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Property Management Group, Ltd. v. City of Philadelphia

United States District Court, E.D. Pennsylvania

May 23, 2017

THE PROPERTY MANAGEMENT GROUP, LTD., B.H. HOLDING CORP., CORE ASSET MANAGEMENT, LLC, GABRIEL FALCO, ELBA GONZALEZ, PENNSYLVANIA APARTMENT ASSOCIATION, EAST, ABOB'S TOWING, INC., SIANI'S TOWING AND RECOVERY, LLC, LEWIS BLUM TOWING, INC., Plaintiffs,
v.
CITY OF PHILADELPHIA, JIM KENNEY, PHILADELPHIA POLICE DEPARTMENT, and RICHARD ROSS, JR., Defendants.

          MEMORANDUM

          ANITA B. BRODY, J.

         Plaintiffs, a coalition of private parking lot owners and towing companies, have towed the City of Philadelphia into court on account of a recently enacted ticket-to-tow ordinance. The ordinance requires a neutral City official, like the police, to verify a parking violation and issue a ticket before a vehicle may be towed. The parking lot owners and towing companies allege this mandate is more than just a speed bump, arguing the ordinance is preempted by state law and that it functions as an unlawful taking and deprivation of procedural due process. The City, claiming this case is a dead end, moves to dismiss the Complaint. Regrettably for Plaintiffs, the wheels have come out from under them; their Complaint reaches the end of its road.

         I. BACKGROUND AND HISTORY OF THE ORDINANCE

         On the streets of Philadelphia, as frequently reported in the press, parking is an intractable problem.[1] The reputation of private towing companies has been tarnished: media accounts detail the vilification of law-abiding tow truck companies, given a bad name by their unscrupulous and predatory brethren who tow legally parked vehicles.[2] Municipal regulations have permitted tow truck drivers to be “judge, jury, and executioner” of parking violations, meaning the tow driver is permitted to both determine if a car is parked illegally and collect fees for towing it. This system has led to widespread abuse, perpetrated by a small number of towing companies, and a chorus of civilian complaints. City Council Hr'g Tr. 50:18-51:20, Nov. 29, 2016.[3]

         Parking and towing regulation in Philadelphia is governed by state law and by municipal ordinance, promulgated by the City Council.[4] Section 3353(b)(1) of the Pennsylvania Vehicle Code makes it unlawful for anyone to park a vehicle on private property without the consent of the owner. 75 Pa. Cons. Stat. Ann. § 3353. To protect a parking space owner's exclusive right of possession over his or her privately owned spaces, this statute also grants private property owners the right to “remove or have removed the vehicle at the reasonable expense of the owner of the vehicle.” 75 Pa. Cons. Stat. Ann. § 3353(c). A property owner may exercise this right so long as a sign is posted to notify the public of relevant parking restrictions. 75 Pa. Cons. Stat. Ann. § 3353(b)(2).

         The City Council has enacted towing ordinances under Section 9-605 of the Philadelphia Code, regulating both consensual and non-consensual tows. Regulations require, among other things, licensing of towing services, approval of fee schedules, proof of insurance, vehicle inspections, and driver background checks. See Phila. Code § 9-605 et seq.[5] Section 9-605(11)(a) of Philadelphia's towing ordinance also mandates specific signage requirements, ensuring motorists are aware of restrictions before an offending vehicle may be towed. If signage requirements have not been followed, towing of the vehicle is prohibited.[6]

         In response to complaints about abusive towing practices, the City Council has experimented with a variety of solutions. In 2010, the City amended its towing ordinance to add a ticketing requirement, largely identical to the ordinance now before this Court. Adding a layer of government approval between the tow truck and the public, the 2010 ordinance required ticketing by the police before an illegally parked vehicle could be towed away at the motorist's expense. Compl. 4-5, ECF No. 1.

         The City abandoned the first ticket-to-tow ordinance in 2012 after it proved “unworkable.” Compl. 5, ECF No. 1. Instead of a ticketing requirement, new regulations were promulgated that required a towing company to photograph an offending vehicle's license plate, as well as the sign prohibiting parking, and notify the police of any impending tow. See Phila. Code § 9-605(11)(e) (repealed 2017).[7] A vehicle owner was entitled to a copy of these photographs before the owner was required to pay towing and storage fees. Id. Failure to comply with these mandates subjected the towing company to monetary penalties and a license suspension. Further, if a vehicle about to be towed had been reported stolen, towing of the vehicle was prohibited for 24 hours to give the owner time to reclaim the vehicle on site. Phila. Code § 9-605(11)(d) (repealed 2017).

