Wheelahan v. City of New Orleans

DAWN ADAMS WHEELAHAN v. THE CITY OF NEW ORLEANS

CIVIL ACTION CASE NO. 19-11720 SECTION: "G"(2)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA

March 30, 2020

ORDER AND REASONS

In this litigation, Plaintiff Dawn Adams Wheelahan ("Plaintiff") brings claims under 42 U.S.C. § 1983 and seeks declaratory and injunctive relief against Defendant the City of New Orleans (the "City") for alleged violations of the First, Fourth, Fifth, and Fourteenth Amendments to the United States Constitution.¹ Before the Court is the City's "Motion to Dismiss for Lack of Subject Matter Jurisdiction under Fed. R. Civ. P. 12(b)(1) and for Failure to State a Claim upon which Relief can be Granted under Fed. R. Civ. P. 12(b)(6)."² Having considered the motion, the memoranda in support and in opposition, the record, and the applicable law, the Court grants the motion in part, denies the motion in part, and grants Plaintiff leave to amend the Complaint to address the deficiencies noted herein.

I. Background

On July 17, 2019, Plaintiff filed a Complaint in this Court against the City of New Orleans (the "City").³ Also on July 17, 2019, Plaintiff filed an Amended Complaint.⁴ In the AmendedComplaint, Plaintiff alleges that she owns a large double house in the Uptown neighborhood of New Orleans, Louisiana.⁵ Plaintiff alleges that she lives in one half of the house, and uses the other half to host family members, friends, or renters.⁶

Plaintiff states that in December 2016, the City Council adopted a series of ordinances amending the City's Comprehensive Zoning Ordinances and the City Code to authorize, define, and regulate various categories of "short term rentals," which went into effect on April 1, 2017.⁷ Plaintiff alleges that the Comprehensive Zoning Ordinances establish sub-categories of short term rentals including "Accessory Short Term Rentals" and "Temporary Short Term Rentals."⁸ Plaintiff further alleges that on May 24, 2018, the City Council enacted another amendment to the Comprehensive Zoning Ordinances establishing an Interim Zoning District, prohibiting "Temporary Short Term Rentals" within the Interim Zoning District, and allowing "Accessory Short Term Rental" licenses only for primary residences whose residents have a homestead exemption.⁹

According to the Amended Complaint, in February 2018, Plaintiff obtained a license from the City, which authorized short term rentals for half of her home under the category of "Temporary Short Term Rental."¹⁰ Plaintiff alleges that in August 2018 the City's Department of Safety and Permits (the "Department") inspected Plaintiff's rental home.¹¹ Plaintiff further allegesthat following the inspection she was notified by the Department that it had issued her an "Accessory Short Term Rental" license.¹²

According to the Amended Complaint, on April 24, 2019, the Department posted a notice on Plaintiff's door stating that the property was not in compliance with City ordinances because: (1) it was not licensed as a short term rental; (2) the license was not displayed on the front of the house; (3) a valid license number was not included in Plaintiff's online advertising; (4) certain information was not posted inside the house as required by the ordinances; and (5) "the short term rental shall not adversely affected [sic] the residential character of the neighborhood."¹³

Plaintiff alleges that she appeared before the Department on several occasions between April and June 2019 to request renewal of the license, but each time she was told that the license could not be renewed.¹⁴ Plaintiff further alleges that on June 14, 2019, the City issued a Notice of Hearing commanding Plaintiff to appear at a hearing on July 17, 2019 for allegedly violating the City ordinances in the following ways: (1) "not having a license;" (2) "not displaying the license on the front facade of the house;" (3) "not including the license number in her listing advertising the house;" and (4) "use of the rental for commercial or social events."¹⁵ Following the hearing, Plaintiff alleges that "the hearing officer employed by the City assessed thousands of dollars of fines against Plaintiff, and other penalties, including refusal to grant her any future short term rental license, without review by a neutral authority."¹⁶

