City of Commerce City v. Enclave West, Inc., No. 07SC445.

• Decision Date: 02 June 2008
• Docket Number: No. 07SC445.
• Citation: 185 P.3d 174
• Parties: CITY OF COMMERCE CITY, a Colorado municipal corporation, Petitioner v. ENCLAVE WEST, INC., a Colorado nonprofit corporation, Respondent.
• Court: Colorado Supreme Court

185 P.3d 174

CITY OF COMMERCE CITY, a Colorado municipal corporation, Petitioner v. ENCLAVE WEST, INC., a Colorado nonprofit corporation, Respondent.

No. 07SC445.

Supreme Court of Colorado, En Banc.

June 2, 2008.

Nathan, Bremer, Dumm & Myers, P.C., J. Andrew Nathan, Allyson C. Hodges, Marni Nathan Kloster, Berg, Hill, Greenleaf & Ruscitti, LLP, Thomas E. Merrigan, Denver, Colorado, Attorneys for Petitioner.

Lawlis & Bruce, LLC, Robert J. Bruce, Delphine L. Farr, Denver, Colorado, Attorneys for Respondent.

Justice HOBBS delivered the Opinion of the Court.

In this C.R.C.P. 106(a)(4) proceeding, we granted certiorari to review the unpublished decision of the court of appeals in Enclave West, Inc. v. City of Commerce City, No. 05CA2686, 2007 WL 1079942 (April 12, 2007).¹ Enclave West, Inc. ("Enclave West") has been operating a licensed private social club in an industrially zoned area of the City of Commerce City ("Commerce City") since 2003. In 2005, it applied for, and was denied, a license to operate a sexually-oriented business on the premises.

In a quasi-adjudicatory proceeding, following a hearing on the license denial, the Commerce City Council ("the City Council") refused to order issuance of the license. It based its decision on a section of the Commerce City ordinance that prohibits a sexually-oriented business from operating within one thousand feet of an occupied single-family residence. The record of proceedings in this action contains evidence that Enclave West's proposed business would be within one thousand feet of an occupied single-family residence.

Enclave West had an opportunity in its license application, and in the quasi-adjudicatory hearing the City Council conducted, to demonstrate that there was no occupied single-family residence within one thousand feet of its proposed sexually-oriented business. However, it chose to argue only that the City Council could not use this issue as the basis for denying its license application.

Enclave West contended that under the applicable ordinances, the City Council could only consider the grounds the city staff had invoked in denying Enclave West's license application. Here, the city staff denied the license application based on the erroneous assertion that the ordinances prohibited a sexually-oriented business within one thousand feet of an Urban Renewal District.

In its decision, the City Council noted that the city staff's reason for denying the license was incorrect. Nevertheless, the City Council concluded that the ordinances required denial of the license application because an occupied single-family residence existed as a pre-existing legal non-conforming use within one thousand feet of the proposed sexually-oriented business.

Enclave West then filed a C.R.C.P. 106(a)(4) appeal before the trial court. The trial court ruled that the City Council did not act arbitrarily and capriciously in refusing to issue the license based on the location of Enclave West's business and the location of the occupied single-family residence.

However, the court of appeals reversed, agreeing with Enclave West's argument that the City Council was foreclosed from considering and receiving evidence concerning the occupied single-family residence. The court of appeals ruled that the Commerce City ordinance restricted the City Council to considering only the grounds for denial provided by the city staff. Thus, the City Council had no choice but to issue the license because the grounds provided by the city staff for the license denial did not include the existence of an occupied single-family residence.

We disagree. We hold that Commerce City's ordinances allowed the City Council to refuse issuance of the license based on the existence of an occupied single-family residence located within one thousand feet of Enclave West's proposed sexually-oriented business. Accordingly, we reverse the judgment of the court of appeals and remand this case to it for consideration of the other issues Enclave West raised in its appeal.²

I.

Since mid-2003, Enclave West has operated a licensed private social club called "The Enclave" in Commerce City. Its application for membership states: "The Enclave is a private membership club whose purpose is to provide an educational and social forum for people interested in alternative lifestyles."

