Supreme Court upholds BeachWalk ruling

The Delaware Supreme Court upheld a Court of Chancery ruling that Ocean Bay Mart LLC did not have vested rights to have its proposed 63-unit development considered as a condominium and that the development, known as BeachWalk, would have to go through Rehoboth Beach’s major subdivision process.

The decision marks what could be the end of what has been a protracted legal battle between the city and property owner Keith Monigle, doing business as Ocean Bay Mart. That battle began in the summer of 2015, when Monigle sought to redevelop the seven-plus-acre site of the Rehoboth Beach Plaza shopping center into BeachWalk, a 63-unit development that would feature 58 single-family units and five multifamily, apartment-style units. 

Monigle sought to develop this project as a condominium on a single, undivided parcel. At a July 2021 trial in Court of Chancery, Monigle testified that he had held meetings with then-Building Inspector Terri Sullivan on whether the project could be developed as a condominium, and while he did not get a definitive answer, he said it was indicated to him that it could be. Monigle also testified that after meetings between City Solicitor Glenn Mandalas and Monigle’s then-attorney Dennis Schrader, it was indicated to him that a condominium is not a subdivision. 

In August 2015, two months after Monigle submitted initial plans for the project, Sullivan left and was replaced by Dam Molina, who ruled that the project could not move forward because of a footnote in the city’s table-of-use regulations stating that no more than one building could be built on a lot. 

Schrader and Monigle appealed Molina’s decision to the board of adjustment, which determined in May 2016 that the city’s code was ambiguous and overruled Molina’s decision. When BeachWalk went before the planning commission for site-plan review, the commissioners determined BeachWalk was a subdivision, a ruling that was upheld on appeal by city commissioners. Shortly after that, the commissioners passed an ordinance codifying that only one building can be built on a lot.

Monigle first filed suit in February 2018 in Delaware Superior Court, where Judge E. Scott Bradley denied the city’s motion to dismiss and remanded the matter back to the city for further review. Upon that review, the Rehoboth commissioners found that BeachWalk was subject to the one-building-on-a-lot ordinance and had to file as a major subdivision. 

Monigle then filed another lawsuit in Chancery Court after the city tried to enforce the ordinance, a regulation passed after BeachWalk filed its application. Monigle’s attorney Richard Forsten argued that Monigle had vested rights to have his project considered as a condominium. 

The city maintained that Monigle did not have vested rights, did not rely on the law in his decision to move forward as a condominium and was subject to the city’s new zoning regulations. Chancery Court Judge Sam Glasscock agreed with the city, and Monigle appealed to the Supreme Court, which heard oral arguments in July in front of a three-justice panel that included Chief Justice Collins Seitz, Justice James Vaughn and Justice Tamika Montgomery-Reeves.

In their decision, the justices said the language of the city’s one-building, one-lot ordinance is “unambiguous and they applied to pending applications, including the BeachWalk site plan. While the city was free to specify that pending applications would be exempt from the new ordinances, it did not do so. Ocean Bay has not made a showing of reasonable, good-faith reliance on statements made by government officials and past condominium projects.”