In Lamar Advertising of South Dakota, LLC v. City of Rapid City et al, the South Dakota Supreme Court addressed whether a City’s agreement to amend its ordinances in exchange for the dismissal of a lawsuit is unlawful.
In 2015, a dispute arose between the City of Rapid City and Epic Outdoor Advertising (“Epic”) regarding the use and repair of video signs. In an effort to resolve the dispute, the City and Epic negotiated a settlement agreement in which the City agreed to amend certain ordinances regarding signage restrictions and to issue two sign permits to Epic. In return, Epic would dismiss its lawsuit against the City when the City had fulfilled its obligations under the agreement. Importantly, under the terms of the settlement agreement, if the amended ordinances were not passed by the City or if any portion of the settlement agreement was declared invalid, the agreement was terminated and Epic could pursue its lawsuit against the City.
Lamar Advertising subsequently filed suit against the City and Epic. In requesting that the settlement agreement be declared invalid, Lamar Advertising contended that the City improperly bargained away its zoning authority when the City agreed to amend its ordinances prior to the notice and hearing procedure for adopting City ordinances. Lamar Advertising also challenged the City’s agreement to issue the sign permits to Epic. The circuit court rejected both claims, concluding that the terms of the settlement agreement were not unlawful and that Lamar Advertising failed to exhaust its administrative remedies for its challenge to the issuance of the sign permits.
On appeal, the South Dakota Supreme Court affirmed the circuit court’s decision. The Supreme Court noted that while the City may not surrender its authority to regulate signage, there was no such surrender here because the City retained control to adopt or reject the amended ordinances through the City’s notice and hearing procedures. The Supreme Court also pointed out that the amended ordinances were not discriminatory and provided no special benefit to Epic to the exclusion of other sign companies.
Regarding the issuance of the sign permits, the Supreme Court agreed with the circuit court that Lamar Advertising was required to exhaust its administrative remedies by appealing the issuance of the permits to the City’s Board of Adjustment. Because Lamar Advertising had failed to do so, the circuit court correctly declined to consider Lamar Advertising’s claim.
The above South Dakota Supreme Court summary was written by Gunderson, Palmer, Nelson & Ashmore, LLP associate attorney Stacy Hegge. For more information please reach out to Stacy through our website or by calling our Pierre office at (605) 494-0105.
