In re Stowe Club Highlands

In re Stowe Club Highlands  (95-341); 166 Vt. 33; 687 A.2d 102

[Filed 08-Nov-1996]

[Motion for Reargument Denied 22-Nov-1996]


       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                                 No. 95-341


In re Stowe Club Highlands                        Supreme Court

                                                  On Appeal from
                                                  Environmental Board

                                                  March Term, 1996


John T. Ewing, Chair

Harold B. Stevens, Stowe, for appellant

Jeffrey L. Amestoy, Attorney General, and John H. Hasen, Assistant
  Attorney General, Montpelier, for amicus curiae State of Vermont


PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


       JOHNSON, J.  Stowe Club Highlands (SCH) appeals a decision of the
  Environmental Board denying SCH's application for a permit to develop a
  twenty-two acre Meadow Lot within the Stowe Club development.  Both the
  District Commission and the Board concluded that the proposed development
  violated the original permit governing the Stowe Club project, and denied
  the permit modification under the doctrine of collateral estoppel.  We
  reject the application of the doctrine of collateral estoppel under these
  circumstances, but conclude that the Board properly denied the permit
  amendment in light of the reliance of the purchasers of lots adjacent to
  the Meadow Lot.  Accordingly, we affirm the Board's decision.

       This case began in 1985, when SCH's predecessor, Stowe Club
  Associates, sought and received an Act 250 permit to develop the 250-acre
  tract of land now known as Stowe Club. The original permit authorized
  construction of a 100-unit hotel, a 10,000-square-foot conference center,
  fifty-five three-bedroom townhouses and a twenty-three lot subdivision. 
  Condition 13 of the original permit states that: "The 40 acre meadow on the
  project tract shall be retained for

 

  agricultural uses for a period of time at least equal to the life of this
  land use permit."(FN1)  In addition, the District Commission at the time made
  findings under 10 V.S.A. § 6086(a)(8) & (9)(B) (Criteria 8 and 9(B)), based
  on statements in the permit application, that the Meadow Lot would remain
  open and would be reserved for agricultural uses.  Condition 1 of the
  original permit explicitly incorporates the findings and conclusions of the
  Commission.

       Some changes have occurred in the Stowe Club development since the
  original permit was issued.  Stowe Club Associates and an adjacent farmer,
  Paul Percy, had entered into an agreement for the sale of the Meadow Lot;
  that sale did not occur.  A 1986 permit amendment allowed construction of
  community waste disposal fields in the Meadow Lot.  Also, the planned
  100-unit hotel was replaced with a smaller, 21-unit facility.

       In 1990, Stowe Club Associates conveyed the project tract to the
  Chittenden Bank in lieu of foreclosure.  The Bank sold a number of
  single-family house lots adjacent to the Meadow Lot, and in 1992, sold the
  remaining portion of the tract to Robinson Springs Partnership, which had
  knowledge of the land use restrictions in the original permit.  Appellant
  SCH is the direct successor in interest of Robinson Springs Partnership.

       The Board also found that Leighton Detora, the owner of a lot adjacent
  to the Meadow Lot and a party below, relied on the fact that the Meadow Lot
  would remain undeveloped when he purchased his lot and built his residence. 
  Specifically, the Board found that Detora enjoys the agricultural character
  of the neighborhood, the cows in the nearby pasture, and the lack of light
  at night from the barn.

                                I.

       We begin with SCH's threshold argument, that replacing the barn with a
  smaller residence and stable does not violate the permit condition
  requiring that the Meadow Lot be retained for agricultural uses.  SCH
  maintains that the smaller residence and stable will increase

 

  the amount of open space and not threaten the agricultural potential of the
  soil.  Following this reasoning, the application to develop the Meadow Lot
  should have been considered independently, and not as an attempt to modify
  the original permit.

