Midwest Entertainment Ventures, Inc. (d/b/a Theatre X) and AMW Investments, Inc. v. The Town of Clarksville ( 2020 )

ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE
MIDWEST ENTERTAINMENT TOWN OF CLARKSVILLE FILED
VENTURES, INC. C. Gregory Fifer Oct 21 2020, 9:35 am
David E. Mosley Applegate Fifer Pulliam LLC CLERK
Jeffersonville, Indiana Jeffersonville, Indiana Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEY FOR APPELLANT AMW Scott D. Bergthold
INVESTMENTS, INC. Law Office of Scott D. Bergthold,
Mickey K. Weber PLLC
Jeffersonville, Indiana Chattanooga, Tennessee
IN THE
COURT OF APPEALS OF INDIANA
Midwest Entertainment Ventures, October 21, 2020
Inc. (d/b/a Theatre X), Court of Appeals Case No.
Appellant-Petitioner-Counterclaim 19A-PL-2962
Defendant, Interlocutory Appeal from the
Clark Circuit Court
and The Honorable Vicki L.
Carmichael, Judge
AMW Investments, Inc., Trial Court Cause No.
10C04-1905-PL-51
Appellant-Counterclaim Defendant,
v.
The Town of Clarksville, Planning
Commission for the Town of
Clarksville, and Rick Barr, Town
of Clarksville Building
Commissioner,
Court of Appeals of Indiana | Opinion 19A-PL-2962 | October 21, 2020 Page 1 of 14
Appellees-Respondents-Counterclaimants
Crone, Judge.
Case Summary
[1] In this interlocutory appeal, Midwest Entertainment Ventures, Inc. (d/b/a
Theatre X) (MEV), and AMW Investments, Inc. (AMW), appeal the trial
court’s order granting the motion for preliminary injunction filed by the Town
of Clarksville, Planning Commission for the Town of Clarksville, and Rick
Barr, Town of Clarksville Building Commissioner (collectively the Town).
MEV and AMW argue that the trial court lacked subject matter jurisdiction to
issue the preliminary injunction. AMW further argues that the trial court erred
by enjoining it. Finding neither of these arguments persuasive, we affirm.
Facts and Procedural History
[2] MEV is an Indiana corporation doing business as Theatre X at 4505 Highway
31 East, Clarksville. AMW owns the real estate at 4505 Highway 31 East and
leases the property to MEV. MEV and AMW share the same principal
business address in Michigan.
Court of Appeals of Indiana | Opinion 19A-PL-2962 | October 21, 2020 Page 2 of 14
[3] In 2018, Theatre X was operating as an adult entertainment venue pursuant to
an adult business license issued to it by the Town. In October of that year, the
Building Commissioner issued a notice of violation (NOV) and an order of
abatement to AMW, notifying AMW that there were holes in the walls
between Theatre X’s viewing rooms in violation of the Town’s Zoning
Ordinance and requiring AMW to permanently close the holes. The NOV was
sent to AMW, as the property owner of the premises, at its principal place of
business in Michigan and at 4505 Highway 31 East, as well as to AMW’s
registered agent. AMW did not file a written statement or appeal in response to
the NOV as provided by the Zoning Ordinance, including any claim that it was
not the proper party in interest as the owner and/or operator of Theatre X.
[4] In November 2018, the Building Commissioner was granted permission by
AMW’s “local attorney David E. Mosley and the manager of Theatre X Joshua
Jantzen” to inspect Theatre X, but the holes had not been remediated.
Appellees’ App. Vol. 2 at 232-33. As a result, the Building Commissioner sent
AMW notice that its adult business license was suspended until the violations
were cured or for a period of thirty days and that the Town was assessing civil
penalties against AMW for the violations of the Zoning Ordinance. AMW did
not file any written statement or appeal in response, including any claim that it
was not the proper party in interest as the owner and/or operator of Theatre X.
Theatre X continued operating even though its license was suspended. AMW
took the necessary steps to have the holes between the viewing rooms closed
up, and another inspection revealed that the required remediation had been
Court of Appeals of Indiana | Opinion 19A-PL-2962 | October 21, 2020 Page 3 of 14
completed. The Building Commissioner then informed AMW that the license
suspension was lifted. The Building Commissioner issued an amended order to
AMW, notifying AMW that the aggregate civil penalty assessed from Theatre
X’s zoning violations was $9100. This civil penalty has not been paid.
