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LLC v. City of Inkster

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

March 21, 2018

26017 MICHIGAN, LLC and C&K VENTURES, INC., Plaintiffs and counter-defendants,
CITY OF INKSTER, Defendant and counter-claimant.


          DAVID M. LAWSON United States District Judge.

         Plaintiff C&K Ventures, Inc. leases property owned by co-plaintiff 26017 Michigan, LLC located in the City of Inkster, where it operates a motel and party store. In February of last year, Inkster city officials conducting an “emergency inspection” shut down the party store (temporarily) and the motel (permanently), believing that the premises were riddled with building code violations and were operated so as to be a public nuisance. The plaintiffs sued the City alleging denial of their procedural and substantive due process rights and an uncompensated partial taking of their property. The City filed a counterclaim to abate alleged nuisance conditions on the plaintiffs' property. The plaintiffs have filed a motion to dismiss the City's counterclaim, contending that it is untimely and not properly before the Court. Inkster has filed a motion to dismiss the complaint in its entirety and a motion for summary judgment on its two-count counterclaim. The Court heard oral argument on November 22, 2017. Because the facts pleaded in the complaint and those undisputed facts evident from the public record establish that the plaintiffs cannot sustain any viable constitutional claims against the City for the closure of their motel, and because the plaintiffs have made no effort to sustain the counts pleaded under various state laws on any other legal authority, the Court will grant Inkster's motion to dismiss. Because the City has failed to put forth any evidence to show that it is entitled to judgment as a matter of law on either count of its counterclaim, the Court will deny its motion for summary judgment. And because the City has not pleaded sufficient facts to describe any plausible claim for nuisance abatement, the Court will grant the plaintiffs' motion to dismiss the counterclaim.

         I. Facts and Proceedings

         The underlying basic facts, which are taken from the complaint and the relevant documents referenced in it, appear to be largely undisputed.

         A. Inspection and Closure of the Michigan Motel

          Plaintiff 26017 Michigan, LLC owns property located on Michigan Avenue in the City of Inkster. Plaintiff C&K Ventures, Inc. leases the property from the LLC entity and, until February 2017, operated a motel on the premises, known as the “Michigan Motel.” C&K also operates a store known as the “25 Hour Party Store” on the same property. The motel was built in 1957 and sold to C&K in 2001. Although not alleged in the complaint, it appears to be undisputed that in 2011, C&K sold the property including the buildings to 26017 Michigan, LLC, and the LLC entity then began to lease back the buildings to C&K, which continued to operate the businesses. The motel was inspected by the fire department each year that it was in operation, and any violations noted during those inspections were fixed promptly.

         On February 27, 2017, the Inkster city police department, acting in concert with other police agencies, descended on the motel purportedly based on an urgent need to conduct a health and safety inspection of the premises. Based on various health and safety violations revealed during the inspection, police placed padlocks on all of the motel rooms. The City later sent the plaintiffs a letter detailing the violations observed. However, the City did not provide any warning of the inspection, no warrant was issued for seizure of the motel property, and the City did not issue any notice of violation or conduct any hearing regarding any purported nuisance conditions or ordinance violations at the property, before shuttering the motel.

         The party store also briefly was shut down during the inspection based on the supposition of City officials that it did not have a “certificate of compliance” issued by the City for operation of the business; however, after a record search disclosed that the store did have a valid certificate, the store was allowed to reopen.

         The letter produced by the City's building official, Ralph Welton, states that the inspection was conducted based on a complaint by the City's Fire Marshal. A report stated that the inspection included 23 guest rooms and three mechanical spaces at the motel, which occupies two adjacent buildings. The report noted the following safety hazards and building code violations: (1) overloaded electrical outlets (14 units); (2) illegal or improper wiring and exposed outlets or electrical fixtures (11 units); (3) broken, damaged, or boarded up exterior windows and doors (14 units); (4) missing or non-functional smoke and carbon-monoxide detectors (nine units); (5) obstructed or nonexistent avenues for emergency egress (four units); and (6) insufficient or blocked fresh air ventilation (two units).

         The report noted that several improperly wired and ventilated water heaters and laundry appliances were found in the mechanical rooms, and there were insufficient clearances or “improper storage” around those appliances. The report also noted several instances of illegal or dangerous appliances installed in several units and numerous units with water damage or other damage to floors, walls, and interior doors, as well as several units with holes or open passageways into adjoining units and the attic above the rooms. The inspectors noted that they could not even enter Unit 26 because of what appeared to be a severe “hoarding” issue with the occupant, which among other things made the entry door impossible to open.

