IN THE UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
Appeal No. 09-1209
THOMAS J. GALLAGHER, ET AL.,
Plaintiffs-Appellants,
v.
STEVE MAGNER, ET AL.,
Defendants-Appellees,
Appeal From United States District Court
For the District of Minnesota
Civil No. 05-CV-1348 (JNE/SRN)
PLAINTIFFS-APPELLANTS
BRIEF WITH ADDENDUM
Matthew A. Engel, Esq.
AASE, ENGEL & KIRSCHER, PLLC
180 East 5th Street, Suite 255
St. Paul, MN 55101
(651) 209-6884
ATTORNEYS FOR PLAINTIFFS-APPELLANTS

CORPORATE DISCLOSURE STATEMENTS
Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure and Rule
26.1A of the Local Rules for the Eighth Circuit Court of Appeals, Appellant Dadder’s
Properties, LLC states that it has no parent corporation and no publicly held
corporation owns at least 10% of its stock.
Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure and Rule
26.1A of the Local Rules for the Eighth Circuit Court of Appeals, Appellant Dadder’s
Holdings, LLC states that its parent company is Dadder’s Properties, LLC and no
publicly held corporation owns at least 10% of its stock.
Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure and Rule
26.1A of the Local Rules for the Eighth Circuit Court of Appeals, Appellant Dadder’s
Enterprises, LLC states that its parent company is Dadder’s Properties, LLC and
no publicly held corporation owns at least 10% of its stock.
Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure and Rule
26.1A of the Local Rules for the Eighth Circuit Court of Appeals, Appellant Dadder’s
Estates, LLC states that its parent company is Dadder’s Properties, LLC and no
publicly held corporation owns at least 10% of its stock.
i

TABLE OF CONTENTS
CORPORATE DISCLOSURE STATEMENTS…………………………………...i
TABLE OF CONTENTS....................................................................................ii
TABLE OF AUTHORITIES...............................................................................iv
JURISDICTIONAL STATEMENT.....................................................................1
STATEMENT OF ISSUES PRESENTED FOR APPEAL ...................................2
MOST APPOSITE CASES……………...............................................................3
REQUEST FOR ORAL ARGUMENT.................................................................3
STATEMENT OF THE CASE ...........................................................................3
FACTS BEFORE THE DISTRICT COURT.........................................................6
INTRODUCTION OF THE DISCRIMINATORY ENVIRONMENT
AND ATTITUDE OF ST. PAUL HOUSING CODE ENFORCEMENT…..6
CODE INSPECTOR REACTION TO THE CITY’S DISCRIMINATORY
ENVIRONMENT AND ATTITUDE IN HOUSING CODE
ENFORCEMENT………………………………………………………….12
THE CITY’S ACKNOWLEDGEMENT OF THE DISPARATE
TREATMENT AND DISPARATE IMPACT OF ITS DISCRIMINATORY
ENVIRONMENT AND ATTITUDE IN HOUSING CODE
ENFORCEMENT………………………………………………….………15
THE CITY’S USE OF HOUSING CODE ENFORCEMENT TO
CIRCUMVENT CIVIL RIGHTS AND TO ADDRESS BEHAVIOR
ISSUES………………………………………………………………….…17
ii

INTRODUCTION OF THE CITY’S WORKING RELATIONSHIP
AND PREFERRENTIAL TREATMENT OF THE PUBLIC HOUSING
AGENCY…………………………………………………………………...2
1
INTRODUCTION OF THE PLAINTIFFS………………………………...22
SUMMARY OF THE ARGUMENT ................................................................26
ARGUMENT....................................................................................................27
I. Summary Judgment Is Reviewed De Novo................................................27
II. “Reasonable Minds” Standard...................................................................27
III. District Court Erred In Dismissing Plaintiffs’ Claims.................................28
a. Fair Housing Act / Disparate Treatment / Disparate Impact………...28
b. Constitutional Rights / Equal Protection / Substantive Due Process..44
c. Void for Vagueness…………………………………………………..50
d. RICO………………………………………………………………….53
e. State Law Claims…………………………………………………..…56
IV. District Court erred in denying Plaintiffs’ original
and renewed motions for sanctions………………………………………….57
V. District Court erred in denying Plaintiffs’ motion to compel………………60
CONCLUSION..................................................................................................63
CERTIFICATION OF COMPLAINCE WITH FRAP AND
CERTIFICATION OF WORD PROCESSING PROGRAM ................................65
iii

