Self-storage company didn’t have standing for judicial review of competitor’s zoning variance, COA affirms

A self-storage company that bemoaned its zoning board’s approval of a variance to allow a competitor to open a similar business down the road has failed to convince the Court of Appeals of Indiana that it had standing to seek judicial review of the case due to the potential loss of business.

In November 2019, DG Properties Taft LLC purchased property in Merrillville that included several retail establishments and 69,000 square feet of vacant space that formerly housed a grocery store and its parking lot. After attempts to find a new tenant for the grocery store failed, the company decided it would convert that space into a self-storage facility.

DG Properties was required to obtain a zoning variance because Merrillville had zoned the property as a C2 commercial district, and operation of a self-storage facility was not permitted on property bearing that designation. So, DG filed its variance application with the town in February 2021.

But EP MSS LLC, the owner of Merrillville Self-Storage, located about a mile away from the DG property, filed a written remonstrance opposing the variance application.

The remonstrance asserted the supply of self-storage space in Merrillville already exceeded demand, and it advocated to the Merrillville Board of Zoning Appeals that denying the variance application would “actually serve the Petitioners and the surrounding self-storage owner/operators from oversupplying the market and leading to failures.”

During a zoning meeting, DG explained that while the vacant portion of the property was built to house a grocery store, a grocery store at that location was no longer an economically viable option. Therefore, DG wanted to convert the area into a facility providing indoor and outdoor self-storage units and asserted the proposed use met all the requirements specified in the Indiana Code to qualify for a variance.

EP then voiced its opposition and explained that it had previously received approval from the board and town council to expand its existing operation and noted that an additional self-storage business would likely derail those plans.

By a unanimous vote, the board issued a favorable recommendation for the variance.

The Merrillville Town Council later entertained the application at its March 2021 meeting, where EP appeared and again voiced opposition to the variance application. Nonetheless, the town council approved the recommendation of the zoning board by a vote of 5-2.

EP then filed a petition for judicial review a month later challenging the approval of DG’s petition for a use variance. The company asserted it was aggrieved by the town’s zoning decision, and it challenged the adequacy of the board’s findings.

Again, EP alleged the market for self-storage units in Merrillville was already oversaturated and the variance would render existing self-storage businesses less profitable, possibly leading them all to fail. It also claimed the zoning variance would hurt existing retail businesses on and around DG’s property.

In response, DG and the town of Merrillville filed a joint brief opposing EP’s petition for judicial review. They argued EP lacked standing because it could not show that the zoning decision “infringed upon a legal right” or that the decision resulted in “a pecuniary or special injury.”

The respondents also claimed EP waived its challenge to the adequacy of the board’s findings by failing to object on that basis at the town council meeting and, nonetheless, the findings were supported by substantial evidence.

The Lake Superior Court ultimately denied EP’s petition for judicial review.

The Court of Appeals affirmed Thursday in EP MSS LLC v. Merrillville Board of Zoning Appeals, DG Properties Taft LLC, Town of Merrillville, and Town of Merrillville Town Council, 21A-MI-261.

The judges concluded that the trial court did not abuse its discretion when it determined EP lacked standing to pursue a petition for judicial review because it is not an “aggrieved” person for purposes of Indiana Code § 36-7-4-1603(a).

Further, judges wrote that EP did not have a right to be free from competition, so Merrillville’s grant of a use variance to DG did not infringe upon the rights of EP.

While EP relied on Department of Financial Institutions v. Wayne Bank & Trust Company, 381 N.E.2d 1100 (Ind. Ct. App. 1978), the COA found that case actually weighed in favor of the town and DG.

Wayne Bank stands for the proposition that promoting economic competition is generally in the public interest and should be encouraged,” Judge Melissa May wrote. “As DG Properties states in its brief, EP MSS ‘does not have a legal right to be free from increased competition.’ Zoning boards are not charged with protecting private business interests from competition.”

The COA further wrote that EP failed to show pecuniary harm.

“Moreover, while EP MSS bemoans the current state of the self-storage market in Merrillville and contends the addition of another self-storage business will lead to a market collapse, it also plans to expand its own self-storage offerings,” May wrote. “Likewise, the danger that EP MSS will lose business to DG Properties is a risk common to all existing self-storage businesses in Merrillville. Therefore, it does not represent a special injury.”

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