A California man is fighting an “unconstitutional receivership scheme” in which his city employs a private law firm to prosecute property-code violations then collects fees from the homeowner, even if the homeowner wins the case.
Ron Mugar, defended by the Institute for Justice, resolved numerous code violations that put his property in receivership. He passed inspection and a court vacated the receivership.
A victory for Mugar?
Not so fast, said the city and its for-profit prosecutors. They filed a motion with the court to be “declared the prevailing party,” and Mugar must now pay the law firm $60,000 in attorneys’ fees.
“Norco’s receivership scheme is unconstitutional,” said IJ attorney Jeffrey Redfern. “Both the U.S. and California Constitutions give citizens the right to face a neutral prosecutor and judicial system. By introducing a profit incentive to the system, Norco and the private lawyers it has hired have created an illegal incentive to rack up fines and legal fees, rather than neutrally enforce the city’s laws.”
IJ said Mugar received notice from the firm of Dapeer, Rosenblit & Litvak LLP that they were going to take over ownership of his house using the receivership process.
So Mugar cleaned his yard, hired a lawyer and fought back, winning in court.
IJ said “attempting to collect attorneys’ fees for a prosecution that the city lost is patently illegal, which is why Ron has partnered with the Institute for Justice to put an end to the city’s use of private lawyers to enforce municipal code violations once and for all.”
Joshua House, an attorney at the Institute for Justice, said Mugar “has always followed orders to comply – there was no need to threaten to take his home.”
“Moreover, it’s unconscionable that he is facing crippling fees after successfully fighting back,” he said.
“By penalizing people for defending their property rights, Norco is violating Ron’s constitutional right to defend himself in court.”
IJ said receiverships are supposed to be a last resort for a city to address an actual safety threat.
“But now, an increasing number of California cities are empowering private, for-profit law firms to use receivership laws address minor code violations by threatening to take away residents’ homes. In the process of doing so, these firms charge enormous, sometimes bankruptcy-inducing amounts of money for their ‘services.’ And the more they fine and charge homeowners, the more money they make,” IJ said.
IJ argued the due process clauses of the U.S. and California Constitutions “require city attorneys to be neutral, without a financial stake in the cases they bring.”
IJ settled a case in Indio, California, in which the city hired a private firm to enforce its code and the lawyers charged an elderly woman nearly $6,000 because her tenants had chickens in their back yard.
The city no longer uses private firms to prosecute such cases.