TABLE OF AUTHORITIES
CASES
2922 Sherman Ave. Tenants’ Ass’n v. District of Columbia,
444 F.3d 673 (D.C. Cir. 2006) 49
Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) 27, 28
Barker v. Ceridian Corp., 122 F.3d 628 (8th Cir. 1997) 27
Barstad v. Murray County, 420 F.3d 880, 887 (8th Cir. 2005) 50
Bassett v. City of Minneapolis, 211 F.3d 1097 (8th Cir. 2000) 26
Bouten v. Richard Miller Homes, Inc., 321 N.W.2d 895 (Minn. 1982) 58
Celotex Corp. v. Catrett, 477 U.S. 317 (1986) 27, 28
Costello v. Mitchell Pub. School Dist. 79, 266 F.3d 916 (8th Cir. 2001) 46
Darst-Webbe Tenant Ass’n Bd. v. St. Louis Hous. Auth.,
417 F.3d 898 (8th Cir. 2005) 28
Dirden v. Dep’t of Housing and Urban Dev., 86 F.3d 112 (8th Cir. 1996) 49
E*Trade Sec. LLC v. Deutsche Bank AG, 230 F.R.D. 58 (D.Minn 2005) 59
East-Miller v. Lake County Highway Dept., 421 F.3d 558 (7th Cir. 2005) 39
Ganley v. Minneapolis Park & Recreation Bd., 491 F.3d 743 (8th Cir. 2007) 45
Gilbert v. Des Moines Area Cmty. Coll., 495 F.3d 906 (8th Cir. 2007) 40
Griffith v. City of Des Moines, 387 F.3d 733 (8th Cir. 2004) 39, 40
iv

Handeen v. Lemaire, 112 F.3d 1339 (8th Cir. 1997) 54, 55
Harbor Broad., Inc. v. Boundary Waters Broad., Inc.,
636 N.W.2d 560 (Minn. Ct. App. 2001) 58
Int’l Bhd. of Teamsters v. United States, 431 U.S. 324 (1977) 39
Kittler & Hedelson v. Sheehan Props., Inc.,
203 N.W.2d 835, 840 (Minn. 1973) 57
Lewis v. Jacks, 486 F.3d 1025 (8th Cir. 2007) 45
McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973) 39, 40, 43
Peterson v. Scott County, 406 F.3d 515 (8th Cir. 2005) 26
Reinhart v. Lincoln County, 482 F.3d 1225 (10th Cir. 2007) 30, 31
Rozman v. City of Columbia Heights, 268 F.3d 588 (8th Cir. 2001) 47
Shaver v. Indep. Stave Co., 350 F.3d 716 (8th Cir. 2003) 27
Shrum v. Kluck, 249 F.3d 773 (8th Cir. 2001) 45
United States v. Diefold, Inc., 369 U.S. 654 (1962) 27
Vill. of Willowbrook v. Olech, 528 U.S. 562 (2000) 46
West v. Goodyear Tire & Rubber Co., 167 F.3d 776 (2d Cir.1999) 59
Woodis v. Westark Community Coll., 160 F.3d 435 (8th Cir. 1998) 51
Zubulake v. UBS Warburg LLC, 220 F.R.D. 212 (S.D.N.Y.2003) 59
Statutes
v

