First Floor Living LLC v. City of Cleveland

83 F.4th 445

FIRST FLOOR LIVING LLC (22-3216);Lush Designs, LLC (22-3217), Plaintiffs-Appellants, v. CITY OF CLEVELAND, OHIO; Laster LLC; Baumann Enterprises, Inc.;Cuyahoga County Land Reutilization Corporation, Defendants-Appellees.

No. 22-3216

No. 22-3217

United States Court of Appeals, Sixth Circuit

Argued: December 6, 2022

Decided and Filed: September 28, 2023

Appeal from the United States District Court for the Northern District of Ohio at Cleveland. No. 1:21-cv-00018—J. Philip Calabrese, District Judge.

ARGUED: Justin D. Stevenson, BOWER STEVENSON LLC, Cleveland, Ohio, for Appellants. Elena N. Boop, CITY OF CLEVELAND, Cleveland, Ohio, for Appellee City of Cleveland. Matthew P. Baringer, DAVIS & YOUNG, Willoughby Hills, Ohio, for Appellee Laster LLC. Richard C.O. Rezie, GALLAGHER SHARP LLP, Cleveland, Ohio, for Appellee Baumann Enterprises. Alayna K. Bridgett, HAHN LOESER & PARKS, LLP, Cleveland, Ohio, for Appellee Cuyahoga County Land Reutilization Corporation. ON BRIEF: Justin D. Stevenson, BOWER STEVENSON LLC, Cleveland, Ohio, for Appellants. Elena N. Boop, Nathaniel Hall, CITY OF CLEVELAND, Cleveland, Ohio, for Appellee City of Cleveland. Matthew P. Baringer, DAVIS & YOUNG, Willoughby

Hills, Ohio, for Appellee Laster LLC. Phil Eckenrode, HAHN LOESER & PARKS, LLP, Cleveland, Ohio, for Appellee Cuyahoga County Land Reutilization Corporation. Robert P. Lynch, Jr., GALLAGHER SHARP LLP, Cleveland, Ohio, for Appellee Baumann Enterprises in case 22-3217 only.

Before: SILER, GILMAN, and NALBANDIAN, Circuit Judges.

SILER, J., delivered the opinion of the court in which GILMAN, J., joined. NALBANDIAN, J. (pp. 458-59), delivered a separate opinion concurring in part and dissenting in part.

OPINION

SILER, Circuit Judge.

In 2018, First Floor Living, LLC ("First Floor") and Lush Designs, LLC ("Lush Designs") (collectively "Plaintiffs") each purchased real estate parcels in Cleveland for the purpose of rehabilitating and redeveloping the properties. First Floor's property was located at 4400 Warner Road, and Lush Designs' property was located at 7410 Linwood Avenue. Prior to Plaintiffs' purchases, the City of Cleveland ("Cleveland") declared the buildings on the properties public nuisances, condemned them, and ordered that they be demolished. Following the purchases, and after Plaintiffs had invested time and resources into renovating the buildings, Cleveland authorized private contractors to demolish them.

In 2021, following demolition of the buildings, Plaintiffs filed suit against Cleveland; Cuyahoga County Land Reutilization Corporation ("Land Bank"); Laster, LLC (Laster); and Baumann Enterprises, Inc. ("Baumann") (collectively "Defendants"), arguing that the demolitions violated numerous state laws and federal constitutional provisions.¹ The district court denied Plaintiffs' Rule 56(d) motion for discovery, granted summary judgment to Defendants on the constitutional claims, and declined to exercise supplemental jurisdiction over the remaining state law claims.

Plaintiffs argue that the district court erred by denying their Rule 56(d) motion for discovery and by granting Defendants' motions for summary judgment. We affirm.

I.

A.

In 2009, Cleveland declared the building located at 7410 Linwood Avenue a public nuisance and condemned it, finding that the building "constitute[d] an immediate hazard to human life and health." The property changed owners for nearly a decade until 2018, when Lush Designs purchased it. Following Lush Designs' purchase of the property, Cleveland sent a "new owner letter" via United States Postal Service ("USPS") certified mail to the Linwood Avenue address and to Leslie Gaskins, the company's statutory agent. The letter informed Lush Designs that the building located on its property had been declared a public nuisance due to numerous code violations and also included a notice of condemnation and demolition. The letter advised Lush Designs that it must correct the violations by submitting a written rehabilitation plan within ten days and satisfying all permitting requirements or the building would be demolished. Certified mail receipts indicate that the letters were received, although the letter sent to Gaskins was signed for by someone other than her. The letter addressed to the Linwood Avenue property was picked up at the post office. Cleveland also posted a condemnation notice on the building in a prominent location.

