IN THE SUPREME COURT OF IOWA NO

IN THE SUPREME COURT OF IOWA NO. 16-1658 ELECTRONICALLY FILED FEB 13, 2017 CLERK OF SUPREME COURT CITY OF EAGLE GROVE, IOWA, Plaintiff- Appellant, vs. CAHALAN INVESTMENTS, LLC, FIRST STATE BANK AND WRIGHT COUNTY TREASURER, Defendants-Appellees. CITY OF EAGLE GROVE, IOWA, Plaintiff-Appellant, vs. CAHALAN INVESTMENTS, LLC, SECURITY SAVINGS BANK AND WRIGHT COUNTY TREASURER, Defendants-Appellees. APPEAL FROM IOWA DISTRICT COURT FOR WRIGHT COUNTY EQCV024134 and NO. EQCV024135 THE HONORABLE CHRISTOPHER C. FOY, DISTRICT COURT JUDGE PRESIDING PLAINTIFF-APPELLANT CITY OF EAGLE GROVE, IOWA FINAL BRIEF Lynn Collins Seaba #AT0007086 MALLOY LAW FIRM, LLP 503 N. Main St. PO Box 128 Goldfield IA 50542 Phone: 515-825-3181 Fax: 515-825-3898 lseaba@malloylawfirm.com ATTORNEY FOR PLAINTIFF-APPELLANT

TABLE OF CONTENTS TABLE OF AUTHORITIES ii STATEMENT OF ISSUES PRESENTED FOR REVIEW 1 ROUTING STATEMENT 1 STATEMENT OF THE CASE NATURE OF THE CASE 1 RELEVANT EVENTS IN COURSE OF PROCEEDINGS 1 DISPOSITION BY THE TRIAL COURT 2 STATEMENT OF THE RELEVANT FACTS 2 LEGAL ARGUMENT ISSUE ON APPEAL 7 STATEMENT OF PRESERVATION OF ERROR 7 STATEMENT OF SCOPE OF REVIEW 7 DISCUSSION 7 CONCLUSION 13 REQUEST FOR ORAL ARGUMENT 14 CERTIFICATION OF FILING 15 CERTIFICATE OF COMPLIANCE UNDER RULE 6.903(1)(g)(1) 16 ii

Cases: TABLE OF AUTHORITIES Page(s): State v. Krogmann, 804 N.W.2d 518, 522 (Iowa 2011) 7 City of Waterloo v. Bainbridge, 749 N.W.2d 245 (Iowa 2008) 7 Kelley v. Story County Sheriff, 611 N.W.2d (Iowa 2000) 10 Bennis v. Michigan, 516 U.S. 442 (1996) 10 Blumenthal Inv. Trusts v. City of West Des Moines 636 NW 2d 255 (Iowa 2001). 12 State v. Seen, 882 N.W.2d 1 (Iowa, 2016) 13 Statutes and Rules: Page(s): I.C.A. 6A.1 8 I.C.A. 6A.4(6) 8 I.C.A. 657A.10A 6,7,8,9,10,11,12,13,14 Iowa R.App.P. 6.907 7 Constitutional Provisions: U.S. Const. amend V 7, 13 U.S. Const. amend XIV 11, 13 Iowa Const. art. I 9 11, 13 Iowa Const. art. I 18 7, 13 iii

STATEMENT OF THE ISSUE PRESENTED FOR REVIEW THE DISTRICT COURT ERRED IN ITS DISMISSAL OF THE PETITIONS BY THE CITY OF EAGLE GROVE, IOWA FOR AN AWARD OF TITLE TO REAL ESTATE WHEN IT HELD THAT IOWA CODE SECTION 657A.10A WAS AN UNCONSTITUTIONAL TAKING OF PROPERTY IN VIOLATION OF THE FIFTH AMENDMENT TO THE UNITED STATES CONSTITUTION AND ARTICLE I, SECTION 18, OF THE CONSTITUTION OF THE STATE OF IOWA. ROUTING STATEMENT The case should be retained by the Iowa Supreme Court as this case presents substantial constitutional questions as to the validity of a statute, specifically Iowa Code Section 657A.10A. STATEMENT OF THE CASE NATURE OF THE CASE This is an appeal of district court dismissal of two petitions filed by the City of Eagle Grove, Iowa for an award of title to real estate pursuant to Iowa Code 657A.10A. RELEVANT EVENTS OF COURSE OF PROCEEDINGS On December 29, 2014, the City of Eagle Grove, Iowa filed two separate petitions to take title to real estate pursuant to Iowa Code 647A.10A against Calahan Investments, LLC, its mortgage holders, and the Wright County Treasurer. (App. pp. 1-6) Calahan Investments, LLC answered denying the 1

