BHA Investments, Inc. v. City of Boise

• Decision Date: 18 February 2004
• Docket Number: No. 30004 | 30409.
• Parties: BHA INVESTMENTS, INC., an Idaho corporation, on behalf of itself and all others similarly situated, Plaintiffs-Appellants, v. CITY OF BOISE, a body politic corporate of the State of Idaho, Defendant-Respondent. Bravo Entertainment, L.L.C., an Idaho Limited Liability Company, and Splitting Kings, L.L.C., and Idaho Limited Liability Company, Plaintiffs-Appellants, v. City of Boise, a body politic corporate of the State of Idaho, Defendant-Respondent.
• Court: Idaho Supreme Court

108 P.3d 315

141 Idaho 168

BHA INVESTMENTS, INC., an Idaho corporation, on behalf of itself and all others similarly situated, Plaintiffs-Appellants, v. CITY OF BOISE, a body politic corporate of the State of Idaho, Defendant-Respondent.

Bravo Entertainment, L.L.C., an Idaho Limited Liability Company, and Splitting Kings, L.L.C., and Idaho Limited Liability Company, Plaintiffs-Appellants, v. City of Boise, a body politic corporate of the State of Idaho, Defendant-Respondent.

Nos. .

Supreme Court of Idaho, Boise, February 2005 Term.

February 18, 2004.

Davison, Copple, Copple & Copple, Boise, for appellants. Edward J. Guerricabeitia argued.

Cary B. Colaianni, Boise City Attorney, for appellants. J. Paige Wilkins argued.

EISMANN, Justice.

These are consolidated appeals. BHA Investments, Inc. v. City of Boise is an appeal from the district court's decision not to certify the case as a class action. We affirm the district court and award attorney fees on appeal. Bravo Entertainment, L.L.C. v. City of Boise is an appeal from a judgment holding that the City was not required to refund an illegally imposed fee. We affirm the judgment insofar as it dismisses the state causes of action and vacate that portion of the judgment dismissing the federal cause of action.

I. FACTS AND PROCEDURAL HISTORY

BHA Investments, Inc. The Plaintiff BHA Investments, Inc., (BHA) is an Idaho corporation whose only asset was a liquor license issued by the state of Idaho. On July 17, 2000, the Power House LLC purchased all of the stock in BHA in order to acquire the liquor license. Pursuant to Boise City Code 5-05-10, the Defendant City of Boise (City) charged BHA a fee of $8,625.00 in order for the liquor license to be transferred to the Power House LLC. BHA paid the fee under protest.

On July 23, 2001, BHA filed a complaint in the district court seeking to maintain a class action lawsuit to recover the liquor license transfer fees paid to the City by it and others. Upon the City's motion, the district court dismissed the complaint on the ground that Idaho Code § 23-916 granted municipalities the authority to impose liquor license transfer fees. BHA appealed, and we reversed, holding that the City had no authority to charge such a fee. BHA Investments, Inc. v. City of Boise, 138 Idaho 356, 63 P.3d 482 (2003).

The case was remanded to the district court, and on June 2, 2003, BHA filed a motion for summary judgment and a motion for class certification. The district court granted the motion for summary judgment and denied the motion for class certification. On August 11, 2003, it entered judgment on behalf of BHA against the City for the sum of $8,625.00 plus prejudgment interest at the statutory rate from October 25, 2000, to the date of the judgment. BHA timely appealed.

Bravo Entertainment, L.L.C. v.City of Boise. On December 14, 2000, Bravo Entertainment, L.L.P., purchased a liquor license. The City charged it a liquor license transfer fee of $9,000. Bravo immediately leased the liquor license to Splitting Kings, d/b/a The Big Easy, (Splitting Kings) which agreed to pay the transfer fee as part of the lease agreement. On December 14, 2000, Splitting Kings paid the fee to the City. On February 26, 2003, Bravo Entertainment, L.L.P. was dissolved, and all of its assets were transferred to the Plaintiff Bravo Entertainment, L.L.C., (Bravo). It owns a 60% majority interest in Splitting Kings.

On August 20, 2003, Bravo filed a complaint seeking damages from the City for the wrongful taking of its property and for unjust enrichment. Both parties moved for summary judgment. In response to the City's contention that Bravo was not the real party in interest, the district court on October 31, 2003, permitted Splitting Kings to be added as a plaintiff, and it joined in the motion for summary judgment.

On December 17, 2003, the district court issued its memorandum decision and order denying Bravo and Splitting Kings's motion for summary judgment and granting the City's motion for summary judgment. The district court ruled in favor of the City on three grounds: (1) Bravo and Splitting Kings had failed to satisfy the notice requirements of Idaho Code §§ 50-219 and 6-906; (2) this Court's opinion in BHA Investments, Inc. v. City of Boise, 138 Idaho 356, 63 P.3d 482 (2003) (BHA I), would not be applied retroactively to cases that were not pending at the time of the opinion; and (3) the fee charged by the City was a disguised tax and a party cannot obtain reimbursement of a tax unless it is paid "under protest." Bravo and Splitting Kings appealed, and on February 5, 2004, the district court entered its judgment dismissing their complaint.