18 U.S.C. Section 1961, et seq. 1, 55, 61, 62
18 U.S.C. Section 1962 5, 54
18 U.S.C. Section 1964 (c), 4 1
28 U.S.C. Sections 1331 1
28 U.S.C. Sections 1337 1
28 U.S.C. Sections 1343 1
28 U.S.C. Sections 1367 1
42 U.S.C. Section 1981, 1, 5, 40, 49
42 U.S.C. Section 1982 1, 5, 49, 58
42 U.S.C. Section 1983 1, 5, 45
42 U.S.C. Section 1985 1, 5, 50
42 U.S.C. Sections 3601, et seq 1, 4, 5
42 U.S.C. Section 3604(a)-(b) 28
42 U.S.C. Section 3613 1
Rules
Fed. R. App. P. 3 1
Fed. R. App. P. 4(a)(1)(A) 2
vi

JURISDICTIONAL STATEMENT
The District Court had original jurisdiction over Appellants’ claims under:
1. Title IX of the Organized Crime Control Act of 1970, as amended, 18 U.S.C.
Sections 1961, et seq.;
2. Title VIII, the Fair Housing Act of 1968 and the Fair Housing Amendments Act
of 1988, 42 U.S.C. Sections 3601, et seq.;
3. 42 U.S.C. Sections 1981, 1982 and 1985; and
4. 42 U.S.C. Section 1983, for violation of the Fourteenth Amendment to the
Constitution of the United States.
The jurisdiction of this Court is authorized by 18 U.S.C. Section 1964 (c), 42
U.S.C. Section 3613, and 28 U.S.C. Sections 1331, 1337 and 1343. The District
Court had supplemental jurisdiction over the state claims herein pursuant to 28 U.S.C.
Section 1367, as Plaintiffs alleged state claims arising from a common nucleus of
operative facts with Plaintiffs' federal claims. Plaintiffs sought injunctive relief
against Defendants as authorized by 42 U.S.C. Section 3613 and/or 18 U.S.C. 1961, et
seq., and/or 42 U.S.C. Section 1982.
This Court has jurisdiction over Appellants’ appeal as a matter of right, under
Fed. R. App. P. 3. The lower court granted summary judgment in an order dated
December 18, 2008 and entered final judgment on December 19, 2008. Appellants
1

filed their Notice of Appeal from the final judgment in the District Court and
servedthe Notice of Appeal on Respondents on January 16, 2009. This appeal is
timely under Fed. R. App. P. 4(a)(1)(A).
This appeal is from a final Judgment of the Court.
STATEMENT OF ISSUES PRESENTED FOR APPEAL
1. Did the District Court err in granting summary judgment to Defendants in
light of evidence creating genuine issues of material fact for trial?
a. Fair Housing Act / Disparate Treatment / Disparate Impact
b. Constitutional Rights Claims / Equal Protection / Substantive Due
Process
c. Void for Vagueness
d. RICO
e. State Law Claims
2. Did the District Court err in denying Plaintiffs’ original and renewed
motions for sanctions?
3. Did the District Court err in denying Plaintiffs’ motion to compel?
2

MOST APPOSITE CASES
1. Darst-Webbe Tenant Ass’n Bd. v. St. Louis Hous. Auth., 417 F.3d 898, 902
(8th Cir. 2005);
2. See Griffith v. City of Des Moines, 387 F.3d 733, 736 (8th Cir. 2004);
3. 2922 Sherman Ave. Tenants’ Ass’n v. District of Columbia, 444 F.3d 673
(D.C. Cir. 2006);
4. 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 assistance,
3

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.
4

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 business expectancy.
The City brought a motion for summary judgment, and the District Court
granted the City’s motion.
5

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
6

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 directorship?
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
added).
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
7

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.
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 added).
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 (emphasis added).
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
8

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.
9

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 added).
Q: He asked that question of the group?
A: Yes.
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
added).
Q: Gentrification?
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 (emphasis added).
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
10

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 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?
A: 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.
11

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, \"Goal: for [force] sale to responsible owner.\" 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 \"Outcomes\"
in a horizontal square there?
A.: Yep.
12

Q: Again, it says \"If correct physical problems (or force sales).\"
A: Uh-huh.
Q: Same question again, had you ever heard anyone discuss that in the
department?
A: Never.
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 added).
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?
A: Yes.
APP. 3, p. 112, lines 6-12.
Q: Did Mr. Dawkins tell you to write up the property?
A: Correct.
Q: To write it up -- did he use the terms \"code to the max\"?
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?
13