         Finally, the report noted that there were no fire-rated walls between any of the units; an attic space that spanned multiple rooms was open and not obstructed by any fire or smoke barriers; and single residential furnace units were used to heat multiple rooms (up to ten each), which posed a violation of the building code since it could allow airborne diseases to spread between units and could allow fire and smoke to spread without a proper smoke or fire barrier.

         It appears to be undisputed that after the inspection, the City's officials or police placed padlocks on all of the guest units of the motel, and the motel has not been operated and no guests have resided there since February 27, 2017.

         B. State Court Criminal Proceedings

         In their counter-claim, the City alleged, and the plaintiffs do not appear to dispute, that the plaintiff entities were charged with numerous misdemeanor counts resulting from the building code violations and other illegal conduct in the operation of the motel. On August 4, 2017, the plaintiffs jointly pleaded guilty in the City of Inkster's Twenty-Second District Court to (1) one count of violating Inkster City Ordinance § 150.237 (Failure to Obtain a Certificate of Compliance); (2) one count of violating City Ordinance § 94.25 (Trash, Debris & Litter); and (3) one count of violating City Ordinance § 156.51(B) (Blight). Plaintiff C&K Ventures, Inc. also pleaded guilty to: (1) 13 counts of violating City Ordinance § 93.31 (Improper Motel Registration); and (2) five counts of violating City Ordinance § 118.03 (30 Day Extended Stay Ordinance).

         C. Consent Judgment

         The City included extensive allusions in its pleadings and briefing to a 2011 Consent Judgment entered in a previous civil action for nuisance brought against C&K Ventures, Inc., before it sold the property to the LLC entity and stepped back into the role of lessor and operator of the motel and party store businesses. However, the City apparently does not dispute the plaintiffs' assertion that the Consent Judgment had a sunset date of three years after it was entered, and it only cites the substantive provisions of the Consent Judgment as proof that the plaintiffs had engaged in nuisance-causing conduct in the past that led to the civil suit.

         D. Police Calls Since February 27, 2017

          The City admits in its counter-claim that “[t]he Michigan Motel has remained closed since [February 27, 2017].” However, the City asserts that since that date, City police have “made no less than 32 police runs to the property.” The City attached to its counter-claim a report (Exhibit A) that states the dates of what presumably were some or all of those police dispatches. It also furnished a “summary” of 45 police reports from calls logged to the vicinity of 26017 Michigan Avenue. That summary is discussed in detail below.

         E. Plaintiffs' Permit Application

         On October 13, 2017, as directed by the Court, the City sent a letter to the plaintiffs explaining its position that the motel would be allowed to reopen if the plaintiffs make repairs to the structure addressing all of the items identified in the February 27, 2017 inspection report, including applying and paying for all required permits. The City noted that all repairs would need to conform to the applicable sections of the 2015 Michigan Rehab Code and other applicable sections of the Mechanical and Plumbing Code, and, in particular, that the building would be “required to have a fire break [at least in the attic].” The City also stated, as the City's building permit official previously had informed the plaintiffs, that the City's building department “can work with [the plans] provided we have a comprehensive cover sheet, ” which would need to include, among other things, a narrative section stating the codes being utilized and the means by which compliance would be achieved for each of the defects identified by the City's inspectors.

         F. The Lawsuit

         The plaintiffs filed their complaint in the Wayne County, Michigan circuit court on June 9, 2017. The complaint pleaded nine substantive counts, which were captioned as follows: “taking / deprivation of property” (Count I); “inverse condemnation” (Count II); “violations of the 2012 Michigan Building Code” (Count III); “violations of MCL 600.2940” (actions to abate nuisance) (Count IV); “violations of the Inkster Zoning Ordinance” (Counts V and VI); “procedural due process violations” (Count VII); “substantive due process violations” (Count VIII); and “selective enforcement” (Count IX). Count X of the complaint stated a non-substantive demand for declaratory and injunctive relief premised on the substantive claims pleaded in Counts I through IX. Although Counts III through VI were captioned as violations of various state statutes, in substance those claims plead that the City failed to follow the procedural requirements of the applicable local ordinances and state statutes before initiating the inspection and resulting closure of the motel. The City removed the case to this Court on June 12, 2017, citing the Court's federal question jurisdiction.

         On August 21, 2017, the City of Inkster filed a counter-claim for nuisance abatement which pleaded two counts under the authority of Michigan Compiled Laws § 600.3801 (Count I) and Inkster City Ordinance § 95.01 (Count II). In Count I the City alleged that the property is a nuisance because of its ongoing use for criminal activities enumerated in the statute. In Count II the City asserted that the property is a nuisance due to the dangerous and unsanitary conditions cited in the February 27, 2017 inspection report.

