Justia Real Estate & Property Law Opinion Summaries

A resident of University Heights, Ohio, who practices Orthodox Judaism, sought to use his home for group prayer sessions due to religious obligations and restrictions on travel during the Sabbath. After inviting neighbors to participate in these gatherings, a neighbor complained to city officials, prompting the city’s law director to send a cease-and-desist letter, warning that using the home as a place of religious assembly violated local zoning laws. The resident then applied for a special use permit to operate a house of worship but withdrew his application before the city’s Planning Commission could reach a decision, stating he did not wish to operate a house of worship as defined by the ordinance. Despite withdrawing, he later filed a federal lawsuit against the city and several officials, alleging violations of federal and state law, including constitutional and statutory claims.The United States District Court for the Northern District of Ohio granted summary judgment for the city and its officials. The court found that the plaintiff’s claims under the Religious Land Use and Institutionalized Persons Act (RLUIPA), the First and Fourteenth Amendments, and the Ohio Constitution were unripe because there was no final decision by the relevant local authorities regarding the application of the zoning ordinance to his property. The court also rejected his Fourth Amendment and Freedom of Access to Clinic Entrances Act (FACE Act) claims on the merits and declined supplemental jurisdiction over a state public records claim.The United States Court of Appeals for the Sixth Circuit affirmed. The court held that most of the plaintiff’s claims were unripe because he withdrew his application before any final decision was made by the city’s zoning authorities, and thus there was no concrete dispute for federal review. The court also held that his facial challenges to the ordinance were forfeited and, in any event, failed as a matter of law. The court further concluded that the Fourth Amendment and FACE Act claims failed on the merits and found no abuse of discretion in declining supplemental jurisdiction over the state law claim. View "Daniel Grand v. City of University Heights, Ohio" on Justia Law

A billboard company sought to erect a sign in a Michigan township, but its application was denied because the proposed billboard did not comply with local height and size restrictions. Instead of appealing the denial or seeking a variance, the company filed a federal lawsuit challenging the township’s sign ordinance on First Amendment grounds, including claims that the ordinance imposed content-based restrictions, constituted an unconstitutional prior restraint, and was unconstitutionally vague. The company did not challenge the height and size restrictions themselves. The township’s ordinance only allowed billboards in certain industrial zones adjacent to interstate freeways, but, according to the company, no such zones existed in the township.The United States District Court for the Eastern District of Michigan granted summary judgment to the township, finding the company lacked standing because its alleged injuries were not caused by the challenged provisions and would not be redressed by a favorable decision. The United States Court of Appeals for the Sixth Circuit affirmed, holding that the company failed to meet the requirements for standing on any of its claims.Subsequently, the company filed a new lawsuit in the same district court, again alleging that the ordinance was a prior restraint on speech. The district court dismissed the suit, holding that res judicata (claim preclusion) barred the action. On appeal, the United States Court of Appeals for the Sixth Circuit held that issue preclusion, not claim preclusion, applied. The court concluded that issue preclusion barred the company from relitigating its prior-restraint claim based on its earlier application, but did not bar claims based on new facts—specifically, the company’s allegation that it was self-censoring and not applying for any billboards due to the ordinance’s discretionary variance process. The Sixth Circuit affirmed in part, vacated in part, and remanded for further proceedings on the new factual allegations. View "Outdoor One Communications LLC v. Charter Twp. of Canton, Mich." on Justia Law

