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Riverside Church v. City of St. Michael

United States District Court, D. Minnesota

August 14, 2017

Riverside Church, Plaintiff,
City of St. Michael, Defendant.

          Samuel W. Diehl, Esq., Dean A. LeDoux, Esq., Gregory R. Merz, Esq., and Matthew P. Webster, Esq., Gray Plant Mooty Mooty & Bennett, PA, and G. Craig Howse, Esq., and Jacob R. Grassel, Esq., Howse & Thompson, PA, counsel for Plaintiff.

          George C. Hoff, Esq., and Jared D. Shepherd, Esq., Hoff, Barry & Kozar, counsel for Defendant.


          DONOVAN W.FRANK United States District Judge


         This dispute arises from a city enforcing its zoning ordinances to thwart a church's attempts to purchase a movie theater for religious worship. The Court held a bench trial from October 18, 2016 to November 8, 2016, to determine whether the city violated the church's constitutional rights by preventing the purchase and whether the city defamed the church in a subsequent statement about the failed purchase.

         Based upon the presentations of counsel, including all pre- and post-trial submissions, and the Court having carefully reviewed the evidence in the case, including all testimony and exhibits entered by the parties, and the Court being otherwise duly advised in the premises, the Court concludes that the city violated the church's constitutional rights and that the city did not defame the church. As a result, the Court awards the church damages in the amount of $1, 354, 595 plus prejudgment and post-judgment interest.


         I. Background

         1. Plaintiff Riverside Church (“Riverside” or the “Church”) is a Christian Missionary & Alliance church that currently meets for collective worship at a church building in Big Lake, Minnesota (the “Big Lake Church”).

         2. Defendant City of St. Michael (“St. Michael” or the “City”) is a city and municipal corporation in Wright County, Minnesota.

         3. Riverside's congregation assembles weekly each Sunday for collective worship, which includes singing and preaching.

         4. Riverside's services are contemporary evangelical Christian worship. The Church incorporates into its services video and lighting, including projecting pre-produced videos and slideshows onto movie screens. (Trial Exhibit (“Ex.”) P001.)[1]The Church intentionally blocks windows in its main worship area so that lighting and video elements are visible. Riverside also simulcasts its services and makes its services available on the Church's website. (P001, P006-7; Trial Transcript (“Tr.”) 1243:23-1244:15 (Lee); 37:14-38:7 (Lundeen); 146:21-147:8 (Machmer).)[2]

         5. In 2004, Riverside's average weekly attendance at its Big Lake Church was approximately 675. But, by the end of 2015, attendance had grown to approximately 1, 600.

         6. Over the years, Riverside expanded and renovated its Big Lake Church and also added additional service times. These efforts, however, were insufficient to meet the needs of Riverside's growing congregation. (Tr. 48:10-25; 47:6-17 (Lundeen).)

         7. Riverside currently has maximum seating for 670 at its Big Lake Church divided between a primary auditorium and a video café where congregants watch a video simulcast of the live service in the main auditorium. (Tr. 152:16-17 (Machmer).)

         8. Riverside first opened its video-café venue in 2005. The Church uses this second worship venue like a movie theater. Much like a movie theater, the video café provides elevated seating, which allows the congregants to clearly see the services being projected on movie screens. (Exs. P001; P007; Tr. 46:24-47:5; 39:11-40:4 (Lundeen).)

         9. As Riverside grew, it began to consider adding a second worship location. Riverside studied the geographic areas from which it drew congregants. The Mississippi River and Interstate 94 (“I-94”) form natural barriers for attendees driving from areas south and east of the Big Lake Church. To reach new members and to provide a convenient site for the significant number of congregants from St. Michael, Albertville, Buffalo, Otsego, and surrounding communities, Riverside focused on locations along I-94 from Rogers to Monticello. (P002; Tr. 53:23-55:3 (Lundeen).)

         II. Riverside Identifies the Theater Property as a Possible Satellite Location.

         10. In early 2014, Riverside identified the former Cinemagic Theater at 4300 O'Day Avenue N.E. in St. Michael (the “Property” or “Theater Property”) as a potential location for a satellite to replay services by video from the Church's location in Big Lake. (D225.)

         11. The Theater Property is bordered to the east by I-94, to the north by Trunck Highway 241 (“TH 241”), to the west by O'Day Avenue (“O'Day”) and the BNSF railroad tracks, and to the south by the Crow River and wetland/flood plain area. The Theater Property sits in the southeast corner of the intersection of TH 241 and O'Day (the “Intersection”). The Intersection is located southwest of the I-94/TH 241 interchange. The current access to the Property's parking area includes a right-in/right-out access along O'Day south of TH 241 and a full access further south of TH 241. The Intersection of O'Day and TH 241 has no traffic signals.

