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American Furniture Warehouse Co. v. Town of Gilbert

Court of Appeals of Arizona, First Division

July 10, 2018

TOWN OF GILBERT, Defendant/Appellee. Category Rate

          Appeal from the Superior Court in Maricopa County No. CV2013-009133 The Honorable James T. Blomo, Judge (Retired)

          Berry Riddell, LLC, Scottsdale By Martin A. Aronson, Jeffrey D. Gross Counsel for Plaintiff/Appellant

          Grasso Law Firm, P.C., Chandler By Robert Grasso, Jr., Kim S. Alvarado Counsel for Defendant/Appellee

          Pacific Legal Foundation, Sacramento, California By James S. Burling Counsel for Amicus Curiae Pacific Legal Foundation

          Chief Judge Samuel A. Thumma delivered the opinion of the Court, in which Presiding Judge Randall M. Howe and Judge Kenton D. Jones joined.



         ¶1 This appeal arises out of the payment of a development fee, imposed by a town ordinance, as a condition of securing a permit to develop land. Plaintiff American Furniture Warehouse Co. (AFW) appeals from the grant of summary judgment in favor of defendant Town of Gilbert. AFW argues that the required payment was an unconstitutional taking and, alternatively, that AFW was denied a required appeals hearing. Although the required payment was not unconstitutional, because AFW has a right to a statutory exaction appeals hearing, summary judgment is affirmed in part and vacated in part and this matter is remanded for further proceedings consistent with this opinion.


         ¶2 AFW operates regional furniture distribution facilities, each typically consisting of a building that includes a showroom (which is open to the public and is used for retail sales), a warehouse and a mezzanine (including an office and shops to assemble and repair furniture). AFW decided to develop such a facility in Gilbert, with a building covering nearly 15 acres of a 40-acre parcel of land that AFW purchased in early 2013. The 630, 290 square-foot building includes a 177, 092 square-foot retail showroom (about 28 percent of the building), a 397, 800 square-foot warehouse and 50-door loading dock (more than 63 percent), a 49, 798 square-foot mezzanine (nearly 8 percent) and a 5, 600 square-foot maintenance area (less than 1 percent).

         ¶3 To obtain development permits, AFW was required to pay Gilbert various fees, including a traffic signal System Development Fee (SDF). In 2009, the town adopted the traffic signal SDF in Gilbert Ordinance 2226, based on projected traffic patterns and "growth-related costs allocated to traffic signals." The traffic signal SDF imposes on new commercial structures different per square foot rates using "Retail," "Office," "Industrial" or "Other Nonresidential" categories. The per square foot rates differ significantly:



$1.593 per square foot


$0.570 per square foot


$0.405 per square foot

Other Nonresidential

“To be determined by the Town Engineer. The Town Engineer will estimate trip generation and determine the traffic [signal SDF] based on the most closely aligned category of either: retail, office or industrial. The [SDF] then is assessed” using Retail, Office or Industrial rates.

         These categories are not defined in Ordinance 2226, which also does not include provisions addressing multiple or mixed uses on a property. For multiple or mixed uses, Gilbert identifies one category for the entire project based on "the main purpose of the building."

         ¶4 Gilbert classified AFW's building as Retail. Applying the $1.593 per-square-foot Retail rate to the entire 630, 290 square-foot building, Gilbert required AFW to pay more than $1 million as a traffic signal SDF. Paying under protest, AFW timely challenged the requirement.

         ¶5 AFW argued the building is Industrial (yielding a lower traffic signal SDF), because that category more closely described AFW's development. AFW also argued that applying the Retail rate was not reasonably related to costs the development would impose on Gilbert. AFW also requested a statutory exaction appeals hearing. See Ariz. Rev. Stat. (A.R.S.) § 9-500.12(A)(1) (2018)[1] (affording property owners an administrative appeal from "a dedication or exaction as a condition of granting approval for the use, improvement or development of real property," unless the dedication or exaction is "required in a legislative act by the governing body of a city or town that does not give discretion" in determining "the nature or extent of the dedication or exaction").

