257 F.3d 600 (6th Cir. 2001), 99-2413, Wojcik v The City of Romulus

Docket Nº:99-2413
Citation:257 F.3d 600
Party Name:Rose Wojcik, an individual; Richard Wojcik, Trustee for the Rose Wojcik Living Trust; and Edgar, Inc., d/b/a Fanny's, a Michigan Corporation, Plaintiffs-Appellants, v. The City of Romulus, a Michigan Municipal Corporation; Phillip Arthurhultz; Maxine Perry; and Betty Pulliam, Defendants-Appellees, The Michigan Liquor Control Commission, an agency o
Case Date:July 18, 2001
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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257 F.3d 600 (6th Cir. 2001)

Rose Wojcik, an individual; Richard Wojcik, Trustee for the Rose Wojcik Living Trust; and Edgar, Inc., d/b/a Fanny's, a Michigan Corporation, Plaintiffs-Appellants,

v.

The City of Romulus, a Michigan Municipal Corporation; Phillip Arthurhultz; Maxine Perry; and Betty Pulliam, Defendants-Appellees,

The Michigan Liquor Control Commission, an agency of the State of Michigan, Defendant.

No. 99-2413

United States Court of Appeals, Sixth Circuit

July 18, 2001

Argued: January 24, 2001

Appeal from the United States District Court for the Eastern District of Michigan at Detroit, Nos. 96-71501; 97-71461, Lawrence P. Zatkoff, Chief District Judge.

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[Copyrighted Material Omitted]

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Robert S. McWhorter, SCHAFER & WEINER, Bloomfield Hills, Michigan, for Appellants.

Jeffrey R. Clark, Joseph Nimako, CUMMINGS, McCLOREY, DAVIS & ACHO, Livonia, Michigan, Barry A. Seifman, Berry, Francis, Seifman, Dearborn, J. Courtney Smith, DEPARTMENT OF ATTORNEY GENERAL, Farmington, Michigan, for Appellees.

Before: BATCHELDER and CLAY, Circuit Judges; POLSTER, District Judge. [*]

OPINION

CLAY, Circuit Judge.

Plaintiffs-Appellants Rose Wojcik, Richard Wojcik as Trustee of the Rose

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Wojcik Living Trust, and Edgar, Inc., (collectively, "Plaintiffs") appeal from the district court's grant of summary judgment in favor of Defendants-Appellees City of Romulus, Michigan, and Michigan Liquor Control Commission members Phillip Arthurhultz, Maxine Perry, and Betty Pulliam (collectively, "Defendants") in this civil rights suit under 42 U.S.C. § 1983 challenging Defendants' refusal to transfer an entertainment permit for use in conjunction with a liquor license. In their complaint Plaintiffs alleged several constitutional violations stemming from the denial of their transfer requests: (1)impairment of contracts in violation of U.S. Const. art. I, §10; (2) violation of due process rights under the Fifth and Fourteenth Amendments; (3) improper taking of property in violation of the Fifth and Fourteenth Amendments; and (4)violation of the First Amendment right to freedom of speech. On cross-motions for summary judgment the district court determined that Plaintiffs were not entitled to transfer of the entertainment permit and that Defendants were entitled to judgment as a matter of law. For the reasons set forth below, we AFFIRM the district court's judgment.

I.

From 1951 to 1986, Rose Wojcik's family owned a bar located at 17421 Huron Drive in Romulus, Michigan (the "bar"). Mrs. Wojcik obtained sole ownership of the bar upon the death of her husband in 1965. On April 9, 1986, she sold the bar operations, including its Class C liquor license, a dance permit and a Sunday sales permit to Gampp Enterprises ("Gampp") under an installment contract for a sum of $85,000. 1 This assignment and transfer from Wojcik to Gampp was approved by both the City of Romulus Council (the "City" or the "Council") and the Michigan Liquor Control Commission ("MLCC") as required under Michigan law. 2

Gampp later applied to the City of Romulus and the MLCC for an entertainment permit for the purpose of having a male revue at the bar. 3 The City of Romulus, through the Romulus City Council, unanimously approved the issuance of the entertainment permit to be held in conjunction with the Class C liquor license and dance and Sunday sales permits. (J.A. at 1549, 1554.) The MLCC also approved the issuance of the new entertainment permit to Gampp.