         12. In 2006, St. Michael approved construction of a 15-screen movie theater with nearly 2, 800 seats on the Theater Property. The capacity of the theater building is over 3, 600 people and its interior area is more than 91, 000 square feet. (Complaint ¶ 43; Answer ¶ 26; Exs. P003, P015.)

         13. A movie theater operated at the Theater Property from late 2006 until September 2010, when the property fell into foreclosure. (Complaint ¶¶ 52-53; Answer ¶ 34; Tr. 405:2-6 (Bot).)

         14. Riverside first heard that the Theater Property might be for sale at a discount price in 2011.

         15. In January 2014, Riverside learned that the Theater Property was officially for sale. According to Pastor Thomas Lundeen, the Theater Property was an ideal property for Riverside. Some of the perceived benefits of the Theater Property included its access to the interstate, its visibility, its large parking area, and the fact that it was ready for assembly use. In January 2014, the Theater Property was listed for $2, 695, 000.

         16. St. Michael's Zoning Ordinance provided for different zoning districts and regulated the types of approved land uses as either “permitted” or “conditional” use. Until April 2015, the Zoning Ordinance did not permit “collective religious worship” in any of its business zones (B-1, B-2, or B-3) either as a “permitted” or “conditional” use. The Theater Property had been zoned B-1 since before 2013.

         17. In the B-1 zoning district, the following uses were allowed:

(a) “Assemblies less than 250 persons in a one-day event, if approved by Zoning Administrator”;
(b) Government Buildings;
(c) “Restaurants”;
(d) “Hospitals, funeral homes, and mortuaries”;
(e) “Professional Offices and Services including . . . day care . . . studios including art and photography, and other similar office uses”;
(f) “Retail Sales and Services including, but not limited to, . . . sporting goods, books, music, . . . on and off-sale liquor, convenience stores, department and discount stores, grocery stores, . . . hotel, motels.”

2014 Zoning Ordinance § 155.105.

         18. In January 2014, Riverside Executive Pastor Skipp Machmer called Mark Weigle, the St. Michael's Community Development Director, to inquire about whether Riverside could use the Theater Property for what Machmer called worship.

         19. The testimony and record before this Court established that Weigle was the most knowledgeable City employee regarding zoning issues. He reviewed, interpreted, and enforced the City's Zoning Ordinance and other land-use regulations. He also was responsible for communicating with parties like Riverside about what the City's Zoning Ordinance means. In this case, he was closely involved in the City's decision-making process regarding Riverside's efforts to purchase the Theater Property.

         20. Weigle informed Machmer in January 2014, during their phone call, that St. Michael's Zoning Ordinance did not permit Riverside to use the Theater Property for collective religious worship. At the time of the January 2014 phone call, Weigle was not aware of how Riverside intended to use the Theater Property; all Weigle knew was that Riverside was a church.

         21. The seller accepted an offer from Cinemasota, Inc. for $1.75 million even though Riverside's offer was higher. Despite initially losing out on the Theater Property, Riverside continued to monitor the pending sale. In April 2014, Cinemasota offered to sell the Theater Property to Riverside for $1.75 million plus closing costs.

         22. With the new offer in hand, Riverside renewed contact with St. Michael regarding the Zoning Ordinance. But Riverside had a narrow window to work with the City as the sale had to happen before the closing on April 23, 2014. Riverside scheduled a meeting with the City for April 14, 2014. Prior to the April 14 meeting-and without inquiring further about Riverside's proposed use of the Theater Property-St. Michael's City Administrator Steve Bot stated in an internal e-mail, “I am a bit confused to the purpose of this meeting being we've told numerous local churches already that the old theater site is not zoned for a church.” (P039.) Bot was described as the most senior staff member at the City.

         23. Weigle met with Riverside on April 14, 2014. At the meeting, Riverside explained that it intended to use the Theater Property as a satellite location where it would project a video simulcast of its services and sermons from the Big Lake Church. Weigle then understood that Riverside's proposed use was similar to the operations of a movie theater. But Weigle still told Riverside that its proposed use was not allowed in the B-1 zoning district. (See P041.) Weigle also testified that additional information- such as the number of auditoriums that Riverside intended to use-was unnecessary to determine whether the Zoning Ordinance allowed “collective religious worship” at the Theater Property. (See Tr. 652:25-643:11 (Weigle).)

         24. On April 24, 2014, Weigle sent an e-mail to Riverside stating that the City would “enforce the Zoning Ordinance as it is written, ” but that Riverside could consider asking “the City to amend the Ordinance to allow churches in the B-1 District.” (P042.) Weigle also invited Riverside to attend an upcoming Planning Commission meeting. Cinemasota, however, had completed its purchase of the Theater Property a day earlier, on April 23. Riverside stated that it therefore did not attend the upcoming Planning Commission meetings.

