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MAG Realty, LLC v. City of Gloucester City

2010 WL 3210441 (U.S. Dist. Ct. D. N.J. 2010) (Unpublished)

ZONING; PRE-EXISTING USES; ADULT ENTERTAINMENT — The act of a go-go bar surrendering its liquor license does not necessarily mean that there has been a change to or intensification of a prior, non-conforming use, and a land use board is obligated to consider whether the property’s current use as a liquorless go-go bar is substantially similar to the property’s use prior to adoption of the zoning ordinance that prohibited adult entertainment businesses in the area.

For more than thirty years, an adult entertainment business operated as a “go-go bar” where customers were able to purchase food and alcoholic beverages while viewing scantily clad female dancers. During that time period, the municipality adopted an ordinance placing the business’s location within its Highway Commercial District in which adult entertainment businesses were considered a prohibited use. The businesses continued to operate on the property as a lawful, pre-existing, non-conforming use.

The current owner of the property and business voluntarily surrendered its liquor license to the New Jersey Alcoholic Beverages Commission. The owner then sought a clarification from the municipality that the surrender of its liquor license would not result in a loss of its right to operate a “go-go bar” as a pre-existing, non-conforming use. At a hearing before the municipal zoning board, the owner presented evidence of the property’s continual use as a restaurant, tavern, and go-go bar for the prior thirty years. It also presented evidence that the only change to the use would be related to its surrendering the liquor license, in its place, allowing customers to bring their own wine and beer. The zoning board denied the owner’s application on the grounds that the proposed use was a new one, resulting in the loss of the protections afforded to a pre-existing, non-conforming use. The owner sued the municipality.

The Court reviewed the municipality’s determination that the proposed use was “new.” It reviewed the municipality’s analysis of the continual use of the property as a restaurant, tavern, and go-go bar. With respect to the property’s use as a restaurant, the Court noted that the business served prepared foods until 2005, after which time it ceased preparing its own foods but made arrangements to have hot foods ordered and served to its customers. This change led the zoning board to conclude that the owner’s use of the property was not substantially similar to its prior lawful use. However, the Court noted that the new use was a constriction of the prior permitted use, not an expansion, and in New Jersey, constrictions of prior non-conforming uses are favored and do not result in a loss of grandfathered protections. The Court found that the zoning board did not discuss the owner’s argument that the changes in food service constituted a reduction in the prior non-conforming use. It concluded that the zoning board either did not apply the appropriate legal framework to the undisputed facts or that it applied the appropriate law in an unreasonable manner.

The Court also reviewed the change in alcohol beverage service at the property to a “BYOB” where customers brought their own alcohol. The Court disagreed with the owner’s argument that a change to BYOB use was clearly a de-intensification of the prior use because customers were no longer permitted to imbibe hard liquor at the premises and were also likely to consume less alcohol since they were required to bring their own alcoholic beverages. The Court noted that without a liquor license, the business was no longer subject to the regulatory authority of the Alcoholic Beverages Commission.

On the other hand, the Court was troubled by the zoning board’s review of the property’s use as a go-go bar against the current zoning standards. It noted that the zoning board was required to determine whether the property’s current use as a go-go bar was substantially similar to its use prior to adoption of the amended zoning ordinance prohibiting adult entertainment businesses in the area. It found that the zoning board’s conclusion that, under the current ordinance, an alcohol consumption license was required to operate the go-go bar rested on an arbitrary and unreasonable basis. The Court concluded that the record was insufficient to determine if the zoning board’s decision was arbitrary, capricious, and unreasonable as a matter of law. It found it impossible to determine if the zoning board would have reached the same conclusion if it used the proper analysis when evaluating the owner’s application.


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