A Michigan landlord who owns several rental properties in Oak Park challenged the city’s housing code, specifically its requirement that landlords consent to property inspections as a condition for obtaining a rental license. The city’s code mandates that landlords apply for a license and certificate of compliance, which involves an initial inspection and periodic re-inspections. The landlord refused to sign the consent form for inspections, resulting in the city withholding his license and issuing fines for renting without one. Despite these penalties, he continued to rent out his properties.The United States District Court for the Eastern District of Michigan granted summary judgment in favor of the city. The district court found that the landlord lacked standing to bring a Fourth Amendment claim because there had been no warrantless, nonconsensual inspection. It also ruled that the city’s licensing and inspection regime did not violate the Fourth Amendment or impose unconstitutional conditions, and that the landlord’s Equal Protection claim was without merit.On appeal, the United States Court of Appeals for the Sixth Circuit held that the landlord did have standing to challenge the licensing scheme under the unconstitutional-conditions doctrine, as the denial of a license for refusing to consent to inspections constituted a cognizable injury. However, the court concluded that the city’s requirement of consent to an initial inspection as a condition of licensing was reasonable and did not violate the Fourth Amendment, drawing on Supreme Court precedent distinguishing between reasonable conditions for public benefits and coercive mandates. The court also found that the city’s inspection requirements for one- and two-family rentals did not violate the Equal Protection Clause, as the classification was rationally related to legitimate public health and safety goals. The Sixth Circuit affirmed the district court’s judgment. View "Herschfus v. City of Oak Park" on Justia Law

Two companies, HBKY and Elk River, each claimed rights to thousands of acres of timber in Kentucky based on their respective contracts with a third party, Kingdom Energy Resources. Kingdom had entered into a timber sales contract with Elk River, allowing Elk River to cut and remove timber from certain land. Separately, Kingdom obtained a $22 million loan from a group of lenders, with HBKY acting as their agent, and mortgaged several properties—including the timber in question—as collateral for the loan. Kingdom later breached both agreements: it ousted Elk River from the land, violating the timber contract, and defaulted on the loan, leaving both HBKY and Elk River with competing claims to the timber.After HBKY secured a judgment in a New York federal court declaring Kingdom in default, it registered the judgment in the United States District Court for the Eastern District of Kentucky and initiated foreclosure proceedings on the collateral, including the timber. Elk River and its president, Robin Wilson, were joined as defendants due to their claimed interest. The district court granted summary judgment to HBKY, finding that Elk River did not obtain title to the timber under its contracts, did not have a superior interest, and was not a buyer in the ordinary course of business under Kentucky law.The United States Court of Appeals for the Sixth Circuit reviewed the case de novo. The court held that the loan documents did not authorize a sale of the timber free of HBKY’s security interest, as the mortgage explicitly stated that the security interest would survive any sale. The court also found that Elk River failed to provide sufficient evidence to establish its status as a buyer in the ordinary course of business. Accordingly, the Sixth Circuit affirmed the district court’s grant of summary judgment in favor of HBKY. View "HBKY, LLC v. Elk River Export, LLC" on Justia Law

The case involves a class action lawsuit filed by Albert Pickett, Jr., Keyonna Johnson, Jarome Montgomery, Odessa Parks, and Tiniya Shepherd against the City of Cleveland. The plaintiffs, all African American residents of Cuyahoga County, Ohio, allege that Cleveland Water's policy of placing water liens on properties for unpaid water bills disproportionately affects Black homeowners. The water liens, which accumulate penalties and interest, can lead to foreclosure and eviction. The plaintiffs claim that this policy violates the Fair Housing Act (FHA) and the Ohio Civil Rights Act (OCRA).The United States District Court for the Northern District of Ohio granted the plaintiffs' motion for class certification, creating the "Water Lien Class" under Rules 23(b)(2) and 23(b)(3) of the Federal Rules of Civil Procedure. The class includes all Black homeowners or residents in Cuyahoga County who have had a water lien placed on their property by Cleveland Water within the last two years. The district court found that the plaintiffs satisfied the requirements of Rule 23(a) and that common questions of law and fact predominated over individual issues.The United States Court of Appeals for the Sixth Circuit reviewed the district court's certification order. The appellate court affirmed the district court's decision, holding that the plaintiffs had standing to pursue their FHA claim on a disparate-impact theory. The court found that the common question of whether Cleveland's water lien policy disproportionately affects Black homeowners predominated over individual issues, satisfying Rule 23(b)(3). The court also held that the district court did not abuse its discretion in certifying the class under Rule 23(b)(2) for injunctive and declaratory relief. The appellate court declined to address the merits of the plaintiffs' FHA claim, focusing solely on the class certification issues. View "Pickett v. City of Cleveland" on Justia Law

