City of Ctr. Point v. Atlas Rental Prop.

• Docket Number: 1210316
• Decision Date: 26 August 2022
• Parties: City of Center Point v. Atlas Rental Property, LLC, and Spartan Invest, LLC
• Court: Alabama Supreme Court

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City of Center Point v. Atlas Rental Property, LLC, and Spartan Invest, LLC

No. 1210316

Supreme Court of Alabama

August 26, 2022

Appeal from Jefferson Circuit Court (CV-22-900072)

SELLERS, JUSTICE.

The City of Center Point ("the City") appeals from a preliminary injunction entered by the Jefferson Circuit Court prohibiting the City from enforcing Ordinance No. 2019-11 ("the ordinance") because, the trial court held, the ordinance is preempted by the Alabama Uniform Residential Landlord and Tenant Act ("the AURLTA") § 35-9A-101 et seq., Ala. Code 1975. We affirm.

I. Facts

The City enacted the ordinance to "require owners, landlords, tenants, and roomers to maintain and improve the quality and appearance of rental housing in the City and to protect the health and safety of persons." The ordinance became effective October 1, 2019, and requires, in relevant part, that a landlord obtain a certificate of occupancy before allowing a new tenant to take possession of a rentalhousing unit. Such a certificate of occupancy is valid for 12 months from the date it is issued or until the rental-housing unit becomes vacant, whichever occurs first. The ordinance specifically provides that, once a rental-housing unit becomes vacant, the landlord is responsible for notifying the City's "housing official," making a timely application for a certificate of occupancy, and scheduling an inspection to determine whether the rental-housing unit complies with the City's "technical codes."^[1] The City charges a $50 inspection fee for each certificate of occupancy. If a rental-housing unit fails to comply with any of the City's technical codes, a certificate of occupancy will not issue. Finally, the ordinance makes it unlawful for a rental-housing unit to become or remain occupied without a certificate of occupancy. Any violation of the ordinance is punishable by a fine not to exceed $500 for each offense, and a "willful violation" is punishable "by imprisonment, not to exceed six (6) months, or both [imprisonment and a fine], at the discretion of the court trying the same. Each day shall constitute a separate offense."

Atlas Rental Property, LLC, manages rental-housing property within the City's limits. Spartan Invest, LLC, owns and rents rentalhousing property within the City's limits. Atlas and Spartan ("the plaintiffs") sought preliminary and permanent injunctive relief against the City, arguing that the ordinance was preempted by § 35-9A-121, Ala. Code 1975, of the AURLTA. Following a hearing, the trial court entered an order finding that the plaintiffs had demonstrated a reasonable chance of success on the merits because, it concluded, the ordinance was preempted by § 35-9A-121. The trial court further found that the plaintiffs had proven all other elements necessary for the entry of a preliminary injunction. This appeal followed.

II. Standard of Review

A party seeking a preliminary injunction must demonstrate that (1) the party would suffer irreparable harm without the injunction, (2) the party has no adequate remedy at law, (3) the party has at least a reasonable chance of success on the ultimate merits of the case, and (4) the hardship that the injunction will impose on the opposing party will not unreasonably outweigh the benefit accruing to the party seeking the injunction. Holiday Isle, LLC v. Adkins, 12 So.3d 1173, 1176 (Ala. 2008). Generally, "'[t]he decision to grant or to deny a preliminary injunction is within the trial court's sound discretion. In reviewing an order granting a preliminary injunction, the Court determines whether the trial court exceeded that discretion.'" Holiday Isle, 12 So.3d at 1175-76 (quoting SouthTrust Bank of Alabama, N.A. v. Webb-Stiles Co., 931 So.2d 706, 709 (Ala. 2005)). We review the legal rulings of the trial court, to the extent they resolve questions of law based on undisputed facts, de novo. Id. at 1176.

