JOHN R. TUNHEIM, District Judge.
This case arises out of the City of Minneapolis' assessment of fees for vacant buildings. Plaintiff DRB # 24 ("DRB"), the owner of a vacant building, brought suit on behalf of himself and others similarly situated challenging the validity of the fees and the City's authority to assess such fees. The matter came before United States Magistrate Judge Janie S. Mayeron on the parties' cross-motions for summary judgment. In an August 2, 2013 Report and Recommendation ("R & R"), the Magistrate Judge recommended that the Court grant Defendants' motion to dismiss because DRB failed to file an appeal of the City's assessments within the time limit provided for such an appeal by Minnesota law. Before the Court are DRB's objections to the R & R. After de novo review of the Magistrate Judge's Report and Recommendation, with particular emphasis on consideration of the issues raised in DRB's objections, see 28 U.S.C. § 636(b)(1)(C); D. Minn. LR 72.2(b), the Court will conclude that the R & R is well-supported and
In 2001 Minneapolis established a Vacant Building Registration ("VBR") program. Minneapolis, Minn., Code of Ordinances [hereinafter M.C.O.] § 249.80. Through the program, owners of vacant properties are required to register the vacant property with the City and pay an annual fee. The fee permits the City to "recover all costs incurred by the city for monitoring and regulating vacant buildings, including nuisance abatement, enforcement and administrative costs." M.C.O. § 249.80(j)(1). The amount of the fee is set by the Director's Fee Schedule. See M.C.O. § 249.80(j)(i); (see also Second Decl. of David Busch, Ex. A, Nov. 7, 2012, Docket No. 18.) If a property owner fails to pay the fee, the City may levy and collect the fee as a special assessment against the property under the City's provision for special assessments for nuisance conditions. M.C.O. § 249.80(j)(3) (referencing M.C.O. § 227.100 (provision for special assessments)). This arrangement is authorized by a Minnesota statute, which permits cities to collect vacant building registration fees as a special assessment against the property. Minn.Stat. § 429.101, subd. 1(a)(12).
When the City intends to assess a VBR fee it must serve a written Notice of Intent to Assess ("Notice") to the property owner. See M.C.O. § 249.80(j)(3); M.C.O. § 227.100. The Notice must comply with certain requirements under the Minneapolis Code of Ordinances and the property owner may challenge the assessment at a hearing. See M.C.O. § 227.100(d). Under Minnesota law, if the owner does not prevail with his or her objections to the assessment, the owner may appeal the assessment to the district court by serving notice to the mayor or city clerk within thirty days after the adoption of the assessment and filing the notice with the district court within ten days after serving notice to the city. Minn.Stat. § 429.081; see also M.C.O. § 227.100(d).
DRB owns the property at 701 Newton Avenue North, Minneapolis. 701 Newton
(Id.) DRB appealed the assessment and after an administrative hearing on July 21, 2011, the hearing officer determined that the assessment should be levied in full. (Id., Exs. D, E.)
Again in April 2012, DRB received a Notice of Intent to Assess for an unpaid 2011 VBR fee of $6,746. (Id., Ex. C.) The relevant part of the 2011 Notice is nearly identical to the 2010 Notice:
(Id.) DRB objected and the hearing officer adopted the assessment on May 31, 2012.
(Id., Exs. F, G.)
DRB does not dispute that it did not appeal the assessments to the district court within the deadline in accordance with Minn.Stat. § 429.081. (See Letter to Magistrate Judge, March 14, 2013, Docket No. 40 (in response to Letter to Magistrate Judge, March 14, 2013, Docket No. 40).) Instead DRB filed this action in state court on behalf of itself, its vacant property at 701 Newton Avenue in Minneapolis, and other owners and properties similarly situated against the City and unknown individual defendants.
The City removed to federal court, denied the allegations in the Complaint and asserted various defenses, including a defense that some claims were barred by the Tax Injunction Act, 28 U.S.C. § 1341. (Notice of Removal, June 22, 2012, Docket No. 1; Answer, June 22, 2013, Docket No. 2.) DRB moves for partial summary judgment on the Tax Injunction Act defense and the Magistrate Judge recommended that the Court grant DRB's motion. The City does not object to that recommendation, so the Court need not consider that issue further and will adopt the recommendation of the Magistrate Judge to dismiss the motion. DRB also moves for partial summary judgment on counts IX through XIX of the Complaint (counts related to the interest rate, the City's authority to assess the fees, and the adequacy of the City's notice of the fees).
The Magistrate Judge issued an R & R, recommending that the Court grant summary judgment for the City on all counts. (R & R, Aug. 2, 2013, Docket No. 62.) The Magistrate Judge reasoned that, because DRB failed to appeal the assessments within thirty days of their adoption, all of DRB's claims are barred by Minn.Stat. § 429.081 and M.C.O. § 227.100. (R & R at 1100-02.) To the extent that DRB argued that those appeal procedures and the time limit for appeal did not apply because the assessments were void for improper notice, the Magistrate Judge found that the Notices met the requirements of M.C.O. § 227.100. (R & R at 1102-03.)
