Freedom-4You: Steinhauser et al v. Magner,CitySt.Paul,MN 05cv-1348 Page 1 of 13
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Saturday, June 6, 2009
Steinhauser et al v. Magner,CitySt.Paul,MN 05cv-1348
There maybe copy errors taken from A Democracy: Sat 6June09
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Appeal From United States District Court
For the District of Minnesota
Civil No. 05-CV-1348 (JNE/SRN)
STATEMENT OF ISSUES PRESENTED FOR APPEAL
Did the District Court err in granting summary judgment to Defendants in light of evidence creating
genuine issues of material fact for trial?
Fair Housing Act / Disparate Treatment / Disparate Impact
Constitutional Rights Claims / Equal Protection / Substantive Due Process
Void for Vagueness
State Law Claims
Did the District Court err in denying Plaintiffs’ original and renewed motions for sanctions?
Did the District Court err in denying Plaintiffs’ motion to compel?
MOST APPOSITE CASES
Darst-Webbe Tenant Ass’n Bd. v. St. Louis Hous. Auth., 417 F.3d 898, 902 (8th Cir. 2005);
See Griffith v. City of Des Moines, 387 F.3d 733, 736 (8th Cir. 2004);
2922 Sherman Ave. Tenants’ Ass’n v. District of Columbia, 444 F.3d 673 (D.C. Cir. 2006);
E*Trade Sec. LLC v. Deutsche Bank AG, 230 F.R.D. 582, 587 (D.Minn 2005).
REQUEST FOR ORAL ARGUMENT
Appellants request oral argument because they appeal from the District Court's grant of summary
judgment. A de novo review of a grant of summary judgment requires detailed analysis of the facts of
the case. Oral argument is critical to a full understanding of the fact issues presented. Appellants
request an oral argument of thirty minutes.
STATEMENT OF THE CASE
Plaintiffs are or were property owners in the rental business with rental properties located within the
City of St. Paul. Plaintiffs’ tenants were almost exclusively African-American, Hispanics, Asians, mixed
race couples, individuals with various disabilities, individuals receiving state and federal financial
Freedom-4You: Steinhauser et al v. Magner,CitySt.Paul,MN 05cv-1348 Page 2 of 13
and families with children, who were and are individuals protected under anti-discrimination laws,
hereinafter defined as “protected class.” Plaintiffs provided housing primarily to low-income,
“protected class” tenants in the City of St. Paul and the majority of the time under the Federal Section 8
funded program. Plaintiffs owned and managed older rental properties located in the inner-city
neighborhoods where older housing stock was common, where poverty was persistent, and where
people of color had a critical need for safe and decent affordable housing.
Commencing in the Fall of 2002, Defendants, all with the approval and participation of the City Council,
intentionally and maliciously commenced and continued an illegal policy, custom and practice of
discriminatory and predatory code enforcement that aggressively targeted Plaintiffs and other St. Paul
landlords, who were lawfully renting to, encouraging, and associating with, individuals with protected
rights to housing under Title VIII, Federal Fair Housing Act and Amendments living within the City of
St. Paul. This discriminatory and illegal policy, custom and practice had a discriminatory impact on the
protected class, and the illegal policy, custom and practice continued at all times thereafter and
continues presently in the City of St. Paul. This intentional, malicious and illegal conduct directly caused
Plaintiffs and other landlords to be damaged in their property or business and caused injury to tenants.
As a direct result of the individual Defendants’ wrongful conduct and malicious discrimination, illegal
code enforcement activities, and pattern of racketeering activity, Plaintiffs and others were forced to
incur significant expenses that were unnecessary and which placed a heavy financial burden on said
landlords and forced them to close their rental units, and sell their rental properties, thereby
decreasing the available rental units for “protected class” members in the City. Further, Plaintiffs
suffered from ruined reputations in the rental business community and great emotional distress in
their family and social relationships.
Plaintiffs brought claims against Defendant City officials and code enforcement employees, in their
individual capacities, under the RICO Act, namely, 18 U.S.C. Sections 1962 (c) (conducting an enterprise
through a pattern of racketeering activity) and (d) (conspiring to violate subsection (c) of Section 1962);
against Defendants under the Fair Housing Act and amendments, 42 U.S.C. Sections 3601, et seq.;
against Defendants under 42 U.S.C. Sections 1981, 1982, 1985 and 1983; and against Defendants for
various state based claims including abuse of process, interference with contract, and inference with
The City brought a motion for summary judgment, and the District Court granted the City’s motion.
FACTS BEFORE THE DISTRICT COURT
INTRODUCTION OF THE
DISCRIMINATORY ENVIRONMENT AND ATTITUDE
OF ST. PAUL HOUSING CODE ENFORCEMENT
“The nature of enforcement, especially at the local level, is that it often involves a significant amount of
political pressure to achieve certain outcomes. The Ad Hoc Committee identified that it is absolutely
essential for the code enforcement function to be guided by a classified manager so that he or she could
have the civil service protection to withstand the pressure to bend the rules to achieve a particular end
that is inconsistent with the code and/or past practices.” (emphasis added) ADD. 84.
On January 6, 2007, St. Paul’s new director of Neighborhood Housing and Property Improvement
(“NHPI”), Bob Kessler, made the above statement about “bending the rules to achieve a particular
end/certain outcomes” in response to a committee that discussed the history of the City's management
of the Code Enforcement function and noted that “the function has not had a classified manager with
subject matter expertise for many years.” Id.
Prior to Mr. Kessler’s directorship, NHPI was directed by Mr. Andy Dawkins. Mr. Dawkins was the
Director of NHPI during the time period in which this litigation is based, 2002-2005. The following are
examples of Mr. Dawkins’ attitude toward code enforcement and the discriminatory environment he
created while the director of NHPI. Mr. Dawkins’ goal was to eliminate rental properties and get rid of
the “bottom tier of tenants” and the “down trodden” through the City’s 1) aggressive code
enforcement, 2) City initiated lawsuits, 3) a force ownership change strategy, and 4) eviction strategy.
Mr. Dawkins testified in his deposition as follows:
As to his attitude toward rental property:
Q: So is it better for neighborhoods to have less rental properties?
A: I will give you your answer. I think that it’s better to have a neighborhood that has more owner
occupied housing in it than has rental property in it for the sake of the neighborhood (emphasis added).
ADD. 85, p. 638, lines 18-22.
As to the City’s force ownership change and eviction strategies:
Q: Back to your notes, I think we can start in the top right corner.
A: And then cervantes (sic)[City Attorney] & Mott [District Court Judge], get those meetings going, have
an aggressive housing court, lawsuit city initiate city Tenant Remedy actions strategy, the force
ownership change strategy, the eviction strategy (emphasis added).
ADD. 86, p. 558, lines 7-8, p. 560, lines 5-9.
As to aggressive code enforcement and its affect on affordable housing:
Q: Was aggressive code enforcement ever a consideration for you or an issue brought up during your
A: Aggressive code enforcement was the key from the first day that we needed to have a more aggressive
consistent stepped-up code enforcement department. That's what everybody told me. That's what was in
the city's chronic problem property report. They said, that's your mission, Dawkins, go do it (emphasis
Q: Was it ever brought up, either by you or within your considerations as a director, that at some point
it may have been eliminating affordable housing?
A: I told you I read the story where Baltimore went over the tipping point. So I told the Sparrow
[SPARL] group and some group of realtors and the chamber of commerce and whoever else I was
talking to, listen, I need you to help me by
eyes and ears and let me know as soon as you think we have stepped up our aggressive, consistent code
enforcement to the point that we are forcing abandonment of properties in the city. I want to know
about it. (emphasis added).
