Parkview Homes, LLC v. City of Lexington

Filing 53

ORDER granting in part and denying in part 27 Motion for Summary Judgment (Written Opinion). Signed by Judge Susan Richard Nelson on 02/27/2017. (SMD)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

Parkview Homes, LLC,

Case No. 15-cv-3692 (SRN/BRT)

Plaintiff,
v.

ORDER

City of Lexington,
Defendant.

Thomas F. DeVincke, Malkerson Gunn Martin LLP, 220 S. 6th St., Ste. 1900,
Minneapolis, MN 55402, for Plaintiff.
George C. Hoff and Justin L. Templin, Hoff Barry & Kozar, P.A., 775 Prairie Center Dr.,
Ste. 160, Eden Prairie, MN 55344, for Defendant.

SUSAN RICHARD NELSON, United States District Judge
This matter is before the Court on Defendant’s Motion for Summary Judgment
[Doc. No. 27]. For the reasons set forth below, that Motion is granted in part and denied
in part.
I.

BACKGROUND
The material facts of this matter are undisputed. Instead, the parties dispute the

significance of some facts and which facts are relevant. The Court notes these disputes
where necessary to its analysis.
A. Facts
Plaintiff Parkview Homes, LLC (“Parkview”) is a Minnesota limited liability
company that is wholly owned by National Loan Acquisitions Company (“NLAC”).

(Def’s Mem. of Law in Supp. of its Mot. (“Mem. in Supp.”) at 2 [Doc. No. 29].)
Parkview owns and operates a manufactured home community located in the City of
Lexington, Minnesota (the “City”). (Compl. at ¶ 3 [Doc. No. 1-1].)
Parkview hopes to adding new manufactured homes to the Community. Before it
may do so, however, the City must first approve permits for the siting of those homes.
(See Compl. at ¶ 13; Mem. in Supp. at 2.) Parkview proposed its plan for these new
manufactured homes to the City in 2014 and the parties have disputed that plan ever
since. In general, Parkview asserts that the City is obstructing the approval of its permit
applications in an attempt “to shut down a manufactured home community in favor of
more desirable economic redevelopment.” (Pl’s Mem. in Opp. to Def’s Mot. (“Mem. in
Opp.”) at 2 [Doc. No. 48]). In contrast, the City views the Community as a “historically
problematic property” for which Parkview has not presented a sufficiently detailed
renovation and redevelopment plan. (See Compl., Ex. C (“Ltr. dated 1/9/2015”) at 12. 1)
Parkview first proposed adding twenty-eight new manufactured homes to the
Community in the summer of 2014. (Mem. in Opp. at 3.) Soon after this initial proposal,
the City informed Parkview that the proposed homes did not meet the building code’s
(the “Code”) minimum square footage and width requirements and thus the City would
not approve the requested permits. (Id. at 4.) In September of 2014, Parkview sent a
letter to the City disputing this assessment. (Id. at 5.) Specifically, Parkview claimed

1

The Complaint and its attachments are presented as a single filing. Thus, unless it
indicated otherwise, the Court cites to the ECF page numbers as they appear in the upper
right hand corner of each document.
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that manufactured homes within the Community were exempt from the dimensional
requirements of the Code by its own terms. (Id.)
In October of 2014, the City required that Parkview provide specifications about
the proposed homes to the building inspector for review. (Id. at 6.) Parkview complied
and provided the requested materials. (Id.) On January 9, 2015, the City expressed
concerns about a number of infrastructure issues in the Community, in particular the
water system. (Id.; see Ltr. dated 1/9/2015.) The City doubted that Parkview could make
the investments required to correct the Community’s alleged infrastructure deficiencies.
(Ltr. dated 1/9/2015 at 11–12.) In light of this doubt, the City threatened condemnation if
Parkview did not provide it with certain “planning and performance assurances.” (Id.)
Despite the letter from the City, Parkview again submitted permitting applications
for twenty new manufactured homes in July of 2015. (Mem. in Opp. at 7; Mem. in Supp.
at 2.) Those applications were denied by the City on August 14, 2015. (Mem. in Supp.
at 3; see Compl., Ex. D (“Ltr. dated 8/14/2015”) at 13–16.) The City notified Parkview
that it would not approve Parkview’s applications until it satisfied six requirements. (See
Ltr. dated 8/14/2015; Mem. in Supp. at 3–4.)

