Estate v. City of Wayne

442 F.Supp.3d 987

ESTATE OF Margaret A. FLUEGGE and Safevest Oakland Acquisition, LLC, on behalf of themselves and others similarly situated, Plaintiffs,

v.CITY OF WAYNE, Defendant.

Case Number 19-10175

United States District Court, E.D. Michigan, Southern Division.

Signed March 2, 2020

Aaron D. Cox, Law Offices of Aaron D. Cox PLLC, Taylor, MI, Mark K. Wasvary, Mark K. Wasvary, P.C., Troy, MI, for Plaintiffs.

Anne McClorey McLaughlin, Matthew J. Zalewski, Rosati, Schultz, Joppich & Amtsbuechler, P.C., Farmington Hills, MI, for Defendant.

OPINION AND ORDER GRANTING DEFENDANT'S MOTION TO FILE RESPONSE TO SUR-REPLY, GRANTING DEFENDANT'S MOTION TO DISMISS, AND DISMISSING AMENDED COMPLAINT WITH PREJUDICE

DAVID M. LAWSON, United States District Judge

When local governments pass ordinances that affect the rights of individuals living and working within their borders, those laws must not violate rights guaranteed by the federal Constitution. If a person is harmed by such an unconstitutional local law, that person may seek redress from a federal court. But without an injury, a federal court has nothing to say about the person's complaint that the city or town may have passed an unconstitutional law. Advisory opinions — the "ghosts that slay" — are not allowed. Vonderhaar v. Vill. of Evendale, Ohio , 906 F.3d 397, 399 (6th Cir. 2018) (quoting Felix Frankfurter, A Note on Advisory Opinions , 37 HARV. L. REV. 1002, 1008 (1924) ).

The City of Wayne, Michigan, enacted a set of property maintenance ordinances under its police power intended to ensure that its aging housing stock and residential units are kept up to code. If a homeowner wants to sell, or a landlord wants to rent, he or she must obtain a certificate of compliance from the City's building and engineering department. One obtains a certificate by paying a fee and scheduling (and passing) an inspection. The plaintiffs believe that the inspection requirement amounts to a warrantless search that violates the Fourth Amendment, and conditioning the sale and right to rent on consenting to inspections violates the Due Process Clauses of the Fifth and Fourteenth Amendments. However, the plaintiffs' premises were never subjected to an unlawful search, and they have not identified any likelihood that they would be subjected to one in the future. With no such injury-in-fact, they have no standing to obtain advice from this Court on the ordinances' constitutionality. Therefore, the Court will dismiss the case for want of subject matter jurisdiction.

I.

The plaintiffs' complaint takes aim at two of the City's ordinances. Chapter 1484 requires the seller of a residence to obtain a certificate of compliance before completing the sale. City of Wayne Code of Ordinances § 1484.04 (Ordinance). That is accomplished by making an application, arranging for an inspection, and paying a fee. Id. § 1484.05. A building official then inspects the property under guidelines established by the International Property Maintenance Code. The purpose of the inspection, says the City, is "to prevent the spread of residential blight, to safeguard life or limb, health, property, and public welfare." Id. § 1484.06. If an inspection turns up code violations, the owner can obtain a certificate of compliance after making the necessary repairs. Id. § 1484.07. Or the owner may obtain a conditional certificate by striking a deal with the buyer to make the repairs. Id. § 1484.08.

If there is a disagreement with a building official, the "aggrieved" person may appeal to the Residential Dwelling Board of Appeals by submitting a timely written request and paying a fee. On appeal, the person has a right "to present witnesses, testimony or proof, and to be represented by counsel." Id. at § 1484.20. The Appeal Board is authorized to "hear and decide appeals where it is alleged by the appellant that there is error in regard to the interpretation of [any part of the Ordinance] ... including the standards of approval." Id. § 1484.21.

The plaintiff's decedent, Margaret Fluegge, owned a home on Chamberlain Street in the City of Wayne. She put the house up for sale in May 2017, about five months before she died in September of that year. Before selling, she paid a $250 city inspection fee and arranged for an inspection, which took place on May 18, 2017. Her son, Scott Fluegge, the personal representative of Margaret's estate, was present. No one objected to that inspection or to a second, follow-up inspection conducted shortly thereafter. The City issued a certificate of compliance, and she sold the home on June 6, 2017.