ADD. 87, p. 566, lines 23-25, p. 567, lines 1-21.
Freedom-4You: Steinhauser et al v. Magner,CitySt.Paul,MN 05cv-1348 Page 3 of 13
As to complaints for applying too much pressure to homeowners:
Q: Have you talked with anyone about Steve Magner, applied pressure to homeowners?
A: Steve Magner and every inspector in my department applied pressure to homeowners.
Q: Have you ever had a complaint about Steve Magner applying too much pressure?
A: I had complaints about every inspector in my department applying too much pressure (emphasis
ADD. 88, p. 575, lines 23-25, p. 576, lines 1-5.
As to political pressure from city council members:
Q: Did she [Kathy Lantry] tell you anything specific she wanted you to do? Did she have any ideas on
how to do code enforcement?
A: Yeah, do code enforcement to the max, do aggressive, consistent stepped-up code enforcement, don't
cut down and shorten the time lines for compliance, and a lot of others (emphasis added).
Q: You said Benehoff was worst. Why was he worse than Lantry?
A: He never let up. He or his aid were on the phone with me every day saying, you're not doing enough
ADD. 89, p. 591, lines 5-11, p. 592, lines 14-18.
Mr. Dawkins documented his approach in a flow chart he developed related to complaints and so called
“problem properties.” Dawkins continued the City’s illegal and discriminatory elimination of low
income rental properties by promoting “targeting of teetering neighborhoods or redeveloping areas,”
“force sales,” “or
eviction” (top right of chart), and “Goal: force sale to responsible owner” (bottom right of chart)
(emphasis added). ADD. 90.
Not only did Dawkins have meetings with Chief Judge Mott and City Attorney Cervantes to get “buy in”
to his aggressive, force ownership change and eviction strategies, Dawkins goals for 2004 included
getting “buy-in” from the Police Department, City Attorney, and Courts. ADD. 91.
In a police training bulletin about “How to Work with the Code Enforcement Problem Property Unit,”
co-writers Andy Dawkins and Assistant Police Chief T. Reding discuss “how to eliminate nuisance
properties” and use the following language:
THIS INFORMATION IS ESPECIALLY IMPORTANT IF YOU GET INSIDE THE PREMISES because this
will allow Code Enforcement to get an administration search warrant that could lead to condemnation
of the property. eviction of the occupants and boarding-up the property. ADD. 92-93.
The police training bulletin further emphasizes that “A single nuisance incident, either a public
nuisance incident or criminal nuisance incident, is enough to revoke a landlord's rental registration
certificate; enough to start an eviction; enough to trigger a §45.04 letter [to] cease and desist or face
criminal charges (emphasis added). Id.
Mr. Dawkins sent an email with respect to an apartment in which he referred to the apartment and the
people as a “mecca for lots of the down-trodden:” ADD. 94.
Bill Cullen, former president of St. Paul Association of Responsible Landlords (SPARL) testified that
Dawkins suggested to landlords that maybe the solution for the City was to try and increase the quality
of properties to the point that the lower tier of less qualified tenants would not have places to rent.
Cullen testified in his deposition as follows:
A: There were two comments that I recall, one from Leslie and one from Andy. Andy asked me, how
would we feel if all those tenants that are at the bottom of the box were no longer in St. Paul (emphasis
Q: He asked that question of the group?
Q: Was there any responses to that?
A: I think we were all dumbfounded. I think the question was how are we going to do that. He talked in
general terms about improving the city -- now I'm nervous about trying to quote him. I remember him
talking about trying to -- the word I would use is gentrify the city. That's what I remember (emphasis
A: He did not use that word. I'm translating it. That's how I remember it. Let's gentrify the city to the
point that none of these individuals with historical behavioral issues would be in the city at all
Q: So was it your understanding what he was suggesting is that try to get rid of the tenants that are at the
bottom of the box?
A: Very clear, yes. He was very clear about that (emphasis added).
ADD. 95, p. 113, lines 1-25.
Q: Did Mr. Dawkins ever say that maybe the solution for the city, including the private landlords, was to
try to increase the quality of properties to such a point that this lower group of less qualified tenants
would not have a place to rent?
A: I believe that's what he was implying all along when he asked the question of; how would it be if we
just didn't have to deal with the tenants that were at the bottom of this market (emphasis added).
Q: I know that. But was he tying that into the system that he had to have a
higher code enforcement standard so that the properties would be at a higher quality level, therefore,
these individuals would not have a place to rent, either because of affordability or too high of cost of the
properties, that kind of thing?
A: I believe that's exactly what he said (emphasis added).
Q: Was that to you concerning that a city official would be voicing that type of a policy or advocating that
kind of a policy?
A: I remember being shocked by Andy's comments, shocked or surprised. I don't know if concern came
to mind as much as, wow, that's surprising (emphasis added).
ADD. 96, p. 202, lines 17-25, p. 203, lines 1-16.
Sara Anderson, a housing advocate from Project Hope recalls City Official Dawkins telling her that City
officials and employees “don't want low-income people renting in the City”. Anderson testified in her
deposition as follows:
Q: Again I want to make sure that we've got everything that you know here today. You indicated in your
affidavit that City officials and employees have told you that they don't want low-income people renting
Freedom-4You: Steinhauser et al v. Magner,CitySt.Paul,MN 05cv-1348 Page 4 of 13
in the City. Do you remember who would have told you that at any time (emphasis added)?
A: Andy Dawkins (emphasis added).
Q: Okay. And you mentioned here this morning that you recall him saying that in the initial meeting you
had with him, correct?
ADD. 97-98, p. 76, lines 20-25, p. 77, lines 1-6.
The City and Mr. Dawkins also had financial incentive to implement its discriminatory environment and
attitude in code enforcement – the goal was to bring in $500,000.00 in inspection fees, which was
“theirs to spend” for “a lot of overtime” and new hires, if the code enforcement officers write-up every
property the way the Mayor [Randy Kelly] told Harold [Robinson] and Mr. Dawkins. APP. 1.
Mr. Kessler’s statement regarding “the pressure to bend the rules to achieve a particular end that is
inconsistent with the code and/or past practices” is exactly what Mr. Dawkins’ achieved in eliminating
Plaintiffs’ rental properties and their “bottom tier of tenants” and the “down trodden.” Mr. Dawkins
used the City’s discriminatory attitude and environment of aggressive code enforcement, illegal
condemnations and code compliance certifications, City initiated lawsuits, a force ownership change
strategy, and eviction strategy, even though he knew that his custom and practice could force
abandonment of properties in the City of St. Paul and eliminate affordable housing, as it did in the
Baltimore study he discussed.
CODE INSPECTOR REACTION TO THE CITY’S DISCRIMINATORY ENVIRONMENT AND ATTITUDE IN
HOUSING CODE ENFORCEMENT
During the course of discovery, housing code inspectors were asked about the City and Mr. Dawkins’
discriminatory attitude and environment of aggressive code enforcement.
Code enforcement inspector John Reardon testified in his deposition as follows:
Q: Look at the smaller block there where it's just below that to the left, where it says, quot;Goal: for [force]
sale to responsible owner.quot; Again, in your work with NHPI when Dawkins was a director, did you ever
overhear or were you part of a conversation about that kind of a subject?
A: No. In fact, I can't believe it's written down like that.
Q: If you go to the top of that same document -- see where it says quot;Outcomesquot; in a horizontal square
Q: Again, it says quot;If correct physical problems (or force sales).quot;
Q: Same question again, had you ever heard anyone discuss that in the department?
