Court Opinion

ID: 9698414
Source: CourtListenerOpinion
Date Created: 2023-08-25 19:49:48.394442+00
Date Added: 2024-06-11T18:20:40.821219
License: Public Domain

DAVID T. PROSSER, J.
¶ 1. (dissenting). On June 6, 2000, the Circuit Court of Milwaukee County ordered Lake Bluff Housing Partners (Lake Bluff) to raze and remove two apartment buildings located on property overlooking Lake Michigan in the City of South Milwaukee. The two buildings contain 56 apartment units. As part of the court's judgment, Lake Bluff was ordered not to renew the leases of the 82 adults and 29 children, a number of whom are disabled, who were then living in these affordable-housing units, so that the two buildings could be torn down.
¶ 2. The circuit court acknowledged that its order would cost Lake Bluff the $4.2 million it had spent to construct the two buildings ($2.7 million of which was still owed on a mortgage), plus an additional $300,000 or more to raze the buildings and restore the land to a dust-free, erosion-free condition. It also acknowledged hardship and inconvenience to the tenants who would be displaced. Nonetheless, the court found that the equities favoring Lake Bluff were outweighed by the *129equities favoring the City of South Milwaukee. It concluded that requiring compliance with the City's R-A zoning classification, which limited the site to single family residences, would vindicate municipal authority to adopt comprehensive zoning ordinances and produce "more open area (about double the current green space)" and "greater access to air and light for area residents." In its lengthy decision, the circuit court found that Lake Bluff did "not have clean hands," that good faith did "not weigh in Lake Bluffs favor," that Lake Bluffs economic predicament was "self-created," and that Lake Bluff had made a calculated business decision to construct the buildings in violation of the zoning ordinance and consequently assumed all risks of its decision. These findings contradicted previous findings by other courts. The circuit court concluded that it could not consider several factors that had been relied upon by these other courts.
¶ 3. On appeal, the court of appeals affirmed. Lake Bluff Housing Partners v. City of South Milwaukee, 2001 WI App 150, 246 Wis. 2d 785, 632 N.W.2d 485.
¶ 4. Lake Bluff now petitions this court for review, but its petition is denied. Because Lake Bluffs petition raises important legal issues for this court's consideration, and because the ultimate decision to raze two relatively new apartment buildings at enormous economic loss and great inconvenience is astounding in light of the entire circumstances of the case, I dissent from our determination not to grant review.
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¶ 5. This dispute has lasted for nearly a decade and resulted in four published decisions from two separate cases. The first case led to Lake Bluff Housing *130Partners v. City of South Milwaukee, 188 Wis. 2d 230, 525 N.W.2d 59 (Ct. App. 1994) (Lake Bluff I), reversed by Lake Bluff Housing Partners v. City of South Milwaukee, 197 Wis. 2d 157, 540 N.W.2d 189 (1995) (Lake Bluff II). The second case produced Lake Bluff Housing Partners v. City of South Milwaukee, 222 Wis. 2d 222, 588 N.W.2d 45 (Ct. App. 1998) (Lake Bluff III), and Lake Bluff Housing Partners v. City of South Milwaukee, 2001 WI App 150 (Lake Bluff IV), and is the litigation presently before this court. Since 1993 three different circuit judges have ruled on the dispute. This court resolved the first case but has not reviewed the legal issues in the second case.
¶ 6. To understand the issues presented by the petition for review, one must understand the complete facts. The two apartment buildings ordered demolished are located on land that was zoned C-2 from 1965 until November 2, 1993. C-2 zoning permits multi-family development. Consistent with that zoning, other apartment complexes are situated in the immediate vicinity of the project.
¶ 7. In October 1992 Lake Bluff applied for a tax credit from the Wisconsin Housing and Economic Development Authority (WHEDA). Its intent was to construct a multi-family affordable- housing development on the land if it received the tax credit.
