(Criminal Penalties and Lack of Warrant Procedure Held to be
Key Failings of Ordinance)
By: Stephen D.
Richman, Esq. - Senior Counsel- Kohrman, Jackson & Krantz
It is not easy being a municipality (such as a city or
village) in Ohio these days. With the Ohio estate tax having been repealed
several years ago and state funds cut to a trickle, it is difficult to make
ends meet; especially in “bedroom communities” without a business tax base.
Residents, of course still want the same level of health, safety and welfare
services they have enjoyed over the years.
Seemingly, as funds continue to
dwindle, so does the power to regulate. Even though Article XVIII of the Ohio
Constitution gives municipalities the power of “Home Rule” (special authority
to create laws and take action regarding local self-government, exercise of
police powers and operation of public utilities, that have not been
specifically granted to the State of Ohio), this power is slowly but surely
being limited. For example, due to relatively recent legislation, municipalities
in Ohio cannot regulate guns in public places, where oil and gas wells are
situated, and how taxes are levied and collected.
Municipalities are also subject
to more and more United States constitutional challenges. Many of these cases
deal with claims that local
governments are taking private property for public use without "just
compensation,” violating individual rights without “due process” and curtailing
free speech in
violation of the First Amendment.
Recently, municipalities in Ohio are
facing claims that they have violated the Fourth Amendment via unconstitutional
“point of sale” ordinances.
Point of Sale Ordinances
While this type of ordinance can
take many forms, the most common makes it unlawful to transfer ownership of any
real estate, or lease to a new tenant, without having obtained a pre-sale
inspection of the property under the applicable municipal code. The pre-sale
inspection procedure usually requires the property owner to complete an application,
schedule and appear for an inspection of the property with the code official,
pay an inspection fee, and correct or otherwise address identified violations
of the municipality’s fire, zoning, building, and property maintenance codes in
order to obtain a certificate of occupancy authorizing the property’s sale or
rental. The violation of pre-sale inspection requirements in this type of
ordinance is usually punishable as a misdemeanor.
Municipalities usually defend
their point of sale ordinances as valuable tools to increase the value of
properties within their borders, and ensure such properties and the residents
occupying the same will be and remain safe. While these ordinances often contain
a “criminal component”, municipalities rarely enforce the criminal penalties,
but deem them necessary to cause compliance.
Notwithstanding the laudable
intentions behind this type of point of sale ordinance, and the usual
reluctance of municipalities to enforce the criminal penalties associated
therewith, the United States District Court for the Southern District of Ohio
in Thompson V. City of Oakwood, Case No. 3:16-cv-169 (S.D. Ohio Feb 9, 2018)
has recently held the (former) point of sale ordinance in Oakwood, Ohio (suburb
of Dayton) has been an unconstitutional violation of the Fourth Amendment of the
U.S. Constitution.
Background/Plaintiffs’ Claims in Thompson
V. City of Oakwood
The pertinent facts of the case
are as follows:
Plaintiffs Jason Thompson and
2408 Hillview LLC (a company formed by Thompson and a partner to buy and sell
homes) own and sell residential homes in Oakwood, Ohio. The LLC engaged an
agent of Re/Max to act as the sellers’/plaintiffs’ agent in the sale of their
property. The agency agreement required
the property owner to apply for any required housing inspections and to furnish
a copy of the certificate of occupancy. The agent paid the $60 application fee
and scheduled an inspection, which inspection revealed some issues that needed
to be addressed to comply with the City of Oakwood Building Code. The issues
were promptly addressed and a final inspection was scheduled. During the final
inspection, the building inspector asked for permission to inspect the garage,
which was inaccessible during the first inspection. Permission was denied, and Ethan
Kroger, the building official therefore, did not inspect the garage.
The plaintiffs then brought an
action in May, 2016 under 42 U.S.C. § 1983 (a civil action for the deprivation
of constitutional/civil rights) against the City of Oakwood and Mr. Kroger, for
allegedly infringing the plaintiffs’ constitutional rights by requiring them to
submit to warrantless searches or risk criminal punishment before permitting
them to sell their homes.
Specifically, the plaintiffs
sought: 1) a declaratory judgment that Oakwood’s pre-sale inspection
requirement was unconstitutional on its face; 2) an injunction against
enforcement of the ordinance containing that requirement; and 3) restitution of
the $60 fee that the plaintiffs paid pursuant to the ordinance. Approximately
one week after the filing, the plaintiffs amended their complaint, seeking to constitute
their action as a “class action suit” on behalf of a class of similarly
situated individuals who sold real estate in Oakwood (during the prior six
years) and were “coerced into paying
pre-sale inspection fees.”
