The Ninth U.S. Circuit Court of Appeals has aside a summary judgment in favor of a city in a dispute over a church's request to relocate and develop an expanded church facility in an industrial park.

The unanimous three-judge appellate panel ruled that District Court Judge Phyllis Hamilton's decision in favor of the City of San Leandro was erroneous, and the Ninth Circuit sent the case back to the trial court for further proceedings. The Ninth Circuit did not rule on the merits of the case.

As the membership of the Faith Fellowship Foursquare Church increased in the early 2000s, the church outgrew its existing facilities. The church began searching for a new location and eventually settled on property on Catalina Street in an industrial park. In March 2006, the church entered into a purchase agreement for the Catalina Street property. 

The city's general plan designated the industrial park for industrial and technological activity. The city's zoning code did not allow assembly uses in the applicable zoning district. City planners advised Faith Fellowship that churches and other assembly uses were allowed only in residential districts, and then only with a conditional use permit. Staff advised the church that, before the church could develop the Catalina Street property, the city would have to amend the zoning code for the industrial limited ("IL") classification, and rezone the property to the IL district.

After the church filed an application, city planners expressed reservations about the broader implications of allowing assembly uses in the IL zone. City officials then debated an alternative strategy: creating an overlay zone applicable to non-residential properties. Meanwhile, the church, in contract to purchase the Catalina property, was running out of time. In October of 2006, the church paid a non-refundable fee of $50,000 to extend the contract to the end of December 2006. At the end of December, the church closed the deal and took title to the property.

In March 2007, the city adopted an overlay zone and applied the overlay to 196 properties amounting to, collectively, more than 200 acres. The Catalina Street property was not eligible for the overlay because the property did not meet the ordinance's criteria. The church then filed an application to apply the overlay to the Catalina Street property. The City Council rejected the application in May 2007. Concurrent with the overlay zoning request, the church sought an assembly use permit for its property. Because the existing zoning did not permit assembly uses, the Planning Commission and City Council denied the request. 

The church then filed a Religious Land Use and Institutionalized Persons Act (RLUIPA) lawsuit.

Judge Hamilton first found that the city's zoning ordinance was a neutral law of general application. Because a neutral law imposes only an incidental burden under RLUIPA, Hamilton ruled, RLUIPA's "strict scrutiny" standard of review did not apply. As a result of applying a standard of review favorable to the city, the District Court granted summary judgment for the city. She found that the city's stated interest of reserving the Catalina Street property for industrial uses was legitimate.

The appellate court first rejected the trial court's determination that, under RLUIPA and as a matter of law, the city's regulations could not impose a substantial burden on the church's exercise of religion. While the ordinance was facially neutral and of broad application, the "burden" was potentially triggered by the church's specific request for a rezoning and separate request for a conditional use permit, the Ninth Circuit found. To significantly burden the exercise of religion, the regulation must be more than an inconvenience, and must be "oppressive" to a "significant extent."

In the summary judgment proceeding at the District Court, the church offered evidence from a realtor and former city manager that there were no other suitable sites in the city to house the church's operations. This evidence included a real estate agent's analysis that none of the 196 parcels zoned with the overlay zone was of sufficient size to house the church's operations, which included concurrent services, children's programs and related ministries for up to 1,600 people at one time. While the District Court found the evidence to be less than persuasive, the appellate court concluded that the evidence was sufficient to defeat a summary judgment motion. The city's argument that these activities could have been conducted at separate locations did not overcome the church's position that its faith required that these activities be conducted simultaneously and physically together.

The Court of Appeals went on to address the District Court's additional determination that the city had provided a compelling government interest in preserving lands for employment uses, as called for in the general plan, and that the city's strategy was the least restrictive means of accomplishing that goal. 

"Even if we assume without deciding that the city's interest is compelling, we believe there is a genuine issue of material fact as to whether the city used the least restrictive means to achieve its interest," wrote New York District Court Judge Kevin Thomas Duffy, sitting by assignment to the Ninth Circuit. "While the city may prefer to preserve the Catalina property for industrial use, the city presents no evidence that it could not achieve the same goals by using other property within its jurisdiction for that purpose."

Procedurally, the case goes back to trial at the District Court.

The Case:

International Church of the Foursquare Gospel v. City of San Leandro, No. 09-15163, 2011 DJDAR 2503. Filed February 15, 2011.

The Lawyers:

For the church: Kevin T. Snider and Matthew B. McReynolds, Pacific Justice Institute, (916) 857-6900.

For the city: Jayne W. Williams, Meyers, Nave, Riback, Silver & Wilson, (510) 808-2000.