Art Neon Co. v. City and County of Denver

• Decision Date: 04 April 1973
• Docket Number: Civ. A. No. C-3427.
• Citation: 357 F. Supp. 466
• Parties: ART NEON CO. et al., Plaintiffs, v. The CITY AND COUNTY OF DENVER, a municipal corporation, and Anthony H. Jansen, Defendants, and Gump Glass Co., Intervenor.
• Court: U.S. District Court — District of Colorado

357 F. Supp. 466

ART NEON CO. et al., Plaintiffs, v. The CITY AND COUNTY OF DENVER, a municipal corporation, and Anthony H. Jansen, Defendants and Gump Glass Co., Intervenor.

Civ. A. No. C-3427.

United States District Court, D. Colorado.

April 4, 1973.

Hoffman, Goldstein & Armour, by Alan A. Armour, Denver, Colo., for plaintiffs and intervenor.

Max P. Zall, City Atty., Earl T. Thrasher, Asst. City Atty., Denver, for defendants.

Davis, Graham & Stubbs, by Richard P. Holme, Denver, Colo., and Gibson, Dunn & Crutcher by Theodore B. Olson, Los Angeles, Cal., for amicus curiae Combined Communications Corp.

Lawrence A. Wright, Jr., Richard F. Mauro, and Howard B. Gelt, Denver, Colo., for amici curiae Consumers.

MEMORANDUM OPINION

WINNER, District Judge.

Following submission of comprehensive pretrial briefs, this case was tried to the Court. Thereafter, long post trial briefs were filed, and the case is ready for determination by this opinion which contains the findings and conclusions required by Rule 52.

Plaintiffs' complaint makes a hydraheaded attack on the validity and constitutionality of the sign code of the City and County of Denver. Revised Municipal Code, Sec. 613, and, more particularly, Sec. 613.5 of the Code. Some of plaintiffs' claims raise questions we deem to arise only under the Constitution of the United States; some argue provisions of both state and federal constitutions, while others are directed at case law and the Constitution of the State of Colorado. By order of March 24, 1973, the Court limited the issues it would try to those arising only under the Constitution of the United States, and, although plaintiffs urged that there is pendent jurisdiction to try other claims, we ruled that under the principles of United Mine Workers v. Gibbs (1966) 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218, and Reetz v. Bozanich (1970) 397 U.S. 82, 90 S.Ct. 788, 25 L.Ed.2d 68, myriad problems should be left for state court determination. We accepted the following phraseology by the city of the question the Court should determine:

"Whether the requirement that certain existing signs owned by plaintiffs be terminated over the periods prescribed by the ordinance is a valid exercise of the municipal police power or an unconstitutional taking of private property without compensation having been made therefor; or is an unconstitutional impairment of the obligation of certain contracts relating to the leasing of signs owned by plaintiffs."

By supplementary order of July 18, 1972, it was explained that included within the issues which might be determined was "the question of equal protection as that question applies to the differing amortization periods contained in the ordinance."

Thus, the constitutional question we today decide is important, but the question decided is narrow, and many of plaintiff's challenges of the ordinance are not resolved.¹ Perhaps we should mention a few of the many things we do not decide.

(1) The city says that some of the signs exist under revocable permit to use city-owned property. We decide nothing having to do with this contention of the city nor do we decide anything arising under plaintiffs' claim that the city is estopped to enforce revocability of any permits. This is a problem for the state courts.

(2) The city says that a sign of Michael T. Thomase, d/b/a Colonial Motel exists under a special dispensation and that it is not affected. We make no determination concerning this.

(3) The right of the city to prohibit the erection of any or all future advertising signs is not before us, and we make no decision as to the validity or invalidity of any such ordinance which may or may not be enacted in the future, although we recognize that there is much authority for upholding such prohibitions.

(4) We decide no questions concerning the reasonableness of the regulations as they relate to the type of business involved, the zone in which the sign is located, the comparable heights of signs in various zones, differentiations between free standing and attached signs and various other types of claimed inequality between signs.

(5) We make no decision as to the validity of the sign code under state law.

(6) We make no determination as to whether the code draws arbitrary distinction between various signs.

Moreover, we do not quarrel with nine of the ten "legal principles" argued by the city. We accept as truisms these "legal principles" stressed in the city's brief: —

1. Denver's charter permits the city to enact zoning ordinances.

2. In adopting zoning ordinances, Council may divide the city into districts.

3. Classification within various zone districts is permitted, and outdoor advertising is a type of business subject to separate classification and regulation.