Q: You're saying never and that would include any time prior to Dawkins being a director, too?
A: I have never heard of forcing sales.
Q: Was that -- you seemed surprised by that -- that it's written down?
A: It seems real discriminatory. I'm not a lawyer, but I can't believe that it's even on paper (emphasis
APP. 2, p. 157, lines 7-25, p. 158, lines 1-6.
Code enforcement inspector Steve Schiller testified that Mr. Dawkins orders to write up a certain
property was “the lowest thing that has ever happened to me.”
Q: What was the nature of the complaint on the property?
A: I was to write up everything.
Q: Who told you that?
A: Andy Dawkins.
Q: Did you go out to the property after you had that conversation?
APP. 3, p. 112, lines 6-12.
Q: Did Mr. Dawkins tell you to write up the property?
Q: To write it up -- did he use the terms quot;code to the maxquot;?
A: Correct. Not that term. He said to do a thorough inspection.
Q: What else did he tell you?
A: It had to be written up and on the Mayor's desk by that afternoon.
APP. 4, p. 114, lines 15-23.
Q: Was there anything about the orders to you to write up Ms. Rodriguez that you felt were unfair?
A: Only from the standpoint that she was in very poor health.
Q: Was she on Social Security or a limited income at all? Any idea?
A: To the best of my knowledge, yes.
Q: She was disabled?
A: To the best of my knowledge.
Q: Were there other homes in her area that were in similar condition exteriorly?
APP. 4, p. 116, lines 12-23.
Q: Tell me more of what Andy Dawkins made you do that you didn't agree with?
A: Standard procedure when there is a death at the property is to give everyone time and to give the
courts time to settle it and time to grieve and all that, that the file is closed.
Q: Dawkins came down on which side of that? Don't close it or do close it?
A: The Mayor said he couldn't close it.
Q: What else?
A: That was my major objection. It was the highlight of my career.
Q: Explain to me the highlight of your career that -- relating to the death situation?
A: Two of my clients died.
Q: Two of your clients died and you weren't allowed to close the file?
A: Two of my clients died and nobody listened to me to even start it in the first place.
Q: What was the result of you not being able to work on that?
A: What do you mean?
Freedom-4You: Steinhauser et al v. Magner,CitySt.Paul,MN 05cv-1348 Page 5 of 13
Q: Did the properties end up condemned or vacant?
A: They ended up vacant.
Q: Both of them?
A: There was only one property down on Butternut.
Q: Anything else?
Q; So you said, quot;the highlight of my career,quot; and so the examples are the Butternut property, and then
closing a file when there has been a death?
A: I could not do that in this case. I mean this was the lowest thing that has ever happened to me
APP. 5, p. 194, lines 22-25, p. 195, lines 1-25, p. 196, lines 1-4.
As another example of inspector reaction to the City and Mr. Dawkins’, code
enforcement employee Maureen Mitch wanted to leave the department in October of 2002, after Mr.
Dawkins took over as director of NHPI. She stated in an email to her supervisor, Steve Magner: “If I
apply in other division's can I still use you as a reference? I think I see where this office is going and I
don't want to be a part of it” (emphasis added). APP 6.
These code enforcement employees’ responses to Mr. Dawkins illegal and discriminatory environment,
attitude, custom and practice are key to the analysis of Plaintiffs’ discrimination claims as well as
Defendants’ claims of immunity.
THE CITY’S ACKNOWLEDGEMENT OF
THE DISPARATE TREATMENT AND DISPARATE IMPACT
OF ITS DISCRIMINATORY ENVIRONMENT AND ATTITUDE IN HOUSING CODE ENFORCEMENT
There are numerous examples in which the City of St. Paul has acknowledged or has been put on notice
that its aggressive, stepped-up housing code enforcement with its force ownership change strategy and
eviction strategy had an adverse impact on protected class members and families living in poverty.
In an email from December of 2005, Jane Prince, legislative aide to council member Jay Benanav, sent
an email to a constituent regarding the issue of the City’s code enforcement system unfairly targeting
people of color:
“The issue of how a complaint-based system may unfairly target people of color is a huge one, and I'm
not sure what we do to get at it. A new mayor and Toni's
and Jay's influence in a new administration can sure help” (emphasis added). APP. 7.
In a memorandum written by Mr. Dawkins to his staff in November of 2004, Mr. Dawkins discusses the
impact that the excessive consumption system has on people of color:
“Perhaps a disproportionate number of folks getting EC bills are people of color; but if this is so, then
maybe it's because a disproportionate number of families living in poverty are people of
color” (emphasis added). APP. 8.
On August 11, 2004, housing law attorney Perry DeStefano, on behalf of Southern Minnesota Regional
Legal Services, gave notice to the City about its discriminatory housing code enforcement by sending a
letter to the city council president, Kathy Lantry, and cautioned the city about its discriminatory
environment and attitude in housing code enforcement: “I was concerned that the City was using the
Building Inspection Department to vacate a building of disabling and minority people. Every person in
this building was a person in a protected class. They were either minorities or disabled people. Vacating
the building by using the inspection department in this manner did have a disparate impact…I thought
you should know that as a practicing housing law attorney who knows about discrimination law that
there is exposure to a discrimination claim on this matter due to the way it was handled (emphasis
added). “I would hate to lose the opportunity to collaborate
together on this case as it does appear that we have got the owner's attention and were making great
progress despite the “hide the ballquot; tactics that were being played by the inspector’s office.” APP. 9-11.
In Mr. DeStefano’s deposition, he was questioned about other instances, which Mr. DeStefano
numbered at greater than ten, in which the City displayed its illegal and discriminatory environment
and attitude in housing code enforcement. APP. 12-13.
This evidence of the City’s illegal and discriminatory environment, attitude, custom and practice are key
to the analysis of Plaintiffs’ claims involving discrimination as well as Defendants’ claims of immunity.
THE CITY’S USE OF
HOUSING CODE ENFORCEMENT
TO CIRCUMVENT CIVIL RIGHTS AND
TO ADDRESS BEHAVIOR ISSUES
There are numerous examples in which the City of St. Paul takes action through housing code
enforcement to address behavior issues, effectively circumventing individual’s civil rights. The City has
provided documents stating that the civil laws are preferable because the burden of proof is less. In
addition, the City is very eager to get inside properties to exercise their illegal and discriminatory
housing code custom and practice. Below are two examples.
In a police training bulletin about “How to Work with the Code Enforcement Problem Property Unit,”
co-writers Andy Dawkins and Assistant Police Chief T. Reding discuss “what legal action is possible” and
tell the officers “this is civil law, so we don’t need proof beyond a reasonable doubt.” In the same
bulletin, the co-writers emphasize the importance of “getting inside” the premises in order to further
the City’s discriminatory code enforcement environment because “getting inside” could lead to
“condemnation of the property, eviction of the occupants and boarding-up the property.” ADD. 92-93.
The City produced through discovery a “Code Enforcement Cheat Sheet” with a couple of examples of
ways to circumvent civil rights. First, it encourages Police Officers by telling them that “Civil laws are
being used and the preponderance of evidence is lower for proof.” In addition, it encourages the Police
Officers to permit warrantless administrative searches by code enforcement officers in furtherance of
the City’s force ownership change strategy and eviction strategy: “If officers get inside of a property for
whatever reason and see code violations, please call for an inspector. Sweeps of the exteriors are being
done by code enforcement, but we don't get interior
Freedom-4You: Steinhauser et al v. Magner,CitySt.Paul,MN 05cv-1348 Page 6 of 13
inspections” (emphasis added). APP. 14.