DRB objects to the R & R, raising three issues for the Court: (1) whether the City's Notices of its intent to assess the fees were deficient, (2) if the Notices were deficient, whether the appeal deadline properly applies, and (3) whether the appeal deadline applies to claims DRB characterizes as "non-special assessment causes of action," such as fraud, unjust enrichment, and negligent misrepresentation.
Upon the filing of a report and recommendation by a magistrate judge, a party may "serve and file specific written objections to the proposed findings and recommendations." Fed.R.Civ.P. 72(b)(2); accord D. Minn. LR 72.2(b). "The district
Here, the Magistrate Judge issued a recommendation applying the standard for summary judgment. Summary judgment is appropriate where there are no genuine issues of material fact and the moving party can demonstrate that it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). A fact is material if it might affect the outcome of the suit, and a dispute is genuine if the evidence is such that it could lead a reasonable jury to return a verdict for either party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A court considering a motion for summary judgment must view the facts in the light most favorable to the non-moving party and give that party the benefit of all reasonable inferences that can be drawn from those facts. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
DRB argues that the City's Notices of the special assessments were deficient under M.C.O. § 227.100. That section states the notice requirements applicable to the Notices DRB received:
M.C.O. § 227.100. DRB argues that the Notices it received were deficient in two ways: they failed to state the "basis for the costs" and they failed to inform the owner of "the existence of any deferment procedure."
The City argues that the issue of the Notices' deficiency is not properly before the Court because DRB did not allege in its Complaint that the Notices were defective. Count XIX of DRB's Complaint is entitled "City's Special Assessments for Unpaid Vacant Building Registration Fees Are Void for City's Failure to Comply with MCO § 227.100(d)." (Compl. at 39.) In the Complaint, DRB also alleges that the
DRB argues that the Notices failed to state the basis for the costs, and instead "[m]erely characterize[ed] or describe[ed] in a narrative form" what the proposed assessments were for. (Pl.'s Objections at 7, Aug. 16, 2013, Docket No. 63.) Specifically, DRB argues that the Notices should have provided a "foundation, development, calculation or explanation" that would justify the amount of the fee. (Id. at 6.) The Court must therefore determine whether the language from the Notices stating: "VACANT BUILDING REGISTRATION FEE" and "Total cost is: $6,550.00" sufficiently provides notice of the basis for the costs as required by the Ordinance.
The ordinance states that the Notice need include only the "basis" for the cost, not the calculation or a justification for it. M.C.O. § 227.100. Words and phrases used in the Minneapolis Code of Ordinances "shall be construed in their plain, ordinary and usual sense." M.C.O. § 3.10. The term "basis for the costs" is most reasonably interpreted in this situation to mean a description of what the costs are for, not a thorough calculation of or justification for the VBR. Generally, the purpose of notice is to enable the owner to challenge the assessment. See Meadowbrook Manor, Inc. v. City of St. Louis Park, 258 Minn. 266, 104 N.W.2d 540, 543 (1960) ("property owner is entitled to a reasonable notice" of special assessment and was entitled to notice that would give taxpayer "opportunity to question the validity of the amount of the assessment"). The information in these Notices provided sufficient information for DRB to challenge the assessments: the Notices made clear that the fees were for the Vacant Building Registration program. DRB would not have needed more specific information about how the City calculated the amount of the fees assessed to its property because the amount of the fees were standardized, not unique to DRB's property. To the extent DRB wished to challenge the amount and justification of the standard fee, it could do that through the objection and appeal procedures, but would not need more information in the Notices about how the City calculated the amounts in order to do so.
To the extent DRB argues that the requirements of Minnesota Statutes § 429.061 should inform the interpretation
Minn.Stat. § 429.061. With regard to the amount of the assessment, Minn.Stat. § 429.061 requires that the notice include only the "total amount of the proposed assessment." None of its other requirements — the "general nature of the improvement" or the "area proposed to be assessed" would require the kind of calculation and justification for the total amount that DRB proposes is required.
Because the Notices identified the amount and type of fee being assessed, the Court finds that the Notices the City sent to DRB adequately stated the "basis for the costs" under M.C.O. § 227.100.
DRB also argues that the Notices were deficient because they failed to include information about the "existence of any deferment procedure." The ordinance requires that the notice "inform the owner
The Court concludes that the phrase "or the existence of any deferment procedure" does not require the City to include information in the Notices about possible waivers and suspensions because waiver and suspension are distinct from deferment in the Minneapolis Code of Ordinances. The Minneapolis Code of Ordinances does not define "deferment procedure," waiver, or suspension. But it refers to waiver and suspension as such, not as deferments, even though it elsewhere refers explicitly to deferral. For example, the Code explicitly delineates deferral procedures for sewer and water service-related payments. See M.C.O. §§ 509.910, 509.970, 505.90.
In light of the references in the same sentence to specific deferment procedures, and the contemplation of other deferrals in the Minneapolis Code of Ordinances, DRB's interpretation that "any deferment procedure" includes the suspension or waiver available when a vacant building owner enters into a restoration agreement is not plausible. The Court therefore finds that the Notices sent to DRB comply with M.C.O. § 227.100 with regard to informing the owner of the "existence of any deferment procedure."
