City seeks dismissal in rental regulations lawsuit

Bell Leasing LLC is suing the city of Laramie in Albany County District Court, arguing that its new rental standards infringe on landlord rights. The city refutes every point Bell Leasing raises.

When the Laramie City Council passed rental regulations in January, it did so over the objections of several prominent local landlords. Bell Leasing Company — which owns more than 30 rental properties in Laramie — sued the city almost immediately, arguing that the new regulations would violate state and federal laws and that the city lacks the legal authority to implement such regulations.

An attorney representing the city of Laramie, Mayor Paul Weaver and City Manager Janine Jordan has now filed a motion to dismiss, asking that the case against his clients be thrown out. Cheyenne Attorney Mark Stewart alleges that the lawsuit fails to state a claim for which relief can be granted and lacks standing to assert one of those claims. The motion to dismiss further argues that it’s not appropriate to sue Weaver and Jordan individually, and that those two parties should be individually dismissed.

The rental regulations in question require that rental units be structurally sound, weatherproofed and fitted with windows suitable for escape from a fire. The units must be free of pests and mold, and all major plumbing, heating and electrical work must be performed by licensed professionals.

“The purpose of the ordinance is to provide minimum habitability criteria for rental housing and to safeguard the health, property and wellbeing of the owners, occupants, and users of rental housing in the City of Laramie,” the motion to dismiss states. “In addition to imposing minimum habitability requirements on rental housing, the ordinance creates a system for registering rental housing properties and a process for handling tenant complaints.”

The lawsuit brought seven counts against the city and its leaders. The motion to dismiss argues that each and every count is baseless.

Due process, unlawful taxes and equal protection

Count 1 alleges that the rental regulations ordinance violates the due process clause of the U.S. Constitution. The city argues in return that it’s too early for anyone to claim that their right to due process has been denied. The regulations will not be enforced before the first day of 2023.

“At the time Bell filed its Complaint, the City Ordinance at issue had not been implemented, thus making it impossible for Bell to allege that its interest in life, liberty, or property has been infringed in any way,” the city’s motion states. “Bell has not yet been asked to pay a fee, nor has its property been subjected to an inspection.”

Count 2 alleges that the ordinance constitutes an unlawful tax, as it requires every landlord to pay $20 per year per rental unit. If this fee is passed on to tenants in the form of raised rents, it would ultimately cost tenants an additional $1.67 per month.

The city’s motion to dismiss cites case law both within and outside of Wyoming to show that fees which simply cover the cost of administering new regulations are generally not considered taxes by the courts. The motion cites a 1996 case against Riverton, which found that the city could lawfully charge fees related to enforcing new fireworks regulations. The motion also cited a 1999 case from Pennsylvania in which a state court there ruled that fees associated with the enforcement of rental regulations were indeed lawful.

“Bell has not alleged any facts that would suggest the fees imposed by the Ordinance are not an expression of the costs associated with the Ordinance, nor has it alleged that the facts are unreasonable,” the motion states.

Count 3 alleges that the ordinance violates the equal protection clauses of the U.S. and Wyoming Constitutions. The motion to dismiss cites case law: “Equal protection in Wyoming requires a law to operate alike upon all persons or property under the same circumstances and conditions.”

Simply put, the city argues that landlords and tenants are not “under the same circumstances and conditions.” The power differential between landlords who have the freedom to invest in rental property and the tenants who have no choice but to be tenants was highlighted by many during council discussions regarding proposed fees.

“Plaintiff’s Complaint entirely fails to set forth a single allegation relevant to the elements of equal protection,” the motion states. “Bell alleges that the Ordinance places the rights of tenants above and before property owners … Plaintiff also alleges that the Ordinance empowers the City Manager to have both absolute or arbitrary power over private legal disputes of tenants and property owners … Even if these two allegations were true, which they are not, they do not assert facts that would create entitlement to relief for the violation alleged.”

Search and seizure

Count 4 alleges that the rental regulations ordinance violates the Fourth Amendment of the U.S. Constitution, which protects against unreasonable searches and seizures.

“This is an unequivocally baseless claim that ignores well-established Wyoming caselaw and U.S. caselaw,” the motion to dismiss states.

The rental regulations are enforced via a complaint system. If a tenant believes the property they are renting fails to meet the standards outlined by the regulations, they must first request a remedy from their landlord. If the landlord has had sufficient time to deal with the issue, but has not remedied the situation, the tenant may file a complaint with the city manager’s office. Only at that point would a violation come to the attention of the city, and only at that point could the city manager inspect the property.

“On its face, the Ordinance allows for inspection of a premises only upon initiation by, and permission of a tenant or owner,” the motion states. “Without such authorization, entry for inspection is limited to that which can be obtained by law.”

And the right to grant the city manager entry rests with the tenants, not the landlord, the city argues.

