Pawn Am. Minn. LLC v. City Of St. Louis Park, No. A08-1697.

• Decision Date: 26 August 2010
• Docket Number: No. A08-1697.
• Citation: 787 N.W.2d 565
• Parties: PAWN AMERICA MINNESOTA, LLC, Appellant,v.CITY OF ST. LOUIS PARK, Minnesota, Respondent.
• Court: Minnesota Supreme Court

787 N.W.2d 565

PAWN AMERICA MINNESOTA, LLC, Appellant,v.CITY OF ST. LOUIS PARK, Minnesota, Respondent.

No. A08-1697.

Supreme Court of Minnesota.

Aug. 26, 2010.

Syllabus by the Court

1. Respondent city's interim zoning ordinance was not adopted until respondent authorized a zoning study to be conducted, thereby satisfying Minn.Stat. § 462.355, subd. 4(a) (2008).

2. Respondent city did not act unreasonably, arbitrarily, or capriciously in enacting its interim zoning ordinance.

Scott G. Harris, Matthew B. Seltzer, Aleava R. Sayre, Leonard, Street and Deinard, Minneapolis, MN; and Eileen M. Roberts, St. Paul, MN, for appellant.

Thomas M. Scott, Campbell Knutson, Eagan, MN, for respondent.

Susan L. Naughton, League of Minnesota Cities, St. Paul, MN, for amicus curiae League of Minnesota Cities.

OPINION

ANDERSON, G. BARRY, Justice.

At issue here is the scope of a municipality's authority to adopt an interim zoning ordinance that placed a moratorium on the establishment of pawnshops within the municipality. Appellant Pawn America Minnesota, LLC, sought declaratory and injunctive relief, asking the district court to (1) declare invalid an interim ordinance adopted by respondent City of St. Louis Park that placed a moratorium on the establishment of pawnshops and the issuance of new pawnbroker licenses, (2) declare that Pawn America is legally entitled to a pawnbroker license, and (3) direct the City to issue a pawnbroker license. Pawn America and the City filed cross-motions for summary judgment. The district court concluded that the interim ordinance was validly enacted, and Pawn America was not entitled to a pawnbroker license because the property it purchased could not be used as a pawnshop under the permanent ordinance. Consequently, the court denied Pawn America's motion for summary judgment, granted the City's motion for summary judgment, and dismissed Pawn America's claims with prejudice. Pawn America appealed, and a divided court of appeals affirmed. Pawn Am. Minn., LLC v. City of St. Louis Park, No. A08-1697, 2009 WL 2447746, at *1, 6 (Minn.App. Aug.11, 2009). Because we conclude that the interim zoning ordinance was validly enacted, we affirm.

Pawn America applied to the City of St. Louis Park on June 7, 2007, for a license to operate a pawnshop at 5600 Excelsior Boulevard.¹ The City's assistant zoning administrator issued a zoning verification letter confirming that the intended use of the property “as a pawn store, secondhand goods store, precious metals dealer and an industrial loan and thrift company” complied with the City's zoning code, but noted that other requirements, such as a certificate of occupancy and registration of land use, may be necessary. ² When Pawn America applied for a pawnbroker license on June 7, the city code permitted two pawnbroker licenses in the City; one license had already been issued, and Pawn America was applying for the second license.

On the same day that Pawn America applied for a pawnbroker license, PAL Holdings, LLC, an operating affiliate of Pawn America, entered into a purchase agreement to acquire the property located at 5600 Excelsior Boulevard. PAL Holdings planned to lease the property to Pawn America, and the closing on the property was set for October 31, 2007. A contingency provision in the purchase agreement provided that the agreement could be canceled and the $30,000 in earnest money refunded if final governmental approvals and licenses could not be obtained by July 16, 2007.³

With the July 16 governmental-approval contingency-period deadline approaching, Pawn America's attorney contacted the City's inspections supervisor on July 13, 2007, to advise her of the contingency-period deadline and to inquire about the status of Pawn America's license application. On July 16, the inspections supervisor sent an e-mail to Pawn America's attorney stating that “[e]verything looks great for the license. I cannot, however, physically issue this license until the store is ready to be open, but as far as we are concerned, the paperwork is in order and the license will be issued as soon as the store is ready for business.” The inspections supervisor also left a voicemail for Pawn America's attorney indicating that she could not issue a pawnbroker license until Pawn America had a signed lease or had the property in its name.

