Opinion
Civil Action No. 2:19-CV-00108-RWS
2020-12-22
SHORT TERM RENTAL OWNERS ASSOCIATION OF GEORGIA, INC., and Kenneth R. Heyman, Plaintiff, v. Molly COOPER, Dennis T. Brown, Laura Semanson, Steve Zaring, Gene Sams, and Eric Johnson, Defendant.
C. Wilson DuBose, DuBose Law Group LLC, Madison, GA, for Plaintiff. Kenneth Edward Jarrard, Jarrard & Davis, LLP, Cumming, GA, for Defendant.
C. Wilson DuBose, DuBose Law Group LLC, Madison, GA, for Plaintiff.
Kenneth Edward Jarrard, Jarrard & Davis, LLP, Cumming, GA, for Defendant.
ORDER
RICHARD W. STORY, United States District Judge
This case comes before the Court on Defendants' Motion for Judgment on the Pleadings [41] and Plaintiffs' Motion for Leave to File an Amended and Restated Complaint and Add Forsyth County, Georgia as a Co-Defendant [44]. Having carefully reviewed the record, the Court enters the following Order.
BACKGROUND
For the purposes of a motion for judgment on the pleadings, the Court accepts all material facts alleged by the non-moving party as true. Perez v. Wells Fargo N.A., 774 F.3d 1329, 1335 (11th Cir. 2014). The Court may also consider documents outside the complaint that are central to the claim at issue and whose authenticity is undisputed. Id. at 1340 n.12.
This case arises from an amendment to Forsyth County's zoning code, the County's Unified Development Code ("UDC"). The amendment ("Short-Term Rental Ordinance" or "Ordinance") adopted regulations that prohibit renting properties in most residentially-zoned areas for periods of less than thirty days. Ordinance violation could result in a fine, not to exceed $1,000.00, or imprisonment, not to exceed 60 days. (Proposed Am. Compl., Dkt. [44-1] ¶ 27.) It was passed by the Forsyth County Board of Commissioners on April 18, 2019.
For the purposes of this Order, a "short-term rental" or "rental on a short-term basis" refers to the renting of a property for any period of fewer than thirty days—to be distinguished from the "Short-term Rental" property use, the definition of which is codified by the UDC.
Plaintiff Short Term Rental Owners Association of Georgia, Inc. ("STROAGA") is a non-profit corporation whose membership consists of persons who rent their single-family dwellings on a short-term basis. Some of the properties are located in Forsyth County. Plaintiff Kenneth R. Heyman is a Georgia resident who owns a house in Forsyth County. He lives in the home and occasionally rents it on a short-term basis.
Defendants Molly Cooper, Dennis T. Brown, and Laura Semanson are Forsyth County Commissioners who voted in favor of the UDC amendment. Defendants Steve Zaring, Gene Sams, and Eric Johnson are employees of Forsyth County. Zaring and Sams are responsible for enforcing the UDC, and Johnson is the county manager.
The Ordinance amended the UDC to generally prohibit renting properties on a short-term basis by defining a new category of property use—the "Short-term Rental." The Short-term Rental use includes nearly every housing type that serves as "[a]n accommodation for transient guests, rented for the purpose of overnight lodging for a period of less than thirty (30) days." The Short-term Rental use is only allowed as a conditional use in agriculturally and agriculture-residentially zoned properties, subject to the granting of a conditional use permit. Properties in every other residential zoning category are not eligible for conditional use permits and are therefore not permitted to engage in short-term rentals.
Left unchanged by the Ordinance was the "grandfather" provision of the UDC. The provision states that "the lawful but nonconforming use of any structure or land at the time of the enactment of this ordinance or any amendment thereto may be continued even though such use does not conform with the provisions of this ordinance." Nonconforming uses that are discontinued for 60 days or more are not permitted to be re-established.
Before the Ordinance, Plaintiff Heyman and the members of STROAGA had occasionally rented their single-family dwellings to acquaintances and members of the public on a short-term basis, including for periods of less than a week. These dwellings are located in residential zoning districts and therefore do not qualify for a short-term rental conditional use permit. On or near Lake Lanier, they are attractive vacation rentals, and the Plaintiffs derive a substantial amount of revenue from renting their dwellings. Some property owners bought or built their dwellings with the expectation that short-term rental revenue could subsidize the properties' cost and upkeep.
On behalf of its members, STROAGA requested that Forsyth County acknowledge that property owners who rented their properties on a short-term basis before the Ordinance may continue to lawfully do so. Forsyth County did acknowledge that property owners who rented their properties on a weekly or monthly basis may continue, but the County expressly denied that those who rented for periods of less than a week would be grandfathered in under the UDC.
II. Procedural History
Two lawsuits were filed to challenge the Ordinance. The North Georgia Boating Club, Inc. and Mr. Heyman filed this lawsuit in May 2019. On the same day, STROAGA filed a lawsuit in Forsyth County Superior Court against the same six defendants as well as Forsyth County. This Court's proceedings were stayed pending the outcome of (1) a motion for judgment on the pleadings in the Superior Court case and (2) the Georgia Supreme Court's decision in Polo Golf and Country Homeowners Association, Inc. v. Cunard. The Georgia Supreme Court ruled in Polo Golf in September 2019. Before the Superior Court issued a ruling on the motion, the plaintiffs voluntarily dismissed the case. Subsequently, the parties in this Court's proceedings consented to substitute STROAGA for the original plaintiff, North Georgia Boating Club Inc.
Defendants next filed the first of two motions at issue in this Order. Defendants sought leave to file a motion for judgment on the pleadings [27], which the Plaintiffs opposed. This Court granted the Defendants' motion and ordered that the Defendants' Reply in support of their motion be docketed as their Motion for Judgment on the Pleadings [41] and treated as their opening brief.