         This solution, as well, had its detractors. City Council Hr'g Tr. 53:18-55:18, Nov. 29, 2016. Private parking lot owners were unhappy with the 24-hour waiting period for stolen vehicles. When a stolen vehicle was left undisturbed for 24 hours, property owners were unable to use their parking spots, and the stolen vehicle was often vandalized or re-stolen. Id. 54:1-15. To combat this, the City began towing all stolen vehicles to a secure lot, and waived fees if an owner reclaimed his or her vehicle within 24 hours. This often left towing companies unpaid for their work. Id. at 54:16-55:9. Further, the City reported that it received complaints of no parking signs being posted after a car was parked, and cars being moved from lawful spots to unlawful ones to provide a predicate to tow. Id. at 51:11-20.

         The City Council again explored amending towing regulations in 2016. On November 29, 2016, a public hearing was held on Bill No. 160682 (“the 2016 ordinance, ” or “the Ordinance”). The 2016 Ordinance proposed reinstating the ticket-to-tow requirement, but omitting the 24-hour waiting period for stolen vehicles. At the hearing, testimony was given by individual citizens, the Philadelphia Police Department, and a representative from Plaintiff Pennsylvania Apartment Association, East, on behalf of private parking lot owners. The City Council heard complaints about abusive towing practices, as well as complaints about the burden of the 24-hour waiting period and of the long delays, waiting for police to arrive to issue a ticket, that private lot owners endured under the prior ticket-to-tow ordinance. A representative of the Police Department testified that a ticketing requirement was necessary to properly determine the legality of disputed tows. Id. at 57:14-24.

         Bill No. 160682, amending Section 9-605 of the Philadelphia Code, was passed by the City Council on December 8, 2016 and signed by Mayor James Kenney on January 24, 2017. The law went into effect on February 1, 2017. Balancing the competing interests involved, the final amended Ordinance resurrects the ticketing requirement to ensure that a neutral law enforcement authority first certifies that a vehicle is unlawfully parked before it may be towed. But to minimize delays in waiting for a ticket, the Ordinance expands the entities eligible to determine if a car is illegally parked. Rather than requiring a ticket from the Philadelphia Police Department, the Ordinance allows “other law enforcement authorities, ” to issue tickets, which includes the Parking Authority, SEPTA, and various university-affiliated police forces. Phila. Code § 9-605(d); City Council Hr'g Tr. 56:13-20; 90:17-91:24, Nov. 29, 2016. The 24-hour waiting period for stolen vehicles was removed entirely.

         The Property Management Group, Ltd., B.H. Holding Corp., Core Asset Management, LLC, Pennsylvania Apartment Association, East, Gabriel Falco and Elba Gonzalez (“Property Owners”), Abob's Towing, Inc., Siani's Towing and Recovery, LLC, Lewis Blum Towing, Inc., (“Towing Companies, ” collectively, “Plaintiffs”) now bring suit in this Court against the City of Philadelphia (“the City”)[8], seeking to invalidate the Ordinance. Plaintiffs' Complaint, ECF No. 1, makes three primary claims in two counts. In Count I, Property Owners and Towing Companies claim the Ordinance was impermissibly enacted and is preempted by state law. They seek an order under the Declaratory Judgments Act, 42 Pa. Cons. Stat. Ann. § 7532, declaring that the Ordinance is void because the City Council exceeded its power under Article IX, Section 2 of the Pennsylvania Constitution and §§ 13131 and 13133 of the Home Rule Act. They also seek an order that the Ordinance is void because it is preempted by the state Vehicle Code, 75 Pa. Cons. Stat. Ann. §§ 3351-3354. In Count II, Property Owners claim the Ordinance is unconstitutional.[9] They claim the Ordinance operates as an unlawful taking without just compensation, in violation of Art. I, Sec. I of the Pennsylvania Constitution and the Fifth and Fourteenth Amendments of the United States Constitution. The Property Owners also claim the Ordinance violates their procedural due process rights because the Ordinance impinges upon their property interests without a requisite post-deprivation hearing.[10]

         On February 15, 2017, Property Owners filed suit in the Court of Common Pleas, seeking to enjoin the Ordinance. They amended their complaint on March 21, 2017, and it was timely removed by the City. ECF No. 1. On March 28, 2017, the City moved to dismiss the Complaint in its entirety for failure to state a claim upon which relief can be granted. ECF No. 5. I exercise jurisdiction over this dispute pursuant to federal question jurisdiction 28 U.S.C. § 1331, and supplemental jurisdiction, 28 U.S.C. § 1367.