In 2017, Gratiot County foreclosed on Donald Freed’s home due to unpaid taxes. Freed’s property, valued at $98,800, was sold for $42,000, although he owed just under $1,110. The county kept all proceeds from the sale, as Michigan’s General Property Tax Act (GPTA) did not require returning surplus proceeds to the property owner. Freed sued Gratiot County and its treasurer, Michelle Thomas, under 42 U.S.C. § 1983, claiming a violation of the Fifth and Fourteenth Amendments. Michigan intervened to defend the GPTA’s constitutionality.The United States District Court for the Eastern District of Michigan dismissed Freed’s complaint for lack of subject matter jurisdiction, citing Wayside Church v. Van Buren County. Freed appealed, and the Sixth Circuit reversed the dismissal, recognizing that the Supreme Court’s ruling in Knick v. Township of Scott partially abrogated Wayside Church. On remand, the district court granted partial summary judgment to Freed, affirming that the county had to pay Freed the difference between the foreclosure sale and his debt, but dismissed claims against Thomas due to qualified immunity.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed Freed’s entitlement to attorneys’ fees from Gratiot County and Michigan. However, the court vacated the district court’s fee calculation and remanded for further proceedings. The Sixth Circuit held that Freed prevailed against both Gratiot County and Michigan, and Michigan’s intervention under 28 U.S.C. § 2403(b) subjected it to attorneys’ fee liability. The court found the district court’s explanation for reducing Freed’s hours and rate by 35% insufficient and required a more detailed justification for the fee award calculation. View "Freed v. Thomas" on Justia Law

Lathfield Investments, LLC, Lathfield Holdings, LLC, and Lathfield Partners, LLC (collectively, "Lathfield") own three commercial buildings in Lathrup Village, Michigan, rented to various commercial tenants. The City of Lathrup Village and its Downtown Development Authority (collectively, the "City") require landlords to obtain a rental license and list each tenant's name and principal business. Lathfield applied for a landlord rental license in July 2020 but did not list the required tenant information, leading to the denial of their application and their tenants' business license applications. Lathfield sued the City, alleging unlawful compulsion to apply for unnecessary licenses and make unnecessary property improvements, bringing eleven claims, nine against the City.The United States District Court for the Eastern District of Michigan granted summary judgment to the City on all nine claims. Lathfield appealed, arguing that the City improperly required site plan approval, violated due process and equal protection rights, and engaged in inverse condemnation, among other claims.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court's decision. The court held that Lathfield's request for declaratory relief regarding site plan approval was moot since the site plan process was already completed. The court also found that Lathfield was required to obtain a general business license under the City Code and that the City Code's tenant registration requirement applied to Lathfield. The court rejected Lathfield's due process claims, noting that the City’s adoption of the Michigan Building Code was a legislative act not subject to procedural due process requirements. The court also dismissed Lathfield's equal protection claim due to a lack of evidence of differential treatment and found no basis for the Contracts Clause claim under 42 U.S.C. § 1983. Lastly, the court concluded that Lathfield failed to establish an inverse condemnation claim or a civil conspiracy. View "Lathfield Investments, LLC v. City of Lathrup Village, Mich." on Justia Law

