CLARKSVILLE MINISTRIES, LLC. v. TOWN OF CLARKSVILLE, INDIANA

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF INDIANA

NEW ALBANY DIVISION

CLARKSVILLE MINISTRIES, LLC, )

)

Plaintiff, )

)

v. ) Case No. 4:21-cv-00135-TWP-KMB

)

TOWN OF CLARKSVILLE, INDIANA, )

TOWN OF CLARKSVILLE BUILDING )

COMMISSION, and RICK BARR, )

Individually and in his Official Capacity as the )

Town of Clarksville's Building Commissioner,

)

Defendants. )

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS

This matter is before the Court on a Motion to Dismiss filed by Defendants Town of

Clarksville, Indiana, Town of Clarksville Building Commission, and Rick Barr, in his official

capacity as the Town of Clarksville's Building Commissioner (collectively, the "Town") (Filing

No. 71). Plaintiff Clarksville Ministries, LLC ("CM") initiated this civil rights action alleging the

Town violated the First and Fourteenth Amendments to the United States Constitution by failing

to issue it a temporary Adult Business License and a temporary adult business employee license

in accordance with a Town Ordinance. (Filing No. 1).1 The Town argues the Complaint should

be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter

jurisdiction under the Younger v. Harris or Colorado River abstention doctrines,2 due to the

1 CM's attempts to amend its Complaint on two sperate occasions were denied because of its failure to satisfy Federal

Rule of Civil Procedure Rule 8, (Filing No. 57; Filing No. 85), so the original Complaint (Filing No. 1) remains the

operative Complaint in this action.

2 The United States Supreme Court has recognized four main categories of abstention named after the cases that gave

rise to them: Pullman, Burford, Younger, and Colorado River. See Railroad Commission of Texas v. Pullman Co.,

312 U.S. 496 (1941); Burford v. Sun Oil Co., 319 U.S. 315 (1943); Younger v. Harris, 401 U.S. 37 (1971); Colorado

River Water Conservation District v. United States, 424 U.S. 800 (1976).

Town’s ongoing enforcement action against CM in a state court proceeding. The Town also seeks

dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6), because the Complaint fails to

state a claim upon which relief can be granted (Filing No. 72; Filing No. 84). Alternatively, the

Town argues the Court should stay these proceedings. Id. For the reasons set forth below, the

Court grants the Motion to Dismiss.

I. LEGAL STANDARDS

A. Motion to Dismiss Under Rule 12(b)(1)

Under established abstention doctrines “a federal court may, and often must, decline to

exercise its jurisdiction where doing so would intrude upon the independence of the state courts

and their ability to resolve the cases before them.” SKS & Assocs., Inc. v. Dart, 619 F.3d 674, 677

(7th Cir. 2010). A motion to dismiss on abstention grounds fits best under Federal Rule of Civil

Procedure 12(b)(1). Nicole K. by next friend Linda R. v. Stigdon, 2020 WL 1042619 (S.D. Ind.

Mar. 3, 2020). Motions under Rule 12(b)(1) challenge the court's subject matter jurisdiction. Fed.

R. Civ. P. 12(b)(1). The burden of proof is on the plaintiff, the party asserting jurisdiction. United

Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir. 2003), overruled on other

grounds by Minn-Chem, Inc. v. Agrium, Inc., 683 F.3d 845 (7th Cir. 2012) (en banc); see also Int'l

Harvester Co. v. Deere & Co., 623 F.2d 1207, 1210 (7th Cir. 1980) (concluding "[t]he plaintiff

has the burden of supporting the jurisdictional allegations of the complaint by competent proof.").

While the district court must accept as true all well-pleaded factual allegations and draw

reasonable inferences in favor of the plaintiff, Ezekiel v. Michel, 66 F.3d 894, 897 (7th Cir. 1995),

the court "may properly look beyond the jurisdictional allegations of the complaint and view

whatever evidence has been submitted on the issue to determine whether in fact subject matter

jurisdiction exists." Id.

B. Motion to Dismiss Under Rule 12(b)(6)

Federal Rule of Civil Procedure 12(b)(6) allows a defendant to move to dismiss a complaint

that has failed to "state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). The

complaint must contain a "short and plain statement of the claim showing that the pleader is

entitled to relief." Fed. R. Civ. P. 8(a)(2). In Bell Atlantic Corp. v. Twombly, the Supreme Court

explained that the complaint must allege facts that are "enough to raise a right to relief above the

speculative level." 550 U.S. 544, 555 (2007). The complaint must include "enough facts to state a

claim to relief that is plausible on its face." Hecker v. Deere & Co., 556 F.3d 575, 580 (7th Cir.

2009). To be facially plausible, the complaint must allow "the court to draw the reasonable

inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009) (citing Twombly, 550 U.S. at 556). When deciding a Rule 12(b)(6) motion, the court

accepts as true all factual allegations in the complaint and draws all inferences in favor of the

plaintiff. Bielanski v. County of Kane, 550 F.3d 632, 633 (7th Cir. 2008). However, courts "are

not obliged to accept as true legal conclusions or unsupported conclusions of fact." Hickey v.

