A city cannot block a property owner's permit after its own appeals board approved it.

Record source: CourtListener

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY NORTHERN DIVISION AT COVINGTON CIVIL ACTION NO. 23-32-DLB-EBA SKLO ACQUISITIONS, LLC PLAINTIFF v. MEMORANDUM OPINION AND ORDER CITY OF COVINGTON, et al. DEFENDANTS * * * * * * * * * * * * * * * * I. INTRODUCTION This matter is before the Court on the Motion for Summary Judgment from Defendants City of Covington, David Davidson and Dalton Belcher (Doc. # 56) and the Motion for Summary Judgment from Plaintiff SKLO Acquisitions, LLC (Doc. # 62). Both Motions having been fully briefed, the matter is ripe for the Court’s review. For the following reasons, Defendants’ Motion for Summary Judgment (Doc. # 56) is granted in part and denied in part, and Plaintiff’s Motion for Summary Judgment (Doc. # 62) is denied. II. FACTUAL AND PROCEDURAL BACKGROUND This case arises from a zoning dispute and the administrative and judicial proceedings that stemmed from it. Plaintiff SKLO Acquisitions, LLC (“SKLO”) is an Ohio limited liability company that owns property in the City of Covington, Kentucky (“the City”), a Kentucky municipality and a Defendant in this case. (Doc. # 1-1 ¶ 1). Defendant David Davidson is the former City Solicitor for the City and Defendant Dalton Belcher is the Zoning Administrator for the City. (Doc. # 56 at 3). On August 26, 2022, SKLO entered an agreement to lease its property located at 1116 Russell Street in Covington, Kentucky (“the Property”) to Allie’s Walkabout (“Allie’s”) for the purpose of operating a dog kennel. (Doc. # 62 at 5). The lease would begin once SKLO received all its necessary governmental permits. (Id.). The Property is located in an area zoned as a Traditional Urban Mixed Use (“TUMU”) District under Covington’s Zoning Code. (Doc. # 56-1 at 9). Notably, the operation of a “kennel”—defined by Article 158.09 of the Covington Neighborhood Development Code as “any premises on which four or more dogs, six months or older, are kept”—is not permitted in the TUMU District. (See Doc. # 56-1 at 2; Doc. # 56-2). Seemingly understanding this, SKLO requested that the Kenton County Planning Commission (“the Planning Commission”) amend the Covington Zoning Ordinance to zone the Property in a Limited Industrial zone, such that the kennel would be in zone where it could operate. (Doc. # 56-3 at 5). After public input and debate, the Planning Commission voted against SKLO’s proposed amendment. (Id. at 10). Nothing in the record indicates that SKLO appealed the Planning Commission’s zoning decision. (Doc. # 61 at 27:1–24). Undeterred, SKLO continued with its plans to rent the Property to Allie’s. (See Doc. # 59-1 ¶¶ 14–15). Following a thorough review of the relevant zoning ordinances, SKLO hired a contractor to perform construction activities on the Property, which first required them to get a Certificate of Appropriateness (“COA” or “the permit”) from the City. (Doc. # 56 at 2). SKLO’s contractor applied for the COA on November 18, 2022. (Doc. # 56-4). The City, through Zoning Administrator Belcher, denied SKLO’s COA on December 8, 2022, finding that the operation of a kennel is not permitted in the TUMU district. (Doc. # 56-5 at 5; Doc. # 58 at 42:14–16, 45:3–18). In response to the City’s denial of the COA, SKLO and Allie’s entered into a First Amendment to their lease agreement, which extended SKLO’s deadline to obtain the requisite zoning permits to September 30, 2023. (Doc. # 62 at 6; Doc. # 59-1 at 27–28). On December 19, 2022, SKLO appealed Belcher’s denial to the City’s Board of Architectural Review and Development (“BOARD”), which is the City’s board of adjustments for zoning decisions. (Doc. # 56-5). SKLO based its appeal on “the Zoning Administrator’s failure to properly apply the [Neighborhood Development Code] to SKLO [sic] proposed use.” (Id. at 5). Specifically, SKLO alleged that Allie’s would be able to operate under the Service Oriented Uses provision of the Neighborhood Development Code § 02.04.3.E, which allows on a limited basis “non-medical services that are generally needed on a recurring basis . . . [such as] animal grooming and kennel services.” (Id. at 6–7). SKLO further alleged that Belcher applied an inappropriate provision of the Code—one which deals with use of land for agricultural, horticultural and equestrian purposes—when analyzing what SKLO’s property would be used for, such that the analysis and application of the code was improper. (Id. at 7). SKLO requested a hearing before the BOARD, which took place on January 18, 2023. (Doc. # 61 ¶ 18). After hearing testimony from several interested parties, the BOARD reversed Belcher and the City’s decision and ordered the City to provide SKLO with the COA. (Doc. # 56-5; Doc. # 59 ¶ 18). The controversial aspects of this case took place after the January 18, 2023 hearing. According to Lev Orlov, one of SKLO’s owners, SKLO’s contractor contacted Belcher to ask when they would receive the COA. (Doc. # 59 ¶ 19). Belcher was not responsive, so on January 30, 2023, SKLO’s counsel emailed David Davidson, Covington’s then–City Solicitor, to inquire about the status of the COA. (Id. ¶ 20; see also Doc. # 59-1 at 30). Davidson responded the same day, stating that the City planned to appeal BOARD’s decision by filing a civil action in Kenton County Circuit Court. (Doc. # 59-1 at 32). Davidson further stated the COA had not been issued and would not be issued “until the process is final.” (Id.). Later that day, Davidson, acting in his role as City Solicitor, filed an action in Kenton Circuit Court, pursuant to Kentucky Revised Statute (“KRS”) § 100.347(1)1 against the BOARD, the BOARD’s members in their official capacities, Belcher in his capacity as Zoning Administrator, and SKLO (“the State Court action”). (See Doc. # 56-7). The Complaint alleged that the City suffered injuries based on an “arbitrary and capricious . . . abuse of the Board of Architectural Review and Development’s delegated powers” that was “a political decision driven by affection for animals and not by law or fact.” (Id. at 12). The next day, SKLO’s counsel communicated to Davidson that SKLO would be filing a § 1983 action alleging a violation of its rights under the Fourteenth Amendment if the City did not issue the COA. (Id. at 38). When the City did not provide SKLO the promised COA, SKLO took two legal actions. First, it moved to dismiss the City’s Complaint in the State Court action. (Doc. # 56-8). In its Motion to Dismiss, SKLO argued that the City did not have standing to, in essence, sue itself for a decision it made. (Id. at 5–9). The Circuit Court issued its Order granting SKLO’s Motion on April 7, 2023, finding that the City did not have sufficient 1 KRS § 100.347(1) provides that “[a]ny person or entity claiming to be injured or aggrieved by any final action of the board of adjustment and that owns real property within the same zone where the property that is the subject of the final action is located shall appeal from the action to the Circuit Court of the county in wh

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