Unpublished Disposition, 902 F.2d 1579 (9th Cir. 1986)

CERTIFICATION TO THE SUPREME COURT OF THE STATE OF ARIZONA

These appeals challenge the validity of billboard regulations in the cities of Mesa and Tucson, Arizona. Whiteco Metrocom, Inc., and Outdoor Systems, Inc., lessors of advertising space on billboards in the two cities, challenge the ordinances as violative of A.R.S. Sec. 9-462.01(A) (2) (1977 & Supp.1989) and Sec. 9-462.02 (1977), of article II of the Arizona Constitution, and of the first, fifth, and fourteenth amendments of the United States Constitution.

Arizona courts have not previously considered whether A.R.S. Sec. 9-462 allows the city regulations challenged here. Because this issue presents a difficult and important question of state law for which there is no controlling authority, we are reluctant to make the determination ourselves. Its determination might obviate our need to reach constitutional questions. Accordingly, pursuant to A.R.S. Sec. 12-1861 et seq. (1977 & Supp.1989) and Ariz.Sup.Ct.R. 27, we certify this question to the Arizona Supreme Court. See Torres v. Goodyear Tire & Rubber Co., 867 F.2d 1234, 1237-39 (9th Cir. 1989) (Torres) .

STATEMENT OF FACTS

Whiteco Metrocom, Inc., is an Indiana corporation which leases small areas of land in the City of Tucson from property owners, constructs billboards on them, and leases advertising space to consumers. The messages on Whiteco's billboards include commercial advertising, noncommercial (including political) advertising, and public service messages. Outdoor Systems, Inc., an Arizona corporation, engages in a similar practice throughout the Phoenix metropolitan area, including the City of Mesa. Outdoor Systems's billboards similarly carry commercial, noncommercial, and public service messages.

In 1985, the City of Tucson enacted a sign code regulating most signs in the city. The code restricts the permissible size, location, and height of signs. It classifies signs as either "on-site" or "off-site." An on-site sign is one which advertises or identifies a use or activity which occurs on the same premises as the sign. All other signs are considered "off-site."

On-site signs are limited in size and number according to the location of the property. Off-site signs are permitted only in certain designated parts of the city (typically industrial or commercial areas) and are not permitted within certain zoning classifications. Even within the areas designated for off-site signs, the code severely restricts size, location, and density of signs.

The code also requires a permit from the city before a sign can be erected and before the message on an existing sign can be changed. The code does not prescribe any standards for issuing permits, nor any time period in which permit applications must be acted upon.

Most relevant to the statutory issue in this appeal, the code requires nonconforming billboards which existed prior to the enactment of the regulations to be removed under a variety of circumstances. First, a nonconforming sign located on property that becomes vacant or unoccupied for 90 days must be removed. Second, when a structure having a nonconforming sign changes use from one occupancy category to another, the sign must be brought into conformance with the code. Third, a nonconforming sign may not be moved, altered, removed and reinstalled, or replaced, unless it can be brought into conformity with the code. Fourth, nonconforming billboards pertaining to outdated events must be removed. Finally, when previously undeveloped property is developed, all billboards on the property must be removed.

Whiteco contends that these provisions, especially the final, so-called "vacant lot provision," will eventually result in the elimination of all nonconforming billboards. Whiteco has already been forced to remove, without compensation from the city, more than 20 billboards due to the vacant lot provision. On October 17, 1986, Whiteco filed suit to avoid further billboard removals.

By amendment to its sign code in 1986, Mesa prohibited all "off-site" billboards (defined as in the Tucson ordinance) within the city limits. The new code also prohibited the issuance of a certificate of occupancy permit for new developments unless all nonconforming signs on the property are removed. The co-plaintiff in the Outdoor Systems litigation is Milton Lee, as trustee for the Danny O. Lee Trust. The trust owns undeveloped land in Mesa, on which is located one of Outdoor Systems's billboards. The trust receives payment from Outdoor Systems for the use of the land on which the billboard is located. The sign located on the trust property is an off-site (and therefore nonconforming) sign under the amended code, and was in existence prior to the enactment of the amendment.

Subsequent to the amendment of the code, the trust applied to the city for a building permit to construct a "sports complex" (including batting cages, trampolines, a video arcade, etc.) on the property. The city refused to issue the permit until the Outdoor Systems billboard was removed, and refused to pay compensation for the destruction of the billboard. Outdoor Systems and the trust then filed this suit.

In the Whiteco litigation, the district court held that the Tucson ordinance violated Whiteco's first amendment rights, but denied all other claims, including the statutory claim. Following an amendment to the sign code granting additional protection for noncommercial speech, the district court reconsidered and granted judgment for the city on all claims.

In the Outdoor Systems litigation, the district court held that the city could not constitutionally require the removal of the nonconforming sign as a condition for granting the building permit. The district court rejected Outdoor System's claim that the sign code exceeded the city's authority under the enabling act, A.R.S. 9-462.01(A) (2). The court did not rule on the plaintiffs' claims that the code failed to provide compensation for terminating a preexisting nonconforming use as required by A.R.S. Sec. 9-462.02.

Whiteco and Outdoor Systems appealed the adverse decisions of the district courts on the statutory claims.