¶ 8. In December 1992 WHEDA awarded Lake Bluff a $266,903 site-specific credit and Lake Bluff then acquired the land for $294,000. Lake Bluff paid WHEDA a non-refundable fee of $16,314 to reserve the credit, understanding that the project had to be built and certificates of occupancy issued by December 31, *1311994. Lake Bluff also had the property surveyed at a cost of $1150 and contracted with an architect to prepare project plans at a cost of $29,513. Prior to purchase of the land, Lake Bluff confirmed that the zoning was consistent with multi-family development.
¶ 9. In February 1993 Lake Bluff representatives met with the mayor, city administrator, building inspector, city engineer, and local alderperson of South Milwaukee to review initial plans for the project. Lake Bluffs initial plan was to build seven apartment buildings, each consisting of eight units. Over time, the plan evolved into a two-building project totaling 56 units. This evolution appears to have been influenced by changes required by the City. The City advised Lake Bluff that to obtain a building permit along the lake it would have to provide a bluff assessment establishing that the project would not cause bluff erosion for 100 years. The City also advised Lake Bluff that South Milwaukee parking requirements had changed and that Lake Bluff would have to modify its plans to meet the new requirements. Lake Bluff then modified its parking plans and commissioned a bluff erosion study at a cost of $4590.
¶ 10. At the February 1993 meeting, city officials reconfirmed that a multi-family project was a permitted use in that zone.
¶ 11. On April 28, 1993, a South Milwaukee resident, William J. Fox, III, sent a letter to a South Milwaukee alderman requesting that Lake Bluffs property be rezoned from C-2 to R-A for single-family unit development. On May 6,1993, the City referred the Fox letter to its Plan Commission for recommendation and report. The Plan Commission considered Mr. Fox's request at a May 24,1993 meeting and recommended to the Common Council that no building permits be issued *132while the rezoning request was under consideration. Lake Bluff was not informed of these developments and did not learn that South Milwaukee was considering a moratorium on the issuance of building permits for this specific property until June 22, 1993, almost two months after receipt of the Fox letter. As a result, Lake Bluff did not have the opportunity to participate in the May meetings of the Plan Commission and Common Council.
¶ 12. On July 6, 1993, the Common Council adopted a resolution imposing a moratorium on the issuance of building permits — solely on Lake Bluffs property — during consideration of the request to rezone the property.1
*133¶ 13. On August 5, 1993, the Wisconsin Department of Industry, Labor and Human Relations approved Lake Bluffs architectural plans, entitling Lake Bluff to seek a footing and foundation permit from South Milwaukee. Obtaining this approval authorized Lake Bluff to begin construction of the buildings if it secured a building permit. That day, Lake Bluff submitted its application for a building permit to the City's building inspector, Michael Vesperman. The application was denied immediately because of the moratorium.
¶ 14. Circuit Judge John S. McCormick later found that following this denial, "Lake Bluff made several attempts to learn from city officials whether there were any deficiencies in its application" for the building permit or "whether the moratorium" against the property formed the sole basis for the denial. He further found that "[d] espite Lake Bluffs efforts to secure a review of its plans and specifications, South Milwaukee did not conduct a review and did not notify Lake Bluff of any deficiencies in its plans, specifications and application," even though the City normally processed such an application within one month of receipt.
¶ 15. On October 7, 1993, the City held a public hearing on the request to change the zoning of the property from C-2 to R-A. Then, on November 2, 1993, the Common Council passed an ordinance changing the zoning classification. This ordinance, which was intended to preclude multi-family development, applied only to Lake Bluffs property.
¶ 16. On March 10,1994, Lake Bluff initiated suit against South Milwaukee and its building inspector. The suit sought a writ of mandamus directing the building inspector to issue a building permit. Only after Lake Bluff commenced this suit did South Milwaukee conduct a comprehensive review of Lake Bluffs appli*134cation. In its response, the City identified a number of specific deficiencies in the application, all of which were corrected in Lake Bluffs subsequent construction.
¶ 17. On April 29, 1994, Judge McCormick made an oral ruling and then issued a writ of mandamus as requested by Lake Bluff. In his written decision, Judge McCormick stated that Lake Bluff acquired vested rights before South Milwaukee's enactment of the moratorium prohibiting the issuance of building permits at the property. He concluded that "South Milwaukee's actions in denying Lake Bluffs application for a building permit were arbitrary, capricious and invalid." He also determined that South Milwaukee had knowledge of Lake Bluffs proposed development and of Lake Bluffs expenditure of significant sums of money toward accomplishing its development, before the City imposed the moratorium and rezoned the property.
