The 9th U.S. District Court of Appeals, 2-1, found owner Steve Diamond's business to be a legal, nonconforming use that existed lawfully before the zoning restriction became effective.
City Attorney Martin Koczanowicz plans to meet with city officials to decide whether to appeal the case to a larger panel of appeals court judges or the U.S. Supreme Court.
“We believe that he did not legally establish himself and that the trial court decision was correct,” Koczanowicz said, referring to a June 2005 decision by the U.S. District Court in Orange County that ruled that a Grover Beach zoning ordinance barring adult businesses downtown did not violate Diamond’s constitutional rights.
Diamond Adult World opened in Grover Beach in December 2003, and the City Council approved a zoning ordinance that allows adult businesses only in a coastal industrial zone in February 2004.
The appeals court decision ruled that the city zoning ordinance took effect when it was approved by the Coastal Commission on April 15, 2004, a month after a local moratorium on adult stores expired, said Diamond’s lawyer, Roger Jon Diamond. He is not related to Steve Diamond.
The amount of adult-oriented merchandise at the store was reduced to 25 percent and the store renamed Diamond Video World after the 9th Circuit Court of Appeals ruled in September 2005 that the store could not operate as an adult business during Diamond's appeal of the District Court decision. The store will return to 100 percent adult material immediately, according to Diamond's attorney.
Steve Diamond said Tuesday he was happy with the ruling, but if the city appeals it, he will continue fighting the case.
“It’s a situation where the city was proven wrong and we’re able to operate,” Steve Diamond said. “I was very happy about it. I always believed in it. I think right prevails.”
Steve Diamond said his business has not caused any problems in the community since it opened.
“It has nothing to do with children; it has nothing to do with prostitution,” he said. “It’s all politics and perception. If they had problems with us … we’d be closed by now.”