The second ordinance, Chapter 1486, deals with landlords and rental units. The ordinance requires owners to register their property as a rental and obtain a certificate of compliance, which requires a city inspection. Ordinances §§ 1486.07, 1486.12. The owner must pay separate fees for registration and inspection, which are good for three years. The inspection, once again, is conducted by a city building official. But before the official can inspect, he or she "shall indicate to all occupants, prior to his or her entry into the unit, that the occupant may prohibit such building official's entry without a search warrant." Id. § 1486.13(b). And disagreements with a building official's determinations may be appealed, after paying a refundable fee, to the Construction Board of Appeals. Id. § 1486.20.

Plaintiff Safevest was incorporated in Delaware in August 2018. That same month, it purchased two houses in the City, intending to rent them. Safevest registered the properties on December 7, 2018, naming Garner Properties & Management Company as the property manager. When Safevest registered the properties, neither had a valid certificate of compliance. On December 10, 2018, the City issued violation notices for both Safevest properties, eventually informing the company, when an errant email address was corrected, that the certificates had expired, that it must pay inspection fees, and that it must schedule an inspection with the City. The management company then paid the registration and inspection fees for the Safevest properties on January 3, 2019.

Detecting a defect in the ordinances, the plaintiffs filed a putative class action complaint in January of last year, alleging violations of the "unconstitutional conditions doctrine" (Count I), and the Fourth Amendment (Count II), unjust enrichment (Count III), and violations of 42 U.S.C. § 1983 (Count IV). The City inspected the properties on February 6, 2019 and found numerous code violations. Safevest's property manager arranged for the inspections and allowed them without objection or protest.

After a case management conference, the Court allowed the plaintiffs to file an amended complaint and permitted discovery on the jurisdictional issue. The defendant then filed a motion to dismiss alleging no subject matter jurisdiction because the plaintiffs lack standing to raise their claims, and the City is entitled to judgment on the pleadings because the plaintiffs have not stated viable claims.

By the time the defendant filed its motion, neither properties had received certificates of compliance, but both actively were being rented. The City has not fined or prosecuted Safevest for refusing an inspection or for renting its properties without a certificate.

II.

The defendant brought its motion to dismiss under both Federal Rule of Civil Procedure 12(b)(1) and 12(c). Rule 12(b)(1) authorizes the dismissal of a civil action "for lack of subject matter jurisdiction." Cartwright v. Garner , 751 F.3d 752, 759 (6th Cir. 2014). The issue of subject matter jurisdiction lurks in every federal case, because the Constitution authorizes federal courts to decide only "Cases" and "Controversies." U.S. Const. art. III, § 2, cl. 1 ; Warth v. Seldin , 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975).

"Cases" may be brought by persons who actually have been wronged, that is, who have "standing" to press a claim when they can show that they have a "personal stake in the outcome of the controversy" at the outset of litigation. Baker v. Carr , 369 U.S. 186, 204, 82 S.Ct. 691, 7 L.Ed.2d 663 (1962). Without proof of actual skin in the game, the lawsuit is no more than "a vehicle for the vindication of the value interests of concerned bystanders" who have no right to ask a federal court its advice about the validity of a local law. United States v. SCRAP , 412 U.S. 669, 687, 93 S.Ct. 2405, 37 L.Ed.2d 254 (1973).

To establish standing, a plaintiff must show that he or she has suffered an "injury in fact," that was caused by the defendant's conduct, and that a favorable decision will redress that injury. Town of Chester v. Laroe Estates, Inc. , ––– U.S. ––––, 137 S. Ct. 1645, 1650, 198 L.Ed.2d 64 (2017) (quoting Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S. Ct. 1540, 1547, 194 L.Ed.2d 635 (2016) ). The first requirement requires proof of an actual injury, that is, " ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’ " Spokeo , 136 S. Ct. at 1548 (quoting Lujan v. Defenders of Wildlife , 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ). "For an injury to be ‘particularized,’ it ‘must affect the plaintiff in a personal and individual way.’ " Ibid. "A ‘concrete’ injury must be ‘de facto ’; that is, it must actually exist." Ibid.

In Count II of their amended complaint, the plaintiffs assert that the pre-sale and rental ordinances allow building officials to enter and inspect houses and rental units without a search warrant. That, they say, would violate the Fourth Amendment. But they do not allege that such an intrusion actually happened to them, and the City offered evidence that both plaintiffs consented to the inspections that occurred. And there is no evidence that the City's building officials ever conducted compliance searches without the occupant's consent or that it has any plans to do...