¶ 18. The City appealed. While pursuing its appeal, the City did not seek a stay under Wis. Stat. § 808.07 of either the writ of mandamus or the judgment. Circuit Judge Raymond E. Gieringer later found that, "The City knew that Lake Bluff had to begin construction immediately upon its receipt of the writ of mandamus" because the two buildings had to be completed by December 31, 1994, in order for Lake Bluff to preserve the low-income-housing tax credit it had been awarded by WHEDA. Judge Gieringer reasoned that by appealing but not posting bond and seeking a stay in judgment, the City was attempting to protect itself from having to pay a large damage award to Lake Bluff in the event that the writ was sustained.
¶ 19. It was in these circumstances that Lake Bluff made the decision to begin construction. On October 4, 1994, in Lake Bluff I, the court of appeals affirmed the circuit court's writ. 188 Wis. 2d 230. *135However, the City's appeal undermined investor confidence in the credit, forcing Lake Bluff to surrender it back to WHEDA.2
¶ 20. After losing in the court of appeals, the City petitioned this court for review. This court granted review on January 17, 1995.
¶ 21. On November 20,1995, eleven months after the court of appeals ruling, the supreme court reversed. Lake Bluff II, 197 Wis. 2d 157. This decision came 19 months after Judge McCormick had issued the writ of mandamus and several months after the construction *136had been completed. This court concluded that Lake Bluffs rights did not "vest" because it did not obtain a building permit or submit a completely error-free application for a building permit before the City succeeded in rezoning the site. Id. at 182. The court concluded:
The theory behind the vested rights doctrine is that a builder is proceeding on the basis of a reasonable expectation. ... Vested rights should only be obtained on the basis of strict and complete compliance with zoning and building code requirements, because a builder's proceeding in violation of applicable requirements is not reasonable.
In this case, it is undisputed that Lake Bluff never submitted an application for a building permit which complied with either the new single-family zoning or with the former C-2 zoning.
Id. at 175.
¶ 22. In Lake Bluff II, this court determined that the circuit court should not have granted the writ of mandamus ordering the City to issue a building permit. It ruled that for purposes of showing a "clear, specific legal right which is free from substantial doubt," as required in a mandamus action, neither Lake Bluff nor the court could rely on equitable principles. Therefore, it reversed, directing that the writ be quashed. Id. at 182.
¶ 23. Significantly, this court did not address the consequences of its decision — it did not ratify a particular remedy for the City.3 Rather, it put the City in a *137position to seek either demolition of the two buildings or some other remedy, in circuit court under Wis. Stat. § 62.23(8).
¶ 24. The second case was commenced by Lake Bluff in an attempt to block the City from trying to remove the buildings. Although Lake Bluff initially obtained a declaratory judgment estopping the City from revoking its building and occupancy permits, its judgment was reversed in Lake Bluff III, 222 Wis. 2d 222. Thereafter, Circuit Judge Francis T. Wasielewski issued the order to raze the buildings, and his order was affirmed by the court of appeals in Lake Bluff IV, 2001 WI App 150.
HH HH HH
¶ 25. On July 1, 1998, this court released its decision in Forest County v. Goode, 219 Wis. 2d 654, 579 N.W.2d 715 (1998). The issue in Goode was whether a circuit court retains equitable power to deny injunctive relief after a zoning ordinance violation has been proven. This court concluded that a circuit court retains its equitable power to deny injunctive relief to enforce a zoning ordinance.
¶ 26. The Goode decision came after the decisions in Lake Bluff I and Lake Bluff II, but shortly before the decision in Lake Bluff III. Hence, in Lake Bluff III, although the court of appeals reversed Judge Gieringer's declaratory judgment, it remanded the case for consideration of Goode. The court of appeals said:
Under Forest County v. Goode, the trial court must, apparently, still balance the competing equities in de*138termining whether an abatement order under § 62.23(8), stats., is required....
