2302 N. Truman Entm't. Mgmt., LLCv. City of Pevely
| Decision Date | 21 December 2012 |
| Docket Number | Case No. 4:11CV599 HEA |
| Parties | 2302 N. TRUMAN ENTERTAINMENT MGMT., LLC d/b/a PURE PLEASURE Complainant, v. CITY OF PEVELY, MISSOURI, and and Hon. JOHN KNOBLOCK, Mayor of the City of Pevely Missouri, Respondents. |
| Court | U.S. District Court — Eastern District of Missouri |
On October 1, 2012 the Court held a bench trial on Complainant 's Complaint for Injunction and Declaratory Judgment and Respondents' Counterclaim for Injunction. Previously, the Court had issued a Temporary Order. Prior to trial, the parties stipulated to trial of the issues in two phases. In this first phase, the parties submit for determination the issue of whether Respondent lawfully denied Complainant 's application for a business license and which party is therefore entitled to injunctive and/or declaratory relief.
Prior to trial, the parties stipulated to 26 enumerated facts which comprise most of the factual allegations of the Complaint for Declaratory Judgment andPermanent Injunction.
The Court finds as follows:
Don Kleinhans Sr . testified that he and his son, Don Kleinhans Jr . were and are members and managers of Complainant, a Florida LLC authorized to do business in Missouri . Kleinhans acknowledged that his family owns other Limited Liability Companies that operate Adult and Sexually Oriented businesses known as "Pure Pleasure Megacenters" which are "adult " or " sexually oriented businesses" defined by the laws of their respective states in Florida, Illinois and elsewhere Missouri .
In 2010 Kleinhans and his son, both of whom are members/managers of Complainant , decided to develop a new kind of store to be known as "Pure Pleasure Boutique," which, unlike the "Megacenter " stores, would not sell any pornography or products to cause it to be a be a " sexually oriented" or "adult " business, and which would sell , for offsite use only, lingerie, lubricants, novelties and marital aids. By avoiding products that would render the store a "sexually oriented business," Complainant planned to locate in a higher customer traffic "retail" zone rather than be consigned to an "industrial " zone less conducive to retail sales. The new store format was a response to the competition of internet pornography sales. This witness was not involved in discussions with cityofficials directly in early discussions with Respondent, rather, his son, Don Kleinhans, Jr. handled the discussions. Kleinhans testified that after his son met with Respondent 's city manager Happy Welch in October of 2010 to determine which of Respondent 's ordinances would apply to Complainant 's contemplated store, Complainant acquired a "Lease with Purchase Option" from the owner of a commercial building known as 8600 Daniel Dunklin Blvd. This building had been vacant since its prior occupant, a tanning salon, departed several years earlier. The building is located in a B-2 retail zone amid banks, an auto part store, fast food restaurants and strip malls on the north side of Respondent 's Main Street. Kleinhans acknowledged that there is a church and school among the stores on the south side of Respondent 's Main Street.
Kleinhans testified that currently, only about one fifth of the store's retail area could be utilized as lack of a Business license precluded obtaining business permits necessary to "build out " (remove the old tanning bed rooms and install one retail sale display areas) in the balance of the interior. Also, the business could not obtain from Respondent a permit to install a sign, water or sewer service.
Kleinhans testified that the store received occupancy permits from the Respondent 's building inspector and from the Dunklin Fire Department afterinstalling "panic hardware" on the rear entrance. Kleinhans testified that Complainant opened the small front area of the store that was available on December 10, 2010, and has remained open on a restricted basis since that time despite multiple citations by Respondent. He testified that one of his reasons for keeping the store open was advice of counsel of the necessity of exercising free speech rights.
When cross examined about the details of Complainant's use of abbreviations in its filings with the Missouri Secretary of State, its stated purposes for doing business, and Complainant 's registration of the fictitious name "Pure Pleasure Boutique", Kleinhans advised that such matters were handled by attorneys or employees for the business.