The Plaintiffs then filed a motion seeking leave to amend their Complaint and add Forsyth County as a co-defendant [44], which the Defendants opposed as futile. The Plaintiffs contend that the Proposed Amended Complaint would obviate the arguments raised by Defendants in support of their Motion for Judgment on the Pleadings.
The Defendants' Motion for Judgment on the Pleadings and Plaintiffs' Motion to Amend are now before this Court.
Defendants correctly flag that Plaintiffs did not properly respond to the motion for judgment on the pleadings. That said, Plaintiffs cured the deficiency by filing a surreply [72] with the Court's permission. Given the breadth of briefing on the docket, the Court finds the issues are sufficiently argued from both sides.
DISCUSSION
Plaintiffs challenge the Ordinance's constitutionality on its face. Defendants move for judgment on the pleadings on two alternative grounds. First, Defendants maintain Plaintiffs do not have standing to challenge the Ordinance's facial constitutionality. Second, Defendants maintain that even if Plaintiffs have standing, their Complaint should be dismissed on the merits. In response, Plaintiffs move to amend their complaint to purportedly fix the supposed deficiencies. While standing is a threshold issue, because it is within the Court's power to allow Plaintiffs to amend the Complaint to further particularize allegations of fact to support standing, the Court will discuss the Motion to Amend [44] first. E.g., Region 8 Forest Serv. Timber Purchasers Council v. Alcock, 993 F.2d 800, 806 (11th Cir. 1993).
Plaintiffs' pleading, including the proposed amended complaint, and briefs make clear they seek a declaration that the Ordinance is unconstitutional on its face, not as applied to any individual Plaintiff. The Court analyzes their claims and Defendants' motion accordingly.
I. Plaintiffs' Motion to Amend the Complaint [44]
a. Legal Standard
When a motion to amend is filed after the deadline from a scheduling order, the movant is required to demonstrate good cause under Federal Rule of Civil Procedure 16(b) before the Court may consider the amendment under Rule 15. Sosa v. Airprint Sys., Inc., 133 F.3d 1417, 1419 (11th Cir. 1998). See also Fed. R. Civ. P. 16(b)(4) ("A schedule may be modified only for good cause and with the judge's consent."). To consider only Rule 15(a) without regard to Rule 16(b) "would render scheduling orders meaningless and effectively would read Rule 16(b) and its good cause requirement out of the Federal Rules of Civil Procedure." Sosa, 133 F.3d at 1419. The good cause standard "precludes modification unless the schedule cannot be met despite the diligence of the party seeking the extension." Id.
Once a court determines that good cause has been shown, only then may it look to Rule 15, which provides that, "a party may amend its pleading only with the opposing party's written consent or the court's leave." But when a party seeks the court's leave, the "court should freely give leave when justice so requires." Id. A court should deny leave under Rule 15 only "where there is substantial ground for doing so, such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [and] futility of amendment." Reese v. Herbert, 527 F.3d 1253, 1263 (11th Cir. 2008). Ultimately, however, the decision of whether to grant leave to amend remains in the court's discretion. S. Grouts & Mortars. Inc. v. 3M Co., 575 F.3d 1235, 1240 (11th Cir. 2009).
b. Analysis
Defendants argue that leave should not be granted to Plaintiffs because their Proposed Amended Complaint [44-1] is futile. The Court disagrees.
First, as for Rule 16's good cause standard (and the lower threshold of undue delay under Rule 15 ), the Court's scheduling order, which incorporates the entire proposed scheduling order, includes a deadline of 30 days after the start of discovery for motions to amend. (Dkt. [19] at 10.) While Plaintiffs filed this motion outside of that deadline, the Court finds there was good cause. After lifting the stay in this case, Defendants filed a Motion for Leave to File their Motion for Judgment on the Pleadings [27], which, on April 21, 2020, the Court granted. Days later, Plaintiffs filed this motion seeking to cure the deficiencies raised in the Motion for Judgment on the Pleadings.
As for Rule 15, Defendants oppose the proposed amended complaint on one ground, futility. They therefore effectively concede they are not prejudiced by the amendment and that it was done in good faith. The Court finds the amendment is not futile because the Amended Complaint further particularizes facts that, for the reasons below, clarify their standing to pursue their constitutional claims.
Accordingly, the Court GRANTS Plaintiffs' Motion to Amend [44]. The proposed amended complaint [44-1] is now the operative complaint. As suggested by Defendants, the Motion for Judgment on the Pleadings will be considered against the Amended Complaint. Further, because the standards for futility and a motion for judgment on the pleadings are the same, the Court will consider relevant arguments made in the motion to amend briefing in its analysis of the merits. See Patel v. Ga. Dep't BHDD, 485 F. App'x 982, 982 (11th Cir. 2012) ("Futility justifies the denial of leave to amend where the complaint, as amended, would still be subject to dismissal.").
II. Defendants' Motion for Judgment on the Pleadings [41]
Plaintiffs seek declaratory and injunctive relief as to the constitutionality of the Ordinance. Plaintiff Heyman also seeks damages under 42 U.S.C. § 1983.
Regardless of the relief sought, Plaintiffs' case rests on allegations that the Ordinance is constitutionally deficient on its face. Plaintiffs' Amended Complaint contains minimal recitals of various alleged constitutional violations. That said, what it makes very clear is that Plaintiffs seek to invalidate the Ordinance as a whole, bringing a "facial," rather than an "as applied" challenge. United States v. Frandsen, 212 F.3d 1231, 1235 (11th Cir. 2000) ("A facial challenge, as distinguished from an as-applied challenge, seeks to invalidate a statute or regulation itself."). A facial challenge attacks the provisions of the Ordinance generally, while an as-applied challenge looks at the application of the Ordinance to a particular property. This distinction is crucial to establish as a threshold matter because it determines the law applied to each constitutional challenge.