         25. After again failing to purchase the Theater Property, Riverside continued its discussions with Weigle and St. Michael City Attorney David Lenhardt. On June 12, 2014, David Lenhardt wrote to Riverside and recommended that Riverside “file an application to re-zone the property or to amend the city's zoning regulations to allow a religious institution to operate in a commercial zone.”[3] So in July 2014, Riverside submitted an application for a text amendment to the City Zoning Code requesting that the Zoning Ordinance be changed to allow Riverside to use the Theater Property. Specifically, Riverside asked St. Michael to allow “assemblies, religious institutions, and places of worship” as permitted uses in the B-1 zoning district.

         III. Riverside Attempts to Purchase the Theater Property.

         26. On August 19, 2014, Cinemasota and Riverside entered into a purchase-and-sale agreement for the Theater Property. Under the August 2014 purchase agreement, Riverside would pay $2, 273, 000 for the Theater Property. The August 2014 purchase agreement also contained a buyer contingency for government approval by the closing in December 2014.

         27. Riverside arranged to finance the Theater Property through Alliance Development Fund (“ADF”). ADF required Riverside to obtain City approval to use the Theater Property before it would finance the purchase.

         28. On September 22, 2014, Riverside received a loan-approval letter from ADF approving a $3.2 million loan. The loan-approval letter contained a zoning contingency. In November 2014, the zoning contingency was replaced with a requirement of a signed agreement between Riverside and the City for occupancy.

         29. St. Michael's staff, the Planning Commission, and the City Council considered Riverside's application from approximately July 2014 through November 2014.

         30. Riverside informed the City that it had a three-phase plan for its worship areas at the Theater Property. Riverside would immediately use one auditorium to seat 370 (“Phase 1”) and also add a second video café in another auditorium with 100-150 seats (“Phase 2”). Then, as soon as it was needed, Riverside planned to combine two theaters which would provide a combined seating total of 750 (“Phase 3”). (P054 at 7; Tr. 190:11-193:20 (Machmer).)

         31. Riverside informed the City that during its three phases, the church intended to use another four of the fifteen auditoriums for children's programming on Sunday morning.

         32. In evaluating St. Michael's application, the City identified, in particular, issues of public safety and traffic impacts. Bot testified that his concerns arose immediately: “I started thinking about what, as I would with any proposed use there, . . . traffic implications would it have at this intersection that I know has issues and concerns.” (Tr. 545:3-6 (Bot).)

         33. The only traffic study reviewed by the City when it considered Riverside's application was a traffic study dated October 30, 2014 (the “2014 Traffic Study”). The study was conducted by SRF Consulting (“SRF”) and Marie Cote, a traffic consultant. The 2014 Traffic Study considered only Riverside's proposed use. According to Cote, the “purpose of the traffic impact study is to determine the total impacts from the proposed development on the roadway and intersections for all users.” (Tr. 938:18-21.)

         34. Bot and Cote discussed the 2014 Traffic Study before it was conducted, and Bot requested that SRF review Riverside's peak use. The results of the 2014 Traffic Study concluded that once attendance levels reached 1, 200 (the upper limit of Riverside's Phase 3 Plan), the Intersection would not function properly and begin to experience operational, queuing, and safety issues. This was the case, according to the study, even if the City were to put in a traffic signal. The parties argue over whether the 2014 Traffic Study was predicated on a sufficient foundation and methodology, and therefore valid. But more fundamentally, Cote and St. Michael acknowledged that the study's potential concerns may never become a reality at the attendance levels cited in the 2014 study. That is, Cote and St. Michael acknowledged that there was a possibility that there might never be any traffic safety issues with Riverside's proposed use of the Theater Property even if attendance reached 1, 200 attendees. Cote testified:

Q. And so if there's a new recession or a new building boom that nobody predicted, that might change the traffic, correct?
A. Correct. That is why we recommended in our 2014 study that after Phase III we should go in and collect data and make adjustments to our recommendations. If by chance the volumes that are being generated based on the three services at St. Michael generates something less or more, then we would revisit the recommendations being made.
Q. Right. Let's go to Exhibit 121, that first bullet again on page 2. . . . So your analysis related to 1200 people was only used to determine when issues may begin and additional mitigation should be considered, correct?
A. Correct.
Q. And so things could change and 1200 could be fine. And if we do a new study when we get to that point, that study could have different results, right?
A. Correct.
Q. And you don't know whether that study would show greater traffic impacts or less traffic impacts?
A. Correct.
Q. You would have to do the study in the ...

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