In rebuttal testimony, Kleinhasns testified that Complainant's Application for Business License states that Complainant is " . . .organized for the purpose of transacting all lawful activities and businesses that may be conducted by a limited liability company under the laws of Florida." Complainant 's exhibit 8 demonstrates that Complainant has registered the fictitious name "Pure Pleasure Boutique" with the Missouri Secretary of State's office. Kleinhans was the Complainant's only witness.
Respondent called its Mayor, the Honorable John Knoblock, as its first witness. He testified that the city had "a master plan" for a "strip mall " use of the area where Complainant 's store is located which was somehow inconsistent with Complainant's store. Mayor Knobloch could not say how Complainant 's store was inconsistent with such plan other than to say it might have something to do with location of roads. No explanation was given as to how the business, rather than the location of the 8600 Daniel Dunklin building, would affect the location of roads. No evidence was introduced regarding how the Complainant 's store would be inconsistent with such "master plan," and no such "master plan" or ordinance adopting such was introduced into evidence. Mayor Knobloch testified that when Complainant submitted its Application for Business License on November 8, 2010, new "Sexually Oriented Business" ordinances were "in the works." However , on cross examination, Mayor Knobloch admitted that by "in the works" he meant that city officials had only thought about or discussed passing ordinances, and that prior to Complainant 's application for license on November 8, 2010 there were no steps taken to enact such an ordinance. Introduction of the bill, first reading, second reading and passage all occurred at a council meeting December 20, 2010, the ordinance having been " tabled" on December 6, 2010. When Mayor Knobloch was asked by the Court why Pevely had deniedComplainant 's application for business license, the sole reason he cited was that as a "Sexually Oriented Business," Complainant 's store could not be located in a B-2 retail zone. When the Court inquired why he considered Complainant 's store at 8600 Daniel Dunklin in Blvd to be a "Sexually Oriented Business," Mayor Knobloch said it was because Complainant 's store was an "Adult Book Store" selling "Adult books." When the Court inquired what Mayor Knobloch considered an "adult book," he stated that he did not know, and that further he had never seen what the Complainant sells, and did not know what language in the city's ordinances defined "Adult book" or "Adult Bookstore."
Mayor Knobloch testified that Respondent had " industrial zones" within the city where sexually oriented businesses could be located. Former Pevely city manager Happy Welch testified that in 2010, it was his job to be in charge of the day to day operations of the city. He was appointed by the city council to this position which he held until sometime in 2011. He testified that none of the city's ordinances concerning "adult oriented businesses" were enacted in response to the Complainant 's application for a business license, but rather because in April of 2010, Respondent became concerned that a "dance troop" was to perform within the city. Exhibits C and D were passed in April of 2010, but Exhibit E was enacted on December 20, 2010 after Respondent had already deniedComplainant 's application for business license on November 18, 2010, and imposed a moritorium on new business license applications on December 6, 2010. Welch had no explanation as to why the city waited until after Complainant 's application for license had been denied to commence the process of enacting Exhibit E.
Welch testified that in October of 2010, "about a month before [they] submitted application for business license Don Kleinhans Jr.. and Complainant 's counsel met with him at City Hall to inquire about obtaining a business license for the proposed store at 8600 Daniel Dunklin Drive, in a B-2 retail zone. Kleinhans and his attorney advised Welch that the store would self-limit customers to exclude minors and would not sell or provide any pornography. They told Welch they contemplated the store selling lingerie, lubricants and " sexy" novelties, but would not sell any items which the city would prohibit to be sold in a B-2 retail zone. Kleinhans and his attorney asked for copies of the city ordinances defining what type of business they could operate and what items they could or could not sell at that location. Welch testified that he provided copies of the requested ordinances. He testified that he told Complainant 's representatives that regardless of the existing ordinances, he did not believe the city would be receptive to the Complainant 's store because the city had a "master plan," which he could notprovide, which he felt was somehow inconsistent with the use proposed by Complainant. No such master plan was ever provided to Complainant's representatives, and no such master plan was placed into evidence.
When Welch received Complainant's application for business license, he called the mayor and councilmen by phone to "poll " them about whether or not to grant the license. Welch testified that they unanimously advised him to deny the license. When asked why the city denied Complainant 's application for business license, he testified that as an "Adult " or "Sexually Oriented" business, Complainant's store could not...
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