Hignell v. City of New Orleans, CIVIL ACTION NO. 19-13773

Citation476 F.Supp.3d 369
Decision Date06 August 2020
Docket NumberCIVIL ACTION NO. 19-13773
Parties Melissa HIGNELL, et al. v. CITY OF NEW ORLEANS
CourtUnited States District Courts. 5th Circuit. United States District Court (Eastern District of Louisiana)

Dawn Adams Wheelahan, Dawn Adams Wheelahan, Attorney at Law, New Orleans, LA, for Melissa Hignell, White Spider Rental Concierge LLC, Garett Majoue, Russell Frank, Samantha McRaney, Bob McRaney, Jimmie Taylor.

Daniel T. Smith, City of New Orleans—Office of the City Attorney, Churita H. Hansell, Shawn Lindsay, Donesia Diane Turner, Sunni Jones LeBeouf, City of New Orleans Law Department, New Orleans, LA, for New Orleans City.

SECTION "B"(1)
ORDER AND REASONS
IVAN L.R. LEMELLE, SENIOR UNITED STATES DISTRICT JUDGE
I. NATURE OF THE MOTION AND RELIEF SOUGHT

Before the Court are plaintiffsmotion for partial summary judgment (Rec. Doc. 35), defendant City of New Orleans response in opposition (Rec. Doc. 41), defendant's motion for summary judgment (Rec. Doc. 48), defendant's post-hearing brief (Rec. Doc. 49), plaintiffs’ post-hearing brief (Rec. Doc. 50), defendant's response to plaintiffs’ post-hearing brief (Rec. Doc. 51), plaintiffs’ response memorandum in support of their motion for partial summary judgment (Rec. Doc. 52), plaintiffs’ response in opposition to defendant's motion for summary judgment (Rec. Doc. 53), plaintiffs’ supplemental memorandum in opposition to defendant's motion for summary judgment (Rec. Doc. 62), and defendant's supplemental memorandum in support of its motion for summary judgment (Rec. Doc. 66). Accordingly,

IT IS ORDERED that plaintiffsmotion for partial summary judgment (Rec. Doc. 35) is DENIED ;

IT IS FURTHER ORDERED that defendant's motion for summary judgment (Rec. Doc. 48) is GRANTED .

II. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

Plaintiffs brought the current action on November 22, 2019, asserting violations of the Commerce Clause, First, Fourth, Fifth, and Eighth Amendments of the United States Constitution, against defendant City of New Orleans, pursuant to 42 U.S.C. §§ 1983, 1988.1 Rec. Doc. 1 at ¶ 1. On December 16, 2019, the New Orleans City Council adopted ordinances that amended the City's Comprehensive Zoning Ordinance ("CZO") and City Code to authorize short term rentals ("STR"). Id. at ¶ 9. The CZO defines an STR as rental of all or a portion of a residential dwelling unit for a period of less than thirty consecutive days. Id. at ¶ 9. CZO Art. 26.2; City Code Art. XI, § 26-613, et seq. These ordinances were effective beginning April 1, 2017. Id. The ordinances have since been repealed and replaced by ordinances M.C.S. 28,156 and M.C.S. 28,157, which impose rules and regulations regarding STRs in the New Orleans Area. See Rec. Docs. 6-4 & 6-5. Notably, the new ordinances: (1) require all STRs have a permit to operate2 ; (2) prohibit all STRs within the French Quarter and Garden District3 ; (3) prohibit social or commercial events taking place in STRs4 ; (4) require proof of a homestead exemption submitted to the Department of Safety and Permits, with a homeowner's ownership interest being at least 50%5 to qualify for an STR permit; (5) require homeowners to "keep guest registration records"6 and allow for a "reasonable inspection[ ]" of the premises7 ; and (6) an assessment of penalties and fines for noncompliance with the ordinances. Plaintiffs filed a motion for temporary restraining order and/or preliminary injunction (Rec. Doc. 6) to enjoin defendant from enforcing M.C.S. 28,156 & M.C.S. 28,157. This Court denied plaintiffsmotion for temporary restraining order and/or preliminary injunction on December 30, 2019. Rec. Doc. 24 (Minute Order).

Parties subsequently filed above noted motions, etc. A hearing with oral argument was held on both motions on May 27, 2020, via telephone. Rec. Doc. 68 (minute entry).

