Phillips v. Borough of Keyport

• Decision Date: 08 December 1995
• Docket Number: No. 95-5143,95-5143
• Citation: 107 F.3d 164
• Parties: George PHILLIPS; Philip Vitale, Appellants, v. BOROUGH OF KEYPORT; Victor Rhodes; Board of Adjustment.
• Court: U.S. Court of Appeals — Third Circuit

Page 164

107 F.3d 164

George PHILLIPS; Philip Vitale, Appellants, v. BOROUGH OF KEYPORT; Victor Rhodes; Board of Adjustment.

No. 95-5143.

United States Court of Appeals,Third Circuit Argued Dec. 8, 1995.

Reargued En Banc Sept. 19, 1996.

Decided Feb. 21, 1997.

Lewis H. Robertson (argued), Evans, Osborne, Kreizman & Bonney, Red Bank, NJ, for Appellants.

Frank N. Yurasko, Somerville, NJ, Gordon N. Litwin (argued), Ansell, Zaro, Bennett & Grimm, Newark, NJ, for Appellee Borough of Keyport.

Michael A. Irene, Jr., Long Branch, NJ, for Appellee Board of Adjustment.

Argued Dec. 8, 1995

Before: STAPLETON, SAROKIN, ^* and ROSENN, Circuit Judges.

Reargued En Banc Sept. 19, 1996

Before: SLOVITER, Chief Judge, BECKER, STAPLETON, MANSMANN, GREENBERG, SCIRICA, COWEN, NYGAARD, ALITO, ROTH, LEWIS, McKEE and ROSENN, Circuit Judges.

OPINION OF THE COURT

STAPLETON, Circuit Judge:

Appellants planned to open an adult book and video store, "X-Tasy", in the Borough of Keyport, New Jersey. Over a ten month period, they sought the necessary zoning and construction permits. Their applications were ultimately denied on the basis of an "adult entertainment uses" ordinance enacted by the Borough allegedly in response to those applications. Appellants insist that delays, denials, and revocations in the permitting process violated their right to substantive due process, that the ordinance violates their right to freedom of speech, and that they are entitled to recover litigation expenses under 42 U.S.C. § 1988. Appellants also contend that the Borough is equitably estopped to deny that they are authorized to pursue their project.

I. The Factual Background

In early 1992, George Phillips and Philip Vitale spotted an abandoned one-story building on Route 36 in the Borough of Keyport, a 1.5-square-mile community in Monmouth County, New Jersey. After visiting the site, they became interested in the property as a potential location for an adult video and book store. After checking zoning and land use regulations, they met with the owner to negotiate a lease of the property. The parties agreed that, if Phillips and Vitale could obtain a zoning permit for the intended use of the property, they would execute a lease.

Phillips contacted Vic Rhodes, construction official and zoning officer of the Borough, and asked him to perform an unofficial inspection of the property to advise plaintiffs as to what they would need in order to obtain a certificate of occupancy. He did so on February 18th, and informed Phillips and Vitale that they would have to comply with various requirements regarding designation of parking places. A week later, Phillips and Vitale submitted to Rhodes an application for a zoning permit to "operate a retail book store w/ novelties--amusements & videos." App. at 29. The address listed on the application was "# 65 Hwy. 36." Id. The line below the address specified, "Block 103, Lot 59." Id. Attached to the application was a survey of "Lots 59 & 61, Block 103 of the Official Tax Map of the Borough of Keyport." App. at 30.

The property that Phillips and Vitale eventually leased--and that Rhodes inspected--is actually located on Lot 61. While Lots 59 and 61 are contiguous, they are situated in different zoning areas. Lot 59 is located in a district zoned as "residential." Lot 61 is situated in a "highway commercial" district. The survey clearly indicated which land was Lot 59 and which was Lot 61.

A few days later, Rhodes telephoned Vitale and requested that he clarify the nature of plaintiffs' intended use of the property. Vitale complied by describing the intended use in writing as "(1) video sales & rentals"; "(2) amusements--adult video arcade"; and "(3) no one under 21 years of age admitted." App. at 31. There was at that time no zoning restriction specifically pertaining to commercial establishments selling, renting or exhibiting sexually explicit material. On March 9th, Rhodes issued to plaintiffs a zoning permit for Block 103, Lot 59.

On March 13th, Phillips and Vitale entered into a five-year lease for "[t]hat portion of the premises known as Block 103, Lot 59 also known as 65 Highway 36." App. at 32. The lease specified that the premises were to be used for "video sales and rental, amusements and adult video arcade" and as "a retail adult book store with novelties and gifts," and that "[n]o one under 21 years of age [would be] admitted to the premises." The lessees agreed to "obtain any and all necessary government permits and approvals to conduct the business as deemed necessary by such governmental entities."