O'Bannon, 287 F.3d 656, 658 (7th Cir. 2002).

II. FACTUAL AND PROCEDURAL BACKGROUND

In its Motion to Dismiss, the Town argues that CM’s Complaint is subject to abstention

because "for nearly three years" it has been engaged in an ongoing enforcement action against CM

in an underlying state court proceeding˗˗concerning Theatre X, and its landlord entity, AMW

Investments, Inc. (“AMW”), and operating entity, Midwest Entertainment Ventures, Inc.

(“Midwest)˗˗and because the state court proceeding presents extraordinary circumstances

justifying abstention. (Filing No. 72-1.) While CM's Complaint is devoid of any facts concerning

the underlying state court proceeding the Court takes judicial notice of, and incorporates certain

factual recitation, from documents filed on the docket of the state court proceeding.3 See Daniel

v. Cook County, 833 F.3d 728, 743 (7th Cir. 2016) (finding that a court may take judicial notice of

an action of other courts or the contents of filings in other courts not for the truth of the matters

asserted in the other litigation, but rather to establish the fact of such litigation and related filings.)

The Court will first address the procedural background relating to the state court

proceedings, before turning to the facts of the instant lawsuit.

A. Midwest's ABL Revocation

In 2018, AMW was the owner of the premises upon which Midwest operated an adult

arcade and adult theater under the name "Theatre X" pursuant to an ABL and ABEL issued to

Midwest and its employee by the Town. (Filing No. 1 at ¶ 36; Filing No. 19-2.) Unbeknownst to

the Town, more than twenty improper openings, or "glory holes", were placed in the walls between

Theatre X's booths that allowed people in adjoining booths to engage in sexual acts. (Filing No.

19-1 at 4-5.) In October 2018, several of Theatre X's patrons were arrested for engaging in sexual

acts and, soon thereafter, the Town conducted an inspection and suspended Midwest's ABL for

violations stemming from electrical issues and the glory holes. Id. at 2-3. Midwest resolved the

electrical issues but did not cover up the glory holes and continued operating Theatre X. Id. at 6.

Ultimately, Midwest corrected the violations and on November 19, 2019, the license suspension

was lifted. Id.

In January 2019, more of Theatre X's patrons were arrested for engaging in sexual acts. Id.

The Town issued a 'notice of intent to revoke' Midwest's ABL for operating Theatre X while its

3 See Case No. 10C04-1905-PL-00051 and styled In Re: The Administrative Appeal of the Notice Issued by the

Clarksville Building Commissioner for the Intended Revocation of an Adult Business License Issued to Theatre X for

Property Located at 4505 Highway 31 E, Clarksville Indiana, Midwest Entertainment Ventures, Inc., (d/b/a/ Theatre

X) v. The Town of Clarksville, Planning Commission for the Town of Clarksville, and Rick Bar, Town of Clarksville

Building Commissioner..

license was suspended and for allowing "acts performed for sexual gratification on the licensed

premises." Id. at 6-7. Midwest appealed the license revocation, and the Clarksville Town Council

held an evidentiary hearing and voted unanimously to revoke Midwest's ABL in connection with

Theatre X. (Filing No. 67-5.)

B. Midwest's Appeal of its ABL Revocation

Midwest's appeal of the Clarksville Town Council's decision soon followed in the Circuit

Court. (Filing No. 67-6.) The Town filed counterclaims against both Midwest and AMW

(collectively, the "Counter Defendants") for "operating or maintaining Theatre X in violation of

certain provisions of the Clarksville Zoning Ordinance" and sought monetary fines,4 a temporary

restraining order, a preliminary injunction, and a permanent injunction. (Filing No. 67-7.) The

Counter Defendants petitioned the Circuit Court to dismiss the case, but that motion was denied,

(Filing No. 67-8), and a separate order was entered granting the Town a preliminary injunction5

against the Counter Defendants "as well as their officers, agents, servants, employees, attorneys,

and those persons in active concert or participation with them who receive actual notice of this

order by personal service or otherwise, from engaging in or allowing [certain] acts at 4505 E.

Highway 31 in Clarksville, Indiana." (Filing No. 19-2 at 10.)

The Circuit Court found AMW, no less than Midwest—with whom AMW shares an

address in Durand, Michigan—responsible for operations at Theatre X (Filing No. 67-8 at 7-8).

The Circuit Court determined that AMW was not merely a lessor as in a typical commercial

landlord-tenant relationship but that "[d]iscovery may reveal additional facts showing the depth of

4 Case No. 10C04-1905-PL-00051, "Town of Clarksville Motion for Imposition of Fines," dated December 12, 2019,

and "Order Regarding Motion for Imposition of Fines," dated February 25, 2020 (Filing No. 67-9; 67-10).

