Alger v. Department of Labor & Industry, 05-001.

CourtUnited States State Supreme Court of Vermont
Citation2006 VT 115,917 A.2d 508
Docket NumberNo. 05-001.,05-001.
PartiesRebecca ALGER, et al. v. DEPARTMENT OF LABOR AND INDUSTRY, et al.
Decision Date09 November 2006

Maryellen Griffin, and Karen Richards, Katherine Berkman, Stephen Norman and John J. McCullough (on the Brief), Vermont Legal Aid, St. Johnsbury, for Plaintiffs-Appellants.

William H. Sorrell, Attorney General, and Clifford Peterson, Assistant Attorney General, Montpelier, for Defendants-Appellants.

Present: REIBER, C.J., and DOOLEY, JOHNSON, SKOGLUND and BURGESS, JJ.

JOHNSON, J.

¶ 1. Plaintiffs Rebecca Alger, et al., appeal from the superior court's dismissal of their action against defendant Vermont Department of Labor and Industry, as well as from the court's denial of their application for class certification. Plaintiffs' claims arise primarily from the Department's attempted closure of an apartment building at 13 High Street in St. Albans for longstanding housing code violations. Plaintiffs allege that the conditions at 13 High Street are symptomatic of the Department's general failure to take action against the owners of rental housing who have violated the housing code.1 Plaintiffs claim that the closure was an unconstitutional taking of property without due process or just compensation. They argue that the court's dismissal was premature because their allegations were sufficient to state due process and takings claims, as well as a claim in the nature of mandamus. Plaintiffs also contend that the court improperly considered the merits of the case in denying class certification. We affirm in part, reverse in part, and remand.

¶ 2. Plaintiffs brought this action in November 2002, following the Department's order that the apartment building at 13 High Street be vacated by November 15, 2002, due to fire and electrical code violations. Plaintiffs' first complaint sought declaratory and injunctive relief pursuant to 21 V.S.A. § 209, which allows any person aggrieved by an action taken by the Commissioner of Labor and Industry to appeal the action to the superior court within twenty days of the action. The complaint alleged that the Department's order failed to comply with the due process requirements of notice and a preclosure hearing, that it was served improperly, and that the Department had failed to demonstrate that the building was imminently hazardous before ordering that it be vacated. In connection with their complaint, plaintiffs sought, and received, a preliminary injunction preventing the Department from closing the building. The Department then agreed to allow the building to remain open until further order of the superior court. Plaintiffs filed a second amended complaint adding claims against Thomas Komasa, the owner of 13 High Street, after he was brought in as a third-party defendant at the Department's request. Plaintiffs' claims against Mr. Komasa some of which have been settled, are not at issue here.

¶ 3. In June 2003, following discovery, plaintiffs filed a third amended complaint containing revised claims and additional allegations against the Department. This complaint also added the claims of two plaintiffs, Tina Neville and Linda Limoge, who did not reside at 13 High Street. We treat the following allegations as true for the purposes of reviewing the superior court's dismissal. Gilman v. Maine Mut. Fire Ins. Co., 2003 VT 55, ¶ 14, 175 Vt. 554, 830 A.2d 71 (mem.).

¶ 4. On October 14, 2002, the Department issued an order regarding numerous fire and electric code violations at 13 High Street. The order cited "a long history of violations" at that building that had been identified no later than 2000, although it did not include previous inspections from as far back as 1994 that had identified similar violations. According to the October 14, 2002 order, the Department had instructed the building's previous owner, Brian Simpson, to correct similar violations in May 2000, notified him of continuing violations in July 2000, and ordered him to correct the violations within thirty days in November 2000. When Mr. Simpson failed to correct the violations, the Department asked, in April 2001, that he submit a plan of corrective action within thirty days, and noted in a report that the violations continued to exist as of August 2001. Chittenden Bank acquired the building from Mr. Simpson in 2002 by foreclosure, and sold it to Mr. Komasa in May 2002. In June 2002, Department personnel met with Mr. Komasa and informed him of the continuing code violations. Mr. Komasa told them that he would correct the violations, but on September 11, 2002, a Department inspection found "no evidence that any work had been done toward improving the condition of the building."

