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Smiley v. Calumet City

May 15, 2009

ALONZO SMILEY, FOR HIMSELF AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
CALUMET CITY, ILLINOIS, DEFENDANT.



The opinion of the court was delivered by: Wayne R. Andersen District Judge

MEMORANDUM, OPINION AND ORDER

This case arises from plaintiff Alonzo Smiley's action against defendant Calumet City, Illinois for injunctive, declaratory, and other relief pursuant to 42 U.S.C. § 1983 and 28 U.S.C. §§ 2201 and 2202 to redress the alleged deprivation, under color of law, of Smiley's constitutional rights guaranteed by the United States Constitution and under Illinois law. Smiley alleges that certain provisions of Chapter 14 of the Municipal Code of Calumet City, Illinois, codified in Ordinance No. 08-06, are facially unconstitutional and constitute an unconditional and unreasonable restraint on the right to freely transfer his property. Before the court now are plaintiff's Motion for Class Certification, plaintiff's Motion for Preliminary Injunction, Mainstreet Organization of Realtors' Motion for Leave to Intervene and defendant's Motion to Dismiss Complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). For the following reasons, plaintiff's Motion for Class Certification [35] is granted, and his Motion for Preliminary Injunction [21] is denied. Defendant Calumet City's Motion to Dismiss [25] is granted, and Mainstreet Organization of Realtors' Motion for Leave to Intervene [48] is denied.

BACKGROUND

I. The Parties

Smiley owns residential property at 508 Jeffrey, Calumet City, Illinois. When Smiley purchased the property, it contained three units. After purchasing the property, Smiley deconverted the property to contain two units and has rented it as two units. Smiley now desires to sell his property with three units, which is the same condition as when he purchased the property. The property is subject to Calumet City's Point of Sale Inspection Ordinance ("POS Ordinance"). Calumet City, located in Cook County, Illinois, is a unit of local government incorporated under the laws of Illinois.

II. The Class Action Claims

Smiley has filed the lawsuit as a class action pursuant to Federal Rule of Civil Procedure 23 on behalf of all owners of residential property in Calumet City. Smiley alleges that the class is sufficiently numerous to make bringing all affected parties before the court impractical. He further alleges that there are three questions of law and fact common to the class, which outweigh any questions that only affect individual class members. These questions are:

a. Whether the Point of Sale Inspection Ordinance is unconstitutional because it unreasonably and unconstitutionally restrains property owners' right to sell their property without due process of law;

b. Whether the Point of Sale Inspection Ordinance is unconstitutional because it fails to provide procedural due process; and

c. Whether Calumet City's policy of refusing to issue re-build letters and/or confirmation that property is legal nonconforming unconstitutionally interferes with the right to freely sell property including by prohibiting owners of legal nonconforming property from selling such property without deconverting.

First Amended Verified Class Action Complaint, ¶29. Finally, Smiley alleges that he meets all the requirements for class certification under Federal Rule 23.

III. The POS Ordinance

In this action, Smiley makes a facial challenge to the constitutionality of the POS Ordinance. Under the POS Ordinance, a Point of Sale Inspection ("POS Inspection") is required. A POS Inspection is defined as "an inspection of real property by the Department conducted in connection with a taxable transfer of real estate to determine whether the condition of said property conforms to the specific regulations identified in this Section." Municipal Code of Calumet City, § 14-1(a)(2). The scope of the POS Inspection is not strictly defined in the Ordinance, although broad parameters are specified. The purpose of the inspection is to determine "whether such property is in compliance with the following specific requirements, which the corporate authorities of the City find are related to the public health, safety and welfare: (1) Compliance with Property Maintenance Code [incorporating the 2006 International Property Maintenance Code] 1/4 (2) Inspection to Determine Possible Illegal Conversions." Municipal Code, § 14-1(c). The code defines "illegally converted" structures as "property 1/4 converted to another additional use beyond that for which the property was originally permitted, and which [i] is in violation of the property's zoning limitations and [ii] is not a legal nonconforming use under Section V of the City Zoning Ordinance." Municipal Code, § 14-1(c). A "legal nonconforming" use of property is defined as "[a]ny lawfully established use of a building or land, on the effective date of the ordinance or of the amendments thereto, that does not conform to the use of regulations for the district in which it is located." Zoning Code, § 5.1.