5 Case No. 10C04-1905-PL-00051, "Order Granting Preliminary Injunction," dated November 21, 2019.

relationship between AMW and [Midwest] in the Theatre X enterprise, as the Town has suggested

that the principals in the two corporations have been long-time adult business partners beyond the

Clarksville business." Id. The Counter Defendants appealed6 the Circuit Court's order granting the

preliminary injunction, and in October 2020, the Indiana Court of Appeals affirmed the

preliminary injunction order (Filing No. 67-11). Approximately five months later, in March 2021,

the Indiana Supreme Court denied transfer7 (Filing No. 67-12).

C. CM Begins Leasing Theatre X and Buys Midwest's Assets

On August 3, 2021, CM, was created as a limited liability company and, despite its name,

sought to operate an adult business on the Premises. (Filing No. 67-15.)8 Two days later, on

August 5, 2021, CM began leasing the Premises, or Theatre X, and, a day later bought all of

Midwest's "assets, equipment, inventory, and [the] good will of the business." (Filing No. 1 at 11;

Filing No. 68-16.) CM subsequently submitted a complete ABL and ABEL application for the

2021 calendar year, (Filing No. 1 at ¶ 40-46), but the Town did not issue CM an ABL or its

employee an ABEL as the local ordinances required, but instead proposed certain amendments to

the zoning laws regulating adult businesses which disqualified the Premises as a lawful location

6 Case No. 19A-PL-02962, and styled Midwest Entertainment Ventures, Inc. (d/b/a/ Theatre X), and AMW

Investments, Inc., v. The Town of Clarksville, Planning Commission for the Town of Clarksville, and Rick Barr, Town

of Clarksville Building Commissioner. See also Midwest Entertainment Ventures, Inc. v. Town of Clarksville, 158

N.E.3d 787(Ind. Ct. App. 2020).

7 Since the Indiana Supreme Court denied transfer, the Town sought a hearing on its pending (1) 2020 motion to

compel discovery against AMW and Midwest, and (2) motion to affirm the 2019 revocation of Theatre X's adult

business license and begin the one-year closure of the business. Following a hearing, the Circuit Court, on August 12,

2021, granted the Town's motion to compel production and affirmed Midwest's ABL revocation in connection with

Theatre X (Filing No. 67-13; Filing No. 67-14).

8 A search on the Indiana Secretary of State's website reveals a corporation filing for Clarksville Ministries LLC, of

which the Court takes judicial notice, which indicates that CM was created on August 3, 2021, as a domestic limited

liability company by the sole manager Michael Sanchez, with its principal office being located at 4505 US Highway

31, Jeffersonville, IN 47130. https://bsd.sos.in.gov/PublicBusinessSearch/BusinessInformationFromIndex

for the operation of an adult business and "there exists no parcel of land within Clarksville where

an Adult Business may operate." (Filing No. 1 at ¶ 63-80.)

D. CM Files this Federal Lawsuit

On August 27, 2021, CM filed suit in this federal court alleging that the First and

Fourteenth Amendments to the United States Constitution were violated when the Town infringed

on its free speech rights: (1) by failing to issue CM a temporary Adult Business License ("ABL"),

(2) by failing to issue its employee a temporary Adult Business Employee License ("ABEL"), and

(3) by proposing an amendment to the zoning laws so as to disqualify the property located at 4505

Highway 31 East, in Clarksville, Indiana ("Theatre X" or "the Premises")9 as a lawful location for

the operation of an adult business. Id. (Filing No. 1.) CM sought an emergency temporary

restraining order,10 a preliminary injunction, nominal damages, compensatory damages, special

damages, and punitive damages. Id. at 22-23.

Approximately a week after CM's Complaint was filed, on September 2, 2021, Midwest

sought voluntary dismissal of its claims in the Clark Circuit Court (the "Circuit Court") because it

was "ceasing to operate … its business," and the Circuit Court granted that motion with prejudice

(Filing No. 67-16). The Circuit Court, however, issued a subsequent order clarifying that while

Midwest's claims were dismissed, "the Town's [counter] claims against the [Counter Defendants]

remain[ed] pending for adjudication."11 Several months later, in January 2022, the Town was

9 While the parties interchangeably refer to the adult business located at 4505 Highway 31 East, Clarksville, Indiana

premises as Theatair X or Theatre X, the Court refers to said premises as Theatre X.

10 On September 7, 2021, this Court granted CM's motion for a temporary restraining order and ordered the Town to

issue "CM a temporary ABL…" and issue "Timothy Miller a temporary ABEL…" once certain deficiencies in the

respective applications were corrected (Filing No. 25). On September 21, 2022, the Court extended the temporary

restraining order (Filing No. 43).