Those six requirements were that

Parkview: 1) provide a “comprehensive plan” of its “proposed rehabilitation of the park,”
including information on lot setbacks and boundaries, construction and utility plans,
storm water compliance, disability accessibility, and sewer discharge data; 2) remove
structures or units located within the municipal right of way; 3) provide the City with test
results on the Community’s water delivery and sewer systems, as well as data on the
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improvements that Parkview made to the water delivery system in 2015; 4) identify
abandoned structures, units, and lots; 5) disclose any existing units that were used for
business purposes and identify any of the proposed units that would be used in similar
ways; and 6) discontinue the use and occupation of a particular home in the Community
that was previously cited for Code violations and remove that unit from its present lot.
(See Ltr. dated 8/14/2015; Mem. in Supp. at 3–4.)
B. Procedural History
Parkview filed suit in state court shortly after receiving the City’s August 14, 2015
letter. (See Compl.) Parkview’s suit presents two counts. (Id.) First, Parkview seeks a
declaratory judgment that the City’s refusal to issue the requested permits—based on its
interpretation of the Code—is improper because it conflicts with federal law regarding
the requirements for manufactured homes (i.e., that federal law preempts the Code).
(Compl. at ¶¶ 7, 16–18.) Second, Parkview asserts a claim under 42 U.S.C. § 1983
alleging that the City “impermissibly attempted to interfere and actually interfered” with
Parkview’s property interests in the Community by refusing to issue the requested
permits under false pretenses. (See id. at ¶¶ 19–25.) Although not specifically stated as a
claim, Parkview also alleges that the City’s attempts to enforce the Code against the
Community would violate Minn. Stat. § 462.357 by altering the Community’s existing
density. (Id. at ¶ 9.) The City removed this case to federal court based on the federal
questions raised in Parkview’s preemption and § 1983 claims. (See Not. of Removal
[Doc. No. 1-2]; Civ. Cover Sheet [Doc. No. 1-3].)
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At the November 21, 2016 hearing on the City’s Motion for Summary Judgment,
Parkview admitted that its § 1983 claim was based on state—not federal—tort and due
process law. In light of this admission and based on the record and briefing, the Court
notified the parties that it would grant the Motion with respect to the preemption and §
1983 claims. However, the Court expressed concern about whether it should exercise
pendent jurisdiction and decide any remaining state law claim(s). The Court agreed to
retain jurisdiction over those claims for a limited time to allow the parties to engage in
settlement discussions. However, shortly thereafter, the parties informed the Court that
settlement would not be possible. (See Doc. Nos. 49, 50.) Thus, as discussed at the
hearing on the Motion, the Court issues this Order disposing of this case..
II.

DISCUSSION
A. Legal Standard
Summary judgment is proper if, drawing all reasonable inferences in favor of the

non-moving party, there is no genuine issue as to any material fact and the moving party
is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett,
477 U.S. 317, 322–23 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249–50
(1986); Morriss v. BNSF Ry. Co., 817 F.3d 1104, 1107 (8th Cir. 2016), cert. denied,
(U.S. Oct. 3, 2016).

“Summary judgment procedure is properly regarded not as a

disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a
whole, which are designed ‘to secure the just, speedy, and inexpensive determination of
every action.’” Celotex, 477 U.S. at 327 (quoting Fed. R. Civ. P. 1).
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The party moving for summary judgment bears the burden of showing that the
material facts in the case are undisputed.

Id. at 323.

