BBL, Inc. v. City of Angl.

• Citation: 809 F.3d 317
• Decision Date: 07 December 2015
• Docket Number: No. 14–1199.,14–1199.
• Parties: BBL, INC., Alva J. Butler, and Sandra K. Butler, Plaintiffs–Appellants, v. CITY OF ANGOLA, Dean Twitchell, in his official capacity, and Vivian Likes, in her individual capacity, Defendants–Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

809 F.3d 317

BBL, INC., Alva J. Butler, and Sandra K. Butler, Plaintiffs–Appellants,

v.CITY OF ANGOLA, Dean Twitchell, in his official capacity, and Vivian Likes, in her individual capacity, Defendants–Appellees.

No. 14–1199.

United States Court of Appeals, Seventh Circuit.

Argued Nov. 4, 2014.

Decided Dec. 7, 2015.

Matthew Joseph Hoffer, Attorney, Bradley J. Shafer, Attorney, Shafer & Associates, Lansing, MI, for Plaintiffs–Appellants.

Robert T. Keen, Jr., Attorney, Cathleen M. Shrader, Attorney, Barrett & McNagny LLP, Fort Wayne, IN, Scott D. Bergthold, Attorney, Law Office of Scott D. Bergthold, P.L.L.C., Chattanooga, TN, for Defendants–Appellees.

Before MANION, WILLIAMS, and SYKES, Circuit Judges.

SYKES, Circuit Judge.

Alva and Sandra Butler and their company, BBL, Inc. (we'll refer to them collectively as "BBL"), purchased a restaurant in the City of Angola, Indiana, and planned to convert it to an adult-entertainment venue featuring nude dancing. Within days of the purchase, Angola amended its zoning and other ordinances to make this use of the property impossible. The Butlers and their company brought this suit alleging claims for violation of their rights under the First Amendment and Indiana law. They moved for a preliminary injunction. The district court denied the motion, and the plaintiffs took this interlocutory appeal seeking review of that decision. See 28 U.S.C. § 1292(a)(1) (authorizing interlocutory appeal of orders granting or denying injunctive relief).

The appeal is a procedural and substantive tangle. The judge denied the preliminary-injunction motion in a brief discussion at the end of a 73–page omnibus order addressing multiple motions then pending before the court. Included in the package of motions was a request by the City for judgment on the pleadings on certain parts of the legal test applicable to BBL's First Amendment claim. The judge granted this motion, leaving the final step in the First Amendment analysis for later decision. That approach was unusual; we question whether "judgment" on the pleadings can be granted on intermediate steps in a doctrinal test. This procedural step affected the judge's decision on the preliminary-injunction motion.

Still, the judge was right to deny the motion. At the preliminary-injunction hearing, BBL made a tactical decision not to contest the City's evidence that the challenged ordinances were designed to reduce the negative secondary effects of adult-entertainment establishments. BBL thus stipulated away the key factual issue in the analysis of the First Amendment claim. To the extent that the preliminary-injunction motion was premised on the state-law claims, the judge also correctly denied it.

BBL attacks other aspects of the judge's omnibus order, but our jurisdiction is limited to the denial of preliminary injunctive relief. On that issue, we affirm.

I. Background

On August 9, 2012, Alva and Sandra Butler submitted the winning bid and a nonrefundable deposit to purchase a restaurant property located at 310 West Wendell Jacob Avenue in the City of Angola. The purchase also included the restaurant's liquor license and an adjoining lot. The Butlers and their company, BBL, Inc., planned to convert the restaurant to a "liquor-licensed food and beverage serving venue ... that presents to consenting adult patrons clothed female performance dance entertainment." The reference to "clothed" female dancing is misleading; the dancers would wear only "pasties and a g-string," in keeping with Indiana's public-indecency statute. See Barnes v. Glen Theatre, Inc., 501 U.S. 560, 111 S.Ct. 2456, 115 L.Ed.2d 504 (1991) (upholding the constitutionality of the statute). This new adult-entertainment venue would be called "Showgirl."

The zoning ordinance then in effect in Angola was promulgated in 2008 and permitted "sexually oriented businesses" to locate in medium-to-large commercial districts. The 2008 ordinance also required businesses in this category to locate at least 1,000 feet away from public gathering places, residential districts, and each other. Finally, the 2008 ordinance required that any new sexually oriented business obtain an Improvement Location Permit. This prerequisite overlaps a provision in Angola's Unified Development Ordinance that requires all property owners to obtain an Improvement Location Permit before making any change in land use.