If code violations are identified, the seller receives written notice of such violations within three days of the POS Inspection. Municipal Code § 14-1(g). Once the repairs are completed, the City must re-inspect the building within three days. Municipal Code, § 14-1(h). If an inspection reveals that a property has been illegally converted, a notice of deconversion will be issued. The notice details the required measures to bring the illegally converted property into compliance with the applicable zoning regulations. Municipal Code, § 14-1(g).

Once a property passes inspection, a "Certificate of Compliance" is issued. The homeowner then takes the Certificate of Compliance to get a transfer stamp from the City. The transfer stamp is required to record the sale of property within Calumet City. Except for property that falls within certain narrow exceptions, the POS Ordinance prohibits the city clerk from issuing transfer stamps unless the seller presents a Certificate of Compliance. Municipal Code 82-327(b). Additionally, the issuance of transfer stamps is prohibited unless the seller provides the city clerk with proof of a current paid water bill. Id.

IV. The First Amended Complaint

In Count I, Smiley seeks a declaration that the POS Ordinance, contained in Section 14-1 of Article I of Chapter 14 of the Municipal Code of Calumet City, unreasonably and unconstitutionally restrains the rights of residential property owners in Calumet City to transfer their property. In essence, the POS Ordinance prevents owners from selling their property until a city inspector has determined that the property passes an inspection and is in compliance with municipal building codes.

Smiley alleges that the scope of the POS Ordinance is unconstitutionally vague because of its incorporation of the 2006 International Property Maintenance Code that requires property to be in "good repair," but fails to define what constitutes "good repair." Second, Smiley alleges that the length of time to obtain the Certificate of Compliance, with the time lags between the inspections, repairs, and re-inspections, is unreasonably long and thereby impedes sales of residential property for an unreasonably long period of time. Third, Smiley asserts that the POS Ordinance provides no meaningful way for a seller to contest an inspector's decision, thereby depriving the seller of due process. Finally, Smiley asserts that the POS Ordinance does not provide sufficient due process protection to prevent a seller from having to erroneously pay a water bill in order to obtain the required transfer stamps to record a transfer of his or her property.

In Count II, Smiley seeks a declaration that the POS Ordinance fails to afford homeowners wishing to transfer their property adequate procedural due process. Smiley asserts that the due process clause requires a hearing be provided before the seller is deprived of his or her right to record a transfer of property. Further, he argues that, because city inspectors have "unfettered discretion to order repairs unrelated to conditions that affect health or safety or the public good" the POS Ordinance is impermissibly vague. First Amended Verified Class Action Complaint, ¶43. With regard to legal nonconforming property, Smiley alleges that the POS ordinance provides insufficient notice for property owners to determine whether property is legal or illegal.

In Count III, Smiley seeks a declaration that in connection with the sale of legal nonconforming property, Calumet City's refusal to issue "re-build" letters and/or to confirm that property is legal nonconforming property constitutes an unreasonable and unconstitutional restraint on the right to freely transfer property. The Calumet City Zoning Code provides that, if legal nonconforming property is damaged by less than 50 percent, it may be rebuilt or repaired to its original condition and the original use continued, even if current zoning regulations would not permit that use. Zoning Code, § 5.5. However, if the legal nonconforming property is damaged by more than 50%, the property can be rebuilt and only used for a conforming use. Id. Smiley asserts that potential buyers of legal nonconforming property are generally not able to secure financing unless Calumet City issues a letter stating that, should the nonconforming property be damaged by 50% or less, it can be rebuilt or repaired to its prior state and maintain its status as legal nonconforming property. First Amended Verified Class Action Complaint, ¶ 49. Smiley alleges that Calumet City refuses to issue these letters and that the City's refusal effectively prohibits property owners from selling their legal nonconforming property, unless they deconvert their property. Smiley requests that this court enjoin Calumet City from refusing to issue rebuild letters, thereby requiring this court to impose on Calumet City the affirmative duty to issue such letters.

