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LLC v. City of Center Line

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

July 31, 2019

HALPERN 2012, LLC, on behalf of themselves and others similarly situated, Plaintiff,



         In this putative class action, Plaintiff Halpern 2012, LLC challenges the constitutionality of Defendant City of Center Line's rental property ordinance. Pending before the Court is Defendant's motion for summary judgment. Plaintiff opposes the motion. On July 10, 2019, the Court held a hearing in connection with the motion. For the reasons set forth below, the Court GRANTS IN PART Defendant's motion for summary judgment. In addition, pursuant to Federal Rule of Civil Procedure 56(f), the Court GRANTS partial summary judgment in favor of Plaintiff on Count II of its complaint.

         I. Background

         Defendant is a municipal corporation in the State of Michigan. Like many municipalities, Defendant has a Property Maintenance Code (“PMC”) that includes provisions regulating landlords and the leasing of residential housing units. Defendant's PMC requires property owners who rent out their properties to, among other things, register their property with the City, comply with habitability standards, and submit to inspections. Defendant charges fees for occupancy certificates and inspections, and imposes fines when inspections are refused. Defendant's ordinances are derived from the International Property Maintenance Code of 2009, a widely used set of standards.

         Plaintiff owns a single-family rental property located at 8424 Harding in Center Line, Michigan that is subject to Defendant's PMC. Plaintiff's property is managed by Garner Property Management. At all relevant times, Plaintiff's property has been occupied by a tenant. After Plaintiff was issued a citation for failing to schedule a follow-up inspection, Plaintiff initiated this putative class action challenging the constitutionality of Defendant's rental property inspection ordinances. Plaintiff alleges that Defendant's PMC is unconstitutional because the version of the PMC in effect when the case was filed authorizes rental property inspections without a warrant or an opportunity for pre-compliance review. Asserting various legal theories, Plaintiff asks the Court to void the PMC and order Defendant to return all fees and fines collected under it.

         The specific ordinance challenged by Plaintiff requires inspection of rental properties to ensure compliance with Defendant's ordinance requirements and habitability standards. Pursuant to Center Line Rental Ordinance § 14-212(a), the city building department shall inspect “on a biennial basis any non-owner occupied residential building in the city including the individual residential dwelling units therein.” (Id. at § 14-212.) The building official “shall determine whether the building complies with the standards of the city building, plumbing, electrical and heating ordinances.” (Id. at § 14-213.) If the building inspected complies with these standards, the city building department will issue a certificate of compliance to that effect. (Id. at § 14-214.) Should a property owner dispute the findings of the inspector, the owner is afforded an appeal procedure as a matter of right. (Id. at § 14-219.) No. person is permitted to occupy any such building without a certificate of compliance. (Id. at § 14-215.)

         Although the inspections are mandatory for a certificate of compliance to be issued, it is the owner of the property who must schedule the inspection. Defendant sends a letter requesting the inspection be scheduled, and the owner is expected to call and do so. A property owner faces a range of penalties if it fails to schedule the inspection and comply with the ordinance.

         On April 10, 2017 an initial inspection of Plaintiff's property was conducted. The parties appear to agree that consent by either the property owner or the tenant was given for the inspection. The inspection report identified a number of issues with the dwelling, including repairs needed to the basement, ceiling, and garage, which were necessary to be completed before a certificate of compliance could be issued. After the inspection, Defendant sent a letter to Plaintiff's property manager detailing the required repairs and setting May 10, 2017 as the completion date. On May 11, 2017, a second letter was sent to the property manager noting that a certificate of compliance was missing in violation of § 14-215. This letter instructed the property manager to contact Defendant within five days to schedule a reinspection that would confirm completion of the repairs. On June 8, 2017, the property manager wrote to Defendant requesting a 45-day extension. Defendant concedes this extension was granted. However, by August 5, 2017, reinspection had still not occurred and third letter was sent to Plaintiff's property manager requesting a follow up inspection. On September 13, 2017, Defendant issued Plaintiff a citation for continuing to rent a residential property without a valid certificate of compliance in violation of § 14-215. In October of 2017 the citation was dismissed by Defendant. Plaintiff did not pay any fines or receive any criminal penalties in connection with the dismissed citation.

         On June 13, 2018, Plaintiff initiated this putative class action lawsuit against Defendant. The complaint includes six counts all arising from the constitutionality of the inspection ordinance. Specifically, Plaintiff claims Defendant's ordinance violates the Fourteenth Amendment's Due Process Clause (Count I) and the Fourth Amendment (Count II) and raises claims of unjust enrichment and the “remedy of assumpsit” under state law (Count III). The complaint also includes claims for injunctive and declaratory relief (Counts IV and V), and for liability under 42 U.S.C. § 1983 (Count VI).

         On February 6, 2018, Plaintiff filed its motion for class certification. Through this motion, Plaintiff seeks certification of a class of all property owners who paid inspection or registration fees under Defendant's ordinance. Following a hearing, the Court took the class certification issue under advisement pending the resolution of Defendant's dispositive motions.

