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California Supreme Court Punts on Property Rights, Refuses to Hear Appeal of Receivership Abuse Victim Ron Mugar

Mugar was ordered to pay over $60,000 in attorneys’ fees to Norco’s private law-firm prosecutor even after successfully getting his case dismissed

policing, profit. abuse, private, property

Riverside, Calif.—Four years ago, Norco homeowner Ron Mugar dared to defend his property in court, and he won. Yet for doing so Ron was nonetheless punished. Norco’s for-profit code enforcement prosecutors—lawyers with Dapeer, Rosenblit & Litvak LLP—charged Ron over $60,000 for what they called “obstructive tactics.” It is illegal and brazen for a law firm to seek attorneys’ fees for a case it lost, but so goes the perverse incentives of a code-enforcement system motivated by profit rather than public safety. Ron fought back with the Institute for Justice (IJ) to challenge the constitutionality of being punished for successfully defending himself in court. Unfortunately, Ron’s journey came to an end Thursday when the California Supreme Court refused to hear his appeal.

“Ron made sure his home was up to code and then he won in court. But he is still being punished with an outrageous charge for exercising his constitutional right to defend himself,” said IJ Attorney Joshua House. “California property owners everywhere should be gravely concerned that having your house up to code won’t stop for-profit prosecutors from robbing you of your savings or your home. We will never stop fighting for property rights in California.”

When Ron received a notice indicating that he had violated the city’s housing code, the city’s for-profit prosecutors with Dapeer, instead of fining him or asking him to bring his property up to code, declared they were going to take his house using a legal process known as a “receivership.” Receiverships are an extreme code enforcement remedy in which a court gives one’s property to a receiver for it to be brought up to code. But because the costs of a receiver can be high, it’s often impossible to pay back the receiver and the homeowner will lose their home. Ron made sure his yard was cleaned up, defended himself in court and got the receivership action against him dismissed. Yet proving that his house was up to code did not stop Dapeer from trying to profit from the ordeal.

For for-profit firms like Dapeer, the goal is not to make sure the city is up to code; it’s to make a massive profit off the backs of California homeowners. After today, for-profit law firms hired by California municipalities will feel emboldened to go after innocent homeowners, even if their homes are up to code.

“Receiverships should be a last resort, because when cities use receiverships, they’re taking away someone’s home and likely all of their equity. The stakes are huge,” said IJ Attorney Jeffrey Redfern. “For-profit prosecutors like Norco’s have a financial incentive to get paid for bringing receivership actions. That is not what code enforcement or receiverships should be about.”

Ron said, “I’m very disappointed that the California Supreme Court refused to hear my case. I will keep fighting to make sure that Californians aren’t punished for defending themselves and their homes in court.”

California is a haven for predatory for-profit code enforcement schemes that abuse citizens’ constitutional rights. In nearby Indio, California, the city had hired a law firm called Silver and Wright LLP to enforce its municipal code. There, the lawyers charged an elderly woman nearly $6,000 in attorneys’ fees because her tenants were keeping chickens in their backyard. Indio no longer uses the firm for prosecution, and it has agreed to settle the lawsuit.

The Institute for Justice has been at the forefront of fighting efforts by the government to use fines, fees and civil forfeiture to raise revenue. Most recently, it secured a unanimous  victory at the U.S. Supreme Court ruling that states cannot impose excessive fines.

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