In September 2007 residents near 5600 Excelsior Boulevard learned that Pawn America would be operating at that location, and the residents expressed to a city council member their concerns about and opposition to Pawn America there. The council member contacted the city manager and the community development director on September 23 to relay these concerns and inquire about the status of the license application. The council member wrote in an e-mail that if there were any available pawnbroker licenses, “lets [sic] lower the number allowable asap.” The city manager then instructed the inspections supervisor to wait before approving the application, but the inspections supervisor did order the required background check.⁴

On September 24, 2007, the city council held a regularly scheduled meeting, and the city manager initiated discussion about Pawn America's license application. The city manager stated that city ordinances permitted two pawnbroker licenses; one was currently in use, and one was still available. He told the city council that in 2002 the pawnshop ordinance was amended to reduce the number of licenses available from three to two, and to impose reporting requirements on pawnshops to track stolen property. The mayor expressed opposition to Pawn America's application, apparently because of the location of the property, and said, “Here's my policy statement on it: Figure out a way to say ‘no.’ Anybody else have anything different about it, I mean ... I don't know, I think that's a terrible location for it. That's just my take on it.” A council member expressed opposition to pawnshops in general, and in particular, said that a pawnshop on Excelsior Boulevard would negatively impact the community's image because of the downtown location and proximity to Highway 100. The city attorney clarified that the zoning on the property permitted a pawnshop, but suggested that the City could adopt a moratorium on new pawnshops by interim ordinance, and initiate a study in order to decide whether the City wanted to implement any additional conditions or restrictions on pawnshops.

On September 26, 2007, the city attorney informed Pawn America that the city council on October 1 would have a first reading of an interim ordinance and would impose a moratorium on opening new pawnshops. Because of this information, and because the inspections supervisor indicated in July that a pawnbroker license would be issued when Pawn America had a lease or title to the property, PAL Holdings entered into a lease agreement with the owner of the property on September 27, 2007, and entered into a sublease agreement with Pawn America. The next day, Pawn America submitted a signed certificate of occupancy and land use registration application, and requested immediate issuance of a pawnbroker license.⁵ The City would not issue the license because of the pending moratorium on new pawnshops, and because the City had not yet completed the background check on Pawn America.

On October 1, 2007, the city council met again and adopted the first reading of an interim zoning ordinance that temporarily prohibited new pawnshops, and passed a resolution directing a study to determine how the City should regulate pawnshops. The resolution also placed a hold on any further processing and approval of pending or new pawnshop licenses. As required by the city charter, every ordinance must have two public readings, with seven days between the first and second readings. In addition, an ordinance must be published in the City's official newspaper; the ordinance is effective 15 days after publication. On October 3, before the second reading of the ordinance, the City sent the interim ordinance to the official city newspaper for publication on October 11, making October 26 the effective date of the interim ordinance.⁶

On October 4, 2007, Pawn America brought an action in district court seeking a writ of mandamus to compel the City to issue a pawnbroker license. The court issued an alternative writ of mandamus requiring the City to issue the license or appear before the court on October 8 to show cause why the City had not issued a license pursuant to Pawn America's June 7 application. At the October 8 hearing, the court denied Pawn America's petition for a peremptory writ of mandamus.

The city council held a special meeting on October 8, 2007, and adopted the second reading of the interim ordinance that temporarily prohibited the further processing and approval of pending or new applications for a pawnbroker license.⁷ Two days later, Pawn America filed an amended mandamus petition that asked for declaratory and injunctive relief. In addition, Pawn America filed a motion for a temporary restraining order under Minn. R. Civ. P. 65.01, asking the court to enjoin the enforcement of the moratorium with respect to Pawn America. On October 22, 2007, the district court denied the temporary restraining order, and the interim ordinance went into effect on October 26.

Pursuant to the resolution passed at the October 1 city council meeting, a zoning study on pawnshops was conducted, and the study was completed on December 5, 2007. The zoning study analyzed pawnshop uses, the City's existing zoning and licensing regulations, and land use controls in other cities. Based on the study, the City adopted a permanent ordinance on February 4, 2008, that became effective on February 22, 2008. Among other changes suggested by the study, the permanent ordinance amended the zoning code to make pawnshops conditional uses, and includes a distance separation requirement between pawnshops, gun shops, liquor stores, and certain...