Dubois Dutch, LLC v. Sandy Township Board of Supervisors and Guido, (Pa. 2007).

Although the exercise of a purchase option in a lease did not effectuate a legal subdivision allowing for relation back to the previous ordinance, lessee was entitled to relief under the modification provisions of the MPC and Township Ordinance.
Case Details:

In 1982, the previous owners of the property informally separated a tract of land into two parcels by virtue of a lease containing a purchase option. At this time, the Township’s 1964 Zoning Ordinance was in place and both parcels satisfied the minimum lot requirements. In 1996, the Township adopted a new Zoning Ordinance and the smaller of the lots did not meet the minimum lot requirements. Guido purchased the property from the previous owners, and Dubois Dutch (“Dubois”) became the lessee under the lease agreement.  In 1998, Dubois attempted to exercise its purchase option.  Guido refused because his remaining parcel would not meet minimum lot size requirements; the Township refused Dubois’s application seeking formal subdivision of the property.

Dubois filed a specific performance action seeking an order to compel Guido to transfer the property. The trial court directed Dubois to file a second request for subdivision approval.  Dubois argued that the 1982 lease option effectuated a subdivision of the property at the time the lease was signed or that the exercise of the option resulted in ownership relating back to the 1982 lease.  Dubois argued that under this relation back theory, the former Zoning Ordinance would apply and the smaller lot would be an existing nonconforming use.  The Planning Commission approved the request and Guido appealed to the trial court, which affirmed the Planning Commission and held that the execution of the lease effectuated a subdivision.  The Commonwealth Court reversed.

Dubois appealed to the PA Supreme Court asking whether the lease with an option to purchase created a property interest in the lessee sufficient to support a legally recognized subdivision of the property either at the time the lease and option were executed or when the purchase option was exercised.  The Supreme Court found that the exercise of the option resulted in a division-in-fact relating back to the time of the agreement.  However, a division-in-fact is not a legal subdivision.  The Supreme Court added that the MPC and the Township’s Subdivision Ordinance contained a modification provision which permitted property owners to ask for relief from the application of a subdivision ordinance if the enforcement would result in hardship. Dubois then filed a request with the Planning Commission for approval under the modification provision.  The Planning Commission rejected the application.  Dubois appealed to the trial court which reversed the Planning Commission and granted Dubois’s request for modification and subdivision, waiving the minimum lot size requirement.  Guido appealed to the Commonwealth Court raising the issues of whether the court should not have considered the issue again because it was already decided, (res judicata) and also whether the trial court erred in granting the request for modification.

First, the Commonwealth Court held that res judicata is applied leniently in land use law cases since there is a great need for flexibility.  The Commonwealth Court affirmed the finding of the trial court that Dubois was entitled to relief under the modification provision.

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