11 Case No. 10C04-1905-PL-00051, "Order Granting Motion to Amend and Clarify Order of Dismissal," dated

September 13, 2021. A review of the state court docket reflects that the Amended Counter Claims are still pending.

granted permission by the Circuit Court to add "claims for the same relief, under the same 2019

regulations, against AMW's and Midwest's sole principals (Jason Mohney and Douglas Marks,

respectively), and against Theatre X's current operating entity, Clarksville Ministries, LLC

("CM"), and its principal, Michael Marie Sanchez" (the "Amended Counter Claims").12

The Town then filed the instant Motion to Dismiss this case pursuant to Rules 12(b)(1) and

(6), arguing that dismissal is warranted under both the Younger or Colorado River abstention

doctrine or, alternatively, the Court should stay these proceedings pending resolution of the Town's

Amended Counter Claims in the Circuit Court (Filing No. 71; Filing No. 72). CM filed a response,

and the Town filed a reply (Filing No. 78; Filing No. 84).

III. DISCUSSION

The Town argues that CM purports to be the “new” operator of Theatre X in Clarksville,

but in reality "CM is simply a new entity from the Deja Vu-related individuals who have operated

Theatre X illegally for years—Douglas Marks of Midwest Entertainment Ventures, Inc. and Jason

Mohney of AMW Investments, Inc." (Filing No. 72 at 1). The Town contends that this action, is

CM's "attempt to evade an injunction and a one-year bar from operating an adult business." Id.

The Town seeks dismissal of CM's Complaint under both Rules 12(b)(1) and 12(b)(6).

Specifically, the Town argues this Court should abstain under Younger because the underlying

state court proceeding qualifies as a (1) quasi-criminal civil enforcement proceeding, (2) the state

court proceeding is judicial in nature and ongoing, (3) regulating the use of land in Indiana

12 Case No. 10C04-1905-PL-00051, "Town of Clarksville's Motion to Amend Counterclaim to Add Parties," dated

January 9, 2022, "Order Granting Motion to Amend Counterclaims," dated January 11, 2022, and "First Amended

Counterclaims" dated January 18, 2022. Since being added as a party in January 2022, CM has filed motions for

sanctions, moved to quash the Town's subpoenas, filed an application to change judge, filed a motion to extend time

to respond to discovery, and its attorneys have appeared. The Circuit Court recently entered an order granting the

Town's motion to compel discovery from CM.

constitutes an important state interest, (4) CM can assert its constitutional grievances in the state

court proceeding, and (5) there are no 'extraordinary circumstances' that would preclude

abstention. Also, in light of the parallel state court proceeding, the Town asks this Court to abstain

under Colorado River. Alternatively, the Town requests that this Court stay the federal action

until the state court proceeding is resolved.

CM Categorically denies the Town's accusations that it is s related to the previous operator

of Theatre X, Midwest or its landlord AMW. (Filing No. 75-1). CM does not dispute that the

underlying state court proceeding is a 'quasi-criminal civil enforcement proceeding' nor that

regulating the use of land in Indiana constitute an important state interest. Instead, CM argues that

(1) the state court proceeding is not ongoing for purposes of Younger, (2) CM cannot raise its

constitutional grievances in the state court proceeding, and (3) 'extraordinary circumstances' weigh

against abstaining under Younger. CM also asserts that the state court proceeding is not

sufficiently parallel to trigger abstention under Colorado River.

The Court concludes that abstention through dismissal of this action is appropriate.

A. Whether the Younger Abstention Doctrine Applies

CM argues that Younger is inapplicable and, even if it were, there are extraordinary

circumstances—namely bad faith and harassment—which weigh against abstention (Filing No.

78). The Court disagrees with CM on both points.

While federal courts have a "virtually unflagging" obligation to hear and decide cases

within its jurisdiction, Sprint Comms., Inc. v. Jacobs, 571 U.S. 69, 78 (2013), principles of comity

and federalism dictate that a federal court will not intervene in ongoing state court proceedings

absent certain extraordinary circumstances. Middlesex Cnty Ethics Comm. v. Garden State Bar

Ass'n, 457 U.S. 423, 431 (1982) (citing Younger, 401 U.S. at 37). Limiting the intervention of the

federal courts preserves the "institutional autonomy of state judicial processes by limiting attempts

by litigants to obtain federal declaratory or injunctive relief on constitutional grounds where such

relief may interfere with certain types of ongoing state proceedings in which they are involved,

and which provide an adequate opportunity to raise the constitutional claims." Forty One News,

Inc. v. County of Lake, 491 F.3d 662, 665 (7th Cir. 2007) (quoting Laurence H. Tribe, American

Constitutional Law § 3–28, at 569–70 (3d ed. 2000)).

