By: Stephen D. Richman, Esq. -
Senior Counsel- Kohrman, Jackson & Krantz
(Criminal Penalties and Lack of
Warrant Procedure Held to be Key Failings of Bedford, Ohio’s Former Point of
Sale Ordinance)
The U.S. District Court for
the Northern District of Ohio has held in Pund
v. City of Bedford, Case No.1:16-cv-1076 (N.D. Ohio Sept. 10, 2018) that a
prior version of the point of sale inspection ordinance of the City of Bedford (suburb
of Cleveland), as well as its rental inspection provisions, were
unconstitutional, in violation of the Fourth Amendment of
the U.S. Constitution.
This is the second Ohio federal
court to strike down ordinances of this type. Earlier this year, the U.S. 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) ruled
that the point of sale ordinance of the City of Oakwood (suburb of Dayton) was
unconstitutional.
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 a code official, pay an inspection fee, and correct or otherwise
address identified violations of the municipality’s fire, zoning, building, and/or
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 Northern District of Ohio
in Pund has followed the lead of the Southern
District of Ohio (in Thompson) in
holding point of sale ordinances with criminal penalties, but without warrant
procedures (such as those formerly enacted in Oakwood, Ohio and Bedford, Ohio) unconstitutional
violations of the Fourth Amendment of the U.S. Constitution.
Bedford’s
Former Point of Sale/Rental Inspection Ordinance
Bedford’s former Point of Sale Inspection
Ordinance required homeowners to obtain a Certificate of Inspection
(“Certificate”) before selling their home. A Certificate, valid for twelve
months, was issued after a building official inspected “all structures or premises used for dwelling purposes and all secondary
or accessory structures to determine whether such structures or premises
conform[ed] to the provisions of th[e] code.” On inspection, the building
official could enter the property at any reasonable time and inspect all areas
of the home, including basements, bathrooms, electrical equipment, roofing,
walks and driveways. Obtaining a Certificate required homeowners to apply for
and consent to a warrantless inspection of the home and to pay an inspection
fee ranging from $50 to $200. If the home did not pass inspection, either (i)
the homeowner was required to perform repairs before the sale, or, (ii) the
buyer could deposit money in escrow to ensure payment for repairs to be made
after the sale. Homeowners that violated the ordinance or refused an inspection
were guilty of a misdemeanor and could be fined and imprisoned.
Similarly, Bedford’s rental inspection ordinance
required landlords to schedule a warrantless inspection of their rental units
every two years, or each time a new tenant was secured. A landlord was to
obtain a Certificate in order to lease its property to a tenant. Landlords paid
an inspection fee ranging from $20 to $50 per unit, and failure to comply could
result in criminal penalties including fines and imprisonment.
It is
important to note that approximately two months after the plaintiffs’ action
was filed, the City of Bedford passed an ordinance that repealed the then
existing pre-sale inspection ordinance and replaced it with a new one. The new
ordinance adds an administrative warrant process for inspections and eliminates
criminal penalties.
Background
of Pund v. City of Bedford
The plaintiffs filed a legal
action against the City of Bedford on behalf of Ken Pund (an area
landlord who was forbidden from selling a home he owns to his daughter, in
which she resides); John Diezic (a homeowner who was prevented from selling his
home in Bedford due to minor cracks in his asphalt driveway); and (1) all other
individuals and businesses that have been subjected to Bedford’s point of sale inspections
between September 10, 2014 and January 30, 2017 (and paid the requisite inspection
fees); and (2) all individuals and businesses that have been subjected to
rental inspections between September 10, 2014 and February 14, 2017 (and paid the
requisite rental inspection fees).
Basically,
the plaintiffs in Pund sought: 1) an
injunction against enforcement of the ordinances containing a warrantless
inspection requirement; 2) a declaratory judgment that Bedford’s point of sale
and rental inspection ordinances were unconstitutional (and that defendant City
of Bedford has been/continues to be unjustly enriched as a result therefrom);
and 3) restitution of the inspection fees plaintiffs paid pursuant to such
ordinances.
Defendant’s
Arguments
The City
of Bedford put forth two basic arguments: 1) it was entitled to summary
judgment on plaintiffs’ claims because its amended ordinance rendered such
claims, moot; and 2) it did not commit any constitutional violation because the
plaintiffs consented to the inspections.