Wehr Constructors, Inc. (Wehr) entered into a contract with St. Claire Medical Center (St. Claire) to build an addition to the hospital. Wehr's performance was allegedly deficient, leading to significant construction defects. St. Claire terminated the contract and sought damages from Wehr's performance-bond carrier, Travelers Casualty and Surety Company (Travelers Surety). Travelers Surety then involved Wehr in the litigation. Wehr sought defense coverage from its insurers: Phoenix Insurance Company (Phoenix), St. Paul Surplus Lines Insurance Company (St. Paul), and Travelers Property Casualty Company of America (Travelers Property).The United States District Court for the Eastern District of Kentucky ruled that none of Wehr’s insurers had a duty to defend Wehr in the lawsuit initiated by St. Claire. The court held that Phoenix’s duty to defend was not triggered because St. Claire did not assert claims directly against Wehr. It also found that St. Paul had no duty to defend because Wehr did not specifically agree to perform as a construction manager, a requirement under the St. Paul policy. Although Wehr did not seek summary judgment against Travelers Property, the court noted that Travelers Property also had no duty to defend for the same reasons as Phoenix.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court affirmed the district court’s decision regarding St. Paul, agreeing that Wehr did not specifically agree to serve as a construction manager. However, it reversed the decision regarding Phoenix, holding that Phoenix had a duty to defend Wehr because the damages alleged by St. Claire potentially fell within the policy coverage, and Wehr was a party to the suit. The court vacated the decision regarding Travelers Property and remanded for further proceedings to determine whether Travelers Property had a duty to defend, given the ambiguity in the district court’s ruling and the stipulation by the parties. View "Phoenix Insurance Co. v. Wehr Constructors, Inc." on Justia Law

Tyler Ross, a manager and co-CEO of ROCO Real Estate LLC and ROCO Management LLC, pleaded guilty to one count of conspiracy to commit an offense against the United States. Ross was involved in a scheme to provide mortgage lenders with inflated income information about properties owned by his real-estate-investment firm. The scheme involved submitting false financial documents to mortgage lending businesses to make underperforming properties appear more profitable than they were, thereby obtaining favorable mortgage valuations and refinancing terms.The United States District Court for the Eastern District of Michigan applied a sentencing enhancement for defendants who derived more than $1,000,000 in gross receipts from one or more financial institutions as a result of their offense. The district court found that Ross's conduct met the enhancement's requirements, as he received over $2 million from a property sale financed by a loan from JPMorgan Chase Bank, which relied on falsified financial documents provided by Ross. The district court sentenced Ross to 12 months and one day of imprisonment, granting a downward variance from the guideline range of 46-57 months.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court's judgment. The court held that the gross-receipts enhancement was correctly applied because Ross's offense targeted financial institutions, and he derived gross receipts from a financial institution as a result of his offense. The court rejected Ross's arguments that the enhancement should only apply when a defendant causes loss to a financial institution and that his receipts were derived from a real-estate firm rather than a financial institution. The court emphasized that the enhancement applies to gross receipts obtained directly or indirectly from a financial institution as a result of the offense. View "United States v. Ross" on Justia Law

Faytima Howard failed to pay her property taxes, leading Macomb County, Michigan, to seize and sell her property in 2023. Howard sued, claiming the county violated the Takings Clause of the Fifth Amendment by keeping proceeds exceeding her tax debt. Previously, Michigan's foreclosure regime was found unconstitutional for not compensating property owners for the surplus from foreclosure sales. However, Michigan amended its law in 2020 to allow property owners to claim any surplus value from foreclosed properties. Howard did not utilize this process.The United States District Court for the Eastern District of Michigan dismissed Howard's complaint for failure to state a claim. The court noted that Michigan's amended law provided a procedure for property owners to claim surplus proceeds, which Howard did not follow. The district court concluded that because Howard did not take advantage of the process, her claim was invalid.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court's decision. The court held that Michigan's procedure for claiming surplus proceeds from foreclosure sales complies with the Takings Clause, as it provides property owners with a reasonable opportunity to claim any surplus. The court distinguished this case from others where no such process was available, emphasizing that Howard's failure to follow the state procedure meant no taking occurred. The court also rejected Howard's arguments that the process was overly burdensome and that the lack of interest and attorney's fees constituted a taking. The court concluded that Michigan's procedures are constitutionally sound and do not violate the Fifth Amendment. View "Howard v. Macomb Cnty., Mich." on Justia Law