QUESTIONS OF LAW

Outdoor Systems first argues that the Mesa ordinance exceeds the authority delegated by the state to regulate billboards. According to A.R.S. Sec. 9-462.01(A) (2), "the legislative body of any municipality by ordinance may in order to protect and promote the public health, safety and general welfare ... [r]egulate signs and billboards." Outdoor Systems argues that this provision permits Mesa only to regulate, not to prohibit, off-site billboards. See Combined Communications Co. v. City and County of Denver, 542 P.2d 79, 82-83 (Colo.1975) (enabling act granting power to "regulate and restrict" the height of billboards did not authorize city to ban billboards altogether).

Mesa argues first that the code does not in fact prohibit all signs--only off-site billboards. See Metromedia, Inc. v. City of San Diego, 453 U.S. 490, 515 n. 20 (1981) (ordinance which allowed on-site advertising and other specifically exempt categories of signs is not "a total prohibition of outdoor advertising"). Further, the city argues that the Arizona enabling statute is broader than the statute construed by the Colorado court in Combined Communications, and that, unlike the Colorado statute, the power to regulate conveyed by section 9-462.01(A) (2) includes the power to prohibit.

Whiteco does not contend that the Tucson code, which does not contain a flat prohibition of billboards in all areas, exceeds the authority conveyed by the enabling act. However, both Whiteco and Outdoor Systems argue that the sign codes violate A.R.S. 9-462.02. This statute provides:

The municipality may acquire by purchase or condemnation private property for the removal of nonconforming uses and structures. ... Nothing in an ordinance or regulation authorized by this article shall affect existing property or the right to its continued use for the purpose used at the time the ordinance or regulation takes effect, nor to any reasonable repairs or alterations in buildings or property used for such existing purpose.

The sign companies contend that this language bars the treatment of nonconforming uses contemplated in the city ordinances. Specifically, they argue that the statute provides for purchase or condemnation as the exclusive mechanism for terminating preexisting nonconforming uses and that it protects any continuing use of the property--here, the continuing presence of a billboard--against termination by other means. In City of Scottsdale v. Scottsdale Associated Merchants, 583 P.2d 891 (Ariz.1978), the Arizona Supreme Court struck down a regulation designed to remove nonconforming signs. The Scottsdale ordinance provided for the automatic removal of nonconforming signs after a given period of years. The Supreme Court held (1) that A.R.S. Sec. 9-462.02 required compensation, and (2) the grace period given sign owners, purportedly to allow "amortization" of the signs, did not constitute sufficient compensation for purposes of the statute. Id. at 892.

The cities argue that City of Scottsdale is distinguishable from this appeal. First, they argue, the city itself is not requiring removal of the nonconforming use. The landowner is given a choice: he may either retain the billboard, or he may remove the billboard and change the use of the land. Thus it is the landowner, not the city, which is requiring the sign companies to remove the billboards. Second, the cities argue that the statute protects nonconforming uses only so long as the use does not change. If the land continues to be used exclusively as the site for a billboard, the billboard may stay. However, when the landowner wishes to change the use--and, for example, use the land as a site for a billboard plus the site for a sports complex--the nonconforming use is no longer protected by the statute.

We agree that these considerations provide an adequate distinction from City of Scottsdale, and, therefore, we are unable to decide the issue based upon that case. In City of Scottsdale, the landowner was not given a choice: his billboard was automatically destroyed at the conclusion of the amortization period. Here, the landowner at least nominally retains the option of continuing the nonconforming use. Thus the termination is accomplished at least in part due to a voluntary action on the part of the landowner. City of Scottsdale does not consider such a circumstance, and hence does not necessarily control this case.

However, that does not resolve the issue of whether the ordinances conform to the statute. The sign companies argue that in posing the "Hobson's choice" of removing the sign or keeping the land undeveloped, the cities are effectively accomplishing an uncompensated taking. In addition, they argue that the cities are reading the statute's protection of "continued use [s]" too narrowly. Because a landowner wishes to build a sports complex on one part of his land, they assert that this should not mean that he is changing the use on another part of the land where he continues to maintain an (unrelated) billboard. They contend that the parcel of land containing the billboard is used for an unchanged nonconforming purpose, and therefore is protected by the statute. No Arizona authority has considered the extent of section 9-462.02 protection in this context. We are reluctant to decide this difficult issue without guidance from the Arizona courts.

A.R.S. Sec. 12-1861, et seq. and Ariz.Sup.Ct.R. 27 allow a federal circuit court to certify questions of state law to the Arizona Supreme Court. Torres, 867 F.2d at 1237. We find that this appeal presents difficult questions of state law relating to the proper interpretation of A.R.S. Sec. 9-462.01(A) (2) and Sec. 9-462.02. In the absence of controlling authority on a difficult and important question, we conclude that these are "choice [s] we are reluctant to make for the State of Arizona." Id. at 1239. Thus the preferred course is to seek guidance from the Arizona court, and thus to allow the Arizona court the opportunity to render the initial decision upon these matters. See id. at 1237-39 (finding no Arizona authority concerning whether a patent licensor can be strictly liable for product defects, and certifying the question to the Arizona Supreme Court to allow that court to make the first determination on the issue).

Therefore, we certify the following questions to the Arizona Supreme Court:

1. Does the City of Mesa sign code, in prohibiting all off-site billboards, exceed the authority delegated to the city by A.R.S. Sec. 9-462.01(A) (2)?

2. Do the Mesa and Tucson sign codes, in requiring the removal of preexisting nonconforming billboards before a landowner may develop or change the use of the property on which the sign is located, impermissibly remove nonconforming uses without purchase or condemnation, in violation of A.R.S. Sec. 9-462.02?

The Arizona Supreme Court may supplement the record in any way it believes appropriate to enable it to answer the certified questions.

CERTIFIED: