Case Title: Kautza v. City of Cody

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1991-06-07T00:00:00Z

Document:
Kautza v. City of Cody1991 WY 86812 P.2d 143Case Number: 90-248Decided: 06/07/1991Supreme Court of Wyoming
MICHAEL KAUTZA AND KURT 
BABCOCK, CO-OWNERS OF PUTT 'N AROUND MINIATURE GOLF COURSE, APPELLANTS 
(PLAINTIFFS),

v.

CITY OF CODY; MAYOR DORSE 
MILLER, JR.; GLENN LIVINGSTON, HARRY McNEIL, RODNEY MASON, RAY MENTOCK, WILLARD 
MINSKE AND RICK WILDER, AS COUNCILMEN AND INDIVIDUALLY; AND COUNCILMEN LOWELL 
RAY ANDERSON, GLENN LIVINGSTON, RODNEY MASON, RAY MENTOCK, WILLARD MINSKE, 
GORDON WILLFORD, RICHARD ROEMMICH AND STEVE HOLLINGSWORTH, INDIVIDUALLY, AND 
DOES 1-100, APPELLEES (DEFENDANTS).

Appeal from the District 
Court, ParkCounty, H. Hunter Patrick, 
J.

Donna S. Sears, argued, 
Sears Law Offices, Lander, for appellants.

Jeffrey A. Donnell, 
argued, Worland, for appellees.

Richard Roemmich, pro 
se.

Before URBIGKIT, C.J., 
and THOMAS, CARDINE, MACY and GOLDEN, JJ.

CARDINE, 
Justice.

[¶1.]     During the year 1976, 
the City of Cody, Wyoming constructed a miniature golf course 
that it thereafter operated through a lessee. In 1987, 11 years later, 
appellants, Michael Kautza and Kurt Babcock, constructed and began operating a 
second miniature golf course in Cody. Appellants then claimed the City competed 
unfairly with them. They commenced a lawsuit against the City and others, which 
was dismissed pursuant to W.R.C.P. 12(b)(6) for failure to state a claim upon 
which relief could be granted.

[¶2.]     We 
affirm.

[¶3.]     Appellants raise the 
following issues:

"I. Did the trial court 
err in dismissing appellants' complaint with prejudice in regards to the lease 
contractual service agreement between the City of Cody and Richard 
Roemmich?

"II. Did the trial court 
err in dismissing appellants' complaint with prejudice since the City is subject 
to the provisions of W.S. Section 40-4-107 for engaging in unfair 
competition?

"III. Did the trial court 
err in dismissing appellants' complaint with prejudice and not preserving 
appellants' federal claims under 42 U.S.C. Section 1983?"

[¶4.]     For purposes of review 
of the order of dismissal, we accept the facts alleged in the complaint as true. 
Gates v. Richardson, 719 P.2d 193, 194 
(Wyo. 1986). 
Our statement of fact comes directly from the appellants' 
complaint.

[¶5.]     The City of Cody miniature golf course 
has been in existence since 1976. The course had been leased to an operator on a 
year-to-year basis until 1987 when the City entered into a seven-year lease with 
appellee Richard Roemmich. Rent under the 1987 lease was 20 percent of the gross 
income from the miniature golf course. In 1990, the City and Roemmich made a new 
lease for a four-year term that required Roemmich to pay 45.5 percent of the 
gross income as rent. The new lease was entered into because the City had 
improved and rebuilt the miniature golf course. Under both leases, the City paid 
utility expenses. In 1987 and 1988, 18 holes of miniature golf at the City 
course cost $1.00. The fee increased to $1.50 in 1989.

[¶6.]     Appellants opened the 
Putt 'N Around Miniature Golf Course in Cody in June of 1987. Putt 'N Around 
initially charged $3.00 to play 18 holes of golf, but in its first year of 
operation lowered the fee to $2.50 and then to $2.00. In 1988, the fee was 
increased to $2.50 for 18 holes; and in 1989, the charge was $2.50 to play 
miniature golf all day.

[¶7.]     Kautza complained to 
the Cody city council on December 5, 1988, that the City charged "abnormally low 
rates" to play on the city course. Kautza filed suit against the City on June 4, 
1990, naming the City, its elected officials, the city parks director, and the 
lessee of the golf course as defendants. The ten counts contained in the Kautza 
complaint alleged that defendants had violated the plaintiff's constitutional 
due process rights under the United States and Wyoming constitutions; that 
defendants caused the plaintiffs severe anguish and emotional distress; 
defendants engaged in unfair trade practices in violation of W.S. 40-4-107; that 
defendants had formed a monopoly; that defendants entered into a conspiracy to 
restrain trade; that defendants unfairly operated the miniature golf course at a 
loss to the plaintiff's detriment; that defendants denied the plaintiffs equal 
protection; and that defendants had violated W.S. 15-9-101 to 15-9-137 
(concerning urban renewal), W.S. 15-6-101 to 15-6-609 (concerning local 
improvements), and W.S. 15-1-701 to 15-1-710 (concerning public 
improvements).

