IN THE COURT OF APPEALS OF IOWA

No. 22-0473

Filed February 8, 2023

LIME LOUNGE, LLC,

Plaintiff-Appellant,

vs.

CITY OF DES MOINES, IOWA,

Defendant-Appellee.

________________________________________________________________

Appeal from the Iowa District Court for Polk County, Dustria A. Relph, 

Judge.

A business appeals a district court’s denial of its motion for declaratory 

judgment, asserting an irreconcilable conflict between state law and a local 

ordinance. AFFIRMED. 

Cornelius S. Qualley and George Qualley IV of Qualley Law, P.L.C., Des 

Moines, for appellant.

John O. Haraldson, Assistant City Attorney for City of Des Moines, for 

appellee.

Considered by Vaitheswaran, P.J., and Greer and Schumacher, JJ.
2

SCHUMACHER, Judge.

Lime Lounge, LLC (Lime Lounge) appeals a district court ruling that denied

its request for a permanent injunction and dissolved a temporary injunction that 

restrained the City of Des Moines (Des Moines) from seeking to revoke Lime 

Lounge’s state liquor license. Lime Lounge contends the basis for the 

revocation—Lime Lounge’s failure to maintain their conditional use permit (CUP) 

as required by Des Moines’s municipal code—is preempted by state law. Lime 

Lounge also claims the ordinance violates the equal protection clause of the state 

and federal constitutions. Further, they assert the CUP constitutes illegal spot 

zoning. We conclude the city’s ordinance related to the CUP is not preempted by 

state law. Additionally, the ordinance does not violate the equal protection clause, 

nor does it amount to illegal spot zoning. Accordingly, we affirm. 

I. Background Facts & Proceedings

Lime Lounge owns and operates a bar in the East Village of Des Moines, a 

mixed use neighborhood that contains commercial and residential buildings. The 

bar has operated since 2011, although not always in the current location. 

Generally, to sell liquor or other alcoholic beverages in this state, an 

establishment must comply with the provisions of Iowa Code chapter 123 (2019). 

In particular, the establishment must submit a liquor control license application to

the state Alcoholic Beverages Division (ABD). See Iowa Code §§ 123.2, .31. The 

code sets out the applicable fees for the applications. See id. § 123.36. Some of 

the fees, depending on the type of license, are remitted to the local authority—the 

city—in which the licensee operates. Id. § 123.36(8). Prior to the ABD receiving 

the application, however, the application must be filed with the local authority, 
3

which is directed to either approve or disapprove of the application. See id.

§ 123.32(2). The application is then forwarded to the ABD. See id. If approved 

by the local authority, the ABD performs the necessary investigation of the 

establishment and either affirms, modifies, or reverses the local authority’s 

decision. See id. § 123.32(6)(b). If the local authority disapproves of the 

application, the applicant has the ability to appeal the decision to the administrator 

of the ABD. See id. § 123.32(6)(a). 

To operate an establishment selling alcoholic beverages in Des Moines, an 

additional step is required. Pursuant to Des Moines Municipal Code section 134-

954, an establishment may be required to obtain a CUP in order to be approved 

by the city’s Zoning Board of Adjustment (ZBOA). That section places different 

requirements on establishments based on the type of business they are engaged 

in—i.e., whether they are restaurants, bars, gas stations, etc.—the zoning district 

they are in, and the type of alcoholic beverages they serve. Des Moines, Iowa, 

Municipal Code § 134-954 (2019). A CUP is only granted if the business meets 

certain requirements, including maintaining trash receptacles, compliance with 

noise ordinances, and avoiding other issues that might constitute a nuisance. Id.

§ 134-954(b), (c). The CUP requires an application—distinct from the state liquor 

license control application—which is either approved or rejected by the ZBOA. It 

also requires payment of certain fees. The city will not consider a liquor control 

license application until the CUP, if necessary, is approved. 

Lime Lounge obtained a CUP and had their liquor control license approved 

in 2011. In 2015, the ZBOA amended Lime Lounge’s CUP after multiple noise 

complaints. The ZBOA revoked Lime Lounge’s CUP in March 2016. Lime Lounge 
4

challenged the revocation. The revocation was upheld on appeal. Lime Lounge, 

LLC v. Zoning Bd. of Adjustment of Des Moines, No. 18-0155, 2019 WL 480197, 

at *11 (Iowa Ct. App. Feb. 6, 2019). 

On May 14, 2019, Des Moines filed a complaint with the ABD to revoke 

Lime Lounge’s state liquor license on the basis of the establishment’s failure to 

comply with local ordinances. See Iowa Code § 123.30(2). Lime Lounge filed a 

motion for declaratory judgment on June 3 and a motion for temporary injunction 

on July 29. The temporary injunction was granted October 4. Des Moines filed a 

motion to deny a permanent injunction and dismiss the suit on November 4, 2021. 

A bench trial was held. On January 20, 2022, the district court dissolved the 

temporary injunction, denied a permanent injunction, and dismissed the suit. Lime 

Lounge filed a motion to reconsider, which was denied. Lime Lounge now 

appeals.1 

II. Standard of Review

Whether Des Moines’s municipal code is preempted by state law or is illegal 

spot zoning are questions of law. As such, we review the court’s ruling for 

correction of errors of law. Pexa v. Auto Owners Ins. Co., 686 N.W.2d 150, 155 

(Iowa 2004). We review constitutional challenges de novo. State v. Mitchell, 757 

N.W.2d 431, 434 (Iowa 2008). 

III. Is the Municipal Code Preempted by Chapter 123?

Lime Lounge contends Des Moines Municipal Code section 134-954 and 

the accompanying CUP requirement is preempted by Iowa Code chapter 123. 

1 Lime Lounge also sought a motion to stay, which was denied by the supreme 

court on August 2, 2022.
5

They claim the ordinance is preempted because it requires an additional permit 

and fees in order to obtain a state liquor license, which is in conflict with Iowa Code 

section 123.37. Lime Lounge also asserts the ordinance usurps the State’s police 

power, see Iowa Code section 123.1, and violates the appeal procedure as 

established in state code. See Iowa Code §§ 123.32; .39. 

Under article III, section 38A of the Iowa Constitution, municipalities 

generally have the authority to regulate their own affairs so long as their actions 

are not inconsistent with state law. The provision is referred to as “home rule.” 

Davenport v. Seymour, 755 N.W.2d 533, 537-38 (Iowa 2008). When considering 

whether a local ordinance conflicts with state law, we utilize the doctrine of 

preemption. Id. at 538. “The general thrust of the preemption doctrine in the 

context of local affairs is that municipalities cannot act if the legislature has directed 

otherwise. When exercised, legislative power trumps the power of local 

authorities.” Id. While there are generally three types of preemption—express, 

conflict, and field—Lime Lounge explicitly limits their claim to express preemption. 

See id. at 538-39. Express preemption “applies where the legislature has 

specifically prohibited local action in a given area.” Id. at 538. We look to the 

“specific language used by the legislature” to determine whether express 

preemption applies. Id.

We first examine Des Moines’s requirement that certain establishments 

obtain a CUP and pay additional fees. Iowa Code section 123.37(1) provides, “The 

power to establish licenses and permits and levy taxes as imposed in this chapter 

is vested exclusively with the state. Unless specifically provided, a local authority 

shall not require the obtaining of a special license or permit for the sale of alcoholic 
6

beverages at any establishment . . . .” Lime Lounge suggests that provision 

expressly preempts the city’s actions—only the State can impose permits and 

taxes. 

We disagree. As a starting point, we do not believe section 123.37 applies 

to the city’s actions. Municipal Code section 134-954 is expressly related to “[t]he

use of land in all districts for the sale of alcoholic liquor, wine and beer.” (Emphasis 

added). As the district court noted, “The ordinance does not require a permit for 

the sale of alcohol, it requires a permit to use certain premises for the sale of 

alcohol.” It’s a land-use regulation, not a regulation on the sale of alcohol. Thus, 

the requirement to obtain a CUP is not a permit requirement “for the sale of 

alcoholic beverages.” 

Viewing the rest of chapter 123 supports this conclusion. See Doe v. State, 

943 N.W.2d 608, 610 (Iowa 2020) (explaining that we read statutory provisions in 

context rather than in isolation). When we do so, it is apparent the legislature 

provides Des Moines the authority to impose regulations so long as they do not 

impose taxes and permits on liquor licenses themselves or restrict the hours during 

which alcohol may be sold. For instance, section 123.39(2) provides: 

Local authorities may adopt ordinances or regulations for the location 

of the premises of liquor control licensed and retail wine or beer 

permitted establishments and local authorities may adopt 

ordinances, not in conflict with this chapter and that do not diminish 

the hours during which alcoholic beverages may be sold or 

consumed at retail, governing any other activities or matters which 

may affect the retail sale and consumption of alcoholic beverages 

and the health, welfare and morals of the community involved.

(Emphasis added.) That section expressly provides cities with the authority to 

regulate the physical premises of an establishment licensed by the State, and it 
7

provides cities with the authority to adopt regulations related to “activities or 

matters” that affect the sale of alcohol so long as the regulations protect the “health, 

welfare and morals of the community.” Iowa Code § 123.37(2). Municipal Code 

section 134-954 includes provisions related to trash collection, avoiding 

congestion and loitering, the location of doors facing certain streets, and noise 

limits. Preventing unsanitary conditions, ensuring the safety of patrons by limiting 

large groups and ensuring access to certain streets, and limiting unnecessary 

noise all relate to the health, welfare, and morals of the community. Thus, rather 

than being preempted by code, the legislature expressly provided cities with the 

authority to impose these types of regulations. 

Lime Lounge contends this case is controlled by Iowa Grocery Industry 

Association v. City of Des Moines, 712 N.W.2d 675 (Iowa 2006). That case 

involved a Des Moines ordinance that required an administrative fee on 

applications for state liquor licenses separate from the fee imposed by state law. 

Iowa Grocery, 712 N.W.2d at 677-78. Our supreme court found the ordinance was 

preempted by Iowa Code chapter 123. In particular, the court noted the ordinance 

conflicted with the existing fee structure and repayment system, undermined 

uniformity in the license applications process, and imposed additional 

requirements on applications. Id. at 680-82. 

While some of the policy rationale behind Iowa Grocery could apply to this 

case, we find the case inapposite. Fundamentally, the ordinances are distinct. In 

Iowa Grocery, the ordinance imposed a fee on license applications. Id. at 681. As 

such, the city administrative fee was directly preempted by chapter 123’s 

provisions related to the application process and the imposition of fees for 
8

applications. Id. Here, the CUP and accompanying fees are separate from the 

application for the state license. As explained above, the ordinance and permits 

regulate the use of premises selling alcohol rather than imposing regulations on 

the sale itself. Thus, whereas the city was expressly prohibited from imposing 

additional fees on liquor license applications in Iowa Grocery, here the city is acting 

under the authority conferred to it by Iowa Code section 123.39. 

Lime Lounge’s preemption claim involving the State’s police powers is 

similarly without merit. It is true that section 123.1 notes that the chapter “shall be 

deemed an exercise of the police power of the state.” However, section 123.39 

permits cities to exercise their own power to regulate the health, welfare, and 

morals of the community. And section 123.30(2) requires establishments to 

comply with local ordinances. It would make little sense for the legislature to 

prohibit cities from imposing regulations while also requiring establishments 

comply with them. 

We also find Des Moines’s municipal code is not preempted by the appeal 

procedure of chapter 123. Lime Lounge essentially claims that once the ZBOA 

revokes a CUP, the only matter before the ABD is whether the licensee is 

complying with local ordinances that require a CUP. As a result, Lime Lounge 

asserts it is impossible to challenge the revocation of the CUP to the ABD. But the 

fact that the CUP revocation has collateral consequences does not undermine the 

appeal process found in chapter 123. The chapter clearly contemplates that noncompliance with local ordinances can be grounds for license revocation. See Iowa 

Code § 123.30(2). Any appeal to the ABD concerning non-compliance with a local 

ordinance would be focused on the act of non-compliance, not the validity of the 
9

local ordinance. And we note that Lime Lounge already utilized the judicial process 

to challenge the validity of its CUP revocation. See Lime Lounge, 2019 WL 

480197, at *5-6. 

Des Moines’s CUP requirement and accompanying fee is not preempted by 

the Iowa Code. As such, the city had the authority, pursuant to the home rule 

doctrine and Iowa Code section 123.39, to regulate the premises of establishments 

selling alcohol. We reject Lime Lounge’s preemption claim. 

IV. Equal Protection Clause

Lime Lounge asserts Municipal Code section 134-954(a) violates the equal 

protection clause of the Iowa and United States constitutions.2 In particular, they 

allege the code allows the ZBOA to impose different restrictions on similar 

businesses that are arbitrary and capricious. The conditions imposed by Municipal 

Code section 134-954(a), which can include obtaining a CUP, requiring a certain 

amount of sales be obtained via food receipts, and imposing distance requirements 

to certain establishments like schools, are based on the type of business,3the 

zoning district the business occupies, and the type of liquor license it holds. Lime 

Lounge appears to only contest the portion of the code that requires certain 

businesses, but not others, to obtain a CUP. 

2

“[W]hile we will generally apply the same analysis to federal and state equal 

protection claims, this court has not foreclosed the possibility that there may be 

situations where differences in scope, import, or purpose of the two provisions 

warrant divergent analyses.” Racing Ass’n of Cent. Iowa v. Fitzgerald, 675 N.W.2d 

1, 5 (Iowa 2004). Neither party suggests we should treat Lime Lounge’s state and 

federal equal protection claims separately. As such, we analyze the claims 

together. 

3 Municipal Code section 134-954(a) establishes different requirements for “food 

sales establishments and retail sales establishments,” gas stations or convenience 

stores, liquor stores, tobacco stores, restaurants, and taverns. 
10

“[T]he Equal Protection clause ‘is essentially a direction that all persons 

similarly situated should be treated alike.’” Fitzgerald, 675 N.W.2d at 7 (quoting

City of Cleburne v. Cleburne Living Ctr., 473 U.S. 432, 439 (1985)). “Whether this 

ideal has been met in the context of economic legislation is determined through 

application of the rational basis test.” Id. “Under this test, we must determine 

whether the classification is ‘rationally related to a legitimate governmental

purpose.’” King v. State, 818 N.W.2d 1, 27 (Iowa 2012) (citation omitted). “The

classification is valid ‘unless the relationship between the classification and the 

purpose behind it is so weak the classification must be viewed as arbitrary or 

capricious.’” Id. at 27-28 (citation omitted). Statutes carry “a strong presumption 

of constitutionality,” and it is the plaintiff’s burden to negate “every reasonable 

basis that might support the disparate treatment.” Fitzgerald, 675 N.W.2d at 8 

(citation omitted) 

Lime Lounge makes two distinct claims here. First, they allege the varied 

requirements—particularly the necessity of obtaining a CUP and the fees 

necessary to do so—imposed on different establishments such as restaurants, 

bars, and retail establishments are arbitrary. See Des Moines, Iowa, Municipal 

Code § 134-954(a). Second, they allege the municipal ordinance allows the ZBOA 

to “impose virtually any condition which it can contemplate—and, more 

onerously—on an individualized basis.” See id. § 134-954(c). 

The city’s classification system for various establishments selling alcoholic 

beverages does not violate Lime Lounge’s equal protection rights. The city has a 

legitimate purpose in ensuring the health, welfare, and safety of the community. 

In relation to businesses that serve alcohol, cities have an interest in regulating 
11

noise levels, maintaining clean public spaces, and ensuring the area is safe for 

patrons and other citizens. The distinction drawn by Des Moines’s Municipal Code 

between bars, restaurants, and other retail establishments is rationally related to 

that purpose. As the city points out, bars tend to operate later in the evening than 

restaurants, be louder—both because of music and patrons—and have increased 

law enforcement involvement. This is particularly true when compared to retail 

establishments that sell alcohol that is consumed elsewhere. Requiring additional 

permitting—which delineates noise, lighting, and sanitary requirements—for 

certain businesses that are more likely to exhibit additional nuisance behaviors is 

rationally related to protecting the community. 

We also reject Lime Lounge’s claim that the ordinance allows the ZBOA 

unfettered discretion in imposing permitting restrictions. Contrary to Lime 

Lounge’s contentions, the ZBOA is limited to imposing conditions “as may be 

reasonably required by the board to ensure that the criteria of subsection (b), 

above, are satisfied.”4 Id. Subsection (b) mandates that (1) the business’s 

“location, design, construction and operation of the particular use adequately 

safeguards the health, safety and general welfare of persons” in the surrounding 

area, (2) the business is separate enough from other structures to prevent noise 

harming the adjoining areas, (3) the business does “not unduly increase 

congestion on the streets” of the area, and (4) the business does not constitute a 

nuisance. Thus, the board is limited to imposing individualized restrictions on 

4 The business must also comply with the “general conditions” found in Municipal 

Code section 134-954(c), which involves adequate lighting, compliance with noise 

ordinances, limiting loitering, and adequate trash removal. 
12

businesses in only a handful of circumstances, all of which relate to minimizing the 

harmful impacts of the business on the community. 

We acknowledge that certain individualized zoning restrictions could 

conceivably violate the equal protection clause. This is not such a case. As 

explained above, the city has an interest in protecting the community’s health and 

welfare. The East Village of Des Moines is a mixed-use neighborhood, containing 

both commercial and residential buildings. Tailoring certain zoning restrictions 

related to noise, congestion, and other nuisance behavior to the specific 

circumstances of the area is rationally related to promoting the community’s 

welfare. 

V. Spot Zoning 

Lime Lounge asserts Municipal Code section 134-954 amounts to illegal 

spot zoning. “Spot zoning is the creation of a small island of property with 

restrictions on its use different from those imposed on surrounding property.” 

Residential & Agric. Advisory Comm., LLC v. Dyersville City Council, 888 N.W.2d 

24, 45 (Iowa 2016) (quoting Perkins v. Bd. of Supervisors of Madison Cnty, 636 

N.W.2d 58, 67 (Iowa 2001)). However, not all spot zoning is illegal. Id. We use a 

three-part test to determine if spot zoning is valid: 

(1) whether the new zoning is germane to an object within the police 

power; (2) whether there is a reasonable basis for making a 

distinction between the spot zoned land and the surrounding 

property; and (3) whether the rezoning is consistent with the 

comprehensive plan.

Id. at 46 (citation omitted). “[T]here must be substantial and reasonable grounds 

or basis for the discrimination when one lot or tract is singled out.” Id. (citation 

omitted).
13

First, we agree with the district court that the municipal code does not 

amount to spot zoning. Lime Lounge provided four examples of conditional use 

permits for neighboring properties that have minor variations in noise restrictions. 

However, these differences are merely semantic. Three of those properties, 

including Lime Lounge’s, are restricted to non-amplified sound that cannot exceed 

what would be “considered background auditory in nature.” Only one property is 

permitted to use amplified sound on certain occasions. Contrary to Lime Lounge’s 

assertion, their property is not “a small island” with different restrictions than the 

rest. 

Even if we were to consider this spot zoning, it would not be illegal. As 

noted above, the noise restrictions and other directives limiting nuisance behavior 

fall squarely within the city’s police power. Furthermore, in the mixed-use 

community, utilizing permits with varied directives allows the city to pursue the dual 

goals of maintaining an entertainment district while also limiting the disturbances 

to the residential buildings in the area. Finally, the zoning in this case is consistent 

with that plan—establishments are given conditions that are relevant to limiting 

nuisance behavior for the surrounding buildings. Des Moines’s zoning does not 

constitute illegal spot zoning. 
14

VI. Conclusion 

We find Des Moines Municipal Code section 134-954 is not preempted by 

state code. Further, the municipal code does not violate Lime Lounge’s equal 

protection rights, nor does it constitute illegal spot zoning. The district court 

properly dissolved the temporary injunction and rejected Lime Lounge’s request 

for a permanent injunction. 

AFFIRMED.