The Younger abstention analysis proceeds in two sequential stages. The first stage

examines whether the underlying state court proceeding falls within one of three "exceptional"

Younger categories of cases: (1) state criminal prosecutions, (2) quasi-criminal civil enforcement

proceedings, or (3) "civil proceedings involving certain orders ... uniquely in furtherance of the

state courts' ability to perform their judicial functions." Sprint, 571 U.S. at 78. The second stage

examines the Middlesex factors, which requires federal courts to abstain from interference in

ongoing state proceedings when they are "(1) judicial in nature, (2) implicate important state

interests, and (3) offer an adequate opportunity for review of constitutional claims," (4) so long as

no extraordinary circumstances [—like bad faith or harassment—] exist which would make

abstention inappropriate." Green v. Benden, 281 F.3d 661, 666 (7th Cir. 2002) (citing Middlesex,

457 U.S. at 436–37); see also FreeEats.com v. Indiana, 502 F.3d 590, 596-97 (7th Cir. 2007).

1. The Younger Exceptional Category

The Town argues that the state court proceeding falls into the second exceptional Younger

category—quasi-criminal civil enforcement proceeding—and CM has not challenged this

contention nor argued that the proceeding does not fit into any of the other exceptional Younger

categories. See Forty One News, 491 F.3d at 665 (concluding "[t]here is no question that the quasi-

criminal prosecution of the violation of an ordinance is an adequate state proceeding for the

purposes of Younger: we have held so in the past..."); see also Ciotti v. County of Cook, 712 F.2d

312, 313 (7th Cir. 1983) (finding that a nuisance action brought by a county against an adult

bookstore for violating certain zoning ordinances constituted a quasi-criminal civil enforcement

action). This Court agrees that the Town's license revocation proceeding qualifies as a quasi-

criminal civil enforcement action under Younger. The Court now turns to the Middlesex factors.

2. Applying the Middlesex Factors

CM focuses its attention on the first and third prongs of the Middlesex analysis.

Specifically, CM argues that the state court proceeding is not ongoing, does not offer an adequate

opportunity for review of constitutional claims, and extraordinary circumstances exist to preclude

abstention under Younger. The Town argues persuasively that an application of the Middlesex

factors weighs in favor of abstention, and no extraordinary circumstance exist.

a. The First Middlesex Factor

CM concedes, and the Court agrees, that the state court proceeding is judicial (Filing No.

67-5; Filing No. 67-6). See Ohio Civil Rights Comm'n v. Dayton Christian Schools, Inc., 477 U.S.

619, 627 (1986); see also Gonzalez v. Waterfront Comm'n of N.Y. Harbor, 755 F.3d 176, 183 (3d

Cir. 2014) (finding that the "hearing was unquestionably judicial in nature as it afforded [the

appellant] with an opportunity to be heard, the right to be represented by counsel, and the right to

present evidence and witnesses on his behalf."). CM mainly relies on New Albany DVD, LLC v.

City of New Albany, Inc., and the Town relies on Huffman v. Pursue, Ltd., to support its respective

arguments on whether the state court proceeding is ongoing. 420 U.S. 592 (1975); 350 F.Supp.2d

789 (S.D. Ind. 2004).

In New Albany DVD, the district court determined that Younger did not apply because the

state court proceeding was not ongoing and that extraordinary circumstances were present to

prevent the court from abstaining. 350 F. Supp. 2d at 793-96. New Albany DVD initially filed a

federal action challenging the constitutionality of a city's refusal to conduct a final inspection,

placing a six-month moratorium on new adult businesses and amending the adult zoning

ordinances to forbid any "sexually oriented business" at the site. Id. at 791. The city then filed a

state court declaratory action; the business then removed that claim to federal court, and, in

deciding not to abstain, the district court found that the state court proceeding was not ongoing

because it was filed later in time to the federal action. Id. at 793. The court reasoned that the

federal action had passed beyond the "embryonic stage" since the court had already ruled on the

motion for preliminary injunction. Id. The court also found that the

facts of the case [were] susceptible to an inference of bad faith prosecution on the

part of the City, which inference, together with our view that the first element of

the Younger doctrine has not been fully satisfied, leads us to conclude that

abstention in the federal lawsuit is not appropriate.

Id. at 796.

In Huffman, the Supreme Court determined that Younger may apply to a subsequent

operator of an adult business. 420 U.S. at 611. There, a city initially filed a state court nuisance

action against the original operator of an adult theater. Id. at 592. However, after the state court

announced its ruling, but before it entered the closure order, a new operator took over the leasehold

interest. Id. Rather than appealing that judgment within the state court system, the new operator

filed suit in the district court alleging the nuisance statute violated the First Amendment. Id. at

598–99. The district court agreed, permanently enjoining a portion of the state court's judgment.

Id. at 599. On appeal, the Supreme Court found that the district court should have applied the

Younger doctrine in determining whether to proceed to the merits and should not have entertained

the action unless the current operator established that early intervention was justified under the

exceptions recognized in Younger. Id. at 611.

Three months after Huffman, the Supreme Court decided Hicks v. Miranda by holding that

Younger barred the claims of two theater owners who sought to enjoin enforcement of a state

obscenity statute. 422 U.S. 332, 348–49 (1975). Although no state proceedings were pending

against the theater owners at the time the federal complaint was filed, criminal charges had been

filed against two employees of the theater, and authorities had seized four copies of the allegedly

obscene film. Id. The court concluded that Younger could not be avoided under these

circumstances because the interests of the theater owners and the employees "were intertwined [,]

and ... the federal action sought to interfere with the pending state prosecution." Id.