[5] In January 2019, the Town issued an adult business license to Theatre X for the
calendar year 2019. In February 2019, police observed Theatre X patrons
engaged in indecent acts on the premises. The Building Commissioner sent
AMW notice of intent to revoke Theatre X’s adult business license on the
grounds that (1) Theatre X’s license had been suspended during the previous
twelve months, and Theatre X had knowingly operated the business while the
license was suspended, and (2) Theatre X had violated the Zoning Ordinance
by knowingly allowing acts of sexual intercourse, sodomy, oral copulation,
masturbation, or other sex to occur in or on the premises. Counsel for MEV
sent an email to the Building Commissioner informing him that the revocation
notice should have been served on MEV as the actual holder of the adult
business license. The Building Commissioner sent an amended notice of intent
to revoke license to MEV at the same addresses at which AMW was initially
served.
[6] In April 2019, the Clarksville Town Council held an evidentiary hearing on the
revocation of Theatre X’s adult business license. MEV appeared by counsel
David E. Mosley. The Building Commissioner appeared with counsel, and
evidence was admitted. In May 2019, the Town Council issued an order
revoking MEV’s adult business license, finding that Theatre X had been
Court of Appeals of Indiana | Opinion 19A-PL-2962 | October 21, 2020 Page 4 of 14
operating in violation of the Zoning Ordinance because Theatre X was not
configured so that every manager’s station had an unobstructed view, by a
direct line of sight, to every area of the premises, and Theatre X management
was knowingly allowing its patrons to commit indecent acts to occur on the
premises. AMW’s App. Vol. 2 at 53. The following month, MEV filed in the
Clark Circuit Court a petition to appeal the revocation of adult business license,
naming the Town, the Planning Commission, and the Building Commissioner
as respondents. Id. at 37.
[7] In June 2019, the Town Council adopted an ordinance to regulate sexually
oriented businesses (SOB Ordinance), codified in Chapter 117 of its municipal
code. Id. at 119. Similar to the Zoning Ordinance, the SOB Ordinance requires
the interior premises of adult theaters to be configured so that every manager’s
station has an unobstructed view, by a direct line of sight, to every area of the
premises (except restrooms) where patrons are permitted. Id. at 127. In
addition, the SOB Ordinance requires sexually oriented businesses to be closed
between midnight and 6:00 a.m. Id. at 126.
[8] Also, in June 2019, the Town filed an answer to MEV’s petition, as well as
counterclaims against MEV and AMW, seeking injunctive relief under the
Zoning Ordinance and the SOB Ordinance and against AMW for the unpaid
civil penalties of $9100 imposed on it for the 2018 Zoning Ordinance violations.
In July 2019, the Town filed a motion for a preliminary injunction, seeking to
enjoin MEV and AMW from operating Theatre X in violation of the Zoning
Ordinance and the SOB Ordinance. MEV and AMW each filed a motion to
Court of Appeals of Indiana | Opinion 19A-PL-2962 | October 21, 2020 Page 5 of 14
dismiss the Town’s counterclaims and motion for preliminary injunction. The
trial court held a hearing on the motions to dismiss and the Town’s motion for
a preliminary injunction, at which the Town presented one witness and offered
three exhibits, all of which were admitted.
[9] In November 2019, the trial court issued an order denying MEV’s and AMW’s
motions to dismiss. The trial court also issued an order granting the Town’s
motion for a preliminary injunction. The trial court entered a preliminary
injunction (1) enjoining MEV and AMW from operating Theatre X unless (a)
the building is configured in such a manner that every manager’s station has an
unobstructed view, by a direct line of sight, to every area inside the building to
which any patron is permitted (excluding restrooms), (b) each manager’s station
is in a fixed designated location that does not exceed thirty-two square feet of
floor area, and (c) an employee is on duty in a manager’s station at all times
any patron is on the premises; and (2) enjoining MEV and AMW from
operating Theatre X between midnight and 6:00 a.m. on any day. Appealed
Order at 10-11. This interlocutory appeal ensued.
Discussion and Decision
Section 1 – Our scope of review in this interlocutory appeal is
limited to the order granting the preliminary injunction.
[10] As an initial matter, we note that MEV and AMW seem to misunderstand the
scope of this interlocutory appeal. In their notices of appeal, MEV and AMW
identified the order being appealed as the order granting the preliminary
Court of Appeals of Indiana | Opinion 19A-PL-2962 | October 21, 2020 Page 6 of 14
injunction. However, in their briefs, MEV and AMW ask this Court to vacate
both the order denying their motions to dismiss and the order granting the
preliminary injunction, and to strike the Town’s counterclaims and answer and
the testimony and exhibits presented during the hearing on the motions. We
observe that “[a]n appeal from an interlocutory order is not allowed unless
specifically authorized by the Indiana Constitution, statutes, or the rules of
court. The authorization is to be strictly construed, and any attempt to perfect
an appeal without such authorization warrants a dismissal.” Allstate Ins. Co. v.