We remand this matter to the trial court to consider whether Goode's analysis of § 59.69(11), stats., applies here, and, if so, whether Lake Bluff can marshal a sufficient showing that "there are compelling equitable reasons" why the trial court should not issue an order of abatement.
Lake Bluff III, 222 Wis. 2d at 231-32 (citations omitted).
¶ 27. The present petition for review raises critical legal questions about the circuit court's application of Goode in the unusual circumstances of this case. In Goode, this court provided the following guidance:
[T]he circuit court, sitting in equity, should weigh heavily the factors considered by boards of adjustment in determining unnecessary hardship, as well as traditional equitable considerations. Equitable defenses, such as laches, estoppel, or unclean hands should also he weighed in appropriate cases.
In deciding whether to deny a request for an injunction based upon a . .. zoning ordinance violation, the circuit court should take evidence and weigh any applicable equitable considerations including the substantial interest of the citizens of Wisconsin in the vigilant protection of the state's shorelands, the extent of the violation, the good faith of other parties, any available equitable defenses such as laches, estoppel or unclean hands, the degree of hardship compliance will create, and the role, if any, the government played in contributing to the violation. This list is not meant to be exhaustive but only to illustrate the importance of the circuit court's consideration of the substantial public interest in enforcing its . .. zoning ordinances.
*139Once a violation is established, a circuit court should grant the injunction except, in those rare cases, when it concludes, after examining the totality of the circumstances, there are compelling equitable reasons why the court should deny the request for an injunction. . .. [T]he circuit court also possesses equitable power to fashion an injunction that does justice. If the court is inclined to deny an injunction, it should first explore alternatives to the requested full injunction to determine whether a more equitably crafted injunction might be appropriate.
Goode, 219 Wis. 2d at 681-82, 684.
¶ 28. The circuit court responded to this directive by concluding that it was constrained not to consider certain equitable factors except as they had been considered in deciding legal questions in previous appellate decisions. The court said:
Insofar as the "totality of the circumstances" includes claims that have already been raised and decided by the appellate courts in this case, those decisions are part of the "totality of the circumstances." For instance, it has already been determined by the Court of Appeals that estoppel does not prevent South Milwaukee from enforcing the provisions of sec. 66.23(8), Stats. See Lake Bluff Housing, 222 Wis. 2d at 229. Furthermore, Lake Bluffs claim that equitable considerations require nullification of the Defendant's change in zoning from C-2 (apartments) to R-A (single family) was rejected by the Supreme Court. See Lake Bluff Housing, 197 Wis. 2d at 179. Likewise, the Supreme Court determined that Lake Bluff had no vested rights in the issuance of building permits under the R-A or C-2 zoning. Lake Bluff Housing, 197 Wis. 2d at 175. Moreover, South Milwaukee's building moratorium was found to be legal for the purposes of these proceedings. Lake Bluff Housing Partners, 197 Wis. 2d at 163. These determinations, and others mentioned below, have become "the law of *140the case which must be followed in all subsequent proceedings in the trial court or on later appeal." Univest Corp. v. General Split Corp., 148 Wis. 2d 29, 38 (1989). The determinations of the appellate courts in this matter will be considered a part of the "totality of the circumstances" and the Goode inquiry will be made within the context of these decisions.
¶ 29. The petitioner in this case now asks the court to clarify the effect of prior appellate court legal holdings on future equitable analyses, and to determine the implications of the "law of the case doctrine" on future equitable evaluations. These are important questions because they will determine both the scope of the circuit court's independent fact-finding in equity and whether Forest County v. Goode has potency in remand situations. They probe what this court intended in Goode and whether the circuit court interpreted Goode too narrowly. The petition argues, persuasively, that the circuit court's legal interpretation of Goode was simply incorrect as a matter of law, impairing the circuit court's exercise of discretion.