Six days later, the Supreme Court reaffirmed that same principle in Doran v. Salem Inn,

Inc., by reiterating that there may be some circumstances where plaintiffs "are so closely related"

that abstention will be warranted although not all plaintiffs are subject to the pending state

proceeding. 422 U.S. 922, 928 (1975). Doran involved a suit by three bar owners who sought to

enjoin enforcement of a local ordinance prohibiting topless dancing. Id. at 924. Although all three

bar owners had similar business interests and were represented by the same counsel, only one of

the owners had been criminally prosecuted in state court. Id. at 928–30. Because the plaintiffs

were otherwise "unrelated in terms of ownership, control, and management," the court declined to

apply Younger to the two bar owners who had not been subject to state prosecution. Id. at 928–

29.

While both Hicks and Doran arguably focus on the fact of joint ownership and control,

neither decision limits the application of Younger to cases where the parties are financially related

or linked by mutual management. Spargo v. New York State Com'n on Judicial Conduct, 351 F.3d

65 (2d Cir. 2003). Courts have consistently recognized that while "[c]ongruence of interests is not

enough" by itself to warrant abstention, where the plaintiffs' interests are so inextricably

intertwined that "direct interference with the state court proceeding is inevitable," Younger may

extend to bar the claims of plaintiffs who are not party to the pending state proceeding. See, e.g.,

Green v. City of Tucson, 255 F.3d 1086, 1100 (9th Cir. 2001) (en banc); see also Cedar Rapids

Cellular Tel., L.P., v. Miller, 280 F.3d 874, 881–82 (8th Cir. 2002) (noting that for Younger

purposes, "the parties in federal and state court need not be identical where the interests of the

parties seeking relief in federal court are closely related to those of [the] parties in pending state

proceedings and where the federal action seeks to interfere with pending state proceedings").

Here, while the facts of this case do not lend itself to a typical Younger analysis, this Court

concludes that abstention is warranted when considering the principles of "equity, comity, and

federalism." See Courthouse News Service v. Brown, 908 F.3d 1063, 1072-74 (7th Cir. 2018). The

following sequence of events are relevant to the Court's determination of whether the state court

proceeding is ongoing: (1) in 2018, the Town commenced license revocation proceedings against

the previous operator—Midwest—of Theatre X; (2) Midwest then appealed its ABL revocation;

(3) the Town then filed counterclaims against the Counter Defendants—AMW and Midwest—in

Circuit Court; (4) in 2019 the Circuit Court then enjoined the Counter Defendants from operating

Theatre X and reaffirmed Midwest's ABL revocation; (5) Midwest's voluntarily dismissed its

claims in Circuit Court; (6) CM then buys Midwest's assets, begins leasing Theatre X from AMW,

and filed this federal action; and (7) The Town added CM as a party in the Circuit Court case.

(Filing No. 67-5; Filing No. 67-6; Filing No. 67-8; Filing No. 67-11; Filing No. 67-12.)

Like Huffman, CM began leasing and operating Theatre X after the Town commenced the

state court proceedings against the Counter Defendants. Similar to Hicks, there is a close enough

relationship between the Counter Defendants, namely AMW and CM. Like Hicks, CM's interests,

as the lessee of Theatre X, and as an adult business operating on the Premises are sufficiently

intertwined with those of the AMW—the owner of Theatre X—who has always leased the

Premises to adult businesses (Filing No. 1; Filing No. 67-14). Both the federal action and the state

court action implicate Theatre X. Id. Finally, the federal action was "sought to interfere with the

pending state prosecution" because the state court proceeding was filed before the federal action,

the Town's counterclaims against the Counter Defendants remained pending at the time CM bought

Midwest's assets and began leasing Theatre X, and the Circuit Court entered a preliminary

injunction against the Counter Defendants with respect to operating Theatre X prior to CM filing

this federal action. Id.; see Hicks, 422 U.S. at 348–49. The Court concludes that CM's interests

are inextricably intertwined with the interests of the Counter Defendants with respect to Theatre

X and, therefore, Younger applies.

CM goes on to argue that the Court should not abstain under Younger because the federal

case has progressed beyond the embryonic stage. (Filing No. 78 at 6.) Even if the federal litigation

predates the state court proceeding, the Court still concludes that the state court proceeding is

ongoing for Younger purposes. In Ciotti v. County of Cook, the Supreme Court held that federal

proceedings were still in an embryonic stage, and Younger applied, because no proceedings of

substance had taken place such as "depositions taken, discovery completed, or briefs filed on the

issues." 712 F.2d 312, 314 (7th Cir. 1983); but see Hawaii Housing Auth. v. Midkiff, 467 U.S.