       We agree with the Board, however, that building a single-family home
  on the  Meadow Lot is not consistent with preserving the lot for
  agricultural uses.  Merely attaching a stable to a house does not convert a
  residential development to an agricultural use.  In the zoning context, for
  example, courts have held that ordinances authorizing the use of certain
  land as a farm do not permit the stabling and training of riding horses. 
  See Demarest v. Heck, 201 A.2d 75, 79-80 (N.J. Super. Ct. App. Div. 1964);
  Old Westbury v. Alljay Farms, Inc., 476 N.E.2d 315, 316 (N.Y. 1985).  There
  are significant differences between an open meadow with an abandoned barn
  and a developed lot with a private home.  As the Board found, a neighboring
  landowner enjoys the lack of light at night in the Meadow Lot.  Moreover,
  SCH's interpretation would render the permit condition nearly meaningless. 
  As we read the original permit, it authorizes significant residential
  development, but sets aside the Meadow Lot to be preserved for agricultural
  uses.  If residential development is permitted in the Meadow Lot as well,
  the permit condition serves no purpose.

       For similar reasons, we reject SCH's argument that the issue of
  replacing the barn with a residence was not raised during the original
  permitting process.  SCH's understanding of the issue at stake is
  unreasonably narrow.  The original permit does not specifically address any
  number of possible uses for the Meadow Lot, from single-family residence to
  industrial complex to skyscraper.  The permit did establish, however, that
  Criteria 8 and 9(b) required that the Meadow Lot remain as open land
  preserved for agricultural uses.  That condition was suggested by Stowe
  Club Associates and incorporated into the permit, and is binding on SCH
  unless the permit is amended.

 

                                II.

       We turn, then, to considering whether the Board should have granted
  SCH's application to amend the original permit to allow development of the
  Meadow Lot.  Although Act 250 does not refer to permit amendments, the
  Board has adopted a rule establishing procedures for applications for
  permit amendments.  Environmental Board Rule 34.  The rule provides that
  "[a]n amendment shall be required for any material or substantial change in
  a permitted project." Id.  The rule does not, however, establish standards
  that guide the Board in evaluating requests to amend existing permits.

       In its decision in this case and in an earlier opinion, In re Cabot
  Creamery Coop., Permit #5W0870-13-EB (Vt. Envtl. Bd. Dec. 23, 1992), the
  Board has applied the doctrine of collateral estoppel to review proposed
  permit amendments.  The Board relied on our statement in In re Carrier, 155
  Vt. 152, 157-58, 582 A.2d 110, 113 (1990) that the principles of collateral
  estoppel generally apply in administrative proceedings, although not as an
  "inflexible rule of law."  Here, the Board applied the five elements of
  collateral estoppel set out in Trepanier v. Getting Organized, Inc., 155
  Vt. 259, 265, 583 A.2d 583, 587 (1990).  Concluding that each of the
  Trepanier criteria was satisfied in this case, the Board denied SCH's
  application.

       We are not persuaded that collateral estoppel provides the correct
  framework in which to evaluate applications for permit amendments.  The
  doctrine of collateral estoppel, or issue preclusion, applies when a party
  seeks to relitigate a factual or legal issue previously decided in a
  judicial or administrative proceeding.  The effect of collateral estoppel
  is that resolution of a specific issue, such as a factual dispute or
  question of law, is given the same preclusive effect as the final judgment
  of the court or agency.  So, if a federal court has ruled against a
  plaintiff on the merits of an age discrimination claim, the plaintiff may
  be collaterally estopped from bringing a separate action under state law
  that turns on the same allegation of age discrimination. See id. at 266,
  583 Vt. at 588.

 

       In a permit amendment case, however, there is no dispute that the
  applicant is bound by the provisions of the original permit.  Here, the
  original permit, including Condition 13, governs the development of the
  Stowe Club tract unless the permit is modified.  By applying collateral
  estoppel, the Board in effect evaluated whether the original permit
  conditions have the force or effect of a judgment; that analysis is
  unnecessary because the original permit is a prior judgment that without
  question binds the parties.