         ¶6 Gilbert denied AFW's protest, stating land use (not trip counts, as AFW argued) determines the traffic signal SDF category; "the main purpose of the building is to sell furniture and ship furniture to customers," meaning the Retail category applied and, as a result, the Other Nonresidential category did not. Concluding that Ordinance 2226 is a legislative act, meaning AFW had no right to appeal, Gilbert also denied AFW's request for a statutory exaction administrative appeals hearing. In July 2013, AFW timely filed this case in superior court. AFW's claims were resolved in two rounds of summary judgment motions.

         ¶7 The first round addressed AFW's original complaint. AFW sought to recover the traffic signal SDF paid under protest, alleging the fee was an unconstitutional exaction or taking (Counts 1, 3 and 6). AFW also challenged Gilbert's denial of its request for a statutory exaction administrative appeals hearing (Counts 2 and 4).[2] After briefing and argument on competing summary judgment motions, the court ruled in favor of Gilbert and against AFW on Counts 1, 3 and 6, stating the traffic signal SDF "is a legislative act that carries a presumption of validity." Finding the appeal hearing claims (Counts 2 and 4) should have been filed as a special action, the court allowed AFW to amend its complaint to seek special action review.

         ¶8 AFW filed an amended pleading and the parties filed the second round of competing summary judgment motions, which addressed those amended Counts seeking special action review. After briefing and argument, the court ruled in favor of Gilbert and against AFW. The court found Gilbert's denial of AFW's "protest is supported by competent evidence and [the] plain language application of the Town Code" and "that the denial is not arbitrary, capricious or an abuse of discretion." Entry of final judgment followed, see Ariz. R. Civ. P. 54(c), and this court has jurisdiction over AFW's timely appeal pursuant to Article 6, Section 9, of the Arizona Constitution and A.R.S. §§ 12-120.21(A)(1) and -2101(A)(1).


         ¶9 Summary judgment is proper when the moving party "shows that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law." Ariz. R. Civ. P. 56(a). The court "view[s] the evidence and reasonable inferences in the light most favorable to the party opposing the motion," Andrews v. Blake, 205 Ariz. 236, 240 ¶ 12 (2003), to determine "whether any genuine issues of material fact exist," Brookover v. Roberts Enter., Inc., 215 Ariz. 52, 55 ¶ 8 (App. 2007). A ruling granting summary judgment is reviewed de novo, "both as to whether there are any genuine issues of material fact and as to whether the moving party is entitled to judgment as a matter of law." Greenwood v. State, 217 Ariz. 438, 442 ¶ 13 (App. 2008).

         I. AFW Did Not Waive Its Claims Resolved By The First Summary Judgment Ruling.

         ¶10 Gilbert argues AFW waived its right to challenge on appeal claims that were resolved in the first summary judgment ruling (Counts 1, 3 and 6) because AFW's amended complaint did not reassert those claims.[3]In essence, Gilbert is arguing that AFW was required to do a pointless act (reassert claims that the superior court had already resolved against AFW by summary judgment) and that the failure to do so results in a waiver of AFW's right to challenge the court's ruling on appeal.

         ¶11 The authority Gilbert cites stands for the proposition that an amended complaint supersedes the pleading it amends because "a plaintiff may not pursue two complaints in the same action." Mohave Concrete and Materials, Inc. v. Scaramuzzo, 154 Ariz. 28, 30 (App. 1987) (citing Campbell v. Deddens, 21 Ariz.App. 295, 297 (1974)). But the fact that only one complaint is operative at any given time does not mean, as Gilbert asserts, that an amended pleading causes a prior pleading to disappear. This is particularly true where dispositive rulings on the merits resolved claims in the prior complaint. Although scant, Arizona case law runs counter to Gilbert's argument. See Harris v. Cochise Health Sys.,215 Ariz. 344, 349 ΒΆ 15 (App. 2007) (exercising appellate jurisdiction challenging dismissal of claims asserted in original complaint but not re-asserted in ...

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