Oron 2015 LLC v. City of Southfield

ORON 2015 LLC, Plaintiff, v. CITY OF SOUTHFIELD, Defendant.

Case No. 18-cv-12671

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

June 17, 2019

Hon. Mark A. Goldsmith

OPINION & ORDER (1) GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS (Dkt. 19); AND (2) DENYING PLAINTIFF'S MOTION TO CERTIFY CLASS (Dkt. 17)

In this action, Plaintiff Oron 2015, LLC challenges the Defendant City of Southfield's (the "City") inspection requirements for residential real property in Southfield, which it says permit warrantless searches and penalize any property owner who refuses inspection.¹ The City has filed a motion for judgment on the pleadings, pursuant to Federal Rule of Civil Procedure 12(c) (Dkt. 19), and Oron 2015 has filed a motion to certify a class (Dkt. 17). The motions have been fully briefed. Because oral argument will not aid the decisional process, the motions will be decided based on the parties' briefing. See E.D. Mich. L.R. 7.1(f)(2); Fed. R. Civ. P. 78(b). For the reasons that follow, the Court grants in part and denies in part the City's motion to dismiss and denies Oron 2015's motion to certify a class.

I. BACKGROUND

According to the complaint, the City of Southfield has adopted the International Property Maintenance Code ("IPMC"), which authorizes the City's code official to enter any premises without a warrant, upon reasonable cause to perform an inspection of the property. Compl. ¶¶ 5, 7; IPMC, Section 104.3. Further, Section 8.509 of the Code of the City of Southfield (the "City Code") provides that city inspectors may enter property without a warrant:

The owner shall schedule with the department the date and time of the inspection; and the department shall notify the owner of the fees that must be paid before the inspection. The owner shall be responsible for notifying each tenant or occupant of the rental dwelling of the date and time of the inspection. The owner or agent is required to provide the code official with access to the rental dwelling and accompany the code official during the performance of all inspections and in the event that the tenant or occupant is not present, the owner or agent must provide access to the inspector by unlocking the door of the tenant or occupant's dwelling unit, verifying that no occupant is present and securing the dwelling unit after the inspection is completed.

Id. ¶ 8.

Oron 2015 alleges that Section 8.509 of the City Code and Section 104.3 of the IPMC (together, the "Inspection Ordinances") make inspections of rental and commercial property in Southfield mandatory and make refusing these inspections a punishable offense. Id. ¶¶ 8, 10, 12. An owner of real property who does not permit the City to inspect the property is denied a certificate of compliance and cannot lawfully rent or occupy their property. Id. ¶ 14. Oron 2015 further alleges that the owner may also face civil infractions or have liens placed upon the property. Id. ¶¶ 15-16.

Oron 2015 owned property in Southfield and was forced to pay the City $340 on August 11, 2016, pursuant to the Inspection Ordinances. Id. ¶¶ 20-22. Had Oron 2015 refused to pay and allow the warrantless search, it claims that it would have been denied the right to rent, use, oroccupy its property. Id. ¶¶ 23-24. Oron 2015 argues that the Inspection Ordinances are unconstitutional and asserts the following claims against the City: (i) violation of due process under the Fifth and Fourteenth Amendments; (ii) violation of the Fourth Amendment's protection against unreasonable searches; and (iii) a state-law claim for unjust enrichment/assumpsit.² It seeks injunctive, declaratory, and monetary relief on behalf of a class of persons who paid registration or inspection fees to the City under the Inspection Ordinances.

The City seeks to dismiss the complaint, arguing that Oron 2015 lacks standing to bring this suit and has failed to state a claim for unjust enrichment/assumpsit. Oron 2015 seeks to certify a class.

II. MOTION TO DISMISS

A. Standard of Review

The City moved under Federal Rule 12(c) for judgment on the pleadings. Any party may move for the entry of a judgment after the pleadings are closed, but early enough not to delay trial. Fed. R. Civ. P. 12(c). Courts apply the same analysis to motions for a judgment on the pleadings under Rule 12(c) as is applied to applications for dismissal under Federal Rule of Civil Procedure 12(b)(6). Warrior Sports, Inc. v. Nat'l Collegiate Athletic Ass'n, 623 F.3d 281, 284 (6th Cir. 2010). "For purposes of a motion for judgment on the pleadings, all well-pleaded material allegations of the pleadings of the opposing party must be taken as true, and the motion may be granted only if the moving party is nevertheless clearly entitled to judgment." JPMorgan ChaseBank, N.A. v. Winget, 510 F.3d 577, 581 (6th Cir. 2007). However, a court need not accept as true legal conclusions or unwarranted factual inferences. Id. at 581-582.