Scroghan, 801 N.E.2d 191, 193 (Ind. Ct. App. 2004), trans. denied.
[11] The Court of Appeals has “jurisdiction over appeals of interlocutory orders
under Appellate Rule 14 except those appeals described in Rule 4(A)(3).” 1 Ind.
Appellate Rule 5(B). Here, the order granting the preliminary injunction is
appealable as a matter of right under Appellate Rule 14(A), but the order
denying MEV’s and AMW’s motions to dismiss is not an order that is
appealable as matter of right. Furthermore, the order denying the motions to
dismiss was not certified by the trial court for interlocutory appeal pursuant to
Appellate Rule 14(B). 2 Therefore, the order denying the motions to dismiss is
not properly before us. “Our scope of review in interlocutory appeals is limited
to the interlocutory order on appeal.” See DuSablon v. Jackson Cty. Bank, 132
1
Appellate Rule 4(A)(3) describes the interlocutory appeals over which our supreme court has jurisdiction.
2
Appellate Rule 14(C) governs orders granting or denying class action certification and is therefore
inapplicable. Appellate Rule 14(D) provides that other interlocutory appeals may be taken as provided by
statute, but neither MEV nor AMW cites to a statute that would provide such an interlocutory appeal.
Court of Appeals of Indiana | Opinion 19A-PL-2962 | October 21, 2020 Page 7 of 14
N.E.3d 69, 76 (Ind. Ct. App. 2019), trans. denied (2020). Our supreme court has
stated that “an interlocutory appeal raises every issue presented by the order
that is the subject of the appeal.” Tom-Wat, Inc. v. Fink, 741 N.E.2d 343, 346
(Ind. 2001). Such interlocutory appeals “are not vehicles through which one
may attack the trial court proceedings as a whole and without regard to the
order on appeal.” DuSablon, 132 N.E.3d at 76. Accordingly, we limit our
review in this interlocutory appeal to the order granting the preliminary
injunction. 3
[12] Even if the order denying the motions to dismiss was properly before us, we
would find MEV’s and AMW’s challenges to it without merit. MEV’s sole
argument on appeal is that the trial court lacked subject matter jurisdiction.
AMW presents the same argument. We observe that where the facts before the
trial court are not in dispute, the question of subject matter jurisdiction is one of
law, which we review de novo. Citizens Action Coal. of Ind. v. Koch, 51 N.E.3d
236, 240 (Ind. 2016). “Subject matter jurisdiction is the power to hear and
determine cases of the general class to which any particular proceeding
belongs.” K.S. v. State, 849 N.E.2d 538, 540 (Ind. 2006). “All circuit courts
have … original and concurrent jurisdiction in all civil cases ….” Ind. Code §
33-28-1-2. In addition, “[i]t is within the province of our courts, using both
common law and chancery jurisdiction, to grant injunctive relief.” Washel v.
3
Although the Town explains in its appellees’ brief that the order denying the motions to dismiss is not the
order being appealed, MEV and AMW do not respond to that fact in their reply briefs.
Court of Appeals of Indiana | Opinion 19A-PL-2962 | October 21, 2020 Page 8 of 14
Bryant, 770 N.E.2d 902, 906 (Ind. Ct. App. 2002). This is a civil action, circuit
courts are vested with power to hear civil cases, and there can be no question
that the trial court has subject matter jurisdiction to grant the preliminary
injunction.
[13] Ignoring that line of reasoning, MEV and AMW argue that because MEV filed
a “petition for review[,]” as opposed to a “complaint[,]” the petition is not a
pleading under the Indiana Trial Rules, and therefore the Town did not have
standing to file an answer, counterclaims, or a motion for a preliminary
injunction, and the trial court did not have jurisdiction to issue the preliminary
injunction. MEV’s Br. at 11-12. 4 We disagree. A petition for judicial review is
analogous to a complaint. Ind. Dep’t of Highways v. Dixon, 541 N.E.2d 877, 880
(Ind. 1989). “A civil action is commenced by filing with the court a complaint
or such equivalent pleading or document as may be specified by statute.” Ind.
