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LLC v. City of Phoenix

Court of Appeals of Arizona, First Division

April 12, 2016

PAWN 1ST, LLC, an Arizona limited liability company, Plaintiff/Appellant,
CITY OF PHOENIX, a political subdivision of the State of Arizona; BOARD OF ADJUSTMENT OF THE CITY OF PHOENIX; and BOB FORD; EMILIO GAYNOR; PATRICK PAUL; ALEX TAUBER; YVONNE HUNTER; BETTINA NAVA; and EMILY RYAN, as members of and constituting the Board of Adjustment of the City of Phoenix, Defendants/Appellees, WILLIAM JACHIMEK dba CENTRAL PAWN, Real Party in Interest/Appellee

          Appeal from the Superior Court in Maricopa County. No. LC 2010-000701-001. The Honorable Lisa Daniel Flores, Judge.

         Baker & Baker, Phoenix, By Thomas M. Baker, Counsel for Plaintiff/Appellant.

         Phoenix City Attorney's Office, Phoenix, By Daniel L. Brown, Robert A. Hyde, Paul M. Li, Brad Holm, Counsel for Defendants/Appellees.

         Spiess & Bell, PC, Phoenix, By James O. Bell, Counsel for Real Party in Interest/Appellee.

         Judge Patricia A. Orozco delivered the opinion of the Court, in which Presiding Judge Margaret H. Downie and Judge Maurice Portley joined.


         Patricia A. Orozco, Judge

         [¶1] Pawn 1st, LLC (Pawn) appeals from the superior court's judgment dismissing its complaint for special action review of a decision by the Board of Adjustment of the City of Phoenix (City) and its members (collectively, the Board) granting a variance to real party in interest William Jachimek, doing business as Central Pawn (Jachimek). Because we conclude that Jachimek's application for a variance to operate a pawn shop within 500 feet of a residential district does not meet the necessary requirements established by statute and ordinance, we reverse the ruling and remand.


         [¶2] The underlying facts and procedural history of this case were stated in Pawn 1st, L.L.C. v. City of Phoenix, 231 Ariz. 309, 294 P.3d 147 (App. 2013) ( Pawn I ). Briefly, Jachimek entered into a lease with an option to purchase commercial property (the Property) zoned C-3 on the southwestern corner of McDowell Road and 32nd Street, intending to operate a pawn shop. Id. at 310, ¶ 2. The City of Phoenix Zoning Ordinance (Zoning Ordinance) requires that the exterior walls of a pawn shop business in a C-3 district be located at least 500 feet from a residential district. Phx., Ariz., Zoning Ordinance § 623.D.132.b (2016). The City's Zoning Administrator denied Jachimek's request for a variance from the 500-foot distance requirement, but on appeal, the Board approved the variance. Pawn I, 231 Ariz. at 310, ¶ ¶ 4-5. Pawn, a competing pawn shop business, filed a complaint in superior court for special action review of the Board's decision. Id. at 310, ¶ 7.

         [¶3] In Pawn I, we reversed the superior court's determination that Pawn lacked standing to bring a statutory special action challenging the Board's grant of a variance to Jachimek and we remanded for consideration of the special action. Id. at 313, ¶ 25. On remand, the superior court denied Pawn's requested relief, finding that:

the variance granted to Jachimek was an area variance and not a use variance. The variance at issue was a deviation from the zoning ordinance that imposed a dimensional requirement for pawn shops, i.e. that the exterior walls of the building in which the pawn shop is located shall be at least five hundred (500) feet from a residential street. Section 623(D)(132) of the Phoenix Zoning Ordinance. This zoning ordinance did not prohibit pawn shops; for that reason, granting a variance was not a " use variance." Because the Board of Adjustment is authorized to consider area variances, its decision to grant the area variance to Jachimek was not ultra vires.
For reasons fully stated in the written and oral arguments of Defendant City of Phoenix and Real Party in Interest Jachimek, the Court finds that there is evidence to support the Board's decision to grant the area variance.

         [¶4] The superior court affirmed the Board's decision and entered judgment dismissing Pawn's complaint with prejudice. Pawn appealed. We have jurisdiction pursuant to Article 6, Section 9, of the Arizona Constitution, and Arizona Revised Statutes (A.R.S.) sections 12-120.21.A.1 and -2101.A.1 (West 2016).[1]


         I. Standard of Review

         [¶5] We review de novo issues involving the interpretation of a statute or a city ordinance. See Whiteco Outdoor Advert. v. City of Tucson, 193 Ariz. 314, 316-17, ¶ 7, 972 P.2d 647 (App. 1998). We generally defer to the Board's decision and presume it to be correct unless it is " not supported by substantial evidence, is contrary to law, is arbitrary and capricious or is an abuse of discretion." A.R.S. § 12-910.E; see also Whiteco, at 317, ¶ 7. If the record contains credible evidence to support the Board's decision, it must be affirmed. See Austin Shea (Ariz.) 7th St. and Van Buren, L.L.C. v. City of Phoenix, 213 Ariz. 385, 392, ¶ 29, 142 P.3d 693 (App. 2006); Murphy v. Town of Chino Valley, 163 Ariz. 571, 574, 789 P.2d 1072 (App. 1989).

         [¶6] However, as to issues of statutory interpretation, we are free to draw our own conclusions as to whether the Board properly applied the law. See Murphy, 163 Ariz. at 574. Further, we may " substitute [our] judgment for the Board's assessment of the legal effect of the underlying facts." Whiteco, 193 Ariz. at 317, ¶ 7. " [We] may substitute our opinion for that of the superior court since we are reviewing the same record." Arkules v. Bd. of Adjustment of Town of Paradise Valley, 151 Ariz. 438, 441, 728 P.2d 657 (App. 1986).

         II. In Granting the Variance, the Board Did Not Make a Change in Permitted Usage

         [¶7] The Board or its Zoning Administrator " may not [m]ake any changes in the uses permitted in any zoning classification or zoning district." A.R.S. § 9-462.06.H.1; Phx., Ariz., Zoning Ordinances § § 303.B.2.a, 307.A.10.a. Pawn argues that Jachimek's request for a variance is not an " area" variance as found by the superior court, but an unauthorized " use" variance because it allows the Property to be developed for an impermissible use; namely, the operation of a pawn shop within 500 feet of a parcel zoned residential. In contrast, the City, the Board and Jachimek argue the variance is a permissible " area" variance.

         [¶8] All parties cite out-of-state cases in support of their respective arguments about whether a distance separation limitation, such as the 500-foot requirement here, constitutes a " use" or " area" variance. Although the terms " use variance" and " area variance" are not embodied in the statutes or ordinances, we find those terms helpful in exploring and explaining the relevant distinctions.

         [¶9] The distinctions between " area" and " use" variances stem from Ivancovich v. City of Tucson Bd. of Adjustment, in which this court addressed the propriety of a 1968 variance request and discussed the distinction at length. 22 Ariz.App. 530, ...

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