The City also used a very large police officer, Dean Koehnen, to further its discriminatory environment
and attitude in code enforcement. Below are two
In an email dated June 30, 2006, code enforcement employee Jackie Girling complained to Officer Dean
Koehnen about exercising his size and influence to strong arm property owners:
“Dean, please in the future, if you are going out on a property where I have pending orders, I would
appreciate a heads up. There was no need for you to go out there other than (what sounds to me like)
Pam from crime prevention hoping that you could strong-arm these people with your quot;size and
influencequot;(emphasis added). APP. 15.
Police Officer Mark Wiegel, who also worked for the housing code department, sent an email on March
29, 2007, indicating that he would take housing code action on a property because there were not
enough behavior problems for the police to act. The police officer requesting assistance to “sick you and
yours on a property,” stated that “the problem is more about the conduct at the house and the type of
people that visit.” Officer Weigel sent Dean Koehnen to the property to “get an inspection and have an
I need to sick you and yours on a property. 1011 Burn is a single family home/owner occupied by Vickie.
I am not sure of her last name. The address has been a problem for well over a year but we haven't been
able to do much. It is up off of the street and they do not actually drugs from there. The problem is more
about the conduct at the house and the type of people that visit. Vickie is Native American and has had
boyfriends arrested off and on.
I’m forwarding this to Dean to see if we can get an inspection and have an impact (emphasis added).
City council president Kathy Lantry made an email request to Officer Mark Wiegel to take code
enforcement action against a property with behavior issues. When the property didn’t meet the criteria
for an excessive consumption violation, Officer Mark Wiegel again indicated that he would send a
message through housing code enforcement:
I realize that there are too many calls overall to this area but from my jobs perspective I'm stuck. I was
even looking for any that could have fallen into excessive consumption for police but none fit that
criteria either. I think at least somewhat of a message can be sent through making them register and by
code enforcement issuing orders (emphasis added). APP. 17.
As can be seen on the email chain below from August 16, 2004, Officer Wiegel again sent code
enforcement to issue orders on a property, even though it didn’t have any behavior or code issues, and
even though the code enforcement officer questioned the inspection, but simply because it was
requested by council member Dave Thune.
“Can you check 348 W. Winona. No dangerous police issues and no current open code.”
“Sure, but why are we checking it then?”
“It came from a citizen through Thune's office and has some police issues, but not enormous” (emphasis
added). APP. 18.
The misuse of the housing code by the City to address behavior problems lends the housing code to
political pressure and to abuse of the complaint based system and is further evidence of the City’s
“bending the rules of code enforcement to achieve a
particular outcome inconsistent with the code” which creates the City’s discriminatory environment
and attitude in code enforcement.
1:57 PM Coleman Brief 15May09 said...
Even Norm Coleman has the Right to quot;due processquot; Traffic Tickets are minor, ELECTIONS ARE
INTRODUCTION OF THE CITY’S WORKING RELATIONSHIP AND PREFERRENTIAL TREATMENT
OF THE PUBLIC HOUSING AGENCY
The St. Paul Public Housing Agency (PHA) owns and manages 4300 units of public housing in the City.
PHA’s public housing includes high-rise properties, family town home developments, and 450 scattered
site properties, which are single family or duplex properties located throughout the City. Plaintiffs claim
these scattered site properties are similar to their rental properties. According to PHA documents, the
scattered site properties’ tenant base is about 32% African-American and 58% Asian/Pacific Islander.
PHA has been chronically underfunded for almost the entire existence of public housing. PHA admits
that it has to prioritize the repairs - life safety and exterior envelope to keep out the moisture. APP. 19.
Hester testified that every year for PHA staff have to ask how much money they have – have to
prioritized the work – in a general sense there are a lot of needs that are being deferred because of
insufficient funds. APP. 20.
Gutzmann testified that PHA has been in crisis mode due to federal funding cutbacks and PHA had to
sell off on two recent occasions many of its homes, where
on average those homes needed $40,000 in repairs. PHA conducted an internal analysis of the costs
needed for each of almost 20 homes, with the estimates running from a low of $13,000 to a high of
$199,000. Gutzmann said the average costs to repair was $40,000. APP. 21. PHA needed to sell these
properties to get the money out of them and to avoid making expensive repairs. APP. 22.
City TISH evaluators conducted city code review prior to PHA sale of those homes and found that many
of PHA’s homes were in fact not compliant with City Codes. APP 23-105. Further, the City has
acknowledged through a TISH report study conducted in 2005 that “as many as 60% of all properties
sold in the city in 2005 had serious code violations. APP. 107.
The City and PHA admit that at no time has the City designated any PHA home as vacant, required a
“Code Compliance” or condemned any of its homes. Docket, 228, Ex. 304. There has never been a
requirement by the City that PHA homes be substantially renovated. APP. 108.
PHA and the City have long recognized that PHA, while maintaining “high performer” status under
Freedom-4You: Steinhauser et al v. Magner,CitySt.Paul,MN 05cv-1348 Page 7 of 13
HUD regulations, owns and manages significant numbers of “problem properties” due to criminal
behavior of residents, guests and third parties on PHA properties. Docket, 224, Exs. 202, 203. Since
1991, the City and PHA have had a special partnership called “ACOP” whereby a platoon of City police
solely to policing PHA family developments. The City police services under ACOP are above and beyond
the “baseline” police services PHA is provided with like any other resident or business in the City. The
City has received over $8 million from PHA for supplemental police services since 1991. Docket, 224,
Exs. 159, 160, 161. The City and PHA detail the significant criminal activity at PHA properties that
supports their conclusion that PHA owns and manages “problem properties”. Docket, 224, Exs. 155, 156,
157, 158, 162, 163, 193, 199, 201, 202, 203, 204, 205.
In 1994, the City proposed to PHA, its long term partner, that the City’s Property Maintenance Code
(City Code) be substituted for the federally mandated Housing Quality Standards (HQS) applicable to
federally subsidized, Section 8 low income housing in the City. During this process, the City and PHA
discovered that the City’s code was actually “more stringent” 82% of the time when compared to the
federal code. APP. 109-115.
In 1994, PHA informed City leaders that “local HUD staff feared more stringent standards would reduce
the supply of affordable housing for Sec 8 holders.” Docket, 224, Ex. 172.
10thCir Calif 42USs1983 said...
10th Cir Interesting Read
Appeals Court Dismisses Section 1983 Suit against Municipal Officials Alleging Eminent Domain Was
Used in Retaliation
INTRODUCTION OF THE PLAINTIFFS
Plaintiffs Thomas Gallagher and Joseph Collins were born and raised in St. Paul and in 1998 began
providing rental housing in the City of St. Paul. Gallagher and
Collins are co-owners of Dadder’s Properties, LLC. Dadder’s Properties, LLC is the owner of three
subsidiary limited liability companies, Dadder’s Holdings, Dadder’s Enterprises, and Dadder’s Estates,
LLC. Their rental portfolio is diversified among these subsidiary limited liability companies owned by
Dadder’s Properties, LLC. At the height of their business, they owned 44 investment properties, 29 of
which provided single family and duplex residential housing, and 9 multi-unit buildings, which in sum
consisted of approximately 200 residential rental units. Their tenant base had a majority of people of
color and included Section 8 recipients. During the period of approximately 2002 through 2005, about
Eighty percent (80%) of their tenants were African-American and mixed race couples. Approximately 10
of the 29 tenants have or did receive federal rent subsidies under the Section 8 program. In each of their
rental properties that housed Section 8 tenants, they passed the PHA inspection before being approved
for receipt of Section 8 rent subsidies. Approximately 19 of the 29 tenants were members of a protected
class. APP. 117-119.