As facial challenges, Plaintiffs' constitutional claims are very broad, arguing the Ordinance is unconstitutional as to every property within its purview. The threshold to establish standing for such claims is lower, and more suitable to associational standing, but on the merits, the burden is heavy.
Put another way, as pled, if the Ordinance is constitutionally sound, Plaintiffs are not entitled to any relief and the complaint is due to be dismissed. The Court will construe the arguments made by both parties accordingly in the analysis below after first setting forth the applicable legal standard.
a. Legal Standard
A party may move for judgment on the pleadings "[a]fter the pleadings are closed—but early enough not to delay trial." Fed. R. Civ. P. 12(c). "Judgment on the pleadings is appropriate where there are no material facts in dispute and the nonmoving party is entitled to judgment as a matter of law." Perez v. Wells Fargo, N.A., 774 F.3d 1329, 1335 (11th Cir. 2014).
When considering a motion for judgment on the pleadings, the Court accepts as true "all allegations in the complaint and construe[s] them in the light most favorable to the nonmoving party." In re Northlake Foods, Inc., 715 F.3d 1251, 1255 (11th Cir. 2013). The Court may grant the motion only if the nonmovant can prove no set of facts in support of his claim or if material facts are undisputed and judgment on the merits is possible by merely considering the contents of the pleadings. See Massih v. Jim Moran & Assocs., Inc., 542 F. Supp. 2d 1324 (M.D. Ga. 2008). In other words, if a comparison of the pleadings exposes a dispute of material fact, judgment on the pleadings must be denied." Perez, 774 F.3d at 1335.
b. Standing
To proceed to the merits of this case, Plaintiffs must have standing for each of their claims. Taylor v. Polhill, 964 F.3d 975, 980 (11th Cir. 2020). Standing to pursue a claim in federal court consists of three elements: (1) injury in fact, (2) causation, and (3) redressability. Id. Defendants maintain that neither Mr. Heyman nor STROAGA's members have stated an injury-in-fact to pursue their claims.
While standing is required for each individual claim, the parties discuss the issue more broadly. For the most part, the Court agrees a more blanket approach is appropriate here. Plaintiffs generally allege the Ordinance is unconstitutional and generally argue one injury-in-fact. To the extent more specific relief was sought, Plaintiffs have not properly pled it, and the Court therefore need not hypothetically consider their standing to bring such a claim.
An injury-in-fact is "an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical." Lujan v. Defs. of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). Defendants argue Plaintiffs generally have not established a legally protected interest, much less one that is concrete or imminent; more specifically, Defendants maintain STROAGA does not have associational standing to sue.
i. Legally Protected Interest
Defendants first argue Plaintiffs have not identified a constitutionally protected right. While this may be true, the inquiry goes to the merits of Plaintiffs' claims, not their standing to bring them. At the pleadings stage, Plaintiffs need only allege, not prove, facts establishing standing. Id. at 561–62, 112 S.Ct. 2130. Here, Plaintiffs seek a declaratory judgment that the Ordinance itself is constitutionally deficient as a whole. Whether they have pled any plausible facial constitutional challenges will be discussed below, but Plaintiffs have alleged constitutional violations of their legally protected interests that give them standing to sue.
ii. Concrete and Particularized
Defendants next argue Plaintiffs' injury is not concrete and particularized because lawful nonconforming uses under the prior ordinance are grandfathered into the amended one. Therefore, according to Defendants, these Plaintiffs do not have standing to challenge even the Ordinance's facial constitutionality because they have not been harmed. In the Amended Complaint, Plaintiffs concede their eligibility for grandfathered short-term rentals; however, the parties dispute whether rentals for less than a week were lawful under the prior ordinance and, therefore, eligible nonconforming uses. (Pls.' Reply to Mot. to Am. Compl., Dkt. [61] at 6 (arguing Plaintiffs' position on the grandfathered rights issue is that "Defendant Heyman and certain STROAGA members lawfully rented their homes for less than seven days before the enactment of the ban on short-term rentals in April 2019, and that they are therefore entitled to continue doing so following the passage of the 2019 UDC amendment.").)
Importantly, Defendants maintain that rentals for less than a week were never lawful and therefore are not grandfathered nonconforming uses under the UDC. In the Amended Complaint, Plaintiffs specifically allege that both Mr. Heyman and members of STROAGA rented, and wish to continue renting, their properties for less than a week. (Proposed Am. Compl., Dkt. [44-1] ¶¶ 2,3.) Based on every representation from Defendants on the record, if Plaintiffs rented their properties for less than a week at the time of filing of the Complaint, or Amended Complaint, they would violate the Ordinance and be exposed to criminal penalty.
Thus, their inability to rent for less than a week without penalty is a concrete and particularized injury-in-fact.
iii. Actual or Imminent
Defendants also argue that any injury was not sufficiently imminent at the time of filing because the Ordinance did not go into effect until January 1, 2020, and Plaintiffs have never been threatened with enforcement. Plaintiffs maintain there is a credible threat of enforcement to establish standing. The Court agrees.
