Judge tosses Duluth landlords' lawsuit against city

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A court decision Wednesday upholds Duluth’s rental property ordinance.

Judge Eric Hylden granted the city’s motion for summary judgment, putting to rest a legal challenge by a group of local landlords.

The plaintiffs — Bradley Allen Johnson, Gary Kalligher and Peter Mattson — initially argued new rental policies enacted were discriminatory in that new fees stood to drive rents higher, effectively pricing people out of certain neighborhoods.

Assistant City Attorney Alison Lutterman suggested just the opposite was true, describing the ordinance as “an effort to make single-family residential homes more available and affordable to low-income people.”

She explained that by putting stricter rules in place, the city slowed the rampant conversion of traditional single-family homes into multi-tenant rentals, particularly in neighborhoods around Duluth’s college campuses.

The landlords also contended the ordinance should be thrown out for being vague. The ordinance has different requirements and license fees for operators of single-family versus multi-tenant properties. The suit took aim at a provision that said a family unit could include “a significant other” and went on to identify a significant other as “a romantic partner.”

J.D. Feriancek, the plaintiffs’ attorney, said the city’s ordinance put landlords in an untenable position, asking would-be tenants to divulge details about their personal lives and potentially causing them to run afoul of the Fair Housing Act.

Judge Hylden said landlords will have fulfilled their duty if they ask prospective tenants whether they fit the definition of a “family unit” as described in the city ordinance, even if the status of a relationship should later change.

The judge’s interpretation lessens landlords’ fears that they would be subjected to a $1,000-per-day penalty prescribed in the ordinance if it was found a property was improperly licensed, according to Feriancek.

“Although we are disappointed in the decision, the trial court has created a mechanism for landlords to shield themselves from liability. The ruling effectively renders the code provision meaningless but will substantially increase costs for future tenants,” he said.

Lutterman said the key determinant will be whether a landlord knowingly violates the ordinance.

While the city did its best to define a family unit, Lutterman acknowledged: “We haven’t yet come up with a single word in the English language to describe all the forms the modern family comes in.”

The suit also challenged the $3,500 multi-tenant license fee the city now charges. Landlords contended the fee was excessive, arbitrary and could not adequately be justified.

But Judge Hylden said in his ruling: “The city has satisfied their obligation under the statute that the fees be fair, reasonable, proportionate and have a nexus to the actual cost of the service.” In making that determination, Hylden cited information provided by John Strongitharm, director of Duluth’s Life Safety Office.

Lutterman characterized Hylden’s decision as “a clear win” for the city.

Despite the ruling, Feriancek remains critical of the city’s new rental rules.

“This ordinance represents another example of city councilors, acting for their own benefit to the detriment of landlords and the people who rent from them,” he said. “Given the current economic climate, the city government should be working towards creating more safe and affordable housing, not creating roadblocks and unneeded fees that will ultimately be paid by those who have little discretionary income. A final decision as to an appeal has not been made at this time.”

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