Plaintiff raises the following seven causes of action against the City: (1) the penalties authorized by the Short Term Rental ("STR") Ordinances effect a taking of Plaintiff's property without compensation in violation of the Fifth Amendment; (2) the penalties authorized by the STR Ordinances are unconstitutionally excessive in violation of the Eighth Amendment; (3) the STR Ordinances prohibit Plaintiff from truthfully advertising and describing her private residential property on the internet and are a prior restraint of speech in violation of the First Amendment; (4) the STR Ordinances pertaining to Plaintiff's speech on the internet are a content-based restriction that infringe on Plaintiff's right to free expression in violation of the First Amendment; (5) the STR Ordinances require disclosures of non-public information without subpoena, without probable cause, and without pre-compliance review by a neutral authority in violation of the Fourth Amendment; (6) the STR Ordinances deny Plaintiff the rights to rent and advertise her residential property that the ordinances afford to other, similarly situated homeowners in violation of the equal protection clause of the Fourteenth Amendment; and (7) the STR Ordinances deny Plaintiff the rights afforded to similarly situated homeowners, assess fines and penalties against Plaintiff without pre-compliance review, without review by a neutral fact finder, without any compelling state interest, and therefore, without due process, in violation of the Fourteenth Amendment.¹⁷

Plaintiff seeks injunctive relief barring the City from enforcing the ordinances to "short term rentals," a declaratory judgment that the City's actions are unconstitutional, and reasonable attorney's fees, expenses, and costs.¹⁸

On August 21, 2019, the City filed the instant "Motion to Dismiss for Lack of Subject Matter Jurisdiction under Fed. R. Civ. P. 12(b)(1) and for Failure to State a Claim upon whichRelief can be Granted under Fed. R. Civ. P. 12(b)(1)."¹⁹ On September 3, 2019, Plaintiff filed an opposition to the motion.²⁰

II. Parties' Arguments

A. The City's Arguments in Support of the Motion

The City raises three principal arguments in support of the motion to dismiss.²¹ First, the City moves to dismiss Plaintiff's Fifth Amendment takings claim for lack of subject matter jurisdiction because the City asserts the penalties for violations of the STR Ordinances do not constitute an unlawful taking.²² Second, the City moves to dismiss Plaintiff's other claims for failure to state a claim upon which relief may be granted because the City contends Plaintiff has failed to assert with sufficient particularity how the STR Ordinances have violated her constitutional rights.²³ Third, to the extent Plaintiff seeks injunctive relief barring the City from enforcing the STR Ordinances in effect at the time of the administrative judgment on July 17, 2019, the City asserts those claims are now moot because the City Council recently voted to amend the STR Ordinances, effective December 2019.²⁴

1. The City Argues Plaintiff's Takings Claim Should be Dismissed for Lack of Subject Matter Jurisdiction

First, the City asserts that this Court lacks subject matter jurisdiction over Plaintiff's takings claim because the City's threat to impose civil penalties for violations of City Code § 26-618 does not constitute a Fifth Amendment claim for taking of Plaintiff's property without just compensation.²⁵ The City contends that in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City the Supreme Court adopted a two-prong test for ripeness under the Fifth Amendment's Takings Clause, explaining that such claims are not ripe until: (1) the administrative body has reached a final decision and (2) the plaintiff has sought compensation for the alleged taking through whatever adequate procedures the state provides.²⁶ The City asserts that although the Supreme Court recently overruled the requirement of the second prong in Knick v. Township of Scott, Pennsylvania, the first prong remains.²⁷

The City asserts that the City's Home Rule Charter, Louisiana state statutes, and the Comprehensive Zoning Ordinance authorize the City to impose penalties for violations of their ordinances.²⁸ Additionally, the City notes that Plaintiff does not allege that the City actually took possession of her property without just compensation because a "threat" does not constitute an actual taking of property without just compensation.²⁹ Accordingly, the City argues that Plaintiff's takings claim should be dismissed for lack of subject matter jurisdiction.³⁰

2. The City Argues Plaintiff's Other Claims Should be Dismissed for Failure to State a Claim Upon Which Relief can be Granted

Second, the City moves to dismiss Plaintiff's Eighth Amendment, First Amendment, Fourth Amendment, and Fourteenth Amendment claims for failure to state a claim upon whichrelief may be granted because the City contends Plaintiff has failed to assert with sufficient particularity how the STR Ordinances have violated her constitutional rights.³¹

a. Eighth Amendment Claim

As to Plaintiff's Eighth Amendment claim, the City argues that Plaintiff has failed to allege with particularity how the penalties for violating the STR Ordinances are not assessed by a neutral hearing officer or how the fines are excessive.³² The City contends that the Louisiana Supreme Court has held that the power to enact and enforce zoning and building laws plainly falls within the City's home rule power to initiate legislation and regulation.³³ The City asserts that the penalties do not exceed the limits authorized by Louisiana Revised Statute § 13:2575.³⁴ Additionally, the...