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?
A: Yes.
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?
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?
A: No.
Q; So you said, \"the highlight of my career,\" 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 (emphasis added).
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
14

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
15

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
16

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 ball\" 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.
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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
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
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examples.
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 \"size and
influence\"(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
impact:”
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). APP. 16.
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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
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particular outcome inconsistent with the code” which creates the City’s discriminatory
environment and attitude in code enforcement.
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. ADD. 5-6.
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
21

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 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 are devoted
22

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.
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
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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 assistance or
24

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.
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SUMMARY OF THE ARGUMENT
The District Court’s Order granting summary judgment to the City on
Appellants’ claims of fair housing, civil rights, racketeering, void for vagueness, and
state law claims blatantly disregards the standard on summary judgment and this
court’s frequent admonition that summary judgment should seldom be granted in
discrimination cases. See Peterson v. Scott County, 406 F.3d 515, 520 (8th Cir. 2005);
Bassett v. City of Minneapolis, 211 F.3d 1097 (8th Cir. 2000).
Throughout, the District Court’s Order openly weighs evidence, declaring there
was no evidence supporting Appellants’ claims when there was supporting evidence,
or that the Court was not persuaded by that evidence or drew conclusions favoring the
City. The granting of summary judgment in the District of Minnesota has become so
routine as to deny individuals their 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 created a discriminatory environment and attitude in housing code
enforcement. This environment, along with the City’s force ownership change
strategy and eviction strategy, which were known by the City to eliminate affordable
housing, have a disproportionate impact on protected class members and give rise to
claims under fair housing, civil rights, void for vagueness, RICO and state law claims.
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ARGUMENT
I. Summary Judgment Is Reviewed De Novo.
This Court reviews a district court’s summary judgment order de novo. See,
Shaver v. Indep. Stave Co., 350 F.3d 716 (8th Cir. 2003).
II. “Reasonable Minds” Standard.
A Court may not grant summary judgment to a defendant unless there is no
genuine issue of material fact in dispute and the defendant is entitled to judgment as a
matter of law. See, Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also,
Barker v. Ceridian Corp., 122 F.3d 628, 632 (8th Cir. 1997). The issue of material fact
required to proceed to trial is not required to be resolved conclusively in favor of the
non-moving party; rather, all that is required is that sufficient evidence supporting the
claimed factual dispute be shown to require a jury to resolve the parties’ differing
versions of the truth. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49
(1986).
The United States Supreme Court has many times reiterated that a trial court
may not weigh the evidence and determine the truth of the matter on a motion for
summary judgment; its sole function is to determine whether disputed fact issues exist.
See Anderson, 477 U.S. at 2510-11; United States v. Diefold, Inc., 369 U.S. 654
(1962). In order to grant summary judgment, a court must find a “complete failure of
27

proof concerning an essential element of the non-moving party’s case.” Celotex, 477
U.S. at 323. Summary judgment may not be granted if “reasonable minds could differ
as to the import of the evidence.” Anderson, 477 U.S. at 250-251.
III. The District Court Erred in Dismissing Plaintiffs’ Claims.
a. Fair Housing Act.
Section 3604 of the Fair Housing Act (FHA) makes it unlawful to refuse to sell
or rent to any person or discriminate in the terms, conditions, or privileges of sale or
rental of a building on the basis of race, color, religion, sex, familial status, or national
origin. 42 U.S.C. §3604(a)-(b). The FHA also makes it “unlawful to coerce,
intimidate, threaten, or interfere with any person in the exercise or enjoyment of, or on
account of his having exercised or enjoyed, or on account of his having aided or
encouraged any other person in the exercise or enjoyment of, any right granted or
protected by” section 3604. Id. §3617.
Disparate Impact
To succeed on their disparate impact claim, Plaintiffs must show that a facially
neutral policy results in, or can be predicted to result in, a disparate impact on
protected classes compared to a relevant population. See Darst-Webbe Tenant Ass’n
Bd. v. St. Louis Hous. Auth., 417 F.3d 898, 902 (8th Cir. 2005). If Plaintiffs make that
showing, Defendants must demonstrate that the objected-to policy has a “manifest
28

