Alger v. Dept. of Labor & Industry , 2006 Vt. 115 ( 2006 )

Alger, et al. v. Dept. of Labor & Industry, et al. (2005-001)
2006 VT 115[Filed 09-Nov-2006]
NOTICE: This opinion is subject to motions for reargument under
V.R.A.P. 40 as well as formal revision before publication in the Vermont
Reports. Readers are requested to notify the Reporter of Decisions,
Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
any errors in order that corrections may be made before this opinion goes
to press.
2006 VT 115No. 2005-001
Rebecca Alger, et al. Supreme Court
On Appeal from
v. Franklin Superior Court
Department of Labor and Industry, et al. November Term, 2005
Howard E. VanBenthuysen, J.
Maryellen Griffin and Karen Richards, and Katherine Berkman and Stephen
Norman (On the Brief), St. Johnsbury, for Plaintiffs-Appellants.
William H. Sorrell, Attorney General and Clifford Peterson, Assistant
Attorney General, Montpelier, for Defendants-Appellants.
PRESENT: Reiber, C.J., Dooley, Johnson, Skoglund and Burgess, JJ.
¶ 1. JOHNSON, J. Plaintiffs Rebecca Alger, et al., appeal from the
superior court's dismissal of their action against defendant Vermont
Department of Labor and Industry, as well as from the court's denial of
their application for class certification. Plaintiffs' claims arise
primarily from the Department's attempted closure of an apartment building
at 13 High Street in St. Albans for longstanding housing code violations.
Plaintiffs allege that the conditions at 13 High Street are symptomatic of
the Department's general failure to take action against the owners of
rental housing who have violated the housing code. (FN1) Plaintiffs claim
that the closure was an unconstitutional taking of property without due
process or just compensation. They argue that the court's dismissal was
premature because their allegations were sufficient to state due process
and takings claims, as well as a claim in the nature of mandamus.
Plaintiffs also contend that the court improperly considered the merits of
the case in denying class certification. We affirm in part, reverse in
part, and remand.
¶ 2. Plaintiffs brought this action in November 2002, following the
Department's order that the apartment building at 13 High Street be vacated
by November 15, 2002, due to fire and electrical code violations.
Plaintiffs' first complaint sought declaratory and injunctive relief
pursuant to 21 V.S.A. § 209, which allows any person aggrieved by an action
taken by the Commissioner of Labor and Industry to appeal the action to the
superior court within twenty days of the action. The complaint alleged
that the Department's order failed to comply with the due process
requirements of notice and a pre-closure hearing, that it was served
improperly, and that the Department had failed to demonstrate that the
building was imminently hazardous before ordering that it be vacated. In
connection with their complaint, plaintiffs sought, and received, a
preliminary injunction preventing the Department from closing the building.
The Department then agreed to allow the building to remain open until
further order of the superior court. Plaintiffs filed a second amended
complaint adding claims against Thomas Komasa, the owner of 13 High Street,
after he was brought in as a third-party defendant at the Department's
request. Plaintiffs' claims against Mr. Komasa, some of which have been
settled, are not at issue here.
¶ 3. In June 2003, following discovery, plaintiffs filed a third
amended complaint containing revised claims and additional allegations
against the Department. This complaint also added the claims of two
plaintiffs, Tina Neville and Linda Limoge, who did not reside at 13 High
Street. We treat the following allegations as true for the purposes of
reviewing the superior court's dismissal. Gilman v. Maine Mut. Fire Ins.
Co., 2003 VT 55, ¶ 14, 175 Vt. 554, 830 A.2d 71 (mem.).
¶ 4. On October 14, 2002, the Department issued an order regarding
numerous fire and electric code violations at 13 High Street. The order
cited "a long history of violations" at that building that had been
identified no later than 2000, although it did not include previous
inspections from as far back as 1994 that had identified similar
violations. According to the October 14, 2002 order, the Department had
instructed the building's previous owner, Brian Simpson, to correct similar
violations in May 2000, notified him of continuing violations in July 2000,
and ordered him to correct the violations within thirty days in November
2000. When Mr. Simpson failed to correct the violations, the Department
asked, in April 2001, that he submit a plan of corrective action within
thirty days, and noted in a report that the violations continued to exist
as of August 2001. Chittenden Bank acquired the building from Mr. Simpson
in 2002 by foreclosure, and sold it to Mr. Komasa in May 2002. In June
2002, Department personnel met with Mr. Komasa and informed him of the
continuing code violations. Mr. Komasa told them that he would correct the
violations, but on September 11, 2002, a Department inspection found "no
evidence that any work had been done toward improving the condition of the
building."
¶ 5. The October 14, 2002 order directed Mr. Komasa to: (1)
immediately vacate apartment 5, the residence of plaintiff Laura Bean,
because it no longer had electrical service and plaintiff Bean was using
candles to light the apartment; (2) submit a plan of corrective action by
October 21, 2002; and (3) begin repairs to correct the violations no later
than November 1, 2002. The order stated that noncompliance would result in
the closure of the building "until such time as all outstanding violations
are corrected." The order was handed to plaintiff Corinne Bluto, who lived
on the third floor, and wedged into the doorway of plaintiffs Alger and
Todd Massey.
¶ 6. Plaintiff Bean vacated her apartment in October 2002.
Plaintiffs Bluto, Alger, and Massey remained in their apartments. Although
Mr. Komasa received an informal extension of the deadline for submitting a
plan of corrective action until November 1, 2002, he did not submit such a
plan by that date, and he took no action to begin correcting the
violations. On November 5, 2002, the Department issued an order that the
building be closed and its electrical service disconnected as of November
15, 2002. The order did not contain a statement that there was an imminent
hazard. The Department did not provide plaintiffs an opportunity for a
hearing prior to the closure date, and did not offer plaintiffs assistance
in relocating or other compensation for the loss of their apartments. The
Department took no additional action against Mr. Komasa, such as the
imposition of administrative fines, and did not refer the case to the
Franklin County state's attorney for civil or criminal prosecution.
¶ 7. Plaintiffs' complaint also contained allegations on behalf of
plaintiffs Neville and Limoge, neither of whom shared plaintiffs' claims
with respect to 13 High Street. Plaintiff Neville alleged that she had
vacated her rental home because of numerous uncorrected code violations,
all of which the Department had identified through inspections, but none of
which the Department had ordered her landlord to correct. Plaintiff Limoge
alleged that she was forced to vacate her rented mobile home when the
Department disconnected her electrical service due to her landlord's
failure to correct electrical code violations. The Department took no
action against either landlord before or after plaintiffs Neville and
Limoge left their homes.