In 1992, Gampp became delinquent on the payments required under its installment contract with Mrs. Wojcik; but Mrs. Wojcik agreed to forbear eviction and acceleration of the outstanding balance in exchange for a security interest in all of Gampp's assets. On October 6, 1992, Mrs. Wojcik and Gampp executed a security

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agreement providing that if Gampp defaulted it would reassign "all interest in and to said business" to Mrs. Wojcik, "subject to consent and approval" of the MLCC. (J.A. at 1556.) Mrs. Wojcik also filed a financing statement with the State of Michigan, thereby perfecting her security interest in "all [of Gampp's] contract rights and general intangibles now owned or hereafteracquired [sic] . . . and all . . . personal property of every kind and description now owned or hereafteracquired [sic]." (J.A. at 1561.) 4

By January of 1993, Gampp was in default. Since Gampp was no longer able to maintain liability insurance, its operations were shut down by the MLCC. Mrs. Wojcik then filed a complaint in the Wayne County Circuit Court, seeking to forfeit Gampp's assets and to obtain a temporary restraining order prohibiting Gampp from impairing or selling the assets of the bar. (J.A. at 105.) On September 10, 1993, the Wayne County Circuit Court entered a default judgment pursuant to a stipulation by the parties reassigning to Mrs. Wojcik all of the assets of the bar, including its liquor license according to the terms of the reassignment (security) agreement entered into by the parties, which made the reassignment subject to the consent and approval of the MLCC. (J.A. at 1562-63.) However, the judgment makes no mention of the reassignment of any permits related to the Class C liquor license.

In 1994 Mrs. Wojcik's grandson, Richard Wojcik, contacted the MLCC and requested the reassignment of the liquor license and all of the related permits, including the Sunday sales permit and the entertainment permit, from Gampp to the Rose Wojcik Living Trust ("Wojcik"). 5 But the MLCC informed Richard Wojcik that in order to request a reassignment, he must first obtain the approval of the City of Romulus as was required under Michigan state law. 6 Richard Wojcik then contacted the City of Romulus and requested its approval of the reassignment of the liquor license along with all of the related permits (dance, Sunday Sales, and entertainment permit) from Gampp to Wojcik.

The Romulus City Council met to consider Wojcik's request. In the process of obtaining approval of the local law enforcement authorities, the Council discovered that during the bar's last year of operation, Gampp failed to pay real and personal property taxes to the City. On August 23, 1994, Romulus Police Chief Robert Brown recommended to the City that it transfer the liquor license and dance permit to Mrs. Wojcik if she paid all of Gampp's outstanding taxes. (J.A. at 1573.) At its regular meeting on September 6, 1994, the Council adopted a resolution conditionally approving the transfer of the Class C liquor license with a dance permit from Gampp to Wojcik subject to Wojcik's payment of Gampp's outstanding real and personal

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property taxes. (J.A. at 1574-75.) But the Council refused to transfer the entertainmentpermit. 7 The MLCC would not accept a conditional approval of the liquor license and refused to transfer the liquor license or any of the permits to Wojcik. Subsequently, Wojcik partially complied with the Council's demands by paying Gampp's outstanding property taxes; however, she refused to pay the personal taxes. (J.A. at 104-05.)

While awaiting action by Romulus on the transfer request, Wojcik entered into a conditional sales contract with Edgar, Inc. ("Edgar") for the sale of the bar as well as the real estate upon which the bar is located. Enforcement of this contract was made subject to Wojcik's ability to transfer the liquor license and all of the permits to Edgar. Edgar then filed an application with the MLCC to transfer the liquor license and all of the permits from Wojcik to Edgar. (J.A. at 1599.) At this point the multiple transfer requests created a two-step process: first, transfer of the liquor license and the related permits from Gampp to the Wojcik Trust; second, a transfer of the same from Wojcik to Edgar. The Romulus City Police Department subsequently conducted an investigation of Edgar and Wojcik. On June 7, 1995, the police chief sent a letter to the City of Romulus referencing its earlier recommendation for conditional approval of the request to transfer the liquor license and what the police chief termed a "dance entertainment permit" from Gampp to Wojcik. (J.A. at 1616.) 8 This letter mentioned that in light of the fact that the MLCC would not accept such a conditional transfer, the City of Romulus Assessor and Treasurer Offices had determined that nothing would be gained by attempting to collect Gampp's outstanding personal property taxes from Wojcik. As a result, the police chief recommended unconditional approval of step one--transfer of the liquor license and the "dance entertainment permit" from Gampp to Wojcik. In a separate letter, the police chief also considered the requested transfer of a liquor license with "dance/entertainment permit" from Wojcik to Edgar. In that letter the police chief recommended that the City determine whether denial of the request would be appropriate given Edgar's intent to operate a lounge offering topless female entertainment in close proximity to a church, and the location of two similar establishments within one mile of the bar. (J.A. at 1617-18.) In his summary, the police chief stated his belief that it would be in the City's best interest if the Edgar transfer request were denied in whole, or that the entertainment permit at least be denied. (J.A. at 1618.)

On July 24, 1995, the Romulus City Council considered the transfer requests. During the meeting the Council stated that it had originally approved the issuance of the entertainment permit to Gampp in 1988 on the basis of representations that it would be used for purposes of a male revue. The Council anticipated that Gampp "would probably use this permit once a year. And this once a year would be during deer season when the men . . . went off to deer hunt[;] they would bring in male dancers...

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