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LXR RS V, LLC v. Municipality of Norristown

United States District Court, E.D. Pennsylvania

October 7, 2019

LXR RS V, LLC, Plaintiff
v.
MUNICIPALITY OF NORRISTOWN, Defendant

          MEMORANDUM

          JOSHUA D. WOLSON, J.

         Pennsylvania law permits municipalities to require property owners to obtain a Use and Occupancy (“U&O”) Certificate before selling real property. See 68 P.S. § 1082.1. The Municipality of Norristown imposes such a requirement. Plaintiff LXR RS V, LLC (“LXR”) claims in this case that Norristown's requirements, at least as applied to it, imposed a temporary taking, violated its rights to substantive and procedural due process, and violated the Civil Rights Act. LXR also asserts claims for a writ of mandamus and a declaratory judgment under Pennsylvania law. Norristown has moved to dismiss all claims. (ECF No. 18.) As explained below, the Court concludes that LXR has not stated a claim for any of its federal causes of action. The Court also declines to exercise supplemental jurisdiction over LXR's state-law claims. The Court will therefore remand this case to the Court of Common Pleas for Montgomery County.

         I. FACTUAL BACKGROUND

         A. Norristown's Ordinances Regarding Sales Of Property

         Under Pennsylvania law, a municipality that requires U&O Certificates must proceed as follows: (1) if the municipal inspection of the property reveals no violations, then the municipality must issue a U&O Certificate; (2) if the inspection reveals one violation but no substantial violation, the municipality must issue a temporary U&O Certificate; and (3) if the inspection reveals at least one substantial violation, the municipality must specifically note the items on an inspection report and issue a temporary access certificate. See 68 P.S. § 1082.1. In the event that an inspection reveals a substantial violation, a purchaser has one year to rectify the violation or to demolish the building. 68 P.S. § 1083.

         Norristown requires U&O Certificates in connection with the sale of property. In particular, Norristown Code § 128-3.3 prohibits the sale of property without a U&O Certificate. The Norristown Code provides for property inspections and the issuance of certificates in compliance with Pennsylvania law. See Norristown Code § 128-6, 128-7.

         B. LXR's Acquisition Of The Properties

         On October 12, 2018, LXR executed a series of Standard Agreements for the Sale of Real Estate (the “Agreements”) to acquire the properties at 5 E. Elm Street, 15 E. Elm Street, and 17 E. Elm Street (the “Properties”). The Agreements included a closing date of November 13, 2018. In addition, the Agreements made LXR, as buyer, responsible to order a U&O Certificate and to make any repairs necessary to obtain a U&O Certificate.

         On October 25, 2018, LXR applied for zoning permits for the Properties. Because Norristown was still processing the zoning permit applications as of the date of the scheduled closing, LXR agreed with the property owners to delay the closing from November 13, 2018, until January 11, 2019. Norristown issued zoning permits on November 20, 2018, and November 28, 2018. The zoning permits identified the need for a U&O inspection to take place as an “Additional Step[] To Be Taken By Applicant.” LXR applied for U&O Certificates on November 28, 2018. Norristown conducted an inspection of the Properties approximately one month later, on December 27, 2018. That same day, Norristown issued a Warning Notice to one of the owners of the Properties, noting violations that the inspection revealed. However, Norristown did not issue a temporary access certificate or a U&O Certificate. Instead, it apparently insisted that the property owners correct the violations so that Norristown could avoid declaring the properties uninhabitable and turning out the residents. (ECF No. 9, Ex. H.)

         LXR and the owners of the Properties extended the closing deadline at least two more times, once to February 8, 2019, and a second time to March 25, 2019. On March 6, 2019, Norristown issued temporary U&O Certificates for the Properties.

         C. Procedural History

         LXR filed this action in the Court of Common Pleas for Montgomery County. In its original Complaint, LXR sought a writ of mandamus and a declaratory judgment under Pennsylvania law. Norristown removed the case to this Court and moved to dismiss the case. LXR then filed an Amended Complaint, in which it seeks a writ of mandamus and a declaratory judgment and in which it asserts claims for a temporary taking, violation of substantive due process, violation of procedural due process, and violation of the Civil Rights Act. Norristown again moved to dismiss under Rules 12(b)(1) and 12(b)(6). (ECF No. 18.)

         Among other things, Norristown argues in its Motion that the Court cannot hear LXR's takings claim because LXR did not pursue remedies in state court. Since the Parties filed their briefs, the Supreme Court has ruled that a property owner “has suffered a violation of his Fifth Amendment rights when the government takes his property without just compensation, and therefore may bring his claim in federal court under § 1983 at that time.” Knick v. Twp. of Scott, Pennsylvania, 139 S.Ct. 2162, 2168 (2019). In July, the Court conducted a status conference with the Parties, during which Norristown acknowledged that the Knick decision renders its argument about Pennsylvania state court remedies moot. The Court therefore will not address that argument.

         II. ...


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