When evaluating a motion for a judgment on the pleadings, a court considers the complaint, the answer, and any written instrument attached as exhibits. Fed. R. Civ. P. 12(c). A court should also consider any undisputed facts. Stafford v. Jewelers Mut. Ins. Co., 554 F. App'x 360, 369-370 (6th Cir. 2014) (taking judicial notice of undisputed facts in documents considered by district court on ruling on 12(c) motion); see also Knutson v. City of Fargo, 600 F.3d 992, 999-1000 (8th Cir. 2010) (holding, on review of 12(c) dismissal, that district court could take judicial notice of a publicly available state-court argument, which involved a concession by the appellant).

The City also challenges Oron 2015's standing to bring the case. "[A] Rule 12(b)(1) motion is the proper vehicle for considering whether subject matter jurisdiction exists in a particular case[.]" Ogle v. Church of God, 153 F. App'x 371, 374-375 (6th Cir. 2005) (finding that the district court "erred by converting the motion to a Rule 12(c) motion for judgment on the pleadings because the Rule 12(c) motion is a decision on the merits that cannot be decided without first determining whether subject matter jurisdiction is proper, regardless of whether the court used the factual record to resolve that threshold inquiry") (citing Ohio v. Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990)). "When a Rule 12(b)(1) motion attacks the factual basis for jurisdiction . . . the district court has broad discretion over what evidence to consider and may look outside the pleadings to determine whether subject-matter jurisdiction exists." Adkisson v. Jacobs Engineering Group, Inc., 790 F.3d 641, 647 (6th Cir. 2015).

B. Analysis

The City puts forth two arguments: first, that Oron 2015 lacks standing to bring this suit; second, that the allegations are insufficient to state a claim for unjust enrichment/assumpsit.

1. Standing

The standing doctrine "requires that a litigant have suffered an injury-in-fact that is fairly traceable to the defendant's allegedly unlawful conduct and likely to be redressed by the requested relief." Peoples Rights Organization, Inc. v. City of Columbus, 152 F.3d 522, 527 (6th Cir. 1998). In order to allege an injury in fact, a plaintiff must allege "an invasion of a legally-protected interest which is (a) concrete and particularized, and (b) actual or imm[i]nent, not conjectural or hypothetical." Sault Ste. Marie Tribe of Chippewa Indians v. United States, 288 F.3d 910, 914 (6th Cir. 2002) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)).

The City argues that Oron 2015 has failed to allege an actual or imminent injury, because it did not suffer an invasion of a legally protected interest. Def. Mot. at 4-5. The City points out that Oron 2015 does not allege that it ever objected to or refused to permit an inspection; instead, Oron 2015 paid the inspection fee. Thus, the City claims that Oron 2015 consented to the inspection and cannot bring a claim. In response, Oron 2015 asserts that it has the right to be free from unreasonable searches, and that the $340 it paid under the allegedly unconstitutional inspection ordinances is a concrete, actual damage. Pl. Resp. at 6-7 (Dkt. 20).

The Court agrees with Oron 2015. Oron 2015 claims that it was required to pay an inspection fee as a result of an allegedly unconstitutional ordinance; this is a concrete economic harm resulting from the City's conduct. Further, Oron 2015 alleges that it was subjected to a warrantless inspection. See Compl. ¶¶ 22-23. This is also sufficient to confer standing, regardless of whether Oron 2015 objected to the inspection or paid any fee, because Oron 2015 alleges that its legally protected interest has been invaded. See Gary B. v. Snyder, 329 F. Supp. 3d 344, 355 (E.D. Mich. 2018) ("Plainly, a plaintiff who alleges a violation of his right to due process states a legally protected interest[.]").

The City argues that Oron 2015 consented to the search, and therefore has no Fourth Amendment claim. But Oron 2015 asserts in its complaint that an owner of real property who does not allow the City to inspect its property is coerced to consent. An owner who does not agree to a search faces several consequences: it is denied a certificate of compliance, cannot lawfully rent or occupy property, may face civil infractions, and is subject to having liens placed on its property. Compl. ¶¶ 14-16, 41. Coerced consent is not consent. See Schneckloth v. Bustamonte, 412 U.S. 218, 228 (1973) ("[T]he Fourth and Fourteenth Amendments require that a consent not be coerced, by explicit or implicit means, by implied threat or covert force."). While the City attempts to minimize the harm of a civil infraction, Def. Reply at 5-6 (Dkt. 24), it does not explain why this would not have a coercive effect on a property owner, unsure of its rights and unwilling to face legal repercussions for asserting them. Accordingly, the Court finds that Oron 2015 has sufficiently alleged injury.³

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