An Ohio appeals court improperly “second-guessed” a Portage County trial court’s decision allowing for sand and gravel mining on a former 225-acre horse farm in Streetsboro, the Ohio Supreme Court ruled today.

A divided Supreme Court determined the Eleventh District Court of Appeals improperly reweighed the evidence concerning Shelly Materials’ application for a conditional use permit to mine the property known as Sahbra Farms. Streetsboro’s planning and zoning commission denied the permit shortly after the city adopted an ordinance to no longer allow surface mining in the city.

In the Court’s lead opinion, Justice Melody J. Stewart wrote the Portage County Common Pleas Court used the proper standard of review for Shelly’s appeal and that the Eleventh District could not substitute its judgment on the evidence for that of the common pleas court. In overturning the trial court, the Eleventh District addressed only one of three arguments raised by the city. The Supreme Court returned the case to the Eleventh District to consider the merits of the city’s other objections.

Justices Sharon L. Kennedy and Michael P. Donnelly joined Justice Stewart’s opinion. Justice Patrick F. Fischer concurred in judgment only.

Justice R. Patrick DeWine dissented, stating that the Eleventh District did not overstep its bounds, but correctly found that Streetsboro’s law required Shelly prove by clear and convincing evidence that it was entitled to a permit, and that the trial court did not properly apply that standard.

Chief Justice Maureen O’Connor joined Justice DeWine’s dissent, as did Third District Court of Appeals Judge William Zimmerman, sitting for Justice Judith L. French.

Mining Expansion Contested
Shelly leased the mineral rights to Sahbra Farms in 2015. At the time, the property was zoned as “rural residential,” and surface mining was permitted as a conditional use. The company sought a conditional use permit to mine for sand and gravel, noting the property adjacent to Sahbra Farms had been used for surface mining for years.

A group of city residents who learned about Shelly’s mining plans asked the city to amend the zoning code to remove surface mining as a conditional use in all districts where it was permitted, including rural-residential districts. The city’s planning and zoning director agreed, and at the recommendation of the Streetsboro Planning and Zoning Commission, the Streetsboro City Council voted to remove mining from the zoning code.

Company Presses for Permit
Because Shelly filed its permit application before the zoning code took effect, the mining ban could not affect its request. The planning and zoning commission then conducted three hearings on Shelly’s application and determined that Shelly did not “establish by clear and convincing evidence” that its proposal met the city’s standards to obtain a permit.

Among other requirements, Shelly had to prove the use of the property for mining would “not be detrimental to property in the immediate vicinity or the community as a whole.” The commission rejected the permit request, and one of its conclusions was that the operation would be detrimental to the properties in the immediate vicinity and would have a negative effect on property values.

The commission reached its conclusion after rejecting the assessment by a certified real-estate appraiser hired by Shelly who reported that surface mining would not adversely affect nearby properties. The commission found the report was flawed because it was not compared to other properties located as closely to sand and gravel mining as envisioned for the Sahbra Farms site.

Following R.C. Chapter 2506, Shelly filed an appeal with the common pleas court, which referred the matter to a magistrate. The magistrate concluded the commission was swayed by non-expert testimony from the city’s planning and zoning director and by public comments objecting to the permit. The magistrate found the evidence from Shelly’s appraiser outweighed the “unsubstantiated speculation” from the city director, and Shelly proved it was entitled to a permit.

The common pleas court adopted the magistrate’s conclusion, noting that the commission appeared to be motivated by the desire to align with the new zoning code that barred all surface mining, rather than determine whether Shelly actually failed to satisfy the standards required for a permit.

The city appealed to the Eleventh District, which in a 2-1 decision overturned the common pleas court. It determined that Shelly did not meet the permit requirement that mining would not be detrimental to nearby property or the community as a whole.

Shelly appealed the Eleventh District’s ruling to the Supreme Court, which agreed to hear the case.

Court Examines Boundaries of Appeal
Justice Stewart explained that for decisions made by local government agencies, such as planning and zoning commissions, the common pleas court acts as the appellate court and reviews the commission’s decisions to determine if the government body’s actions were appropriate. The Supreme Court has ruled that the common pleas court “weighs the evidence to determine whether the preponderance of reliable, probative, and substantial evidence supports the administrative decision, and if it does, the court may not substitute its judgment for that of the administrative agency.”

When a common pleas court rules on an administrative matter, a party can appeal to the court of appeals, and under R.C. 2506.04, that review is “more limited in scope” than the review by the common pleas court, the opinion stated.

“While the court of common pleas is required to examine the evidence, the court of appeals may not weigh the evidence,” the opinion stated.

Appraisals of Comparable Property at Issue
The Supreme Court’s opinion stated the key difference between the decisions of the common pleas court and the Eleventh District was the evaluation of the evidence presented by Shelly’s appraiser, who had more than 30 years of experience and submitted a 76-page report.

The appraiser testified that it was challenging to find comparable sales of properties near sand and gravel mining operations, but concluded there was “little to no conclusive evidence” to show the sales of property in close proximity to surface-mining operations are adversely affected. The city had challenged the appraiser’s work, arguing that the properties he used were further away than what Shelly proposed for Sahbra Farms and sometimes were separated by natural barriers.

While the common pleas court rejected the city’s critique, the Eleventh District accepted it.

The common pleas court, acting within the scope of its review authority, “weighed the expert’s opinion differently than the commission,” the opinion stated.

“The court of appeals had no authority to second-guess the decision of the court of common pleas on questions going to the weight of the evidence supporting the commission’s findings,” the opinion concluded.

Common Pleas Court Applied Wrong Standard, Dissent Stated
In his dissenting opinion, Justice DeWine faulted the magistrate and common pleas court for applying the wrong standard of review when it evaluated the planning and zoning commission’s decision. The court essentially compared the evidence presented in Shelly’s appraisal to the position of the city’s planning and zoning director and found Shelly’s case to be stronger.

But the requirement of the Streetsboro code is not that Shelly’s evidence is more convincing, but rather that it provides “clear and convincing evidence” to meet all the requirements to earn a permit, the dissenting opinion stated.

Nothing in the common pleas court’s decision assesses whether Shelly Materials had provided clear and convincing evidence that the proposed use would not be detrimental to the nearby property or the community as a whole, the dissent stated. The opinion noted that because Shelly had to provide clear and convincing evidence, the city did not have to provide any competing evidence.

The Eleventh District did not second guess how the common pleas court weighed the evidence, but instead only examined the presentation of Shelly’s appraiser, who explained the difficulties in finding comparable properties, the dissent explained. The appraiser testified before the commission that the properties in the immediate area of the mining area “could have or see some possible effect,” the dissent noted.

The appeals court could merely take the appraiser at his word because the appraiser “admitted that his evidence failed to show that the mine would not have detrimental effects on neighboring properties,” the opinion stated. The ordinance requires “clear and convincing evidence, and we cannot ignore that requirement,” the dissent concluded.

2018-0237. Shelly Materials, Inc. v. Streetsboro Planning & Zoning Comm., Slip Opinion No. 2019-Ohio-4499.

View oral argument video of this case.

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