¶ 8. Plaintiffs' third amended complaint no longer relied on 21
V.S.A. § 209. Instead, the complaint phrased plaintiffs' legal claims in
terms of the Department's failure to perform its mandatory statutory
duties, and its failure to exercise discretion in performing its
discretionary duties. The complaint alleged that the Department
"arbitrarily abused [its] authority to enforce the habitability statutes
and rules by failing and neglecting to take action to cause violations to
be eliminated or removed in accordance with the statutes and rules," failed
to establish or follow a procedure for penalizing landlords who fail to
correct code violations, and failed to establish or follow a procedure for
legal action against such landlords. Plaintiffs alleged that the
Department's actions were consistent with its general failure to enforce
the housing code except by evicting tenants in rental housing. That is,
the Department rarely, if ever, issued fines or referred a landlord for
prosecution, despite its statutory authority to do so, even after closing a
rental property. The amended complaint also contained the previous
complaints' claims that the Department took plaintiffs' property without
due process or just compensation by terminating plaintiffs' residential
tenancies without providing a pre-closure hearing or taking effective
action to force landlords to correct the violations that resulted in the
closures. (FN2)
¶ 9. Plaintiffs also moved to certify a class of similarly situated
tenants and a subclass of tenants who had suffered the loss of their rental
housing. Plaintiffs' motion for class certification defined the class as
"all residents of rental housing in Vermont where there are one or more
violations of the statutes and rules pertaining to habitability and
enforced by [the Department]," including "all people who now reside in such
housing, all people who have resided in such housing since November 13,
1999, and all people who will reside in such housing in the future." The
subclass was composed of "all Vermont residential tenants who have in the
past three years, or will in the future, be forced to move out of their
homes as a result of [the Department's] actions and omissions regarding
code enforcement in rental housing." The Department opposed class
certification, and the superior court denied plaintiffs' motion, finding
that plaintiffs' proposed class failed to meet the requirements of Vermont
Rule of Civil Procedure 23.
¶ 10. The Department also filed a motion to dismiss under Rule
12(b)(6), arguing that the allegations in plaintiffs' complaint were
insufficient to state a claim for which relief could be granted. The
superior court granted the Department's motion and dismissed plaintiffs'
claims, ruling that the Department's action in forcing plaintiffs to vacate
their rental housing was an exercise of the police power, not subject to
due process or takings analysis, and that plaintiffs' claims that the
Department had abused its authority, which were in the nature of the writ
of mandamus, were not properly brought under Rule 75. Even had plaintiffs
followed the procedures of Rule 75, the court stated that their allegations
were legally insufficient because the Department's duty to act was
discretionary, and any failure to act was not "an arbitrary abuse of
power." See Sagar v. Warren Selectboard, 170 Vt. 167, 171, 744 A.2d 422,
426 (1999) (stating that mandamus is not generally available for
discretionary decisions absent an arbitrary abuse of power).
¶ 11. Plaintiffs now appeal the court's dismissal of their complaint
and its denial of their motion for class certification. They argue that
the court erred by: (1) dismissing their complaint despite allegations that
were sufficient to state mandamus, takings, and due process claims against
the Department; and (2) improperly considering the merits of their
complaint in denying their motion for class certification. We agree that
the court's dismissal of plaintiffs' claims was premature, but find that
denial of class certification was appropriate here, and therefore, we
affirm in part, reverse in part, and remand for further proceedings.
I.
¶ 12. Plaintiffs first contend their complaint should have survived
a motion to dismiss because it stated claims upon which relief could be
granted. "A motion to dismiss is not favored and rarely granted." Gilman
v. Maine Mut. Fire Ins. Co., 2003 VT 55, ¶ 14, 175 Vt. 554, 830 A.2d 71(mem.). This is especially true "when the asserted theory of liability is
novel or extreme," as such cases "should be explored in the light of facts
as developed by the evidence, and, generally, not dismissed before trial
because of the mere novelty of the allegations." Ass'n of Haystack Prop.
Owners, Inc. v. Sprague, 145 Vt. 443, 447, 494 A.2d 122, 125 (1985). In
reviewing a motion to dismiss, we consider whether, taking all of the
nonmoving party's factual allegations as true, " 'it appears beyond doubt'
that there exist no facts or circumstances that would entitle the plaintiff
to relief." Amiot v. Ames, 166 Vt. 288, 291, 693 A.2d 675, 677 (1997)
(quoting Levinsky v. Diamond, 140 Vt. 595, 600-01, 442 A.2d 1277, 1280-81
(1982)). We treat all reasonable inferences from the complaint as true,
and we assume that the movant's contravening assertions are false. (FN3)
Id.
A.
¶ 13. We first address plaintiffs' claim that the Department failed
to enforce the housing code, which plaintiffs characterize as a claim in
the nature of mandamus. Although Rule 81(b) abolished the writ of
mandamus, relief in the nature of mandamus remains available under Rule 75.
Garzo v. Stowe Bd. of Adjustment, 144 Vt. 298, 299-300, 476 A.2d 125, 126
(1984). The superior court faulted plaintiffs for failing to proceed under
Rule 75, but plaintiffs did not fail to satisfy any requirement of Rule 75
by simply filing a complaint demanding a mandatory injunction. To the
extent Rule 75 alters the requirements of mandamus, it relaxes its formal
requirements-for instance, by eliminating responsive pleading requirements
at the discretion of the court, and by allowing amendment to permit a
defective Rule 75 claim to be brought as an ordinary civil action.
V.R.C.P. 75(b).
¶ 14. The Department interprets the court's statement as a ruling
that plaintiffs' claims were brought outside the statute of limitations.
We see no indication of such reasoning in the court's ruling. The
limitations period set by Rule 75 with respect to failures to act is "six
months after expiration of the time in which action should reasonably have
occurred." V.R.C.P. 75(c). This time limit, however, is not
jurisdictional, Fyles v. Schmidt, 141 Vt. 419, 422, 449 A.2d 962, 964
(1982), and the Department raises it for the first time on appeal. The
only time bar raised below was with respect to plaintiffs' challenge under
21 V.S.A. § 209; the Department failed to address any applicable bar to
plaintiffs' mandamus claims, and responded to these claims only in terms of
its lack of a mandatory duty. We thus decline to address this issue on
appeal. See Rennie v. State, 171 Vt. 584, 587, 762 A.2d 1272, 1277 (2000)
(refusing to consider a statute of limitations argument that was not
specifically raised below, even though the same issue had been raised with
respect to related claims).
¶ 15. Perceiving no procedural default, we turn to the substance of
plaintiffs' complaint. Mandamus will ordinarily lie only "to compel a
public officer to perform an official act which is merely ministerial," and
only where "the right sought to be enforced is certain and clear." Roy v.
Farr, 128 Vt. 30, 34, 258 A.2d 799, 801-02 (1969). This rule is subject to
the exception, however, that where there is "an arbitrary abuse of the
power vested by law in an administrative officer or board which amounts to
a virtual refusal to act or to perform a duty imposed by law, mandamus may
be resorted to in the absence of other adequate legal remedy." Id., 258
A.2d at 802.
¶ 16. Although the fire, electrical, and plumbing safety codes are
each addressed by a separate statutory scheme, the enforcement provisions
of each are similar. Each code explicitly commits enforcement to the
discretion of the Department by allowing the Commissioner of Labor and
Industry to set priorities for inspection and enforcement. See 21 V.S.A. §
252(b) (2003) (FN4) (allowing the commissioner to "establish priorities for
enforcing these rules and standards based on the relative risks to persons
and property from fire or particular types of premises"); 26 V.S.A. § 893
(allowing the commissioner to set electrical inspection priorities); id. §
2173(b) (allowing the commissioner to set priorities for plumbing
inspection and enforcement).
