HUACHUCA CITY — A complaint filed by the owners of Dusk till Dawn Cabaret for judicial review of a decision by the town of Huachuca City to deny the company a 2017 business license is moving closer to an early 2019 trial in the Cochise County Superior Court.
Judge John Kelliher, Jr. signed an order June 28 setting pretrial deadlines in the case initiated by ME Management LLC in May 2017 after Huachuca City cited zoning issues in its denial of a license for the adult-oriented business located on the east side of State Route 90.
The company was granted the business licenses in 2012 through 2016.
Under the judge’s order, both sides have until Aug. 31 to disclose rebuttal experts and non-expert witnesses they intend to call at trial, and must participate in mediation or a settlement conference by Oct. 12.
Kelliher also announced he’ll set a trial date Oct. 22 unless the case is resolved by then.
ME Management, owned by Michael Johnson and Ernesto Sanchez Jr., took over Dusk till Dawn and its liquor license in 2012. The property, at 830 Arizona St., used to be BJ’s Cantina before it became Pin Ups Lounge, which started featuring topless dancing in 2004.
The club later changed its name to Dusk till Dawn Cabaret and was promoted as a gentlemen’s club.
At issue in the dispute is state law, the town’s code, and zoning regulations which pertain to adult oriented businesses.
The Arizona Legislature has enacted land-use restrictions to minimize “deleterious secondary effects” of such businesses. One restriction prohibits operation of an adult-oriented business within 1,320 feet of a day-care facility, school, public playground, community rec center, place of worship, or residence.
Municipalities and counties in Arizona may adopt ordinances to further regulate the location and hours of adult-oriented businesses, but local regulations must be as restrictive as state law.
The complaint raises questions of whether Huachuca City’s town code always included the 1,320-foot prohibition related to residences, or if not, when any code changes occurred. There’s also the issue of whether the town can now enforce the residential prohibition if it wasn’t properly enforced in the past.
ME Management asserts it relied in part on the town’s prior issuance of business licenses to it and previous owners of adult-oriented businesses at the same location as an indication the business complied with local zoning regulations.
The company wants the judge to compel Huachuca City to issue the business license and a certificate of occupancy it needs to operate.
In the alternate, it seeks a finding that the town attempted to impose illegal exactions and other restraints on the use of the property, for which it asks damages of not less than $700,000.
In its answer to the complaint, the town agreed ME Management and predecessors obtained town business licenses for an adult-oriented business at that location, but argued issuance of a license is discretionary and does not imply a property complies with zoning regulations.
The town also contends the company failed to exhaust all administrative remedies with the town before filing a complaint with the superior court.
“This matter stems from a decision of the zoning administrator; accordingly, before the superior court has jurisdiction, plaintiff must first appeal the [administrator’s] decision to the board of adjustment,” the answer states.
The judge has not yet ruled on that issue.
In addition, the town believes ME Management is responsible for what has transpired with its business operation.
“Plaintiff’s damages, if any, were caused by plaintiff’s own actions and or inactions,” the answer states, adding “Plaintiff has failed to mitigate its damages, if any.”
The town hopes Kelliher will deny the company’s requested relief and dismiss the complaint. It also requests an award of its court costs and reasonable attorney fees.
On June 28, the mayor and council held an executive session to discuss the ongoing litigation but did not vote to take any action. City Manager Matthew Williams declined to comment about the matter, citing the ongoing litigation.
The town is represented by an attorney provided through its risk management policy.