In re Beliveau NOV, 2013 VT
41
One of the pleasures of practicing law is the
opportunity to argue for what we like to call a “good faith extension of the
law.” In practice, this occasionally
translates to “weasel out of it however you can, even if all you’ve got is a
misshapen club legal foot to stand on.”
Today’s homeowner-petitioner to the SCOV may not have more than a spider’s
filament on which to rest his argument, but I’d give him a high five for
creativity.
Beginning in 2008, homeowner began renting out rooms
in his home in Fairfax, where he lived, for a flexible monthly fee. The Town of Fairfax caught wind in May of
2008, and issued a citation to homeowner for converting his single-family home
to a rooming-and-boarding house without a permit. The Town gave him a choice: get a permit and
Town approval, or quit it. He chose
Option C: ignore them.
The Fairfax Zoning Bylaws define a boarding house
with a one-two-three test: 1) a home occupied by the owner; 2) where people are
provided with and charged for meals and/or sleeping accommodations; and 3) for
a fixed period of time.
The Zoning Administrator turned the citation into a
formal notice of violation (or “NOV”).
Homeowner appealed to the Fairfax Development Review Board. The Board found homeowner had changed the use
of his home to a boarding house, without a permit. Homeowner appealed to the environmental
court.
Meanwhile, the Town filed an enforcement action in
the environmental court. The court
granted judgment in favor of the Town, and slapped a $23,000 penalty on
homeowner. Homeowner appealed to the
SCOV.
In an unpublished memorandum decision, the SCOV
reversed the environmental court and remanded to determine whether homeowner
resided in the home while he was renting it, and whether he rented rooms for a
“fixed period of time.” The Town and
homeowner did some additional discovery, then each filed cross-motions for
summary judgment. The environmental
court found again in favor of the Town, slapped a nearly-tripled $63,000
penalty on homeowner, and told him to stop it already. Homeowner appealed to the SCOV a second time.
On Appeal, the Court considers three questions
raised by homeowner: 1) whether the environmental court got it right in
concluding he was operating a boarding house without a permit; 2) whether the
Zoning Bylaw was unconstitutionally vague; and 3) whether the court calculated
the penalty wrong.
Homeowner’s first challenge is to the trial court’s
conclusion about whether his arrangement was for a “fixed period of time,” and
is based on several unique facts of his boarding arrangements. All agreements with individuals renting rooms
in his house were oral, and for a period of one month at a time, though
homeowner allowed tenants to remain past the end of the month without payment,
and sometimes bartered repairs and other services in exchange for rent. Homeowner did acknowledge that he was
required to give notice to tenants according to law before kicking them out.
Homeowner argued that, rather than creating a
month-to-month tenancy, he created an “at-will tenancy,” a peculiar and ancient
form of occupancy characterized by an oral agreement for use of land for an
indefinite length of time. The problem
with this is two-fold. First, at-will
tenancies are a very old idea that really only made sense when farmers were
renting fields for dozens of years at a time.
Second, Vermont’s residential tenancy laws convert all at-will tenancies
where rent is collected into periodic tenancies for a “fixed period of time,” such
as month-to-month or however long the period is defined (hint: it’s usually
when you pay your rent). In homeowner’s
case, he rented to people on a more or less month-to-month basis, albeit with
flexible terms.
The SCOV rejects this argument out of hand noting
that homeowner’s position would lead to an “absurd result.” If all rental arrangements such as his were
at-will, lacking a definite end date, periodic tenancies would be read out of
the statutes. In light of this, the SCOV
finds the environmental court’s interpretation of the Zoning Bylaws reasonable,
and it affirms.
Homeowner’s second argument was that the Bylaw is
impermissibly vague. As a result, it
doesn’t give property owners appropriate notice of what is and what is not a
boarding house, and gives the Fairfax zoning officials too much discretion in
deciding when owners are in violation of the Bylaw.
In furtherance of this argument homeowner argued
that the definition of “family” in the Zoning Bylaws is vague, and that
enforcement requires zoning officials to peek into the private, everyday
activities of a household, single-family or boarding house, to determine
whether they act like a family unit (e.g., do they eat together, watch TV together,
share bathrooms, and share a food budget).
But this information is easily obtained by way of a
questionnaire—as the Town used here—and the distinction in the Bylaws is clear
enough that the Town doesn’t have “unfettered discretion” to call an
arrangement a family unit or not. The
environmental court was presented with nothing indicating that homeowner’s
renters acted as a family or household unit, and concluded that they did not. A reasonable conclusion, says the SCOV.
Going further, though, the SCOV notes that the interest
the homeowner is asking the SCOV to protect is economic, not constitutional. Where an economic interest is involved, an
owner can as easily resort to the administrative body trying to enforce the law
for clarification and can participate in the process to amend the laws to be
more clear.
The fact that homeowner had the opportunity to ask
the Town to explain its definition of boarding house, but chose to ignore it
and continue renting while carrying on his numerous appeals, is the nail in the
coffin. The SCOV doesn’t take kindly to
those who flaunt the law to their advantage, and only cry unconstitutional when
it is convenient. Homeowner loses on his
second argument.
Homeowner’s last argument seems appealing, if only
for the fact that by the time the case got up to the SCOV on the final appeal
the fines the Town requested had jumped up to nearly $100,000. Here, homeowner splits hairs in a creative
attempt to avoid paying an arm-and-a-leg for renting to whomever he wants.
The statute governing fines for violating a zoning
bylaw sets a cap of $100 per violation each day, with the trial court having
the discretion to set the amount of the fine under that amount. The court has to balance the weight of the
continuing violation against the cost of compliance, and the cost of
enforcement.
Here, the environmental court weighed the benefit of
homeowner’s violation for four years against the attorney’s fees and costs the
Town incurred to make him comply and the fact that homeowner could at any time
have stopped renting to boarders, without regard for homeowner’s costs of
maintaining his home (he would have had to pay taxes, utilities, repairs, etc.,
regardless). The environmental court
arrived at a reasonable $56.48 per day for the violation.
Homeowner argues that, under SCOV case law, a
property owner need not “disgorge all profits” earned while he was out of
compliance if there was no association between the owner’s misconduct and the
“economic advantage gained from the misconduct,” (higher profit margins or
increased market share). The only
“economic benefit” homeowner gained compared to his competitors, he argues, was
the cost of the permit to operate as a boarding house.
But here again, homeowner’s argument falls on deaf
ears. The same case that homeowner
relies on noted that this approach doesn’t apply where the violation is
starting a business without a permit.
The Vermont Legislature also clarified a month after homeowner started
renting that “economic benefit” includes not just “competitive advantage
gained” but “any gain, advantage, wrongful profit, or delayed avoided cost,”
resulting from violation.
Considering that the environmental court set the
fine at less than the statutory cap, and that homeowner could have converted
his house back to a single-family dwelling at any time, rather than continuing
to profit from boarders, the SCOV finds the penalty reasonable.
Poor homeowner—he has to pay $93,000 in fines, and
get a permit to continue renting. Kudos
to him for his attempts at creativity, but one suspects that this decision is
likely to put the kibosh on other homeowners eyeing the potential boarding
house market.
Woe to the mysterious lodgers of Fairfax, Vermont!
Seems like a strange result.
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