“By claiming that its fourth amendment rights would be violated in the event a tenant instigates and allows an inspection of Bell’s Rental Housing property, pursuant to the Ordinance, Bell asserts that it has an expectation of privacy on such premise,” the motion states. “This is unsupported by law. Wyoming and U.S. caselaw clearly establish that landlords do not have a reasonable expectation of privacy to prevent searches authorized by tenants of leased properties. It is the tenant, not the landlord that possesses the right to allow or refuse searches of the space they rent.”

The motion cites extensively from a 2006 case out of Vincennes, Indiana, which also delved into the Fourth Amendment rights of landlords and tenants.

“Tenants’ well-established right to be free of warrantless inspection does not confer any rights on the landlords,” that court found, adding that a landlord’s interest in their rented property is “substantially further down the scale of protected interests than either the residential or commercial tenant, and in most circumstances fall off the scale altogether.”

Upon inspection, the city manager would have to find a violation of the rental standards before the landlord would be ordered to fix it, or in refusing to fix it, ordered to pay a fee.

The Indiana court continued.

“The landlords have no right to operate residential rental units in violation of housing code standards,” the court found. “‘The expectation that certain facts will not come to the attention of authorities’ is not a privacy interest that society considers reasonable … If the only thing a landlord has to fear from a housing code inspection is discovery of code violations, the landlord has no cognizable privacy interest in keeping violations hidden from authorities.”

Freedom of contract and legal authority

Count 5 alleges that the rental regulations ordinance violates the freedom of contract, stepping into the middle of a private contract between two parties — landlord and tenant.

“While freedom of contract is the general rule in Wyoming, ‘it is nevertheless not absolute but subject to a great variety of legitimate restraints, among which are such as are required for the safety and welfare of the state and its inhabitants,’” the motion states, citing a 1935 Wyoming case.

The motion cites other cases in which government entities were allowed to restrict the freedom to contract when the health or safety of residents was at stake.

“The acts of police power placed the same if not greater restrictions on citizen’s freedom of contract and other constitutional rights than the Ordinance at issue,” the motion states. “Nonetheless, such regulations were found to be reasonable because they were instigated to protect and promote general welfare.”

Count 5 also alleges that the ordinance violates the commerce clause since some Laramie landlords are not Laramie residents and live in other states. The ordinance requires non-local owners to designate a local agent.

“Though the City of Laramie’s Ordinance may incidentally affect an out of state property owner, the conduct being regulated occurs entirely within the bounds of the City of Laramie and is intended for the legitimate local benefit of providing safe housing to its residents,” the motion states.

Count 6 alleges that the city lacks the legal authority to impose rental regulations. The city’s motion to dismiss is not impressed by this charge.

“The Plaintiff has failed to adequately set forth any specific, concise, and direct allegation to put the City of Laramie on notice of how it lacks legal authority and what exactly it lacks the legal authority to do,” the motion states. “In any case, Wyoming case law and the Wyoming Constitution demonstrate that the City possessed the legal authority to enact the Ordinance.”

The motion once again cites case law to argue that local laws may go beyond state laws, so long as they do not conflict with the state law and as long as the state has not passed a law “preempting” the issue (in other words, establishing that the state specifically gets to set the terms on a given issue, such as the state of Wyoming does with the penalties for drunk driving).

Regulation-supporters and city councilors alike argued that the state statutes detailing contracts, or leases, between landlord and tenants, fail to protect tenants from unsafe living conditions. Some landlords argued the opposite. The motion to dismiss argues that the state statutes do not enforce health and safety standards for rental properties.

“The statutes do not impose duties upon either party,” the motion states. “The Ordinance, on the other hand, imposes a duty on all landlords to uphold certain habitability standards for the general welfare of the public. Ultimately, the City of Laramie imposes new standards that the Wyoming Statutes do not address, let alone preempt.”

Injunction and injury

Count 7 asks the court to issue a preliminary injunction, stopping the rental regulations until this lawsuit is decided one way or the other. The motion to dismiss points out that the regulations have not yet been implemented, and argues “it is possible that this suit could be decided before the ordinance is ever implemented.”

“The only hypothetical ‘injury’ that Bell would possibly incur as a result of the Ordinance being implemented during this litigation would be an expenditure of funds for registering any residential housing properties it owns,” the motion states. “This is not an irreparable injury and could be easily remedied in the form of a monetary refund in the unlikely event the City is unsuccessful in this suit.”

Other “injuries” suggested by the lawsuit are not injuries borne by the landlord, the motion argues.

“Bell alleges that enforcement of the Ordinance ‘will produce great or irreparable injury to Plaintiff as [it] will be forced to adjust the rent of tenants to offset the cost associated with the Ordinance and/or terminate current leases and evict tenants,’” the motion states. “These alleged ‘irreparable injuries’ illustrate harm that may come to Bell’s tenants but completely fail to demonstrate how Bell itself will be harmed irreparably.”