[¶8.]     Defendants filed a 
motion to dismiss the complaint upon the grounds that it failed to state a claim 
upon which relief could be granted pursuant to W.R.C.P. 12(b)(6). The trial 
court granted the motion. In a decision letter, the court found that the City 
could lawfully operate a miniature golf course and owed appellants no duty not 
to compete.

[¶9.]     Dismissal is a drastic 
remedy and should be granted sparingly. Paravecchio v. MemorialHospital, 742 P.2d 1276, 1283 (Wyo. 1987), cert. denied 
485 U.S. 915, 108 S. Ct. 1088, 99 L. Ed. 2d 249 (1988). We will sustain a dismissal 
pursuant to W.R.C.P. 12(b)(6) only if the complaint shows on its face that the 
plaintiff is not entitled to relief. 742 P.2d  at 1283. In reviewing the motion, 
we consider the facts alleged in the complaint as admitted and view them in the 
light most favorable to plaintiff. Id.

[¶10.]  Although the appellants in their 
complaint alleged their cause of action in ten counts, the dismissal is 
challenged in their brief on three issues, and we address those issues in the 
order presented.

[¶11.]  The first issue concerns the length of 
the contract between the City and Roemmich. Appellants take a two-sided approach 
to their contract validity issue. They look first to the 
governmental-proprietary function distinction in arguing the invalidity of the 
contract; then, alternatively, they rely upon the rule for determining the 
voidability of governmental long-term contracts we adopted in Mariano & 
Associates v. Board of Co. Comm'rs, 737 P.2d 323 (Wyo. 
1987).

[¶12.]  This court has recognized that 
governmental entities perform both governmental and proprietary functions. 
Biscar v. University of Wyoming Board of Trustees, 605 P.2d 374, 376 
(Wyo. 1980). A 
governmental function is one

"[w]here the activity has 
been undertaken at the direction of the legislature - or involves legislative or 
judicial discretion * * *." Id.

Alternatively, a 
propriety function is one

"[w]here the activity has 
historically been carried on by a private corporation, or * * * it generates 
fees." Id. 
(citations omitted).

The distinction between 
these types of functions was discussed in Biscar for the purpose of determining 
whether the university trustees had immunity in a suit over a teacher's 
contract. Id. 
at 377.

[¶13.]  We have never applied the distinction 
between governmental and proprietary functions to determine the validity of a 
governmental contract that extended beyond the term of the governing body that 
entered into the contract. See Note, Contract Law - Local Governments Can Void 
Long Term Contracts, 23 Land & Water L. Rev. 567, 569-71 (1988). Courts 
relying upon this distinction generally enforce those contracts involving 
proprietary functions but declare void those contracts concerning governmental 
functions that extend beyond a term of the governing body. Id. at 569, n. 22. The 
appellants argue that the lease-contract for the miniature golf course is 
proprietary and, thus, the contract void. Appellants are simply incorrect in 
their claim. If the contract involves proprietary functions, it is under the law 
valid and enforceable. Thus, if we accept appellants' contention that this is a 
proprietary contract, their reliance on the governmental-proprietary distinction 
is misplaced and does nothing to advance their cause.

[¶14.]  However, in Mariano, we found "no 
reasoned justification for the governmental-proprietary differential as the 
dispositive test." 737 P.2d  at 327. Instead, we adopted the following 
rule:

"[A]n agreement extending 
beyond the term of the contracting authority * * * may be voidable by the 
government or void upon attack by a third party if, under the facts and 
circumstances, the agreement is not reasonably necessary or of a definable 
advantage to the city or governmental body." 737 P.2d  at 
331-32.

The burden of proof to 
show the lack of necessity or advantage lies with the party attacking the 
validity of the contract. 737 P.2d  at 330.

[¶15.]  Appellants' entire complaint lacks any 
allegation that the lease-contract is unnecessary, nor does it contain an 
allegation that it is not of advantage to the City. The most we can discern from 
the allegations in the complaint is appellants' contention that the contract is 
detrimental to them. That contention, however, is insufficient to mount a 
third-party challenge to the validity of the contract. Thus, appellants failed 
to state a claim for which relief could be granted on this 
issue.