allegations of the petition and challenging the constitutionality of the 657A.10A. (App. pp. 7-10) After service, neither of the mortgage holders answered and each was served a notice of default and were found in to be in default at the time of hearing. (App. pp. 11-16, Transcript page 13 line 22 page 14 line 3) The Wright County Treasurer was named as a party due to delinquent real estate taxes; however, these taxes were paid prior to the trial. (Transcript page 14, lines 4-12) These cases were consolidated for trial which was held on December 2-3, 2015. DISPOSITION BY THE TRIAL COURT The district court ruled that the statute effected an unconstitutional taking of private property without just compensation, and dismissed the Plaintiff s petitions. (App. pp.17-23) STATEMENT OF THE RELEVANT FACTS In 2013, the City of Eagle Grove, Iowa recognized that it had an excessive number of abandoned, dangerous, dilapidated or blighted properties located within its city limits causing a public nuisance. (Transcript pages 19, line 7 page 20, line 17 and page 25 line 4-18) Cahalan Investments, LLC is the owner of two unoccupied rental properties, one located at 107 N. Blaine and another located at 823 S. Commercial in the City of Eagle Grove, Iowa, which 2

were identified by the City of Eagle Grove as abandoned and disconnected from public water service for several years. (App. p. 34, 49; Transcript page 22 line 8 - page 23 line 10) Both properties are dilapidated and neither property is habitable in violation of Chapter 145 of the Municipal Code of the City of Eagle Grove, Iowa. (App. pp. 24-32, 37-43, 52, Transcript pages 34, line 14 to page 35, line 21) The property at 107 N. Blaine had been purchased by Cahalan Investments, LLC on May 21, 2002 and has remained unoccupied since that time. Kevin Cahalan began work on remodeling of the property shortly after purchasing the property but abandoned the work approximately ten years ago. (Transcript page 318 line 24 to 322 line 25) The City of Eagle Grove, Iowa had the property inspected on September 14, 2014 and the inspector found the building unsafe. (App. pp. 44-47) On October 2, 2014, the City of Eagle Grove, Iowa sent notice to Cahalan Investments, LLC regarding the condition of this property. This notice stated that the property constitutes a public nuisance that is a menace to the public health, welfare and/or safety by reason of inadequate maintenance, dilapidation, obsolescence, manifestly unsafe, or abandonment. The notice required Cahalan Investments, LLC as owner of the property to either rehabilitate the property consistent with safe and habitable conditions or demolish the building. (App. p. 48) The property was 3

inspected again on November 17, 2015 less than one month before the trial in this case and Cahalan Investments, LLC the property remained dangerous and uninhabitable. (App. p. 52, Transcript page 107, lines 6-10) By admission of its manager, Cahalan Investments, LLC does not intend to rehabilitate the property. (Transcript page 326, lines 4-6). The property at 823 S. Commercial had been purchased by Cahalan Investments, LLC on December 13, 2011. (App. p. 34) At the time of purchase, the house was unoccupied and the property has been unoccupied since the time of purchase by Cahalan Investments, LLC. (Transcript page 267 line 22 -page 268 line 1, page 304 lines 4-20) The City of Eagle Grove received a report from police officer Josh Kuisle on the abandonment of the property and on September 9, 2014, the City of Eagle Grove sent notice to the Cahalan Investments, LLC regarding the condition of this property. (App. pp. 33) This notice stated that the property constitutes a public nuisance that is a menace to the public health, welfare and/or safety by reason of inadequate maintenance, dilapidation, obsolescence, manifestly unsafe, or abandonment. The notice required Cahalan Investments, LLC to either rehabilitate the property consistent with safe and habitable conditions or demolish the building. (App. p. 33) This property was also inspected by Jes 4

