Court reverses ruling for city, finds for massage parlor landlord

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A commercial landlord sued by the city of Indianapolis after his ex-tenant was accused of committing unlawful acts in an unlicensed massage parlor beat city hall Wednesday at the Indiana Court of Appeals.

The COA reversed summary judgment in favor of the city, finding its effort to enforce an ordinance against the landlord to be unreasonable. The panel remanded the case for entry of summary judgment in favor of landlord Broad Ripple Property Group, LLC.

The landlord had rented space at 5306 N. Keystone Avenue to Weihong Tan Kreiter, who was doing business as Sunrise Therapy Spa.  The spa operated as an unlicensed massage parlor in violation of Revised Code of the Consolidated City of Indianapolis and Marion County § 912-2.

After undercover Indianapolis Metropolitan Police officers made separate visits to the spa and “were offered genital touching,” police closed down the business and notified BRPG, which terminated the tenant’s lease. BRPG had no knowledge a license was required, was unaware of any illegal activity, and worked with the city after the tenant’s lease was terminated, according to the record.

Nevertheless, the city sued BRPG, seeking damages and fines for violations of §§ 912-2 and 912-6. After both sides filed motions for summary judgment, the trial court granted the city’s motion.

But the COA reversed, finding the matter was not moot as the city argued, and ruling the city’s interpretation of its code could not subject the landlord to enforcement in this case.     

“We reject the City’s overly-broad interpretation of the relevant ordinances and agree with BRPG that the City’s proposed interpretation and application of the ordinances essentially make a commercial landlord strictly liable for its tenant’s violation of the various licensing ordinances,” Judge Cale Bradford wrote for the panel in Broad Ripple Property Group, LLC v. City of Indianapolis, 49A04-1608-OV-1773.

Bradford wrote that the focus of the code “throughout is on the licensee and the business being regulated. … We cannot agree with the City that (Revised Code § 801-803(a)) clearly subjects commercial landlords such as BRPG to liability for licensing violations committed by their tenants, and when read in context with the entire regulatory scheme, the unreasonableness of the City’s interpretation is apparent.” 

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