958 F.2d 1354 (6th Cir. 1992), 90-6371, Bannum, Inc. v. City of Louisville, Ky.

Docket Nº:90-6371.
Citation:958 F.2d 1354
Party Name:BANNUM, INC., Plaintiff-Appellee, v. CITY OF LOUISVILLE, KENTUCKY, Defendant-Appellant.
Case Date:March 23, 1992
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

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958 F.2d 1354 (6th Cir. 1992)

BANNUM, INC., Plaintiff-Appellee,



No. 90-6371.

United States Court of Appeals, Sixth Circuit

March 23, 1992

Argued Oct. 4, 1991.

Rehearing En Banc Denied May 12, 1992.

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Scott T. Wendelsdorf (argued and briefed), Ogden, Sturgill & Welch, Louisville, Ky., for plaintiff-appellee.

James H. Highfield, Asst. Director of Law, J. Michael Brown, Scott R. Cox (briefed), Donald L. Cox (argued and briefed), Lynch, Cox, Gilman & Mahan, Louisville, Ky., for defendant-appellant.

Before: JONES and NELSON, Circuit Judges; and JOINER, Senior District Judge. [*]

JOINER, Senior District Judge.

The City of Louisville appeals the bench ruling for Bannum, Inc., in this action, brought pursuant to 42, U.S.C. § 1983, 1 on the ground that the district court misapplied City of Cleburne v. Cleburne Living Center, 473 U.S. 432, 105 S.Ct. 3249, 87 L.Ed.2d 313 (1985).

Bannum owns and operates community training centers (CTCs) under contract with the United States Bureau of Prisons (Bureau). The Bureau solicited bids from Bannum and other companies for its CTC operation in Louisville in 1985 and again in 1988. In 1985, Bannum's bid was accepted and Bannum entered into a contract with the Bureau to operate a CTC in Louisville. In 1986, the contract was rescinded by the Bureau in response to Bannum's inability to demonstrate that its proposed CTC property was in compliance with Louisville's zoning ordinance.

Litigation ensued between the parties in state and federal court. In the case at bar, the district court found that Louisville's zoning ordinance deprived Bannum of its rights under the Equal Protection Clause of the Fourteenth Amendment in that CTC operators were required to apply for a "discretionary special use permit," while operators of similar group residential uses faced no such application requirement. A careful reading of City of Cleburne leads this court to conclude that the trial court did not clearly err in finding a provision of Louisville's zoning ordinance constitutionally invalid as applied to Bannum, and in granting injunctive relief and damages. Accordingly, we affirm the district court.


The dispute between Louisville and Bannum has now been the subject of three

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lawsuits: Bannum I, Bannum II, and Bannum III.

The CTC program, intended to facilitate the reintegration of federal offenders into society, began in Louisville in 1967, and was run continuously until 1985 by Dismas House of Kentucky. In 1985 the Bureau solicited bids from CTC operators, including Bannum, for the Louisville CTC program. Bannum conducted its seven-state CTC operation from its offices located on Clay Street in Louisville, in an area known as Butchertown. Prior to 1985, Bannum leased property located on East Washington Street in Louisville. These properties comprised three housing units; a duplex and a single family residence. Bannum submitted a bid to the Bureau for operation of a CTC at the East Washington Street location, and also informed the Bureau of the possibility of using the Clay Street location as a CTC. Both of these properties were located in zoning districts designated "M-2 Industrial" under the zoning regulations in effect in 1985. In October 1985, the Bureau accepted Bannum's bid and awarded it the Louisville contract.

The contract required Bannum to demonstrate that the proposed CTC facility site was in compliance with all applicable local zoning regulations. In order to comply, Bannum sought a "certificate of occupancy" and zoning approval as a "boarding house" from the city. This request was made after Bannum obtained confirmation from city officials that boarding houses were permitted to operate under the zoning regulations in a number of zoning districts without obtaining a special use permit. 2