DRB's next objection to the R & R is that, because notice was deficient, the City lacked jurisdiction to adopt the assessments so the time frame for appealing the
The Magistrate Judge recommended that the Court find that DRB waived its claims by failing to properly file an appeal with the district court within 30 days of the adoption of the assessments. If a property owner fails to do so, all objections to the special assessment are waived. Minn.Stat. § 429.081 ("All objections to the assessment shall be deemed waived unless presented on such appeal."). The statute also precludes a property owner from raising objections to the special assessment in any other manner. Id. ("This section provides the exclusive method of appeal from a special assessment levied pursuant to this chapter."). Minnesota courts have interpreted this statute to mean unambiguously that there is "no other avenue of contesting special assessments." Sievert v. City of Lakefield, 319 N.W.2d 43, 44 (Minn. 1982), citing Krahl v. Nine Mile Creek Watershed Dist., 283 N.W.2d 538, 545 (Minn.1979); see also Peterson v. City of Inver Grove Heights, 345 N.W.2d 274, 277 (Minn.Ct.App.1984) ("Minn.Stat. §§ 429.061, subd. 2 and 429.081 are not ambiguous. They require timely written objections or a reasonable cause for failing to so object to preserve the right to appeal. The clear objective of the statutes was to improve the assessment process by promoting participation in the process and to insure a degree of finality.").
Specifically, the Minnesota Supreme Court interpreted Minn.Stat. § 429.081 to mean that, where a property owner did not object pursuant to § 429.081 but rather sued directly in district court, the owner waived the right to assert any claims against the municipality attacking the assessment. In Sievert v. City of Lakefield, the court held that Minn.Stat. § 429.081 barred contract claims attacking a special assessment that plaintiff attempted to bring as direct suit, finding that "[s]ince the legislative intent of section 429.081 is clear, Sievert can maintain his suit only if it is not an attack on a special assessment." 319 N.W.2d at 44 (noting "there is no suggestion" that plaintiff could not have brought his contract claims in the hearing process provided); see also Chard Realty, Inc. v. City of Shakopee, 392 N.W.2d 716, 719 (Minn. Ct.App. 1986) (owner waived objections to assessment by not objecting or appealing according to Minn.Stat. § 429.081).
Appeal under Minn.Stat. § 429.081 is not the exclusive method of attacking an assessment, however, if the City failed to provide proper notice of its intent to assess. This is because the City has the authority to adopt assessments only when it provides adequate notice. Klapmeier v. Town of Ctr. of Crow Wing Cnty., 346 N.W.2d 133, 136 (Minn.1984) ("Proper notice of assessment proceedings is a jurisdictional prerequisite to any action by the town board. There must be strict compliance with the statutory notice provisions." (internal citations omitted)); see also Sykes v. City of Rochester, 787 N.W.2d 192, 197 (Minn.Ct.App.2010) (city council "lacked jurisdiction to adopt the assessments because it did not strictly comply with the statutory notice requirements. Because the assessments were never adopted, the 30-day limitations period never began to run."); Countryside Village v. City of North Branch, 430 N.W.2d 206, 208 (Minn.Ct.App.1988), aff'd 442 N.W.2d 304 (Minn.1989).
Finally, DRB argues that the appeal procedures and time limit do not apply because the special assessments are facially void because they bear no relation to the benefits received. Whether or not an assessment is reasonably related to the benefits the property owner receives is a question for a court once the assessment is properly before the court, not a basis for a court to preemptively declare an assessment void such that the time limit for appeal never began to run. DRB cannot avoid the time limit and procedures for appeal by disputing the reasonableness of the fee, as the Court could not reach a conclusion on that question before the issue is properly before the Court (through a proper, timely appeal). The case DRB cites in support of facially voiding assessments involved disputes that were properly before the court after the owner complied with the relevant appeal procedures. See Cont'l Sales & Equip. v. Town of Stuntz, 257 N.W.2d 546, 549-50 (Minn. 1977) (determining that the plaintiffs' objections were properly before the court and then, reviewing the objections themselves, determining that a portion of the assessment at issue was void because it did not relate to the benefits the owners received); see also American Bank of St. Paul v. City of Minneapolis, 802 N.W.2d 781, 784 (Minn.Ct.App.2011) (court considered challenge to reasonableness of assessment, where plaintiff had properly appealed the special assessment to the district court).1
Finally, DRB argues that its causes of action that are not related to the assessments are not subject to the time limit. In making this argument, DRB appears to consider its registration with the City for the VBR program to be a contract, giving rise to contractual causes of action such as fraud, negligent misrepresentation, and unjust enrichment. DRB makes no argument and provides no evidence upon which a reasonable jury could conclude that it had a contract with the City such that those claims could be considered separate from its objections to the assessment. Rather, those claims essentially attack the City's adoption of the assessments, and are barred by DRB's failure to appeal the assessments pursuant to § 429.081. See Sievert, 319 N.W.2d at 44 (explaining that plaintiff could have brought contract claims that essentially attacked the assessment as part of special assessment appeal, and such claims were therefore waived by failure to appeal under § 429.081).
All of DRB's claims seek to challenge the special assessments and should have been filed as an appeal from the assessments through the procedure laid out in Minn.Stat. § 429.081. DRB did not do so. Therefore, the Court will adopt the recommendation of the Magistrate Judge to dismiss DRB's claims with prejudice.
