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The Hotboxxx, LLC v. City of Gulfport

Supreme Court of Mississippi

January 8, 2015

THE HOTBOXXX, LLC
v.
CITY OF GULFPORT, MISSISSIPPI

DATE OF JUDGMENT: 03/28/2013.

COURT FROM WHICH APPEALED: HARRISON COUNTY CHANCERY COURT. TRIAL JUDGE: HON. SANFORD R. STECKLER.

FOR APPELLANT: BLEWETT W. THOMAS.

FOR APPELLEE: JEFFREY S. BRUNI.

BEFORE RANDOLPH, P.J., KING AND COLEMAN, JJ. WALLER, C.J., DICKINSON AND RANDOLPH, P.JJ., KITCHENS, CHANDLER, PIERCE AND KING, JJ., CONCUR. LAMAR, J., CONCURS IN PART AND IN THE RESULT WITHOUT SEPARATE WRITTEN OPINION.

OPINION

Page 22

NATURE OF THE CASE: CIVIL - OTHER

COLEMAN, JUSTICE.

¶1. At issue in the instant dispute is whether The Hotboxxx, LLC, has standing to bring suit challenging the constitutionality of a zoning ordinance passed by the City of Gulfport. Hotboxxx claims tat the chancery court erred by finding it had submitted an invalid privilege license application and that, regardless of the invalid license application, it has standing to sue. The City of Gulfport maintains that the application was incomplete and invalid; therefore, Hotboxxx does not have standing. Because Hotboxxx did not properly file an application and because Hotboxxx's commercial property lease was therefore void, we hold that Hotboxxx indeed lacks standing. Thus, we affirm the judgment of the Harrison County Chancery Court that Hotboxxx's application was incomplete and invalid and that it had no standing.

FACTS AND PROCEDURAL HISTORY

¶2. On September 17, 2009, Barry Artz, co-owner of The Hotboxxx, LLC (previously A & P Enterprises, LLC) filed a business privilege license application with the City of Gulfport for the operation of an adult entertainment retailer. At the time, Artz already had signed a lease for commercial office space located at 1820 Pass Road in Gulfport, Mississippi, and Hotboxxx had generated a business plan. On October 7, 2009, Artz was informed that the Hotboxxx application had been forwarded to the city attorney. On December 1, 2009, Artz received a letter from the city attorney stating that, in preparation

Page 23

for new regulations concerning adult businesses, the city counsel would consider a moratorium on issuing privilege license applications. Subsequently, in January 2010, without accepting or rejecting the Hotboxxx application, the city placed a six-month moratorium on issuing privilege licenses. On June 22, 2010, the city passed Ordinance Case # 1006PC088 (hereinafter the Ordinance), which contained zoning regulations restricting the areas of town in which adult businesses could be located. The new zoning regulations prevented Hotboxxx from opening its adult business at the location where it had obtained a lease.

¶3. On August 16, 2010, Hotboxxx filed a complaint in Harrison County Chancery Court claiming that the ordinance was unconstitutional. The City of Gulfport removed the case to the Federal District Court for the Southern District of Mississippi and filed a motion for dismissal under Federal Rule of Civil Procedure 56, claiming that Hotboxxx had failed to submit a completed application and therefore lacked standing to sue. Hotboxxx then filed an amended complaint, contending it had standing to sue because, under the Mississippi standard for standing, it had a colorable interest. On January 26, 2011, the district court dismissed the case for lack of standing. The district court dismissed the case without prejudice, finding that, under the federal standing requirements, Hotboxxx's claim was " speculative and hypothetical" because it was undisputed that the application was not complete.

¶4. On February 1, 2011, Hotboxxx filed a new complaint in Harrison County Chancery Court, citing the same issues presented in the first suit. Gulfport then filed a Motion to Dismiss, noting that the case previously had been dismissed by the district court for lack of standing, precluding Hotboxxx from bringing the claims again under the principle of res judicata. Hotboxxx responded to the Motion to Dismiss, claiming that dismissal without prejudice did not preclude a second suit and that standing requirements are different for Mississippi. Additionally, Hotboxxx claimed that Gulfport has a ministerial duty to advise the applicant of any omissions in its application.

¶5. Without a formal hearing on the matter, on July 9, 2012, the chancery court issued Findings of Fact and Conclusions of Law. First, it stated that the application was incomplete, as determined by the district court. Second, under res judicata, it determined the instant case was different from the one originally filed, " but all the material issues that this Court must address have already been addressed by the Federal District Court." Hotboxxx filed a Motion to Vacate the Findings of Fact, advancing four issues. Hotboxxx claimed the following: the issue of a valid application was contested and not subject to summary judgment, res judicata did not apply, Hotboxxx has standing, and even despite res judicata , Hotboxxx is not barred from pleading a new federal civil rights claim. Finding merit in Hotboxxx's motion, the chancery court then bifurcated the trial, stating that there was a need to hear first the issue of whether Hotboxxx had submitted a valid privilege license application.

¶6. At the hearing from February 25, 2013, to February 26, 2013, Artz claimed that, when he submitted his application, he knew of a flow chart that indicated his license would be processed within a ten-day period. Artz also claimed that, when he submitted his application, he submitted the whole, complete application. Gulfport claimed that the application was not signed or notarized as required. Both parties disputed which version of the application -- three versions existed -- was actually submitted to the city. At the close of the

Page 24

hearing, the chancellor made a bench ruling that Exhibit 4 was the privilege application submitted to the city, and it was incomplete. Subsequently, on March 28, 2013, in his Final Judgment and Order of Dismissal with Prejudice under Rule 12 or Rule 56, the chancellor stated that an incomplete application had been submitted and that Hotboxxx had no standing to sue. He then re-adopted and incorporated his July 9, 2012, Findings of Fact and Conclusions of Law for any remaining issues. Hotboxxx appealed.

STANDARD OF REVIEW

¶7. Findings of a chancellor will not be disturbed on review unless the chancellor was " manifestly wrong, clearly erroneous, or applied the wrong legal standard." Bluewater Logistics, LLC v. Williford, 55 So.3d 148, 166 (Miss. 2011) (quoting Powell v. Campbell, 912 So.2d 978, 981 (Miss. 2005)). The Court will apply abuse of discretion when reviewing a chancellor's decision. Mississippi Power Co v. Hanson, 905 So.2d 547, 549 (Miss. 2005) (citing McNeil v. Hester, 753 ...


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