On March 18th, Rhodes issued plaintiffs three construction permits under their zoning permit. Plaintiffs allege that they thereafter expended substantial sums of money to repair and renovate the property for their intended use.

By this time, however, word of the plans for an adult book store had spread around the Borough and had generated significant opposition. Charles Barreca, who lives directly behind the property at issue, stated at a Borough Council meeting on March 23rd that he would do all he could to stop plaintiffs from opening their proposed store and that he had begun to circulate a petition in the area to that end. At the same meeting, the Borough attorney explained that the Zoning Board of Adjustment could review and overturn Rhodes's decision to issue the zoning permit. Other local leaders, including the mayor, also voiced their opposition. Faithful to his promise, on March 29th, Barreca appealed the issuance of the zoning permit to the Board, and the Board announced that it would review the matter at its upcoming meeting, on April 20th. On April 2nd, Rhodes issued and posted a "stop construction" notice, ordering plaintiffs to stop work at "Block 103, Lot 61, 65 Hwy 36" until the appeal was resolved. The appeal was based on the mistaken identification of the lot number.

On April 14th, Phillips and Vitale filed a second application for a zoning permit, this time with the proper address of the location. The application stated that their intention was "to operate a retail bookstore w/ novelties, amusements & videos, adult video arcade, video sales & rentals (no one under 21 years of age admitted)." App. at 42.

On April 20th, the Board of Adjustment held its hearing on the first application. Barreca attended, along with another resident, to urge reversal. Phillips and Vitale were represented by counsel, who admitted that the permit had been issued for Block 103, Lot 59, that this location was in a residential district, and that his clients' intended use was not permitted in such a district. Barreca and his supporter submitted eight photographs purporting to show that the present condition of the plaintiffs' proposed building and site differed from the conditions represented on the old survey attached to their application for the zoning permit. On the basis of this evidence, the Board granted the appeal and reversed Rhodes's decision to issue the initial zoning permit.

Eight days later, Rhodes advised plaintiffs that their second application for a zoning permit had been denied due to (1) inaccuracies in the survey they had submitted with the application, (2) the need to replace a fence pursuant to Ordinance 25:1-14.6.B, and (3) reports from a previous tenant that the sewer line servicing the building did not operate. Phillips and Vitale undertook to correct the problems and, on June 16th, submitted a third application for a zoning permit, together with a revised survey and receipts for sewer line repairs.

A week later, while the plaintiffs' third application was pending, members of the Borough Council introduced at a Council meeting two ordinances targeted at establishments involved in so-called adult entertainment. Ordinance No. 30-92, entitled "Public Indecency," would prohibit female topless and bottomless exhibitions and male bottomless exhibitions. It was patterned after the Indiana statute upheld by the Supreme Court in Barnes v. Glen Theatre, Inc., 501 U.S. 560, 111 S.Ct. 2456, 115 L.Ed.2d 504 (1991). Ordinance No. 31-92, entitled "Adult Entertainment Uses," ("the Ordinance" or "Ordinance 31-92") would restrict adult entertainment uses to industrial districts and prohibit them within 1000 feet of residential zones, schools, churches, and public playgrounds, swimming pools, parks and libraries. Under the proposed scheme, Phillips and Vitale would need a use variance to open their store, because they were located in a highway commercial district. The Council referred the second ordinance to the Borough Planning Board for review. In connection with the ordinances, Mayor John J. Merla stated to the Asbury Park Press correspondent:

We're not going to tolerate this kind of filth in the Borough of Keyport. We don't support it (adult entertainment) going into any community in the Bayshore.

App. at 14-15.

On July 23rd, the Borough Planning Board held a public meeting to consider proposed Ordinance No. 31-92. The Board had earlier solicited and reviewed a legal opinion concerning the Ordinance, and at the hearing, it heard an oral presentation by an engineering expert. It recommended that the Council pass the proposed ordinance, but suggested three changes, the most significant of which was to reduce the "buffer zone" from 1000 to 500 feet.

At the Council meeting on July 28th, the Council adopted Ordinance No. 31-92 as amended in light of the Planning Board's suggestions. The minutes of the meeting indicate that, although the meeting was open to the public for comments, the sole comment on Ordinance No. 31-92 was made by the Borough counsel, reporting the Planning Board's recommended changes and stating that the mayor had disqualified himself at the Planning Board meeting. Ordinance No. 31-92 contained the following legislative findings and prohibitions:

(a) In the development and execution of this section it is recognized that there are certain uses which, because of their very...