After purchasing the property, Lush Designs allegedly "invested substantial time and resources into improving and repairing" the building. Gaskins spoke with individuals at Cleveland's building department on numerous occasions and was told that the Linwood Avenue building was "not subject to" a condemnation order. However, in 2019, Cleveland issued a permit to Baumann to demolish the building. Then, after searching its database and finding no active or unrevoked rehabilitation permits for the building, Cleveland authorized Baumann to proceed with the demolition, which occurred later that month. Lush Designs learned about the demolition when its representative arrived at the property "and found an empty lot where [its] building used to stand."

B.

In 2016, Cleveland declared the building located at 4400 Warner Road to be a public nuisance and condemned it, finding the building "to be structurally unsafe." Cleveland posted a notice on the building that "[t]his [s]tructure is in a DANGEROUS CONDITION and has been CONDEMNED" by the Commissioner of the Division of Code Enforcement within Cleveland's Department of Building and Housing. Cleveland also sent a letter via certified mail to the building's address, enclosing the notice that had been posted at the property. The letter listed the building violations and advised the owner that, to prevent "further enforcement action, including demolition of the property at your costs," the owner needed to file a notice of appeal with the Cleveland Board of Building Standards and Building Appeals or submit a rehabilitation plan to Cleveland's Building and Housing Department and obtain all required permits within 30 days. Thereafter, Cleveland sent another letter, this one to the State of Ohio, which owned the property at the time. That letter instructed the State to notify Building and Housing within 10 days of any corrective actions it planned to take to address the safety violations; it also included instructions for obtaining all necessary permits and submitting a written plan to the Building and Housing Department. The letter indicated that, pursuant to Cleveland Codified Order § 3103.09(k)(2), "any and all owners of the property who appear in the chain of title from the time of receipt of the condemnation notice until demolition of the building or structure are jointly and severally responsible for all costs and expenses incurred by the Department of Building and Housing."

The letter also noted that, under Ohio Revised Code § 5301.253,

any violation notice of the Department of Building and Housing that appears on the Department's public records is notice to all subsequent purchasers, transferees, or other person who acquire[s] any interest in the real property in which the violations exist and may be enforced against their interest in the real property without further notice or order to them.

A certified mail return-receipt confirmed that the property owner, the State, received the letter. Upon receiving this notice, the State never submitted a remediation plan, filed an appeal, or addressed the safety violations.

The State then sold the property to Land Bank in late 2016, and Land Bank sold the property to First Floor in 2018. For the next two years, First Floor allegedly invested money, time, and resources into rehabilitating and developing the property. However, First Floor never applied for any rehabilitation permits.

In 2020, Cleveland mailed the same notice of condemnation and demolition order previously sent to the State of Ohio to First Floor via certified mail, both to the property address and to First Floor's statutory agent Joon Yub Kim. The certified mail receipts indicate that the letter sent to the property was returned as "vacant" and the letter to Kim was returned as "unclaimed." Although Cleveland argued that it posted notice at the property after First Floor's purchase, the only evidence of a posting, which the district court disregarded, was a series of "disjointed handwritten notes on what appears to be a post-it note." Cleveland also searched its databases for evidence that First Floor had applied for any construction permits demonstrating that it intended to rehabilitate the structure. Finding none, Cleveland authorized Laster to demolish the building. First Floor learned about the demolition from a neighbor of the property. First Floor unsuccessfully attempted to halt the demolition.

C.

In 2021, Plaintiffs filed suit against Defendants, alleging (1) deprivation of property without due process in violation of the Fourteenth Amendment; (2) taking of property in violation of the Fifth Amendment; and (3) several state law claims. After the Defendants filed motions for summary judgment, the district court held a status conference in which Plaintiffs "indicated that some discovery may be necessary to respond to the motions." The district court directed Plaintiffs to file a Rule 56(d) motion requesting discovery.

Plaintiffs filed their Rule 56(d) motion and requested discovery in the following areas:

• internal communications by Laster and Baumann "regarding the process by which they demolished the properties";

• communications between Cleveland and both Laster and Baumann regarding those companies' relationship with Cleveland;

• the identities of the individuals involved in the building demolitions;

• "potential depositions of" those who were involved in the demolitions;

• "Land Bank[']s internal communications about the First Floor Living Property" to confirm there were "no further intentional or wrongful actions" taken by the

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