Oakwood Codified Ordinance § 17-107.5
The ordinance at issue (Oakwood Codified Ordinance § 17-107.5)
provided that, “it shall be unlawful for
the owner of any real estate premises to transfer legal or equitable ownership
of that premises, or change tenants, without having obtained a pre-sale
inspection of it under this code.” The
ordinance further provided that upon completion of the inspection and other
requirements, an owner could obtain a “certificate of occupancy”, which was
necessary because, it was illegal, per the ordinance for a new owner or tenant
to occupy any premises, “without having
obtained from the code official or the previous owner a valid certificate of
occupancy ...” In addition, under § 17-106.4 of the Oakwood Code, an owner
who failed to comply with the pre-sale inspection or occupied a premises
without having obtained a certificate of occupancy was guilty of a minor
misdemeanor.
It is important to note that
approximately two months after the plaintiffs’ action was filed, the City of Oakwood
passed an emergency ordinance that repealed the then existing pre-sale
inspection ordinance and replaced it with a new one. The new ordinance adds an
administrative warrant procedure for residential and business inspections and
clarifies that asserting rights under the Fourth Amendment will not trigger
criminal penalties.
Defendant’s Arguments
Generally, Oakwood credited its
point of sale ordinance with encouraging residents to maintain their homes,
increasing home values and decreasing the number of fires and structural failures.
The City of Oakwood also pointed out that: a) its property maintenance code
contains an administrative appeal procedure for property owners to challenge
any decision or order of a code official, and no Oakwood property owner (including
plaintiffs), has filed an administrative appeal challenging the point of sale ordinance; b) Oakwood has never denied a
property owner an occupancy permit or cited a property owner for failure to
comply with the pre-sale inspection requirement, and c) to its knowledge, no
other owner has objected to the ordinance. The City of Oakwood did acknowledge,
however that it has informed at least two property owners— (the plaintiffs) that
failure to have a pre-sale inspection was a misdemeanor.
Specifically, the city argued
that: 1) it was entitled to summary judgment on Plaintiffs’ § 1983 claims
because its amended ordinance rendered moot, the plaintiffs’ claim; 2) it did
not commit any constitutional violation because the plaintiffs consented (through
their real estate agent) to the pre-sale inspection; 3) the plaintiffs relied
on inadmissible evidence and failed to address the history of the pre-sale
inspection ordinance; and 4) Oakwood’s code enforcement officer did not commit
any constitutional violation and, even if he did, he would be entitled to qualified
immunity.
The Court’s Analysis in Thompson
V. City of Oakwood
Before analyzing the crux of the
case, the court in Thompson agreed
with the defendant’s argument that the amended ordinance rendered the plaintiffs’
injunction claims, moot. As stated by the court, “Since Oakwood’s amended ordinance provided Plaintiffs the injunctive
relief they sought; as a result, that portion of Plaintiffs’ claims is indeed
moot. Their claims for actual and nominal damages relating to the prior
ordinance, however, are not.”
To address the defendant’s claim
that no damages should be awarded (because plaintiffs consented to the search,
and accordingly did not violate the Fourth Amendment), the court in Thompson first summarized the general
rule of (and quoted precedent with regard to) such amendment, before evaluating
whether or not the general exception to the general rule (namely, that
consented-to searches do not require a warrant) applied.
--the 4th Amendment (General Rule)-The Fourth Amendment of
the U.S. Constitution provides that “[t]he
right of the people to be secure in their persons, houses, papers, and effects,
against unreasonable searches and seizures, shall not be violated, and no
Warrants shall issue, but upon probable cause, supported by Oath or
affirmation, and particularly describing the place to be searched, and the
persons or things to be seized.” U.S. Const. amend. IV. The basic purpose
of the Fourth Amendment . . . is to “safeguard
the privacy and security of individuals against arbitrary invasions by
government officials.“ Camara v. Mun.
Court, 387 U.S. 523, 527 (1967). The U.S. Supreme Court has repeatedly held
that “searches conducted outside the
judicial process, without prior approval by a judge or a magistrate judge [e.g.,
via a warrant], are per se unreasonable subject only to a few specifically
established and well-delineated exceptions.”
The court in Thompson then gave two examples of unconstitutional, point of sale
ordinances that authorized warrantless, unconsented-to inspections to enforce
city codes. Namely, the San Francisco building code ordinance at issue in the Camara case, and the Portsmouth [Ohio]
Rental Dwelling Code at issue in Baker v.
City of Portsmouth, No. 1: 2015 WL 5822659 (S.D. Ohio Oct. 1, 2015). As in
the Oakwood ordinance, the San Francisco and Portsmouth ordinances required
applications to the applicable municipal authority for an occupancy permit (in
order to sell, with regard to Camara;
and to rent with regard to Portsmouth), a fee was charged, a city official
approved or denied the permit based on an inspection, and failure to consent to
the warrantless inspection was punishable as a criminal offense.
According to the court in Thompson, the United States Supreme
Court’s decision in Camara and its
progeny establish that a municipality violates the Fourth Amendment of the U.S.