In March of 2005, Enclave West submitted an application to Commerce City for a sexually-oriented business license at the same premises. The hand-delivered cover letter to Commerce City, signed by its attorney, recites "Given the legal uses of the property, its zoning and the fact that no park, school or church is or will be located nearby, the application is proper."

However, this assertion only partially referenced the applicable ordinance and, given the facts in the record of this case, is not correct. Under Commerce City ordinance art. II, section 21-39(1), no sexually-oriented business can be located within one thousand feet of an occupied single-family residence. Section 21-39(1) states:

No adult entertainment use shall be located within one thousand (1,000) feet of the exterior boundary of any public zone district, any residential zone district, or any existing and occupied mobile home, or single-family or multifamily residence, whether located within or without the City of Commerce City, except a mobile home or residence which is authorized as a use by permit or exists as an illegal use, whether within or without the City of Commerce City.

(Emphasis added).

However, instead of referencing both sections 21-39(1) and 21-39(2) of this ordinance, the cover letter by Enclave West's counsel referenced only section 21-39(2) of the ordinance, which provides:

No adult entertainment use shall be located within one thousand (1,000) feet of any church or synagogue, or any educational institution or licensed child care center, or any public community center, park, fairground, or recreation center, or any publicly owned or maintained building open for use to the general public, or in any area designated as an urban renewal project pursuant to C.R.S. Section 31-25 et seq. or as said article may be hereafter amended, whether such uses are located within or without the City of Commerce City.

(Emphasis added).

Under Commerce City ordinance section 9-455(d)(l) & (m), the applicant is responsible for submitting a complete application, which must include evidence that the proposed location of such a business complies with the zoning and use ordinances. Despite the assertion in Enclave West's cover letter that the application is proper under Commerce City ordinances, neither the cover letter, nor the application, nor Enclave West's presentation at the City Council hearing contains any evidence concerning the zoning and use status of Enclave West's proposed sexually-oriented business in relation to the adjacent residence.

Based on the City Council's finding contained in the record, Enclave West's premises is located within one thousand feet of an occupied single-family residence, in violation of subsection (1) of the ordinance. The City Council's finding states, in pertinent part:

The City presented evidence, and Enclave West did not contest, that there is an occupied single-family residence located next door to the building used by Enclave West, Inc. . . . There is no dispute that there is an occupied and existing single-family residence located within 1,000 feet of Enclave West, Inc

The City Council also found that Enclave West's application was incomplete because it failed to contain evidence from Commerce City concerning the zoning and use status of Enclave West's premises in relation to the adjacent residential structure. Accordingly, the City Council refused to issue the license and ordered the city's staff to return the application to Enclave West, refunded its filing fees, and gave Enclave West the opportunity to submit a complete application. However, rather than resubmit its application, Enclave West brought this action for judicial review.

Enclave West contends that Commerce City must approve its application for a sexually-oriented business license, because the city staff mistakenly denied the application based on the Urban Renewal District portion of section 21-39(2) of the ordinance and this was the only justification the city staff cited for denial of the license. The city staff sent Enclave West a denial letter which states, in pertinent part:

This Section, 21-39(2), Adult entertainment uses, states: No adult entertainment use shall be located within one thousand (1,000) feet of . . . any area designated as an urban renewal project . . . Our findings show that the property and building . . . is within one thousand feet (1,000) of an Urban Renewal District. . . .

All parties to this case now concede that the ordinance prohibits such a business only "in any area designated as an Urban Renewal District pursuant to C.R.S. Section 31-25 et seq." and does not prohibit such a business located within one thousand feet of an Urban Renewal District.

Enclave West relies on section 9-456(d) of the Commerce City ordinances for its argument that the City Council cannot rely on other reasons not initially cited by city staff. Section 9-456(d) states:

In the event that the City Manager or his designee denies a license application, the City Manager or his designee shall make findings of fact stating the reason for the denial and a copy of such a decision shall be sent by certified mail to, or be served upon, the applicant at the address shown in the application within ten (10) days after the denial. An applicant shall have the right to a hearing before the City Council, provided that written request for such hearing is made to the City Council within ten (10) days of the date of service of the denial of the license by the City Manager or his designee. The hearing shall follow all of the relevant procedures set forth for a suspension or...