Where an injunction is sought against governmental enforcement of an allegedly unconstitutional statute or regulation, a plaintiff need only establish a credible threat of enforcement. MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 128-9, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007) (finding plaintiff had pre-enforcement standing to seek a declaratory judgment in federal court that an underlying patent was invalid, unenforceable, or not infringed). Further, where a law was recently enacted, or where the enforcing authority is defending the challenged law in court, a court may infer an intent to enforce the law. See Harrell v. The Fla. Bar, 608 F.3d 1241, 1257 (11th Cir. 2010) ("If a challenged law or rule was recently enacted, or if the enforcing authority is defending the challenged law or rule in court, an intent to enforce the rule may be inferred.").
Here, Defendants have been defending the Ordinance in court since it was enacted in 2019. At the time the Complaint was filed, the Ordinance was already in effect. While they agreed to abstain from enforcement until January 2020, nothing in the record indicates Defendants do not intend to enforce the ordinance now. What is more, the Ordinance includes criminal penalties for violations. Thus, potentially grave harm to Plaintiffs is imminent if they violate the Ordinance. Plaintiffs' withholding of rentals for less than a week eliminates the imminent threat of prosecution but does not eliminate Article III jurisdiction to challenge the Ordinance on its face. MedImmune, 549 U.S. at 129, 127 S.Ct. 764. Therefore, the Court infers an intent to enforce the Ordinance, creating a credible threat of enforcement to give Plaintiffs an actual or imminent injury-in-fact. Plaintiffs have standing to seek prospective relief without exposing themselves to liability. Id.; see also Virginia v. Am. Booksellers Ass'n, Inc., 484 U.S. 383, 393, 108 S.Ct. 636, 98 L.Ed.2d 782, (1988) ("We are not troubled by the pre-enforcement nature of this suit. The State has not suggested that the newly enacted law will not be enforced, and we see no reason to assume otherwise. We conclude that the plaintiffs have alleged an actual and well-founded fear that the law will be enforced against them.").
iv. Associational Standing
Despite Defendants' contentions otherwise, this injury-in-fact is sufficient to grant STROAGA associational standing to bring these claims as well. An association has standing to bring suit on behalf of its members where "(a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization's purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit." Greater Birmingham Ministries v. Sec'y of State for Alabama, 966 F.3d 1202, 1219–20 (11th Cir. 2020).
Defendants challenge STROAGA's standing because the complaint fails to establish that the members of STROAGA have a property interest at risk from certainly impending enforcement and fails to identify the properties or the members in question. This goes to the first element, whether STROAGA's members have standing to sue in their own right.
The Amended Complaint states that "STROAGA's members in Forsyth County own homes that have been rented and are under contract to be rented, on a short-term basis." (Am.Compl., Dkt. [44-1] ¶ 14.) Further, it claims "[m]embers of STROAGA and Plaintiff Heyman have previously rented their homes for periods of less than 30 days and less than seven days ... and currently have contracts to rent their homes for periods of less than 30 days and less than seven days." (Id. ¶25.)
Therefore, the Amended Complaint alleges the members of STROAGA have the same injury-in-fact discussed more generally above. Defendants have not cited any authority to support their position that associational standing requires more precise pleading in this context. The STROAGA members seek declaratory and injunctive relief that the Ordinance is unconstitutional because it prevents them from renting their properties for less than seven days. They also explicitly disclaim damages in its Surreply. (Surreply, Dkt. [72] at 9 (clarifying the Amended Complaint does not seek damages on behalf of STROAGA).)
Thus, STROAGA's individual members do not need to be parties to the suit for this Court "to fashion the sort of prospective injunctive relief sought by" the association. Nat'l Parks Conservation Ass'n v. Norton, 324 F.3d 1229, 1244 (11th Cir. 2003) ; see also Greater Birmingham Ministries v. Sec'y of State for Alabama, 966 F.3d 1202, 1220 n.29 (11th Cir. 2020) (noting that the Supreme Court in Hunt v. Washington State Apple Advertising Comm'n, 432 U.S. 333, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977) considered " ‘the type[s] of relief that an association could properly pursue on behalf of its members,’ and found that prospective relief weighed in favor of finding that associational standing exists.").
In conclusion, Plaintiffs collectively have demonstrated an injury in fact, and Plaintiff STROAGA has established its associational standing to challenge the Ordinance's facial constitutionality on behalf of its members. Thus, Plaintiffs have standing to bring their claims. The Court now turns to the merits of the case.
c. Plaintiffs' Claims
Plaintiffs' case rests on their assertion that the Ordinance is facially unconstitutional under the Fourteenth Amendments' Equal Protection and Due Process Clauses, the Fifth Amendments' Takings Clause, the First Amendments' Free Speech Clause, and Article I's Contracts and Commerce Clauses. Plaintiffs appear to maintain that because the Ordinance is unconstitutional under at least one of these theories, it should be declared unconstitutional as a whole, Defendants should be enjoined from enforcing it, and Plaintiff Heyman is entitled to damages under Section 1983. Separately, though related, Plaintiffs seek a declaratory judgment determining the scope of lawful nonconforming uses grandfathered into the Ordinance. The Court begins there.
Plaintiffs also allege the Ordinance violates the Georgia Constitution's Equal Protection, Due Process, and Takings Clauses; however, because these clauses of the Georgia Constitution are coterminous with the those of the United States Constitution, the same analysis applies to both the state and federal claims. Smith v. Atlanta Independent School District, 633 F.Supp.2d 1364, 1380 (N.D. Ga. 2009) (citing Nodvin v. State Bar of Ga., 273 Ga. 559, 544 S.E.2d 142, 145 (2001) ) (equal protection); Jordan v. Randolph Cty. Sch., 4:08-CV-131CDL, 2009 WL 1410082, at *6 (M.D. Ga. May 19, 2009) (noting the Georgia Constitution's grant of due process is generally co-extensive with the Fourteenth Amendment of the United States Constitution) (citing In re Floyd County Grand Jury Presentments for May Term 1996, 225 Ga.App. 705, 484 S.E.2d 769, 772 (1997) ); Diversified Holdings, LLP v. City of Suwanee, 302 Ga. 597, 807 S.E.2d 876, 885 (2017) (interpreting the federal and Georgia takings clauses as essentially the same and relying on federal law for analysis of a state law takings claim). In line with this, neither party has made separate arguments under state law.
i. Legal Nonconforming Use
As part of the lawsuit, the Court must determine what the Ordinance prohibits. Plaintiffs seek a declaratory judgment that they have a right to continue renting their properties for less than a week as a grandfathered legal nonconforming use. Defendants maintain such use was never legal and therefore is not grandfathered.