Constitution when it requires a property owner to consent to a warrantless
inspection of their property or face a criminal penalty, unless a valid
exception to the warrant requirement exists.
The court in Thompson then agreed with the reasoning of these “warrantless
inspection cases” by quoting the following statement made by the court in Camara: “administrative searches are
significant intrusions upon interests protected by the Fourth Amendment and when
authorized and conducted without a warrant procedure, lack the traditional safeguards
which the Fourth Amendment guarantees to the individual.”
---Consent Exception-If your distant memory of 11th grade history
or Con Law is telling you, “wait a
second, I remember there being a number of instances or exceptions where a
warrant is not necessary, where a warrantless search or seizure would still be
considered “reasonable” and not run afoul of the Fourth Amendment”, you
would be correct. “Plain view”, “search incident to a lawful arrest”, “exigent
circumstances” and “consent” are some of the more common “warrant
exceptions.”
The defendant and its counsel in Thompson were certainly aware of the
consent exception, and used it to justify their argument for summary judgement
in their favor (recall the plaintiffs’ real estate agent consented to the
inspection of the plaintiffs’ property; the agent just asked it not include a
search of the garage).
As to defendant’s claim that plaintiffs
consented to the search, the court in Thomson
first recognized and agreed that consent to search is in fact a
well-established exception to the Fourth Amendment’s warrant requirement… in general.
Here, however, the court reasoned
that the issue was not whether or not consent was an exception, but rather, “whether or not a property owner could
voluntarily consent to a pre-sale inspection where the governing ordinance
makes it a criminal offense not to do so and refusing an inspection results in
the denial of a certificate of occupancy.”
The plaintiffs argued that, “the denial of a certificate of occupancy and
criminal penalty that could result from a failure to consent are so coercive
that any consent given cannot be deemed voluntary,” and accordingly, the
exception should not apply.
The City of Oakwood argued that
the ordinance’s criminal penalty was not coercive because Oakwood never
enforced it against any property owner and that, “if Oakwood homeowners had objected to the inspection, the inspection
would not occur, and any potential defects would simply transfer to the buyer.”
The court in Thomson was not convinced, stating that, “Even if these facts are undisputed, they do not remove the coerciveness
of Oakwood’s ordinance.” Quoting precedent (prior court decisions, on
point), the court in Thompson
provided the test of sorts to constitutionally evaluate the type of point of
sale ordinances (that used to be) on the City of Oakwood’s books: “When evaluating the validity of an
individual’s consent under the Fourth Amendment…not any type of consent will
suffice, but instead, only consent that is unequivocally, specifically, and
intelligently given, uncontaminated by any duress and coercion… [and] a person
cannot provide such uncontaminated consent when refusal to do so empowers the municipal authority to deny him the right to
sell his property (or make it very difficult for him to find a willing buyer
and title insurance company) and prosecute him for a criminal misdemeanor.”
Applying this so called test to the facts in Thompson, the court basically agreed with the plaintiffs and concluded,
“Here, even if Oakwood has never denied a
certificate of occupancy or enforced the criminal provisions of its ordinance, the
mere possibility of such action is enough to render any consent involuntary as
a matter of law.”
--Holding of Thompson V. City of
Oakwood-Specifically, the court in Thompson ruled as follows: “1. Plaintiffs are granted summary judgment
as to liability on their (a) § 1983 claim under the Fourth Amendment against
Oakwood only, (b) § 1983 claim under the unconstitutional conditions doctrine
against Oakwood only, and (c) unjust enrichment/restitution claim against
Oakwood; 2. Mr. Kroger is granted summary judgment in his favor as he is
entitled to qualified immunity on both of Plaintiffs’ § 1983 claims; and 3. The
Court certifies the following class under Fed. R. Civ. P. 23(b)(3): All
individuals and businesses that have (1) sold houses within the City of Oakwood
since May 25, 2010; and (2) paid pre-sale inspection fees to the City of
Oakwood in conjunction with the sale of their houses.
Moral of the Story
Most municipalities infuse their
building and zoning codes with criminal penalties for violation of the same. In
their defense, enforcing compliance with ordinances is often difficult without
the threat of criminal penalties. Usually, such ordinances provide more “bark
than bite” and are only enforced as a last resort.
As provided in
Thompson V. City of Oakwood, however, it
seems that point of sale ordinances that call for criminal penalties (whether
or not actually enforced) will most likely be held unconstitutional, at least
where no administrative warrant procedure is provided. In other words, for
those municipalities who have not yet done so, it is time to revise. For those
municipalities thinking jurisdictionally, think again.
T
he 1851
Center for Constitutional Law (the "Center") has also filed a lawsuit in the
Northern District of Ohio against the City of Bedford (outside Cleveland, Ohio)
with regard to a similar point of sale ordinance. Stay tuned.