relationship” to legitimate, nondiscriminatory policy objectives and “is justifiable on
the ground it is necessary to” the attainment of those objectives. Id. If Defendants
make that showing, the burden shifts back to Plaintiffs to show that a viable
alternative means is available to achieve the legitimate policy objectives without
discriminatory effects. Id. at 902-03.
The City’s discriminatory environment and attitude in code enforcement and
targeting non-PHA low income housing with excessive and illegal code enforcement
results in less choice in housing for the protected-class individuals seeking affordable
housing because it drives private landlords who have affordable rental options out of
the rental market, creates displacement of “protected class” members like Plaintiffs’
tenants, and raises the operating costs for the landlords who do not or cannot get out
of the business.
Plaintiffs as a group had or have a higher percentage of people of color and
disabled “protected class” in their properties. Plaintiffs were targeted – PHA was not.
Plaintiffs have scattered site properties with over two times the number of African-
Americans occupying their privately owned units than African-Americans occupying
the PHA scattered site homes.
The City forcibly requires only the private market to bear the excessive costs of
“code compliance inspections and certifications” with corresponding removal of State
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Building Code grandfathering protections, application of “current codes,” and
resulting increase in costs to the private owners – removing those properties from the
rental market for months in the short term during the “code compliance,” and forcing
many owners into financial crisis, with abandonment, foreclosure, and reduction in
low-income housing stock available for the 10,000 families waiting for housing.
The District Court cites Reinhart v. Lincoln County, 482 F.3d 1225, 1230 (10th
Cir. 2007), as the basis for its analysis: “It is not enough for the [plaintiffs] to show
that (1) a regulation would increase housing costs and (2) members of a protected
group tend to be less wealthy than others. It is essential to be able to compare who
could afford the housing before the new regulations with who could afford it
afterwards.” ADD. 12.
Plaintiffs disagree with the Reinhart holding and the District Court’s conclusion
that Plaintiffs’ argument is insufficient to withstand summary judgment. Plaintiffs
have shown that the City’s housing code is the facially neutral policy, but it is the
discriminatory environment and attitude in the enforcement of its housing code that
results in a disparate impact on protected classes by the elimination of affordable
housing.
An analysis of the difference in rents under an HQS inspection standard of
federally funded Section 8 properties and the application of the City’s housing code to
30

private landlords would be nearly impossible. There are far too many variables in the
assessment of rents for publicly owned rental properties subject to HQS and privately
owned rental properties subject to the city housing code. First, Section 8 determines
the amount of rent available for their program. Second, real estate by its nature is
unique, so the assignment of a rent number to a group of properties subject to the city
housing code would be unrealistic. Third, the variables included in determining rent
in the private market include location, square footage, neighborhood, community, lot
size, and market conditions. These factors would make it nearly impossible to
conduct a Reinhart analysis of what rents are under the City’s housing code vs. what
rents would be under the HQS. Further, how could Plaintiffs provide this evidence
when Plaintiffs never operated a program that was subject to HQS? In addition, the
comparisons wouldn’t be valid because HQS runs on subsidies, deferred maintenance,
and other help from the City such as Police services.
It would be reasonable for a fact finder to determine that a larger financial
burden would be placed on a property owner or occupant with an 82% more stringent
housing code. Further, and more specifically, the Plaintiffs’ affidavits in opposition to
summary judgment describe in detail the additional financial burden suffered due to
the City’s discriminatory environment and attitude in housing code enforcement.
Saint Paul has acknowledged that “Fair housing laws provide protection from
31