Plaintiff Troy Allison was born and raised in St. Paul and in February of 2005, started in the business of
providing rental housing in the City of St. Paul. Allison is an independent business owner, having
operated a handyman business and dumpster roll-off business since 2004. Allison was the owner of
seven (7) rental properties within the City of St. Paul. Four (4) of his seven (7) tenants received Section 8
other assistance. Four (4) of his seven (7) tenants were members of a protected class. In each of his
rental properties that housed Section 8 tenants, he passed the PHA inspection before being approved
for receipt of Section 8 rent subsidies. Due to the Defendants’ conduct, he lost each of these properties
to foreclosure in 2006. APP. 292-294.
Jeff and Sara Kubitschek are residents of White Bear Township. The Kubitschek’s started in the
business of providing rental housing in the City of St. Paul in 1999. The Kubitschek’s were owners of
four (4) rental properties within the City of St. Paul. Seven (7) of their eight (8) tenants received Section
8 assistance or other assistance. All eight (8) of their tenants were members of a protected class. In each
of their rental properties that housed Section 8 tenants, they passed the PHA inspection before being
approved for receipt of Section 8 rent subsidies. APP. 343-344.
There maybe copy errors.
Plaintiffs make a claim for disparate treatment under the FHA. Disparate treatment, which occurs when
some people are treated less favorably than others because of their race, color, religion, sex, or national
origin, “is the most easily understood type of discrimination.” Int’l Bhd. of Teamsters v. United States,
431 U.S. 324, 335 n.15 (1977). Proof of discriminatory motive is crucial to a disparate treatment claim.
Id. Plaintiffs may survive summary judgment on their disparate treatment claims by presenting either
“direct evidence” of discrimination or “creating the requisite inference of unlawful discrimination”
under the framework set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802-03 (1973). See
Griffith v. City of Des Moines, 387 F.3d 733, 736 (8th Cir. 2004); East-Miller v. Lake County Highway
Dept., 421 F.3d 558, 563 (7th Cir. 2005) (distinguishing between “direct evidence” and McDonnell
Douglas framework in FHA context).
A plaintiff with direct evidence that illegal discrimination motivated the adverse action does not need
the three-part McDonnell Douglas analysis to survive summary
judgment, even if the strong evidence is circumstantial. See Griffith, 387 F.3d at 736. A plaintiff who
lacks evidence that clearly points to the presence of an illegal motive, however, can only avoid summary
judgment by creating the requisite inference of unlawful discrimination under the McDonnell Douglas
framework. Id. Under the McDonnell Douglas framework, once the plaintiff establishes a prima facie
Freedom-4You: Steinhauser et al v. Magner,CitySt.Paul,MN 05cv-1348 Page 8 of 13
case of discrimination, the burden shifts to the defendant to articulate a legitimate, nondiscriminatory
reason for its actions. See Gilbert v. Des Moines Area Cmty. Coll., 495 F.3d 906, 914 (8th Cir. 2007). If
the defendant offers a legitimate, nondiscriminatory reason, the burden shifts back to the plaintiff to
put forth evidence showing the defendant’s proffered explanation is a pretext for unlawful
Although Plaintiffs did not cite the McDonnell Douglas case until their analysis under their §1981
analysis, Plaintiffs still provided a three-part McDonnell Douglas analysis in their discussion of the Fair
Housing claims: the City operates with a discriminatory environment and attitude in housing code
enforcement, the City claims that the actions are legitimate to achieve their policy objectives, and there
is a reasonable alternative in the PP2000 program to achieve those policy objectives through non-
In the facts section above, a December 19, 2005 email message from Jane
Prince, legislative aide to former council member Jay Benanav, is discussed in which Ms. Prince states:
“the issue of how a complaint based system may unfairly target people of color is a huge one, and I’m
not sure what we do to get at it...they can help us think through the very real possibility that people color
are targeted by the city’s complaint based system.” APP 7. The reason a complaint based system can
possibly target people of color is because the complaint based system is used for reasons other than
housing code enforcement, “to achieve particular outcomes” as stated by Mr. Kessler, such as
addressing behavior issues better suited for Police.
With respect to PHA, “The parties agree that African-Americans make up a disproportionate percentage
of low income tenants in both private and PHA housing.” Order p. 12. From at least 1995, the City and
PHA have known that the City’s more stringent code standards are applied to Section 8 and privately
owned rental properties occupied disproportionately by “protected class” members.
10:44 PM caught_judicial misconduct said...
Plaintiffs make claims under 42 U.S.C. §1983 for alleged violations of their rights under the Fourteenth
Amendment to the United States Constitution. Success on a §1983 claim requires a showing of: “(1) [a]
violation of a constitutional right, (2) committed by a state actor, (3) who acted with the requisite
culpability and causation to violate the constitutional right.” Shrum v. Kluck, 249 F.3d 773, 777 (8th Cir.
Plaintiffs allege violations of their Fourteenth Amendment right to equal protection as a result of the
City’s code enforcement policies. The Equal Protection Clause of the Fourteenth Amendment requires
state actors to treat similarly situated people alike and permits state actors to treat dissimilarly situated
people dissimilarly. Ganley v. Minneapolis Park & Recreation Bd., 491 F.3d 743, 747 (8th Cir. 2007). As a
threshold matter, Plaintiffs must establish that Defendants treated them differently from similarly
situated landlords. Id. In addition to unequal treatment, Plaintiffs must also show intentional or
purposeful discrimination. See Lewis v. Jacks, 486 F.3d 1025, 1028 (8th Cir. 2007).
The facts and evidence submitted in support of discriminatory intent to prove their FHA claims also
supports Plaintiffs §1983 claims. The City’s discriminatory environment and attitude in housing code
enforcement, force ownership change
strategy and eviction strategy were known by the City to eliminate affordable housing and to have a
disproportionate impact on protected class members.
Plaintiffs make a “class of one” equal protection argument based on the City’s preferential treatment of
the St. Paul Public Housing Agency. The purpose of a class-of-one equal protection claim is “to secure
every person within the State’s jurisdiction against intentional and arbitrary discrimination, whether
occasioned by express terms of a statute or by its improper execution through duly constituted agents.”
Vill. of Willowbrook v. Olech, 528 U.S. 562, 564 (2000). Plaintiffs may prevail on their class-of-one
claim by showing they have been “intentionally treated differently from others similarly situated and
that there is no rational basis for the difference in treatment.” Id.; see also Costello v. Mitchell Pub.
School Dist. 79, 266 F.3d 916, 921 (8th Cir. 2001).
The parties agree that African-Americans make up a disproportionate percentage of low income tenants
in both private and PHA housing. ADD. 12. From at least 1995, the City and PHA have known that the
City’s more stringent code standards are applied to privately owned rental properties occupied
disproportionately by “protected class” members. The City’s “minimum housing maintenance code” was
actually “more stringent” 82% of the time when compared to the federal mandated Housing Quality
Standards (HQS) applicable to federally subsidized, Section 8 “low
income” housing in the City. APP 109. The City and PHA privately admitted that HUD would not approve
a City and PHA plan to substitute the City’s higher code for HQS in Section 8 inspections of privately
owned low-income rental housing because HUD, the City and PHA recognized that application of a
higher code standard to City housing stock would adversely affect availability of affordable housing
stock. APP 416.
Substantive Due Process
Plaintiffs contend Defendants’ enforcement of the housing code violated their substantive due process
rights. Plaintiffs must show that a governmental power was exercised arbitrarily and oppressively to
succeed on their substantive due process claims. See Rozman v. City of Columbia Heights, 268 F.3d 588,
591 (8th Cir. 2001). The government action must be arbitrary in the constitutional sense. Id. “[T]he
theory of substantive due process is properly reserved for truly egregious and extraordinary cases.” Id.