Wilwerth on September 14, 2014 and found to be unsafe to occupy. (App. pp. 29-32) On December 1, 2014, the City Council of the City of Eagle Grove, Iowa held a hearing on both properties, pursuant to the notices sent on September 9, 2014 and October 2, 2014. After hearing, the City Council made a determination that both properties were in violation of Chapter 145 of the Code of Ordinances of the City of Eagle Grove, Iowa. This Municipal Code Chapter entitled Dangerous Buildings is the only local housing and building code in effect within the City of Eagle Grove, Iowa. Section 145.03 defines an unsafe building as structure which meets any of five criteria which are defined as: various inadequacies, manifestly unsafe, inadequate maintenance, fire hazard or abandoned. Section 145.03 Code of Ordinances of the City of Eagle Grove, Iowa. Following this hearing, petitions were filed in District Court pursuant to 657A.10A to take title to both of the properties to abate the nuisance. (Transcript page 29 lines 22-25, page 209 line 24- page 210 line 9, App. pp. 27-28, 54-58) The conditions of both properties have remained unchanged since the filing of the petitions. The City of Eagle Grove estimates that it will cost $12,117 to demolish the property at 823 S Commercial and $10,999 to demolish the building at 107 N. Blaine. (App. p. 53) The assessed value of the 5

lot at 823 S Commercial on January 1, 2015 was $8,900 (App. pp. 35-36) The assessed value of the lot at 107 N. Blaine on January 1, 2015 was $5,400. (App. pp. 50-51) The public nuisance continues to exist on both properties and the evidence presented at trial supports a finding that the both properties are abandoned in accordance with Iowa Code Section 657A.10A. At trial, Kevin Cahalan, as owner and manager of Cahalan Investments, LLC, the Defendant in this action, testified that he has no intention to make either property habitable in the foreseeable future. (Transcript page 329 lines 16-18; page 332 line 8-page 333 line 22) The City of Eagle Grove has no public use for the property. (Transcript page 77 lines 3-5) The action taken by the City of Eagle Grove, Iowa to file petitions for title to real property pursuant to Iowa Code 657A.10A is part of its efforts to rehabilitate its residential areas by the removal of abandoned and dilapidated structures within the City. (Transcript page19 line 7 -page 20 line 12) 6

LEGAL ARGUMENT ISSUE ON APPEAL: The District court erred when it dismissed the Petitions of the City of Eagle Grove. An award of title to the real estate at issue in this action pursuant to Iowa Code Section 657A.10A would not be an unconstitutional taking of property in violation under the Fifth Amendment to the United States Constitution or Article I, section 18, of the Constitution of the State of Iowa. PRESERVATION OF ERROR: The issue of the constitutionality of Iowa Code Section 657A.10A was raised by the Defendant-Appellant, Cahalan Investments, LLC in its answers to the petitions and was presented at conclusion of the trial on December 3, 2015. Both the City of Eagle Grove and Cahalan Investment, LLC filed trial briefs on this issue and the issue was addressed in the district court s order issued September 10, 2016 in which the district court held that Iowa Code Section 657A.10A was an unconstitutional taking of private property. SCOPE OF REVIEW: The scope and standard of review in this case is de novo. In considering alleged violations of constitutional rights, our standard of review is de novo. State v. Krogmann, 804 N.W.2d 518, 522 (Iowa 2011) (citing State v. Lyman, 776 N.W.2d 865, 873 (Iowa 2010)). Additionally, the petitions pursuant to 7

Iowa Code section 657A.10A which on appeal were tried in equity and Iowa R.App.P. 6.907 requires that the review of equity actions be reviewed de novo. DISCUSSION: Review of the constitutionality of Iowa Code Section 657A.10A has been raised before this Court in Waterloo v. Bainbridge 749 N.W.2d 245 (Iowa 2008); however, in that case, the Court found that the constitutional challenge had not been properly preserved for review. This case now comes before this Court with the issue properly preserved for review by this Court. A. An award of title to real estate pursuant to Iowa Code 657A.10A is not considered an exercise of eminent domain. Both the Fifth Amendment to the United States Constitution and Article I, 18, of the Constitution of the State of Iowa prohibit government from taking private property for public use without just compensation. U.S. Const. amend V; Iowa Const. art. I 18. In most instances, when government takes private property for public use it is through the process of eminent domain. Iowa Code Chapter 6A known as Eminent Domain law (condemnation) provides for taking of private property by the governmental subdivisions within the State of Iowa of property for public improvement. I.C.A. 6A.1. The right to take private property for public use is conferred upon all cities for public purposes which are reasonable and necessary as incident to powers and duties conferred 8