229, 238 (1984) (concluding that the issuance of a preliminary injunction by a federal court

constituted a proceeding of substance).

Here, this federal case is at an embryonic stage because no such proceedings, as described

in Ciotti, have occurred. CM's federal action was filed three years after the state court proceeding,

and the only proceeding that has occurred here is limited to CM's request for emergency relief on

the issuance of a temporary ABL and ABEL (Filing No. 25; Filing No. 43). Unlike New Albany

DVD, the current owner and prior operator of Theatre X were subject to numerous adverse Circuit

Court rulings for violating city ordinances, including operating on a suspended license, and were

enjoined from operating Theatre X. (Filing No. 67-8; Filing No. 19-2 at 10.) The Court has not

addressed the merits of CM's constitutional challenge, and no preliminary injunction has been

issued. The Court, drawing all reasonable inferences in favor of CM, cannot find that the federal

case is beyond its embryonic stage, thus, the Court concludes that the state court proceeding is

ongoing for purposes of Younger.

The Court is also concerned that this federal case may create the risk of friction and

conflicting rulings with the Circuit Court in connection with Theatre X. The Circuit Court made

it clear that, "the Town's [counter] claims against [AMW and Midwest] remain pending for

adjudication." A review of the Circuit Court's docket, as of the date CM began leasing Theatre X

and filed suit in this Court, reflects that the Town's counterclaims against the Counter Defendants

were still pending. Since being added as a party in January 2022, CM has filed several motions

with the Circuit Court. Notably, on October 4, 2022, the Circuit Court entered an order granting

the Town's motion to compel discovery from CM and to allow the Town's suit against them to

continue. After considering the principles of "equity, comity, and federalism," the Court finds that

the state court proceeding was and still is ongoing.

b. The Second Middlesex Factor

CM concedes, and this Court agrees, that regulating local land use and zoning issues are

"important state interests" for Younger purposes. Discovery House, Inc. v. Consolidated City of

Indianapolis, 970 F.Supp. 655, 659 (S.D. Ind. 1997).

c. The Third Middlesex Factor

CM contends it cannot raise its constitutional claim in the state court proceeding and that,

[b]ut for the progress of this action, CM would have had no opportunity to open

and operate and there would be no basis for CM to advance its claims that it has

established a lawful nonconforming use or, for that matter, for the Town to claim

CM somehow operated in violation of its ordinances.

(Filing No. 78 at 7.) The Court disagrees with CM.

The Circuit Court is one of general jurisdiction and has authority to adjudicate CM's

constitutional claims against the Town. I.C. § 33-28-1-2; Pennzoil Co. v. Texaco Inc., 481 U.S. 1,

15 (1987). "Minimal respect for the state processes, of course, precludes any presumption that the

state courts will not safeguard federal constitutional rights." See 31 Foster Children v. Bush, 329

F.3d 1255, 1279 (11th Cir. 2003) (quoting Middlesex, 457 U.S. at 431). Thus, a federal court

"should assume that state procedures will afford an adequate remedy, in the absence of

unambiguous authority to the contrary." Mapes v. Indiana, 2020 WL 1987260, *2 (S.D. Ind. Apr.

27, 2020) (quoting Pennzoil Co. v. Texaco Inc., 481 U.S. at 15).

Here, the Circuit Court is fully competent to resolve CM's constitutional claims. CM does

not claim that state law clearly bars his constitutional claims, Middlesex, 457 U.S. at 432, nor does

it identify any viable legal barrier to raising the First Amendment claims in the Circuit Court

proceedings. The Court is further persuaded that the Circuit Court is the best forum to resolve this

matter. The Town's state court proceeding regarding Theatre X began in 2019. The Clarksville

Indiana Town Council, state trial court and state appellate courts have all invested considerable

resources in the state court proceeding concerning Theatre X. Most notably, on October 4, 2022,

the Circuit Court entered an order granting the Town's motion to compel discovery from CM and

has set a hearing for January 19, 2023, on the Town's motion for default against CM. This Court

is persuaded that this federal case may not only create the risk of friction and conflicting rulings,

but also rejects the vital principle that "state courts are co-equal to the federal courts and are fully

capable of respecting and protecting" First Amendment rights. City of Indianapolis & Marion

Cnty. v. H-Indy, LLC, 166 N.E.3d 347 (Ind. Ct. App. 2021) (holding city violated store's

constitutional rights in blocking store opening).

As such, the Court concludes that Younger applies and will now determine whether CM

has met its burden of proof regarding the alleged Younger exception.

d. The Younger Exception

CM claims the state court proceeding was brought in bad faith or to further harass CM with

the goal of forcing the business to close (Filing No. 78 at 6). The Court again disagrees with CM.

