C. Line, Inc. v. City of Mali

• Decision Date: 02 August 2013
• Docket Number: No. 3:11–cv–92.,3:11–cv–92.
• Citation: 957 F.Supp.2d 1012
• Parties: C. LINE, INC., Plaintiff, v. CITY OF DAVENPORT; Craig Malin; and Alan Guard, Defendants.
• Court: U.S. District Court — Southern District of Iowa

957 F.Supp.2d 1012

C. LINE, INC., Plaintiff,

v.CITY OF DAVENPORT; Craig Malin; and Alan Guard, Defendants.

No. 3:11–cv–92.

United States District Court,

S.D. Iowa,

Davenport Division.

Aug. 2, 2013.

Michael J. McCarthy, McCarthy Lammers & Hines, Brubaker Flynn & Darland, Davenport, IA, Michael J. Meloy, Koos & Meloy Law Firm, Bettendorf, IA, for Plaintiff.

Samuel J. Skorepa, Rand S. Wonio, Lane & Waterman LLP, Davenport, IA, for Defendants.

ORDER

ROBERT W. PRATT, District Judge.

Before the Court are the following motions: 1) a partial ¹ Motion for Summary Judgment (Clerk's No. 35), filed by C. Line, Inc. (“Plaintiff” or “C. Line”); and 2) a Motion for Summary Judgment (Clerk's No. 47) filed by the City of Davenport (“Davenport”), Craig Malin (“Malin”), and Alan Guard (“Guard”) (collectively “Defendants”). Defendants filed a resistance (Clerk's No. 46) to Plaintiff's Motion (Clerk's No. 46). Plaintiff field a resistance (Clerk's No. 51) to Defendants' Motion, and Defendants filed a Reply (Clerk's No. 53). The matters are fully submitted.

I. FACTUAL BACKGROUND

C. Line is an Iowa limited liability company with its principal place of business in Davenport, Iowa. Pl.'s Statement of Material Facts (“Pl.'s Facts”) ¶ 1 (Clerk's No. 35.1). Davenport is a municipal corporation organized and existing under the Constitution and laws of the State of Iowa. Id. ¶ 2. At the times relevant to this case, Malin was Davenport's city administrator, and Guard was Davenport's finance director. Id. ¶¶ 3–4; Defs.' Resp. to Pl.'s Facts (“Defs.' Resp. to Pl.'s Facts”) ¶ 4 (Clerk's No. 46.2). The parties agree that all of Defendants' actions in relation to this case were taken in the course and scope of official duties and under color of state law and authority. Pl.'s Facts ¶ 5.

In February 1997, C. Line opened an adult cabaret business called “Chorus Line” at 4128 North Brady Street in Davenport.²Id. ¶ 10. In 2001, Davenport adopted ordinance No. 2001–228, which established Chapter 5.16 of the Davenport Municipal Code to provide for the licensing and regulation of “adult entertainment” businesses. Id. ¶ 11. On August 19, 2003, C. Line was informed by a letter that Chorus Line must cease operating as an adult business. Id. ¶ 12. On October 14, 2003, C. Line filed suit against Davenport in this Court. Id. ¶ 13 (citing C. Line, Inc. d/b/a Chorus Line v. City of Davenport, Iowa, Case No. 3:03–cv–90113). On August 20, 2004, C. Line and Davenport entered into a Consent Decree. Id. ¶ 14. The Consent Decree was signed on behalf of Davenport by Assistant City Attorney Brian Heyer (“Heyer”), approved by the Court, and is fully binding on Davenport and its officers and employees. Id. ¶ ¶ 14, 18. Amongst other things, the Consent Decree provides:

1. The City of Davenport will issue an adult cabaret license to C. Line, Inc., d/b/a Chorus Line; § 5.16.120 notwithstanding. Said license shall be subject to the regulations of Chapter 5.16 and shall be renewable as provided thereunder.

2. C. Line, Inc. shall be allowed to amend its corporate structure, if necessary, such that the majority interest in C. Line, Inc., the owner of the adult cabaret license, may be sold or transferred to any otherwise qualified person or entity pursuant to Chapter 5.16 of the Davenport Municipal Code.

3. The Chorus Line is a pre-existing non-conforming use....

[5]. The provisions of Chapter 5.16 may be enforced by the City of Davenport, except as modified by this Consent Decree....

Id. ¶¶ 14–17.

At the time of the Consent Decree, C. Line was owned by Michael Cline (“Cline”). Id. ¶ 25. Cline sold C. Line to Larry Starkman, Michael Siegel, and Steven Brown in 2007. Id. In November 2008, C. Line voluntarily closed Chorus Line. Id. In December 2008, Chorus Line was evicted from 4128 Brady Street by a forcible entry and detainer petition granted in favor of the landlord of the property. Id. In early 2009, the corporate ownership of C. Line was transferred to Nadeem Mazhar (“Mazhar”). Id. ¶ 26.

On July 28, 2009, C. Line applied to Davenport for an adult entertainment license as part of the reopening of the Chorus Line adult cabaret business at 4128 Brady Street. Id. ¶ 30. Pursuant to Davenport Municipal Code § 5.16.050(A), three “reviewing departments” must approve adult entertainment licenses: the Fire Department, the Zoning and Land Use Department, and the Police Department. Id. ¶ 32. Each of the three reviewing departments recommended approving C. Line's application, and the matter was returned to Davenport's Finance Department for issuance of an adult entertainment business license under Davenport Municipal Code §§ 5.16.040 and 5.16.050. Id. ¶¶ 31, 33–34.