         Now before the Court is Defendant's motion summary judgment seeking dismissal of Plaintiff's claims in their entirety. Plaintiff filed a response in opposition and Defendant submitted a reply brief. Plaintiff has also filed a motion to amend Count III of its complaint, which the Court will grant through this Order, as discussed below.

         II. Summary Judgment Standard

         “Summary judgment is proper only if the moving party shows that the record does not reveal a ‘genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'” Benison v. Ross, 765 F.3d 649, 658 (6th Cir. 2014) (quoting Fed.R.Civ.P. 56(a)). A genuine issue of material fact exists when there are “disputes over facts that might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). But “[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing First Nat. Bank of Ariz. v. Cities Servs. Co., 391 U.S. 253, 289 (1968)).

         In addition, once the moving party has met its burden, the non-moving party must make a “showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Bormuth v. Cty. of Jackson, 870 F.3d 494, 503 (6th Cir. 2017). The non-moving party must present some evidence in support of its complaint to defeat a motion for summary judgment and show that a genuine issue for trial exists-i.e., that a reasonable jury could return a verdict for the non-moving party. See Anderson, 477 U.S. at 248.

         III. Analysis

         A. Plaintiff's Claims

         Although the complaint is styled in six counts, there are really only two viable standalone causes of action: deprivation of due process under the Fourteenth Amendment (Count I) and violation of the Fourth Amendment prohibition against unreasonable searches (Count II). The remaining counts either address aspects of those claims brought under 42 U.S.C. § 1983 or the types of relief sought. See MS Rentals, LLC v. City of Detroit, 362 F.Supp.3d 404, 411 (E.D. Mich. 2019) (addressing nearly identical claims).

         The parties agree that under Michigan law there is no independent cause of action for the claim of assumpsit. See Fisher Sand & Gravel Co. v Neal A. Sweebe, Inc., 494 Mich. 543, 564, 837 N.W.2d 244, 256 (2013). As Plaintiff points out, however, Fisher preserved the substantive remedies traditionally available under assumpsit. Id. at 256-257. The availability of those remedies depends in part on Plaintiff's success on its substantive counts. See MS Rentals, 362 F.Supp.3d at 412; Garner Properties & Mgmt. v. Charter Twp. of Redford, No. 15-14100, 2017 WL 3412080, at *17 (E.D. Mich. Aug. 8, 2017); NILI 2011, LLC v. City of Warren, No. 15-13392, 2017 WL 5467746, at *9 (E.D. Mich. Nov. 14, 2017).

         Plaintiff filed a motion to amend its complaint to clarify that it brings its count for restitution (Count III) under a theory of unjust enrichment and to clarify the underlying cause of action for restitution. The Court will grant leave to amend the complaint. However, for the reasons discussed below, this claim (Count III) will be dismissed. Similarly, the counts styled as “Injunctive Relief” (Count IV) and “Declaratory Relief” (Count V) do not state independent claims. These remedies are dependent on the viability of the Fourth and Fourteenth Amendment claims.

         Finally, the claim styled as “Violation of 42 USC 1983” (Count VI) alleges only that Plaintiff is entitled to relief for the previously-alleged constitutional violations. To prevail on a § 1983 claim, a plaintiff must show “(1) the deprivation of a right secured by the Constitution or laws of the United States; (2) caused by a person acting under the color of state law.” Bayes v. Cleland, 799 F.3d 600, 607 (6th Cir. 2015) (citing Sigley v. City of Parma Heights, 437 F.3d 527, 533 (6th Cir. 2006). There is no dispute here as to the second element. Plaintiff argues the first element is satisfied by the demonstrated unconstitutionality of the inspection provisions challenged in Counts I and II. Count VI, then, is merely a repetition of those counts. See MS Rentals, 362 F.Supp.3d at 412.

         B. Standing

         Defendant challenges Plaintiff's standing to assert its Fourth Amendment claim (Count II) on two grounds. First, Defendant argues Plaintiff lacks Fourth Amendment standing to assert a constitutional violation resulting from a search of tenant-occupied rental properties. Second, Defendant argues Plaintiff has not suffered an injury-in-fact and therefore fails to meet the Article III requirements for federal jurisdiction.

         1. Plaintiff's reasonable expectation of privacy in tenant-occupied property.

         It is undisputed that at all relevant times, Plaintiff's property was occupied by a tenant. According to Defendant, this means Plaintiff lacks standing to assert a claim under the Fourth Amendment because it lacked a reasonable expectation of privacy in its occupied rental property. (ECF No. 24, PG. Id. 609.) Defendant cites Shamaeizadeh v. Cunigan, 338 F.3d 535 (6th Cir. 2003) to support the proposition that a property owner of a tenant-occupied property lacks standing to challenge the constitutionality of a municipality's rental property code on Fourth Amendment grounds. In response, Plaintiff argues Shamaeizadeh is distinguishable from the present case and that notwithstanding the occupancy status of the property, it has standing to ...

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