Variance Requests, Aggrieved Parties and the Open Market Fueled by Friendly Competition
Written by: Alan Nochumson
In a recent opinion, the Pennsylvania Supreme Court in South Bethlehem Associates v. Zoning Hearing Board of Bethlehem Township, 294 A.3d 441 (Pa. 2023) established that a party appearing before a local zoning board cannot subsequently seek judicial review of a variance request granted by the local zoning board unless that party is deemed an aggrieved party. Specifically, the Supreme Court in South Bethlehem Associates clarified that a party will not qualify as aggrieved solely because their business will someday compete with the future business of the party requesting a zoning variance.
In South Bethlehem Associates, the appellee, Central PA Equities 30, owned a 3.5-acre parcel and sought to construct a four-story, 107-room hotel on their property, the opinion said.
According to the opinion, the proposed hotel would be approximately a couple of blocks away from an existing hotel owned by the appellant, South Bethlehem Associates.
Finding itself in the light industrial/office campus (phased) zoning district and neighboring a residential neighborhood, the Bethlehem Township Zoning Code required that the proposed hotel have a 150-foot setback and construct an earth berm within the setback, the opinion said.
However, adhering to these limitations, the subject property would have a buildable area too small to house a hotel, the opinion said.
Additionally, constructing earth berms would be impractical because of a utility easement for power lines on that side, the opinion said.
Resultantly, the appellee requested a dimensional variance to utilize a 74-foot setback, a 76-foot variance from the original requirement, and a waiver of the earth-berm requirement, the opinion said.
Eventually, the Bethlehem Zoning Board (hereinafter the board) held a hearing on the variance request, the opinion said.
At this hearing, the appellant appeared and entered their appearance at the hearing on the appropriate form as an objector, the opinion said.
In opposition to the appellant’s appearance at the hearing, the appellee argued that the appellant did not have standing to challenge the variance request as the appellant was only there as a business competitor to contest the hotel’s construction, the opinion said.
In response to the stated opposition, the appellant argued that it had standing to challenge the variance request as it held an interest in the construction of a future hotel that would be mere blocks away from its hotel, the opinion said.
Citing to Section 10908(3) of the municipalities planning code (hereinafter the MPC), the board ruled that the appellant had such standing because by entering his appearance on the objector sheet, it became a party of record, the opinion said.
Nonetheless, the board unanimously granted the appellee’s requested variances, the opinion said.
Afterwards, the appellant appealed this administrative ruling to the Northampton County Court of Common Pleas.
Again, the appellee argued that the appellant did not possess standing to challenge the variance request.
The trial court in South Bethlehem Associates ruled that, since the appellant timely appeared before the Board as an objector and was presumed to be affected by the variance request because it owned a nearby property, it possessed standing to appeal the administrative ruling.
In addition, the trial court in South Bethlehem Associates affirmed the board’s decision to grant the underlying variance request.
Following the trial court’s ruling, the appellant appealed it to the Pennsylvania Commonwealth Court.
The Commonwealth Court ultimately affirmed the trial court’s ruling, but ruled that the appellant lacked standing in challenging the variance request.
In doing so, the Commonwealth Court, citing to In re Farmland Industries, 531 A.2d 79, 84 (Pa. Commw. 1987), declared that one cannot challenge a variance request by way of judicial review solely to deter free competition. The Commonwealth Court explained that the appellant did not show aggrievement here because the impact upon their interest stemmed from the competition that would arise from the new hotel, not from the actual variance request itself.
Afterwards, the Supreme Court granted allocatur limited to whether the Commonwealth Court erred in holding that the appellant did not have standing to seek judicial review.
More precisely, the Supreme Court analyzed whether the Commonwealth Court incorrectly applied an aggrieved person standard even though the legislature had repealed that standard.
In the majority opinion penned by Justice Sallie Updyke Mundy, the Supreme Court first explained that traditionally, standing to initiate judicial proceedings depends on the litigant suffering an adverse effect.
According to Mundy, this is determined by a court evaluating the following factors: whether the complaining party’s interest in conformity with the law is greater than that of the general public; whether the party’s harm was actually caused by the issue being complained of; and whether the harm is remote or speculative.
Mundy emphasized the distinction between what is required to appear as an adverse party at a hearing before a local zoning board as compared to subsequent judicial proceedings.
To compare the two, Mundy cited to the liberal standard for standing at a hearing before a local zoning board laid out in Section 908(3) of the MPC: “The parties to the zoning board hearing shall be the municipality, any person affected by the application who has made timely appearance of record before the board, and any other person including civic or community organizations permitted to appear by the board. The board shall have power to require that all persons who wish to be considered parties enter appearances in writing on forms provided by the board for that purpose.”
Distinguishing this standing requirement from standing during subsequent judicial proceedings, Mundy expressed that the legislature’s intent may have been to avoid delays at local zoning boards by avoiding arguments over whether parties were aggrieved, but that there is no indication that the legislature likewise meant to eliminate the aggrievement standard as a predicate to an appeal to a court of law.
Next, explaining the purpose of standing, Mundy highlighted that it aims to protect the court system and the public from improper plaintiffs.
Mundy then elaborated that an improper plaintiff has no legally enforceable interest affected by the matter complained of, stressing that, even if there is a harmed interest, the key language is that the interest must be a “legally enforceable” one, as this alone is what the law protects.
Hinging on this distinction, Mundy clarified that, being free from market competition may very well be in the interest of the already-established hotel, but it is not a legally enforceable interest that courts will protect.
Mundy framed this argument in public policy, noting that courts protect market competition but not market competitors from competition by pointing out that such an interest in avoiding competition cannot be the basis for a claim to aggrievement for purposes of judicial standing.
Accordingly, the Supreme Court affirmed the Commonwealth Court’s ruling and simultaneously confirmed the principle that an appellant will lack standing as an aggrieved person if their only affected interest is the desire to suppress competition in the open market.
Dylan Beltrami, a third-year law student at the Drexel University Thomas R. Kline School of Law, who is interning at the firm, assisted in the preparation of this article.
Alan Nochumson is the principal of Nochumson P.C., a legal services firm with a focus on real estate, land use & zoning, litigation, and business counseling for the people of Pennsylvania and New Jersey. Nochumson is a frequent author and lecturer on issues commonly confronting businesses, individuals and professionals. You can reach him at 215-399-1346 or email@example.com.
Tamarrin Johnson is an associate attorney at the firm. You can reach her at 215-399-1346 or firstname.lastname@example.org.