¶ 17. Each code also empowers the Department to respond to
violations in several ways. Each contains a provision authorizing an
administrative fine of not more than $1,000 for each violation of a rule or
order. 21 V.S.A. § 254(c) (2003) (fire); 26 V.S.A. § 897(a) (electrical);
id. § 2175(d) (plumbing). In addition, each authorizes action in the
superior court to enforce a regulation or order by injunctive relief and,
in the case of fire code violations, fines of up to $20,000. 21 V.S.A. §
254(a)-(b) (allowing superior court prosecution for injunctive or other
relief and fines of up to $10,000 for a violation of any provision and
$20,000 for a violation of an emergency order); 26 V.S.A. § 897(b)
(authorizing the superior court, "on application by the commissioner," to
grant injunctive relief for electrical code violations); id. § 2175(e)
(authorizing the superior court, "[o]n application by the commissioner," to
enjoin plumbing code violations. (FN5) Each scheme also authorizes the
Department to issue an order to the owner of the premises to correct a
violation. 21 V.S.A. § 253(a) (fire); 26 V.S.A. § 895 (electrical); id. §
2175(b)(1) (plumbing). If a fire code violation is not corrected following
an order, the building may be closed. 21 V.S.A. § 253(a). An uncorrected
plumbing or electrical violation may result in the disconnection of
service. 26 V.S.A. § 895 (electrical); 26 V.S.A. § 2175(b)(3) (plumbing).
¶ 18. By authorizing the commissioner of labor and industry to set
inspection and enforcement priorities and enabling the Department to
exercise one or more of several enforcement options, the Legislature has
vested a great deal of discretion in the Department in performing the
duties addressed in plaintiffs' complaint. Thus, the duties plaintiffs
seek to enforce are not ministerial, and mandamus can lie against the
Department only under the "arbitrary abuse of power" exception. See Roy,
128 Vt. at 34, 258 A.2d at 801-02 (distinguishing discretionary duties from
ministerial acts). To determine whether plaintiffs' claim fits within this
exception, we must determine whether the facts they allege and the
reasonable inferences from those facts establish that the Department's
conduct was so arbitrary that it amounted a refusal to act or a failure to
perform a legal duty, and that plaintiffs have no other adequate remedy.
Id., 258 A.2d at 802.
¶ 19. We agree with plaintiffs that they have no alternative remedy.
"In order to supersede mandamus, the other remedy must be competent to
afford relief on the very subject matter in question, and be equally
convenient, beneficial and effective." Id. at 37, 258 A.2d at 803. The
Department argues that plaintiffs have a remedy under 21 V.S.A. § 209,
which allows for appeals to the superior court from actions or orders of
the Commissioner of Labor and Industry, but this statute, by its plain
language, applies only to actions and orders, not to failures to act. 21
V.S.A. § 209 ("[A] person aggrieved by an order or action of the
commissioner . . . may appeal to the superior court for the order or action
within 20 days after the order is issued or the action is taken.")
(emphasis added). Rule 75 is a better avenue for challenging a failure to
act, and the Department has identified no alternative remedy. See V.R.C.P.
75 (allowing review of "[a]ny action or failure or refusal to act by an
agency of the state or a political subdivision thereof") (emphasis added).
¶ 20. The key question is thus whether the Department's alleged
failures to act were sufficiently arbitrary that they can be characterized
as nonperformance of a legal duty. We acknowledge that it is difficult to
articulate a clear answer to this question. In the context of a motion to
dismiss, though, we need to consider only two broad preliminary questions
to determine whether plaintiffs' complaint is sufficient to survive
dismissal and allow further factual development: (1) whether there is some
minimum standard of conduct with which the Department must comply; and (2)
whether plaintiffs' complaint alleges that the Department has failed to
comply with that standard.
¶ 21. Plaintiffs contend that, while the Department has discretion
in how it enforces the housing code, the Department's actions represent a
wholesale failure to enforce the code. The Department responds by arguing
that it does not owe plaintiffs a legal duty of any kind, including a duty
to enforce the housing code. The Department appears to base this argument
on the fact that it does not owe plaintiffs a duty of care in tort. See,
e.g., Corbin v. Buchanan, 163 Vt. 141, 144, 657 A.2d 170, 172 (1994)
(holding that agency could not be held liable for damages resulting from
allegedly negligent fire safety inspections). The type of duty plaintiffs
must assert to fit within the exception to the requirements of mandamus is
distinct from a duty of care. The proposition that the law imposes duties
on an administrative agency is not related to the proposition that the
agency must take care to prevent harm to the public or risk liability for
negligence. In Roy, for instance, we held mandamus to lie against a local
board for its failure to correct a previously identified violation of the
health code. 128 Vt. at 36, 258 A.2d at 803. There, the duty imposed by
law on the board was not a duty that the plaintiff could enforce in tort if
he fell ill as a result of the violation. Instead, it was a more general
duty to obey and enforce a mandatory statutory provision. Id. Thus, the
fact that the Department does not owe plaintiffs a duty of care does not
resolve the question of whether the Department may have other affirmative
legal duties.
¶ 22. We agree with plaintiffs that the Department has, at minimum,
a legal duty to enforce the housing code, and that a wholesale failure to
enforce the code would violate that duty. This is a somewhat simplistic
and misleading description of the Department's alleged conduct, however.
Such a description cannot be reconciled with the fact that, for instance,
the Department inspected the building at 13 High Street several times and
identified multiple violations of the code, nor with the fact that the
Department ultimately ordered the building closed and its utility service
terminated. A more accurate description of the alleged conduct is that the
Department enforced the housing code as a regime of voluntary compliance.
The specific omissions identified by plaintiffs are the Department's
repeated failures to issue administrative fines or refer violations of the
housing code and specific Department orders to the state's attorney for
civil prosecution. In other words, the Department failed to take any
action to ensure compliance with the provisions of the housing code or its
own specific orders.
¶ 23. We conclude that the Department's use of a voluntary
enforcement scheme can be characterized as a failure to perform a legal
duty. Although there can be no expectation that the Department's limited
resources will allow it to correct every code violation, a voluntary
compliance regime is entirely inconsistent with the statutory framework of
the housing code. The fire code phrases the duties of landlords in
mandatory terms, explicitly requiring compliance with the Department's fire
safety rules. See 21 V.S.A. § 251(b)-(c) (stating that "[a] person shall
not maintain, keep or operate any premises or any part thereof . . . in a
manner which causes or is likely to cause harm to other persons or property
in case of fire" and that "[o]n premises under his control, a person shall
observe rules promulgated under this subchapter for the prevention of fires
which may cause harm to other persons or property"). While the electrical
and plumbing codes lack similarly explicit language, they imply much the
same thing by authorizing penalties for violations of the Department's
rules and orders. Supra, ¶ 16. The Legislature could have enacted the
housing code as a system of voluntary compliance, where the Department's
only duties would have been to inform landlords of their deviations from
sound safety practices, and to step in as a last resort to prevent imminent
threats to the community. Instead, it created a system composed of
mandatory provisions, and it assigned responsibility for enforcing those
provisions to the Department.