On September 21, 2009, while C. Line's application was pending before the Finance Department, Malin performed a site inspection at Dr. John's Lingerie Boutique (“Dr. John's”), also located at 4128 North Brady Street. Id. ¶ 36. Dr. John's sells lingerie, shoes, hosiery, and adult novelties, movies, and magazines. Id. Since opening, it had operated under a general retail business license issued by Davenport in August 2008. Id. ¶¶ 36, 42. Indeed, Dr. John's had never been notified by Defendant that is was considered an “adult entertainment business” as defined by Chapter 5.16 of the Davenport Municipal Code.³Id. ¶ 44. After observing Dr. John's advertising and merchandise, Malin returned to City Hall and met with Matt Flynn (“Flynn”), the senior manager of the Community Planning and Economic Development Department, and Tom Warner (“Warner”), corporate counsel. Id. Under Warner's guidance, a letter was drafted denying C. Line an adult cabaret license pursuant to Davenport Municipal Code § 17.47.030(B), which prohibits two adult entertainment businesses from being located on the same lot or within 500 feet of each other. Id. According to the letter, Dr. John's was an adult business establishment situated in the same building and on the same lot as C. Line. Id. ¶ 41. Guard signed the letter and mailed it to Mazhar by certified mail on September 24, 2009. Id. ¶¶ 36, 39, 40.

On October 9, 2009, C. Line appealed Guard's denial of an adult entertainment license pursuant to Davenport Municipal Code § 5.16.050(F), which permits license denials to be appealed to the city administrator or his designee. Id. ¶ 46; Defs.' Statement of Add'l Material Facts (“Defs.' Facts”) ¶ 1 (Clerk's No. 47.2). A hearing was held on the appeal on October 22–23, 2009, with Malin presiding.⁴ Pl.'s Facts ¶ 49. During the hearing, Davenport presented only the testimony of Warner, who stated that he inspected Dr. John's on October 20, 2009, and based on his observations, believed that it was an “adult store.” ⁵Id. ¶ 52. Based on the assertion that Dr. John's was an adult store, Defendants maintained throughout the hearing that the nonconforming use established by the Consent Decree ran with the parcel of land and that it “leapfrogged” to Dr. John's when Chorus Line was evicted from the Brady Street location.⁶ Defs.' Facts ¶ 4. Warner admitted, however, that C. Line had an adult entertainment license under the terms of the 2004 Consent Decree and that a nonconforming use had to be out of business for more than one year to lose its rights to a nonconforming use under Davenport's zoning ordinances. Pl.'s Facts ¶¶ 53–54.

For its part, C. Line admitted the Consent Decree into evidence, argued that C. Line had a right to an adult entertainment license thereunder,⁷ and called several witnesses.⁸Id. ¶¶ 50–51. Dr. John's store manager, Kelly Smith (“Smith”), opined that Dr. John's was not an “adult store,” because it holds a retail business license, has never been advised that it needed an adult entertainment business license, and sells many items that could be found at similar retail stores like Victoria's Secret and Spencer Gifts.⁹Id. ¶ 56. Flynn testified that, on behalf of the land use department, he signed off on C. Line's license application after merely looking in the windows of Dr. John's. Id. ¶ 58. Guard testified that: 1) he signed the letter denying C. Line's license application without having the application in front of him ( id. ¶ 61); 2) in the three years before the hearing, he had not renewed any of the three other adult entertainment business licenses issued by Davenport ¹⁰ ( id. ¶ 60); 3) he never personally inspected Dr. John's before issuing the denial letter; rather, he relied solely on information given to him by Warner or by Malin after Malin's September 21, 2009 site inspection ¹¹ ( id. ¶¶ 59, 63); and 4) at the time he denied C. Line's application, he did not know whether or not the Chorus Line had been closed for more than twelve months. Id. ¶ 64.

On October 23, 2009, following the conclusion of the hearing, Malin performed a “follow up” site inspection to Dr. John's to ascertain for himself the approximate percentage of adult material for sale in the store.¹²Id. ¶ 66. On October 26, 2009, Malin entered a decision denying C. Line's appeal and upholding Guard's September 24, 2009 denial of C. Line's application for a new adult entertainment business license. Id. ¶ 68. Malin based his decision predominantly on his own inspection of Dr. John's. Id. ¶¶ 69–70; see Pl.'s App. in Supp. of Pl.'s Mot. for Summ. J. (“Pl.'s App.”) at 66 (Clerk's No. 35.2) (Malin explaining his observations from the October 23, 2009 visit and concluding that “[i]t is the undersigned's opinion, confirmed by direct inspection and calculation at the post hearing site inspection, that Dr. John's is, by its inventory, advertisement and admission of its own employees, an adult establishment”). Although Malin acknowledged the Consent Decree in his ruling, he did not address Defendants' arguments about it, concluding instead that Dr. John's status as an adult establishment was dispositive. Pl.'s Facts ¶ 71; Defs.' Resp. to Pl.'s Facts ¶ 71.

On October 26, 2009, C. Line filed an appeal from Malin's decision with the Zoning Board of Adjustment (“ZBA”) and paid a $250...