applicable zoning restrictions in several respects.
[2] In April, 1999, Doug Harden, the Director of the Plan Commission and
building inspector, met with Hofstetter regarding septic system design for
the Story Property and informed Hofstetter that the Story Property had been
granted PUD approval by the Plan Commission and the County Commissioners.
May 4, 1999, Mueller applied to the Plan Commission for an improvement
location or building permit stating that B&B sought to build an addition to
the mill to be used for storage and restrooms.  The application states that
the property is a PUD.
[3] Compare covenants number (3) “No outside loudspeakers or audio
equipment will be used for any reason what so ever;”  (4) “No overnight
camping will be allowed within the PUD or in any of its parking areas;” and
(5) “No excessive noise or excess lighting shall be allowed . . . The
outside lights to be turned off at 10 p.m.;” with (2) “The developers agree
to follow through with the PUD site plan layout concepts and to complete
all work in a professional manner.”
[4] Prior to I.C. § 36-7-4-101 section 613 applied to “advisory planning,”
“area planning” and “metropolitan development.”  Currently, section 614
applies to “metropolitan” planning and 615 to “advisory area” planning.
The Plan Commission is “advisory” pursuant to Indiana Code section 36-7-1-
2.