         II. DISCUSSION

         In deciding a motion to dismiss under Rule 12(b)(6), a court must “accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (internal quotation marks omitted).

         To survive dismissal, a complaint must allege facts sufficient to “raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In order to determine the sufficiency of a complaint under Twombly and Iqbal, a court must engage in the following analysis:

First, the court must take note of the elements a plaintiff must plead to state a claim. Second, the court should identify allegations that, because they are no more than conclusions, are not entitled to the assumption of truth. Finally, where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief.

Connelly v. Steel Valley Sch. Dist., 706 F.3d 209, 212 (3d Cir. 2013), as amended (May 10, 2013) (quoting Burtch v. Milberg Factors, Inc., 662 F.3d 212, 221 (3d Cir. 2011).

         “As a general matter, a district court ruling on a motion to dismiss may not consider matters extraneous to the pleadings. However, an exception to the general rule is that a ‘document integral to or explicitly relied upon in the complaint' may be considered . . . .” In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (citations omitted). Thus, a court may consider “the complaint, exhibits attached to the complaint, matters of public record, as well as undisputedly authentic documents if the complainant's claims are based upon these documents.” Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010).

         Further, a facial challenge to a legislative or municipal act is “the most difficult challenge to mount successfully.” United States v. Salerno, 481 U.S. 739, 745 (1987). To deem the statute facially invalid, the challenger must establish “that no set of circumstances exists under which [the statute] would be valid . . . or that the statue lacks any plainly legitimate sweep.” United States v. Stevens, 559 U.S. 460, 472 (2010). Courts are generally to defer to the judgment of the legislature, and “do not sit as a super-legislature to weigh the wisdom of legislation nor to decide whether the policy which it expresses offends the public welfare.” Day-Brite Lighting Inc. v. State of Missouri, 342 U.S. 421, 423 (1952).[11]

         A. COUNT I - PREEMPTION

         In Count I of their Complaint, Property Owners and Towing Companies make several overlapping arguments. First, they claim that enactment of the Ordinance runs afoul of the City Council's powers under Article IX, Section 2 of the Pennsylvania Constitution and § 13133(a) of the Home Rule Act. Specifically, they allege the Ordinance was erroneously enacted because “it involves the regulation of parking, which is not an inherently municipal function.” Pls.' Resp. Mot. Dismiss 29, ECF No. 6. Second, they argue that the Ordinance is violative of § 13133(b) of the Home Rule Act because the Ordinance is preempted by Vehicle Code § 3353(c). Finally, they make out a standard conflict preemption claim, arguing directly that the Ordinance conflicts with Vehicle Code § 3353(c) and is therefore preempted.[12] The City moves to dismiss Count I of the Complaint because, they argue, the Ordinance is a valid exercise of the City's municipal power as a towing regulation.

         1. Enactment under the Home Rule Act, § 13133(a) - Municipal Functions

         “[I]t is fundamental that municipalities are creatures of the state and that the authority of the Legislature over their powers is supreme.” Naylor v. Township of Hellam, 565 Pa. 397, 403 (2001) (citations omitted). The City's “ability to exercise municipal functions is limited only by its home rule charter, the Pennsylvania Constitution, and the General Assembly.” City of Philadelphia v. Schweiker, 579 Pa. 591, 605 (2004).[13] “[I]n analyzing a home rule municipality's exercise of power . . . [courts] begin with the view that it is valid absent a limitation found in the Constitution, the acts of the General Assembly, or the charter itself, and [courts] resolve ambiguities in favor of the municipality.” Nutter v. Dougherty, 595 Pa. 340, 357 (2007) (citations omitted). See also 53 Pa. Cons. Stat. Ann. § 2961 (“All grants of municipal power to municipalities governed by a home rule charter under this subchapter . . . shall be liberally construed in favor of the municipality.”).

