US Partners Financial Corp. v. KANSAS CITY, MO., 88-1133-CV-W-5.

• Court: U.S. District Court — Western District of Missouri
• Writing for the Court: Dan G. Jackson, III, Asst. City Atty., Kansas City, Mo., for defendants
• Citation: US Partners Financial Corp. v. KANSAS CITY, MO., 707 F. Supp. 1090 (W.D. Mo. 1989)
• Decision Date: 19 January 1989
• Docket Number: No. 88-1133-CV-W-5.,88-1133-CV-W-5.
• Parties: U.S. PARTNERS FINANCIAL CORPORATION, Kansas City Partners, Ltd., and Entertainment Kansas City, Inc., Plaintiffs, v. KANSAS CITY, MISSOURI, et al., Defendants, Marion Laboratories, Inc., Mildred Bennett, Mr. & Mrs. Clean, Inc., Intervenors.

707 F. Supp. 1090

U.S. PARTNERS FINANCIAL CORPORATION, Kansas City Partners, Ltd., and Entertainment Kansas City, Inc., Plaintiffs, v. KANSAS CITY, MISSOURI, et al., Defendants Marion Laboratories, Inc., Mildred Bennett, Mr. & Mrs. Clean, Inc., Intervenors.

No. 88-1133-CV-W-5.

United States District Court, W.D. Missouri, W.D.

January 19, 1989.

James C. Bowers, Jr., Douglas S. Laird, Polsinelli, White, Vardeman & Shalton, Kansas City, Mo., for plaintiffs.

Dan G. Jackson, III, Asst. City Atty., Kansas City, Mo., for defendants.

Donald W. Giffin, Mark P. Johnson, Therese M. Schuele, Spencer, Fane, Britt & Browne, Sherwin L. Epstein, Kansas City, Mo., for intervenors.

ORDER

SCOTT O. WRIGHT, Chief Judge.

I. Findings of Fact

Plaintiffs U.S. Partners Financial Corporation, Kansas City Partners, Ltd., and Entertainment Kansas City, Inc., have filed a complaint seeking injunctive and monetary relief based upon the allegation that § 39.156 Kansas City Code of General Ordinances (COGO) (the adult entertainment zoning ordinance) as applied by the defendants unlawfully deprived the plaintiffs of their Constitutional rights. The First Count of the plaintiffs' complaint states that § 39.156 COGO as applied to the plaintiffs imposes a prior restraint on their First Amendment Right to freedom of expression. The Second Count contends that the plaintiffs were deprived of their Due Process rights under the Fifth and Fourteenth Amendments to the United States Constitution.

Plaintiff U.S. Partners Financial Corporation, a Delaware corporation, is the general partner in plaintiff Kansas City Partners, Ltd., a Texas limited partnership. The third plaintiff is Entertainment Kansas City, Inc., a Texas corporation. The limited partnership is an investment vehicle to acquire capital for the purchase of the site and to refurbish the old Confetti's building. Entertainment Kansas City, Inc. would then lease the property from the limited partnership, and operate and manage the new facility.

The plaintiffs have brought this cause of action against the Defendant City of Kansas City, Missouri, which is a constitutionally chartered municipal corporation under the Constitution of the State of Missouri. Defendant Richard L. Berkley is the Mayor of Kansas City, Missouri. Defendants Chuck Weber, Sally Johnson, Frank Palermo, Robert M. Hernandez, Joanne M. Collins, Charles A. Hazley, Dan Cofran, Katheryn Shields, Emanuel Cleaver II, Mark Bryant, Bob Lewellen and John A. Sharp are all duly elected members of the City Council of Kansas City, Missouri. Intervenors Marion Laboratories, Inc., Mildred Bennett, and Mr. and Mrs. Clean, Inc. were granted permission to intervene by the Court under Rule 24(a)(2) of the Federal Rules of Civil Procedure. Each Intervenor owns property in the area near the property on which plaintiffs propose to operate an adult entertainment facility.

Before the hearing on the Preliminary Injunction, the Court ordered consolidation of the hearing with the trial on the merits, pursuant to Rule 65(a)(2) of the Federal Rules of Civil Procedure. This case was heard on January 4-5, 1989. The evidence presented during the two-day trial showed that in the spring of 1988, John Kirkendoll and Mark Mayad, the President and Executive Vice-President of U.S. Partners, investigated the possibility of opening an adult entertainment club¹ in Kansas City. Their interest was sparked by inquiries made by the owner of the Confetti's Club at 4207 Woodfield about selling the existing Confetti's facility to U.S. Partners. Kirkendoll and Mayad inspected the building and adjacent property, and also looked at several other possible sites in the Kansas City area. The plaintiffs determined to purchase the Confetti's property, knowing that it was zoned "CP-2", or planned business center.²

As the first step in establishing the Kansas City Gold Club, the plaintiffs filed an application to rezone the site at 4207 Woodfield from District CP-2 to District C-X/C-2. This step was necessary because § 39.156 COGO provides that an exotic dance facility³ must have C-X zoning. C-X zoning is an "overlay" zoning category which exists in connection with some other category of zoning. Under the City's zoning ordinance, C-X zoning may only be established in C-2 (local retail business district), C-3 (intermediate business), and C-4 (central business district) zones.

