City of Arlington v. Centerfolds, Inc.

• Citation: 232 S.W.3d 238
• Decision Date: 14 June 2007
• Docket Number: No. 2-06-080-CV.,2-06-080-CV.
• Parties: CITY OF ARLINGTON, Texas and the License and Amortization Appeal Board of the City of Arlington, Appellants, v. CENTERFOLDS, INC. and Steven William Craft, Appellees.
• Court: Court of Appeals of Texas

232 S.W.3d 238

CITY OF ARLINGTON, Texas and the License and Amortization Appeal Board of the City of Arlington, Appellants, v. CENTERFOLDS, INC. and Steven William Craft, Appellees.

No. 2-06-080-CV.

Court of Appeals of Texas, Fort Worth.

June 14, 2007.

Rehearing Overruled July 12, 2007.

Fanning, Harper & Martinson, Thomas P. Brandt, Joshua A. Skinner, and John F. Roehm III, Dallas, for Appellants.

Quaid & Quaid, L.C., Charles Joseph Quaid, Dallas, for Appellees.

Panel B: LIVINGSTON, DAUPHINOT, and HOLMAN, JJ.

OPINION

TERRIE LIVINGSTON, Justice.

This is an appeal from the trial court's summary judgment in favor of appellees Centerfolds, Inc. and Steven William Craft on procedural due process grounds with regard to the denial of appellees' application for a location exemption for a sexually oriented business (SOB) in Arlington, Texas. In four issues, appellants the City of Arlington, Texas and the License and Amortization Appeal Board of the City of Arlington contend that (1) this case should be dismissed because appellees do not have standing, (2) appellees waived their due process claims by failing to raise them at the hearing before the Board, (3) appellees failed to establish their due process claims, and, alternatively, (4) a genuine issue of material fact precludes summary judgment. We affirm.

Background Facts

Appellee Craft is Vice President of appellee Centerfolds, which leases property on West Division Street in Arlington. Since 1988, Centerfolds has operated several SOBs at that location. In July 2003, Centerfolds was operating an SOB named La Bare at the location, which featured male dancers and catered to female patrons. In July and August 2003, appellees closed La Bare and began renovating the premises to start a new SOB, Chicas Locas, which featured female dancers and catered to mostly Hispanic male customers. Centerfolds did not open Chicas Locas to customers until late August 2003.

In 1992, the City passed an ordinance prohibiting the operation of an SOB within 1,000 feet of a residence, thus making Centerfolds' operation a nonconforming use under the new ordinance. ARLINGTON, TEX., CODE, SEXUALLY ORIENTED BUSINESS ORDINANCES art. III, §§ 3.01-.02(A) (2004). SOBs that were already in operation when the ordinance was passed and that are considered nonconforming uses under the ordinance are allowed to apply for an exemption to the location restrictions each year. Id. § 3.02(A). The building in which Chicas Locas is located is within 1,000 feet of two residential areas.

To obtain a location exemption, an SOB must prove its entitlement to the exemption by a preponderance of the evidence at a hearing before the Board. Id. art. IV, § 4.11. Section 4.11(E) of the ordinance provides that the Board may grant the exemption if it makes the following findings:

1. That the location of the [SOB] will not have a detrimental effect on nearby properties or be contrary to the public safety or welfare;

2. That the location of the [SOB] will not downgrade the property values or quality of life in the adjacent areas or encourage the development of urban blight;

3. That the location of the [SOB] in the area will not be contrary to any program of neighborhood conservation, nor will it interfere with any efforts of urban renewal or restoration; and

4. That all other applicable provisions of [the SOB ordinance] will be observed.

Id. § 4.11(E). Beginning "a couple of years" after the passage of the new SOB ordinance, Centerfolds applied for, and the Board granted, such an exemption each year.

On September 22, 2003, after Centerfolds had converted its business to Chicas Locas from La Bare, appellees applied to renew their location exemption for 2004. The chief of police denied the application because of the club's proximity to a residential area. After a hearing at which appellees and the City both presented evidence, the Board denied the exemption application on January 20, 2004. Appellees appealed the Board's decision to the district court. Id. § 4.09.

Appellants filed a motion for partial summary judgment contending that the Board's decision must be affirmed based on the substantial evidence standard of review.¹ In their response, appellees contended that the Board's decision could not be upheld on substantial evidence grounds because they were denied procedural due process during the hearing before the Board. Specifically, appellees contended, among other things, that they were not allowed to cross-examine members of the public who made remarks to the Board in a public comment session held before the hearing, that Board members impermissibly considered the unexamined public comment in deciding to deny appellee's request for a location exemption, that appellees were denied full and effective cross-examination of witnesses at the hearing because they were not allowed to re-examine witnesses after Board members asked questions of them, and that the Board failed to file required findings of fact and conclusions of law in support of its decision.