¶ 24. Plaintiffs contend that the Department has subverted this
mandatory statutory scheme by following a general policy that violations of
the housing code will not result in sanctions against landlords. According
to the complaint, the long history of violations at 13 High Street resulted
in only the following pattern of action and inaction by the Department: (1)
the Department inspected the building and identified serious violations;
(2) the Department informed the landlord of the results of the inspection;
(3) the Department issued a specific deadline for correction of the
violations identified by the inspection report; (4) the landlord failed to
take any corrective action; and (5) the Department took no further action
until the next time it inspected and identified the same or similar
violations. After several years of repeating this cycle, the violations
became severe enough that the Department threatened to close the building
if Mr. Komasa failed to complete the ordered repairs. When Mr. Komasa did
not respond, the Department ordered the building closed, but took no
additional enforcement action against Mr. Komasa.
¶ 25. While the Department correctly points out that the housing
code did not require the Department to take a specific enforcement action,
such as issuing an administrative fine or referring the matter to the
state's attorney for civil prosecution, the pattern of violations
plaintiffs have identified required some response beyond issuing yet
another order requesting compliance. Instead, obeying the housing code,
and even obeying direct orders of the Department, became an entirely
voluntary obligation on the part of Mr. Komasa and his predecessors. The
incentives created by the Department's alleged enforcement scheme were for
the building's landlords to ignore the housing code and the Department's
occasional inspections and orders, to avoid spending any additional money
on a deteriorating building, and to allow the building to grow
progressively less safe, until it finally became uninhabitable. The
housing code became a mandatory obligation only when the building was
deemed imminently hazardous. At that point, it may well have been in Mr.
Komasa's best interest to have the tenants of 13 High Street removed,
allowing him to renovate and find new tenants, presumably at a higher rent.
¶ 26. The Department's alleged enforcement regime appears
inherently ineffective with respect to ensuring anything but the minimum
level of housing code compliance necessary to avoid imminent hazards;
everything else is left to the discretion of the landlord. The only
meaningful role the Department plays in protection against run-of-the-mill
violations is to inform the landlord of their existence. A landlord who is
confident that a building can be maintained at a minimally habitable level,
or who is indifferent to the loss of already-diminishing rental income from
a deteriorating building, may ignore the housing code with impunity.
Rental housing under such an enforcement regime cannot be expected to be
any safer or healthier than it would be without any housing code at all.
If that is the system the Department has implemented, it represents an
arbitrary abuse of power that amounts to a failure to comply with its legal
duties. As plaintiffs' complaint is sufficient to allege that such a
system is in place, it states a claim in the nature of mandamus under Rule
75. We reverse and remand so that plaintiffs may attempt to prove their
allegations.
B.
¶ 27. We next address plaintiffs' claim that the Department's
actions resulted in the loss of their leaseholds without due process or
just compensation. We agree with the Department that the isolated act of
ordering a building vacated cannot be characterized as an unconstitutional
taking without just compensation, or as a taking without due process, when
the order to vacate is necessary to eliminate an imminent threat of harm.
We nevertheless hold that dismissal on these grounds was premature with
respect to plaintiffs' takings claims. While plaintiffs' complaint does
not state a due process claim, the facts alleged were sufficient to raise
the question of whether the Department's alleged failures to act led to the
destruction of plaintiffs' leaseholds without compensation.
¶ 28. We first address plaintiffs' claim that the Department failed
to provide them with due process, in the form of notice and a hearing,
prior to ordering that they vacate their homes. The Fourteenth Amendment
to the United States Constitution provides that no state shall "deprive any
person of life, liberty, or property without due process of law." U.S.
Const. amend. XIV. The United States Supreme Court has interpreted this
Due Process Clause to require notice and a predeprivation hearing before a
person's property is taken. Fuentes v. Shevin, 407 U.S. 67 (1972). This
requirement does not apply, however, in "extraordinary situations where
some valid governmental interest is at stake that justifies postponing the
hearing until after [deprivation]." Id. at 82 (quotations omitted).
"Protecting citizens from an immediate risk of serious bodily harm falls
squarely within those 'extraordinary situations' contemplated in Fuentes."
Flatford v. City of Monroe, 17 F.3d 162, 167 (6th Cir. 1994).
¶ 29. We agree with the Department that the closure of the building
at 13 High Street and the termination of utility service at the other
buildings were justified by an immediate risk of serious bodily harm.
"[W]here the need to protect lives is the basis for [the challenged
deprivation], government officials should not be made to hesitate in
performing their duties, particularly where postdeprivation remedies can
immediately correct any errors in judgment." Id. at 168. While there
might be circumstances under which the Department's findings of code
violations would be insufficient to establish the exigency necessary for
action without a prior hearing, plaintiffs' allegations do not establish
such circumstances. Each of the Department's orders to vacate or cut off
utility service was supported by findings of dangerous code violations, and
plaintiffs' complaint concedes the existence, and in most cases, the
seriousness, of these violations. Indeed, much of the complaint is devoted
to establishing that the longstanding violations were serious enough to
merit Department action prior to the orders to vacate. No further factual
development is necessary to determine that the violations at issue posed
enough of a threat to merit ordering plaintiffs to vacate their homes, and
it was, therefore, appropriate for the court to dismiss plaintiffs' due
process claims.
¶ 30. It was not appropriate, however, for the court to dismiss
plaintiffs' takings claims. Both the Vermont and federal constitutions
prohibit takings of private property for public purposes without
compensation. U.S. Const. amend. V ("[N]or shall private property be taken
for public use, without just compensation."); Vt. Const. ch. I, art. 2
("That private property ought to be subservient to public uses when
necessity requires it, nevertheless, whenever any person's property is
taken for the use of the public, the owner ought to receive an equivalent
in money."). This prohibition applies not only when the government takes
property for its own use through the formal procedures of eminent domain,
but also when government regulation results in the loss of a property
interest. Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015
(1992). The property interest lost need not be an ownership interest; a
leasehold is an interest in property subject to analysis under the takings
clause. Alamo Land & Cattle Co. v. Arizona, 424 U.S. 295, 303 (1976); see
also Devines v. Maier, 728 F.2d 876, 880 (7th Cir. 1984) (holding that a
residential leasehold is a property interest compensable under the takings
clause). Moreover, the loss need not be permanent; a temporary taking of
property can be compensable. First English Evangelical Lutheran Church of
Glendale v. County of Los Angeles, 482 U.S. 304, 318 (1987).
¶ 31. The prohibition on takings without compensation is not
absolute. We have previously held that an exercise of the police power to
abate a public nuisance, and specifically, to abate a fire hazard, is not a
compensable taking. Eno v. City of Burlington, 125 Vt. 8, 13, 209 A.2d
499, 504 (1965) ("A fire hazard is a nuisance and the abatement of such a
nuisance is not the taking of property without due process or a taking for
which compensation must be made."). While takings jurisprudence,
especially at the federal level, has undergone significant development
since our holding in Eno, there remains no question that the abatement of a
nuisance is not a taking. " '[T]akings' jurisprudence . . . has
traditionally been guided by the understandings of our citizens regarding
the content of, and the State's power over, the 'bundle of rights' that
they acquire when they obtain title to property." Lucas, 505 U.S. at 1027.