"It is a tenet of zoning law that a property owner may acquire a vested right under a zoning ordinance which precludes retroactive application of zoning ordinances." Goldrush II v. City of Marietta, 267 Ga. 683, 482 S.E.2d 347, 360 (1997). The Amended Ordinance accounts for these vested property interests through a grandfathering provision, allowing all prior legal nonconforming uses to continue under the Ordinance unless ceased for 60 days. (UDC 10-2.3, Dkt. [10-2] at 96.) All parties agree that Plaintiffs have grandfathered rights to rent their properties for more than a week but less than 30 days. They also generally agree that legal nonconforming uses are those allowed under the prior ordinance. They dispute, however, whether rentals for less than a week were legal under the prior ordinance and therefore grandfathered into the amended one.
The dispute boils down to a narrow statutory interpretation issue. Before the Short-term Rental Ordinance, short-term rentals were permitted for residential homes that were classified as "dwelling units." The prior ordinance defined a dwelling unit as
One or more rooms connected together and constituting a separate, independent, housekeeping establishment for use on a basis involving owner occupancy or rental or lease on a weekly, monthly or longer basis, with provision for cooking, eating and sleeping and physically set apart from any other rooms or dwelling units in the same structure.
(UDC 71, Dkt. [72-1] (emphasis added).) The parties agree, if the clause "on a weekly, monthly or longer basis" modifies both "lease" and "rental" then rentals for less than a week are not grandfathered, lawful nonconforming uses under the Ordinance.
"The starting point in statutory interpretation is ‘the language [of the ordinance] itself.’ " Ardestani v. I.N.S., 502 U.S. 129, 135, 112 S.Ct. 515, 116 L.Ed.2d 496 (1991) (quoting United States v. James, 478 U.S. 597, 604, 106 S.Ct. 3116, 92 L.Ed.2d 483 (1986) ). "If the language at issue has a plain and unambiguous meaning with regard to the particular dispute in the case, and the statutory scheme is coherent and consistent, the inquiry is over." Bankston v. Then, 615 F.3d 1364, 1367 (11th Cir. 2010) (quoting Robinson v. Shell Oil Co., 519 U.S. 337, 340, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997) ). In determining whether a statute is plain or ambiguous, the Court considers ‘the language itself, the specific context in which that language is used, and the broader context of the statute as a whole." Id.
The unambiguous meaning of the statute indicates "on a weekly, monthly or longer basis" modifies both "lease" and "rental." While separated by a disjunctive, both "lease" and "rental" describe a non-owner occupancy use. Thus, a consistent reading of the statute does not distinguish between the two when describing the length for which a non-owner can occupy the space and have it still constitute a dwelling unit. This reading fits within the context the language was used because longer stays indicate an intent to live, or dwell, in a space, as opposed to short, temporary stays. Looking at the broader context of the statute as a whole, home businesses used for "lodging services" were expressly prohibited under the prior ordinance. (UDC 16-3.1(C)(5), Dkt. [10-2] at 149.) Thus, it follows that "rentals" or "leases" for less than a week would convert a dwelling unit to a lodging service under the plain reading of the prior UDC.
Accordingly, the Court finds that Plaintiffs' rentals for less than a week were not lawful under the prior Ordinance and are therefore not grandfathered nonconforming uses under the amended Ordinance. The Court therefore cannot grant Plaintiffs a declaratory judgment that they have a right to continue renting for periods of less than seven nights. Defendants' Motion is GRANTED as to this claim.
ii. Facial Constitutional Challenges
Generally speaking, "[i]nsofar as the Constitution is concerned, a municipal government may control the use of land within its jurisdiction for what it perceives to be the common good." Corn v. City of Lauderdale Lakes, 997 F.2d 1369, 1373 (11th Cir. 1993). And, while material facts may preclude judgment as a matter of law on zoning issues, the constitutionality of a zoning decision is ultimately an issue for the Court, not the factfinder. Id.
The Court agrees with Defendants that even Plaintiffs' Amended Complaint contains problematic elements of a "shotgun" pleading. That said, on a motion for judgment on the pleadings, the Court construes the pleadings in the nonmovant's favor, here Plaintiffs. To the extent possible, the Court evaluates Plaintiffs' constitutional challenges, in turn, below.
Rule 8 requires that a complaint contain "a short and plain statement of the claim showing that the pleader is entitled to relief." (emphasis added). A shotgun pleading is one in which "it is impossible to comprehend which specific factual allegations the plaintiff intends to support which of his causes of action, or how they do so." Estate of Bass v. Regions Bank, Inc., 947 F.3d 1352, 1358 (11th Cir. 2020). Such a pleading fails to satisfy Rule 8's basic requirement because "[s]uch a pleading is never plain." Id. "[A] district court that receives a shotgun pleading should strike it and instruct counsel to replead the case," because it is "not the proper function of courts in this Circuit to parse out such incomprehensible allegations." Id. at 1358. But if a plaintiff who is represented by counsel has already received notice of the defects and fails to correct them, the complaint can be dismissed with prejudice. Vibe Micro, Inc. v. Shabanets, 878 F.3d 1291, 1296 (11th Cir. 2018). Ultimately, the power to dismiss the Complaint derives from the Court's "inherent authority to control its docket and ensure the prompt resolution of lawsuits." Weiland v. Palm Beach Cty. Sheriff's Office, 792 F.3d 1313, 1320 (11th Cir. 2015).