4. Zoning ordinances are to be construed as a whole.

5. Ordinances are presumptively constitutional.

6. If constitutionality is debatable, the ordinance should be upheld.

7. If there is a reasonable factual basis on which the ordinance can be found valid, a court should assume that the legislative body acted on the basis of those facts unless the record affirmatively shows that another factual basis was relied upon.

8. Many cases hold, and the Colorado Supreme Court has held that under Colorado law non-conforming uses may be terminated if a reasonable amortization period is allowed. The underlying reasoning of these cases is that constitutionally just compensation may be provided by amortization.

9. Non-conforming uses should be made conforming as rapidly as is reasonably possible.

We do not agree with the city's tenth "legal principle" that a plan of amortization is the only way in which just compensation can be paid for required termination of non-conforming uses. Lamm v. Volpe (1971) 10 Cir., 449 F.2d 1202, infra, 23 U.S.C. § 131 and 1963 C.R.S., 1971 Perm.Supp., 120-5-28(2), all dispose of this "legal principle." The Colorado statute provides:

"The division of highways may remove any nonconforming advertising device and may acquire all real and personal property rights pertaining to the nonconforming advertising device by gift, purchase, agreement, exchange, or eminent domain. All proceedings in eminent domain shall be conducted as may be provided by law. The division of highways may adopt appraisal concepts and acquisition procedures which are appropriate to the evaluation and removal of nonconforming advertising devices."

If the city wishes to adopt an ordinance similar to the Colorado statute or similar to the federal Highway Beautification Act, no Fifth Amendment question can arise under such an ordinance. The case is before us only because the city wants to force destruction of the signs without cash outlay on its part and because it insists on paying the compensation it admits is due only by way of an amortization scheme instead of paying compensation the way the state and federal governments do. As we shall see before this opinion is concluded, the only real question is, "Who is to pick up the tab for beautification of the city resulting from the tearing down of the advertising signs?" The state and the federal government think that the taxpayers must pay the piper. The city says that the sign companies have to bear the loss.

Before entering upon a discussion of this fundamental question, it is necessary that we dispose of a preliminary argument advanced by the city. The city says that three of the plaintiffs and an intervenor have failed to establish jurisdictional amount. In effect the city argues that proof by these parties at time of trial would not justify an eminent domain award in excess of $10,000.00, but this isn't the test of amount in controversy. St. Paul Mercury Indemnity Co. v. Red Cab Co. (1938) 303 U.S. 283, 58 S.Ct. 586, 82 L.Ed. 845. The evidence established that these parties made a good faith claim that they will be damaged by more than $10,000 in a given year as a result of the enforcement of the ordinance, and that is all that is required. The evidence abundantly meets the test of Ronzio v. Denver & R. G. W. R. Co. (1940) 10th Cir., 116 F.2d 604:

"In determining the matter in controversy, we may look to the object sought to be accomplished by the plaintiffs' complaint; the test for determining the amount in controversy is the pecuniary result to either party which the judgment would directly produce."

In support of its jurisdictional amount argument, the city almost concedes that the evidence at the time of the preliminary injunction hearing was sufficient to establish jurisdictional amount, but then counsel say, "We know of no rule of law whereby the evidence offered by these parties in an application for preliminary injunction carries forward to a hearing on the merits of the case." Rule 65(a)(2) enunciates such a rule:

". . . any evidence received upon an application for a preliminary injunction which would be admissible upon the trial on the merits becomes a part of the record on the trial and need not be repeated upon the trial."

Jurisdictional amount was proven as to all parties, and with the question of jurisdictional amount out of the way, we come to the merits of the case. The important parts of the challenged ordinance are:

"Sec. 613-5. Nonconforming Signs.

".5-1. Declaration of Public Policy.

It is reasonable that a time limit be placed upon the continuance of existing nonconforming signs. An amortization program permits the owner to plan during a period when he is allowed to continue the nonconforming signs while at the same time assuring that the District in which the nonconforming signs exist will eventually benefit from a substantial uniformity of permanent signs.

".5-2. Definition of Nonconforming Signs.

A nonconforming sign shall be any sign which:

".5-2(1). On the effective date of this ordinance was lawfully maintained and had been lawfully erected in accordance with the provisions of any prior zoning ordinance but which sign does not conform to the limitations

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