Thus, where, as here, "the State seeks to sustain regulation that deprives
land of all economically beneficial use," it may refuse to compensate a
property owner only if the regulation prohibits a use of the land that was
"not part of his title to begin with." Id. When the challenged state
action is consistent with "background principles of the State's law of
property and nuisance," no property interest has been taken, and no just
compensation is due. Id. at 1029.
¶ 32. Although plaintiffs bear no responsibility for creating the
nuisance the Department attempted to abate through its orders, remaining in
a building that posed a threat to public safety was not among the "bundle
of rights" reserved to them as tenants. Vermont law allows a tenant to
remain in a dwelling after a landlord's violation of the warranty of
habitability. See 9 V.S.A. § 4458(a) (providing that a tenant "may . . .
terminate the rental agreement on reasonable notice" if the landlord fails
to comply with habitability requirements, as one of several alternatives
under such circumstances). This does not mean, however, that tenants are
entitled to remain in a building when doing so threatens the surrounding
community, as in cases where occupancy of the building poses a fire hazard.
Accordingly, to the extent plaintiffs' claims challenge the Department's
ultimate decision to order that their homes be vacated or their utility
service be terminated, their allegations do not state valid takings claims.
¶ 33. It would be unfair, however, to construe plaintiffs' claims so
narrowly. Instead, we understand plaintiffs to challenge the Department's
entire course of action with respect to the dwellings at issue. Like
plaintiffs' claims under Rule 75, their takings claims rest on their
allegations that the Department failed to carry out its enforcement duties.
In this sense, the government action that resulted in the destruction of
plaintiffs' property interests was the Department's alleged policy of
enforcing the housing code only as a last resort in cases of imminent harm.
This approach to takings analysis is entirely consistent with Eno, as
plaintiffs do not seek compensation for the Department's abatement of a
nuisance. Instead, they seek compensation for the Department's role in
allowing the nuisance to continue unabated for so long. At the time
plaintiffs were forced to vacate their homes, each plaintiff possessed only
the illusory right to remain in an imminently hazardous dwelling. At the
time plaintiffs allege the Department should have acted, though, each had a
valid property right to occupy her home.
¶ 34. We recognize that plaintiffs' takings claims are unusual, but
that is not a sufficient reason to allow their dismissal without full
factual development. See Sprague, 145 Vt. at 447, 494 A.2d at 125 (stating
that claims should not be dismissed simply because they are novel or
extreme). We need only ascertain that plaintiffs' complaint corresponds to
general takings principles, and we conclude that it does. The complaint
alleges that the Department's choice to enforce the housing code only as a
last resort deprived them of all beneficial use of their homes. See Lucas,
505 U.S. at 1015 (stating that just compensation is categorically
appropriate "where regulation denies all economically beneficial or
productive use of land"). The complaint also contains sufficient
allegations to remove plaintiffs' claims from the exception that the
government need not compensate for enforcing pre-existing background
principles of nuisance. Id. at 1029. The government's ability to avoid
paying compensation when it abates a nuisance, such as an imminent fire
hazard, is conditioned on its lack of responsibility for the exigency. See
Devines, 728 F.2d at 884 (allowing the state to condemn uninhabitable
residential apartments without compensating the tenants when "the
uninhabitability of the leasehold interest . . . occurs through no fault of
the State").
¶ 35. Plaintiffs and the Department agree that the landlords of the
buildings at issue were primarily responsible for the buildings' condition,
but plaintiffs contend that the Department shares that responsibility.
They allege that the Department knew of the relevant code violations, and
that in the face of the landlords' refusal to take corrective action, it
chose to allow the violations to continue until they became serious enough
to require removal of the tenants or termination of utility service. But
for the Department's failure to act, there would have been no nuisance to
abate, and plaintiffs' property would not have been taken. (FN6) If
plaintiffs can prove these allegations, they will be entitled to just
compensation. Their complaint thus states valid takings claims, and the
superior court's dismissal of these claims was premature.
II.
¶ 36. As a final matter, we affirm the superior court's denial of
class certification. Provided that the superior court has applied the
correct legal standards, we review the court's decision on a motion for
class certification for abuse of discretion. Caridad v. Metro-North
Commuter RR., 191 F.3d 283, 291 (2d Cir. 1999). Here, plaintiffs contend
that the court erred in applying the law, so our review is de novo. Miller
v. Miller, 2005 VT 89, ¶ 10, 178 Vt. 273, 882 A.2d 1196. Motions for class
certification are controlled by Rule 23, which is substantively identical
to Federal Rule 23. Reporter's Notes, V.R.C.P. 23. To be certified, a
class must satisfy the four requirements of Rule 23(a), which are commonly
referred to as numerosity, commonality, typicality, and adequacy of
representation. (FN7) E.g., Amchem Prods., Inc. v. Windsor, 521 U.S. 591,
613 (1997). Rule 23(b) contains additional prerequisites, but the superior
court did not consider whether a class action would be appropriate under
Rule 23(b), as it determined that the class failed to satisfy the
requirements of Rule 23(a).
¶ 37. Plaintiffs moved for certification of a class containing "all
residents of rental housing in Vermont where there are one or more
violations of the statutes and rules pertaining to habitability and
enforced by [the Department]," including "all people who now reside in such
housing, all people who have resided in such housing since November 13,
1999, and all people who will reside in such housing in the future." In
addition, plaintiffs sought to certify a subclass "of all Vermont
residential tenants who have in the past three years, or will in the
future, be forced to move out of their homes as a result of [the
Department's] actions and omissions regarding code enforcement in rental
housing."
¶ 38. The superior court determined that the proposed class was
overbroad, and thus, that "it would not be administratively feasible for
the Court to determine if a particular individual is a member of the
proposed class." See 7A C. Wright, A. Miller & M. Kane, Federal Practice
and Procedure § 1760, at 136, 140 (stating that although a class need not
be "so ascertainable that every potential member can be identified at the
commencement of the action," it must be "sufficiently definite so that it
is administratively feasible for the court to determine whether a
particular individual is a member"). Furthermore, the court decided
against plaintiffs on class certification because a class cannot "be
defined so broadly that it encompasses individuals who have little
connection with the claim being litigated," nor can the class definition be
too "amorphous." Id. at 142-44.
¶ 39. Our analysis of the proposed class definition leads us to the
same conclusion as the superior court. The class included virtually every
renter and leasehold in the state of Vermont over which the Department has
jurisdiction and where there may have been a code violation. It was
entirely fair for the superior court to hold that the class was too
amorphous as so defined. We acknowledge that the trial court could have
required a narrower definition of the class that was more in line with the
allegations in the complaint, and that it did not do so. In re New York
City Mun. Sec. Litig., 87 F.R.D. 572, 580 (S.D.N.Y. 1980). ("Prior to
decision on the merits, leave to amend the complaint to redefine the class
should be freely given [by the trial court]."). There was no real effort
to force redefinition because the trial court dismissed the action for
failure to state a claim.