upon cities. I.C.A. 6A.4(6). If private property is taken by a city pursuant to Iowa Code Chapter 6A, this chapter does provide for the compensation of property owners of the reasonable value of that property which has been taken for public use. In the case at hand, the analysis of the district court focuses on the subjective value as presented by Cahalan Investments, LLC and the lack of any provision for compensation to Cahalan Investments, LLC by the City of Eagle Grove, Iowa as if this is simply a case of condemnation pursuant to eminent domain under Iowa Code Chapter 6A; however, this case now before this Court is not based upon condemnation of private property in accordance with Iowa Chapter 6A. The City of Eagle Grove has no use for the property and does not intend to retain the property. The City of Eagle Grove has petitioned to obtain title to the property pursuant to Iowa Code 657A.10A as an alternative remedy to abate a nuisance within the City of Eagle Grove, Iowa. It is not disputed that the remedy requested would award title to the City and extinguish all property rights of the Defendant, Cahalan Investments, LLC; however, the primary distinction is that the taking of property in this instance is to alleviate a public nuisance as the current owner, Cahalan Investments, LLC has allowed the property to remain uninhabited and deteriorating for years and under its ownership both parcels of property have become public nuisances. The second distinction is that the City is not taking 9

the property within the City for public use. As the evidence presented at trial demonstrated, the City had no use for the property and the costs of demolition of the dilapidated houses would exceed the value of the lots. The award of title free and clear of liens provides the City with clear title so that after the City has abated the nuisance by removal of the abandoned building, the vacant lot may be then be further conveyed by the City to return it private use. Without this process, these abandoned properties would continue in a dilapidated and abandoned state for an indefinite time. B. An award of title to real estate pursuant to Iowa Code 657A.10A is constitutional as this is an exercise of police power by the City of Eagle Grove Iowa to regulate property for health safety and welfare of all citizens. The requirement of just compensation does not apply if the governmental entity is taking property to abate a nuisance pursuant to its police power. This Court has defined the distinction between the two as follows: Eminent domain is the taking of private property for a public use for which compensation must be given. On the other hand Police Power controls and regulates the use of property for the public good for which no compensation need be made. Kelly v. Story County Sheriff 611 NW2d 475, 479 (Iowa 2000), Kent v Polk County Bd. of Sup rs 391 N.W.2d 220 (Iowa 1986). 10

This principle has been recognized by the United States Supreme Court as well in Bennis v. Michigan which held that The State may take property in an exercise of power other than eminent domain without compensating the owner 516 U.S. 442, 452-53 (1996). Since both the United States and the State of Iowa recognize that government may take property without compensation in some circumstances, as long as due process is met, the award of title to real estate pursuant to Iowa Code 657A.10A is constitutional. C. An award of title to real estate pursuant to is constitutional as Cahalan Investments, LLC was afforded due process in accordance with under the Fourteenth Amendment to the United States Constitution and Article I, section 9, of the Constitution of the State of Iowa. In its brief to the trial court, Cahalan Investment, LLC claimed that it was not afforded procedural due process when the City of Eagle Grove sought to obtain an award of title to real estate pursuant to Iowa Code 657A.10A. However, this issue was not addressed by district court in its order presumably as the petitions were dismissed by the district court under its analysis pursuant to Article V of United States Constitution and Article I, section 18 of the Iowa Constitution. The City of Eagle Grove addresses this issue as it is part of the constitutional analysis of Iowa Code 657A.10A. The Fourteenth 11