V. The Related Litigation

A. Mainstreet Org. of Realtors v. Calumet City

This case presents the same issues raised in litigation brought by proposed intervenors the Mainstreet Organization of Realtors ("the Association") entitled Realtor Association of West/South Suburb Chicagoland v. Calumet City, No. 06 C 2271 (N.D. Ill.)(Shadur, J.) (the "Prior Litigation"). In the Prior Litigation, a local realtor association (the "Association") filed suit seeking an injunction against Calumet City's enforcement of the POS Ordinance. The Association challenged the constitutionality of Calumet City's then-enacted POS Ordinance. On August 8, 2006, Judge Shadur entered a preliminary injunction which enjoined the City from enforcing the Ordinance and from ordering deconversion of legal nonconforming property.

Calumet City Appealed

On October 17, 2007, the Seventh Circuit held that the Association did not have standing to sue Calumet City, vacated the preliminary injunction and dismissed the lawsuit. Specifically, the Seventh Circuit vacated the injunction on the ground that the Association lacked "prudential" standing to challenge the POS Ordinance. Mainstreet Org. of Realtors v. Calumet City, 505 F.3d 742 (7th Cir. 2007). In its opinion, the Seventh Circuit stated that a challenge to the POS Ordinance should be brought in a lawsuit by all homeowners in Calumet City joined in a class action. Id. at 747.

B. Hussein Mann and Debra Houston-Mann v. Calumet City

This case also presents similar issues presented in a case pending before Judge Coar, Hussein Mann and Debra Houston-Mann v. Calumet City, No. 08 C 555 (N.D.Ill.). The allegations in the Mann case are virtually identical to those in this case. Specifically, plaintiffs in Mann also seek declarations that the POS Ordinance is facially unconstitutional and that the City's refusal to issue re-build letters and/or confirm that the property is legally nonconforming in connection with the sale of legal nonconforming property constitutes an unreasonable and unconstitutional restraint on the right to transfer property freely. In addition, plaintiffs in Mann seek an award of damages to compensate them for damages suffered as a result of Calumet City's failure to comply with an order entered by Judge Shadur in Realtor Association of West/South Suburb Chicagoland v. Calumet City, No. 06 C 2271, in which Judge Shadur ordered the City to compensate plaintiffs for the damages they suffered as a result of the City's interference with the sale of their property.

Judge Coar recently granted Calumet City's Motion to Dismiss First Amended Complaint pursuant to Federal Rule 12(b)(6) and denied plaintiffs' Motion for Partial Summary Judgment. Mann v. Calumet City, 2009 U.S. Dist. LEXIS 12192 (N.D. Ill. Feb. 17, 2009). Judge Coar concluded that Calumet City's POS Ordinance is facially constitutional. He recognized that the POS Inspection "is a one-time inspection made before an intended transfer of property, for the stated limited purposed of checking for compliance with municipal codes and for illegal conversions." Id. at *30. He further stated that the POS Ordinance provided multiple layers of procedural due process protection, both before and after the inspection and identification of violations and repairs, to property owners who dispute the inspection scheme and evaluations. Id. at *34. Finally, Judge Coar concluded that Calumet City is not required, and has no affirmative duty, to issue rebuild or conformation letters for legal nonconforming properties. Id. at *48-49.

Judge Coar also granted the City's Motion to Dismiss Intervenors as Party-Plaintiffs. Relying on the Seventh Circuit's opinion in Mainstreet Org. of Realtors v. Calumet City, 505 F.3d 742 (7th Cir. 2007), Judge Coar concluded that Mainstreet Organization of Realtors did not allege any new theory of injury that would justify a re-examination of the Seventh Circuit's decision to dismiss the Association's first challenge to the POS Ordinance. Mann, 2009 U.S. Dist. LEXIS 12192, at *56-58.

ANALYSIS

I. Smiley's Motion for Class Certification

Smiley requests that this court certify a class comprising all owners of residential property in Calumet City under Federal Rule of Civil Procedure 23. He further requests that this court appoint him as class representative and that his attorneys Patrick Nash and Philip Stahl of the law firm Grippo & Elden LLC be appointed as counsel for the class. Calumet City requests that this court deny Smiley's request for class certification or, in the alternative, stay the decision pending adjudication of Calumet City's ...


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