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California Supreme Court:

San Bernardino- The California Supreme Court yesterday granted review in a case where the Court of Appeal held that a city is liable for damages resulting from its enforcement by a preliminary injunction of a city zoning ordinance determined to be unconstitutional.

In Manta Management Corporation v. City of San Bernardino, E036942, the Fourth District upheld a jury award of $1.4 million for damages incurred by Mantra as a result of a preliminary injunction the city obtained to enforce a zoning ordinance prohibiting Manta’s operation of an adult cabaret.

On appeal, the city argued that damages are available for a wrongfully issued preliminary injunction only if a bond had been posted or if the party wrongfully enjoined prevailed in a separate action for malicious prosecution, neither of which occurred.

Manta contended that the trial court correctly found it was entitled to recover damages resulting from the injunction, despite the absence of an injunction bond, via its cross-complaint for the violation of its civil rights pursuant to 42 U.S.C. Sec. 1983.

Justice Art W. McKinster, writing for Div. Two, agreed with Manta, saying:

“[J]ust as the act of seeking an injunction maliciously and without probable cause is a tort, so too is the act of seeking and obtaining an injunction to enforce an unconstitutional ordinance.”

McKinster concluded:

“[T]he section 1983 action is a tort action independent of the statutory remedies for improperly issued preliminary injunctions, and . . . the absence of a bond is irrelevant to Manta’s claim for damages.”

In 1993, the city issued Manta a conditional use permit for the operation of a nightclub to feature live entertainment and dancing on Hospitality Lane in a commercial area zoned CR-3.

Manta began operation of its nightclub, the Rocket Theater, featuring stand-up comedy acts in 1994. Later that year Manta renamed the club The Flesh Club and began featuring topless female dancers, thereby converting it into an adult cabaret. Adult cabarets are not permitted in CR-3 zones.

In 1995, the city attorney brought an action alleging the cabaret constituted a public nuisance, and seeking to abate the nuisance through preliminary and permanent injunctions. San Bernardino Superior Court Judge Duane M. Lloyd granted the city’s motion for preliminary injunction and ordered Manta to cease performances of the type characterizing adult cabarets.

Manta appealed the order granting the preliminary injunction and cross-complained against the city for declaratory relief and damages. The cross-complaint included several state causes of action and a cause of action alleging that the “ordinances and code provisions and actions” of the city violated its civil rights under the federal and state constitutions, and sought relief pursuant to 42 U.S.C. Sec. 1983.

Trial commenced in 1996 before San Bernardino Superior Court Judge Carl Davis, who bifurcated the issues, ruling that the issue of whether the preliminary injunction should be dissolved or made permanent would be tried before any damage issues.

Following trial, Davis ruled that the initial ordinance was constitutionally invalid because it neither served a substantial governmental interest nor allowed for reasonable alternative avenues of communication. He dissolved the preliminary injunction. The Fourth District affirmed, and the Supreme Court denied review.

The parties agreed to hold a two-step trial on Manta’s cross-complaint, first to determine liability and second to determine damages. Prior to the commencement of the bench trial, Manta filed amended its cross-complaint to allege only civil rights violations.

In the liability phase, San Bernardino Superior Court Judge Donald R. Alvarez found that the act of requesting and obtaining the preliminary injunction and the stay pending appeal constituted a basis for liability under section 1983 of title 42 of the United States Code. In the subsequent trial on damages, the jury awarded Manta $1.4 million in damages for lost profits.

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