330 Rehoboth Ave. lawsuit moved to Superior Court

City, plaintiffs arguing over what complaints should be allowed to be included
March 14, 2023

About this time last year, Rehoboth Beach commissioners voted against the proposed rezoning of the property on the southeast corner of Rehoboth Avenue and State Road.

A short time later, the owner of the property, 330 Hospitality LLC, filed a lawsuit in Chancery Court against the city, claiming city commissioners erred in their reasoning for denial.

The case is still in court, but now it’s in Superior Court, where the two parties are arguing over what should be included as part of the plaintiff’s complaint.

The property in question, 330 Rehoboth Ave., is about 42,500 square feet, of which about 23,000 square feet  along Rehoboth Avenue is zoned C-1 commercial, while about 19,500 square feet along State Road is R-1 residential. 

The proposed rezoning of the residential portion has been on the books since January 2019, when Lockwood Design and Construction’s Don Lockwood first brought it forward. He had a 99-year lease on the property. A couple of years later, Lockwood, in partnership with former Gallo Realty owner Bette Gallo, purchased the property under the name 330 Hospitality LLC.

After multiple meetings, the planning commission voted against the rezoning of the residential portion in December 2021. A few months later, in March 2022, city commissioners also voted 5-2 against the request.

Representing 330 Hospitality, attorney Rick Berl filed a lawsuit in Chancery Court in May 2022. He argued the five commissioners who voted against the rezoning erred in their reasoning.

In October, the Chancery Court issued a ruling that, among other things, said Superior Court is the appropriate venue for a land-use issue. Berl refiled the lawsuit in November, and now the two sides are arguing about what should be included.

Berl has essentially submitted the same lawsuit, with the same complaints. The city is arguing the suit should only include an appeal of the commissioners’ decision to deny the rezoning change.

According to attorney Dan Griffith, who is representing the city, the record should be confined to what was before the city commissioners, and whether their decision was arbitrary and capricious. He said this is an appeal from an adverse land-use decision, and those appeals are usually very straightforward and narrow.

In a February brief written in response to the city’s case for dismal, Berl said provisions in state law say complaints can’t simply be dismissed because they were initiated in the wrong court. Regardless of the procedure, the underlying principle must be preserved, which is to facilitate a transfer between courts and to protect litigants from having their claims dismissed, he said.

During a commissioner workshop March 6, city attorney Glenn Mandalas said both sides have briefed arguments, and the city is waiting to see if the judge is going to require oral arguments before a decision is made on how to proceed. A specific date for the decision was not given.


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