City Of El Paso Texas v. El Paso Entertainment, In
464 F. App'x 366
5th Cir.2012Background
- Defendants-appellants are Texas corporations owning or operating two SOBs in El Paso, Foxy’s Nightclub and Lamplighter Lounge, and entered an Agreed Judgment with the City allowing operation despite nonconforming use.
- Agreed Judgment enjoined enforcement of adult business ordinances as long as the clubs remained at their current locations by their current owners and operators, and incorporated City Code Chapter 20.62.
- Diedrich initially owned the clubs; after 1995 he sold his shares to Reiber, who had no involvement in the settlement negotiations.
- In 2007 El Paso enacted Ordinance 016624 tightening licensing/regulations; the City filed suit seeking declaratory relief that the Agreed Judgment no longer applies due to a change in ownership.
- District court held that ‘owners and operators’ referred to natural persons; Fifth Circuit vacated for ambiguity and remanded for extrinsic evidence; evidentiary hearing occurred in 2010.
- On remand, district court concluded, and this court affirmed, that ‘owners and operators’ meant individuals (natural persons) and City could enforce 016624 against the clubs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Right to jury trial on interpretation | Defendants—Gordon credibility; consent decree nature weighs toward court interpretation. | Interpretation of ambiguity should be jury question under contract principles and Seventh Amendment. | No right to jury; district court properly interpreted the Agreed Judgment. |
| Meaning of 'owners and operators' in the Agreed Judgment | Intended to include natural persons; evidence shows city’s intent aligned with individuals. | Ambiguity; defendants’ witnesses suggest corporate ownership could sustain protections. | The terms mean natural persons; district court’s interpretation affirmed. |
| Plain language interpretation of the contested paragraph | Language supports non-conforming status for Foxy’s/Lamplighter and third-party beneficiary status for CR&R. | Reading would render 'real party in interest' meaningless and contract terms superfluous. | Reading consistent with the whole paragraph; district court’s construction affirmed. |
| Exclusion of Dean Reiber and Levy testimony | Excluded evidence would illuminate parties’ intent; parol evidence allowed for ambiguities. | Reiber/Levy testimony sheds light on City’s understanding; exclusion was error. | District court did not abuse discretion; even if error, was harmless. |
Key Cases Cited
- In re Corrugated Container Antitrust Litigation, 752 F.2d 137 (5th Cir. 1985) (enforcement of consent decree involves non-jury interpretation of judgment)
- Dean v. City of Shreveport, 438 F.3d 448 (5th Cir. 2006) (consent decrees analyzed by contract principles; ambiguity resolved with extrinsic evidence)
- United States v. City of Miami, Fla., 664 F.2d 435 (5th Cir. 1981) (consent decrees have both contractual and injunctive features; interpretation centers on the decree)
- IT T Cont’l Baking Co. v. United States, 420 U.S. 273 (Supreme Court 1975) (consent decrees’ dual character; interpretation not solely contract-based for Seventh Amendment purposes)
- G & W Marine, Inc. v. Morris, 471 S.W.2d 644 (Tex. Ct. App. 1971) (exclude subjective undisclosed thoughts in contract interpretation)