Do billboard permit rights run with the land or with an individual? Permit rights run with the land is the lesson or Lamar Co v City of Fremont. Here are the facts.
- Several billboard structures were constructed in Fremont, Nebraska by Bellows Outdoor in 1991 and 1999 on land owned by three separate landlowners.
- The billboard structures became non-conforming when the City adopted a new zoning code in 2000. The zoning code, however, allowed non-conforming signs to be replaced so long as they were no bigger than the previous structure and used a monopole design,.
- Lamar advertising bought the billboard structures in 2001.
- In 2003 Victor Outdoor and the landowners applied and received permits from Fremont to replace the Lamar signs.
- In 2003 and 2004 the three landlowners each terminated their leases with Lamar and Lamar removed its structures.
- Victor Outdoor erected sign replacing Lamar’s signs.
- Lamar filed suit arguing that Victor did not have the right to erect new signs. It contented (1) that the non-conforming use right vested with the individual (e.g. Lamar) using the right and remained with the individual once the right was terminated; (2) that Victor had tortiously inferfered with Lamar’s relationship with its landlord.
- A district court ruled against Lamar. The courts found that when the leases were effectively and lawfully terminated, Lamar’s nonconforming use rights for its signs were also extinguished.
- An appeals court also ruled against Lamar finding that non-confirming use rights run with the land, not with a person: …we are persuaded that the right to maintain a legal nonconforming use “runs with the land,” meaning it is an incident of ownership of the land and is not a personal right. The court also rejected the tortious interference claims: The undisputed facts in this case are that Victor and Lamar are both in the same business and that both conduct business in the Fremont area. The record further shows that Lamar’s leases were terminated by their terms. Even giving all inferences in favor of Lamar, there is nothing in the record to indicate that Victor employed improper means to replace Lamar’s leases, and there is no evidence that Victor will restrain further competition.
Billboard Insider’s take: Permitting rights run with the land. A billboard company can’t claim it has a use non-conforming use rights after it’s lease is validly canceled. The case is also interesting in that the court went into detail as to what is and is not tortious interference. We’ll write more about that in a future post. It would be interesting to hear what our out of home attorneys opine on what is and is not tortious interference in your state.
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To me, it seems that when the structures were removed, the non-conforming rights should be extinguished. In other words, Victor Outdoor should not have been able to obtain a permit to rebuild, because the sign was removed.
Fremont was one of the few communities whose zoning code specifically allowed you to replace a non-conforming sign with another sign. This is not the normal case with most non-conforming signs.
Great reminder for operators to be careful to not get carried away wasting money on litigation when the facts are clearly not in their favor and only the lawyer benefits from the fight.
In California, billboard permits do not “run with the land.” Instead, the permit belongs to the applicant, unless the applicant notifies Caltrans of a transfer. The applicant is usually the operator. In most (but not all) billboard leases, the lease identifies the operator as the owner of the sign and related permits. The contract terms will determine who owns the permit and the sign.
When a non-conforming sign is removed, it generally stays removed (subject to an exception that allows relocation in eminent domain cases). I am unaware of any local jurisdiction that allows replacement of non-conforming signs that have been removed or destroyed. In some cases, modifying a non-conforming sign will change the sign from “legal, non-conforming” to illegal.
Tortious interference with contract requires 1) a valid contract between plaintiff and a third party; and 2) defendant’s knowledge of the contract; and 3) defendant’s intentional act designed to induce a breach or disruption of the contractual relationship; and 4) an actual breach or disruption of the relationship; and 5) resulting damage.
As applied to a billboard lease, if an operator offers more rent, to take effect at the expiration of an existing lease, there is no tortious interference. If an operator persuades a property owner to cancel an existing lease before the term ends, that is tortious interference.
As always, “it depends” is the only correct answer to any legal question. From the summary in your article, it looks like the lease that Lamar acquired did not specify who owned the permit or the signs. It also looks like the lease allowed the property owner to terminate the lease at will.
Another factor is the appellate court’s statement that, “there is nothing in the record to indicate that Victor employed improper means to replace Lamar’s leases.” If Victor had used “improper means” Lamar might have a case for interference with prospective economic advantage, but that’s a different topic.