       The central question in this case is not whether to give effect to the
  original permit conditions, but under what circumstances those permit
  conditions may be modified.  Under the permit amendment process set up by
  the Board, permits are not final and unalterable.  A party subject to a
  permit may seek to amend the conditions, and presumably, the Board will
  sometimes grant the amendment.  To resolve these cases consistently and
  fairly, the Board must develop a set of standards governing permit
  amendments.  The elements of collateral estoppel, although superficially
  appealing, cannot substitute for such standards.  The doctrine of
  collateral estoppel is based on the premise that issues previously
  litigated and resolved on the merits should not be reopened.  The Board,
  however, has explicitly acknowledged in Rule 34 that previously litigated
  permit conditions in some cases may be revisited.

                               III.

       We consider it neither appropriate nor necessary in the context of
  this case to fully explore what standards should guide the Board in
  evaluating applications for permit amendments. That task belongs, in the
  first instance, to the Board, which may decide to express those standards
  through rulemaking rather than through individual decisions.  See 3 V.S.A.
  § 801(9) ("rule" defined as "agency statement of general applicability
  which implements, interprets, or prescribes law or policy"); 1 K.C. Davis &
  R.J. Pierce, Administrative Law Treatise § 6.7, at 260-66 (3d ed. 1994)
  (rulemaking procedures generally allow for greater efficiency and
  fairness).  Here, along with collateral estoppel, the Board addressed
  certain policy considerations that it considered relevant in deciding
  whether to grant the permit amendment.  The Board's

 

  analysis of these issues was appropriate and, in the context of this case,
  sufficient to support the denial of the permit amendment.

       The Board framed its discussion as weighing the competing values of
  flexibility and finality in the permitting process.  If existing permit
  conditions are no longer the most useful or cost-effective way to lessen
  the impact of development, the permitting process should be flexible enough
  to respond to the changed conditions.  The Board recognized three kinds of
  changes that would justify altering a permit condition:

    (a) changes in factual or regulatory circumstances beyond the control
    of a permittee; (b) changes in the construction or operation of the
    permittee's project, not reasonably foreseeable at the time the permit was
    issued; or (c) changes in technology.

  The Board concluded that no relevant changes in technology or factual or
  regulatory circumstances had occurred, and that the changes in the
  construction and operation of the overall development were reasonably
  foreseeable.

       SCH argues that the Board erred as a matter of law by requiring that
  changed circumstances be unforeseeable to merit modification of a permit
  condition.  Relying on our decision in Carrier, 155 Vt. at 158, 582 A.2d  at
  113, SCH maintains that any substantial change, whether or not the change
  was foreseeable, should be grounds to amend a permit condition.  Our
  conclusion in Carrier, that "as a general rule, a zoning board or planning
  commission `may not entertain a second application concerning the same
  property after a previous application has been denied, unless a substantial
  change of conditions ha[s] occurred,'" id. (quoting Silsby v. Allen's
  Blueberry Freezer, Inc., 501 A.2d 1290, 1295 (Me. 1985)), is not relevant
  here.  In that case, we evaluated the application of collateral estoppel to
  proceedings before a planning commission.  As we have already discussed,
  collateral estoppel is not the proper framework for this case.  Moreover,
  the standards that govern a planning commission's consideration of a second
  application for a project after it denies the first application are not
  helpful in determining whether the Board should allow changes to an
  existing Act 250 permit.

 

       We agree with the Board that the foreseeability of the changes to the
  Stowe Club project is relevant to the evaluation of the application for a
  permit amendment.  Rarely will a large-scale development such as Stowe Club
  progress exactly as planned.  Contracts often fall through and financial or
  other restraints may require some parts of a project to be eliminated or
  downsized. In this sense, foreseeability is related to the degree of
  change; while small or moderate changes are expected and even common,
  extreme changes will likely come as a surprise to all involved. Permit
  applicants should consider foreseeable changes in the project during the
  permitting process, and not suggest conditions that they would consider
  unacceptable should the project change slightly.  Otherwise, the initial
  permitting process would be merely a prologue to continued applications for
  permit amendments.