When Bannum's intention to operate a CTC at the East Washington Street location became known, neighborhood opposition developed. City officials indicated to concerned residents in the Butchertown area that they too opposed the CTC operation. In November 1985, Louisville filed an action in the Jefferson County Circuit Court (Bannum I ) seeking a restraining order against Bannum based upon a restrictive covenant in the deed to Bannum's East Washington Street property. The deed limited the use of the property to a "three-unit dwelling house." The city complained that the zoning regulations defined dwelling houses as units "defined for or occupied by one family," and therefore to use the property to house 24 prisoners would violate the regulations. As relief, the city sought to enjoin Bannum from operating a CTC at the East Washington Street location, and to prevent application for a special use permit to operate a CTC in Louisville under the distinct zoning classification of an "institution," or "any other classification." The Jefferson County Circuit Court granted the city a temporary injunction, but denied its request for an order prohibiting Bannum from applying for a special use permit to operate a CTC under zoning classifications other than a "boarding house." Bannum's motion for ex parte intermediate relief, filed in the Kentucky Court of Appeals, was also denied.

Bannum next submitted affidavits to the Jefferson County Planning Commission and Board of Zoning Adjustments in order to establish a non-conforming use of the East Washington Street property. Bannum was informed by the city's attorney that a CTC was properly categorized under the zoning regulations as "institutional" use (the term "institution" was not defined by the zoning regulations in effect in 1985) and that operation of a CTC, whether in a M-2 Industrial district, or any other district in Louisville, could only be accomplished by obtaining a special use permit.

A special use permit is obtained through a multi-step procedure: (1) an applicant must attend a pre-application conference; (2) file a formal application with the Board of Zoning Adjustment; (3) a public hearing must take place; and (4) the issuance of a final decision by the Board. Only the final

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decision is appealable to the Kentucky Court of Appeals.

Bannum was aware of the considerable public opposition to its planned operation and chose not to apply for a special use permit. Rather, it sought to have the provision of the zoning regulation, which required institutional uses to apply for a special use permit, declared violative of the Equal Protection Clause of the Fourteenth Amendment.

In November 1985 Bannum filed its complaint (Bannum II ) in federal court seeking temporary and permanent injunctive relief prohibiting the city from interfering with its use of the East Washington Street property as a CTC. Bannum alleged that it was a denial of equal protection for the city to distinguish between the intended use of the East Washington Street property as a CTC, by requiring Bannum to obtain a conditional use permit, while not requiring that similar residential facilities obtain such a permit. The district court granted the motion for a temporary restraining order prohibiting the city from interfering in the occupancy of the East Washington Street property by Bannum's "tenants."

Following a preliminary injunction hearing, the district court granted the city's motion to dismiss on the grounds of abstention, and thereby dissolved the previously entered temporary restraining order. The court noted the ongoing action in the state court in which Bannum's constitutional claims could be resolved, and found that the state court had entered a judgment which would be nullified by granting the relief sought by Bannum. This, the district court found, would constitute an improper interference with the functioning of the state court.

Bannum filed its next complaint (Bannum III ) in district court in February of 1986. It was predicated, not upon use of the East Washington Street property which had been the subject of Bannum I and II but, rather, focused on use of the Clay Street property as a CTC. Bannum raised the same constitutional claims previously addressed by the district court, taking issue with the zoning regulations as they existed at the time of the complaint.

In March 1986 Bannum's contract with the Bureau, which had been modified to extend the date for commencement of operations from December 1, 1985, to March 1, 1986, was cancelled because Bannum could not document its conformance with local zoning requirements. The city then moved for dismissal of Bannum's claims on abstention grounds. The court denied the motion and determined that, in light of the Supreme Court's opinion in City of Cleburne, Bannum's action was no longer an action from which a federal court should abstain. Thereafter, in the words of the district court, the action lay "essentially dormant" for approximately three years.

While the action lay dormant, the Jefferson County Planning Commission was active. In September 1986 an amended version of the zoning regulations was enacted. The Development Code, as amended by Ordinance No. 308, Series 1986, contained provisions detailing requirements for a special use permit to operate uses termed "exceptional residential uses," and "social rehabilitation residences," within Louisville. In contrast to the failure of the former regulations to define "institution," the current regulations are specific:

EXCEPTIONAL RESIDENTIAL USE: Any premises for which admission to residency in or occupancy of the premises is limited to or intended for persons with a common student status, club membership, religious affiliation, disability, infirmity, physical or emotional illness.

RESIDENCE FOR SOCIAL REHABILITATION: A dwelling unit for two or more persons which are under any...

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