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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.




         This case arose after a church tried unsuccessfully to purchase a theater as a place to show simulcasts of its services. The city blocked the purchase by concluding that its zoning ordinance prohibited the proposed use. The city, however, knew at the time that it could amend the ordinance to allow the church to purchase the theater without abandoning its zoning concerns. The church filed suit alleging that the ordinance violated the church's constitutional rights and that the city had defamed the church in various press releases. After a bench trial, the Court concluded that the city had violated the church's constitutional rights and that the church had not been defamed. The Court awarded the church $1, 354, 595.

         The parties both moved for post-judgment relief. This matter is before the Court on the defendant's motions for amended findings and for a new trial (Doc. No. 168), and the plaintiff's amended motion to amend the judgment (Doc. No. 176). Based on the parties' submissions and the Court's review of the record, the Court grants the parties' motions in part and denies them in part. The Court will issue amended findings and conclusions consistent with this memorandum opinion.


         A. Factual Background

         The Court assumes the reader's familiarity with the facts as set forth in the amended findings. (Doc. No. 191.) This dispute centers on a fifteen-screen movie theater in St. Michael, Minnesota (generally, the “Theater Property”). In early 2014, a bank was selling the Theater Property after it had sat unused since 2010. The Theater Property was zoned in a commercial district (the “B-1 Zone”). During this time Riverside Church, a church in Big Lake, Minnesota, had explored expanding to a satellite site after it had exhausted its ability to expand the Big Lake site. Riverside identified the Theater Property as a possible satellite location where it could play simulcasts of its services in Big Lake.

         In January 2014, Riverside called Marc Weigle about whether Riverside could purchase the Theater Property as its satellite site. Weigle is the most knowledgeable employee for the City of St. Michael regarding zoning and ordinance issues. Weigle told Riverside that the Theater Property was not zoned for assembly uses, which included houses of worship. Riverside worked with the City from January to April to try to reach a resolution where Riverside could use the Theater Property. But those efforts somewhat ended in April 2014 when another buyer purchased the Theater Property.

         Riverside, however, was still trying to purchase the Theater Property from its new owner, and Riverside therefore continued to discuss the zoning ordinance with the City. On June 12, 2014, the City's attorney 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.” (P045.) So, in July 2014, Riverside did just that: It filed an application requesting that the City change the B-1 Zone to allow assemblies, including houses of worship, as a permitted use.[1]

         In August 2014, Riverside entered into a purchase agreement to buy the Theater Property. Thus, the need for the City's decision on Riverside's application became more urgent. The parties exchanged possible solutions, but nothing definitive materialized. The City's principal (if not only) concern with the sale was the impact on traffic in the area. The City commissioned a traffic study, which was completed in October 2014. The traffic study found that once the church reached 1, 200 worshippers, the traffic at an intersection leading to a highway would not function properly. The parties then tried to negotiate a settlement around a 1, 200-person limit. The parties reached an impasse after the City added a provision that required Riverside to waive its rights in the event that the City had to sue to enforce the agreement.

         Meanwhile, the City had to make a decision on Riverside's pending application. The City had held a number of working sessions and public hearings on the matter. The City considered a number of options, including amending the ordinance to allow assembly uses in the B-1 Zone as a conditional use. On November 10, 2014, however, the City adopted a moratorium on new assembly uses, including churches, while the City studied potential impacts. At the same meeting, the City amended the ordinance to remove theaters from the list of permitted uses in the B-1 Zone and added multiplex theaters as a conditional use. Then on November 25, 2014, the City rejected Riverside's application.

         In early 2015, Riverside had yet another opportunity to purchase the Theater Property through an option contract. Under the option contract, Riverside could purchase the Theater Property for roughly $3.5 million plus the costs that the owner had incurred to prepare the Theater Property for use. This time, Riverside filed a lawsuit to compel the City to change the ordinance. On April 8, 2015-mere weeks after Riverside filed its complaint-the City amended the ordinance to allow assembly uses, including churches, in the B-1 Zone. On April 21, 2015, the City issued a conditional use permit to Riverside. But by then, the price-over $5 million-had exceeded what Riverside could afford. Thus, Riverside could not exercise the option.

         B. Procedural History

         The procedural history of this case is complex. As relevant here, Riverside brought claims alleging that the City had violated Riverside's First Amendment rights to free exercise of religion and its rights to free speech and assembly. Riverside also claimed that it was defamed by the City in released statements. The Court denied Riverside's free-exercise claim on the City's motion for summary judgment, but allowed Riverside's free-speech-and-assembly claim and its defamation claim to proceed to trial.

         The Court held a bench trial from October 18, 2016, to November 8, 2016. At the conclusion of the trial, the Court found that the City had violated Riverside's constitutional rights, but that the City had not defamed Riverside. As a result, the Court awarded Riverside damages in the amount of $1, 354, 595. The City filed a motion for a new trial and a motion to amend the judgment. Riverside also filed a motion to amend the judgment.[2]


         I. Motion for a New Trial

         A. ...

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