1. Equal Protection
The Amended Complaint alleges the Ordinance denies equal protection of the laws without a rational basis for doing so. Equal protection claims that do not implicate "suspect classifications" are reviewed under the rational-basis standard. E.g., Checker Cab Operators, Inc. v. Miami-Dade Cty., 899 F.3d 908, 921 (11th Cir. 2018) (noting suspect classifications include "race, alienage, national origin, gender, or illegitimacy"); Haves v. City of Miami, 52 F.3d 918, 921 (11th Cir. 1995). There is no plausible argument that the Ordinance discriminates on its face. Thus, as Plaintiffs concede, the Court should review this facially neutral Ordinance under the rational-basis standard. Haves, 52 F.3d. at 921 (applying rational basis scrutiny to a zoning ordinance). Therefore, the Court need ask only whether the Ordinance is "rationally related to the achievement of some legitimate government purpose." Checker Cab, 899 F.3d at 921. "The first step in determining whether legislation survives rational-basis scrutiny is identifying a legitimate government purpose—a goal—which the enacting government body could have been pursuing." Haves, 52 F.3d. at 921 (emphasis in original). "The second step ... asks whether a rational basis exists for the enacting governmental body to believe that the legislation would further the hypothesized purpose." Id. at 922.
Rational basis scrutiny proscribes only the very outer limits of a legislature's power. Williams v. Pryor, 240 F.3d 944, 948 (11th Cir. 2001). "A statute is constitutional under rational basis scrutiny so long as ‘there is any reasonably conceivable state of facts that could provide a rational basis for the’ statute." Id. (quoting FCC v. Beach Commc'ns., Inc., 508 U.S. 307, 314, 113 S.Ct. 2096, 124 L.Ed.2d 211 (1993) ) (emphasis in original). Thus, unsurprisingly, "[a]lmost every statute subject to the very deferential rational basis scrutiny standard is found to be constitutional." Id.
Nevertheless, Plaintiffs still argue the purpose of the Ordinance is too arbitrary and irrational to survive rational basis review. Plaintiffs bear the burden of negating "every conceivable basis which might support" the Ordinance. Id.
Defendants maintain Forsyth County has a legitimate interest in regulating short-term rentals of residential property to mitigate their adverse impact on the quality of life for neighboring residents. They also posit short-term rentals reduce the stock of affordable residential housing by converting residential units into tourist accommodations. Generally speaking, Defendants suggest their goal is to enhance and maintain the residential character of a community.
In their Surreply, Plaintiffs offer a jumbled set of reasons why the Ordinance is not rationally related to a legitimate purpose without supporting their positions with any authority or directly challenging Defendants' stated purpose. At best, Plaintiffs argue Defendants must prove that they considered elements such as traffic, noise, and the comings and goings of strangers before enacting the Ordinance to rely upon them now as a legitimate purpose. Yet, a "challenged ordinance will survive rational basis review if it could have been directed toward some legitimate government purpose, even if that purpose did not actually motivate the enacting legislature." Checker Cab, 899 F.3d at 921. "In other words, a legislative choice is not subject to courtroom fact-finding and may be based on rational speculation unsupported by evidence or empirical data." Beach Commc'ns, Inc., 508 U.S. at 315, 113 S.Ct. 2096.
Further, Plaintiffs' conclusory allegation that Defendants were improperly influenced by "persons associated with the hotel industry and persons who wish to remove the possibility that homeowners might rent lake properties on a short-term basis to persons of different races or ethnic origins" does not save this claim. Again, without any authority, they generally argue that this improper motivation invalidates the Ordinance under the Equal Protection clause when coupled with the other alleged deficiencies.
This evidence certainly creates an issue of fact, but one that is immaterial "because the actual motives of the City are not at issue" under rational-basis review. Haves, 52 F.3d at 923 (emphasis in original). Ultimately, the "prohibition of the Equal Protection Clause goes no further than the invidious discrimination," which Plaintiffs do not allege or argue in their briefing. Beach Commc'ns, Inc., 508 U.S. at 316, 113 S.Ct. 2096 (quoting Williamson v. Lee Optical of Oklahoma Inc., 348 U.S. 483, 489, 75 S.Ct. 461, 99 L.Ed. 563 (1955) ); (Plaintiffs' Surreply, Dkt. [72] at 22 ("Plaintiffs do not dispute that the short-term rental ordinance is reviewed under a rational basis test ") (emphasis added).).
At this stage of the litigation, it is Plaintiffs' burden to plausibly allege their claims. This burden is particularly high when challenging a local ordinance because "lawmakers are presumed to have acted constitutionally." Panama City Med. Diagnostic Ltd. v. Williams, 13 F.3d 1541, 1545 (11th Cir. 1994).