Amendment to the United States Constitution and Article I, section 18, of the Constitution of the State of Iowa require that government shall not take property without due process. Similarly, art. I 9 of the Iowa Constitution, provides that no person shall be deprived of life, liberty or property, without due process of law. In this case, Cahalan Investments, LLC, has been granted procedural due process before both the City Council of the City of Eagle Grove, Iowa as well as the district court. On December 1, 2014, the City Council of the City of Eagle Grove, Iowa held a hearing on both properties, pursuant to the notices sent on September 9, 2014 and October 2, 2014. After hearing, the City Council made a determination that both properties were in violation of Chapter 145 of the Code of Ordinances of the City of Eagle Grove, Iowa. Upon filing of the petitions by the City of Eagle Grove, Iowa for award of title to real estate pursuant to Iowa Code 657A.10, Cahalan Investments, LLC was then served notice with an opportunity to be heard in the district court. The requirements of procedural due process were met in the district court, Calahan Investments, LLC was served notice, appeared and answered and participated in the trial. Substantive due process is not applicable to this case. Substantive due process is reserved for the most egregious governmental abuses against liberty or property rights, abuses that shock the conscience or otherwise offends judicial 12

notions of fairness and that are offensive to human indignity. Blumenthal Inv. Trusts v. City of West Des Moines 636 NW 2d 255, 265 (Iowa 2001). D. The legislature is given presumption that statutes are constitutional and the record in this case shows that Cahalan Investments, LLC did not meet the burden to show that Iowa Code 657A.10A is unconstitutional. When asserting a constitutional challenge to a statute, challenger bears heavy burden, because it must prove unconstitutionality beyond a reasonable doubt. State v. Seen, 882 N.W.2d 1 (Iowa, 2016). Cahalan Investments, LLC presented no evidence at trial that the City of Eagle Grove, Iowa was attempting to take its property for a public purpose. Cahalan Investments, LLC presented no evidence at trial that it had not been given procedural due process when it was served notices of the action taken by the City of Eagle Grove before the City Council. Cahalan Investments, LLC presented no evidence at trial that it had not been given procedural due process in the district court proceeding. Cahalan Investments, LLC has not met the burden to show that Iowa Code 657A.10A is unconstitutional. As applied to the facts of this case, an award of title of both parcels of real estate to the City of Eagle Grove, Iowa pursuant to Iowa Code 657A.10A is a constitutional under the Fifth and Fourteenth Amendments of the United States Constitution as well 13

as Article I, section 9 and Article I, section 18 of the Constitution of the State of Iowa. CONCLUSION: Wherefore, the Appellant requests that this Court reverse the district court and remand these cases to the district court for an order awarding title of the two subject properties to the City of Eagle Grove, Iowa pursuant to Iowa Code 657A.10A. REQUEST FOR ORAL ARGUMENT The City of Eagle Grove, Iowa requests the opportunity for oral argument in this appeal. Respectfully submitted, /s/ Lynn Collins Seaba Lynn Collins Seaba, AT0007086 MALLOY LAW FIRM, LLP 503 N. Main Street, PO Box 128 Goldfield, IA 50542 (515) 825-3181 Telephone (515) 825-3898 Fax lseaba@malloylawfirm.com ATTORNEYS FOR APPELLANT 14

CERTIFICATE OF SERVICE AND FILING I hereby certify that on February 13, 2017, I electronically filed the foregoing document with the Clerk of the Supreme Court of Iowa using the Iowa Electronic Document Management System which will send notification of such filing to the counsel below: Eric Joseph Eide 3 North 17 th St Suite 2 Fort Dodge IA 50501 ATTORNEY FOR APPELLEE /s/ Lynn Collins Seaba Lynn Collins Seaba, AT0007086 MALLOY LAW FIRM, LLP 503 N. Main Street, PO Box 128 Goldfield, IA 50542 (515) 825-3181 Telephone (515) 825-3898 Fax lseaba@malloylawfirm.com ATTORNEYS FOR APPELLANT 15

CERTIFICATE OF COMPLIANCE This brief complies with the type-volume limitation of Iowa R. App. P. 6.901(1)(g)(1) because it contains 3,043 words, excluding the parts of the brief exempted from Iowa R. App. P. 6.901(g)(1). This brief complies with the typeface requirements of Iowa R. App. P. 6.903(1)(e) and type-style requirements of Iowa R. App. P. 6.903(1)(f) because this brief has been prepared in a proportionally spaced typeface utilizing 14-point Times New Roman font in the 2010 edition of Microsoft Word. /s/ Lynn Collins Seaba February 13, 2017 Lynn Collins Seaba Date 16