Justia U.S. 3rd Circuit Court of Appeals Opinion Summaries

The plaintiffs filed suit under 42 U.S.C. 1983 challenging a Jersey City ordinance curtailing the ability of property owners and leaseholders to operate short-term rentals. The plaintiffs alleged that having passed an earlier zoning ordinance legalizing short-term rentals, which enticed them to invest in properties and long-term leases, the city violated their rights under the Takings Clause, the Contract Clause, and the Due Process Clauses by passing the new ordinance, which, they allege, undermined their legitimate, investment-backed expectations and injured their short-term rental businesses. The plaintiffs also sought a preliminary injunction. The district court dismissed the complaint.The Third Circuit affirmed. Not every municipal act legalizing a business activity vests the business owner with a cognizable property right. The plaintiffs’ forward-looking right to pursue their short-term rental businesses is not cognizable under the Takings Clause, but the plaintiffs articulated three cognizable property rights: use and enjoyment of their purchased properties, long-term leases, and short-term rental contracts. Because the properties may still be put to multiple economically viable uses, there has been no total taking of those “properties.” Rejecting “partial takings” claims, the court noted that the plaintiffs may have relied on the previous ordinance in deciding to invest in short-term rentals but they failed to take into account the restrictions in place in that ordinance and the city’s strong interest in regulating residential housing. View "Nekrilov v. City of Jersey City" on Justia Law

When Revel entered Chapter 11 bankruptcy, its tenant, IDEA, continued to operate nightclubs and a beach club on Revel's Atlantic City casino premises. IDEA sought to protect its right to continue operating by filing an adversary proceeding. Polo became the defendant in the proceeding (and IDEA’s landlord) when the court approved a Purchase Agreement. The Sale Order authorized Polo’s purchase of Revel’s assets “free and clear of all liens, claims, encumbrances and other interests of any kind” under 11 U.S.C. 363(f). The Order contained carve-out provisions that expressly preserved certain rights relating to IDEA’s continued use of the casino premises under the Lease. After entering the Order, the Bankruptcy Court granted Revel’s long-pending motion to reject the Lease retroactively. IDEA filed a notice of its election to retain its rights as a tenant under section 365(h), as expressly allowed by the Sale Order. In an omnibus order, the Bankruptcy Court clarified major aspects of the post-petition landlord–tenant relationship between IDEA and Polo. The Third Circuit affirmed the Bankruptcy Court and the district court. IDEA is permitted to reduce its rental obligations under a tenant-protective provision, 11 U.S.C. 365(h), the Lease, and the doctrine of equitable recoupment, regardless whether its rights arose before or after Revel filed for bankruptcy and regardless whether they arose before or after Revel rejected the Lease. View "Revel AC Inc v. IDEA Boardwalk, LLC" on Justia Law

Vorchheimer suffers from pulmonary hypertension and other disabilities and must use a rolling walker to get around. She owned a condominium in The Philadelphian and had a reserved parking space in front of the building. Vorchheimer used her walker to get from her condo to the lobby and then used her cane from the lobby to her car. She could neither lift her walker, nor fold it, nor put it into her car, so she began leaving her walker in the lobby. The building managers refused to allow her to continue to do so, but offered her alternatives that involved having staff members take and store the walker or storing the walker in the building’s indoor garage. She sued under the Fair Housing Amendments Act, 42 U.S.C. 3604(f), claiming that her preferred accommodation was necessary to equally enjoy her home. The Third Circuit affirmed the dismissal of her complaint, holding that she had not plausibly pleaded necessity. For a housing accommodation to be “necessary” under the Act, it must be required for that person to achieve equal housing opportunity, taking into account available alternatives. Leaving the walker in the lobby was her preference but given the four alternatives offered she did not plausibly plead that it was necessary. View "Vorchheimer v. Philadelphian Owners Association" on Justia Law