¶ 40. On remand, however, a trial court has discretion to change a
decision not to certify a class, even where an appellate court has affirmed
the trial court's earlier denial of class certification. Salazar-Calderon
v. Presidio Valley Farmers Ass'n, 765 F.2d 1334, 1350 (5th Cir. 1985).
Under Rule 23(c)(1), the superior court has continuing power to adjust its
class decisions in light of evidentiary developments and the general
progression of the case from assertion to facts. Richardson v. Byrd, 709
F.2d 1016, 1019 (5th Cir. 1983). In view of the early stage of this
litigation, and our reversal of the trial court on the motion to dismiss,
plaintiffs are not barred from seeking certification of a more precisely
defined class that meets the standards of Rule 23.
¶ 41. We add, as guidance on remand, that plaintiffs must establish
a sufficient connection between any proposed class of renters and the
Department for a class action to stand. At the same time, we caution the
trial court that in the event that plaintiffs move to certify a new class
on remand, the certification decision must be made wholly apart from a
consideration of the merits of the case using the standards set out under
Rule 23(a) & (b).
Affirmed in part, reversed in part, and remanded for further
proceedings consistent with the views expressed herein.
FOR THE COURT:
_______________________________________
Associate Justice
------------------------------------------------------------------------------
Dissenting
¶ 42. BURGESS, J., concurring in part and dissenting in part.
Rather than call on the courts to run the Department of Labor and Industry,
a task we are neither qualified nor authorized to do, plaintiffs should
address their complaint to the executive branch responsible for setting
code enforcement priorities, and to the legislative branch that granted the
Department its broad discretionary authority over the priority and method
of housing code enforcement. Contrary to the tenor of the complaint and
the majority opinion, the applicable statutes impose no requirement on the
Department to use its enforcement tools in any particular sequence, to any
prescribed degree, or in any manner more satisfactory to plaintiffs.
Therefore, I would affirm the trial court's dismissal of plaintiffs'
complaint for failing to state a viable cause of action.
¶ 43. Regarding plaintiffs' due process claim, the legislation cited
in the complaint imposes neither an actionable duty issuing from the
Department to these plaintiffs in particular, nor any procedural conditions
on the Department before it responds to imminent hazards. As acknowledged
by the majority, the Department may respond to emergencies with emergency
measures, without a prior hearing, and properly did so in the case of the
plaintiffs living at 13 High Street. Thus, I concur with the majority's
decision to affirm dismissal of the plaintiffs' due process claims as
unfounded.
¶ 44. As for plaintiffs' request for class certification, the
named plaintiffs appear to have little in common with the amorphous and
varied class that they purport to represent. The original plaintiffs at 13
High Street had to vacate after a long history of inspections reiterated
code violations that ultimately threatened an immediate risk of bodily
harm. Intervening plaintiff Neville alleges being misled by her landlady
to move back into a residence previously condemned, and not approved for
reoccupancy, by the Department. The code violations described by
intervening plaintiff Limoge were imminently hazardous, but her inspection
experience-three inspections in three days-was quite different from that of
the other plaintiffs. Thus, on the pleadings, the situations of the named
plaintiffs are dissimilar, and they have little resemblance to the broad
class they claim to represent: "all . . . tenants," three years past and in
the future, who "live in housing where there exists one or more violations
of the codes," regardless of the severity of the violation.
¶ 45. The class, as pleaded, fails to satisfy the "[p]rerequisites
to a class action" set out under V.R.C.P. 23(a). Questions of law and fact
must be common to the class, id. at 23(a)(2), and claims of the named
plaintiffs based on acts or omissions of the Department must be typical of
the claims of the class. Id. at 23(a)(3). The complaint fails to allege
what law, facts and claims are common and typical between tenants forced
out of their homes due to immediate danger of fire or electrocution, and
plaintiffs' proposed class of tenants faced with single, or even multiple,
minor code violations such as nonworking electrical outlets, absent
bannisters or missing junction box covers. If the putative class alleged
by plaintiffs "is so numerous that joinder of all members is
impracticable," as required by V.R.C.P. 23(a)(1), it is only because the
class is overbroad as pleaded. Accordingly, I concur with the majority's
decision to affirm the trial court's denial of class certification.
¶ 46. I would, however, also affirm the trial court's dismissal of
plaintiffs' mandamus and takings claims. Plaintiffs seek to mandate the
Department of Labor and Industry to enforce the housing codes against
landlords in a manner satisfactory to the tenants, and, under a tortured
theory of unconstitutional governmental taking, look to the Department to
pay tenants for closing dangerous rental units. Plaintiffs' frustration is
understandable in that they are relatively powerless and stuck between the
Department's code enforcement and their landlords' recalcitrance.
Nevertheless, their complaint alleges only that the Department is enforcing
the housing code in a manner disagreeable to them, rather than contrary to
statute. Notwithstanding the majority's inaccurate characterization of the
Department's enforcement program as one of "voluntary compliance," the
allegations in the complaint describe enforcement decisions and mechanisms
falling well within the choices authorized by the Department's enabling
legislation.
¶ 47. The enforcement program described by plaintiffs could just as
easily be characterized as "comply or close," rather than "voluntary
compliance," and the majority agrees that the orders to vacate in this case
were justified by the emergency situations presented. Ante, ¶ 29. Because
the complaint fails to set forth an "arbitrary abuse of power" by the
Department sufficient to support the mandamus action, Roy v. Farr, 128 Vt.
30, 34, 258 A.2d 799, 802 (1969), and further fails to allege any
unconstitutional taking recognized in law, both claims were properly
dismissed. Accordingly, I respectfully dissent from the remand for further
litigation.
¶ 48. Given the undisputed facts of the Department's enforcement
efforts as pleaded by plaintiffs, even the majority is compelled to
describe as "somewhat simplistic and misleading" plaintiffs' claim that the
Department's actions amounted to a wholesale failure to enforce the code
Ante, ¶ 22. Plaintiffs' own allegations demonstrate that the Department
made frequent inspections of the subject properties, found violations,
issued orders compelling the landlords to rectify the violations, required
the landlords to prepare a plan of corrective action, threatened various
actions if the landlords did not comply, and eventually closed hazardous
buildings or terminated dangerous utility services when the landlords
failed to comply.
¶ 49. The majority moves to revive the complaint, however, by
reconstructing what, in the majority's view, plaintiffs really meant to
say-that the Department's methods of enforcing the housing code amounted to
"a regime of voluntary compliance" in which there was no effort to coerce
correction of violations. (FN8) The reason that plaintiffs do not actually
make such a claim might be because several of their own allegations are
expressly contrary to the majority's characterization of their claim.
