A federal appeals court has ordered a mosque and the city of Alpharetta to settle their differences over a zoning dispute in mediation.

The Islamic Center of North Fulton is suing the city over a 2010 decision to deny the center permission to expand its facility on Rucker Road.

Mosque leaders asked the city council for the OK to build a 12,032-square foot mosque and a 1,910-square foot community hall on the properties. The council denied the request, citing a 2004 promise city leaders said the mosque made not to expand further.  Mosque leaders argue the current facility is inadequate for the needs of its 600 members.

"Their decision, in our opinion, was arbitrary and capricious," said attorney Doug Dillard after the hearing in downtown Atlanta.

Dillard argued to the three-judge panel that the city council's decision violated the Religious Land Use and Institutionalized Persons Act, which offers protections to religious entities in zoning matters.

"I think they were very concerned about whether we were being treated fairly," Dillard said of the judges.

Alpharetta's attorney, Scott Busby, called the situation a "a run-of-the-mill zoning case" and argued Alpharetta "has tried to be fair and impartial."

Busby argued the mosque imposed the burden on itself by purchasing a 4-acre plot of land surrounded by homes.

"If you buy a 4-acre site, you're not going to build an airport on it," he argued, adding that RLUIPA doesn't allow for "unfettered" growth.

Chief Judge Joel Dubina said the case "case cries out for some kind of settlement," and he ordered them back to mediation for a second time.

If both sides can't reach an agreement within 120 days, Dubina told them a court would rule.

"Hopefully this time we'll get it worked out," Dillard told Petchenik.  "If we don't resolve it, somebody is going to win and somebody is going to lose."