Germann v. Stephens

• Decision Date: 13 June 2006
• Docket Number: No. 05-446.,05-446.
• Citation: 332 Mont. 303,137 P.3d 545,2006 MT 130
• Parties: Shelley GERMANN, Plaintiff and Appellant, v. Gary STEPHENS, Don Nelson, Shirley Jacobson, and Jan Metzmaker, in their official and individual capacities as Council Members of the City of Whitefish, the City Council of Whitefish, and the City of Whitefish, Defendants and Respondents.
• Court: Montana Supreme Court

Page 545

137 P.3d 545

2006 MT 130

332 Mont. 303

Shelley GERMANN, Plaintiff and Appellant, v. Gary STEPHENS, Don Nelson, Shirley Jacobson, and Jan Metzmaker, in their official and individual capacities as Council Members of the City of Whitefish, the City Council of Whitefish, and the City of Whitefish, Defendants and Respondents.

No. 05-446.

Supreme Court of Montana.

Submitted on Briefs March 8, 2006.

Decided June 13, 2006.

Rehearing Denied July 12, 2006.

COPYRIGHT MATERIAL OMITTED

Taryn S. Hart, Richard F. Gallagher, Church, Harris, Johnson & Williams, P.C., Missoula, for Appellant.

Angela K. Jacobs, Hammer, Hewitt & Jacobs, PLLC, Kalispell, for Respondents Stephens, Nelson, Jacobson and Metzmaker.

James M. Ramlow and Shelly F. Brander, Kaufman, Vidal, Hileman & Ramlow, P.C., Kalispell, for Respondent City of Whitefish.

Justice BRIAN MORRIS delivered the Opinion of the Court.

¶1 The City of Whitefish (City) enacted a temporary zoning ordinance in 1999 and a permanent zoning ordinance in 2000 that required business owners to obtain conditional use permits in order to operate new establishments that serve alcohol or permit gambling. The City denied Shelley Germann's (Germann) applications for conditional use permits. Germann appeals from an order of the Eleventh Judicial District, Flathead County, granting summary judgment in favor of the City, the City Council of Whitefish (Council), and Gary Stephens, Don Nelson, Shirley Jacobson, and Jan Metzmaker (Council Members), in their official and individual capacities as Council Members. Germann further appeals from the District Court's decision to grant attorney fees to the Council Members under 42 U.S.C. § 1988 and its denial of her motion for costs incurred in preparation for a settlement conference. We affirm in part, reverse in part, and remand for further proceedings consistent with this Opinion.

¶2 Germann's appeal presents the following issues:

¶3 1. Whether the District Court properly granted summary judgment to the City on Germann's state and federal claims.

¶4 2. Whether the District Court properly granted summary judgment to the Council Members on Germann's state and federal claims.

¶5 3. Whether the District Court abused its discretion in awarding attorneys' fees to the Council Members under 42 U.S.C. § 1988.

¶6 4. Whether the District Court abused its discretion by denying Germann's motion for costs incurred in preparation for a mandatory settlement conference.

FACTUAL BACKGROUND

¶7 Germann owned the Downtowner Motel located at 224 Spokane Avenue in Whitefish from 1995 until 2002. Local zoning ordinances in effect before June of 1999 designated the Downtowner's property as WB-3. The zoning ordinances allowed for bars and casinos on property zoned WB-3. The Downtowner sits directly across the intersection of Spokane Avenue and Second Street from the Whitefish Central School. The School's primary entrance sits on Spokane Avenue and lies approximately 420 feet from the entrance to the Downtowner. The School's mailing address is 600 East Second Street.

¶8 Germann applied with the Department of Revenue (DOR) for approval to transfer an on-premises liquor license for operation at the Downtowner in August of 1998. Germann also applied for a gambling operator's license in September of 1998. DOR mailed a notice of the proposed liquor license transfer to various City officials, including the City Attorney and Virgil Bench, the City Building Inspector. The notice requested that City officials inform DOR by February 27, 1999, whether the application satisfied all of the local laws and ordinances that the respective officials were responsible for regulating. DOR also published two separate notices of Germann's application in the Whitefish Pilot newspaper.

¶9 Bench received phone calls from several concerned citizens regarding Germann's intent to operate a bar and casino at the Downtowner. Bench telephoned DOR in response and notified it that the Downtowner was within 400 feet of Central School and Foursquare Church. Bench also sent two letters to DOR noting that the Downtowner was within 600 feet of a school and a church. Bench expressed his view that the Downtowner's proximity to the school and the church precluded operation of a bar and casino under State liquor licensing laws.