However, a party opposing

summary judgment “‘may not rest upon the mere allegation or denials of his pleading,
but ... must set forth specific facts showing that there is a genuine issue for trial,’ and
‘must present affirmative evidence in order to defeat a properly supported motion for
summary judgment.’” Ingrassia v. Schafer, 825 F.3d 891, 896 (8th Cir. 2016) (quoting
Anderson, 477 U.S. at 256–57). “[T]he nonmoving party must ‘do more than simply
show that there is some metaphysical doubt as to the material facts.’” Conseco Life Ins.
Co. v. Williams, 620 F.3d 902, 910 (8th Cir. 2010) (quoting Matsushita Elec. Indus. Co.,
v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). Summary judgment is proper where
the non-moving party fails “‘to make a showing sufficient to establish the existence of an
element essential to that party's case ....’” Walz v. Ameriprise Fin., Inc., 779 F.3d 842,
844 (8th Cir. 2015) (quoting Celotex, 477 U.S. at 322). While the moving party bears the
burden of showing that the facts are undisputed, a judge is not confined to considering
only the materials cited by the parties, and “it may consider other materials in the
record.” Fed. R. Civ. P. 56(c)(3).
B. Federal Preemption
Congress may prohibit municipalities from passing ordinances that conflict with
federal legislation and regulations by enacting a statute with an express preemption
provision. See Arizona v. United States, 132 S. Ct. 2492, 2500–01 (2012); see U.S.
Const., art. VI, cl. 2. Congress included such a preemption provision in the National
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Manufactured Housing Construction and Safety Standards Act of 1974 (the “Act”). 42
U.S.C. § 5403(d); see 24 C.F.R. § 3282.11. That section expressly prohibits states and
municipalities from continuing or establishing any standard concerning the “construction
or safety” of manufactured homes that deviates from the federally-mandated standards on
these issues. 42 U.S.C. § 5403(d); see Lauderbaugh v. Hopewell Twp., 319 F.3d 568,
576 (3d Cir. 2003) (“[T]he [Act] prohibits localities from imposing any safety and
construction standard upon manufactured homes that differs from the federal standard.”);
Texas Manufactured Hous. Ass’n, Inc. v. City of Nederland, 101 F.3d 1095, 1100 (5th
Cir. 1996).
The preemptive reach of § 5403(d) is limited to standards and requirements for
manufactured homes related to consumer protection. Georgia Manufactured Housing
Ass’n, Inc. v. Spalding County, Georgia, 148 F.3d 1304, 1310 (11th Cir. 1998) (“[T]he
construction and safety standards preempted by the Act are those standards that protect
consumers from various potential hazards associated with manufactured housing. In
contrast, a zoning requirement related to aesthetics is not preempted because the goals
and effects of such a standard have nothing to do with consumer protection”);
Schanzenbach v. Town of Opal, Wyo., 706 F.3d 1269, 1273 (10th Cir. 2013) (“An
examination of the Manufactured Housing Act shows that its core concern is the creation
of uniform standards for construction and safety of manufactured housing in the United
States, with the resulting reduction in the costs of such homes.”). As a result, local
ordinances that do not address consumer protection—such as those aimed at aesthetics
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and promoting property values—are not preempted by § 5403(d). Lauderbaugh, 319
F.3d at 578 (“The [Act] preempts only safety and construction standards. It is focused on
consumer protection . . . and does not strip a township of its authority to make land use
decisions regarding, for example, aesthetics or property values.”); see Georgia
Manufactured Hous. Ass’n, , 148 F.3d at 1310 (holding that a 4:12 roof pitch requirement
is not preempted because it is an aesthetic condition for placement of manufactured
homes).