Indeed, it is precisely the Department's enforcement of the fire and
electrical safety statutes, rather than toleration of imminent hazards,
that prompted plaintiffs' complaint. The complaint describes a system of
inspections combined with closure orders that fall squarely within the
Department's discretion as authorized by law. The alleged facts show that
the Department inspected, found violations, ordered compliance, threatened
consequences for noncompliance, and then followed through on the
consequences. What plaintiffs seek is increased intermediate enforcement
efforts emphasizing litigation to assess monetary and judicial sanctions
against landlords, but the statutes impose no duty on the Department to
enforce the code as preferred by plaintiffs. Nor do plaintiffs allege that
their remedy of mandated fines, penalties, and injunctions would actually
be more effective-and not result in earlier closures and more tenant
dislocation-than the policy alleged to be in place.
¶ 50. In any event, the enforcement actions that plaintiffs
complain about here are explicitly discretionary and not subject to
mandamus. As the majority acknowledges, mandamus is ordinarily limited to
compelling "merely ministerial" acts of public officials. Roy, 128 Vt. at
34, 258 A.2d at 801. Mandamus "does not issue to compel action that is
discretionary," Richardson v. City of Rutland, 164 Vt. 422, 424, 671 A.2d
1245, 1247 (1995) (quoting Dobbs, Remedies § 2.10, at 112 (1973)(internal
quotations omitted), except " '[w]here there appears, in some form, an
arbitrary abuse of the power vested by law in the administrative officer .
. . which amounts to a virtual refusal to act or to perform a duty imposed
by the law.' " Id. (quoting Couture v. Selectmen of Berkshire, 121 Vt. 359,
361, 159 A.2d 78, 80 (1960)); see Vt. State Employees' Ass'n v. Criminal
Justice Training Council, 167 Vt. 191, 195, 704 A.2d 769, 771 (1997)
(explaining that writ of mandamus may be extended, in the absence of any
other adequate legal remedy, only "to reach extreme abuses of discretion
involving refusals to act or perform duties imposed by law").
¶ 51. In this case, as the majority acknowledges, the fire,
electrical, and plumbing safety statutes all commit inspection and
enforcement priorities to the discretion of the commissioner of labor and
industry. Ante, ¶ 16. Each safety scheme authorizes, but does not
require, the Department to respond to violations in various ways, including
issuing orders to building owners to correct violations, 21 V.S.A. § 253(a)
(fire); 26 V.S.A. § 895 (electrical); 26 V.S.A. § 2175(b)(1) (plumbing),
and to impose a variety of sanctions if the violations are not corrected.
See 21 V.S.A. § 253(a) (commissioner "may" close building if fire code
violation is not corrected); 26 V.S.A. § 895 (commissioner "may" disconnect
electrical service if code violation is not corrected); 26 V.S.A. §
2175(b)(3) (commissioner "may" disconnect water or sewer service if
plumbing code violation is not corrected) (emphases added). The statutes
also authorize, but do not require, the Department to seek civil and
administrative fines and injunctions for violations. Ante, ¶ 17. Further,
as in the instant case, if the commissioner deems a fire code violation to
be imminently hazardous, the commissioner "shall" order the violation
corrected immediately and, if it is not corrected, "may" order the premises
immediately closed until the violation is corrected. 21 V.S.A. §253(a)
(emphasis added).
¶ 52. The majority's recognition of a mandamus action based on the
allegations in plaintiffs' complaint is wholly unsupported and, in fact,
contradicted by the pleadings. The majority acknowledges that the statutes
vest within the Department "a great deal" of enforcement discretion, ante,
¶ 18, and then recites the plaintiffs' allegations that the Department
inspected buildings, ordered correction of violations, and later ordered
the closing of imminently hazardous premises for noncompliance. Yet,
notwithstanding its acknowledgment of the Department's enforcement actions,
the majority stretches to allow the mandamus claim by declaring that the
Department's inspections and orders to close and vacate dangerous premises
in the face of uncorrected violations "could be characterized as a failure
to perform a legal duty," because the Department did not exercise the other
enforcement options available under the statutes. Ante, ¶ 23. The
majority first imagines that litigation to secure fines, penalties and
injunctions would necessarily accomplish better code compliance than
closing dangerous buildings, and then concludes that an enforcement regime
limited to inspection and closure of dangerous buildings is subject to
mandamus as an "arbitrary abuse of power" because such a program leaves
rental housing no "safer or healthier than it would be without any housing
code at all." Ante, ¶ 26.
¶ 53. This is a fallacy for at least three reasons. First, the
inspection and closure of dangerous housing for uncorrected code violations
obviously removes unsafe housing from the rental market, which is, at
worst, still a better result than having no housing code at all. Second,
nothing in the pleadings support an implication that scofflaw landlords
would respond more compliantly to a system of monetary penalties and
injunctions, or that such sanctions are otherwise inherently more
compelling, than the Department's "comply or close" enforcement program
described by plaintiffs. Third, and most importantly, it cannot be an
abuse of discretion for the Department to exercise the discretion expressly
granted by the Legislature to set priorities and elect, from several
express options, how to enforce the housing code.
¶ 54. That plaintiffs or this Court might exercise enforcement
discretion differently does not mean that the Department's enforcement
decisions are an abuse of discretion. Plaintiffs cannot, with a straight
face, seek to enjoin the Department's enforcement of the housing code on
the one hand, and on the other hand complain that there is no enforcement.
"Mandamus will not lie for the review of acts that involve the exercise of
judgement and discretion." Richardson, 164 Vt. at 424, 671 A.2d at 1247.
Plaintiffs' mandamus complaint fails to allege the necessary "abuse of
power" amounting to a refusal by the Department, virtual or otherwise, to
enforce the housing codes as authorized by the statutes. Id. Hence, the
trial court properly dismissed the complaint.
¶ 55. Plaintiffs fare no better on their takings claim. As the
majority recognizes, plaintiffs have no valid takings claim based on the
Department's decision to close their buildings or to terminate their
utility services due to an imminent hazard. Plaintiffs complain that the
Department's condemnation of a dangerous building amounted to a taking of
their leasehold, but the law is settled that governmental abatement of a
fire hazard is not a compensable taking. Eno v. City of Burlington, 125
Vt. 8, 13, 209 A.2d 499, 504 (1965). Nevertheless, the majority again
seeks to resurrect plaintiffs' complaint by recasting its takings claims as
a claim for compensation based on the Department allowing a nuisance to
persist unabated after ongoing inspections. The majority reasons that the
government can be financially liable for the loss of the leaseholds if,
"but for the Department's failure to act, there would have been no nuisance
to abate," and so no need to condemn the residences. Ante, ¶¶ 34-35.
Under this logic, the police become liable for the acts of the criminals.
¶ 56. The majority's theory first depends on the viability of
plaintiffs' inconsistent claim that the Department refused or failed to act
by inspecting and condemning the rental units. The underlying mandamus
claim is untenable, and the takings claim must fail for the same reason.
Plaintiffs' pleadings admit that the Department did take action, although
not the action prescribed by plaintiffs, and the majority agrees that the
actions taken were authorized by the statutes.
¶ 57. The majority erroneously "ascertain[s] that plaintiffs'
complaint corresponds to general takings principles." Ante, ¶ 34.