discrimination in housing for certain groups, generally referred to as “protected
classes” and “[t]hese groups have been included in fair housing laws because
individuals have been identified over time as having difficulties in obtaining housing
due to their status as a member of one of these groups.” Docket, 224, Ex. 267.
In April 2003, the City confirmed that, “the lack of affordable housing
opportunities remains a major issue facing many Saint Paul lower income households
[at or below 30% of the AMI], who are also protected class members.” “[T]he lack of
affordable housing realistically limits housing choice for many protected class
members.” “27.6% of Saint Paul’s lower income residents cannot find adequate
affordable housing in the City of Saint Paul.” Docket, 222, Ex. 86.
In a 1995 PHA email from Al Hester to Jon Gutzmann, prior to the completion
of the City’s study comparing the city code to HQS which determined that the city
code was 82% more stringent than HQS, the impact of a more stringent code on
affordable housing was discussed: “I repeated that local HUD staff feared more
stringent standards would reduce the supply of affordable housing for Sec 8 holders.
APP. 116.
The following are examples of the statistical evidence provided to the District
Court used by Plaintiffs in their analysis of the impact of the City’s discriminatory
environment and attitude in housing code enforcement on affordable housing:
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The City has long acknowledged that “people of color” and other “protected
class” persons have a disproportionate need for affordable housing in the City. In
June 2005, the City reported to HUD that 37,000 households had unmet housing
needs. Docket, 224, Ex.268.
The City’s Housing Action Plan 2002 stated “affordability of housing in St.
Paul continues to be a critical issue” and “the need and demand for housing that is
affordable to lower income households(…below 30% of AMI) is severe.” The City’s
Task Force noted “there are not adequate resources currently targeted to address this
situation.” The Task Force was concerned that City data showed over five years a
total of 649 units have been demolished, of which 123 units (the PED/HRA projects)
triggered the local policy. Docket, 222, Ex.103.
In 2005, PHA reported to the City (for inclusion in City’s Consolidated Plan
2005) that 6,219 people were on PHA’s waiting lists with a 2-4 year wait; a
disproportionate number of minority residents were on PHA’ lists – 61 percent were
African-Americans; 2,747 Section 8 applicants, and the list was closed. Docket, 224,
Ex.268.
PHA scattered sites home occupancy revealed: Asians at 60.6%; African-
Americans 28.7%; Whites 9.7%. By December 2005, PHA’s waiting list showed
African-Americans at 57%, Whites at 25% and Asians at 16%, with occupancy at
33

PHA overall at African Americans 34.6%, Whites 38.4% and Asians at 13.3%.
Docket, 224, Exs. 181, 182.
HUD’s 2000 Census “CHAS” data for St. Paul showed that among renters in
the City, 37.1 % of White renters had housing problems (cost burdens of greater than
30% of income and/or overcrowding or without complete kitchen or plumbing
facilities) while 53.9% of Blacks had such problems, and Hispanics had 57.5% Black
family households had 59.3% and Hispanics families had 64.9%. Docket, 224, Ex.
262.
The District court criticizes Plaintiffs contention that the City’s affordable
housing shortage supports a conclusion of disparate impact because Jon Gutzmann,
Executive Director of PHA, did not identify the housing code as a contributor, rather a
lack in federal funding. First, the reason that the housing code was not a contributor to
PHA’s affordable housing shortage is because the City does not apply their housing
code equally to PHA and PHA has never been subject to the City’s discriminatory
environment and attitude in housing code enforcement, force ownership change
strategy, eviction strategy, a vacant building registration, condemnation, or code
compliance certification. Second, Gutsmann’s identification of insufficient federal
funding as contributing to the affordable housing shortage is analogous to the
insufficient resources available to Plaintiffs to comply with the City’s illegal and
34

discriminatory environment and attitude in housing code enforcement, force
ownership change strategy, eviction strategy, vacant building registration,
condemnation, or code compliance certification. Plaintiffs’ argument regarding the
relationship between the lack of affordable housing and Fair Housing Act violations is
sufficient to withstand summary judgment.
The District Court also criticized Plaintiffs’ putting forth a Vacant Buildings
report prepared by the City as evidence of disparate impact, in which the number of
vacant homes in the City increased from 367 in 2003 to 1466 in 2007, and which
reported that “foreclosed properties are or were disproportionately renter-occupied.
Plaintiffs’ argument stands that the City’s discriminatory environment and attitude in
housing code enforcement, force ownership change strategy, eviction strategy, vacant
building registration, condemnation, or code compliance certification were all
significant factors in the increase in vacant buildings. Further, housing code expert
Don Hedquist’s opinions at summary judgment were unopposed and he opined, based
on the evidence and his vast experience, that the code compliance requirement had
contributed to the large number of vacant buildings.
The District Court’s attempt to weigh this evidence and draw conclusions
misses two significant factors related to the City’s Vacant Buildings report. First, the
items that contributed to the increase in vacant buildings cited by the court, such as
35

