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LLC v. City of Warren

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

November 14, 2017

NILI 2011, LLC, EETBL, LLC, and Investment Realty Services, LLC D/B/A SBYC Garner, LLC Plaintiffs,
v.
The City of Warren, Defendant.

          R. Steven Whalen United States Magistrate Judge.

          OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT [55]

          GERSHWIN A. DRAIN UNITED STATES DISTRICT JUDGE.

         I. Introduction

         This case concerns rental ordinances enacted by the City of Warren, Michigan. Plaintiffs NILI 2011, LLC, EETBL, LLC, and Investment Realty Services, LLC doing business as SBYC Garner, LLC filed a Complaint on September 28, 2015. See Dkt. No. 1. Plaintiffs assert the following claims against the Defendant City of Warren: violations of procedural due process (Count I); violations of due process through ordinances that are void for vagueness (Count II); violations of the Fourth Amendment prohibition on unreasonable searches and seizures (Count III); assumpsit under Michigan law (Count IV); and violations based on municipal liability and 42 U.S.C. § 1983 (Counts V and VIII). Plaintiffs request injunctive and declaratory relief in Counts VI and VII, respectively.

         Defendant filed a Motion for Summary Judgment on August 16, 2017, and this motion is fully briefed. Dkt. No. 55.

         Presently before the Court is the Defendant's Motion for Summary Judgment [55]. A hearing on this motion was held on Tuesday, November 7, 2017 at 10:00 A.M. For the reasons that follow, the Court will GRANT IN PART and DENY IN PART Defendant's Motion for Summary Judgment [55]. The Court will GRANT Defendant's Motion on Counts II and IV, and DENY Defendant's Motion on Counts I, III, and V-VIII.

         II. Background

         The Plaintiffs are limited liability companies who own rental properties in Warren, Michigan. Dkt. No. 1, p. 2 (Pg. ID 2). The Defendant is the City of Warren, located in Macomb County, Michigan. Id.

         The City has enacted ordinances covering the maintenance of rental properties. Id. at p. 3 (Pg. ID 3). These ordinances are largely from the International Property Maintenance Code (“IPMC”).[1] Renting a property in Warren requires satisfying several requirements. First, in applying for a rental license, rental owners must certify that they agree to “release the City of Warren, its agents, servants and employees from any and all liability resulting from the required inspections and observations hereunder.” Dkt. No. 55, p. 27 (Pg. ID 588). Next, a person must register the property with the City and obtain a certificate of compliance with the rental code. Dkt. No. 1, p. 5 (Pg. ID 5). To obtain a certificate of compliance, the rental property must pass an inspection conducted by a City housing code official. Id. A certificate of compliance is valid for two years. Dkt. No. 55-2, p. 7 (Pg. ID 606).

         A City housing code official must personally inspect a property prior to the issuance of a certificate of compliance. Dkt. No. 60-4, pp. 5-6 (Pg. ID 1492-93). The City's procedure for gaining access to a rental property is described in Section 104.3 of the IPMC. Dkt. No. 55-6, p. 12 (Pg. ID 643). Under that section, where a premises is occupied a code official must request permission from the occupant to enter. Id. “If entry is refused, the code official shall have recourse to the remedies provided by law to secure entry.” Id.

         The City's code officials apply the IPMC when inspecting a rental property. Dkt. No. 1, p. at 3 (Pg. ID 3). The IPMC does not define some key terms, namely “good repair.” See Dkt. No. 55, p. 21 (Pg. ID 582). Instead, the IPMC provides that any undefined terms “shall have ordinarily accepted meanings such as the context implies.” Id.; see also Dkt. No. 55-6, p. 18 (Pg. ID 649). In some instances, the IPMC offers examples regarding the meaning of an undefined term. For example, the IPMC understands the exterior of a building to be in “good repair” where that building is “structurally sound and sanitary so as not to pose a threat to the public health, safety or welfare.” Dkt. No. 55-6, p. 21 (Pg. ID 652).

         The City's rental coordinator, Marilyn Tremberth, testified that City inspectors sometimes apply different, conflicting interpretations of code provisions. Dkt. No. 60-3, pp. 49-50 (Pg. ID 1354-55). Likewise, a Warren property manager observed that City inspectors subjectively administer the IPMC and sometimes require changes not mandated by the IPMC. Dkt. No. 60-4, p. 4 (Pg. ID 1491).