Trial Rule 3 (emphasis added). After MEV filed its petition for review, the trial
rules permitted the Town to file a responsive pleading. See Ind. Trial Rule 7(A)
(identifying, inter alia, a complaint and answer as pleadings). Indiana Trial
Rule 13(B) provides that “[a] pleading may state as a counterclaim any claim
against an opposing party not arising out of the transaction or occurrence that is
the subject matter of the opposing party’s claims.” Indiana’s modern rules of
trial procedure “abrogate all restrictions on the right to plead a counterclaim.”
4
AMW makes the same argument, but for simplicity’s sake, we cite only MEV’s brief.
Court of Appeals of Indiana | Opinion 19A-PL-2962 | October 21, 2020 Page 9 of 14
Nelson v. Butcher, 170 Ind. App. 101, 112, 352 N.E.2d 106, 114 (1976), trans.
denied. Therefore, we have no difficulty concluding that the Town had standing
to file an answer and counterclaims, and a motion for a preliminary injunction
based on the counterclaims. 5 MEV’s and AMW’s argument that the trial court
did not have jurisdiction to issue the preliminary injunction fails. 6
Section 2 – The trial court did not abuse its discretion by
issuing the preliminary injunction.
[14] MEV and AMW argue that the trial court did not have subject matter
jurisdiction to issue the preliminary injunction, but as explained above, we
reject this argument. MEV presents no other arguments challenging the order
granting the preliminary injunction, and therefore we affirm that order as it
applies to MEV.
[15] AMW contends that the trial court erred by enjoining it. The trial court made
numerous findings of fact relevant to this contention. The trial court found that
5
We decline to address MEV’s and AMW’s arguments relying on the Administrative Orders and Procedures
Act (AOPA) because they did not present those arguments to the trial court, as shown by the complete
absence of any reference to the AOPA in the order denying their motions to dismiss. See Freeman v.
Timberland Home Ctr., Inc., 148 N.E.3d 321, 324-25 (Ind. Ct. App. 2020) (“Generally, a party may not present
an argument or issue to an appellate court unless the party raised that argument or issue to the trial court.”)
(quoting Baird v. ASA Collections, 910 N.E.2d 780, 786 (Ind. Ct. App. 2009), trans. denied (2010)).
6
AMW also argues that its joinder to the action is impermissible. Specifically, AMW argues that it was
misjoined because it was not joined when the revocation of MEV’s adult business license was heard by the
Town Council and because AMW has no interest in the adult business license. These arguments ignore that
AMW was named as a party pursuant to the Town’s counterclaims, and the counterclaims do not seek to
make AMW a party to MEV’s appeal of the license revocation. In addition, the Town’s counterclaim for the
civil penalties imposed on AMW for the 2018 Zoning Ordinance violations concerns only AMW.
Accordingly, this argument also fails.
Court of Appeals of Indiana | Opinion 19A-PL-2962 | October 21, 2020 Page 10 of 14
MEV operates Theatre X, MEV and AMW share the same principal business
address, AMW owns the land and the building in which Theatre X is operated,
and both MEV and AMW are subject to the Zoning Ordinance and the SOB
Ordinance. Appealed Order at 3. The trial court also found that the lease
agreement between MEV and AMW requires the property to be used only for
adult entertainment and quoted the following lease provision:
Alterations. [MEV] shall not remodel, reconstruct, add to, or
demolish any part of the Building (s) or subtract from any real
or personal property included in the Leased Premises or make
any alterations to the interior of the Building(s) without the prior
written consent of [AMW] (sic) all such alterations, changes,
improvements and additions to the Leased Premises for which
[MEV] has obtained [AMW]’s consent shall not (i) impair the
structural integrity or soundness of the Building(s) or any
improvements on the Leased Premises, or (ii) impair the
economic value of the Leased Premises; and such alterations,
changes, improvements and additions by [MEV] shall be made
in compliance with all applicable governmental requirements,
codes, and applicable zoning ordinances; and any alterations,
changes improvements and additions made by [MEV] shall
immediately become the property of [AMW] and shall become and be
part of the Leased Premises. (Emphasis added).
Id. at 4 (underlining replaced with italics). In addition, the trial court found that
the “record shows that AMW has the power to correct, and prevent, violations
of the Town’s ordinances occurring at AMW’s Theatre X property.” Id. The
trial court found that AMW, as the owner of Theatre X, was notified in 2018
that the holes between the viewing rooms in Theatre X were in violation of the
Zoning Ordinance, AMW permitted inspection of Theatre X, the Building
Court of Appeals of Indiana | Opinion 19A-PL-2962 | October 21, 2020 Page 11 of 14
Commissioner sent notice to AMW that Theatre X’s adult business license was
suspended, AMW had the holes closed up, and the Building Commissioner
notified AMW’s counsel that the suspension was lifted, all of which
demonstrated AMW’s control over Theatre X. Id. at 4-5. Finally, the trial
court found that MEV and AMW “knowingly maintained the Theatre X
premises in violation of, and have knowingly permitted, allowed, and failed to
prevent violations of, the Zoning Ordinance and SOB Ordinance [direct-]line-
of-sight requirements, as well as the SOB Ordinance hours of operation
regulation.” Id. at 9.