Based on the foregoing, and all the files, records, and proceedings herein, the Court
1. Plaintiffs' Motion for Partial Summary Judgment as to Defendants' Tax Injunction Act Defense [Docket No. 9] is
2. Plaintiffs' Motion for Partial Summary Judgment [Docket No. 15] is
3. Defendants' Motion for Summary Judgment [Docket No. 33] is
4. Plaintiffs' lawsuit is hereby
JANE S. MAYERON, United States Magistrate Judge.
This matter is before the Court on plaintiffs' motions for Partial Summary Judgment [Docket Nos. 9, 15] and defendants' Motion for Summary Judgment [Docket No. 33].
These matters were referred to the undersigned by the District Court for a Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1)(B) [Docket No. 26].
DRB# 24 is a Minnesota Limited Liability Company that acquired 701 Newton Avenue North, Minneapolis ("701 Newton"), in June 2008, for $11,200. Second Declaration of David Busch ("Busch Decl. II"), ¶ 2 [Docket No. 18]. 701 Newton is vacant and as of November 2012, had thirty open housing code violations. Affidavit of Kristin Sarff ("Sarff Aff."), Ex. A (code compliance record for 701 Newton) [Docket No. 24].
In June 2011, DRB# 24 received a Notice of Intent to Assess from the City of Minneapolis ("City")
In April 2012, DRB# 24 received a Notice of Intent to Assess $6,746 for 2011 unpaid VBR fees on 701 Newton Ave. Id., Ex. C. The assessment was appealed and on May 31, 2012, an administrative hearing officer ordered that the assessment be levied in full. Id., Ex. F, G. The Notice of Decision provided that the assessment could be appealed to the state district court by serving the Notice of Appeal upon the Mayor or City Clerk within thirty days of the adoption of the assessment by the City Council. Id., Ex. G. The 2010 and 2011 assessments appear on the City's special assessment rolls, indicating that the fees were adopted and assessed. Id., Ex. H.
Minnesota Stat. § 429.081 provides that any person aggrieved by an assessment "who is not precluded by failure to object prior to or at the assessment hearing, or whose failure to so object is due to a reasonable cause, may appeal to the district court by serving a notice upon the mayor or clerk of the municipality" within thirty days of the date of the adoption of the assessment. DRB# 24 does not dispute that it did not appeal the 2010 or 2011 assessments to the state district court, although for reasons described below, it contends that it was not required to do so
DRB# 24 and 701 Newton sued the City in state court on June 4, 2012, and on June 22, 2012, the City removed the case to federal court. See Complaint, Notice of Removal [Docket No. 1].
Plaintiffs' Complaint alleged that on April 25, 2001, the City adopted an ordinance for the collection of VBR fees. Compl., ¶ 9 (citing Minneapolis Code of Ordinances ("M.C.O.") § 249.80(i)(1) (2001)). The ordinance required that all owners of vacant buildings in the City pay a yearly fee of $400.00. Id. The stated purpose of the ordinance was to recover the administrative costs expended by the City in registering and monitoring the buildings. Id. The ordinance also gave the City the authority to impose special assessments to collect unpaid VBR fees. Id.
On May 26, 2006, the City amended the ordinance, increasing the amount of the yearly fee to $2,000.00. Id., ¶ 10 (citing M.C.O. § 249.80(i)(1) (2006)). The ordinance was further amended on February 29, 2008, setting the annual fees as established according to a fee schedule. Id., ¶ 11. The 2008 amended ordinance restated the purpose of the fee as intending to recover all costs "incurred by the city for monitoring and regulating vacant buildings including nuisance abatement, enforcement and administrative costs." Id. Also in 2008, the City set the fee at $6,000.00. Id., ¶ 12, Ex. A. In 2009, the VBR fee was set at $6,360 (Id., ¶ 14); in 2010, the VBR fee was set at $6,650 (Id., ¶ 15); in 2011, the VBR fee was set at $6,746 (Id., ¶ 16); and in 2012, the fee was set at $6,949. Id., ¶ 17.
Plaintiffs asserted that the City calculated the fees relying on a flawed study prepared by the City's Inspections Department and the fees are excessive and unreasonable in light of their purpose as codified in the Minneapolis Code of Ordinances. Compl., ¶¶ 12-13, 20-41. Plaintiffs further alleged that the VBR fee is materially in excess of the amount required to actually process the annual VBR form and to monitor the vacant building site, as permitted by the ordinance. Id., ¶ 21. In support of this allegation, plaintiffs analyzed what they believed to be the actual costs of inspections based on the City's budget. Id., ¶¶ 23-33. Based on plaintiffs' analysis, the City's actual costs of processing the vacant building registration fee and monitoring the vacant building sites ranged from $387 in 2007 to $1,300 in 2012. Id., ¶ 34. Consequently, the fees assessed by the City resulted in overcharges ranging from $1,173 in 2006 to $6,168 in 2011 and $5,649 in 2012. Id., ¶ 35. Because the VBR fee so grossly exceeds the City's actual costs of administration and monitoring, plaintiffs characterized the fee to be a fine. Id., ¶ 40. Plaintiffs maintained that they, and similarly situated property owners,
Plaintiffs also alleged that the 8% interest rate charged by the City on unpaid VBR fees exceeds the 5% interest rate permitted by Minn.Stat. § 435.17. Id., ¶¶ 85-91. Plaintiffs asserted that the City's VRB fee assessments violated their rights under the Fourth, Fifth and Fourteenth Amendments of the United States Constitution and their rights under Sections Eight, Ten and Thirteen of the Minnesota State Constitution. Id., ¶¶ 51-121. Plaintiffs also claimed that the excessive
Plaintiffs further alleged that the City does not have the legal authority to specially assess VBR fees absent an enabling statute. Id., ¶ 131. Plaintiffs claimed that before 2008, Minn.Stat. § 429.101 did not allow for the special assessment of VBR fees. Id., ¶ 130. In 2008, the statute was amended to allow municipalities to specially assess VBR fees, but for the limited purpose of administrating programs to identify and register vacant buildings. Id., ¶¶ 133-136 (citing Minn.Stat. § 429.101, subd. 1(12)). Plaintiffs maintained that the City's attempt to recover costs beyond the limits of the enabling statute, such as for monitoring and nuisance abatement, renders the VBR ordinance void both before and after the 2008 statutory amendment. Id., ¶¶ 132, 136.