         The City of Philadelphia exists as a first class city under the Home Rule Act, 53 Pa. Stat. Ann. § 13131 et seq. See also 351 Pa. Code §§ 1.1-100-12.12-503 (Philadelphia's Home Rule Charter). The Home Rule Act is an enabling statute that “grants to first class cities that adopt a home rule charter, i.e., Philadelphia, ‘complete powers of legislation and administration in relation to its municipal functions.'” City of Philadelphia v. Rendell, 888 A.2d 922, 929 (Pa. Commw. Ct. 2005) (quoting 53 Pa. Stat. Ann. § 13131). Section 13133(a) of the Home Rule Act places limits on a municipality's powers by “identify[ing] those activities that do not constitute home rule municipal functions.” Id. Section 13133(b) of the Home Rule Act dictates that “no city shall exercise powers contrary to, or in limitation or enlargement of, powers granted by acts of the General Assembly which are . . . applicable in every part of the Commonwealth.” 53 Pa. Stat. Ann. § 13133(b). A municipal ordinance can therefore be violative of § 13133(a) of the Home Rule Act, by regulating in an impermissible area, or of § 13133(b) of the Act, by regulating inconsistently with state statute.

         As identified, there are three external limits to the City's municipal power: the Constitution, the Home Rule Charter, and state statute. Plaintiffs point to no internal provisions of the Pennsylvania Constitution that deem the Ordinance outside the bounds of the City's municipal power. They also fail in arguing that § 13133(a) of the Home Rule Act limits the City's ability to legislate in the area of parking or towing. While it is true that parking is not an inherently municipal function, that does not mean the City cannot regulate in that area. City of Philadelphia v. Rendell, 888 A.2d at 929 n. 18 (“There is no authority for the City's premise that parking is an inherently municipal function.”). This merely means that a municipality may not point to the Home Rule Act as its source of authority to regulate parking, but must derive the power to regulate parking from another statutory source. “[T]he Parking Authority Law, a non-home rule enactment, is the source of the [parking regulation] power, 53 Pa. C.S. § 5504(a), and the source of the City's power to delegate parking functions to the [parking authority], 53 Pa. C.S. § 5505(a).” Id. (citing Schweiker, 579 Pa. at 610).[14] Although parking is not an inherently municipal function, neither ‘parking' nor ‘towing' is expressly listed as an activity “that [does not] constitute home rule municipal functions” in Section 13133(a) of the Home Rule Act. City of Philadelphia v. Rendell, 888 A.2d at 929.[15] Property Owners and Towing Companies therefore fail in claiming that the Ordinance violates § 13133(a) of the Home Rule Act by regulating a non-municipal function.

         2. Preemption Claims under the Home Rule Act, § 13133(b)[16]

         The Property Owners and Towing Companies hitch their remaining allegations in Count I to the third external constraint on municipal power, arguing the Ordinance is preempted by state statute. “Preemption takes three forms . . . express, conflict, and field preemption.” Nutter v. Dougherty, 595 Pa. at 357. “Total preemption is the exception and not the rule.” Council of Middletown Township v. Benham, 514 Pa. 176, 184 (1987). Plaintiffs make no claim of field, or total, preemption. Instead they assert that the Ordinance is expressly preempted by § 6101(a) of the Vehicle Code. They also argue that conflict preemption applies, and that the Ordinance fails because it conflicts with § 3353(c) of the same Vehicle Code. The City asserts that the Vehicle Code “indicates no intent to preempt local action . . . .” Defs.' Mot. Dismiss 11, ECF No. 5.

         a. Express preemption

         For a state statute to expressly preempt local action, the General Assembly must “expressly signal[] its preemptive intent” in the relevant statute. Nutter, 595 Pa. at 357. Express preemption requires a “clear statement of legislative intent to preempt” and absent such a statement, “state legislation will not generally preempt local legislation on the same issue.” Mars Emergency Med. Servs., Inc. v. Township of Adams, 559 Pa. 309, 315 (1999).

         The Property Owners and Towing Companies point to § 6101(a) of the Vehicle Code as “express” intent to preempt. That provision reads: “no local authority shall enact or enforce any ordinance on a matter covered by the provisions of this title unless expressly authorized.” 75 Pa. Cons. Stat. Ann. § 6101(a). Although dubious whether or not this provision qualifies as a clear statement of legislative intent to preempt all local ordinances on the subject, such an inquiry is of no moment.[17] Merely because the General Assembly requires express statutory authorization for local regulation does not mean the legislature has decreed that municipalities many not regulate in the area. See Benham, 514 Pa. at 180 (“The state is not presumed to have preempted a field merely by legislating in it.”). Furthermore, the Vehicle Code does in fact “expressly authorize” towing regulation. Section 3353(c) of the Vehicle Code, the very provision Property Owners and Towing Companies claim conflicts with the Ordinance, see infra, states that “[a]ny city . . . may, by ordinance, provide . . . for municipal regulation of authorized towing ...


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