Carol and Jerard Muszik are making a federal case out of their dispute with their Florida beach community, Redington Shores, over the town’s short-term vacation rental regulations.
In mid-December, their company, Management Properties, LLC, sued their home town in U.S. District Court in Tampa for actions they say violate the U.S. Constitution.
They are asking the court to toss out the town’s months-old vacation rental regulations, alleging they violate both the Fourth (search and seizure) and Fourteenth (equal protection) Amendments.
The Musziks also allege the regulations violate state law, which they say the court can review because the state law “form(s) a part of the same case.”
Florida law says only the state can regulate vacation rental properties, but allows local governments to conduct inspections for compliance with state building and fire codes, further stating:
A local law, ordinance, or regulation may not restrict the use of vacation rentals, prohibit vacation rentals, or regulate vacation rentals based solely on their classification, use, or occupancy.
The lawsuit claims the town’s ordinance violates both this law and the Florida Constitution which limits the taxing ability of local governments.
The town, of course, has a very different view.
And, with the growth of the short-term rental industry in recent years, this is not the first time federal and state courts have been asked to weigh in on government regulations.
Lawsuit challenges town ordinance
The Musziks’ vacation rental corporation was formed just the day before the lawsuit was filed, although the couple began operating a vacation rental business in 2017 just after purchasing the home on the Gulf of Mexico for $2 million. The home is now valued at $4.8 million by Zillow.
According to the lawsuit, the town is illegally demanding that they turn over many of their business records if they want to continue operating their business.
The regulations, which were established by the town last August but became effective this month, state “vacation rentals can create negative compatibility impacts in residential neighborhoods” by creating excessive noise, parking issues, garbage and “diminished public health safety and welfare.”
The ordinance applies directly to vacation rental properties, while recognizing that state law bars the town from prohibiting vacation rental use or from regulating the duration or frequency of such rentals.
Any residential property rented to vacationers for less than 30 days is subject to inspections “at the town’s discretion.” The regulations set occupancy limits and rules governing solid waste handling, advertising, signage, parking, noise and pets.
The Musziks are required to apply for a Certificate of Use permit annually, as well as to hold a state operating license and to carry liability insurance.
The following requirements are particularly egregious to the Musziks:
- A monthly report that discloses each advertised vacation rental listing and the total number of nights each listing was rented.
- A requirement that they comply with all administrative subpoenas and legal process documents.
- Maintenance of a register of names and dates of all guests that is open to inspection by the town at any time.
- A maximum occupancy based on the number of bedrooms.
- Fines for violating the ordinance ranging from $100 for the first violation up to $2,500 and special permit revocation on the third and subsequent violations.
The Musziks maintain in their lawsuit that the town is violating the Fourth Amendment by requiring them to make the property and business records available for inspection at any time “without a warrant” first being issued — and requires them to agree to this provision before being issued a permit.
This, the lawsuit states, forces the Musziks to “waive their Fourth Amendment rights and consent to warrantless inspections that are beyond the town’s authority.’’
The Musziks’ attorney, Joseph P. Kenny said the inclusion of the Fourteenth Amendment violation was included in order to incorporate the state law issue in the federal suit.
“We feel the town has no legitimate interest to demand the Musziks turn over business records and agree to inspections of the premises,” Kenny said. “State law says that can be done only for a building code or fire safety inspection.”
The town’s attorney, Jay Daugneault refutes the Musziks’ legal arguments and challenges the federal court’s jurisdiction to decide their request for a declaratory judgment on an issue that has yet to be heard in a state court.
He recently filed a motion to dismiss the case, but if the court denies it, a jury trial likely would not begin until late 2021 or early 2022.
Redington Shores Town Clerk Mary Palmer said the town is just beginning to notify property owners of the newly enforceable regulations for vacation rental properties.
“We don’t really know how many there are, but they could be in the hundreds,” Palmer said. “So far, we have issued just one Certificate of Use permit.”
The Musziks’ property has yet to secure a permit.
This is not the first time the Musziks have sued the town. A lawsuit filed earlier last year in Pinellas-Pasco Circuit Court challenging the denial of a setback variance on another property is still pending.
