Delaware Supreme Court to hear BeachWalk case

The Delaware Supreme Court is set to hear oral arguments in a long-running legal dispute between the City of Rehoboth Beach and the developer of the proposed BeachWalk project.

Arguments will be heard at 10 a.m., Wednesday, July 20, in Dover as owner/developer Keith Monigle seeks to overturn the Delaware Court of Chancery’s ruling that a Rehoboth ordinance mandating one building on one lot applied to BeachWalk, a proposed 63-unit housing development to be built at the 7.75-acre site of the Rehoboth Beach Plaza shopping center. 

Monigle’s attorney, Richard Forsten, said in legal briefings filed with the Supreme Court that the case “represents an existential moment for property owners and property rights in Delaware.”

Forsten is asking the Supreme Court to reverse the Chancery Court’s decision because it is based on legal error.

At issue is whether Monigle relied on statements from city officials to make his decision to develop BeachWalk as a condominium project instead of as a subdivision, and whether the city can enforce an ordinance enacted after BeachWalk’s plans had been submitted to Rehoboth building and licensing. 

The tale of BeachWalk dates back to 2008, when Monigle and his wife, Mary Beth, began exploring redevelopment of the shopping center. Inspired by the Cottages at Philadelphia Place, an eight-unit condo development on Philadelphia Street, the Monigles filed plans for BeachWalk in June 2015, which included 58 single-family detached units and five multifamily units.

In a July 2021 trial in front of Court of Chancery Judge Sam Glasscock, Monigle testified that he decided to build a condominium development around 2012 because the majority of the residents would likely be retirees or second-home owners. He said he was advised by his attorney at the time, Rob Robinson, that a condo development would only need site-plan review by the city, not a subdivision plan, which would be a lengthier process. Monigle intended to build the complex on a single lot. 

Monigle 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. 

Plans for BeachWalk were submitted in June 2015; two months later, in August, Sullivan left and was replaced by Dam Molina, who ruled in late 2015 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 the city commissioners. Shortly after that, the commissioners passed an ordinance codifying that only one building can be built on a lot. 

The first lawsuit came 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. 

A second lawsuit was filed in Chancery Court after the city tried to enforce the ordinance that stated only one building can be built on a lot, an ordinance that was passed after BeachWalk filed its application. Forsten argued the city could not enforce the ordinance because Monigle had vested rights; in other words, he was grandfathered in. 

At trial and in its legal filings, the city’s attorney, Max Walton, said Monigle did not rely on city or state law to decide to proceed as a condominium because he had not read the relevant codes.

“Monigle did not act in good-faith reliance on the state of law under which he proceeded. Monigle knew and understood all along the city’s position that a major subdivision is required for BeachWalk,” he said.