Both cases were consolidated for the appeal.

II. ISSUES ON APPEAL

A. Did the district court err in denying BHA's motion for class certification?

B. Did the district court err in granting the City's motion for summary judgment and dismissing Bravo and Splitting Kings's complaint?

C. Is any party entitled to an award of attorney fees on appeal?

III. ANALYSIS

A. Did the District Court Err in Denying BHA's Motion for Class Certification?

BHA sought certification of its lawsuit as a class action under Rules 23(a) and (b) of the Idaho Rules of Civil Procedure. BHA alleged that there would be seventeen members in the class, all of whom were known persons or entities within the City. In denying the motion for class certification, the district court held, "While there is not a specific number of members required in order to be considered `so numerous' that joinder of all members is impracticable, the Court finds that 17 members is not sufficient to be considered `numerous' in this case."

The decision of a trial court to grant or deny class certification is reviewable on appeal under an abuse-of-discretion standard. Pope v. Intermountain Gas Co., 103 Idaho 217, 646 P.2d 988 (1982). When deciding whether a trial court has abused its discretion, this Court considers three factors: (1) whether the trial court correctly perceived the issue as one of discretion; (2) whether the trial court acted within the boundaries of this discretion and consistent with the legal standards applicable to the specific choices available to it; and (3) whether the trial court reached its decision by an exercise of reason. Bream v. Benscoter, 139 Idaho 364, 79 P.3d 723 (2003).

In order to certify a lawsuit as a class action, the trial court must find that all four factors in Rule 23(a) exist and that at least one factor in Rule 23(b) exists. If the court finds that a necessary factor is absent, it need not address the other factors. The first factor in Rule 23(a) is that "the class is so numerous that joinder of all members is impracticable." The district court determined that this factor had not been met, and therefore denied class certification. The district court did not abuse its discretion in deciding that seventeen known entities located within the City did not constitute a class that was so numerous that joinder of all members is impracticable.

B. Did the District Court Err in Granting the City's Motion for Summary Judgment and Dismissing Bravo and Splitting Kings's Complaint?

1. Did the exaction of the liquor license transfer fee constitute a taking of property? In their complaint, Bravo and Splitting Kings alleged that the City's fee to transfer a liquor license constituted a taking of its property without just compensation in violation of the United States and Idaho Constitutions. Citing BHA Investments, Inc. v. State, 138 Idaho 348, 63 P.3d 474 (2003), the City argues that because a liquor license is not property, the imposition of an unlawful transfer fee for a liquor license does not constitute the taking of property. The City misreads that case.

In BHA Investments, Inc. v. State, we stated, "The primary argument of BHA is that the money in excess of a reasonable transfer fee is a taking." 138 Idaho at 355, 63 P.3d at 481. BHA contended that the amount of the fee must bear a reasonable relationship to the value of the services rendered and any excess charged over such amount constituted an unconstitutional taking of property. We noted that a liquor license fee, including the transfer fee at issue, was imposed by the State pursuant to its police power. As such, we stated, "Liquor license fees may be imposed to such a degree that the amount effectively discourages entrance in the business. The funds for a transfer fee need not relate specifically to the amount needed to investigate the transfer." 138 Idaho at 353, 63 P.3d at 479 (internal citations omitted). We held that because of the latitude given the State under its police power to impose fees for liquor licenses, the transfer fee at issue was not an unconstitutional taking of property. As we stated, "Deference is given to the State in its use of the police power in this case regarding the transfer fee. There is no unconstitutional taking under either the Idaho or United States Constitution." 138 Idaho at 355, 63 P.3d at 481. Our holding in BHA Investments, Inc. v. State has no application to this case because the City does not have the power to charge a fee for transferring a liquor license. BHA I.

The City argues, "Money associated with the transfer of a liquor license is not property." Of course, if that argument were valid then the City should have no problem returning the money it unlawfully exacted, since it would not be returning property. Money is clearly property that may not be taken for public use without the payment of just compensation. Brown v. Legal Found. of Wash., 538 U.S. 216, 123 S.Ct. 1406, 155 L.Ed.2d 376 (2003).

In BHA Investments, Inc. v. State we quoted from San Remo Hotel L.P. v. City and County of San Francisco, 27 Cal.4th 643, 117 Cal.Rptr.2d 269, 41 P.3d 87, 106 (2002), as follows: "To put the matter simply, the taking of money is different, under the Fifth Amendment, from the taking of real or personal property. The imposition of...