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COA overturns injunction against Charlestown code enforcement scheme

September 10, 2018

A special judge’s ruling that preliminarily enjoined the city of Charlestown from inconsistently imposing code violation fees while simultaneously finding the city was not subject to the state’s Unsafe Building Law has been overturned. The Indiana Court of Appeals ruled Monday that the trial court erred in finding the UBL does not apply to the city, thus requiring remand for re-examination of how local and state regulations should work together.

The case of City of Charlestown, Indiana, et al. v. Charlestown Pleasant Ridge Neighborhood Association Corporation, et al., 10A01-1712-CT-2896, traces back four years to 2014, when the southern Indiana city first considered redeveloping Pleasant Ridge, a neighborhood in Charlestown that is comprised of World War II-era homes. According to city attorney Michael Gillenwater, the homes were only intended to stand for roughly 10 years, but many remain today and have fallen into disrepair.

Thus, the city, under the direction of Mayor Bob Hall, sought to use federal blight elimination funds to redevelop the neighborhood. That plan was scratched after residents objected, and the city instead began using code enforcement and fines to revitalize the neighborhood.

Specifically, the city council passed a series of ordinances that allowed the city to inspect Pleasant Ridge homes beginning in August 2016 and impose non-waivable fines for code violations. Meanwhile, local developer John Neace formed Pleasant Ridge Redevelopment, LLC, a redevelopment company that began offering to buy Pleasant Ridge homes for $10,000. Through an agreement with the city, Neace was not required to pay fines on the homes he purchased in exchange for his promise to eventually demolish them.

All of this, residents claimed, was part of Hall’s plan to raze Pleasant Ridge and build nicer homes in its place, leaving them without affordable housing options. Gillenwater, however, told the Indiana Lawyer in November that the city had helped subsidize a new housing development where Pleasant Ridge residents could move into energy-efficient homes with lower utility bills and increased home equity.

Despite that assertion, a group known as the Pleasant Ridge Neighborhood Association and some of its resident members sued the city and its Board of Works, arguing the code enforcement plan violated local, state and federal laws, including the local property maintenance code, the Unsafe Building Law and federal and state constitution protections. The residents and neighborhood association — which was fined nearly $9,000 for code violations — sought injunctive relief.

Special Judge Jason Mount of Scott County granted the preliminary injunction against the city, finding the local property maintenance code requires the city to “provide a reasonable opportunity to make repairs before fines may be imposed.” That was not done here, Mount said, pointing to the fact that fines began accruing against the neighborhood association immediately and daily, even before it was made aware of the code violations found in a duplex it owns.

Mount also said the city violated equal protection laws by imposing fines on the residents, but not on Neace’s LLC. However, the special judge said the plaintiffs’ claim under the Unsafe Building Law likely would not succeed because, under the Home Rule Act, local ordinances superseded that law.

Mount’s ruling on the UBL formed the basis of the Court of Appeals’ Monday reversal. The panel agreed with the homeowners’ cross-appeal that the trial court erred in concluding Charlestown is not required to adhere to the UBL because of the Home Rule Act, noting the city voluntary agreed to adopt the law in 2001.

“It is true, as the City asserts, that the Home Rule Act implements the ‘policy of the state … to grant units all the powers that they need for the effective operation of government as to local affairs,’” Judge Terry Crone wrote for the unanimous court. “…However, the Home Rule Act also provides that ‘(i)f there is a constitutional or statutory provision requiring a specific manner for exercising a power, a unit wanting to exercise the power must do so in that manner.’”

“… Moreover, the PMC explicitly provides, ‘This ordinance does not supersede Federal or State laws, statutes or regulations, except as allowed,’” Crone said.

The court remanded the case for the trial court “to consider how the UBL and the (property maintenance code) work together in light of our conclusion that the City is bound to enforce the PMC in accordance with the UBL, and to reconsider the Homeowners’ claim that the City’s manner of enforcing the PMC violates the UBL.” The court also noted the residents’ remaining claims would have to be re-examined, as well, if they chose to continue to pursue those claims. However, the judges declined to address the issues raised by the city in its appeal of the preliminary injunction.

In a statement released Monday after the decision was handed down, the Virginia-based Institute for Justice, which brought the lawsuit on behalf of the Pleasant Ridge residents, claimed the ruling as a victory that provides "procedural protections from overzealous city code enforcement."

"Today's opinion is another rebuke to the city of Charlestown's reckless disregard for state law," IJ senior attorney Anthony Sanders said in the statement. "This includes a cap on the amount of fines, and a mandate that fines can only be issued against recalcitrant property owners. The city has wantonly ignored those protections through issuing immediate fines against property owners in its illegal quest to force them to sell their properties to developer John Neace."

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