The trial court denied appellants' motion for summary judgment because of the procedural due process concerns; however, because appellees had failed to file their own motion for summary judgment, the trial court could not grant them the relief they had asked for in their response: for the case to be remanded to the Board for a new hearing. Appellees then filed a motion for summary judgment raising the same procedural due process grounds.² The trial court granted the summary judgment motion without specifying any particular grounds, vacated the Board's order denying appellants' application for a location exemption for 2004, and remanded the case to the Board for a trial de novo on appellees' application for a location exemption.

Standard of Review

A plaintiff is entitled to summary judgment on a cause of action if it conclusively proves all essential elements of the claim. See TEX.R. CIV. P. 166a(a), (c); MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex.1986). When reviewing a summary judgment, we take as true all evidence favorable to the nonmovant, and we indulge every reasonable inference and resolve any doubts in the nonmovant's favor. IHS Cedars Treatment Ctr. of DeSoto, Tex., Inc. v. Mason, 143 S.W.3d 794, 798 (Tex.2004). Questions of law are appropriate matters for summary judgment. Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999); Westchester Fire Ins. Co. v. Admiral Ins. Co., 152 S.W.3d 172, 178 (Tex. App.-Fort Worth 2004, pet. filed) (op. on reh'g). Summary judgment is proper in an appeal to the trial court pursuant to the substantial evidence review because the only issue before the trial court is a question of law. In re Edwards Aquifer Auth., 217 S.W.3d 581, 587 (Tex.App.-San Antonio 2006, orig. proceeding); Parks v. Harris County Civil Serv. Comm'n, 225 S.W.3d 246, 250 (Tex.App.-El Paso, 2006, no pet.); Arrellano v. Tex. Employment Comm'n, 810 S.W.2d 767, 770-71 (Tex.App.-San Antonio 1991, writ denied).

Standing

In their first issue, appellants contend that appellees lack standing to challenge the Board's decision because they did not fulfill the requirements to apply for an exemption. According to appellants, under section 3.02 of the City's SOB ordinance, only an SOB that has "continuously operated" has standing to apply for an exemption under section 4.11. Although the City did not plead the matter at trial, it contends that it may raise the matter for the first time on appeal because standing implicates the trial court's subject matter jurisdiction.

Applicable Law

A plaintiff must have both standing and capacity to bring a lawsuit. Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 848 (Tex.2005); Coastal Liquids Transp., L.P. v. Harris County Appraisal Dist., 46 S.W.3d 880, 884 (Tex. 2001). The issue of standing focuses on whether a party has a sufficient relationship with the lawsuit so as to have a justiciable interest in its outcome. Lovato, 171 S.W.3d at 848. Standing, therefore, focuses on who may bring an action, M.D. Anderson Cancer Ctr. v. Novak, 52 S.W.3d 704, 708 (Tex.2001); In re Guardianship of Archer, 203 S.W.3d 16, 23 (Tex.App.-San Antonio 2006, pet. denied), and is concerned with whether the claimant has a particularized injury distinct from that suffered by the general public. Bland ISD v. Blue, 34 S.W.3d 547, 555-56 (Tex.2000); All Seasons Window & Door Mfg., Inc. v. Red Dot Corp., 181 S.W.3d 490, 497 (Tex. App.-Texarkana 2005, no pet.).

Standing requires that there be a real controversy between the parties that will actually be determined by the judicial declaration sought. Lovato, 171 S.W.3d at 849. This means that litigants must be "properly situated to be entitled to [a] judicial determination." Id. (quoting 13 CHARLES ALAN WRIGHT, ARTHUR R. MILLER, & EDWARD H. COOPER, FEDERAL PRACTICE AND PROCEDURE: JURISDICTION 2D § 3531, at 338-39 (2d ed.1984)). Without standing, a court lacks subject matter jurisdiction to hear the case. Id.; Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443 (Tex.1993). Thus, the issue of standing may be raised for the first time on appeal. Lovato, 171 S.W.3d at 849.

The issue of capacity, however, "is conceived of as a procedural issue dealing with the personal qualifications of a party to litigate." Id. at 848 (quoting 6A CHARLES ALAN WRIGHT, ARTHUR R. MILLER, & MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE: CIVIL 2D § 1559, at 441 (2d ed.1990)). Our supreme court has distinguished between standing and capacity, stating that "[a] plaintiff has standing when it is personally aggrieved, regardless of whether it is acting with legal authority; a party has capacity when it has the legal authority to act, regardless of whether it has a justiciable interest in the controversy." Nootsie, Ltd. v. Williamson County Appraisal Dist., 925 S.W.2d 659, 661 (Tex. 1996). In contrast to a challenge to standing, a challenge to a party's capacity must be raised by a verified pleading in...