The Hayes family is a low-income family whose rent is subsidized by enhanced voucher assistance under the Housing Act, 42 U.S.C. 1437f(t) (Section 8). Enhanced vouchers exist to enable residents to “choose” to continue renting the “dwelling unit in which they currently reside.”because an ordinary voucher does not cover a tenant’s rent to the extent that it exceeds the applicable payment standard, and, following a valid opt-out, property owners are no longer subject to limitations on what they may charge for rent. The Hayes family's eligibility to receive enhanced vouchers is contingent upon their continued tenancy in a unit currently owned by Harvey. Harvey notified the Hayes family that he would not renew their lease. The Hayes family refused to vacate, arguing that as enhanced-voucher tenants, they have an enforceable “right to remain” in their unit as long as it is offered for rental housing. The district court granted Harvey summary judgment. The Third Circuit initially affirmed. On rehearing, the Third Circuit reversed. The statute’s plain language and history indicate that enhanced voucher holders may not be evicted absent good cause, even at the end of a lease term. The court remanded so that the district court may consider whether Harvey has good cause to evict. View "Hayes v. Harvey" on Justia Law

The Hayes family is a low-income family whose rent is subsidized by enhanced voucher assistance under the Housing Act of 1937, 42 U.S.C. 1437f(t) (Section 8). Because an ordinary voucher does not cover a tenant’s rent to the extent that it exceeds the applicable payment standard, and, following a valid opt-out, property owners are no longer subject to limitations on what they may charge for rent, enhanced vouchers exist to enable residents to “choose” to continue renting the “dwelling unit in which they currently reside.” The Hayes family's eligibility to receive enhanced vouchers is contingent upon their continued tenancy in a unit currently owned by Harvey. Toward the end of their most recent lease term, Harvey notified the Hayes family that he would not renew their lease. The Hayes family refused to vacate the premises, arguing that as enhanced-voucher tenants, they have an enforceable “right to remain” in their unit as long as it is offered for rental housing. The district court granted Harvey summary judgment. The Third Circuit affirmed. The Act does not obligate property owners to renew enhanced-voucher tenancies after the initial lease term. View "Hayes v. Harvey" on Justia Law

In 1962, PWV leased to Norfolk Southern certain railroad properties, consisting of a 112-mile tract of main line railroad and approximately 20 miles of branch rail lines in Western Pennsylvania, Ohio, and West Virginia. After securing appropriate regulatory approvals, the Lease went into effect on October 16, 1964. The term of the Lease is 99 years, renewable in perpetuity at the option of Norfolk Southern absent a default. On May 17, 1990, Norfolk Southern entered into a sublease with Wheeling & Lake Erie Railway. Wheeling assumed the rights, interests, duties, obligations, liabilities, and commitments of Norfolk Southern as lessee, including the role as principal operator of the Rail Line. In 2011, disputes arose following the proposed sale of an unused branch of the railroad line, a restructuring by PWV and its demand for additional rent and attorney's fees. Norfolk Southern sought a declaration that it was not in default under the terms of the Lease. The Third Circuit affirmed the district court’s use of course-of-performance evidence, found that PWV had engaged in fraud to obtain Norfolk’s consent to a transaction otherwise prohibited by the Lease. View "Norfolk Southern Railway Co v. Pittsburgh & West Virginia Railroad" on Justia Law

The Lansaws operated a daycare in space leased from Zokaites. After they entered into a new lease with a different landlord, but before they moved, Zokaites served them with a Notice for Distraint, claiming a lien against personal property for unpaid rent. The following day, the Lansaws filed for bankruptcy, triggering the automatic stay, 11 U.S.C. 362(a). Zokaites’s attorney was notified of the filing on August 17, 2006. On August 21, Zokaites and his attorney entered the daycare during business hours, by following a parent, and photographed the Lansaws’ personal property. On August 27, Zokaites entered after business hours, using his key, then padlocked the doors, leaving a note stating that Zokaites would not unchain the doors unless Mrs. Lansaw’s mother agreed that she had not been assaulted by Zokaites, the Lansaws reaffirmed their lease with Zokaites, and the Lansaws ceased removing property from the daycare. The Lansaws removed the chains and slept in the building. Zokaites locked the door from the outside and left with the Lansaws’ keys. The Lansaws called the police. Meanwhile, Zokaites attorney communicated by phone and letter with the new landlord, stating that, if the new lease was not terminated, Zokaites would sue the new landlord. In an adversary proceeding, the Bankruptcy Court awarded the Lansaws attorney fees ($2,600), emotional-distress damages ($7,500) and punitive damages ($40,000) under 11 U.S.C. 362(k)(1). The district court and Third Circuit affirmed. Section 362(k)(1) authorizes the award of emotional-distress damages; the Lansaws presented sufficient evidence to support the award. View "In re: Lansaw" on Justia Law