         The City has moved to dismiss all counts of the complaint. The plaintiffs have moved to dismiss the counterclaim.

         II. Defendant's Motion to Dismiss

         A. Jurisdiction

         The City argues the plaintiffs have not pleaded viable claims, and all of them must be dismissed. It invokes Federal Rule of Civil Procedure 12(b)(6), and leads off with the argument that the plaintiffs lack standing to sue because they have not obtained a certificate of compliance to operate the business. The City confounds that argument with the contention that the plaintiffs' claims are not ripe for adjudication. Both of those justiciability issues implicate the Court's subject matter jurisdiction, as federal courts may “hear[] [only] actual cases and controversies, ” Miller v. City of Wickliffe, 852 F.3d 497, 502-03 (6th Cir. 2017) (citing U.S. Const. art. III, § 2, cl. 2; Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)), and are more properly raised under Rule 12(b)(1).

         The City's argument that the plaintiffs have not alleged sufficient facts to establish jurisdiction amounts to a facial attack under Rule 12(b)(1), which means that “the court takes the allegations of the complaint as true” on its jurisdictional facts. Cartwright v. Garner, 751 F.3d 752, 759 (6th Cir. 2014). For standing, the Court must assess those allegations to determine if the plaintiffs have alleged the “three elements that serve as its irreducible minimum, ” which consist of “an injury in fact - an invasion of a legally protected interest, ” “causation - i.e., that [their] injury is fairly traceable to the challenged action of the defendant, ” and “that a favorable decision could redress the injury.” Miller, 852 F.3d at 502-03 (citing Lujan, 504 U.S. at 560).

         “‘At the pleading stage, general factual allegations of injury resulting from the defendant's conduct may suffice' to establish standing.” Christian County Clerk ex rel. Kem v. Mortgage Electronic Registration Systems, Inc., 515 F. App'x 451, 454 (6th Cir. 2013) (quoting Lujan, 504 U.S. at 561). “[W]hen the Lujan Court used the phrase ‘legally protected interest' as an element of injury-in-fact, it made clear it was referring only to a ‘cognizable interest, ' and the Court ‘did not mean to suggest a return to the old “legal right” theory of standing rejected in Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150 (1970).'” Ibid. (quoting Parker v. District of Columbia, 478 F.3d 370, 371 (D.C. Cir. 2007), aff'd sub nom., District of Columbia v. Heller, 554 U.S. 570 (2008) (quotation marks omitted)).

         Ripeness, on the other hand, “is a justiciability doctrine designed ‘to prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements over administrative policies, and also to protect the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties.'” National Park Hospitality Association v. Department of Interior, 538 U.S. 803, 807-08 (2003) (quoting Abbott Laboratories v. Gardner, 387 U.S. 136, 148-149 (1967)). “Determining whether administrative action is ripe for judicial review requires us to evaluate (1) the fitness of the issues for judicial decision and (2) the hardship to the parties of withholding court consideration.” Id. at 808.

         The plaintiffs have pleaded sufficient facts to show that they suffered a concrete and particularized injury fairly traceable to the City's conduct when City officials shuttered their motel as a result of the purported building code violations. The absence of a certificate of compliance is irrelevant to this point, because they need not establish that they had any “legal right” to operate the business in order to pass the standing threshold. The undisputed fact that the City padlocked the plaintiffs' premises and excluded them from entering or using it is sufficient ground to support the Court's jurisdiction to inquire whether that action was lawful and supported by any rational government concern. “‘As the Supreme Court clarified in Data Processing, a plaintiff need not have a ‘legal right, ' or a right protected by the law of property, contract, tort, or statute, to suffer injury-in-fact.'” Christian County Clerk ex rel. Kem v. Mortgage Electronic Registration Systems, Inc., 515 F. App'x 451, 454 (6th Cir. 2013) (quoting Club Italia Soccer & Sports Org. v. Charter Township of Shelby, 470 F.3d 286, 292 (6th Cir. 2006)).

         The controversy is ripe, because it is undisputed that the exclusion of the plaintiffs from their motel premises was an accomplished fact on February 27, 2017, and the City has taken the position since then that, not only is no compensation due to the plaintiffs for its invasion of their property, but also that the plaintiffs ought to pay the City to raze the structure that was seized. See Horne v. Department of Agriculture, 569 U.S. 513, ---, 133 S.Ct. 2053, 2062 (2013) (“[A] ...

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