Plaintiffs alleged that the City failed to properly notify them and other vacant property owners of the basis of costs for the VBR fees, and that as such, it failed to comply with the procedural requirements of M.C.O. § 227.100, which provides that the City "shall" provide notice of basis for the costs charged. Id. ¶¶ 137-143.
Plaintiffs further alleged that they, and similarly situated vacant property owners, did not benefit from the VBR fees, and that as such, the City violated Section Thirteen of the Minnesota State Constitution, as well as the Fourth, Fifth, Fourteenth Amendments of the United States Constitution. Id., ¶¶ 144-150.
Plaintiffs alleged intentional or negligent misrepresentation by the City of the costs incurred in monitoring and registering vacant buildings as well the legality of the interest rate charged; the City unjustly enriched itself through its administration of the VBR program; and slander of title as a result of the City's publication of the special assessments on 701 Newton. Id., ¶¶ 151-177, 178-180, 181-184.
Among other grounds of relief, plaintiffs sought a judgment that the VBR fees and interest rates charged do not comply with the relevant M.C.O. provisions or state statutes and that they were entitled to attorneys' fees pursuant to 42 U.S.C. § 1983. Id., ¶¶ 185-189; Prayer for Relief, ¶¶ a-f.
The City answered, generally admitting the history of amendments to the VBR fee ordinance, denying the existence of any similarly situated properties, denying any state or federal constitutional violations, and generally denying the allegations in the Complaint, except for the facts relating to the assessment of the VBR fees against 701 Newton. The City asserted various defenses including statutory, discretionary, official, vicarious and qualified immunity; plaintiffs' federal constitutional claims were barred by the Tax Injunction Act; plaintiffs' claims were barred by the applicable statute of limitations; and failure to exhaust available judicial remedies. First Amended Answer of Defendant City of Minneapolis, [Docket No. 4].
Plaintiffs moved for partial summary judgment on the City's Tax Injunction Act defense. [Docket No. 9]. Plaintiffs moved separately for partial summary judgment on their claims that the VBR fee is void and unenforceable. [Docket No. 15]. Defendants initially moved for summary judgment on all of plaintiffs' claims, but later, based on an agreement with plaintiffs, excluded from its motion plaintiffs' claims that the VBRs were excessive and unreasonable.
Summary judgment is proper if, drawing all reasonable inferences favorable to the non-moving party, there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); see also Unigroup, Inc. v. O'Rourke Storage & Transfer Co., 980 F.2d 1217, 1219 (8th Cir.1992). "`Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.'" DePugh v. Smith, 880 F.Supp. 651, 656 (N.D.Iowa 1995) (quoting Anderson, 477 U.S. at 248, 106 S.Ct. 2505). "[I]f the court can conclude that a reasonable trier of fact could return a verdict for the nonmovant, then summary judgment should not be granted." DePugh, 880 F.Supp. at 656 (quoting Anderson, 477 U.S. at 248, 106 S.Ct. 2505).
The moving party bears the burden of showing that the material facts in the case are undisputed. Celotex Corp., 477 U.S. at 322-23, 106 S.Ct. 2548; see also Mems v. City of St. Paul, Dep't of Fire & Safety Servs., 224 F.3d 735, 738 (8th Cir.2000). If the moving party has carried its burden, the non-moving party must demonstrate the existence of specific facts in the record that create a genuine issue for trial. Anderson, 477 U.S. at 256, 106 S.Ct. 2505; Krenik v. County of LeSueur, 47 F.3d 953, 957 (8th Cir.1995). "The nonmoving party may not rest on mere allegations or denials, but must show through the presentation of admissible evidence that specific facts exist creating a genuine issue for trial." Minnesota Laborers Health & Welfare Fund v. Swenke, 2003 WL 21521755, *1, 2003 U.S. Dist. LEXIS 11439, *4-5 (D.Minn.2003) (citations omitted).
Summary judgment is appropriate where the material facts are not in dispute, and the court need only apply the law to the facts in the record. See Eisenrich v. Minneapolis Retail Meat Cutters, 282 F.Supp.2d 1077, 1080-81 (D.Minn.2003) (citing Oldham v. West, 47 F.3d 985, 988 (8th Cir.1995)).