       SCH also argues that the Board erred by concluding that the changes to
  the project were foreseeable.  Specifically, SCH claims that the following
  changes were unforeseeable: (1) the planned sale of the Meadow Lot to Percy
  did not occur; (2) the Meadow Lot now serves as a community leachfield, and
  if limited to agricultural uses is suitable only as pasture and hay land;
  (3) the number of residential units was decreased slightly; and (4) the
  hotel plans were changed from a 100-unit hotel and conference center to a
  21-unit facility.  SCH does not, however, explain why those relatively
  minor changes were not reasonably foreseeable.  SCH's predecessor must have
  realized that some real estate contracts would not be consummated.  At the
  time the original permit was issued, the Meadow Lot was used only for hay,
  and there is no suggestion that a different agricultural use, such as
  planting crops, was expected.  The smaller numbers of residential units and
  hotel rooms are differences of degree, not kind.  Despite SCH's claims, not
  every deviation from a plan is unforeseeable.  The Board was justified in
  finding that the changes to the Stowe Club project were foreseeable.

       Next, the Board considered the need for finality in the permitting
  process.  The Board recognized that parties and other interested persons
  rely on permit conditions designed to mitigate the impact of proposed
  developments.  In this case, the Board found that purchasers of

 

  adjacent residential lots relied upon the permit condition restricting
  development of the Meadow Lot when they chose to live in the neighborhood. 
  The Board also noted that the District Commission relied upon the
  representations of Stowe Club Associates, using the permit condition as one
  aspect of a mitigation plan for the overall development.

       SCH maintains that the Board erred by considering any reliance by
  adjacent landowners, because the permit condition is not a real covenant
  and cannot be enforced by the other landowners.  This hypertechnical
  argument obscures the basic concern: whether allowing the permit amendment
  is appropriate under the circumstances.  The standing of the adjoining
  landowners to enforce the existing permit is not relevant to whether the
  Board should grant the permit amendment.

       We are similarly unpersuaded by SCH's claim that the Board improperly
  emphasized the representations made by Stowe Club Associates in the
  original permit application.  This case is easily distinguished from our
  decision in In re Kostenblatt, 161 Vt. 292, 299, 640 A.2d 39, 44 (1994)
  where we held that representations made to a zoning board could not be
  enforced unless they were expressly incorporated into the permit.  The
  representations of Stowe Club Associates were incorporated into the permit,
  through Conditions 1 and 13; the Board did not attempt to enforce any
  unwritten conditions.  The Board simply considered two facts: first, that
  the restriction on the Meadow Lot was suggested by the original applicant,
  and second, that the District Commission used the permit condition as part
  of a plan to mitigate the impact of the development as a whole.  As the
  Board was evaluating the District Commission's reliance on the permit
  condition, these facts were a proper part of the Board's inquiry. 

       The reasonable reliance of the District Commission and the neighboring
  landowners weighs strongly against granting the permit amendment.  This is
  particularly true because it appears that SCH and its predecessors
  benefitted from that reliance: first, when the District Commission issued
  the original permit, and later, when persons such as Detora purchased lots
  around the perimeter of the Meadow Lot.  None of the other issues
  considered by the Board or

 

  raised by SCH overcomes the reliance of the neighboring landowners and the
  District Commission.  On these facts, the Board was justified in denying
  SCH's application for a permit amendment.

       Affirmed.


                              FOR THE COURT:



                              _______________________________________
                              Associate Justice




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                                  Footnotes



FN1.    The Meadow Lot was later determined to contain twenty-two
  acres, not the forty acres described in the original permit.