Dunham v. Lake County Commission

#29531-r-SPM
2022 S.D. 30

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA

****

KAREN DUNHAM, Petitioner and Appellant,

v.

LAKE COUNTY COMMISSION,
LAKE COUNTY COMMISSION SITTING
AS THE LAKE COUNTY BOARD OF
ADJUSTMENT, Respondent and Appellee,

and

HODNE HOMES, LLC, Respondent.

****

APPEAL FROM THE CIRCUIT COURT OF
THE THIRD JUDICIAL CIRCUIT
LAKE COUNTY, SOUTH DAKOTA

****

THE HONORABLE KENT SHELTON
Judge

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JIMMY NASSER of
Nasser Law Firm, P.C.
Sioux Falls, South Dakota Attorney for petitioner and
appellant.

ZACHARY PETERSON
JACK H. HIEB
DOMINIC F. KING of
Richardson, Wyly, Wise
Sauck & Hieb, LLP
Aberdeen, South Dakota Attorneys for respondent and
appellee.

****

ARGUED
NOVEMBER 8, 2021
OPINION FILED 06/01/22
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MYREN, Justice

[¶1.] Karen Dunham petitioned the circuit court for a writ of certiorari

challenging the Lake County Board of Adjustment’s (Board) decision to grant a

variance to Hodne Homes, LLC (Hodne Homes) to build a facility to store and

display boats. On remand from this Court, the circuit court addressed a newly-

raised issue about Dunham’s standing and dismissed Dunham’s petition. Dunham

appeals. We reverse and remand.

Facts and Procedural History

[¶2.] This matter is the second appeal in a case previously addressed by this

Court in Dunham v. Lake County Commission (Dunham I), 2020 S.D. 23, 943

N.W.2d 330. The facts underlying this case have not changed. Dunham has owned

Lot 2 in Dunham’s and Hemmer’s First Addition (Lot 2) since 2002. In March 2018,

Hodne Homes purchased Lot 1 of Dunham’s and Hemmer’s First Addition (Lot 1)

adjacent to Dunham’s lot. Sodak Marina LLC (Sodak Marina) owns the lot south of

Lot 1 and operates a business selling boats on that lot. Branden and Jamie Hodne

own Sodak Marina and Hodne Homes.

[¶3.] Lots 1 and 2 are in the Lake Park 3 zoning district (LP-3) of the Lake

County Zoning Ordinance (the zoning ordinance). Section 1105 of the zoning

ordinance states that LP-3 was “established to provide for oversized private and

commercial storage facilities.” The LP-3 zoning allows “private and commercial

storage facilities containing no more than four thousand (4000) square feet and

[which] do not have side walls with a height greater than fourteen (14) feet.” The

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zoning ordinance also imposes a minimum setback requirement of two feet on the

side yards and ten feet in the rear yard for properties within LP-3.

[¶4.] After Hodne Homes purchased Lot 1, it applied for a variance and a

conditional use permit (CUP) from the Lake County Commission sitting as the

Board of Adjustment. Hodne Homes sought approval to construct a building to

display and store boats for Sodak Marina. They proposed the construction of a

5,760-square-foot building with sixteen-foot sidewalls. Both of those specifications

exceeded the limits for structures within the LP-3 zone. As finally submitted, the

proposed structure would also violate the two-foot side yard setback on one side by

one foot and the ten-foot rear yard setback by five feet. The setback requirement

between the proposed building and Dunham’s side of Lot 1 complied with the zoning

ordinance. The variance request sought to relax the two-foot side yard and ten-foot

rear yard restrictions on Lot 1. The CUP application requested permission to

exceed the sidewall height and square footage limitations. The Board conducted a

public hearing on April 17, 2018. Dunham opposed both the variance and the CUP.

The Board approved the variance and the CUP.

[¶5.] On May 11, 2018, Dunham filed a petition for writ of certiorari with

the circuit court, challenging the Board’s approval of the variance and the CUP.

The Board filed a return to the petition for writ of certiorari on July 17, 2018. The

circuit court denied Dunham’s petition for writ of certiorari, determining the Board

had jurisdiction to grant or deny the variance and CUP and that both the CUP and

variance were granted in compliance with the zoning ordinance and statutory

regulations. Dunham appealed to this Court.

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[¶6.] In Dunham I, this Court affirmed the circuit court’s denial of

Dunham’s challenge to the CUP but reversed and remanded the circuit court’s

denial of Dunham’s challenge to the variance because the Board failed to consider

the special conditions prong of the two-part test required by SDCL 11-2-53(2). Id.

¶¶ 18–21, 30, 943 N.W.2d at 335–36, 338. Specifically, this Court stated that the

Board failed to make adequate findings that an “extraordinary and exceptional”

situation on the property existed and failed to consider whether a denial of the

variance would create “peculiar and exceptional practical difficulties” or

“exceptional and undue hardship” on Hodne Homes. Id. ¶ 20, 943 N.W.2d at 336.

Additionally, we indicated that upon remand, “the Board must determine whether

the variance will allow a use that is not permissible within LP-3.” Id. ¶ 23, 943

N.W.2d at 336. We remanded “the variance application to the Board for further

proceedings consistent with this opinion.” Id. ¶ 38, 943 N.W.2d at 339. However,

we recognized that the Board had “specifically conditioned the approval of the CUP

‘upon compliance with all applicable provisions’” of the zoning ordinances, and we

noted that we were not expressing an opinion as to “whether our reversal and

remand of the variance decision impacts the [CUP] approved by the Board.” Id.

¶ 30 n.9, 943 N.W.2d at 338 n.9.

[¶7.] Once the case returned to the circuit court, that court promptly

remanded the matter to the Board for further proceedings consistent with this

Court’s decision. On July 21, 2020, the Board held a hearing regarding the circuit

court’s order remanding for further proceedings. At this hearing, Hodne Homes

argued that Lot 1 was a unique property in Lake County because it was the only

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situation where there was a commercial property adjacent to an LP-3 zone. Hodne

Homes asserted that Sodak Marina was obligated to build a display and storage

building to secure the opportunity to sell boats from Crestliner and Manitou. They

further stated that the setback, height, and size restrictions for buildings in the LP-

3 zone could not accommodate a necessary track to move boats in and out of the

display and storage building. Hodne Homes noted that if the variance were not

granted, Sodak Marina would not be able to continue to sell boats for Crestliner and

Manitou, which would cause them exceptional and undue hardship. Hodne Homes

argued that using the building as a storage and display facility for boats was

permitted under Section 505(3) of the zoning ordinance.

[¶8.] Dunham asserted that it was improper for the Board to consider the

nature of Sodak Marina’s business in granting the variance. She contended that

the Board was confined to analyzing the particular features of Lot 1 at the time the

zoning ordinance was enacted. She noted that when Hodne Homes purchased Lot 1,

it contained a building that conformed to the zoning ordinance. Dunham argued

that the Board had not been provided with Sodak Marina’s dealership contracts

with boat manufacturers, such as Crestliner and Manitou, to support the claim that

the variance was necessary to maintain these contracts. Dunham asserted that

under the definition of a “variance” in the zoning ordinance, a variance could only

be granted based on conditions peculiar to the land—not conditions created by the

actions of Hodne Homes (i.e., boat dealership contracts). Lastly, Dunham claimed

Sodak Marina would use the building for retail sales, violating the LP-3 zoning

regulations.

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[¶9.] The Board unanimously voted to find that Hodne Homes would suffer

peculiar and exceptional practical difficulties or exceptional and undue hardship if

the variance were denied. The Board further unanimously voted that there was an

extraordinary and exceptional situation on Lot 1 that made the variance necessary,

and the variance’s use would not be detrimental to the other uses in the LP-3

zoning area because it was in the general character of the other uses within that

area. Dunham objected to the Board’s decision to grant the variance because she

contended the Board made no actual factual findings at the hearing.

[¶10.] On September 1, 2020, the Board issued written findings of fact. In

Finding 13, the Board found that Lot 1 was the only property in Lake County where

a commercial business is directly adjacent to LP-3 property. In Finding 14, the

Board found that “to facilitate the sale of boats made by manufacturers such as

Crestliner and Manitou, Applicant has to demonstrate that it has a sales office, a

shop, and a sufficient display area to show the boats” and that the zoning

restrictions within the LP-3 zoning “would not accommodate a showroom large

enough for storage of these boats and the Applicant could not have made the

building any smaller and still met such dealer requirements.” The Board used

these findings to enter further findings of the existence of an extraordinary or

exceptional situation or condition on Lot 1 and that if the variance was not granted,

it would create peculiar and exceptional practical difficulties or an exceptional and

undue hardship for Hodne Homes. In Finding 15, the Board found that the

building’s purpose of storing and displaying boats was permitted under LP-3 zoning.

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[¶11.] To return the matter to the circuit court, Dunham filed a second

petition for writ of certiorari with the circuit court on September 30, 2020. Instead

of filing a return, the Board filed a motion to dismiss, asserting that Dunham lacked

standing because she was not aggrieved by the variance as required by SDCL 11-2-

61. This was the first time in the lengthy procedural history of this case that the

Board raised any issue regarding Dunham’s standing. The Board claimed that

because this Court had affirmed the CUP, only the variance remained in dispute.

The Board further claimed the variance did not affect Dunham because it did not

alter the side yard setback requirement between her property and the proposed

building.

[¶12.] In her brief opposing the motion to dismiss, Dunham asserted that the

Board waived standing because it never raised the issue in any previous

proceedings in the case’s litigation. She also contended that even if the argument

was not waived, she has standing because she is a person aggrieved by the Board’s

decision to grant the variance. She noted that she is the neighbor to the north of

the lot owned by Hodne Homes and claimed the proposed oversized building would

directly interfere with her use and enjoyment of her property.

[¶13.] In its reply brief, the Board asserted that the existence of standing is a

necessary part of establishing subject matter jurisdiction and that standing cannot

be waived. The Board argued that because the side yard setback between the

proposed building and Dunham’s yard complies with the zoning ordinance,

Dunham’s property is unaffected by the variance. The Board contended that this

Court’s affirmance of the CUP eliminated the alleged injuries outlined by Dunham

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as a basis for her standing to petition for a writ of certiorari. Following a hearing

on the motion to dismiss, the circuit court issued a memorandum decision

dismissing Dunham’s petition because of a lack of standing. Dunham now appeals.

Analysis and Decision

[¶14.] In its motion to dismiss Dunham’s second petition for writ of certiorari

to return the matter to the circuit court, the Board argued that Dunham was no

longer an aggrieved party with standing to appeal the Board’s subsequent decision

on remand, which related solely to the variance. A person must be “aggrieved by

any decision of the board of adjustment” to have standing to bring suit under SDCL

chapter 11-2.∗ To be “aggrieved,” Dunham must show that she “suffered ‘a personal

and pecuniary loss not suffered by taxpayers in general, falling upon [her] in [her]

individual capacity, and not merely in [her] capacity as a taxpayer and member of

the body politic of the county[.]’” See Powers v. Turner Cnty. Bd. of Adjustment,

2020 S.D. 60, ¶ 17, 951 N.W.2d 284, 291 (quoting Cable v. Union Cnty. Bd. of

Comm’rs, 2009 S.D. 59, ¶ 26, 769 N.W.2d 817, 827).

∗ Under the version of SDCL 11-2-61 (amended in 2020) in effect at the time
Dunham filed her original petition:

Any person or persons, jointly or severally, or any taxpayer, or
any officer, department, board, or bureau of the county,
aggrieved by any decision of the board of adjustment may
present to a court of record a petition duly verified, setting forth
that the decision is illegal, in whole or in part, specifying the
grounds of the illegality. The petition shall be presented to the
court within thirty days after the filing of the decision in the
office of the board of adjustment.

(Emphasis added.)

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[¶15.] In her original petition for writ of certiorari, Dunham alleged that the

Board’s decision to grant Hodne Homes’ request for a variance and a CUP for Lot 1

would cause her to experience a lack of daylight and drainage issues. On these

allegations, Dunham sufficiently pled the existence of an injury necessary to

establish standing for certiorari review under SDCL 11-2-61.

[¶16.] Although standing was not raised as an issue in Dunham’s first

appeal, this Court necessarily determined that Dunham was an aggrieved party

with standing to challenge both the variance and CUP. See Elliott v. Bd. of Cnty.

Comm’rs of Lake Cnty, 2005 S.D. 92, ¶ 17, 703 N.W.2d 361, 368 (providing that the

question of standing as it relates to invoking the court’s jurisdiction must be raised

sua sponte when jurisdiction does not affirmatively appear from the record).

Although the CUP was approved in the first appeal, we remanded Dunham’s

challenge to the variance because the Board failed to consider the special conditions

prong of the two-part test required by SDCL 11-2-53(2). We noted that “[t]he Board

specifically conditioned the approval of the CUP ‘upon compliance with all

applicable provisions of the [Ordinance].’” Dunham I, 2020 S.D. 23, ¶ 30 n.9, 943

N.W.2d at 338 n.9. The CUP authorized Hodne Homes to exceed the height and

square footage limitations set forth in the ordinance. However, to construct a

building that size on that lot, Hodne Homes still needed the variance in the setback

requirements to comply with “all applicable provisions” of the zoning ordinance. Id.

The injuries Dunham alleged regarding access to light and drainage issues both

related to the size of the building and implicated both the CUP and the variance.

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[¶17.] When we remanded, we necessarily determined that Dunham would

continue to have standing to seek relief from the circuit court if the Board once

again granted the requested variance. We reverse the circuit court’s dismissal and

remand for the circuit court to address the merits of Dunham’s petition.

[¶18.] JENSEN, Chief Justice, and KERN and DEVANEY, Justices, concur.

[¶19.] SALTER, Justice, concurs specially.

SALTER, Justice (concurring specially).

[¶20.] I agree with the Court’s conclusion that we necessarily decided the

question of standing in Dunham I, and I write specially to emphasize that we are

not deciding it again here. After we reached the conclusion in Dunham I to remand

the case to comply with the two-part Hines test, see Hines v. Bd. of Adjustment,

2004 S.D. 13, ¶ 12, 675 N.W.2d 231, 234, we continued our analysis of the variance

question in anticipation of further substantive proceedings. Indeed, we specifically

“address[ed] Dunham’s other separate challenges to the variance to provide the

Board and parties with guidance on remand.” Dunham I, 2020 S.D. 23, ¶ 21, 943

N.W.2d at 336 (emphasis added). Under the circumstances, the circuit court was

not authorized to consider different issues outside the scope of the remand.

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