Plaintiffs have provided sufficient evidence to withstand summary judgment because the City’s
enforcement of the housing code in a discriminatory environment and manner is truly egregious -
aggressive, force ownership change strategy and eviction strategies - even with a facially neutral
housing code, were not necessary for achieving their policy objectives. In fact, it was documented that
Freedom-4You: Steinhauser et al v. Magner,CitySt.Paul,MN 05cv-1348 Page 9 of 13
program was a great success in achieving their policy objectives.
Further, evidence presented to the Court also demonstrates that the Defendants applied an illegal “code
compliance” requirement in violation of State law and selectively to Plaintiffs and other private owners,
but not to PHA who was similarly situated with problem properties and poor housing stock. The City’s
“Code Compliance Inspection Certification” requirement for older homes to be stripped of their
“grandfathering” protections under the State Building Code and brought to “present code” is a
significant burden to older homes and all other illegal and retaliatory actions are designed to
accomplish that main illegal goal in the City’s discriminatory environment and attitude in housing code
enforcement. Defendants have no discretion to violate State law, and have no legitimate policies,
interests or objectives that justify the deliberate violation of State law by requiring code compliance
certification and stripping grandfathering protections for older homes.
Portions of the City’s own code recognize the “Building Code under which” a building was “originally
constructed”. For example, City’s 2002-03 Minimum Property Maintenance Standards for all Structures
and Premises, Sections 34.09 (2) (a) and (b); and 34.10 (2), (3) (“maintained in accordance with the
Building Code in effect when originally constructed”). Don Hedquist’s supplemental report details the
Defendants’ violations of the State Building Code.
§1981 and §1982
Plaintiffs are required to show discriminatory intent to prevail on their claims under 42 U.S.C. §§ 1981,
1982. Dirden v. Dep’t of Housing and Urban Dev., 86 F.3d 112, 114 (8th Cir. 1996).
The facts and evidence submitted in support of discriminatory intent to prove their FHA claims also
supports Plaintiffs §1981 and §1982 claims. The City’s discriminatory environment and attitude in
housing code enforcement, force ownership change strategy and eviction strategy were known by the
City to eliminate affordable housing and to have a disproportionate impact on protected class members.
Plaintiffs cited and the District Court discussed 2922 Sherman Ave. Tenants’ Ass’n v. District of
Columbia, 444 F.3d 673 (D.C. Cir. 2006), where the District of Columbia’s lack of explanation for how it
narrowed a list of seventy-five properties recommended for closure that were evenly distributed across
the city down to five apartment buildings located in neighborhoods having an average Hispanic
population 4.4 times that of the city as a whole supported an inference of intentional discrimination.
444 F.3d at 684.
The District Court isolated Plaintiffs’ maps and failed to consider the evidence from the FHA analysis -
that the City’s discriminatory environment and attitude in housing code enforcement, force ownership
change strategy and eviction strategy
were known by the City to eliminate affordable housing and to have a disproportionate impact on
protected class members. The discriminatory environment Plaintiffs refer to includes animus toward
rental properties (Andy Dawkins’ own statements), a complaint based code enforcement system that
has a problem with targeting people of color (Jane Prince’s email and Dawkins’ memo) , and getting rid
of the bottom tier of tenants and low income people in the City (Cullen’s and Anderson’s testimony).
To prevail on a §1985 claim, the plaintiffs must show that “(1) the defendants conspired, (2) with the
intent to deprive them, either directly or indirectly, of equal protection of the laws, or equal privileges
and immunities under the laws, (3) an act in furtherance of the conspiracy, and (4) that they or their
property were injured, or they were deprived of exercising any right or privilege of a citizen of the
United States.” Barstad v. Murray County, 420 F.3d 880, 887 (8th Cir. 2005).
Again, the District Court failed to consider the evidence from the FHA analysis - that the City’s
discriminatory environment and attitude in housing code enforcement, force ownership change
strategy and eviction strategy which were known by the City to eliminate affordable housing and to have
a disproportionate impact on protected class members. Plaintiffs alleged with particularity and
specificity the City’s understanding of the impact of their discriminatory environment and attitude in
housing code enforcement, force ownership change strategy and eviction strategy. Further, this
discriminatory environment in housing code enforcement was “agreed to,” or an “understanding was
reached,” when Dawkins had meetings with Chief Judge Mott and City Attorney Cervantes to get “buy
in” to his aggressive, force ownership change and eviction strategies (Dawkins goals for 2004 included
getting “buy-in” from the Police Department, City Attorney, Courts and Neighborhoods). ADD 91.
Void for Vagueness.
Plaintiffs claim that chapters 34, 43, 45 and 51 of the St. Paul Legislative Code (“City Code”) are void for
vagueness because they fail to provide landlords and other property owners with sufficient notice of
their basic obligations under law, thereby placing unwarranted discretion in the hands of those charged
with code enforcement.
The void-for-vagueness doctrine is embodied in the due process clauses of the fifth and fourteenth
amendments. Woodis v. Westark Community Coll., 160 F.3d 435, 438 (8th Cir. 1998). A vague
regulation violates the Constitution because it fails (1) to define the offense with sufficient definiteness
that ordinary people can understand prohibited conduct and (2) to establish standards to permit
enforcement of the law in a non-arbitrary, non-discriminatory manner. Id. “In a facial vagueness
enactment reaching a substantial amount of constitutionally protected conduct may withstand
constitutional scrutiny only if it incorporates a high level of definiteness. An enactment imposing
criminal sanctions or implicating constitutionally protected rights demands more definiteness than one
which regulates the economic behavior of businesses.” Id.
Plaintiffs Gallagher, Collins, Dadder’s and Kubitschek (as well as Steinhauser and Harrilal), had
properties labeled by the city as “problem properties.” Plaintiffs Steinhauser, Meysembourg, Johnson,
Brisson, Allison, and Kubitschek were all subject to “code compliance certifications.”
Plaintiffs have not received adequate notice of proscribed conduct, or in other cases under city code,
required conduct, in maintaining their rental properties. For example, with tenant turnover, Plaintiffs
typically clean the property in order to re-rent the premises. On many occasions, it may take several
weeks to several months to re-let the property, depending on the amount of tenant damage that needs
Freedom-4You: Steinhauser et al v. Magner,CitySt.Paul,MN 05cv-1348 Page 10 of 13
repair and the rental market.
With Plaintiffs Allison and Dadder’s, 15221524 Carroll was designated as vacant just 23 days after sale
of the property. Gallagher provided signed leases and rent deposit slips on appeal of the vacant building
designation, but the appeal was denied. Defendant Senty declared the building vacant by looking
through a second
story window while standing on the ground. Defendant Senty could not define “legally occupied.” APP
Dawkins, an attorney, a 15 year servant in the Minnesota House of Representatives, and as the former 4
year director of the City’s code enforcement division (NHPI), could not describe the three categories of
vacant buildings, could not define code compliance, and did not know if “legally occupancy” was defined
in the Code as the Code states it should (which it does not). When asked about vacant buildings,
Dawkins stated: “It was always confusing to me, and I’m not sure I can get it right even today.” APP 432.