[16] “We review a trial court’s grant or denial of a preliminary injunction for an
abuse of discretion.” Great Lakes Anesthesia, P.C. v. O’Bryan, 99 N.E.3d 260, 268
(Ind. Ct. App. 2018). In granting a preliminary injunction, the trial court is
required to issue special findings of fact and conclusions thereon. Ind. Trial
Rules 52(A), 65(D). We review the special findings and conclusions for clear
error. Ind. Trial Rule 52(A). “Findings of fact are clearly erroneous when the
record lacks evidence or reasonable inferences from the evidence to support
them. A judgment is clearly erroneous when a review of the record leaves us
with a firm conviction that a mistake has been made.” Sperro LLC v. Ford Motor
Credit Co., 64 N.E.3d 235, 244 (Ind. Ct. App. 2016) (quoting Orndorff v. Ind.
Bureau of Motor Vehicles, 982 N.E.2d 312, 319 (Ind. Ct. App. 2012), trans. denied
(2013)). In making this determination, we neither reweigh evidence nor assess
witness credibility, and “we consider only the evidence favorable to the
judgment and the reasonable inferences arising therefrom.” Great Lakes
Court of Appeals of Indiana | Opinion 19A-PL-2962 | October 21, 2020 Page 12 of 14
Anesthesia, 99 N.E.3d at 268. We owe no deference to a trial court’s
determination of questions of law and review such questions de novo. McCauley
v. Harris, 928 N.E.2d 309, 313 (Ind. Ct. App. 2010), trans. denied (2011).
[17] “In seeking an injunction for a zoning violation, the moving party must prove
the existence of a valid ordinance and a violation of that ordinance.” Plaza Grp.
Properties, LLC v. Spencer Cty. Plan Comm’n, 877 N.E.2d 877, 896 (Ind. Ct. App.
2007), trans. denied (2008). AMW does not challenge the validity of the Zoning
Ordinance or the SOB Ordinance but argues that the Town failed to
demonstrate that AMW violated any ordinance and that the trial court clearly
erred in finding that AMW had the power to correct and prevent the violations.
Specifically, AMW contends that the Town provided no evidence that AMW
“operates” Theatre X, citing provisions of the SOB Ordinance defining
“operates” and “operating[.]” AMW’s Br. at 25. This argument relates only to
the SOB Ordinance; AMW presents no argument that the Town failed to
demonstrate that AMW, as the owner of Theatre X, violated the Zoning
Ordinance. Accordingly, even if AMW’s argument had merit, it would affect
only the portion of the preliminary injunction involving Theatre X’s business
hours. However, we are unpersuaded by AMW’s argument.
[18] Section 117.05(A) of the SOB Ordinance provides, “A person who operates or
causes to be operated an adult arcade or adult motion theatre shall comply with
Court of Appeals of Indiana | Opinion 19A-PL-2962 | October 21, 2020 Page 13 of 14
the following requirements.” 7 AMW’s App. Vol. 2 at 126 (emphasis added).
Section 117.02 defines “[o]perate” to mean, “to cause to function or to put or
keep in a state of doing business.” Id. at 124. Under the lease agreement,
AMW requires MEV to operate the premises as an adult entertainment venue,
and AMW retains the ultimate authority to control any changes to the building,
including those necessary to comply with applicable ordinances. In addition,
the evidence in the record before us supports the trial court’s findings regarding
AMW’s participation in the 2018 Zoning Ordinance violations. AMW’s
argument on this issue is merely a request to reweigh the evidence, which we
must decline. We conclude that the trial court did not abuse its discretion by
enjoining AMW.
[19] Based on the foregoing, we affirm the order granting the preliminary injunction.
[20] Affirmed.
Robb, J., and Brown, J., concur.
7
AMW maintains that it is not a person, but person as defined in the SOB Ordinance includes a corporation.
AMW’s App. Vol. 2 at 124.
Court of Appeals of Indiana | Opinion 19A-PL-2962 | October 21, 2020 Page 14 of 14