         If a premises fails an inspection, the City sends a notice to the rental owner regarding the violation. Dkt. No. 1, pp. 8-9 (Pg. ID 8-9). The IPMC requires that certain information be included in this notice, in particular, the right to appeal and the City's ability to place a lien on a non-compliant property; the City does not include this information in its notices. Dkt. No. 55-6, p. 13 (Pg. ID 644); see, e.g., Dkt. No. 60, pp. 1-7 (Pg. ID 1283-1289).

         The City's failure of inspection notices do, however, notify rental owners that they have sixty days to rectify the violations. See Dkt. No. 60-2, p. 3 (Pg. ID 1285). Before a second inspection can occur, a rental owner must pay a $40 fee, if the interior of the premises must be re-inspected, and confirm that the violations have been cured. Id. If the premises fails a second inspection, the City gives the owner fifteen days to make the necessary repairs. Id. at p. 8 (Pg. ID 1290). The owner must schedule a third inspection within fifteen days and, again, a $40 fee is imposed if the interior of the house must be inspected a third time. Id.

         Where a rental owner fails or does not schedule a third inspection, the City immediately issues the owner a ticket. Id. This ticket subjects owners to fines of up to $1, 000. Id. If a rental owner refuses to pay the fine, the owner must attend a court proceeding. Id. This proceeding solely concerns “why [rental owners] were unable to complete inspections within the allotted time.” Id. Put another way, the hearing only allows rental owners to address whether they possess a certificate of compliance; it does not allow them to contest the merits of code inspectors' evaluations of a property. Dkt. No. 1, p. 16 (Pg. ID 16).

         The IPMC contains a section detailing an appeal process which allows rental owners to dispute a code inspector's decisions-the City did not adopt this section, however. Id. at p. 8 (Pg. ID 8); see also Dkt. No. 55-6, p. 16 (Pg. ID 647); see also Dkt. No. 55-2, p. 4 (Pg. ID 603). Instead, the City simply provides this court hearing after the rental owner receives a fine for non-compliance. See Dkt. No. 1, p. 16 (Pg. ID 16).

         III. Legal Standard

         Under Federal Rule of Civil Procedure 56(c), “summary judgment shall be granted if ‘there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.' ” Cehrs v. Ne. Ohio Alzheimer's Research Ctr., 155 F.3d 775, 779 (6th Cir. 1998). A court must view the facts, and draw reasonable inferences from the facts, in the light most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). No genuine dispute of material fact exists where the record “taken as a whole could not lead a rational trier of fact to find for the non-moving party.” Matsushita Elec. Indus., Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The key inquiry is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson, 477 U.S. at 251-52.

         IV. Discussion

         Defendant argues it is entitled to summary judgment on all of Plaintiffs' claims. Dkt. No. 55, p. 12 (Pg. ID 573). Specifically, Defendant contends there is no genuine dispute about Plaintiffs' claims regarding (1) procedural due process; (2) due process violations based on the void for vagueness doctrine; (3) prohibitions on unreasonable searches and seizures under the Fourth Amendment; (4) assumpsit under Michigan law; (5) municipal liability; and (6) 42 U.S.C. § 1983. Defendant also opposes Plaintiffs' request for injunctive and declaratory relief.

         The Court agrees with the Defendant that it is entitled to summary judgment on Counts II and IV. The Court finds that the Defendant is not entitled to summary judgment on Counts I, III, and V-VIII, however.

         A. Count I: Procedural Due Process

         1. Notice

         Defendant contends there is no genuine dispute that it has provided Plaintiffs with notice that comports with procedural due process. Conversely, Plaintiffs allege that reasonable minds may disagree about whether the Defendant has violated their procedural due process rights, as the City's failed notices of inspection do not include all the information required by the City's rental regulations. The Court finds that the Plaintiffs' argument has merit.

         “ ‘Procedural due process imposes constraints on governmental decisions which deprive individuals of ‘liberty' or ‘property' interests within the meaning of the Due Process Clause of the Fifth or Fourteenth Amendment.' ” Kaminski v. Coulter, 865 F.3d 339, 347 (6th Cir. 2017) (quoting Mathews v. Eldridge, 424 U.S. 319, 332, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976)). As it concerns procedural due process, “the deprivation of property by state action is not itself unconstitutional; ‘what is unconstitutional is ...


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