When asked about code compliance, Dawkins stated, “That’s always been confusing to me. The best I
can tell you is that I attempted to learn about it when I heard that it became part of the settlement of the
first Tenant Remedy Action”. Id. In his duties as Director of NHPI, Dawkins never had any discussions
with his inspectors between 2002-2005 as to when a code compliance would be required. Id. When
asked about “legal occupancy” in an email from a resident trying to understand the vacant building
code, and whether the term even appears in the City’s code, Dawkins wrote, “I am not sure it appears
anywhere. I would interpret this to mean not over-occupied and not trespassers.” APP 433.
Code enforcement manager Lippert, former head of the Problem Property 2000 program, could not
define a problem property. When asked about problem properties,
Lippert stated, “I don’t use the term and I don’t have a definition.” APP 434. When asked why he
doesn’t use the term, Lippert states, “That term has been used so often by so many people, it means so
many different things to so many different people that I don’t think it uniformly defines anything. So
there is too much chance of misunderstanding by using the term, so I don’t use it.” Id.
This Court has seen the facts and evidence behind the City’s discriminatory environment and attitude in
housing code enforcement and the force ownership change strategy and eviction strategies. Because
many of the significant terms used in the City’s code are insufficiently defined, because the City code
lends itself to arbitrary enforcement by different application, and because Plaintiffs and others are
forced to guess at the code’s prescriptions, the code should be declared unconstitutionally vague
because the housing code is being abused.
Plaintiffs brought RICO claims against Defendants claiming violations of 18 U.S.C. § 1962(c), (d). A
plaintiff who brings suit under 18 U.S.C. § 1962(c) must prove that the defendant engaged in (1) conduct
(2) of an enterprise (3) through a pattern (4) of racketeering activity. Handeen v. Lemaire, 112 F.3d
1339, 1347 (8th Cir. 1997).
“Racketeering activity” is defined in 18 U.S.C. § 1961(1). That section lists as
predicate acts certain state law crimes, conduct that is “indictable” under various federal provisions,
and numerous other offenses. Handeen, 112 F.3d at 1353. Plaintiffs based their RICO claims in their
Complaint on seven predicate acts: mail fraud, bank fraud, wire fraud, the Hobbs Act, tampering,
bribery, and interstate travel or transportation in aid of racketeering enterprises. In Plaintiffs’ brief,
Plaintiffs added facts obtained through discovery to their RICO claims on alleged false claims of housing
code violations, Defendants’ use of the City’s housing code rather than the HQS, misrepresentations of
code compliance inspections, and extortion.
From the period of 2002 and thereafter, Defendants have, through a joint enterprise, participated in
conduct which qualifies as racketeering activity. Defendant Magner engaged in excessive code
enforcement and targeting properties with the intent of forcing property owners to sell their properties.
In each case, Magner enforced numerous code violations which required thousands of dollars in
rehabilitation work. Prior to completion of the rehabilitation work, Magner approached property
owners Osterman and Lois Jacobs, offering to arrange for each to sell their property to either Magner or
someone of Magner’s choosing. In both cases, Magner presented the property with an offer that was
grossly below market value. APP 435-437 (Osterman), 438-442 (Jayasuriya), 443-456 (Hayes), 457-459
Magner’s conduct is sufficient to meet the “relatedness” requirement because it
exhibits a similar purpose, result, type of victim, and method of commission. Not only did Magner
enforce code violations which required excessive repairs, he attempted to corner each of the above-
mentioned property owners into selling their property at a price below market value. Plaintiffs also
contend that Magner has personally benefited from such behavior by transferring “inside knowledge” to
Wally Nelson who has not only purchased many distressed single family and duplex homes under
Magner’s control, but is also a close friend of Magner’s and has provided construction services to Mr.
Magner’s father at a discounted rate ($10,000.00). Docket, 213, Ex. 33-35; Docket, 210, Ex. 72. Magner’s
clear purpose was to force these property owners to sell their properties and move out.
The City and PHA knew the City’s minimum maintenance code was more strict 82% of the time when
compared to federal HQS and yet fail to disclose this important fact to public or HUD in their
Consolidated Plans – this non-disclosure was a material misrepresentation to the community, to
Plaintiffs and other landlords, and property I owners, as well as to tenants and other occupants, all of
whom HUD considered beneficiaries of the disclosure requirement in the AI process and annual and
five year updates to HUD.
Further, Plaintiffs made similar claims that Defendants falsified claimed code violations in order to
deprive Plaintiffs of monies through excessive consumption fees
(Dawkins’ memo regarding raising “a half million” in re-inspection fees), permit fees, other city fees,
and of Plaintiffs investments. Plaintiff Affidavits, APP 284-287 - code violations for birds nesting, kiddy
Based upon the foregoing facts and conclusions, this Court should find that summary judgment as
pertaining to RICO is not appropriate and Defendants’ motion should therefore be denied
Freedom-4You: Steinhauser et al v. Magner,CitySt.Paul,MN 05cv-1348 Page 11 of 13
State Law Claims.
Plaintiffs make three state law claims: (1) abuse of process, (2) tortious interference with contract, and
(3) tortious interference with Plaintiffs’ business expectancy.
To succeed on an abuse of process claim, Plaintiffs must show that there was an ulterior purpose and
that Defendants used the process to achieve something not within the scope of the proceedings. Kittler
& Hedelson v. Sheehan Props., Inc., 203 N.W.2d 835, 840 (Minn. 1973).
To prevail on a tortious interference with contract claim, Plaintiffs must show (1) the existence of a
contract; (2) Defendants’ knowledge of the contract; (3) Defendants’ intentional procurement of its
breach; (4) without justification; and (5) damages resulting therefrom. See Bouten v. Richard Miller
Homes, Inc., 321 N.W.2d 895, 900 (Minn. 1982).
Success on Plaintiffs’ tortious interference with business expectancy claim requires a showing of (1) the
existence of a reasonable expectation of economic advantage or benefit belonging to Plaintiffs; (2) that
Defendants had knowledge of that expectation of economic advantage; (3) that Defendants wrongfully
and without justification interfered with Plaintiffs’ reasonable expectation of economic advantage or
benefit; (4) that in the absence of the wrongful acts of Defendants, it is reasonably probable that
Plaintiffs would have realized their economic advantage or benefit; and (5) that Plaintiffs sustained
damages as a result of this activity. See Harbor Broad., Inc. v. Boundary Waters Broad., Inc., 636
N.W.2d 560, 569 (Minn. Ct. App. 2001).
The City’s discriminatory environment and attitude in housing code enforcement, force ownership
change strategy and eviction strategy which were known by the City to eliminate affordable housing and
to have a disproportionate impact on protected class members – this is exactly the type of evidence
Plaintiffs rely on in support of their State Law claims. As the District Court did in its Order, Plaintiffs
did not repeat the facts and analysis of the FHA/disparate treatment and impact portion of their brief.
IV. The District Court Erred in Denying Plaintiffs’ Original and Renewed Motions for Sanctions.
Spoliation is the intentional destruction of evidence and when it is established,
the fact finder may draw inference that the evidence destroyed was unfavorable to the party responsible
for its spoliation. See E*Trade Sec. LLC v. Deutsche Bank AG, 230 F.R.D. 582, 587 (D.Minn 2005) (citing
Black's Law Dictionary 1401 (6th ed.1990); see also Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 216
(S.D.N.Y.2003)(spoliation of evidence is the destruction or significant alteration of evidence, or the
failure to preserve property for another's use as evidence in pending or reasonable foreseeable
litigation); see also West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir.1999)).
Defendants had a duty at the commencement of the Steinhauser lawsuit in May 2004, to place a
litigation hold on all relevant evidence that might be useful to Plaintiffs. Defendants failed to do so then
or thereafter when they were sued in Harrilal and Gallagher in 2005. Discovery requests in Steinhauser
were served on Defendants in November of 2004 requesting all inspection reports, records and
“emails” of all officials and City agencies. Defendants continued to destroy e-data/e-mails and TISH
reports thereafter. Defendants failed to place a “litigation hold” on potentially relevant documents.
