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TBS Group, LLC v. City of Zion

United States District Court, N.D. Illinois, Eastern Division

January 23, 2017

TBS GROUP, LLC, Plaintiff,
v.
CITY OF ZION, ILLINOIS, Defendant.

          MEMORANDUM OPINION AND ORDER

          JOHN W. DARRAH, United States District Court Judge

         On June 3, 2016, Plaintiff filed a Complaint, alleging violations of the Fair Housing Act (“FHA”), 42 U.S.C. § 3601 et seq., and seeking declaratory judgment as well as injunctive relief to prevent Defendant from enforcing the adopted ordinance and Comprehensive Plan. Defendant filed a Motion to Dismiss [13] pursuant to Fed.R.Civ.P. 12(b)(6). For the reasons discussed below, Defendant's Motion [13] is granted.

         BACKGROUND

         TBS Group, LLC is a property owner located in Round Lake Beach, Illinois, that rents properties located in Zion that are subject to the ordinance. (Compl. ¶ 6.) On or about July 7, 2015, the City of Zion, Illinois, adopted ordinance 15-O-33. (Compl.) The ordinance added the following language to the Zion Municipal Code under Section 10-9 “Permit fee schedule”:

         Rental Certificate inspection $75.00 per dwelling unit

Residential buildings containing more than 132 multiple-family dwelling units, as those terms are defined in Chapter 102 of this Code: Not to exceed $10, 000 per calendar year.
Residential buildings containing more than 132 multiple-family dwelling units, as those terms are defined in Chapter 102 of this Code, and part of a single, geographically contiguous, complex of multiple-family dwelling units, as determined by the Director of Building and Zoning: Not to exceed $10, 000 per calendar year.

(Dkt. 13-2, p. 7.) The ordinance also provides permit fees for smaller residential units, commercial units, and “industrial and warehouse” units. (Id.) The ordinance requires that owners of rental property pay a fee, obtain a rental certificate, and open rental homes for inspection before being rented. (Compl.) Failure to comply with the ordinance results in fines of up to $10, 000 per year. (Id.)

         Under the ordinance, registration and inspection fees are $100.00 or more each, and violations can accrue a fine of $750.00 per day. (Id. ¶ 14.) Plaintiff alleges Defendant's ordinance has made housing unavailable because of national origin, race, or color, and constitutes discrimination in terms, conditions, or privileges of sale or rental dwellings or in provision of services because of national origin, race, or color. (Id. ¶ 18.) Plaintiff also alleges that this ordinance is selectively enforced against landlords who have African-American and Latino tenants or has a disparate impact on them. (Id. ¶ 17.) The population of Zion is 31 percent African-American, 27 percent Latino, and 48.9 percent White. (Id. ¶ 10.) The rental population within Zion is 39.3 percent African-American, 14.9 percent Latino, and 39 percent White. (Id.)

         Defendant also maintains a Comprehensive Plan that places multiple-family housing almost exclusively in a specific area of Zion. (Id. ¶ 12.) This area is next to industrial areas and remote from green space. (Id.) Plaintiff further alleges the Comprehensive Plan will make housing unavailable because of national origin, race or color by locating multi-family rental housing in less-desirable industrial areas far from desirable green space. (Id. ¶ 19.)

         LEGAL STANDARD

         Rule 12(b)(6) permits a defendant to move to dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). To survive a motion to dismiss, a complaint must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555). However, plaintiffs are not required to “plead the elements of a cause of action along with facts supporting each element.” Runnion ex rel. Runnion v. Girl Scouts of Greater Chicago & Nw. Indiana, 786 F.3d 510, 517 (7th Cir. 2015). Rather, the complaint must provide a defendant “with ‘fair notice' of the claim and its basis.” Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008) (quoting Fed.R.Civ.P. 8(a)(2) and Twombly, 550 U.S. at 555). When evaluating a Rule 12(b)(6) motion, the court accepts the complaint's well-pleaded factual allegations as true and draws all reasonable inferences in the plaintiff's favor. Twombly, 550 U.S. at 555-56.

         ANALYSIS

         Plaintiff alleges that Defendant's ordinance violates § 3604(a), § 3604(b), and § 3617 of the FHA. Plaintiff also alleges that the Comprehensive Plan violates § 3604(a). The parties disagree as to the pleading standard that should apply to claims under the FHA. Plaintiff argues that the notice pleading standard of Federal Rule of Civil Procedure 8 applies. See Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010) (applying Rule 8 pleading standards to the plaintiff's claims of racial discrimination in violation of the Fair Housing Act and Rule 9 heightened pleading standards to the plaintiff's fraud claims). However, the Seventh Circuit later stated that the Iqbal/Twombly standard was applied in Swanson. McCauley v. City of Chicago, 671 F.3d 611, 617 (7th Cir. 2011) (“In Swanson, on the other hand, we applied Twombly/Iqbal and held that the plaintiff's allegations were sufficient to survive a motion to dismiss on at least some of her claims.”). The Seventh Circuit explained that “in the absence of an obvious legal alternative explanation, ...


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