Eliason v. City of Rapid City

• Decision Date: 30 September 2019
• Docket Number: CIV. 17-5082-JLV
• Citation: 417 F.Supp.3d 1190
• Parties: David ELIASON, an individual; and 1141 LLC, a South Dakota Limited Liability Company, Plaintiffs, v. CITY OF RAPID CITY, a South Dakota Municipality, Defendant.
• Court: U.S. District Court — District of South Dakota

417 F.Supp.3d 1190

David ELIASON, an individual; and 1141 LLC, a South Dakota Limited Liability Company, Plaintiffs,

v.CITY OF RAPID CITY, a South Dakota Municipality, Defendant.

CIV. 17-5082-JLV

United States District Court, D. South Dakota, Western Division.

Signed September 30, 2019

Matthew J. Hoffer, Pro Hac Vice, Shafer & Associates, P.C., Lansing, MI, Roger A. Tellinghuisen, Michael V. Wheeler, DeMersseman Jensen Tellinghuisen & Huffman, LLP, Rapid City, SD, for Plaintiffs.

John K. Nooney, Robert J. Galbraith, Nooney & Solay, Carla Cushman, Joel Landeen, City Attorney's Office, Rapid City, SD, for Defendant.

ORDER

JEFFREY L. VIKEN, CHIEF JUDGE

INTRODUCTION

Plaintiffs David Eliason and 1141 LLC brought this civil action under 42 U.S.C. § 1983 challenging portions of the municipal code of Rapid City, South Dakota, ("the City") relating to the regulation of sexually oriented businesses. (Docket 1). The court granted plaintiffs a preliminary injunction and enjoined the City from denying them the necessary city permit to open a sexually oriented business, Dick & Jane's Super Spot. (Docket 24). Plaintiffs now move for summary judgment, seeking a permanent injunction, a declaration that portions of the Rapid City Municipal Code are facially unconstitutional, and damages for lost profits engendered by the City's permit denial. (Docket 33). The City opposes the motion. (Docket 45). For the reasons given below, the court grants plaintiffs' motion in part and denies it in part. The court permanently enjoins the City from enforcing certain sexually oriented business regulations as to plaintiffs, finds one regulation facially unconstitutional and denies summary judgment as to damages.

DISCUSSION

I. Facts

The following recitation consists of the material facts developed from the plaintiffs' statement of undisputed material facts (Docket 38), plaintiffs' response to those facts (Docket 44), and other evidence in the record where indicated.¹ These facts are "viewed in the light most favorable to the party opposing the motion." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quotation omitted).

Mr. Eliason is a South Dakotan in the business of operating sexually-themed retail stores. (Docket 38 at ¶ 37). In 2017, he began the process of opening a store in Rapid City, South Dakota, now called "Dick & Jane's Super Spot ("Dick & Jane's").² (Docket 31 at ¶¶ 2 & 4). The Rapid City Municipal Code ("RCMC") regulates businesses deemed "adult oriented businesses" and "sexually oriented businesses." See RCMC §§ 5.70, 17.50.186. Plaintiffs intended to sell items which would render the business sexually and adult oriented, including "adult-themed novelties and sexual aids" and "DVD's [sic] and magazines with sexual themes[.]" (Docket 38 at ¶ 3). No party alleges Dick & Jane's was improperly classified as a sexually or adult oriented business.

In April of 2017, Mr. Eliason met with Vicki Fisher, a City planning official, to express his interest in opening a sexually oriented business. Id. at ¶ 5. Ms. Fisher advised him to meet with a wider array of officials. Id. at ¶ 6. On May 9, Mr. Eliason and his attorney met with four officials, including Carla Cushman, an Assistant City Attorney. Id. at ¶ 7. At that meeting, 1141 Deadwood Avenue was identified as a location which would likely be compliant with City regulations concerning the location of sexually oriented businesses.³ Id. at ¶¶ 8-10. This location is a strip mall building hosting commercial tenants. (Docket 37-6 at pp. 2-4). On April 17, Mr. Eliason, on behalf of REDE LLC, sent a letter to the owners of 1141 Deadwood Avenue expressing his intent to lease a suite in that building. (Docket 31-1).

On July 26, Mr. Eliason, through project planner Renner Associates, applied for a conditional use permit to open a sexually oriented business as required by City regulations.⁴ (Dockets 38 at ¶ 14 & 37-4). City staff members evaluated the application and recommended granting it. (Docket 37-5 at pp. 6-7). Specifically, staff concluded the proposed business complied with City regulations regarding the location of sexually oriented businesses. Id. The Rapid City Planning Commission unanimously approved the application on August 24. (Dockets 38 at ¶ 18 & 37-6 at pp. 10-12).