[¶16.]  In their second issue, appellants contend 
that the City of Cody was subject to the provisions of the W.S. 
40-4-107. That statute states in part:

"(a) It shall be unlawful 
for any person, partnership, firm, corporation, joint-stock company, or other 
association engaged in business within this state, to sell, offer for sale 
or advertise for sale any article or product, at less than the cost thereof to 
such vendor, or give, offer to give or advertise the intent to give away any 
article or product for the purpose of injuring competitors and destroying 
competition." (emphasis added)

The City does not fit 
within the above-named entities listed in the statute. This statute, therefore, 
has no application to the City of Cody.

[¶17.]  It is within the powers granted the City 
of Cody to 
establish and regulate the operation of parks. W.S. 15-1-103(xxii). Included 
within this power is the discretion to lease its recreational facilities to 
private parties, "provided the public is not excluded and the public use * * * 
is promoted by the arrangement." Lassiter v. Town of Oxford, 234 F.2d 217, 218 
(4th Cir. 1956). Cf. Simkins v. City of Greensboro, 149 F. Supp. 562 (D.C.N.C.), 
aff'd 246 F.2d 425 (4th Cir. 1957) (City may not lease publicly-owned golf 
course to private club to operate for the purpose of denying blacks the right to 
use the golf course). See also 10 E. McQuillin, The Law of Municipal 
Corporations § 28.53 (3d ed. 1990). There is no claim here that the City lease 
involved discriminatory or other questionable practices. It appears only that 
the City owns and leases its miniature golf course for the benefit of its 
citizens, and by doing so it performs a legitimate municipal function. We find 
no other facts alleged to conclude that the City is doing other than that 
specifically authorized by statute in its ownership and leasing of a golf 
course. Municipal golf courses are too common and accepted for us to so hold 
otherwise.

[¶18.]  The final issue appellants raise involves 
the dismissal of their claims of denial of their constitutional rights pursuant 
to 42 U.S.C. § 1983. Their complaint alleges that they were denied their right 
to due process because the City competed with their golf course, diverting 
profits from them, and that they were denied equal 
protection.

[¶19.]  Under the 14th Amendment of the 
United 
States Constitution and Art. 1, § 6 of the 
Wyoming Constitution, the state cannot deprive a citizen of his property without 
due process of law. The "property" which appellants alleged as being taken were 
possible profits to be realized from the operation of their miniature golf 
course. The complaint alleges that appellants' expectancy of a profit was 
defeated by the operation of a similar venture under control of the City. The 
hope to earn a profit amounts to nothing more than a "mere unilateral 
expectation" and does not rise to a property interest to which due process 
rights attach. Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 161, 101 S. Ct. 446, 451, 66 L. Ed. 2d 358 (1980). See also Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1055, 104 S. Ct. 2862, 2874, 
81 L. Ed. 2d 815 (1984) (distinguishing between property interest in a "reasonable 
investment-backed expectation" and "mere unilateral expectation"). An interest 
in avoiding competition also is not a property interest to which due process 
rights attach. Izaak Walton League v. Marsh, 655 F.2d 346, 361, 67 A.L.R.Fed. 1 
(D.C. Cir. 1981). It is not stated in the complaint whether the appellants' 
course continued to operate after the complaint was filed nor that appellants 
lost any other property - real, personal or intangible - connected with the golf 
course. Appellants' complaint failed to allege that the City deprived them of a 
protected property interest.

[¶20.]  We also fail to find any equal protection 
claim sufficiently stated in the appellants' complaint. An equal protection 
violation requires a showing that the state has made a classification that 
treats similarly situated people differently and that the classification is not 
rationally related to a legitimate state end. Clements v. Fashing, 457 U.S. 957, 963, 102 S. Ct. 2836, 2843, 
73 L. Ed. 2d 508 (1982). When a "suspect class" or a "fundamental right" is 
involved in the classification, we apply a strict scrutiny test which requires a 
showing that the classification is necessary to achieve a compelling state 
interest. Washakie Co. School District No. 1 v. Herschler, 606 P.2d 310, 333 
(Wyo. 1980), cert. denied 449 U.S. 824, 101 S. Ct. 86, 66 L. Ed. 2d 28 (1980); Clements, 457 U.S.  at 963, 102 S. Ct.  at 2843. Appellants' complaint makes a blanket statement that their equal 
protection rights were denied. The complaint fails to allege any type of 
classification, suspect or otherwise, nor any type of fundamental right involved 
in the City's operation of the golf course. 

[¶21.]  Affirmed.