The
Court’s Analysis in Pund V. City of Bedford
As
with the court in Thompson, the court in Pund agreed with the
defendant’s argument that the amended ordinance rendered the plaintiffs’ injunction claims, moot. Citing
precedent (prior cases on point), the court in Pund explained that “[W]hen
the issues presented are no longer ‘live’ or the parties lack a legally
cognizable interest in the outcome,” a case (or case issue) becomes moot.
And, since Bedford’s amended ordinance
provided plaintiffs the injunctive relief they sought; the court in Pund
declared the injunction portion of the plaintiffs’ claims no longer live, and
therefore, moot. However, further citing precedent, the court clarified that “[W]here a claim for
injunctive relief is moot, relief in the form of damages for a past constitutional
violation is not affected.” In other
words,
the Pund court held that plaintiffs
retained a “backward-looking right to challenge
the original law”; in
terms of their claims for a declaratory judgement and monetary damages relating
to the prior ordinance. The City of Bedford tried to argue away plaintiffs’
right to a declaratory judgement (leaving simply, a claim for monetary
damages), however, the court in Pund disagreed, explaining that “Declaratory
relief is part and parcel of [a] claim for monetary relief, which is live.”
To
address the defendant’s argument that there was no constitutional violation,
and accordingly no damages to be awarded (because plaintiffs consented to the
search, and accordingly did not violate the Fourth Amendment), the court
in Pund 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
court in Pund stated, as a general
rule, that “The Fourth Amendment protects
people in the privacy of their homes and against ‘unreasonable searches and
seizures’;” and that searches of
the home by the government “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.” As
you may recall from high school government class, “Plain view”, “search
incident to a lawful arrest”, “exigent circumstances” and “voluntary consent”
are some of the more common “warrant exceptions,” where a warrantless search or seizure would still be considered
reasonable and not run afoul of the Fourth Amendment.
The
defendant and its counsel in Pund were certainly aware of the “consent
exception,” and in fact used it to justify their argument for summary judgement
in their favor. The plaintiffs, however countered that “voluntary consent to inspection, necessary for the City’s compliance
with the Fourth Amendment, was impossible for any homeowner to give under the
terms of the ordinance because the only alternative to consent was criminal
penalty.”
In
holding for the plaintiffs, the court in Pund first
recognized and agreed that voluntary consent to search is in fact a
well-established exception to the Fourth Amendment’s warrant requirement, by
simply stating that, “A homeowner’s
voluntary consent to a search satisfies the government’s Fourth-Amendment
obligations.” However, just as general rules of law always have exceptions,
exceptions to exceptions are just as common, and ruled the day in Pund v City of Bedford. Quoting
precedent (establishing an exception to the consent exception) by the court in Thompson, and others before it, the
court in Pund agreed with the
plaintiffs and held that “consent given
under threat of criminal penalty can never be deemed voluntary.” Applying the facts to the law, the Pund Court summarized that the Bedford
inspection ordinances were unconstitutional because they required a homeowner
to obtain a certificate in order to sell a home, which in turn allowed a
building inspector to enter and search the property without a warrant, failure
to comply was punishable as a misdemeanor of the first degree, and consent to
the search could not be considered voluntary because of the criminal penalties
which would ensue without such consent.
Would
it have made a difference if the City of Bedford never enforced its inspection ordinances
against any property owner?
While
not discussed in the Pund case, the
court in Thompson clearly provided that such facts would make no difference, by
stating: “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 Pund V. City of Bedford
Specifically,
the court in Pund ruled as follows: “the City’s Point of Sale Inspection Ordinance and Rental
Inspection Ordinance, as they existed on May 4, 2016, are unconstitutional both
facially and as applied to Plaintiffs because they violate the Fourth Amendment
to the U.S. Constitution. [The Court] further declares that fees resulting from
searches under those Ordinances resulted in unjust enrichment and that
Plaintiffs are entitled to compensation.”
The case is still moving forward, however on
issues involved in determining class action participation and the amount of
compensation due.
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.
However,
as provided in Pund v City of
Bedford (and Thompson V. City of Oakwood), it seems that Ohio 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, if it was not clear
after Thompson, it is definitely
advisable now for those municipalities who have not yet done so, to clearly
review their point of sale/inspection ordinances and revise them accordingly.
