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STATE OF MINNESOTA IN SUPREME COURT A08-233

Court of Appeals

Meyer, J.

Halla Nursery, Inc., et al., Appellants, vs. City of Chanhassen, Respondent. ________________________ Phillip R. Krass, Benjamin J. Court, Krass Monroe, P.A., Minneapolis, Minnesota, for appellants. Thomas M. Scott, Campbell Knutson, Professional Association, Eagan, Minnesota, for respondent. ________________________ Filed: May 6, 2010 Office of Appellate Courts

SYLLABUS 1. The plain terms of a stipulation and judgment between a property owner

and a municipality prohibit use of a sign that violates illumination standards under the municipalitys zoning ordinance. 2. The doctrine of vested rights does not apply when a landowner

substantially completes a project in reliance on an erroneously issued building permit. Affirmed. 1

OPINION MEYER, Justice. Appellants Donald and Sandra Halla own real property in the City of Chanhassen that they lease to appellant Halla Nursery, Inc. (collectively "Halla"). At issue is the interpretation of a 1997 stipulation and judgment between Halla and respondent City of Chanhassen concerning an illuminated sign at Hallas nursery and the application of the vested rights doctrine. The district court allowed Halla to continue using the illuminated sign, concluding that Halla had obtained vested rights to use the sign. The court of appeals reversed. The court concluded that the sign did not comply with the terms of the 1997 stipulation and judgment. The court also held that Halla did not have vested rights to use the sign because Halla was aware that construction of an illuminated sign was prohibited by the 1997 stipulation and judgment and relevant city ordinances. We affirm the court of appeals. In 1994, Halla constructed a retail sales building without obtaining a building permit on property located at the intersection of Highway 101 and Pioneer Trail in Chanhassen, Minnesota. The City inspected the building and determined that it did not comply with building code requirements. The City sought to enjoin Halla from operating a business in the new building. On February 10, 1997, the parties entered into a stipulation for entry of judgment to resolve the dispute over the building. The stipulation and judgment addressed signage, which is at issue here. Paragraph 6A of the stipulation and judgment provides that the following signs are allowed: 2

1.

Existing sign on the roof of the Garden Center.

2. Existing sign at the entrance to the Subject Property from Highway 101, or an updated pylon sign of the same height and square footage. 3. One off premises directional sign may be placed in the southeast quadrant of the intersection of Highway 101 and Pioneer Trail on Lot 2, Block 1, Halla Great Plains Addition. The sign content shall be as approved by City Staff in the sign permit. The sign may not exceed eight (8) feet in height and seventy-two (72) square feet in size per sign face. The sign may have two sides back-to-back or "V" shaped. The sign shall not be lit. Before erecting the sign, a sign permit must be obtained from the City. The sign must be removed when the lot on which it is located is sold. The stipulation and judgment further provides that "[t]he action or inaction of the City shall not constitute a waiver or amendment to the provisions of this Stipulation," and "[e]xcept as otherwise provided herein, the Subject Property shall be subject to the requirements of the Citys Zoning Ordinance, as may be amended from time to time." The stipulation and judgment also provides its provisions "shall be liberally construed to protect the publics interest." Following the entry of judgment, the City issued a sign permit to Halla. The permit approved sign faces 8 feet in height and 72 square feet in total area. Halla then constructed the sign. Shortly after the sign was completed, the Chanhassen Community Development Director observed that the sign faces were illuminated in violation of the stipulation and judgment. The Director contacted Halla regarding illumination of the sign, but the conversation became confrontational, and the issue went unresolved. The City did not take any action, choosing instead to wait, assuming that the property would soon be sold and the sign torn down. illuminated until 2005. 3 The sign, however, remained standing and

On March 28, 2005, the City received a new sign permit application from Halla. According to Halla, relocation of the sign was required due to road improvements at the intersection of Highway 101 and Pioneer Trail. The permit application indicated that Halla was planning to erect an illuminated monument sign that would be approximately 9 feet tall with a total area of 102 square feet. The application also indicated that the sign would have electronic message centers. On April 11, 2005, a permit for the new sign was issued by a Chanhassen city planner, who was not aware of the 1997 stipulation and judgment and apparently did not notice that the proposed sign would have electronic message centers.1 In early 2006, Halla began construction of the sign at a cost of $124,000. On April 28, 2006, with construction nearly complete, the City received a call from a concerned citizen who reported that electrical hook-ups were being installed on the sign. The City issued a stop-work order on the basis that a conditional use permit is required for electronic message centers. The City also determined that the new sign exceeded the size requirements for signs under the City Code. In June 2006, Halla filed a complaint against the City seeking injunctive relief, declaratory judgment, and a writ of mandamus to prohibit the City from interfering with the use of the sign. The City filed a counterclaim, alleging that the sign violated the 1997

1

Under the Chanhassen City Code, all "moving" or "flashing" signs are prohibited except temperature signs or barber poles, which require a conditional use permit. Chanhassen, Minn., City Code

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