equity stripping, predatory lending, unforeseen life events, etc., can reasonably be
attributed to the other percentage of foreclosed properties that were not the
“disproportionate number of the foreclosures that were renter-occupied.” Second, it is
reasonable to assume that the City’s own report will not identify its own housing code
or its discriminatory environment and attitude in enforcing its housing code as a cause
of increased vacancies or foreclosures.
Plaintiffs spent most of their memorandum of law in opposition to summary
judgment providing evidence to the District Court that enforcement of the housing
code was done in an illegal and discriminatory environment and that the aggressive,
force ownership change strategy and eviction strategies employed by the City were
not necessary for achieving their policy objectives. Plaintiffs also provided evidence
of viable alternatives, both employed within the city, to achieve their objectives. In
addition to the less stringent HQS standard applied to PHA properties, Plaintiffs also
discussed the Problem Property 2000 (PP2000) program.
Plaintiffs have always asserted PP2000 as a viable alternative. Plaintiffs
presented evidence showing PP2000 was successful in addressing the interests of the
City, code enforcement officials and inspectors, tenants, landlords and neighbors, and
reduced complaints, improved the housing stock and thereby drastically reduced
condemnations and the adverse impact of displacement that the later heavy
36

enforcement policy predictably created. Once again, the District Court fails to
recognize that the enforcement of the housing code was done in a discriminatory
environment and manner and that the aggressive, force ownership change strategy and
eviction strategies employed by the City, even with a facially neutral housing code,
were not necessary for achieving their policy objectives. In fact, it was documented
that their PP2000 program was a great success in achieving their policy objectives,
while reducing the “displacement” of protected class tenants.
In fact, the City Council in January 2001, had found the “Problem Properties
2000” “program” so successful that “There are also other problem properties that
should be included and the program could be expanded to include those.” APP. 417-
421.
Jeff Hawkins, a member of the PP2000 inspector group, stated, “the idea with
PP2000 is that you communicate with the landlords and see what problems they were
having so that you could formulate a better plan for compliance instead of just
constant punishment for it. [W]e wanted to work towards compliance and towards
everybody having a good working relationship instead of the constant enforcement,
enforcement, enforcement. PP2000 inspectors thought the City could obtain better
housing stock with a cooperative relationship with owners. PP2000 had an overall
positive effect. From discussions with the PP2000 landlords, Hawkins observed that
37

there needed to be a balance between the costs of doing repairs on properties in
relation to attempts to keep rents affordable especially with the older rental properties.
Hawkins recalls that owners informed the City that if code enforcement pushed too
hard, there would be abandonment of the low-income properties.” APP. 422-427.
Finally, code enforcement supervisor Dick Lippert wrote a memo dated
10/11/00, re PP 2000 Report, to inspectors Essling, Hawkins, Yannarelly, describing
the success of the PP2000 program. “I am putting a copy of this in your personnel file
so there is a permanent record of your work on this.” APP. 428. The Progress Report
on PP2000 January to September, 2000, provides the successful details of the
program. APP. 429-431.
Plaintiffs were adversely affected by Defendants’ illegal and discriminatory
environment and attitude in the application of the City’s more stringent code,
including from increased City fees, renovation costs, loss of rental income from
wrongful condemnations and illegal code compliance certification requirements and
loss of grandfathering protections of rental properties, and were as a result forced to
sell or abandon their rental properties. Plaintiffs’ “protected class” tenants were
disproportionately affected by Defendants’ application of the City’s code and were
subject to displacement from housing and inability to located replacement housing.
The facts before the District Court show the City’s discriminatory environment
38

and attitude in housing code enforcement. The above evidence shows the lack of
affordable housing that is created by over-aggressive code enforcement, which in turn
leads to a disparate impact on a protected class, a violation of the Fair Housing Act.
This evidence is sufficient to withstand summary judgment.
Disparate Treatment
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
39

