Klingner v. City of Braham

• Decision Date: 08 February 2001
• Docket Number: No. CIV. 00-1667 ADM/AJB.,CIV. 00-1667 ADM/AJB.
• Citation: 130 F.Supp.2d 1068
• Parties: Gerald KLINGNER, Gary Klingner, and G & G Investments, Inc., Plaintiffs, v. CITY OF BRAHAM; Terry Turnquist, Mayor of the City of Braham; Braham City Council and Council Members 1-5; Sally Hoy, Braham City Administrator; Beverly Ceaglske, Community Development Director, City of Braham; and Robert Knowles, Police Chief of the City of Braham, Defendants.
• Court: U.S. District Court — District of Minnesota

130 F.Supp.2d 1068

Gerald KLINGNER, Gary Klingner, and G & G Investments, Inc., Plaintiffs, v. CITY OF BRAHAM; Terry Turnquist, Mayor of the City of Braham; Braham City Council and Council Members 1-5; Sally Hoy, Braham City Administrator; Beverly Ceaglske, Community Development Director, City of Braham; and Robert Knowles, Police Chief of the City of Braham, Defendants.

No. CIV. 00-1667 ADM/AJB.

United States District Court, D. Minnesota.

February 8, 2001.

Richard Diamond, Mitchell Scott Paul, Minnetonka, MN, for Plaintiffs.

Thomas Scott, Campbell Knutson, PA, Eagan, MN, for Defendants.

MEMORANDUM OPINION AND ORDER

MONTGOMERY, District Judge.

I. INTRODUCTION

On January 18, 2001, the undersigned United States District Judge heard Defendants' Motion to Dismiss, or in the alternative, for Summary Judgment [Doc. No. 7] on Plaintiffs' claims for (1) "Deprivation of Property without Due Process of Law"; (2) "Negligent Performance of Public Duties"; (3) "Intentional Interference with Contractual Relations"; and (4) "Conspiracy to Deprive Plaintiffs of Civil Rights." Compl., ¶¶ 7-10. For the reasons set forth below, Defendants' motion is granted.

II. BACKGROUND

Gerald Klingner and Gary Klingner ("Plaintiffs") are the principal shareholders of G & G Investments, Inc., which holds the liquor license for "The Pub and Grill on Central" ("The Pub"). Compl., ¶ 1. Although there is a municipal off-sale liquor store, The Pub is the only on-sale liquor business in the City of Braham. Knowles Aff. ¶ 2.

The City of Braham ("the City") is a political subdivision of the State of Minnesota, located in the County of Isanti. The City's population is approximately 1,300 and its downtown area consists of six blocks. Knowles Aff. ¶ 2. Terry Turnquist ("the Mayor") is the Mayor of Braham. Turnquist Aff. ¶ 1. City Council Members 1-5 ("the Council") are the members of the City Council of Braham. Compl., ¶ 1. Sally Hoy is employed by the City as the city administrator. Id. Beverly Ceaglske is employed by the City as its community development director. Id. Robert Knowles ("Police Chief") is employed by the City as Police Chief. Id. Collectively, this group will be referred to as "Defendants."

In November of 1996, Plaintiffs purchased an existing establishment licensed to sell 3.2 beer in the City with the intent of upgrading it to an on-sale liquor establishment and restaurant. Compl., ¶ 3. Plaintiffs then applied for a transfer of the existing 3.2 beer license and for a hard liquor license. Id. On February 3, 1997, the City Council adopted Ordinance No. 166 allowing the issuance of on-sale hard liquor licenses in the City. Compl., ¶ 3.6. The City issued Plaintiffs a hard liquor license on March 3, 1997. Id. ¶ 3.7. However, before issuing an on-sale hard liquor license, Minnesota law requires the City to hold a special election to allow the voters to decide whether the City should have the power to issue such licenses. See Minn.Stat. § 340A.601, subd. 5. The City did not discover until December of 1999 its error in issuing the initial liquor license prior to holding a special election. Plaintiffs first learned of the special election oversight in April of 1998. Compl., ¶ 5. On May 5, 1998, the City Council held a hearing and adopted Resolution 98-13 declaring the hard liquor license null and void. Id. Plaintiffs' 3.2 beer license remained in effect. The Council adopted a resolution scheduling a special election for June 23, 1998. Id. The referendum passed giving the City the power to issue liquor licenses and the Council then adopted a new ordinance authorizing the issuance of hard liquor licenses. Id. On July 8, 1998, Plaintiffs were issued a valid hard liquor license. Id.