The City asserted that plaintiffs' federal constitutional claims are barred by the Tax Injunction Act ("TIA"), 28 U.S.C. § 1341. First Amended Answer of Defendant City of Minneapolis ("First Amend. Answer") [Docket No. 4], p. 34, ¶ 16. In support of their motion for partial summary judgment on this claim, plaintiffs argued that the TIA jurisdictional bar is limited to suits questioning the constitutionality of
The City conceded that the VBR is a fee and not a tax. Defendants' Memorandum in Opposition to Plaintiffs' Simultaneous Motions for Partial Summary Judgment ("Defs'. Mem.") p. 24 [Docket No. 25].
Plaintiffs replied that the City cannot maintain that the Court has jurisdiction to decide whether the VBR fee is reasonable and simultaneously argue that if the fees is found to be excessive and unreasonable, then the Court would lose jurisdiction over the matter. Pls.' Reply, p. 10 [Docket No. 29].
The TIA prohibits federal courts from exercising jurisdiction over certain claims involving state taxation. The TIA provides:
28 U.S.C. § 1341. Whether an assessment constitutes a "tax" for the purpose of the TIA or a fee is a question of federal law and the court is not required to rely on a municipalities' characterization of the assessment. Ben Oehrleins & Sons & Daughter, Inc. v. Hennepin County, 115 F.3d 1372, 1382 (8th Cir.1997) (citing Wright v. McClain, 835 F.2d 143, 144 (6th Cir.1987)). To determine whether an assessment or levy is a tax, "the court must look to the purpose underlying the premium." Marigold Foods, Inc. v. Redalen, 834 F.Supp. 1163, 1166 (D.Minn.1993). "Premiums primarily imposed for revenue-raising purposes are considered to be taxes." Id. (citation omitted). "Premiums imposed for regulatory or punitive purposes, even though they may also raise revenue, generally are not considered taxes." Id. (citation omitted).
Pursuant to M.C.O. § 249.80(i)(1), adopted in 2001, the purpose of the VBR was to defray administrative costs for registering and processing the vacant building registration form and for the costs of the City in monitoring the vacant building site. Pl. TIA Mem., p. 5. The 2008 amendment provided that the VBR is "imposed to recover all costs incurred by the City for monitoring and regulating vacant buildings, including nuisance abatement, enforcement and administrative costs." Id., p. 6. By its express language, the purpose underlying the VBR fee is clearly regulatory and is not levied to raise revenues, and the City has not offered any evidence to the contrary. Further, the City has not provided any evidence that it has ever considered or treated the VBR fee as a tax. Finally, the City admitted that the VBR fee is not a tax. Defs. Mem., p. 24. Defendants' desire to hang onto their TIA
The parties' arguments in favor of partial summary judgment are summarized as follows. According to plaintiffs, there is no ordinance enabling the City to specially assess VBR fees. Pls'. Mem. PSJ, pp. 16-19. The collection of unpaid VBR fees is governed by M.C.O. § 227.100, which outlines the notice requirement for the removal of certain offensive matter or nuisances from property, which exist in violation of M.C.O. § 227.90. Id., p. 16. M.C.O. § 227.90 (2000) refers to the removal and disposition of "offensive matter," "offensive conditions" and "nuisance." Id.
Plaintiffs contended that because the City could not reasonably expect the vacant building itself to be removed, the ordinance contemplates a different type of nuisance altogether and thus, the City lacked an enabling ordinance to specially assess the VBR fees. Id., pp. 16-19. In addition, Minnesota did not enact a statute permitting special assessment of VBR fees until 2008. Id., p. 20. The statute enacted in 2008, while enabling special assessment of VBR fees, limited the recoverable costs to those expended identifying and registering vacant buildings. Id., p. 19 (citing Minn.Stat. § 429.101, subd. 1(a)(12) (2008)). The City's VBR ordinance exceeded the scope of the statute by including costs associated with monitoring, nuisance abatement, and enforcement. Id., pp. 19-20,
In addition, plaintiffs maintained that the City lacked jurisdiction to specially assess the VBR fees against 701 Newton because the City failed to comply with statutory notice requirements regarding its Notice of Intent to Assess. Id., pp. 20-23. Plaintiffs asserted that the City's Notice of Intent to Assess failed to meet the requirements of Minn.Stat. § 429.061, subd. 1, in that the notices received by DRB# 24 failed to state the general nature of the improvement at issue, did not identify any proposed assessment roll on file with the clerk, and did not describe the area to be assessed. Id., pp. 21-23.
Next, Plaintiffs argued that the annual interest rate of 8% charged by the City for special assessments exceeds the 5% maximum interest rate permitted by statute and at any rate, the City was charging an effective interest rate of 13.67%, not the 8% it claimed to be charging. Id., pp. 23-26.
