PHILADELPHIA – The City of Philadelphia and its Department of Licenses and Inspections is again attempting to dismiss with prejudice a class action lawsuit which alleges it attempts to generate additional revenue for the City by issuing excessive fines on a daily basis, for both failure to state a claim and through arguing a previously-decided state court ruling should bar the instant case.
Tunskai Properties, LLC first filed suit in the U.S. District Court for the Eastern District of Pennsylvania on Aug. 17 versus the City of Philadelphia and the Department of Licenses and Inspections (L&I). All parties are of Philadelphia.
“The Philadelphia Department of Licenses and Inspections has long been infamous for its systematic corruption, incompetence and chronic underfunding, all of which tragically combined in the 2013 Salvation Army building collapse, killing 6 and injuring 13. That tragedy was supposed to usher in major changes, and many hoped that the once notoriously dysfunctional department would be subject to better oversight, properly managed, and that the safety of the citizens of Philadelphia would be its primary concern,” the suit stated.
“That, however, never happened. Instead, the Department merely entered a new chapter of exploitation, with a primary focus on generating revenue by assessing excessive fines, facilitated by a vague and open-ended city ordinance. That law provides L&I the opportunity to improperly generate tens if not hundreds of millions of dollars of revenue by any means necessary – often by extorting unsuspecting victims and doling out fines as a punitive and retributive weapon.”
The suit said that L&I, which is responsible for issuing construction permits, ensuring building safety and conducting inspections, has disregarded the Salvation Army building tragedy and continued to place its own interests above the safety of Philadelphia residents by “charging unconstitutional, hefty fines backed by only an ‘open-ended and vague’ provision of the city code and geared only to generate additional revenues at the expense of alleged violators.”
According to the lawsuit, Philadelphia is authorized by the Pennsylvania Legislature to impose a $300 to $2,000-per-day fee for each offense of the city code. But the plaintiff said each day an apparent violation continues counts as a completely separate offense, with no maximum cumulative fine in place despite the per-day cap.
Tunskai Properties is a Florida-based developer which claims it was fined $7,200 per day and ordered to pay the City of Philadelphia more than $2 million in penalties, after it was cited by the defendants on Dec. 20, 2017 for an alleged violation of Section A-601 of the Philadelphia Administrative Code.
The plaintiff said that it and other business cannot remedy the issues for which they have been fined because they are not able to obtain permits and licenses from the L&I until the fines are paid.
“In doing so, L&I has created a lucrative scheme using the daily accruing fine provisions of the Philadelphia Code as a way to extort vast amounts of money. Upon information and belief, in just the last four years alone, L&I has generated at least tens of millions of dollars from this criminal enterprise,” the suit stated.
UPDATE
After an amended version of the complaint was lodged on Oct. 13, counsel for the City of Philadelphia filed a second motion to dismiss the complaint on Nov. 6, citing a prior complaint resolved in state court that should preclude the instant case.
“Plaintiff’s amended class action complaint – replete with irrelevant and inflammatory averments – at its core represents a collateral attack on a valid and final state court judgment. Even conjuring up unrelated tragedies and irrelevant events dating back to the 1950s cannot hide plaintiff’s objective purpose: to have this court violate the principles of comity by interfering with parallel and ongoing state court proceedings,” the dismissal motion read, in part.
“However, this Court lacks subject matter jurisdiction over such cases through both the Younger abstention doctrine and Rooker-Feldman doctrine and should therefore dismiss this matter in its entirety pursuant to Federal Rule of Civil Procedure 12(b)(1). Additionally, having failed to raise these claims when provided the chance in state court, plaintiff cannot now overcome the principles of res judicata. Thus, the amended class action complaint also fails to state a claim on which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff’s amended class action complaint should be dismissed with prejudice in its entirety and plaintiff should not be granted further leave to amend.”
According to the City’s counsel, the Younger abstention requires “a federal district court to refrain from exercising jurisdiction when pending state proceedings provide an adequate forum for all relevant issues presented in the federal case.”
Additionally, the City said the Rooker-Feldman doctrine and res judicata should preclude the instant case and dismiss it.
“Plaintiff’s amended class action complaint is a collateral attack on a state court judgment. In essence, plaintiff seeks review and reversal of the unfavorable state court judgment against it, a review prohibited by the Rooker-Feldman doctrine,” the motion stated.
“The Rooker-Feldman doctrine holds that federal district courts lack subject-matter jurisdiction over ‘cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments.”
For counts of violating the Excessive Fines Clause of the 8th Amendment to the U.S. Constitution, violating the Excessive Fines Provision of Article I, Section 13 of the Pennsylvania Constitution, violating due process under the 14th Amendment to the U.S. Constitution, violating due process under Article I, Sections 1, 9 and 11 of the Pennsylvania Constitution, unjust enrichment/disgorgement through creation of a common fraud and a preliminary and permanent injunction to stay and set aside execution and open all judgments under the All Writs Act, the plaintiff is seeking a long list of reliefs including, but not limited to:
• A declaration that Philadelphia Code, Sections 1-109(1), 1-109(2), 1-109(3), and/or Philadelphia Administrative Code, Section A-601.1 (Title 4) be revised to reflect a reasonable cap that does not deprive property owners of their entire property or otherwise infringe on the rights granted individuals pursuant to the U.S. Constitution and the Pennsylvania Constitution;
• An order requiring disgorgement of all of the ill-gotten gains derived by the defendants from its aforementioned misconduct into a common fund for the benefit of plaintiff and the Class Members;
• Pre-judgement interest at the maximum rate permitted by applicable law, attorney’s fees pursuant to applicable law, contract, and/or equitable principles; such other relief as deemed just and proper, plus a trial by jury.
The plaintiff is represented by Matthew P. Faranda-Diedrich and Joshua Upin of Royer Cooper Cohen Braunfeld, in Philadelphia.
The defendants are represented by Brendan J. Philbin and Jane Seu of the City of Philadelphia’s Law Department.
U.S. District Court for the Eastern District of Pennsylvania case 2:20-cv-04004
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com