Ebiza, Inc. v. City of Davenport
| Decision Date | 01 June 2006 |
| Docket Number | No. 3:06-cv-00039-JEG.,3:06-cv-00039-JEG. |
| Citation | 434 F.Supp.2d 710 |
| Parties | EBIZA, INC., and Roberto Orozco, Plaintiffs, v. CITY OF DAVENPORT, Defendant. |
| Court | U.S. District Court — Southern District of Iowa |
Steven J. Havercamp, Stanley, Lande & Hunter, Davenport, IA, for Plaintiffs.
Brian E. Heyer, City of Davenport, Davenport, IA, for Defendant.
This matter comes before the Court on Plaintiffs' Motion for Preliminary Injunction (Clerk's No. 2) and Defendant's Motion to Dismiss (Clerk's No. 5). Plaintiffs are represented by Steven J. Havercamp, and Defendant is represented by Brian E. Heyer. Following a hearing on Tuesday, May 15, 2006, both motions are fully submitted and ready for disposition.
Plaintiff Ebiza, Inc., is an Iowa corporation. Plaintiff Roberto Orozco, an Hispanic male residing in Bettendorf, Iowa, owns half of Ebiza's issued stock, and is its president. Defendant City of Davenport ("the City") is an Iowa municipal corporation located in Scott County, Iowa. This litigation focuses on the maze of licensing ordinances the City has required Plaintiffs to navigate in their journey to open a functional, profitable business in the City.
The Village of East Davenport ("the Village") is a colloquial name for a group of around eighty businesses found in eastern Davenport. According to Plaintiffs, the Village is known for, among other things, food and drink establishments. Plaintiffs allege businesses possessing class "C" liquor control licenses,1 wine shops, and restaurants2 serving or selling alcohol are scattered about the Village.
The facility providing the focus of this litigation is known as The Village Hall ("the Hall"). Plaintiffs allege the Hall is centrally located amongst the Village bars and restaurants.3 The Hall has periodically operated as a bar, dance hall, place of assembly, and reception hall since 1921, but no liquor license has been issued to businesses operating in the facility since 1998.
On August 25, 2005, Orozco leased the Hall for three years intending to operate it as a bar where patrons could also dance. Orozco claims he performed costly upgrades to the facility. In order to sell alcoholic beverages at his business, Orozco was required to have a liquor control license, see Iowa Code § 123.2, so on September 19, 2005, he filed a class "C" liquor license application with the City, see id. § 123.32(1) (). His application was initially approved by the Zoning Division, the Police Department, and the Fire Department. But see Davenport, Iowa, Municipal Code § 5.10.100 (). Orozco then learned that as a result of a recently enacted ordinance,4 he required a special use permit from the City's Zoning Board of Adjustment (ZBA) before the City Council would consider his liquor license application. Orozco did not challenge the ZBA's authority to grant such a permit, see Iowa Code § 414.12(1)-(3) (); see also id. § 123.37 (), but instead filed an application. A ZBA Staff Report recommended approval with a number of conditions and restrictions primarily related to parking, litter, and noise control.
At its October 5, 2005, meeting, the ZBA considered Orozco's special use permit application. Minutes of the meeting indicate a number of individuals objected to the issuance of the permit. Many complaints centered on a perceived shortage of parking spaces and anticipated increases in traffic congestion and noise the business would cause. The ZBA elected to deny Orozco's application. A "Finding of Fact" explained why:
The board concludes that while the parking requirement of the ordinance may be met the practical affect [sic] is an increase in congestion on the surrounding streets.
The board concludes that the suitability of the business with the size of the building would not be in keeping with the surrounding commercial uses.
The board concludes that given the size of the building and potential crowd generation, that trash generation is a concern and that location of trash receptacles (read dumpster [sic]) could only occur within the front yard of the property.
Compl. Ex. 8, at 2-3. Orozco asked the ZBA to reconsider. Minutes of the ZBA's October 19 meeting indicate evidence was presented challenging the characterization of the property made at the previous meeting, but Orozco's application was again denied.
On November 4, 2005, Orozco and Ebiza filed the first of two appeals5 in the Iowa District Court in and for Scott County. Their first action constituted an appeal of the ZBA's refusal to issue a special use permit. See Iowa Code § 414.15 (). Plaintiffs sought a declaration that the ZBA's actions were arbitrary and capricious and an order that a special use permit issue.
Meanwhile, Orozco's business changed course. On November 16, 2005, Orozco filed a business license application indicating a desire to operate the Hall as a dance facility for patrons under age nineteen. See Davenport, Iowa, Municipal Code § 5.42.020 (). The City's Municipal Code provides that such a business license is to automatically issue upon the payment of any required fees or charges and the presentment of a receipt for such fees to the city clerk. Id. § 5.02.070(A). However, the mayor may act to alter the automatic nature of this procedure. See id. § 5.02.090(B).
In a letter dated December 1, 2005, Orozco was informed that Mayor Charles W. Brooke had directed the City's revenue manager not to issue the business license pursuant to the mayor's authority under Davenport Municipal Code § 5.02.090(B)."6 According to Mayor Brooke, there were "sufficient reasons to believe that the business [was] likely to lead to violation of ordinances related to the breach of the peace, and [Orozco] made false or misleading representations in connection with the license application." Mayor Brooke did not explain why the business was likely to lead to a breach of the peace; nor did he indicate which representations were false or misleading.
A party denied a business license may appeal. See id. § 5.02.100. Plaintiffs claim appeals are heard by the mayor. But see Talarico v. City of Davenport, 215 Iowa 186, 244 N.W. 750, 752 (1932) (); see also Davenport, Iowa, Municipal Code § 5.08.180(B) (). Orozco claims Mayor Brooke heard such an appeal on December 20, 2005, and again denied the business license application, this time failing to issue a written statement detailing the rationale for the denial.
Plaintiffs initiated the second of their state court actions on January 20, 2006, wherein they challenged the mayor's conduct in blocking the issuance of their business license. In that action, Plaintiffs requested a declaration that the mayor's conduct was arbitrary and capricious or otherwise illegal and violated due process. Plaintiffs also demanded an order that their business license application be granted.
Again altering his business plan, Orozco abandoned his idea for a dance hall and instead decided to open a business named "Ebiza Restaurant and Bar" at the Hall as a joint venture with a company owned by established restauranteurs. On January 18, 2006, Ebiza filed a class "C" liquor license application with the City for Ebiza Restaurant and Bar. Orozco listed himself as the owner of the business. Plaintiffs claim the City refused to process this application because the joint venturers were not listed as owners. Ebiza then filed yet another class "C" liquor license application on February 27, 2006, listing the joint venturers as co-owners. This application was to be considered at a March 15 City Council meeting.
On March 7, 2006, a Davenport business owner filed an appeal with the ZBA, arguing the business Ebiza proposed required a special use permit. Plaintiffs contend Ebiza Restaurant and Bar required no such permit because at least half of its gross income was to be derived from the sale of prepared food and food-related services. See Davenport, Iowa, Municipal Code § 17.48.020(B)(3)(a)(2) (). Nevertheless, according to the City, this appeal "stay[ed] all proceedings in furtherance of the action appealed from," Iowa Code § 414.11, which, in the City's opinion, included Ebiza's liquor license application pending before the City Council. The ZBA heard the appeal of the local business owner on March 15, and it was denied. However, as a result of the appeal-initiated stay, on March 9, the Public Safety Committee8 of the City Council tabled Ebiza's liquor license application for four weeks.
Minutes of the March 15, 2006, City Council meeting indicate the Council did not consider Ebiza's liquor license application. Instead, the Council passed a resolution "establish[ing]...
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