General principles of takings law are neatly summarized in Chapter I,
Article 2 of the Vermont Constitution: "[W]henever any person's property is
taken for the use of the public, the owner ought to receive an equivalent
in money." Excluding police intervention, compensable takings normally
require a governmental interference with private property, "and exclusion
of the owner from its beneficial use." See Griswold v. Town Sch. Dist. of
Weathersfield, 117 Vt. 224, 226, 88 A.2d 829, 831 (1952). The
deterioration of a tenant's use and enjoyment of a leasehold imagined by
the majority as resulting from the Department's decision not to seek
monetary penalties and injunctions does not correspond to general takings
principles. Such a decision by the Department interferes with no property
interest. There is no public use. Short of a closure order responding to
an imminent hazard which the majority agrees is not a taking, tenants are
not to be excluded from their leaseholds. Plaintiffs' takings claim is not
merely "novel or extreme," as the majority suggests, ante, ¶ 34, but is
unrecognizable and nonexistent in law.
¶ 58. This really appears to be a damages claim for alleged
Department nonfeasance masquerading as a takings claim. The majority
recognizes as much when it confirms that plaintiffs "seek compensation for
the Department's role in allowing the nuisance to continue unabated for so
long." Ante, ¶ 33. The legal and practical effect of the majority
extending inverse takings claims to allege inaction by government agencies
is troubling. All victims of loss arising from regulatory or criminal
violations by third parties could claim compensation upon a mere allegation
that "but for" a lack of action by the enforcement authority, the offender
could not have succeeded. (FN9) Such a claim could arise whenever a
regulatory agency head, prosecuting authority, or police chief charged with
the general duty of enforcing the law determined to prioritize enforcement
efforts in one area at the necessary expense of another. Even if no
liability ultimately obtained, what resources would be diverted to
pre-trial discovery and litigation of such causes of action? Since total
deprivation of a leasehold due to condemnation cannot be a taking, Eno, 125
Vt. at 13, 209 A.2d at 504, how can an agency's alleged inaction leading to
condemnation, but resulting in less than a taking, be compensable as a
taking? The cause of action invented by the majority is unworkable.
¶ 59. I would affirm the trial court's dismissal of the takings
claim, as well as the underlying mandamus claim upon which it is based. I
am authorized to say that Chief Justice Reiber joins in the dissent.
_______________________________________
Associate Justice
------------------------------------------------------------------------------
Footnotes
FN1. Plaintiffs and the Department refer to the housing statutes and
regulations that the Department administers collectively as the "housing
code," "habitability statutes and rules," or "building safety regulations."
For the sake of simplicity, we will use the term "housing code" to describe
these statutes and regulations.
FN2. Of the named plaintiffs listed in the third amended complaint, we note
that only plaintiffs Bean, Neville, and Limoge raise individual claims of
takings without just compensation. We continue to refer to these
plaintiffs as "plaintiffs" to avoid confusion.
FN3. Our disagreement with the dissent appears to be over the breadth of the
standard of review in this case. Our standard of review of 12(b)(6) motions
is long-standing and generous to the nonmovant, and thus, we read
plaintiffs' complaint broadly-recognizing that their allegations are novel.
The dissent, on the other hand, appears to read the complaint narrowly and,
as such, forecloses the possibility of further evidentiary development at
the trial court level in contravention of the standard, which disfavors
dismissal by 12(b)(6) motion.
FN4. Pursuant to 2003, No. 141 (Adj. Sess.), fire safety jurisdiction was
transferred to the Department of Public Safety, and the relevant provisions
in Title 21 were transferred to Title 20, §§ 2728-2739. For the purposes
of this opinion, we refer to the provisions in place at the time of
plaintiffs' original complaint.
FN5. We reject the Department's argument that the statute vests civil
prosecutorial discretion solely in the state's attorney. The housing code
contemplates that the Commissioner of Labor and Industry will refer some
set of violations to the state's attorney for prosecution. For instance,
the fire code provides that "[t]he state's attorney of the county in which
[a] violation occurs shall prosecute such violation and may commence a
proceeding in the superior court." 21 V.S.A. § 254(a). While this
language, in isolation, might seem to vest discretion solely in the state's
attorney, § 254(c) provides, after authorizing the commissioner to assess
administrative penalties, that "[a]n election by the commissioner to
proceed under this subsection shall not limit or restrict the
commissioner's authority under subsection (a) of this section," indicating
that the commissioner is primarily responsible for initiating civil
prosecution, presumably by referring violations to the appropriate state's
attorney. (Emphasis added).
FN6. The dissent mischaracterizes plaintiffs' takings claim when it posits
that our decision would allow, "[a]ll victims of loss arising from
regulatory or criminal violations by third parties [to] claim compensation
upon a mere allegation of . . . a lack of action by the enforcement
authority." Post, ¶ 58. Plaintiffs allege a complete failure of the
Department to act as statutorily prescribed-affecting an entire class of
persons-rather than a discretionary decision resulting in dissatisfaction
or loss to one renter. At this point in the proceedings plaintiffs have
merely made allegations (presenting novel mandamus and takings claims) that
we are allowing to go forward; whether plaintiffs will ultimately be
successful on the merits of their claims, we leave to the trial court upon
full development of the facts.
FN7. The precise terms of Rule 23(a) require, in relevant part, that:
(1) the class is so numerous that joinder of all members is
impracticable, (2) there are questions of law or fact common to
the class, (3) the claims or defenses of the representative
parties are typical of the claims or defense of the class, and (4)
the representative parties will fairly and adequately protect the
interests of the class.
FN8. The majority asserts that its reading of the complaint as such is
simply a matter of broad reading encouraged by the standard of review
under V.R.C.P. 12(b)(6). Ante, ¶ 12 n. 3. But even the broadest reading
must still "consider . . . all of the nonmoving party's factual allegations
as true." V.R.C.P. 12(b)(6). Here, plaintiffs' factual allegations were
that the Department routinely exercises some statutorily authorized
enforcement actions, although not others. My view that plaintiffs'
dissatisfaction with the enforcement options actually pursued by the
Department fails to support a claim of utter failure in enforcement is not
a result of narrow reading, as the majority suggests, but rather is the
product of treating plaintiffs' factual allegations as true.
FN9. The majority asserts that this mischaracterizes plaintiffs' takings
claim, contending that plaintiffs allege a "complete failure of the
Department to act as statutorily prescribed-affecting an entire class of
persons." Ante, ¶ 35 n. 6. The majority is incorrect on several levels.
The statutes do not prescribe, in the mandatory sense, that the Department
do anything plaintiffs insist upon. On the other hand, the Department's
enforcement actions as alleged by plaintiffs were explicitly authorized by
the statute. While plaintiffs employ the words "wholesale failure," this
merely conclusory pleading is plainly contradicted by their factual
allegations of enforcement as recited in the complaint and by the majority.
These named plaintiffs failed to effectively allege an "entire class"
affected by the Department's enforcement actions. Intended or not, given
that plaintiffs allege the Department took enforcement action and complain
that its enforcement was unsatisfactory, the majority today recognizes a
cause of action for compensation for imperfect law enforcement.