III. Discussion

A. Reasonable Chance of Success on the Ultimate Merits

The City argues that the plaintiffs failed to demonstrate that they have a reasonable chance of success on the ultimate merits of their case because, it says, the ordinance is not preempted by § 35-9A-121. The City specifically claims that the AURLTA governs only the landlord-tenant relationship. The City points out that the stated purpose of the ordinance is to encourage landlords and tenants to maintain and improve the quality of rental-housing units and to protect the health and safety of tenants and their families. Thus, the City contends that the ordinance regulates only "rental-housing units," not the contractual relationship between a landlord and a tenant.^[2]

Section 11-45-1, Ala. Code 1975, provides, in relevant part, that a municipality may "adopt ordinances and resolutions not inconsistent with the laws of the state" to provide for the health and safety of the inhabitants of the municipality. In other words, the legislature has clothed municipalities with the authority to adopt ordinances pursuant to their police powers. St. Clair Cnty. Home Builders Ass'n v. City of Pell City, 61 So.3d 992 (Ala. 2010). Municipal ordinances, however, may be preempted by a state statute in three situations: (1) "when the statute defines the extent to which its enactment preempts municipal ordinances," (2) "when a municipal ordinance attempts to regulate conduct in a field that the legislature intended the state law to exclusively occupy," and (3) "when a municipal ordinance permits what a state statute forbids or forbids what a statute permits." Ex parte Tulley, 199 So.3d 812, 821 (Ala. 2015).

Section 35-9A-102(b), Ala. Code 1975, states that the underlying purposes and policies of the AURLTA are:

"(1) to simplify, clarify, modernize, and revise the law governing the rental of dwelling units and the rights and obligations of landlords and tenants;

"(2) to encourage landlords and tenants to maintain and improve the quality of housing; and

"(3) to make uniform the law with respect to the subject of [the AURLTA] among those states which enact it."

(Emphasis added.)

Section 35-9A-121 specifically states:

"[1.] [The AURLTA] applies to and is the exclusive remedy to regulate and determine rights, obligations, and remedies under a rental agreement, wherever made, for a dwelling unit located within this state. [2.] No resolution or ordinance relative to residential landlords, rental housing codes, or the rights and obligations governing residential landlord and tenant relationships shall be enacted or enforced by any county or municipality, and any such resolution or ordinance enacted both prior to or after January 1, 2007, is superseded by [the AURLTA]. [3.] Notwithstanding these provisions, a county or municipality may enact and enforce building codes, health codes, and other general laws that affect rental property provided that such codes equally affect similarly situated owner-occupied residential property."

(Emphasis added.)

The trial court concluded that the ordinance fits "squarely" within the City's police power to adopt ordinances; but, it determined, the express language of § 35-9A-121 preempts the ordinance based on the legislature's clear indication that regulation of the landlord-tenant relationship in Alabama is an area the legislature intended to occupy to the exclusion of counties and municipalities. We agree. Section 35-9A-121 contains three provisions. Relevant here is the second provision, which expressly prohibits ordinances "relative to residential landlords, rental housing codes, or the rights and obligations governing residential landlord and tenant relationships." The ordinance specifically relates to residential landlords and the rights and obligations governing the landlord-tenant relationship. The ordinance provides that, each time a rental-housing unit becomes vacant, a landlord is obligated to obtain a certificate of occupancy, which requires that the rental-housing unit be inspected for compliance with the City's technical codes. Moreover, the ordinance makes it unlawful for a rental-housing unit to be occupied without a valid certificate of occupancy and specifically provides that any violation of the ordinance is punishable by fine, imprisonment, or both. In other words, the ordinance directly interferes with the landlord-tenant relationship by restricting any association between a landlord and a prospective tenant and by preventing a contract from even forming between them unless and until the landlord acquires a certificate of occupancy. Although the stated purpose of the ordinance is "to maintain and improve the quality and appearance of rental housing in the City and to protect the health and safety of persons," it is clear that everything the ordinance purports to accomplish in that regard is addressed by the AURLTA, thus proving that the ordinance is duplicative, unnecessary, and the exact type of regulation the legislature intended to preempt.

Specifically, § 35-9A-204, Ala. Code 1975, already imposes upon a landlord affirmative duties relative to the repair and maintenance of rental-housing units. Section 35-9A-204(a) specifically states that a landlord shall:

"(1) comply with the requirements of applicable building and housing codes materially affecting health and safety;^[3]

"(2) make all repairs and do whatever is necessary to put and keep the premises in a habitable condition;

"(3) keep all common areas of the premises in a clean and safe condition;

"(4) maintain in good and safe working order and condition all electrical, plumbing, sanitary, heating ventilating, air-conditioning, and other facilities and appliances, including elevators, supplied or required to be supplied by the landlord;

"(5) provide and maintain appropriate receptacles and conveniences for

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