¶10 Section 16-3-306, MCA, prohibits DOR from granting retail liquor licenses to establishments located "within 600 feet of and on the same street as a building used exclusively as a church . . . or as a school. . . ." The statute further provides that the distance shall be measured in a straight line from the center of the nearest entrances of each establishment. Section 16-3-306, MCA. DOR's administrative rules restrict the application of § 16-3-306, MCA, however, only to those instances in which the business mailing addresses of each establishment are on the same street. Rule 42.12.129(1)(b), ARM.

¶11 The City issued Germann a building permit in April of 1999 that allowed Germann to change the Downtowner from Group B occupancy to Group A occupancy. Group A occupancy allows for uses such as bars and casinos. The City lacked any authority, however, to permit Germann to open a bar or casino, as the State of Montana exclusively regulates the operation of bars and casinos. See Title 16, Chapter 3, Montana Code Annotated (Control of Liquor, Beer, and Wine); Title 23, Chapter 5, Montana Code Annotated (Gambling).

¶12 City officials became concerned that DOR's interpretation of § 16-3-306, MCA, would allow Germann to operate a bar and casino despite its close proximity to the Central School. The City was further concerned that other bars and casinos might be proposed, particularly in light of its inability to control the opening of such establishments. The City thereafter enacted emergency Ordinance 99-8 (Emergency Ordinance) on June 7, 1999, as a temporary ordinance that prohibited "any new establishments [from] attempting to sell on-premises alcoholic beverages, beer and/or wine or attempting to permit or operate gambling or gaming" within the City unless such establishments received a conditional use permit from the Council.

¶13 DOR had not approved Germann's application for a liquor license at the time the Emergency Ordinance took effect. Section 23-5-119, MCA, provides that applicants for a gambling license must possess a valid liquor license as a prerequisite to obtaining a gambling license. The Montana Gambling Control Division (MGCD) earlier had filed a disciplinary action against Germann for making false representations on her gambling license application. Germann had yet to resolve this disciplinary action with MGCD at the time the City passed the Emergency Ordinance. In fact, neither DOR nor MGCD had ruled on Germann's applications by the time that she sold the Downtowner in 2002.

¶14 Germann applied for a conditional use permit to operate her property as a bar and casino on September 27, 1999. The Flathead Regional Development Office (FRDO) prepared a staff report evaluating Germann's application. FRDO's report noted that the Downtowner sat on the edge of a residential neighborhood near the Central School, residences, and a church. The report recommended denial of Germann's application. FRDO presented the report to the city-county planning board and the board likewise recommended denial. FRDO then presented the report to the Council on December 20, 1999. Members of the public spoke at the Council meeting and voiced their concerns about the Downtowner's proximity to the church and to the Central School. The Council adopted FRDO's report as findings of fact and denied Germann's application.

¶15 The Council enacted a permanent zoning ordinance (Ordinance 00-06) on April 3, 2000, that precluded casinos on property zoned WB-3, such as the Downtowner. Ordinance 00-06 still allowed bars on WB-3 property if an applicant received a conditional use permit from the Council. Germann applied for a conditional use permit to operate the Downtowner as a bar in April of 2002. Germann still had not received a liquor license from DOR. FRDO reviewed the application and recommended it be denied based on the Downtowner's proximity to the Central School, churches, and residential neighborhoods. FRDO noted that the Downtowner's parking lot was a mere 100 feet from the school. The Council considered Germann's application in June of 2002. Several members of the public again voiced their opposition to the establishment of a bar near the Central School. The Council denied Germann's application.

PROCEDURAL BACKGROUND

¶16 Germann filed an action against the City, alleging various state and federal claims for damages allegedly suffered as a result of the City's enactment of the Emergency Ordinance and Ordinance 00-06, and from its denial of her applications for conditional use permits. Count two of Germann's complaint requested a declaratory judgment that the Emergency Ordinance was void and unenforceable. Germann moved for partial summary judgment on this count. The City filed a cross motion for summary judgment. The District Court granted the City's motion after determining that the Emergency Ordinance was valid and enforceable. Germann did not appeal the District Court's ruling.

¶17 Germann filed a motion for leave to file a second amended complaint. The District Court granted Germann's motion subject to several conditions. Notably, the District Court refused to allow Germann to repeat allegations that the Emergency Ordinance was void and unenforceable, as it already had disposed of that issue on summary judgment. Germann's amended complaint still contained allegations that the Emergency Ordinance was void and unenforceable despite the District Court's admonition. Germann's second amended complaint also included state and federal claims against the City, Council, and the Council Members in their individual and official capacities, including claims under 42 U.S.C. § 1983 (§ 1983).

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