In addition to the limitation on the types of zoning over which C-X may overlay, certain geographical limits are placed on its use. C-X zoning may not be established "within 1,000 feet of any church, school, or area zoned for residential use" nor will "more than two of the uses regulated by this section ... be located within 1,000 feet of each other."⁴ The ordinance provides that these limitations may be waived if the applicant files a petition with the City Plan Commission "which indicates approval of the proposed regulated use by 51% of the persons residing or owning property within a radius of 1,000 feet of the location of the proposed use."

In an effort to comply with the procedures set out in § 39.156 COGO, the plaintiffs filed their application with the City Plan Commission, a commission comprised of private citizens with expertise in city planning issues. This application included a petition containing the signatures and approval of more than 51% of the persons residing or owning property within a 1,000-foot radius of the adult entertainment facility.⁵

On September 6, 1988, the City Plan Commission considered the proposal and recommended that it be granted. Mr. Joe Serviss, a member of the City Plan Commission, appeared at trial and testified that the plaintiffs' proposal was "a judgment call" on its merits, a decision on which people could disagree. Commissioner Victoria Noteis testified that she agreed with this assessment. Mr. Serviss further testified that he knew of no motivation by the City Development Staff to deny U.S. Partners of its First Amendment Rights.

At the trial of this case, the plaintiffs claimed that at the City Plan Commission hearing, they offered to make their proposal a "limited district plan," or C-2p zoning under § 39.271 COGO. This issue was not raised in the plaintiffs' pleadings and was not raised before the City's zoning authorities. The transcript of the City Plan Commission proceedings indicates the occurrence of a short discussion among the Commission members of a "p" district, but the plaintiffs' attorney made no written offer of a "p" plan, nor were the necessary application and site plan ever filed, examined, or approved by City authorities. The attorney for the plaintiffs claimed that he was willing to orally amend the application, but even if an oral amendment could be effective, he failed to state on the record any of the necessary conditions for a limited district plan. The City Plan Commission never noticed or held a public hearing on a limited district plan, as required by § 39.271(E) COGO. Further, at the Plan Commission hearing, the Assistant City Attorney and the Chairman of the Commission agreed that the matter before the Commission was for an open C-2 zoning, and nothing more.

Following the City Plan Commission's approval of the plaintiffs' proposal, the three ordinances⁶ implementing the City Plan Commission's recommendation were introduced before the City Council and the issue was then referred to the Plans and Zoning Committee of the City Council ("P & Z Committee") for a public hearing. On October 12, 1988, after the hearing, the P & Z Committee voted to deny proposed Ordinance No. 63093. Because Proposed Ordinances 63094 and 63095 were contingent upon the passing of No. 63093, there was no need to take action on them after No. 63093 was denied. On October 20, 1988, the City Council adopted the recommendation of the P & Z Committee. The Council voted to deny No. 63093, thereby making Nos. 63094 and 63095 moot.

The plaintiffs contend that the actions of the City Council in denying Ordinance No. 63093 and taking no action on Nos. 63094 and 63095 were done with the intent to impose a prior restraint on the plaintiffs' First Amendment right to freedom of expression. A review of the evidence presented to the City Council in opposition to the proposed ordinances shows that substantial reasons exist for the Council's action which are completely unrelated to the plaintiffs' exercise of their First Amendment rights.

First, on September 8, 1988, the City Development Staff delivered its Combined Staff Report on the three applications in sequence. The Staff Report recommended denial of all three applications. The first application involved severing the CP-2 or planned business district. The Staff concluded that it was not appropriate to remove over one-half of a CP district with an approved site development plan and place it into an "open" zoning district. The Staff Report stated:

An open C-2 district means that a site development plan is not required or reviewed by the City prior to the use of the property. Even though the applicant is proposing a site development plan for their District C-2/C-X, it is not required and can not be enforced by the City. Additionally, there is a larger planning issue which this case brings forth. That is whether or not the City should continue to encourage planned development in this area or allow it to be developed with numerous unrelated and uncontrolled uses.

Combined Staff Report at pp. 2-3.

Second, there was competent and substantial evidence presented by Professor Eric Strauss to the Plans and Zoning Committee of the City Council on October 12, 1988 in opposition to the proposed ordinances. His credentials and report were provided to each of the four Council members comprising the Committee. Professor Strauss has a J.D. degree and a Ph.D. in Urban and Regional Planning and is the Chairman of the Graduate Program in Urban Planning at the University of Kansas.

Dr. Strauss opined that rezoning the tract...