In response, the City contended that since at least 2001, M.C.O. § 249.80 has authorized the City to levy and collect unpaid VBR fees as a special assessment. As to plaintiffs' argument that nuisance removal was a condition precedent to the imposition of the assessment pursuant to
Further, the City asserted that it was statutorily authorized to specially assess VBR fees both before and after the 2008 amendment. Id., pp. 7-11. Before 2008, Minn.Stat. § 429.101, subd. 1(c) (1991)
The City also contended that plaintiffs' claims regarding the lack of an enabling statute to authorize the pre-2008 VBR fees were time-barred because plaintiffs failed to appeal the assessments to the state district court within thirty days of the adoption of the assessments. Id., pp. 9-10. Minnesota Stat. § 429.081 provides that a property owner has thirty days from the adoption of the assessment to appeal to the state district court. Id., p. 10. Any objections not appealed are deemed waived. Id. At the hearing, the City expanded this argument, claiming that because plaintiffs failed to appeal any of their VRB assessments to the state district court, all of their claims arising out of the assessments were time-barred and must be dismissed.
As for the notice requirements of Minn. Stat. § 429.061, the City maintained that they do not apply to the VBR ordinance. Id., pp. 12-14. According to the City, municipalities are allowed to adopt their own special assessment procedures. Id., p. 12 (citing Curiskis v. City of Minneapolis, 729 N.W.2d 655, 658 (Minn.Ct.App. 2007) ("Minnesota Statutes Chapter 429 governs local improvements and special assessments, and allows a city to use either Chapter 429 or its home rule charter in making improvements and imposing special assessments).") and that is what the City did here. M.C.O. § 249.80, subd. (j)(3) provides that the procedural requirements of M.C.O. § 227.100 apply to levying and collection of VBR fees. M.C.O. 227.100 requires that the Notice of Intent to Assess "shall" state:
According to the City, the notices received by DRB# 24 fully complied with these requirements. Defs.' Mem., pp. 12-14.
As for plaintiffs' arguments regarding the interest rate charged on unpaid VBR fees, the City argued that it has the authority to apply different interest rates to each type of special assessment. Id., p. 14-15. The City maintained that Minn. Stat. § 435.17, cited by plaintiffs, only applies to assessments for public improvements and that other Minnesota statutes permit an interest rate of 8%. Id., p. 14 9 (citing Minn.Stat. § 463.161, Minnesota's abatement statute, which allows municipalities to charge 8% interest for assessments relating to removal of hazardous conditions at any hazardous building or property). More to the point, Chapter 435 applies to assessments for public improvements, not assessments for VBR fees. Id., p. 15. The City further claimed that plaintiffs' calculation of the effective interest rate charged by the City is flawed and that in fact only an 8% interest rate was charged. Id., pp. 16-17.
In reply, plaintiffs asserted that Minn. Stat. § 429.101 did not give the City the statutory authority to specially assess VBR fees, because property owners were already charged separately for the removal of public health and safety hazards. Pls'. Reply, p. 3. Plaintiffs contended that the VBR fee, if assessed for the purpose of removing public health and safety violations, would amount to a second billing for the same services. Id.
Plaintiffs also submitted that even if M.C.O. § 227.100 governs the procedural requirements for special assessments, the City failed to meet those standards. Id., pp. 5-6. Plaintiffs maintained that the City's Notice of Intent to Specially Assess does not provide notice of the basis for the costs recovered by the assessment. Id. Thus, the City lacked jurisdiction under either set of procedural guidelines. Id.
In a letter sent to this Court after the hearing, the City clarified that plaintiffs had appealed their assessments at administrative hearings, but that plaintiffs never appealed the assessments to the state district court. Defendant's Letter dated March 14, 2013 [Docket No. 39]. Plaintiffs responded, maintaining that the City lacked jurisdiction to assess the VBR in the first instance as a result of the defective notices DRB# 24 received, thus rendering irrelevant the question of whether plaintiffs appealed to the state district court within the thirty-day time period. Plaintiffs' Letter Dated March 14, 2013. [Docket No. 40]. Plaintiffs did not, however, contest the City's factual assertions regarding their failure to appeal. Id.
After a careful reading of the relevant ordinances and statutes and in light of the uncontested facts regarding DRB# 24's failure to appeal the City's assessments to the state district court, this Court concludes that the Gordian knot created by plaintiffs' reference to and reliance on various (and at times, seemingly irrelevant and inapplicable) statutes
Minnesota Stat. § 429.081 provides:
(emphasis added).
In addition, M.C.O. § 227.100 requires that the Notice of Intent to Assess to state:
(emphasis added).
This Court is required to construe the words of the statute according to their plain meaning. See American Family Ins. Grp. v. Schroedl, 616 N.W.2d 273, 277 (Minn.2000) ("Basic canons of statutory construction instruct that we are to construe words and phrases according to their plain and ordinary meaning."). Ordinances are subject to the same construction. Eagan Econ. Dev. Auth. v. U-Haul Co. of Minn., 787 N.W.2d 523, 535 (Minn. 2010) (stating that statutory construction rules apply to construction of municipal ordinances). Further, a statute of limitations "must be strictly construed against a plaintiff." PHL Variable Ins. Co. v. U.S. Bank Nat'l Assoc., Civ. No. 10-1197 (RHK/AJB), 2010 WL 3926310 at *5 (D.Minn. Oct. 4, 2010). The appeal of a special assessment to the district court is "wholly statutory, there being no commonlaw right to such an appeal, and ... the conditions imposed by the statute must be strictly complied with. The conditions will not be extended by construction." Wessen v. Village of Deephaven, 284 Minn. 296, 170 N.W.2d 126, 128 (1969). Furthermore, "[t]he construction and applicability of statutes of limitations are questions of law." Noske v. Friedberg, 670 N.W.2d 740, 742 (Minn.2003).
