Strizheus v. City of Sioux Falls

664 F.Supp.3d 937

Vitaliy STRIZHEUS, Nataliya Strizheus, Plaintiffs, v. The CITY OF SIOUX FALLS, SOUTH DAKOTA, Defendant.

4:23-CV-04028-RAL

United States District Court, D. South Dakota, Southern Division

Signed March 27, 2023

Emily C. Maurice, Jeana L. Goosmann, Goosmann Law Firm, Sioux City, IA, Patrick J. Borchers, Pro Hac Vice, Omaha, NE, for Plaintiffs.

Claire E. Wilka, William C. Garry, Cadwell Sanford Deibert & Garry, LLP, Sioux Falls, SD, for Defendants.

OPINION AND ORDER DENYING MOTION FOR PRELIMINARY INJUNCTION

ROBERTO A. LANGE, CHIEF JUDGE

Plaintiffs Vitaliy and Nataliya Strizheus (collectively "Plaintiffs") seek a preliminary injunction to prevent Defendant the City of Sioux Falls ("the City") from enforcing a final state court judgment permitting the razing of Plaintiffs' partially constructed mansion because of past violations of the City's code. Razing of the home would be an incredibly wasteful, unfortunate, and somewhat irrational undertaking. However, under the facts and applicable law, Plaintiffs have failed to make a sufficient showing to justify a federal district court entering a preliminary injunction that effectively would overturn state court decisions on matters of state law. Nothing in this decision prevents Plaintiffs from pursuing federal constitutional claims for a Fifth and Fourteenth Amendment taking without just cause or an Eighth and Fourteenth Amendment claim for excessive fine or from seeking relief in state court, if the City proceeds to demolish the structure.

I. PROCEDURAL AND FACTUAL HISTORY

The City had given notice that it would raze Plaintiffs' partially constructed mansion beginning on February 27, 2023. Plaintiffs filed this suit on February 17, 2023, ten days before the start of the City's planned demolition, Doc. 1, and then sought a motion for preliminary injunction on February 19, 2023, Doc. 3. This Court set and held an evidentiary hearing on the motion for preliminary injunction on February 24, 2023, the Friday before the date the City gave for demolition to begin. At the close of the hearing, the City agreed at this Court's request to wait for a 28-day period both because of the volume of snow on the ground and to allow additional time for the parties to brief and this Court to rule on the preliminary injunction motion. This Court then entered an order directing that the City take no action to raze Plaintiffs' home for 28 days (until March 27, 2023) and reserving decision on the preliminary injunction motion until then to allow the parties to explore settlement and to submit any further brief on issues framed by the hearing. Doc. 23.

Plaintiffs filed an Amended Complaint on March 3, Doc. 30, dropping both certain city officials as named defendants and their claims under 42 U.S.C. § 1983 for violation of the equal protection clause and civil conspiracy for alleged discrimination against them as Ukrainians.¹ The City filed a post-hearing supplemental brief and affidavit, Docs. 31-32, and Plaintiffs filed a supplemental brief, Doc. 33.² Though it would be far more rational for the parties to resolve this dispute through perhaps auction or other prompt sale of the house to someone who would quickly finish it, the parties have not settled the dispute.

This Court draws the facts from the testimony and exhibits from the February 24 hearing, the materials of record not being contested, and the decision of the Supreme Court of South Dakota in the underlying litigation.³ Plaintiffs Vitaliy and Nataliya Strizheus married in 2004 and have seven children. Both emigrated from Ukraine to Sioux Falls, Vitaliy arriving when he was 12 and Nataliya arriving when she was 14. Nataliya is a stay-at-home mother, while Vitaliy has been involved with online marketing of others' products and established The Four Percent Group LLC apparently to sell instructions on how to profit from online marketing.

In 2013, Plaintiffs bought lots at 6800 South Westfield in southern Sioux Falls, intending to build a 10,000 square foot, custom-made dream mansion on the lots. Plaintiffs were denied the construction loan they sought and instead decided to self-finance construction. The City issued a building permit on August 12, 2013, to Plaintiffs' initial general contractor, Creative Building Corporation, to start residential construction. In 2015, a client who represented 90% of Vitaliy's business income went bankrupt, and the following year Vitaliy's father was diagnosed with cancer. Progress on the partially constructed mansion stalled in 2015 due to the inability of Plaintiffs to finance further construction. Apparently, only the shell of the home was completed or partially completed at that point.