¶ 30. At the outset of this dispute, Circuit Judge McCormick found that Lake Bluff relied on existing zoning when it purchased the property, advised the City of its intentions, expended additional money after it had informed the City of its plans, and then was not timely alerted when the City unexpectedly began to change its position. Judge McCormick found that the City did not identify the deficiencies in Lake Bluffs application until after Lake Bluff filed its first lawsuit. Thus, because of the City's actions, Lake Bluff was effectively prevented from meeting the test for vested rights this court established in Lake Bluff II. Judge McCormick concluded that the City's actions in denying *141Lake Bluffs application for a building permit were "arbitrary, capricious and invalid."
¶ 31. Judge Wasielewski determined that these equitable factors simply could not be considered de novo in his determination of whether or not to issue the raze order. The court of appeals affirmed in a published decision, ruling that "[b]ecause the trial court balanced all of the equitable considerations under Forest County v. Goode, there was no erroneous exercise of discretion." Lake Bluff IV, 2001 WI App 150 at ¶ 1 (citation omitted). These decisions have ramifications for litigants far beyond this dispute. They will also affect the procedures and attitude of local officials as they consider zoning matters.
¶ 32. In his dissent in Lake Bluff I, Judge Ralph Adam Fine wrote eloquently that: "The law must be sufficiently predictable so that men and women can conduct their business with the assurance that the rules are not going to change in mid-stream." 188 Wis. 2d at 259. Perhaps, someday, someone will explain why this just maxim does not apply to Lake Bluff.

 South Milwaukee's city attorney advised the Plan Commission that a moratorium on building permits for the property could be imposed by a resolution of the common council. Lake Bluff Housing Partners v. City of South Milwaukee, 188 Wis. 2d 230, 235-36, 525 N.W.2d 59 (Ct. App. 1994) (Lake Bluff I). At oral argument before the court of appeals, however, the city attorney advised the court of his doubts regarding the legality of the moratorium. He indicated that, in all likelihood, a moratorium enacted by ordinance would have been lawful but a moratorium by resolution was of dubious legality. Id. at 236 n.1. Likewise, in Lake Bluff Housing Partners v. City of South Milwaukee, 197 Wis. 2d 157, 163 n.2, 540 N.W.2d 189 (1995) (Lake Bluff II), this court noted that "counsel for defendant [City of South Milwaukee] stated that this moratorium was of questionable legality." However, the court went on to say that because "the moratorium was never challenged... we will accept it as valid for purposes of this review." Id. Lake Bluff insists now that it did challenge the legality of the moratorium. See Petition for Review at 15 n.3. In any event, this court accepted the moratorium as valid only for purposes of its review in the 1995 case.

 Two appellate decisions have stated otherwise. In Lake Bluff Housing Partners v. City of South Milwaukee, 222 Wis. 2d 222, 226, 588 N.W.2d 45 (Ct. App. 1998) {Lake Bluff III), the court said that "Lake Bluff was able to take advantage of the tax credits allocated for the development." In Lake Bluff Housing Partners v. City of South Milwaukee, 2001 WI App 150, ¶ 24, 246 Wis. 2d 758, 632 N.W.2d 485 (Lake Bluff IV), the court said that "Lake Bluffs contention that construction had to begin because the project needed to be completed by December 1994 was not correct. Lake Bluff failed to meet the deadline, and still secured tax credits for the project" (emphasis added).
In the period between these two decisions, Judge Francis T. Wasielewski reported that Lake Bluff had to give up the credits before using them. The court wrote:
Michael Lerner testified that in 1992, Lake Bluff was awarded $2.6 million in credits for this project over a 10 year period. To preserve its right to the credits, it had to build the project and obtain certificates of occupancy by December 31, 1994.
This deadline was not met. Occupancy permits for the 2 buildings were not issued until August and September, 1995. Some time in the late summer or early fall of 1994, Lake Bluff surrendered its credits to WHEDA. Mr. Lerner said that the continuing litigation over the legality of the Lake Bluff Project dampened the enthusiasm of potential bidders... . The continuing litigation "put a cloud over the financial viability of the tax credits" (emphasis added).

 When Circuit Judge Raymond E. Gieringer considered this dispute, he found as fact that: "In its decision, the Supreme Court remanded this case to the circuit court 'with instructions *137to quash the writ.' The Supreme Court made no Order with regard to the Buildings, the building permits or the occupancy permits."