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 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
discrimination. Id.
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-discriminatory means.
In the facts section above, a December 19, 2005 email message from Jane
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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.
Proof of the discriminatory motivation behind the City’s actions is the credible
evidence that Defendants did have less restrictive means available to meet legitimate
policy interests. The highly successful PP2000 program that the City Council was
recommending be continued shortly before Mayor and Dawkins took control and
dramatically shifted policy and practices, and the City’s successful partnership with
PHA on behavior issues related to PHA’s tenants, were alternatives that would not
41

have adversely impacted and displaced “protected class” tenants and their private
market housing providers. The City’s partnership with PHA had existed for decades.
The City worked with the largest provider of low-income housing. The City provides
all types of support to PHA and not once did anything to undermine PHA’s significant
mission, like Plaintiffs, to provide “safe and decent” affordable housing to those less
fortunate. A reasonable fact finder could see that Defendants had a less restrictive
means available in PP2000 to meet legitimate policy interests that were successful and
non-discriminatory, as opposed to the aggressive, force ownership change strategy and
eviction strategies used by the City.
Dawkins own statements to Bill Cullen (getting rid of the bottom of the box
tenants) and Sara Anderson (doesn’t want low income people in the city) are sufficient
evidence at summary judgment to constitute a prima facia case of disparate treatment.
ADD 95-98. A reasonable fact finder could draw a reasonable conclusion about Mr.
Dawkins intent in stating “how would [the landlords] feel if all those tenants that are
at the bottom of the box were no longer in St. Paul” and “he didn’t want low-income
individuals renting in the City.” However, the District court makes a conclusion and
discards the evidence by saying “No evidence suggests that this facially race neutral
statement arose from racial animus on the part of Dawkins.”
Perry DeStefano, a former legal aid attorney in Saint Paul, wrote to the City
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Council in 2004 notifying the City that neighbors were using the city inspections
department to adversely impact protected classes in the city. Because the City used
housing code enforcement and “hide the ball” tactics to vacate a building occupied by
protected class members, DeStefano notified the City that “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.” APP 9-11.
The District Court ends its disparate treatment analysis again by weighing the
evidence and under the more restrictive analysis without the benefit of the three-part
McDonnell Douglas analysis. Had the District Court viewed the evidence in a light
most favorable to the Plaintiffs, and had the District Court used the three-part
McDonnell Douglas analysis without dismissing all of Plaintiffs’ evidence for failing
to show a specific link between racial animus and any challenged decision, Plaintiffs’
claims for disparate treatment would not have been dismissed.
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b. Constitutional Rights.
§1983
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. 2001).
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
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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
45

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 their PP2000
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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.
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§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
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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).
§1985
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
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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.
c. 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 challenge, an
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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 repair and the
rental market.
With Plaintiffs Allison and Dadder’s, 1522\\1524 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
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story window while standing on the ground. Defendant Senty could not define
“legally occupied.” APP 124.
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,
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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.
d. RICO.
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
53

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 (Jacobs).
Magner’s conduct is sufficient to meet the “relatedness” requirement because it
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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
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(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 pools, etc.).
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.
e. 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).
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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,
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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.
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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
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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
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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
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.
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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
“extortion.”
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
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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 Procedure.
CONCLUSION
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
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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.
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CERTIFICATION OF COMPLIANCE WITH FRAP 32
AND CERTIFICATION OF WORD PROCESSING PROGRAM
Counsel for Plaintiffs-Appellants-prepared its brief using Microsoft Word 2007
for its word processing program. This brief contains 13,970 words. Counsel also
certifies that the attached CD has been scanned for computer viruses and there are no
viruses on the CD. The only document contained on this CD is the Appellant’s Brief
in the PDF file format.
Dated: May 5, 2009 By: s/ Matthew A. Engel
Matthew A. Engel, Esq.
65