There is no doubt that the limitation period reflected in Minn.Stat. § 429.081 is a statute of limitations that expires thirty days after the adoption of the assessment. Sykes v. City of Rochester,
This Court is not bound by a decision by the state district court. Nonetheless, this Court has considered the order of State District Court Judge Marilyn Brown Rosenbaum dated December 12, 2012, in Meldahl v. City of Minneapolis, Henn. Co. Dist. Ct. File No. 27-CV-11-24739, and notes that this Court's conclusion regarding the thirty-day limitation period is consistent with Judge Rosenbaum's decision. See Defendant's Letter dated December 19, 2012 [Docket No. 30] (attaching a copy of Judge Rosenbaum's decision in Meldahl).
In Meldahl, a property owner in Minneapolis was assessed VBR fees and sidewalk repair assessments, among other assessments on his vacant properties. Id. Citing Minn.Stat. § 429.081, Judge Rosenbaum granted summary judgment to the City on Meldahl's appeal of the sidewalk assessments, noting that he filed his appeal eighteen days beyond the thirty-day limit described by the statute. Id., p. 7.
Plaintiffs contend, however, that the thirty-day limitation period is irrelevant because the City failed to comply with the notice requirements of Minn.Stat. § 429.061, and M.C.O. § 227.100(c) and (d). See Plaintiffs' Letter dated March 14, 2013. Plaintiffs' contention is meritless.
Minn.Stat. § 429.061 relates to the assessment procedure for improvements such as curbs, gutters, and storm sewers and contains specific notice provisions, such as publication in a newspaper that the city council will meet to consider the proposed assessment. Not only have plaintiffs not established that this statute applies to the City's assessment of VBR fees, but plaintiffs failed to respond to the City's argument that the City may rely either on Chapter 429 or its home rule charter when imposing special assessments. In fact, nowhere in plaintiffs' fifty-three page Complaint did they ever allege that the notices they received from the City were defective. At any rate, Minneapolis is a home rule charter city
Here, the 2011 and 2012 Notices of Intent to Assess received by plaintiffs stated the amount and basis for the amount of the assessment (identifying the VBR fee as the basis) and the time, date and place of the hearing the determine the validity of the assessment. Busch Decl. II, Exs. B, C. The Notices stated that if the assessments were adopted by the City Council, the assessments could be appealed to the district court within thirty days after final approval. Id. As permitted by M.C.O. § 227.100, the Notices informed plaintiffs that written objections to the assessments should be filed no later than fifteen days before the hearing.
Plaintiffs contended that the Notices were non-compliant because they did not state the basis of the cost for the special assessment. Pls.' Reply, p. 6. This Court disagrees. Without expressly saying so, plaintiffs seem to believe the City was required to present some sort of explanation or detail of the VRB fee itself (e.g. an analysis of the components of the VRB fees of the sort provided by plaintiffs in their original memorandum of law in support of their motion. See, Docket No. 17, pp. 27-30). The Court does not read the ordinance that way — the plain words of the ordinance state that the basis of the costs shall be provided, not that an analysis or breakdown of the costs are to be provided. The City's notices did just what they were supposed to do: they stated that the basis for the assessments are the current VBR fee as determined by the City, thereby providing the affected property owner with adequate notice under the ordinance. Whether the City could have done more to provide affected property owners with an explanation as to how the VBR fee was derived is irrelevant; M.C.O. § 227.100 does not require more and the Court will not read any such requirement into the ordinance.
In summary, the Court concludes that summary judgment in the City's favor is required. Contrary to plaintiffs' assertion, the City did not lack jurisdiction to assess the VBR fees because the Notices of Intent to Assess the plaintiffs received satisfied the requirements of M.C.O. § 227.100. It is undisputed that plaintiffs did not timely appeal their VBR assessments to the state district court. Accordingly, having failed to timely appeal any of the assessments by the City, all grounds for objecting to the assessments barred and waived.
For the reasons set forth above, IT IS RECOMMENDED that:
(1) Plaintiffs' Motion for Partial Summary Judgment on Defendant's Tax Injunction Act Defense [Docket No. 9] be determined moot in light of this Court's recommendation that Defendants' Motion for Summary Judgment be granted.
(2) Plaintiffs' Motion for Partial Summary Judgment [Docket No. 15] be DENIED.
(3) Defendants' Motion for Summary Judgment [Docket No. 33] be GRANTED.
(4) This matter be dismissed with prejudice.
Dated: August 2, 2013
The other case involved another very different context — the notice required to be provided to union members in order for them to object to "fair share" fees. There, the information required to be included in the notice was set out by state regulation, which required that the notice contain "sufficient information to identify expenditures for collective bargaining and contract administration services." Kuehn v. Am. Fed'n of State, Cnty. & Mun. Emps., Council No. 65, Hibbing, Minn., 435 N.W.2d 130, 133 (Minn.Ct.App. 1989) (quoting Minn. R. 5510.140, subpt. 1(D) (1987)). The notice required by a separate statutory scheme and accompanying regulations does not bear on the notice required under Minneapolis ordinance.