Thus, as the Eleventh Circuit and other federal courts interpreting similar ordinances have held, the Short-term Rental Ordinance is a rational and reasonable means to accomplish enhancing and maintaining the residential character of the community by cutting down on traffic and protecting surrounding property values. Corn, 997 F.2d at 1375 ("This Court has held that permissible bases for land use restrictions include concern about the effect of the proposed development on traffic, on congestion, on surrounding property values, on demand for city services, and on other aspects of the general welfare.")(collecting cases); Karol v. City of New York, 396 F.Supp.3d 309, 323 (S.D.N.Y. 2019) (holding the short term regulations were justified because the city had a legitimate interest in ensuring "permanent housing stock and maintain[ing] the residential character of neighborhoods."); Ewing v. City of Carmel-By-The-Sea, 234 Cal. App. 3d 1579, 1596, 286 Cal. Rptr. 382,392 (1991) ("We have already determined that the Ordinance is rationally related to the stated goal. Carmel wishes to enhance and maintain the residential character of the R–1 District. Limiting transient commercial use of residential property for remuneration in the R–1 District addresses that goal.").
Accordingly, Plaintiffs have failed to allege a plausible equal protection claim.
2. Due Process
The Amended Complaint alleges the Ordinance "denies due process to persons who have a grandfathered right to continue renting on a short-term basis, in violation of the United States and Georgia Constitutions." Among other missing information, Plaintiffs do not specify whether they bring a procedural or substantive due process claim.
As discussed above, all parties agree that Plaintiffs have a grandfathered right to continue renting their properties on a short-term basis, as long as the rental is for a week or longer. The Court has found that rentals for less than a week are not grandfathered nonconforming uses. Plaintiffs' challenge is thus construed as a substantive due process claim, alleging the Ordinance deprives Plaintiffs of their right to rent their property for less than a week.
In the context of zoning regulations, the Eleventh Circuit has recognized a tailored substantive due process right of a property owner not to have use of his or her land "restricted by reasons having no substantial relation to the public health, safety, morals, or general welfare." Corn, 997 F.2d at 1374-5 (11th Cir. 1993) ("It has long been established that zoning regulations will not be declared unconstitutional as violative of substantive due process unless they are clearly arbitrary and unreasonable.") (internal citation omitted). Thus, substantive due process claims require a showing that the government acted arbitrarily and capriciously, which is the same as the rational basis inquiry. Id. For the reasons discussed above, the Court finds Defendants did not act arbitrarily and capriciously in enacting the Ordinance.
3. Takings Clause
The Supreme Court has repeatedly emphasized a distinction between takings claims that arise in the context of facial challenges and those that arise in the context of challenges to the application of a statute or regulation to a particular property. See Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 494, 107 S.Ct. 1232, 94 L.Ed.2d 472 (1987) ("[W]e have recognized an important distinction between a claim that the mere enactment of a statute constitutes a taking and a claim that the particular impact of government action on a specific piece of property requires the payment of just compensation."). The former constitutes a takings claim based on a facial challenge, while the latter constitutes a takings claims based on an "as-applied" challenge. Cf. id. at 494–95, 107 S.Ct. 1232. The distinction is material.
Plaintiffs rely on cases applying the as-applied standard. Defendants correctly argue the standard for a facial challenge, which the Court applies.
Plaintiffs, in pursuing a facial challenge, must show that the Ordinance is unconstitutional in all of its applications. Id. When a state does not physically invade the property, an ordinance can still constitute a regulatory taking "where the regulation denies all economically beneficial or productive use of land." Vesta Fire Ins. Corp. v. State of Fla., 141 F.3d 1427, 1431 (11th Cir. 1998) (quoting New Port Largo, Inc. v. Monroe County, 95 F.3d 1084, 1089 (11th Cir. 1996) ) (emphasis in original).
Plaintiffs have not, nor could they plausibly, alleged the Ordinance deprives them of all economically beneficial or productive use of their property. Under the Ordinance, any residential property can be used for rentals or leases for more than 30 days. Thus, Plaintiffs can still derive economic benefit from renting their properties; not to mention the unchanged right to occupy the property as an owner. A mere diminution in the value of property is insufficient to demonstrate a taking requiring just compensation. E.g., Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1018, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992) ("Government hardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law."); Corn, 997 F.2d at 1372-73 ("The standard is not whether the landowner has been denied those uses to which he wants to put his land; it is whether the landowner has been denied all or substantially all economically viable use of his land.")
Accordingly, Plaintiffs have not plausibly alleged the Ordinance works as an unconstitutional taking.
While not material given the Court's finding, it is worth noting that the remedy for a takings challenge, whether facial or as-applied, is compensation not the declaratory and injunctive relief sought by Plaintiffs. Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 536, 125 S.Ct. 2074, 161 L.Ed.2d 876 (2005) (holding the Takings Clause of the Fifth Amendment "is designed not to limit the governmental interference with property rights per se , but rather to secure compensation in the event of otherwise proper interference amounting to a taking.")(emphasis in original).
4. Free Speech
Plaintiffs generally allege the Ordinance "chills the right of free speech protected by the First Amendment by discouraging persons who wish to rent on a short-term basis from advertising or otherwise communicating the availability of short-term rentals to family, friends and the general public." (Proposed Am. Compl. Dkt. [44-1] at 13.) Yet, they never address the claim further in their Motion to Amend briefing. Defendants suggest the claim was added to secure standing, which is unnecessary given the Court's above findings. (Resp. to Mot. to Am., Dkt. [48] at 14.)
The Court finds this claim is not plausible because the speech allegedly chilled is an incidental burden from the Ordinance which is directed at commerce or commercial conduct. See, e.g., Sorrell v. IMS Health Inc., 564 U.S. 552, 567, 131 S.Ct. 2653, 180 L.Ed.2d 544 (2011) ("[T]he First Amendment does not prevent restrictions directed at commerce or conduct from imposing incidental burdens on speech.").