Similarly, the Act does not preempt local restrictions on the location of

manufactured homes, or other restrictions/requirements related to the infrastructure these
homes employ (e.g., water, sewer, etc.). See Lauderbaugh, 319 F.3d at 576 (“[T]he act’s
aim is to set standards for how manufactured homes will be built; it does not attempt to
determine where they will be located.”).
Parkview argues that the established case law limiting the scope of preemption
under § 5403(d) was rendered obsolete by amendments to the Act in 2000. (Mem. in
Opp. at 13–18.) Parkview contends that those amendments changed the Act from a
consumer protection law into an affordable housing law and broadened the Act’s
preemption effect accordingly. (See id.)
In 2000, the American Homeownership and Economic Opportunity Act
(“AHEOA”) amended § 5403(d) to include the following:
Federal preemption under this subsection shall be broadly and liberally
construed to ensure that disparate State or local requirements or standards
do not affect the uniformity and comprehensiveness of the standards
promulgated under this section nor the Federal superintendence of the
manufactured housing industry as established by this chapter.
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Furthermore, AHEOA added the following sections to the Act’s “Findings and Purposes”
section:
(a) Findings
Congress finds that-(1) manufactured housing plays a vital role in meeting the housing
needs of the Nation; and
(2) manufactured homes provide a significant resource for affordable
homeownership and rental housing accessible to all Americans.
(b) Purposes
The purposes of this chapter are-(1) to protect the quality, durability, safety, and affordability of
manufactured homes;
(2) to facilitate the availability of affordable manufactured homes
and to increase homeownership for all Americans;
…
(4) to encourage innovative and cost-effective construction
techniques for manufactured homes;
…
(8) to ensure that the public interest in, and need for, affordable
manufactured housing is duly considered in all determinations
relating to the Federal standards and their enforcement.
42 U.S.C. § 5401.
Parkview maintains that these amendments mean that the Act’s preemption
provision now encompasses the City’s reasons for denying Parkview’s permit
applications. (Mem. in Opp. at 13–18.) Tellingly, however, Parkview does not cite a
single case in support of this theory. Instead, courts that have considered preemption
under the Act since AHEOA’s amendments continue to focus on consumer protection.
See, e.g., Schanzenbach, 706 F.3d at 1273 (explaining that “[a]n examination of [the Act]
shows that its core concern is the creation of uniform standards for construction and
safety of manufactured housing in the United States” and that “the preemptive effect of
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[the Act] is limited to local laws governing the construction and safety of manufactured
homes . . . .”); Lauderbaugh, 319 F.3d at 578 (stating that the Act “preempts only safety
and construction standards. It is focused on consumer protection . . . .”) (internal citation
omitted).

Moreover, the pre-2000 preemption analysis continues to be cited with

approval. See, e.g., Schanzenbach, 706 F.3d 1269; Lauderbaugh, 319 F.3d 568; Burton
v. City of Alexander City, Ala., No. CIV. A.99-D-1233-E, 2001 WL 527415 (M.D. Ala.
Mar. 20, 2001), aff’d sub nom., Burton v. City of Alexander, 277 F.3d 1379 (11th Cir.
2001).
As these cases confirm, Congress did not intend for AHEOA to extend preemption
to local standards that do not concern safety and construction requirements for
manufactured homes. Burton, 2001 WL 527415 at *9 (“Congress plainly did not intend
[in the AHEOA] to preempt zoning laws that operate only where HUD does not.”).
Merely including language related to affordable housing in the AHEOA’s findings and
purpose section does not evidence congressional intent to preempt the well-established
zoning authority of municipalities. See Manufactured Housing Construction and Safety
Standards: Notice of Internal Guidance on Preemption, 62 FR 3456-01 (“Federal
preemption cannot be based upon a general purpose of the Act . . . .”).

This is

particularly true since the Act’s preemption provision still expressly limits itself to state
and local standards “regarding the construction or safety” of manufactured homes. See
42 U.S.C. § 5403(d). Thus, in order for the City’s restrictions and requirements to be

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preempted, they must relate to the construction or safety of the manufactured homes that
Parkview intends to add to the Community.
The only specific Code provisions that Parkview identifies as allegedly preempted
by § 5403(d) are those setting minimum width and square footage requirements for
manufactured homes. 2 (Mem. in Opp. at 13.) However, Parkview does not provide any
details on why it considers these provisions to be related to construction or safety
standards. These Code provisions are not aimed at consumer protection and are instead
more akin to aesthetic restrictions on manufactured housing. They are therefore not
preempted by 42 U.S.C. § 5403(d).
Similarly, none of the City’s other requirements that Parkview must meet before it
grants the permitting applications—as listed in its August 14, 2015 letter—are intended
to regulate the construction or safety of Parkview’s proposed manufactured homes.
These six requirements primarily concern the location and use of the Community’s
existing units, as well as the Community’s water supply system. They do not obviously
concern the “various potential hazards associated with manufactured housing,” see
Georgia Manufactured Hous. Ass’n,, 148 F.3d at 1310, and Parkview offers no argument
how or why these requirements run contrary to any federal regulation or standard under
the Act. Thus, Parkview’s preemption claim fails as a matter of law.