III. LAW AND ANALYSIS
a. Fed. R. Civ. P. 56 Summary Judgment

Under Federal Rule of Civil Procedure 56, summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting Fed. R. Civ. P. 56(c) ). See also TIG Ins. Co. v. Sedgwick James of Wash. , 276 F.3d 754, 759 (5th Cir. 2002). "As to materiality, the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine issue of material fact exists if the evidence would allow a reasonable jury to return a verdict for the non-moving party. Anderson , 477 U.S. at 248, 106 S.Ct. 2505. The court should view all facts and evidence in the light most favorable to the non-moving party. United Fire & Cas. Co. v. Hixson Bros. Inc. , 453 F.3d 283, 285 (5th Cir. 2006). Mere conclusory allegations are insufficient to defeat summary judgment. Eason v. Thaler , 73 F.3d 1322, 1325 (5th Cir. 1996).

The movant must point to "portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of material fact." Celotex , 477 U.S. at 323, 106 S.Ct. 2548. If and when the movant carries this burden, the non-movant must then go beyond the pleadings and present other evidence to establish a genuine issue. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp. , 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). However, "where the non-movant bears the burden of proof at trial, the movant may merely point to an absence of evidence, thus shifting to the non-movant the burden of demonstrating by competent summary judgment proof that there is an issue of material fact warranting trial." Lindsey v. Sears Roebuck & Co. , 16 F.3d 616, 618 (5th Cir. 1994). "This court will not assume in the absence of any proof that the nonmoving party could or would prove the necessary facts, and will grant summary judgment in any case where critical evidence is so weak or tenuous on an essential fact that it could not support a judgment in favor of the [non-movant]." McCarty v. Hillstone Rest. Grp. , 864 F.3d 354, 357 (5th Cir. 2017).

Additionally, "[a] partial summary judgment order is not a final judgment but is merely a pre-trial adjudication that certain issues are established for trial of the case." Streber v. Hunter , 221 F.3d 701, 737 (5th Cir. 2000). Partial summary judgment serves the purpose of rooting out, narrowing, and focusing the issues for trial. See Calpetco 1981 v. Marshall Exploration, Inc. , 989 F.2d 1408, 1415 (5th Cir. 1993).

b. Fifth Amendment Claim

The takings clause of the Fifth Amendment, made applicable to the States through the Fourteenth Amendment to the United States Constitution, states: "nor shall private property be taken for public use, without just compensation." U.S. Const. V.; see also Lingle v. Chevron U.S.A. Inc. , 544 U.S. 528, 536, 125 S.Ct. 2074, 161 L.Ed.2d 876 (2005). The Fifth Circuit has held that to prevail on a takings claim, the plaintiff "must demonstrate that he has a protectable property interest." Dennis Melancon, Inc. v. City of New Orleans , 703 F.3d 262, 269 (5th Cir. 2012). The Fifth Circuit further noted that the constitution does not create property interest, but rather protects them. Id. Thus, in order to determine whether a property interest has been taken, " courts must ‘resort to existing rules or understandings that stem from an independent source such as state law’ to define the range of interests that qualify for protection as ‘property’ under the Fifth and Fourteenth Amendments.’ " Id. (quoting Lucas v. S.C. Coastal Council , 505 U.S. 1003, 1030, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992)). Further, to have a property interest " ‘a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it.’ " Id. (quoting Bd. of Regents of State Colleges v. Roth , 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972) ). Defendant contends plaintiffs’ assertion that they had a vested property right in their STR licenses and permits is not supported by relevant caselaw nor the City's prior STR ordinances. This Court agrees.

Defendant cites Dennis Melancon, Inc. v. City of New Orleans in support of their contention that plaintiffs did not have a vested property right in their STR permits. Rec. Doc. 48 at 9-10. In Dennis , the Fifth Circuit vacated the district court's grant of a preliminary injunction enjoining the City from enforcing permit regulations with respect to taxicabs because the taxicab permit holders "[had] not demonstrated a substantial likelihood of establishing that [the ordinances] effected a regulatory taking." Id. at 272.8 The Court explained that the heavily regulated nature of the permits and the City's power to exercise control over those permits resulted in the permit holders having, if anything, a "limited bundle of rights" in connection therewith. Id. Further, the court noted that the permit extended to taxi drivers was " ‘in the nature of a personal privilege or license,’ because it ‘may be amended or revoked by the power authorized to issue it.’ " Id. at 273 (quoting State ex rel. Hutton v. City of Baton Rouge , 217 La. 857, 47 So. 2d 665, 668 (1950) ).

Similar to the permits in Melancon and the taxicab industry in New Orleans, land use and zoning have historically been extensively regulated. See Schad v. Borough of Mount Ephraim, 452 U.S. 61, 68, 101 S.Ct. 2176, 68 L.Ed.2d 671 (1981) ("The power of local governments to zone and control land use is undoubtedly broad and its proper exercise is an essential aspect of achieving a satisfactory...

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