5. Contracts Clause
The Contracts Clause provides that "[n]o State shall ... pass any ... Law impairing the Obligation of Contracts ...." U.S. Const. art. I, § 10.15 Although sweeping in its language, that "Clause is not ... the Draconian provision that its words might seem to imply." Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 240, 98 S.Ct. 2716, 57 L.Ed.2d 727 (1978). Instead, "[t]he Contract Clause protects contracting parties' reasonable contractual expectations against unreasonable abrogation by the states." S&M Brands, Inc. v. Georgia ex rel. Carr, 925 F.3d 1198, 1202–03 (11th Cir. 2019). "The threshold inquiry is whether the law ‘operate[s] as a substantial impairment of a contractual relationship’ involving the plaintiff." Id. (quoting Spannaus, 438 U.S. at 244, 98 S.Ct. 2716 ). Here, Plaintiffs fail to even allege the existence of a specific contract impaired by the Ordinance. See APT Tampa/Orlando, Inc. v. Orange County, No. 97-891-CIV, 1997 WL 33320573, at *7 (M.D. Fla. Dec. 10, 1997) (dismissing plaintiffs' Contracts Clause claim because "Plaintiffs have not alleged that a contract exists"). The Contracts Clause protects against the impairment of existing contracts; it does not provide a right to enter contracts in the future. See, e.g., General Motors Corp. v. Romein, 503 U.S. 181, 190, 112 S.Ct. 1105, 117 L.Ed.2d 328 (1992) (observing that a Contracts Clause claim may arise where a change in law impairs the "obligation of pre-existing contracts") (emphasis added).
As such, a contract clause claim considers the rights of a particular contract under the Ordinance, not the Ordinance as a whole. Put another way, this is an as-applied, not facial, challenge. Plaintiffs explicitly state their challenges are facial, and the specificity of pleading in their Amended Complaint reflects a broad challenge.
But even assuming the sufficiency of Mr. Heyman's allegation that his property "has been rented, and is under contract to be rented, on a short-term basis," the Court properly defers to the County's judgment as to the necessity and reasonableness of the Ordinance. See Energy Reserves Group, Inc. v. Kansas Power and Light Co., 459 U.S. 400, 412–13, 103 S.Ct. 697, 74 L.Ed.2d 569 (1983) (holding that, unless the state itself is a contracting party, "[a]s is customary in reviewing economic and social regulation, ... courts properly defer to legislative judgment as to the necessity and reasonableness of a particular measure."); Vesta Fire, 141 F.3d at 1434. As discussed above, the Court finds Defendants have demonstrated a legitimate interest in regulating short-term rentals to mitigate their adverse impact on the quality of life for neighboring residents, among other rationales. The County was not a party to the rental contracts, so based on the Commission's judgment, the Ordinance's impact on Mr. Heyman's existing rental contracts cannot be said to be an unconstitutional impairment. See Vesta Fire, 141 F.3d at 1434.
6. Interstate Commerce
In the Amended Complaint, Plaintiffs repackage their prior privileges and immunities claim into an interstate commerce claim, alleging the Ordinance "impairs interstate commerce by denying persons from outside of Georgia the ability to rent homes in Forsyth County on a short-term basis, in violation of the United States Constitution."
The Commerce Clause provides, "Congress shall have Power ... [to] regulate Commerce ... among the several states...." U.S. Const. art. I., § 8, cl. 3. Congress's authority to regulate commerce inherently carries with it a prohibition on the states from adopting laws that impede the flow of interstate commerce. See Barclays Bank, PLC v. Franchise Tax Bd., 512 U.S. 298, 310, 114 S.Ct. 2268, 129 L.Ed.2d 244 (1994). This authority, known as the dormant Commerce Clause, "has long been understood ... to provide ‘protection from state legislation inimical to the national commerce [even] where Congress has not acted.’ " Id. (quoting Southern Pac. Co. v. Ariz. ex rel. Sullivan, 325 U.S. 761, 769, 65 S.Ct. 1515, 89 L.Ed. 1915 (1945) ).
To determine whether the Ordinance discriminates on its face against interstate commerce, the Court looks to whether it provides differential treatment of in-state and out-of-state economic interests. United Haulers Ass'n, Inc. v. Oneida-Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330, 331, 127 S.Ct. 1786, 167 L.Ed.2d 655 (2007) ; here, whether the Ordinance benefits Georgians and burdens out-of-staters. See Id.
Plaintiff has not plausibly alleged such a claim. Out-of-state and in-state renters are treated the same under the Ordinance.
A nondiscriminatory statute can still be struck as unconstitutional, but only if "the burden imposed on [interstate] commerce is clearly excessive in relation to the putative local benefits." Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970). Here, Plaintiffs allege the Ordinance burdens interstate commerce by denying persons from outside of Georgia the ability to rent homes in Forsyth County on a short-term basis. That said, the Ordinance allows out-of-state persons, like in-state persons, to rent properties in Georgia for more than 30 days. Further, due to the grandfathering, there will still be short-term rentals for at least a week available. Thus, this is merely an incidental burden that is not clearly excessive in relation to the local benefits of enhancing and maintaining the residential character of a community.
d. Remaining Issues
Because the Court finds that Plaintiffs have not pled any plausible constitutional violations, their claims for prospective relief and Mr. Heyman's claims for damages under Section 1983 are due to be dismissed. Defendants' Motion [41] is accordingly GRANTED.
The Court therefore need not consider the immunity defenses raised. That said, as an aside, the Parties correctly appear to agree Forsyth County was the proper defendant for this action.
Conclusion
For the foregoing reasons, Plaintiffs' Motion to Amend [44] is GRANTED. Defendants' Motion for Judgment on the Pleadings [41] is also GRANTED. Plaintiffs' Amended Complaint is DISMISSED. The Clerk is DIRECTED to close the case.
SO ORDERED this 22nd day of December, 2020.