At the April 14, 2008, hearing on Plaintiffs renewed motion for sanctions the Court acknowledged that
no showing of “bad faith” was required because the subject documents had been destroyed by
Defendants after litigation was commenced.
Nevertheless, the Court applied the “bad faith” standard in its Order. Order at 7-10, 13, 14.
Plaintiffs never limited their document request to email communications from December of 2005
forward, or at any other time waived their right to email communications for the relevant periods prior
to December 2005. Plaintiffs agreed to limit the number of individuals from whom which they sought
emails, not limit the emails that were produced during litigation. Ms. Seeba’s claim that Plaintiffs had
limited their request for emails for December of 2005 forward is a deliberately false assertion of the
record. Ms. Seeba’s comments at the August 2007 hearing clearly show that she was requesting a
limitation individuals, not a limitation of the time period for emails. Plaintiffs would not waive their
right to emails written during the course of litigation.
Defendants’ failure to place any litigation hold on e-mails/e-data after the commencement of litigation
in May of 2004 and failure to preserve back-up tapes prior to December of 2005 allowed Defendants to
destroy relevant evidence for the key time periods prior to December 2005, which created an absence of
communications between and among Defendants and other city officials and employees and third
parties from 1999 through 2005, concerning Plaintiffs claims and regarding Defendants’ claims of
immunity. Given the sampling of emails provided in
this brief by Plaintiffs’ counsel, it is reasonable to conclude that e-data/e-mails prior to December 2005
would have produced evidence supportive of Plaintiffs’ claims of intentional discrimination and
relevant to Defendants’ claimed immunity.
V. The District Court Erred in Denying Plaintiffs’ Motion to Compel.
Magistrate Nelson denied Plaintiffs’ joint motion to compel the production of the tax records, banking
records and cell phone records of Defendant Steve Magner, a supervisor of vacant buildings for the
Neighborhood Housing and Property Improvement office (NHPI) of St. Paul and a member of the
Problem Property Unit of NHPI.
Plaintiffs sought these personal records to support claims that Defendant Magner had committed the
predicate acts of “attempted extortion” and “extortion” under the federal Racketeering Act, 18 U.S.C.
Section 1961, et seq. (hereinafter referred to as “RICO Act”).
Attempted extortion is an illegal predicate act under the RICO Act. 18 U.S.C. § 1961. Under the RICO Act,
“Racketeering activity” is defined as, “(A) any act or threat involving…extortion, or (B) any act which is
indictable under any of the following provisions of title 18, United States Code §1951 (relating to
interference with commerce, robbery, or extortion). 18 U.S.C. §1961 (emphasis added).
During the period of 2002 and thereafter, Mr. Magner was the head inspector in
charge of all vacant buildings for the City. Gallagher, Collins, the Dadder’s entities, Allison and Jeff and
Sara Kubitschek were subject to the “vacant building” supervision of Mr. Magner during this period.
Mr. Magner testified that as a vacant building supervisor he was privy to a great deal of personal and
financial information of owners of single family and duplex property owners required at his direction to
Freedom-4You: Steinhauser et al v. Magner,CitySt.Paul,MN 05cv-1348 Page 12 of 13
undergo expensive certification of Code Compliances. Docket, 213, Ex. 33-35.
Plaintiffs claim that Mr. Magner has personally benefited from his transfer of “inside” knowledge to
Wally Nelson who has purchased a great deal of distressed single family and duplex homes under
Magner’s control. In fact, Mr. Magner has admitted that Mr. Nelson has purchased a great number of
properties that are subject to Mr. Magner’s control and supervision. Docket, 213, Ex. 33-35. Mr. Magner
admitted that he has known Wally Nelson for many years, that he and Mr. Nelson have a long standing
practice of frequent social contacts, and that Mr. Nelson has provided construction services to Mr.
Magner’s father on his homestead located in Stillwater, across the road from Steve Magner‘s
homestead. Docket, 213, Ex. 33-35. Mr. Nelson admitted that his business partner had performed new
construction services for Mr. Magner’s father’s new home in Stillwater for $10,000.00. Mr. Nelson also
admitted to having assisted Mr. Magner’s father lay sod at his new house. Docket, 210, Ex. 72.
Affidavits and sworn statement from four individuals that were presented to the Magistrate on
Plaintiffs’ Joint Motion to Compel constituted direct evidence of “attempted extortion” by Defendant
Magner in his official position as a supervisor of code enforcement for Defendant City.
Plaintiffs were seeking Magner’s personal records as further evidence that Magner had committed the
RICO predicate act of “attempted extortion” and for evidence that he had committed “extortion” under
the RICO Act. Magistrate Nelson’s determination that “Plaintiffs have produced absolutely no evidence
that he has derived any income from the alleged pattern of racketeering” was clearly erroneous and
contrary to law. Plaintiffs are seeking to show evidence Magner “derived income” from the alleged
pattern of racketeering through his bank records and tax returns. Plaintiffs have already presented
evidence of the predicate act of “attempted extortion.” Because “attempted extortion” is a RICO
predicate act, Plaintiffs should be allowed to examine Magner’s bank records and tax returns to
determine if in fact he has derived any income that would constitute the additional predicate act of
The fact the Magner was unsuccessful in his attempted extortion, or that he did not derive income from
those individuals, does not mean that an illegal predicate act was not committed or that discovery of his
bank records and tax returns should not be
allowed. As the Court held in MacLaughlin, “that the extortion effort ultimately failed can not exonerate
Anderson, since Macgall alleged, and the Hobbs Act forbids, attempted extortion.” See McLaughlin at
194 (citing 18 U.S.C. § 1951(a)).
In sum, given the nature of the claims against Magner, his tax, banking and personal cell phone records
fall within the proper scope of permissible discovery under the Federal Rules of Civil Procedure and the
Court should allow such discovery. Plaintiffs are agreeable to subjecting Magner’s cell phone records
and financial documents to provisions of a protective order to protect his privacy and financial security
interests. Plaintiffs’ request for such documents is within the scope of discovery, is relevant, material
and likely to lead to the discovery of admissible evidence under Rule 26 of the Federal Rules of Civil
The Order of the District Court is replete with examples of the Court ignoring the standard for summary
judgment motions. Repeatedly, the District Court weighed evidence, stating that the Court was “not
persuaded” or that the evidence did not “show” discrimination, that there was no evidence, or the Court
“concluded” that the evidence was insufficient. This disregard for the summary judgment standard has
become the norm, and this kind of “trial on the paper” violates plaintiffs’ Constitutional right to trial by
jury. The facts, when all inferences are drawn in favor
of Plaintiffs, clearly present evidence from which a reasonable fact finder could conclude that the City’s
custom, policy and practice was a discriminatory environment and attitude in housing code
enforcement, that the force ownership change strategy and eviction strategy were known by the City to
eliminate affordable housing and to have a disproportionate impact on protected class members. For
these reasons, Plaintiffs ask this Court to reverse the District Court’s grant of summary judgment and
remand the case for trial.
AASE, ENGEL & KIRSCHER, PLLC
Dated: May 5, 2009 By: s/ Matthew A. Engel
Matthew A. Engel (Attorney Lic. #315400)
180 East 5th Street, Suite 255
Saint Paul, Minnesota 55101
T: (651) 209-6884
Attorney for Plaintiffs-Appellants Gallagher, et.al.
Posted by Sharon 4Anderson at 9:34 AM
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