The parties agree that the property in question is located in a medium-to-large general commercial district. If everything went as the Butlers planned, Showgirl would be the first sexually oriented business in Angola.

On August 16, 2012, the Butlers contacted City Attorney Kim Shoup to confirm that Showgirl would be able to operate at this location under the City's zoning laws. The Common Council quickly instructed Shoup to research the scope of permissible regulation of sexually oriented businesses. On August 23 Angola's zoning administrator, Vivian Likes, replied by letter to the Butlers' inquiry, stating that this use was not permitted under the 2008 ordinance because a public gathering place was located within 1,000 feet of the property. On September 10 Likes clarified that the public gathering place in question was a proposed Steuben County Multi–Use Trail, on which construction would begin in the spring of 2013.

The Butlers thought Likes was mistaken about the legal effect of the proposed trail because none of the trail heads would be within 1,000 feet of the property and other parts of the trail weren't "public gathering places" within the meaning of the ordinance. So they pressed on with their plan and closed on the property on September 11, 2012.

Angola reacted to this turn of events by changing its zoning and regulatory ordinances for sexually oriented businesses. On September 17 the Common Council adopted Angola Ordinance No. 1418–2012, entitled An Ordinance Establishing Licensing Requirements and Regulations for Sexually Oriented Businesses within the City of Angola, Indiana. This ordinance began with several pages of citations to court cases and studies regarding the negative secondary effects of sexually oriented businesses. Next came three specific factual findings:

(1) Sexually oriented businesses ... are associated with a wide variety of adverse secondary effects including, but not limited to, personal and property crimes, prostitution, potential spread of disease, lewdness, public indecency, obscenity, illicit drug use and drug trafficking, negative impacts on surrounding properties, urban blight, litter, and sexual assault and exploitation.

(2) Sexually oriented businesses should be separated from sensitive land uses to minimize the impact of their secondary effects upon such uses, and should be separated from other sexually oriented businesses, to minimize the secondary effects associated with such uses and to prevent an unnecessary concentration of sexually oriented businesses in one area.

(3) Each of the foregoing negative secondary effects constitutes a harm which the City has a substantial government interest in preventing and/or abating.... [T]he City's interest in regulating sexually oriented businesses extends to preventing future secondary effects of either current or future sexually oriented businesses that may locate in the City. The City finds that the cases and documentation relied on in this ordinance are reasonably believed to be relevant to said secondary effects.

The new licensing ordinance imposed a host of requirements on sexually oriented businesses, but only one is relevant here. Section 19 requires sexually oriented businesses to be located "at least 750 feet from every residence." It's undisputed that BBL's property doesn't meet this requirement.

On November 12 the Angola Plan Commission recommended that the Common Council amend the 2008 zoning ordinance to remove sexually oriented businesses as a permitted use in commercial districts and move them to moderate-intensity industrial districts. In addition, to bring the zoning code into conformity with the new licensing and regulatory ordinance for sexually oriented businesses, the Commission recommended adding an identical requirement of a 750–foot buffer zone from any residence. The preexisting dispersal requirement—requiring sexually oriented businesses to be located at least 1,000 feet from residential districts, public gathering places, and each other—was retained. Finally, the Commission recommended repealing the specific requirement in the 2008 ordinance that sexually oriented businesses obtain an Improvement Location Permit. The generally applicable provision requiring all property owners to obtain an Improvement Location Permit before making any change in land use would remain in place.

On November 19 the Common Council adopted the Commission's recommendations as Ordinance No. 1425–2012, An Ordinance Amending the Unified Development Ordinance with Respect to the Regulation of Sexually Oriented Businesses. The new zoning ordinance contains a list of justifications substantially similar to those in the new licensing and regulatory ordinance described above.

As this regulatory and rezoning activity was occurring, BBL began some limited construction at the property, including resurfacing the parking lot, reroofing the building, and taking care of miscellaneous maintenance tasks. During this time, Angola's building commissioner, Dean Twitchell, visited the property several times. He told the Butlers that installing new roofing material and demolishing interior non-load-bearing walls wouldn't require a permit. But on October 1 he ordered the Butlers to stop work when he noticed that a load-bearing wall was being dismantled and a new partition wall installed. This type of construction could only take place pursuant to a "construction design release" from the State of Indiana and a building permit from the City. At this point the Butlers halted their construction efforts. By this time they had invested at least $456,000 into the...