The apartment building, constructed in 1912, was used first as a factory, before it was abandoned. Goldtex purchased the the building in 2010 and hired KlingStubbins to design a plan to convert the entire building into rental apartment units and retail space. The building was almost gutted for conversion into a residential building with 163 apartment units and ground floor retail space that began accepting tenants in 2013. A housing advocacy group filed suit alleging violation of the design and accessibility requirements of the Fair Housing Act (FHA), 42 U.S.C. 3604(f)(3)(C). The district court dismissed, citing HUD’s interpretation of the provision—which exempts converted buildings from the accessibility requirements if they were constructed prior to March 13, 1991. The Third Circuit affirmed, finding the agency’s interpretation entitled to deference. The interpretations are reasonable and reflect a legitimate policy choice by the agency in administering an ambiguous statute. View "Fair Hous. Rights Ctr. v. Post Goldtex GP LLC" on Justia Law

Bare Exposure operates “Atlantic City’s Only All Nude Entertainment.” HMS, a private corporation, leases expressway service plazas from the South Jersey Transportation and New Jersey Turnpike Authorities to operate restaurants and convenience stores. The Authorities are not involved in day-to-day operations or management, but only perform long-term maintenance to parking areas, building exteriors, and lobbies. HMS entered into a contract, allowing CTM to install and service brochure display racks in plaza lobbies. HMS “must approve all brochures or publications” before placement. The Authorities were not a party to the CTM contract. HMS discovered a Bare Exposure brochure in a CTM display rack. HMS instructed CTM to remove all Bare Exposure brochures. HMS did not consult with or receive any direction from the Authorities and did not consider the New Jersey Administrative Code. The Authorities never directed HMS to take any actions regarding the brochures. Bare Exposure contends that the Authorities placed government signs and photographs in lobbies and filed suit under 42 U.S.C. 1983 alleging that HMS violated the First and Fourteenth Amendments. The Third Circuit affirmed summary judgment in favor of HMS. HMS did act not “under color of any statute, ordinance, regulation, custom, or usage, of any State,” absent direct involvement by state authorities either in the decision to remove the brochures or in general plaza operations. View "P.R.B.A. Corp. v. HMS Host Toll Roads, Inc." on Justia Law

In 2000 the Port Authority signed a 30-year lease for the largest marine terminal at Port Elizabeth (445 acres including structures and berthing) with Maher, which handles cargo. The Lease requires “Basic Rental,” (in 2012, $50,413 per acre, totaling $22,433,612) plus “Container Throughput Rental,” based on the type and volume of cargo at Maher’s terminal. For eight years, Maher was exempted from Throughput Rental. Since 2008 the first 356,000 containers are exempted; for containers 356,001 to 980,000, Maher paid $19.00 per container in 2012; and for each additional container, Maher paid $14.25. Maher must handle a minimum amount of cargo to maintain the Lease and pay an annual guaranteed minimum Throughput Rental. Maher paid $12.5 million in Throughput Rental in 2010, and expected the 2012 amount to be $14 million. Maher claims the Port Authority profits from the Lease and uses the revenue to fund harbor improvements and projects unrelated to services provided to Maher or vessels. In 2012 Maher sued, alleging violations of the Constitution’s Tonnage Clause; the Rivers and Harbors Appropriation Act, 33 U.S.C. 5(b); and the Water Resources Development Act, 33 U.S.C. 2236. The Third Circuit affirmed dismissal, agreeing that Maher lacked standing to bring its Tonnage Clause and RHA claims because it was not a protected vessel and did not adequately plead that fees imposed on vessels were not for services rendered. Maher’s WRDA claim failed because Maher had not shown that the Authority imposed fees on vessels or cargo and because the WRDA did not prohibit use of Lease revenue to finance harbor improvements. View "Maher Terminals LLC v. Port Auth. of NY" on Justia Law