According to Carol Muszik, the town is waging a vendetta against her by not granting her the same variance it has given to others on the same street.
As for the federal lawsuit, she said the town has deliberately made the rules for vacation rentals particularly “onerous.”
What do the Fourth and Fourteenth Amendments say?
In a series of Supreme Court cases, corporations have been recognized as “people” and are afforded much the same rights as individuals, including Constitutional protection against arbitrary searches and seizures (Fourth Amendment) and the right to due process (Fourteenth Amendment).
William Pitt the Elder, who would later become England’s prime minister, declared in a 1763 speech to Parliament that:
The poorest man may in his cottage bid defiance to all the force of the crown. It may be frail — its roof may shake — the wind may blow through it — the storm may enter, the rain may enter — but the King of England cannot enter — all his force dares not cross the threshold of the ruined tenement.
Just a few years later, strong opposition to warrantless searches and seizures in the American colonies led directly to the American Revolution and the inclusion of a guarantee against unreasonable searches in the U.S. Constitution.
The Fourth Amendment, part of the original Bill of Rights passed by Congress and ratified by the states in 1791, reads:
The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
The Fourth Amendment guides the issuance of search warrants, the definition of probable cause, and the setting of rules for government inspections, surveillance procedures, and the reach of policing policies, criminal and privacy laws.
According to the Legal Information Institute of Cornell Law School, Fourth Amendment protection usually only applies if the person or business has an expectation of privacy.
Fourth Amendment court rulings have generally been favorable to government regulatory interests, with the court allowing warrantless searches in situations involving health and safety, particularly in heavily regulated industries, such as alcohol and firearms.
Generally, however, the Court held in two 1967 cases that when there are objections, warrants are required for administrative, non-criminal inspections.
Subsequently, the court ruled in 1978 that a warrantless health and safety inspection of businesses not heavily regulated violated the Fourth Amendment.
However, in 1981, the Court held in Donavan V. Dewey that “warrantless administrative searches of commercial property do not necessarily violate (the Fourth) Amendment.’’
Clearly, the court’s application of Fourth Amendment guarantees against unreasonable searches has been strongly situational.
The Fourteenth Amendment’s five sections were passed following the Civil War to codify citizenship for former slaves and, most relevant to present law, guarantee people equal protection and due process under the law. The relevant section that applies to Redington Shores’ alleged failure to provide due process to the Musziks reads, in part:
SECTION 1. All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.
The due process clause has been the subject of many cases argued before the U.S. Supreme Court. In Nebbia v. People of New York (1934), the Court held:
“Under our form of government the use of property and the making of contracts are normally matters of private and not of public concern … But neither property rights nor contract rights are absolute; for government cannot exist if the citizen may at will use his property to the detriment of his fellows, or exercise his freedom of contract to work them harm… subject only to constitutional restraint the private right must yield to the public need… in the absence of other constitutional restriction, a state is free to adopt whatever economic policy may reasonably be deemed to promote public welfare, and to enforce that policy by legislation adapted to its purpose.”
In ruling on Nebbia, the court stressed that laws abridging the Constitution’s guarantee of due process should not be “unreasonable, arbitrary, or capricious,” adding that “the Constitution does not guarantee the unrestricted privilege to engage in a business or to conduct it as one pleases.”
Lawsuits proliferate over vacation rental issues
Hardly a week goes by without a new lawsuit being filed in either state and federal courts over vacation rental regulations.
Some involve homeowners upset over partiers invading their neighborhoods. Others involve rental property owners upset, like the Musziks, over attempts by their local governments to regulate or even ban the renting of private homes to vacationing visitors.
Here are just a few lawsuits that have been filed in recent months:
- A federal lawsuit in Maui, HI, challenges a county ordinance that sharply limits the total number of vacation rental properties.
- Vacationers filed a class action lawsuit against a North Carolina county over lost deposits when their vacation destinations were closed because of COVID-19.
- Neighbors are suing a short-term vacation rental property in Mt. Helix, CA, over racing cars, domestic violence incidents, and drug transactions.
- The national Institute for Justice is spearheading a lawsuit pitting property owners against vacation rental regulations implemented by the city of Wilmington, NC.