¶ 5. The October 14, 2002 order directed Mr. Komasa to: (1) immediately vacate apartment 5, the residence of plaintiff Laura Bean, because it no longer had electrical service and plaintiff Bean was using candles to light the apartment; (2) submit a plan of corrective action by October 21, 2002; and (3) begin repairs to correct the violations no later than November 1, 2002. The order stated that noncompliance would result in the closure of the building "until such time as all outstanding violations are corrected." The order was handed to plaintiff Corinne Bluto, who lived on the third floor, and wedged into the doorway of plaintiffs Alger and Todd Massey.

¶ 6. Plaintiff Bean vacated her apartment in October 2002. Plaintiffs Bluto, Alger, and Massey remained in their apartments. Although Mr. Komasa received an informal extension of the deadline for submitting a plan of corrective action until November 1, 2002, he did not submit such a plan by that date, and he took no action to begin correcting the violations. On November 5, 2002, the Department issued an order that the building be closed and its electrical service disconnected as of November 15, 2002. The order did not contain a statement that there was an imminent hazard. The Department did not provide plaintiffs an opportunity for a hearing prior to the closure date, and did not offer plaintiffs assistance in relocating or other compensation for the loss of their apartments. The Department took no additional action against Mr. Komasa, such as the imposition of administrative fines, and did not refer the case to the Franklin County state's attorney for civil or criminal prosecution.

¶ 7. Plaintiffs' complaint also contained allegations on behalf of plaintiffs Neville and Limoge, neither of whom shared plaintiffs' claims with respect to 13 High Street. Plaintiff Neville alleged that she had vacated her rental home because of numerous uncorrected code violations, all of which the Department had identified through inspections, but none of which the Department had ordered her landlord to correct. Plaintiff Limoge alleged that she was forced to vacate her rented mobile home when the Department disconnected her electrical service due to her landlord's failure to correct electrical code violations. The Department took no action against either landlord before or after plaintiffs Neville and Limoge left their homes.

¶ 8. Plaintiffs' third amended complaint no longer relied on 21 V.S.A. § 209. Instead, the complaint phrased plaintiffs' legal claims in terms of the Department's failure to perform its mandatory statutory duties, and its failure to exercise discretion in performing its discretionary duties. The complaint alleged that the Department "arbitrarily abused [its] authority to enforce the habitability statutes and rules by failing and neglecting to take action to cause violations to be eliminated or removed in accordance with the statutes and rules," failed to establish or follow a procedure for penalizing landlords who fail to correct code violations, and failed to establish or follow a procedure for legal action against such landlords. Plaintiffs alleged that the Department's actions were consistent with its general failure to enforce the housing code except by evicting tenants in rental housing. That is, the Department rarely, if ever, issued fines or referred a landlord for prosecution, despite its statutory authority to do so, even after closing a rental property. The amended complaint also contained the previous complaints' claims that the Department took plaintiffs' property without due process or just compensation by terminating plaintiffs' residential tenancies without providing a pre-closure hearing or taking effective action to force landlords to correct the violations that resulted in the closures.2

¶ 9. Plaintiffs also moved to certify a class of similarly situated tenants and a subclass of tenants who had suffered the loss of their rental housing. Plaintiffs' motion for class certification defined the class as "all residents of rental housing in Vermont where there are one or more violations of the statutes and rules pertaining to habitability and enforced by [the Department]," including "all people who now reside in such housing, all people who have resided in such housing since November 13, 1999, and all people who will reside in such housing in the future." The subclass was composed of "all Vermont residential tenants who have in the past three years, or will in the future, be forced to move out of their homes as a result of [the Department's] actions and omissions regarding code enforcement in rental housing." The Department opposed class certification, and the superior court denied plaintiffs' motion, finding that plaintiffs' proposed class failed to meet the requirements of Vermont Rule of Civil Procedure 23.

¶ 10. The Department also filed a motion to dismiss under Rule 12(b)(6), arguing that the allegations in plaintiffs' complaint were insufficient to state a claim for which relief could be granted. The superior court granted the Department's motion and dismissed plaintiffs' claims, ruling that the Department's action in forcing plaintiffs to vacate their rental housing...

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