The partially completed home was vandalized multiple times by local juveniles according to the Plaintiffs. On one occasion in or around 2016, a swastika⁴ was painted on a concrete wall of the partially completed home, Exh. 5, although there is no evidence that the City in any way endorsed that abomination. Neighbors complained to the City about the stalled construction and condition of the lot. A city attorney testified at the preliminary injunction hearing that he accompanied a city inspector to the site and found it unsecured with pigeons living inside; the city attorney considered the home to be a nuisance.

On August 31, 2016, the City found the house to be an unsafe structure as defined by Section 108.1.1 of the International Property Maintenance Code (IPMC) and unfit for human occupancy as defined by Section 108.1.3 of the IPMC.⁵ City of Sioux Falls v. Strizheus, 984 N.W.2d 119, 121 (S.D. 2022). The City had adopted the IPMC through Sioux Falls City Ordinance (SFCO) 150.095, subject to certain amendments, additions and deletions as set forth in SFCO 150.096. Id. at 121-22. That code provision states:

The code official shall order the owner or owner's authorized agent of any premises upon which is located any structure, which in the code official's or owner's authorized agent judgment after review is so deteriorated or dilapidated or has become so out of repair as to be dangerous, unsafe, insanitary, or otherwise unfit for human habitation or occupancy, and such that it is unreasonable to repair the structure, to demolish and remove such structure; or if such structure is capable of being made safe by repairs, to repair and make safe and sanitary, or to board up and hold for future repair or to demolish and remove at the owner's option; or where there has been a cessation of normal construction of any structure for a period of more than 18 months, the code official shall order the owner or owner's authorized agent to demolish and remove such structure.

Id.; SFCO § 150.096.

The City on September 2, 2016, issued a notice of demolition ordering the Plaintiffs to begin demolition of the home within 20 days of receipt of the notice. City of Sioux Falls, 984 N.W.2d at 121; Doc. 32-1. Plaintiffs appealed the order for demolition to the Property Maintenance Board of Appeals, which granted them an extension until December 1, 2016, to complete the exterior of the home. City of Sioux Falls, 984 N.W.2d at 122. Plaintiffs failed to complete the home exterior by that date. Id.

On September 22, 2017, the City issued an amended notice and order for demolition to the Plaintiffs, finding the structure to remain in violation of the City's ordinance, and requiring completion of demolition by November 11, 2017. Id.; Doc. 32-2. Plaintiffs neither appealed this order nor demolished the partially completed house. City of Sioux Falls, 984 N.W.2d at 122. The City then filed a complaint in state court in December of 2018, seeking enforcement of its ordinance and the order for demolition thereunder. Id. The City alleged that it had issued at least seven building permits since the initial permit in 2013 and that each had been suspended or cancelled due to a lack of progress or inspection. Id. Plaintiffs took out additional permits but did not initially hire an attorney, and the City sought default judgment. Id. Plaintiffs then hired an attorney, contested default judgment, and represented that they expected to complete the exterior of the home by October 1, 2019. Id. The case then languished.

More than two years later, the City filed a motion for summary judgment and statement of undisputed materials facts, with several affidavits including nearly identical affidavits from three neighbors, the chief building official's affidavit, and an affidavit from Plaintiff's contractor Troy Stallings of Creative Building Corporation. Id. at 122-23. The City's submissions established that Plaintiffs had not made any significant progress since 2015 toward completion of the home and indeed the general contractor no longer had an agreement in place with Plaintiffs, had canceled the insurance, and had done no work since 2015. Id.

Plaintiffs at this point in the state litigation were proceeding again without an attorney, did not file a response to the statement of undisputed material facts, and countered with unsworn statements about intending to complete the home and having arrangements to do so. Id. at 123. Plaintiffs made none of the claims raised in their Complaint, Amended Complaint, or proposed Second Amended Complaint—that the demolition would be a takings clause violation under the Fifth and Fourteenth Amendments and an Excessive Fine under the Eighth and Fourteenth Amendments, that the City and its officials were acting with ethnic animus and engaged in a civil conspiracy to deprive Plaintiffs of their constitutional rights, that the ordinance was unconstitutional, or that the City is estopped to enforce demolition orders by having granted permits during the pendency of the state case. The state judge granted summary judgment, concluding that the City had shown that normal construction had ceased for over eighteen months. Id.

Plaintiffs hired counsel and appealed, arguing that the City failed to meet its burden of showing an absence of ...