An exception to Younger applies when "the state proceeding is motivated by a desire to

harass or is conducted in bad faith." Huffman, 420 U.S. at 611. This exception exists because the

harms posed by bad faith prosecution are both immediate and great, and defending against the state

proceedings would not be an adequate remedy at law because it would not ensure protection of the

plaintiff's federal constitutional rights. Collins v. County of Kendall, Illinois, 807 F.2d 95, 98 (7th

Cir. 1986) (affirming dismissal under Younger where an adult bookstore and its employees claimed

a pattern of harassment based on more than 30 obscenity prosecutions, a civil nuisance suit, and

searches and seizures of their bookstore); see also Grandco Corp. v. Rochford, 536 F.2d 197, 203

(7th Cir. 1976) (concluding that evidence of multiple prosecutions is not sufficient by itself to

support the necessary inference of bad faith and harassment). "The Younger rule, as applied in

Hicks, […] requires more than a mere allegation and more than a 'conclusory' finding to bring a

case within the harassment exception." Grandco Corp., 536 F.2d at 203. This specific evidence

must show that state prosecution "was brought in bad faith for the purpose of retaliating for or

deterring the exercise of constitutionally protected rights." Collins, 807 F.2d at 99.

Here, CM's claim of bad faith and harassment is not sufficiently supported to undercut the

case for Younger abstention. CM claims the following events evidence the Town's bad faith and

harassment of CM: (1) refusing to issue CM a temporary ABL, (2) proposing changes to certain

zoning ordinances in response to CM's application, (3) filing a state court proceeding in an effort

to have the present suit dismissed, and (4) naming CM’s manager, Michael Marie Sanchez, as a

defendant (Filing No. 78 at 8). Viewing the allegations in CM's Complaint in the light most

favorable to CM, as the Court must at this stage, the Court nonetheless concludes that CM's

Complaint nor its evidence demonstrate that the state court proceeding was brought against CM to

retaliate for or to deter the exercise of its constitutional rights. On the contrary, it is consistent

with a good-faith belief on the part of the Town that CM was created to evade certain adverse

rulings, including a preliminary injunction, that was issued by the Circuit Court against the

previous operator, Midwest, and owner, AMW, of Theatre X. Midwest Entm’t Ventures, Inc. v.

Town of Clarksville, 158 N.E.3d 787 (Ind. Ct. App. 2020) (upholding the Circuit Court's

preliminary injunction against the Counter Defendants). The Town is simply trying to proceed

with its protracted litigation concerning the operation of Theatre X. Regardless, as already

discussed, CM is not foreclosed from raising the federal claims in the state court proceeding.

For these reasons, the Court concludes that CM has failed to show that extraordinary

circumstances exist to prevent abstention. The Court now turns to whether dismissal rather than

staying these proceedings is appropriate.

B. Whether to Dismiss or Stay the Federal Action

Finally, upon finding that the Court should abstain, "we are only left with the issue of how

to abstain from these claims; by dismissing or merely staying them." Majors v. Engelbrecht, 149

F.3d 709, 714 (7th Cir. 1998). The pivotal question in making this determination is whether any

of the relief sought by the plaintiff in its federal action is unavailable in the state action. Id.; Green

v. Benden, 281 F.3d 661, 667 (7th Cir. 2002) ("A stay is appropriate when a plaintiff is foreclosed

from bringing his damages claims in the state proceeding."). In Deakins v. Monaghan, the

Supreme Court determined that when Younger abstention is required, "the District Court has no

discretion to dismiss rather than to stay claims for monetary relief that cannot be redressed in the

state proceeding." Simpson v. Rowan, 73 F.3d 134, 137 (7th Cir. 1995) (quoting 484 U.S. 193,

202 n. 6 (1988)); see, e.g., Gakuba v. O'Brien, 711 F.3d 751, 753 (7th Cir. 2013) (staying a § 1983

case rather than dismissing it because monetary relief was unavailable to a plaintiff in his defense

of ongoing criminal charges). Here, the state court proceeding is not a criminal matter, and CM

has not asserted that the Circuit Court is incapable of providing any of the forms of relief which it

has requested in the federal action. The Circuit Court clearly has the power to grant CM a

temporary restraining order, a preliminary injunction, award monetary damages, and determine

whether the Town's actions are constitutional. Consequently, the Court concludes that dismissal,

rather than staying CM's federal action, is appropriate here.

Because the Younger doctrine is dispositive of this action, the Court need not determine

applicability of the Colorado River abstention doctrine, and because CM's claims are dismissed

on jurisdictional grounds, the Court need not consider the Town's Rule 12(b)(6) motion.

IV. CONCLUSION

For the reasons stated above, the Town's Motion to Dismiss (Filing No. 71) GRANTED.

Plaintiff Clarksville Ministries, LLC's Complaint is dismissed without prejudice to re-raising its

claims before the appropriate state court.

A final judgment will enter in a separate entry.

SO ORDERED.

Date: _ 1/17/2023 ( Ye a \ Jabhon neat}

Hon. Tan¥a Walton Pratt, Chief Judge

United States District Court

Southern District of Indiana

20

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