On August 31, a martial arts studio serving children located less than 1,000 feet from 1141 Deadwood Avenue, Black Hills Taekwondo LLC ("BHT") (also known as "Karate for Kids"), appealed the Planning Commission's approval of Mr. Eliason's conditional use permit. (Dockets 38 at ¶ 21 & 37-7). BHT argued it was an "educational facility" under City regulations. (Docket 37-7 at pp. 2-6). City regulation prohibits sexually oriented businesses from operating within 1,000 feet of an educational facility. RCMC § 17.50.186(D)(1)(b). The Planning Commission specifically considered and rejected the argument BHT would be an educational facility blocking Mr. Eliason's conditional use permit. (Docket 37-12 at pp. 14-15).

The Rapid City Common Council, the municipal legislative body, took up BHT's appeal during its September 18 meeting. (Docket 38 at ¶ 28). Prior to the meeting, Assistant City Attorney Cushman wrote a memorandum to the Common Council concluding BHT was not an educational facility. (Docket 37-10). At the meeting, 15 members of the public—including four leaders of local Christian churches and a representative from the Family Heritage Alliance—urged the Common Council to grant BHT's appeal and deny Mr. Eliason's conditional use permit.⁵ (Docket 37-13 at pp. 18-44). No member of the public spoke in favor of denying the appeal. Following public comment, some Council members made remarks concerning their religious and moral opposition to sexually oriented businesses, in addition to the issue of whether BHT qualified as an educational facility.⁶ Id. at pp. 45-51. The Common Council voted 6-4 to grant BHT's appeal. (Docket 38 at ¶ 30).

As president of REDE LLC, Mr. Eliason executed a five-year lease for suites 9 and 10 of 1141 Deadwood Avenue on September 11. (Docket 31-2). On September 15, Mr. Eliason, on behalf of REDE LLC, assigned the lease to 1141, LLC ("1141").⁷

After the Common Council denied the conditional use permit, Mr. Eliason informed his new landlord via e-mail and stated the decision "would have no impact on the lease" because he would be "modifying the inventory list and operation to a level that a conditional use permit is not required[.]" (Docket 41-23).

Mr. Eliason and 1141 brought the present suit on October 18, 2017. (Docket 1). Plaintiffs moved for a preliminary injunction enjoining the City from enforcing RCMC § 17.50.186 against them. (Dockets 14 & 17). The court held a hearing on plaintiffs' motion on January 19, 2018. (Docket 22). Two witnesses testified at the hearing and the court received 15 exhibits into evidence. (Dockets 22 & 23). On January 29, the court entered a preliminary injunction enjoining the City from continuing to deny plaintiffs a conditional use permit. (Docket 24).

Dick & Jane's opened for business on February 14, 2018. (Dockets 31 at ¶ 35 & 44 at p. 24). Plaintiffs assert Dick & Jane's could have been open by May 14, 2017, had there been no conditional use permit requirement or had the Common Council not denied the permit on October 14, 2017. (Docket 38 at ¶¶ 38-39). The City vigorously disputes these assertions and argues Dick and Jane's could not have opened earlier than January of 2018. (Dockets 44 at ¶¶ 38-39 & 45 at pp. 10-14). Plaintiffs did not apply for the necessary adult oriented business license—which is distinct from the conditional use permit required to open a sexually oriented business—until February 9, 2018. (Dockets 42-1 & 42-2). The permits were approved on March 1. Id.

II. Legal Standards

A. Summary judgment

Under Federal Rule of Civil Procedure 56(a), a movant is entitled to summary judgment if the movant can "show that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). Once the moving party meets its burden, the nonmoving party may not rest on the allegations or denials in the pleadings, but rather must produce affirmative evidence setting forth specific facts showing that a genuine issue of material fact exists. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Only disputes over facts which might affect the outcome of the case under the governing substantive law will properly preclude summary judgment. Id. at 248, 106 S.Ct. 2505. "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Id. at 247-48, 106 S.Ct. 2505 (emphasis in original).

If a dispute about a material fact is genuine, that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party, then summary judgment is not appropriate. Id. However, the moving party is entitled to judgment as a matter of law if the nonmoving party failed to "make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In such a case, "there can be ‘no genuine issue as to any material fact,’ since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id. at 323, 106 S.Ct. 2548.

In determining whether summary judgment should issue, the facts and inferences from those facts must be viewed in the light most favorable to the nonmoving party. Matsushita, 475 U.S. at 587-88, 106 S.Ct. 1348. The key inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one pa...