2

In fact, Parkview explicitly states that it “does not and never has argued that all of the
City’s excuses for denying the Permit Applications are pre-empted.” (Mem. in Opp. at
13 n.4.)
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C. 42 U.S.C. § 1983
Federal law provides a cause of action for the deprivation of any “rights,
privileges, or immunities secured by the Constitution and laws” under the color of a state
“statute, ordinance, regulation, custom, or usage.” 42 U.S.C. § 1983. At the hearing on
the Motion for Summary Judgment, Parkview admitted that any due process claim it had
was based on state—not federal—law.

Since § 1983 requires the deprivation of a

federally granted right or privilege—and Parkview admits any due process claim it has
sounds under state law—Parkview’s § 1983 claim fails as a matter of law.
D. Pendent Jurisdiction
Claims that the City violated state law by requiring that Parkview adjust the
Community’s existing density and violated Parkview’s substantive due process rights by
acting in an arbitrary and capricious manner can fairly be read into the Complaint.
However, because Parkview’s preemption and § 1983 claims fail as a matter of law, the
question is whether this Court should exercise pendant jurisdiction (sometimes called
“supplemental jurisdiction”) over the remaining state law claims.
Federal district courts “have supplemental jurisdiction over all other claims that
are so related to claims in the action within [the court’s] original jurisdiction that they
form part of the same case or controversy . . . .” 28 U.S.C. § 1367(a). Important here, a
court may decline to exercise supplemental jurisdiction where it “has dismissed all claims
over which it has original jurisdiction.” 28 U.S.C. § 1367(c)(3). “A district court’s
decision whether to exercise that jurisdiction after dismissing every claim over which it
12

had original jurisdiction is purely discretionary.” Carlsbad Tech., Inc. v. HIF Bio, Inc.,
556 U.S. 635, 639 (2009).
The factors a court should consider in determining whether to exercise
jurisdiction over pendent state law claims are judicial economy,
convenience, fairness, and comity. In the usual case in which all federallaw claims are eliminated before trial, the balance of factors to be
considered under the pendent jurisdiction doctrine will point toward
declining to exercise jurisdiction over the remaining state-law claims.
Wilson v. Miller, 821 F.3d 963, 970–71 (8th Cir. 2016) (alterations, citations, and
quotations omitted); see United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726
(1966) (“Certainly, if the federal claims are dismissed before trial, even though not
insubstantial in a jurisdictional sense, the state claims should be dismissed as well.”).
As just explained, the Court will dismiss Parkview’s preemption and § 1983
claims, which served as the basis for original subject matter jurisdiction. The parties
presented no briefing on whether this Court should exercise supplemental jurisdiction
over Parkview’s remaining state law claims. 3 The substance of the remaining state law
claims was minimally addressed in the parties’ briefing and there is no indication that the
parties expended considerable time or resources exploring them during discovery. These
claims were not even explicitly set forth in Parkview’s Complaint. Given that these
claims deal solely with matters of state law, the Court is convinced that they would be
best addressed in state court. In short, the Court finds no compelling reason why it
3

At the hearing on the Motion for Summary Judgment, the City expressed its preference
that this Court rule on all of Parkview’s claims, but when pressed on why exercising
supplemental jurisdiction over the remaining state law claims was appropriate, the City
could not articulate a compelling reason and ultimately acquiesced to those claims being
dismissed without prejudice if they were not settled. (See Doc. No. 49 at 2.)
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should exercise supplemental jurisdiction over Parkview’s remaining state law claims and
thus declines to do so.
III.

ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS

HEREBY ORDERED THAT:
1. Defendant’s Motion for Summary Judgment [Doc. No. 27] is GRANTED IN
PART AND DENIED IN PART as follows:
a. Plaintiff’s federal preemption and 42 U.S.C. § 1983 claims are
DISMISSED WITH PREJUDICE;
b. Plaintiff’s state
PREJUDICE.

law

claims

are

DISMISSED

WITHOUT

LET JUDGMENT BE ENTERED ACCORDINGLY.

Dated: February 27, 2017

s/ Susan Richard Nelson
SUSAN RICHARD NELSON
United States District Judge

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