Although Plaintiffs have never been charged with any zoning or building code violation, the City has discussed with Plaintiffs potential violations of the City's sign ordinance by banners being hung on the exterior of the business. Lind Aff. ¶¶ 2-3. On the weekend of March 7-8, 1998, the Mayor removed, from property located three blocks away, temporary banners advertising The Pub's business. Turnquist Aff. ¶ 2. The banners were in violation of the City's sign ordinance.

On the evening of April 3, 2000, Plaintiffs complained to the Police Chief about an excessive amount of police patrolling past The Pub that evening. Knowles Aff. ¶ 5. On May 8, 2000, Plaintiffs contacted the Police Chief concerning police patrolling activities on the evening of May 5, 2000. Id. ¶ 6. Plaintiffs complained that the police repeatedly walked back and forth in front of The Pub recording automobile license plate numbers. Id. Plaintiffs further complained that the police later followed patrons as they left The Pub, making them nervous. Id.

III. DISCUSSION

If, on a motion for judgment on the pleadings, matters outside such pleadings are presented to and not excluded by the court, the motion is treated as one for summary judgment as provided in Rule 56. Fed.R.Civ.P. 12(c). Because the factual material contained in the affidavits of both parties has been considered, and because plaintiff has had the opportunity to respond to the affidavits submitted by defendant, defendant's motion will be analyzed as one for summary judgment under Fed. R.Civ.P. 56. See George v. City of St. Louis, 26 F.3d 55, 57 (8th Cir.1994) (holding that the district court properly treated defendant's motion to dismiss as one for summary judgment where defendant's motion was worded in the alternative and plaintiffs themselves submitted matters outside the pleadings).

Rule 56(c) provides that summary judgment shall be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c). The movant has the burden of showing that no genuine issue of material fact exists. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the movant meets its Rule 56(c) burden, the non-movant "must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). When weighing the evidence offered by the parties on a motion for summary judgment, this Court must review the evidence and all inferences drawn from that evidence in the light most favorable to the party opposing the motion. See Matsushita Elec. Indus. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

A. Due Process claim

The Fourteenth Amendment prohibits state action that deprives "any person of life, liberty, or property, without due process of law." U.S. Const. amend. XIV, § 1. The possession of a protected life, liberty, or property interest is thus a condition precedent to the government's obligation to provide due process of law. Movers Warehouse, Inc. v. City of Little Canada, 71 F.3d 716, 718 (8th Cir.1995). "To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it." Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). The property interest must consist of "more than a unilateral expectation." Id. It must derive from "a legitimate claim of entitlement to it." Id. Property interests "are created and their dimensions defined by existing rules or understandings that stem from an independent source such as state law — rules or understandings that secure certain benefits and that support claims of entitlement to those benefits." Id. Thus, the property interest in a liquor license must derive from Minnesota law.¹

State law can create a property interest in a number of different ways. See Craft v. Wipf, 836 F.2d 412, 416 (8th Cir.1987). State law can explicitly create a property right.² Id. Additionally, a state may "create a constitutionally protected interest by establishing statutory or regulatory measures that impose substantive limitations on the exercise of official discretion." Id. at 417 (citing Hewitt v. Helms, 459 U.S. 460, 470, 103 S.Ct. 864, 74 L.Ed.2d 675 (1983)). Finally, a state may create a protected property interest by "rules and understandings between the state and the other party." Id.

In this case, however, no such property interest exists to support a due process claim. In Hymanson v. City of St. Paul, the Minnesota Supreme Court expressly stated that "[u]nder Minnesota law, there is no property right in a liquor license." 329 N.W.2d 324, 326 n. 1 (Minn.1983); accord Country Liquors, Inc. v. City Council of Minneapolis, 264 N.W.2d 821, 826 (Minn.1978) (holding that there is no property interest in an unissued liquor license); Paron v. City of Shakopee, 226 Minn. 222, 32 N.W.2d 603, 607-08 (1948) (holding that city council had discretion to approve applications for liquor licenses and that liquor license holder was no more entitled to renewal than first-time applicant); Arens v. Village of Rogers, 240 Minn. 386, 61 N.W.2d 508, 519 (1953) ("no person has a vested property right to engage in or continue to engage in the liquor business"); see also Snyder v. City of Minneapolis, 441 N.W.2d 781, 792 (Minn.1989) (holding that revocation of a mistakenly issued building permit without any pre-deprivation hearing did not give rise to a due process claim because no property interest existed in the erroneous permit); State v. Hovorka, 100 Minn. 249, 110 N.W. 870, 871 (1907) (holding that licenses issued under Minnesota law do not create property interests in renewal of the license that are protected by the Due Process Clause).

Minnesota law simply does not recognize a protected property interest in a liquor license. Here, the City Council adopted an ordinance to allow the issuance of liquor licenses in the City and then issued a liquor license to Plaintiffs. However, the ordinance under which the liquor license was issued was invalid under a Minnesota law...