Minnesota Realty and Management LLC, Relator v. Minneapolis Department of Regulatory Services ( 2015 )

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2014).
STATE OF MINNESOTA
IN COURT OF APPEALS
A14-1958
Minnesota Realty and Management LLC,
Relator,
vs.
Minneapolis Department of Regulatory Services, et al.,
Respondents
Filed August 3, 2015
Reversed
Worke, Judge
Minneapolis Department of Regulatory Services
Lee R. Johnson, Johnson & Greenberg, P.L.L.P., St. Louis Park, Minnesota (for relator)
Susan L. Segal, Minneapolis City Attorney, Lee C. Wolf, Assistant City Attorney,
Minneapolis, Minnesota (for respondent)
Considered and decided by Smith, Presiding Judge; Hudson, Judge; and Worke,
Judge.
UNPUBLISHED OPINION
WORKE, Judge
Relator challenges the revocation of its rental license, arguing that revocation was
based on violations of an ordinance it was in compliance with at the time of the hearing
on the notice of revocation. We agree and reverse.
DECISION
Relator Minnesota Realty and Management LLC challenges the city council’s
revocation of relator’s rental license for property it owns in Burnsville, Minnesota. “City
council action is quasi-judicial and subject to certiorari review if it is the product or result
of discretionary investigation, consideration, and evaluation of evidentiary facts.”
Staeheli v. City of St. Paul, 732 N.W.2d 298, 303 (Minn. App. 2007) (quotation omitted).
On certiorari review, we do not retry facts or make credibility determinations, and “will
uphold the decision if the lower tribunal furnished any legal and substantial basis for the
action taken.” Id. (quotation omitted). We will reverse a city council’s decision “if it is
fraudulent, arbitrary, unreasonable, unsupported by substantial evidence, not within its
jurisdiction, or based on an error of law.” Lam v. City of St. Paul, 714 N.W.2d 740, 743
(Minn. App. 2006) (quotation omitted).
The city council adopted approval of the revocation of relator’s license after an
administrative hearing officer (AHO) concluded that relator’s license should be revoked
because relator received notice of revocation for having multiple instances of illegal
occupancy. Relator argues that revocation merely for two violations is contrary to the
applicable ordinance because relator achieved compliance before the hearing date; thus,
there was no legal basis to revoke the license. There is no dispute that relator corrected
the violation. Therefore, we must determine, based on the ordinance, whether the license
could be revoked based on two violations, or whether the license could not be revoked
because the property was in compliance on the date of the hearing. This court interprets
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an existing city ordinance de novo. Frank’s Nursery Sales, Inc. v. City of Roseville, 295
N.W.2d 604, 608 (Minn. 1980).
Relator twice violated the ordinance that requires bedrooms to have a ceiling
height of not less than seven feet. Minneapolis, Minn., Code of Ordinances (MCO)
§ 244.800 (2015). Because rooms with ceilings under the minimum height were used as
bedrooms, relator violated a requirement that “[n]o rental dwelling . . . shall be over
occupied.” MCO § 244.1910(a)(3) (2015). Because of the occupancy violations, relator
failed to meet minimum standards to hold a rental dwelling license. Id.(a) (2015).
“Failure to comply with any of the[] standards and conditions shall be adequate grounds
for . . . revocation . . . of a rental dwelling license . . . .” Id.
After the first violation on January 10, 2011, relator was given until February 4 to
come into compliance with the ordinance, which it did. After the second violation on
May 6, 2014, relator was given until June 14 to come into compliance, which it did by re-
inspection on May 27. However, following the second violation, respondent Minneapolis
Department of Regulatory Services issued a notice of revocation. The applicable
ordinance provides in relevant part that: “if the director determines that a building or
dwelling unit fails to meet licensing standards [in section] 244.1910 . . . for a second
time, under the same owner/licensee, the director shall mail the owner . . . a notice of . . .
revocation . . . of the license.” MCO § 244.1940(a) (2015). The notice warned relator
that if an appeal of the determination “recommending” revocation was not taken within
15 days, the license would be revoked. MCO §§ 244.1960(a), .1940(a)(4) (2015).
Relator appealed within 15 days.
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Following a hearing, the AHO found that relator admitted the violations, but took
corrective action. The AHO found that relator achieved compliance with the ordinance
when the beds were removed from the rooms and the tenant signed a letter of compliance.
The AHO, relying on MCO § 244.1940, recommended revocation after determining that
respondent “issued a valid Notice of Revocation . . . for having had multiple instances
[of] illegal occupancy.”
To support its contention that relator’s license was properly revoked for having
two violations, respondent cites to MCO § 244.1930(a) (2015), which states that when a
“dwelling unit fails to meet licensing standards . . . for a second time under the same
owner/licensee, a notice of director’s determination of noncompliance shall not be
required to be sent as the . . . dwelling unit may be subject to an action for . . . revocation
. . . pursuant to section 244.1940.” Respondent claims that relator was provided “one
chance to bring [the] propert[y] into compliance with the licensing standards and . . . a
second violation of these standards provided adequate grounds to revoke a rental
license.” For several reasons respondent’s argument is not persuasive.
First, the AHO did not rely on MCO § 244.1930(a), which states that a
determination of noncompliance is not required following a second violation. Following
the second violation, relator was given an opportunity to achieve compliance with the
ordinance, which it did. Additionally, relator was given notice that appeal must be taken
within 15 days of the determination recommending revocation. See MCO § 244.1960(a).
Relator was given notice that it must comply with the ordinance by a set date and was
also given notice that the license would be revoked unless it appealed within 15 days. If
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revocation is automatic after a second violation, it is unclear as to why relator was
instructed to comply with the ordinance and given the opportunity to appeal.
The decision to revoke relator’s license is based on an error of law because the
AHO did not rely on the MCO that respondent cites in its brief relating to a notice of
noncompliance not being required for a second violation. Relator received a notice and
was afforded a hearing. Following the hearing, the AHO found that relator complied
with the ordinance.
Reversed.
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