Running Afoul of the Law

Ramona Morales has worked for most of her life cleaning houses and selling Avon makeup in and around California’s Coachella Valley. Through hard work and thrift, she was eventually able to save enough money to buy a modest rental property. With the help of friends and relatives, she fixed it up and rented it to supplement her income. After many years of work, Ramona has purchased and rehabilitated ten rental properties.

After owning and operating the properties for many years without any major issues, in late 2014 one of her tenants ran afoul of the law.

On December 30, 2014, a city code enforcement officer mailed Ramona a warning indicating that her tenant was illegally raising chickens and roosters in her backyard, which is illegal in Indio.7 Ramona immediately told her tenant that she had to get rid of them. The tenant initially agreed, but dragged her feet on finding a new home for the fowl. A few months later, Ramona received a second warning in the mail. She contacted her tenant again and demanded that she get rid of the chickens. Thinking that the problem was the noise, Ramona’s tenant got rid of the rooster, but kept the chickens.

Finally, in June of 2015, a city inspector was dispatched to Ramona’s property “in reference to a complaint regarding roosters at the location.”8 The officer reported she “could see from the sidewalk one rooster/chicken through the side yard fencing in the backyard.”

The officer wrote two tickets: One for keeping farm animals for $75 and the second for $75 for renting a house without a business license (something Ramona had not understood was required). The officer issued a declaration in support of an arrest warrant for Ramona, authorizing her arrest “day or night.”

At her arraignment in Riverside Superior Court, Ramona used her limited English to attempt to explain the situation. She said that she had done everything she could as a landlord short of evicting them to make the tenant remove the chickens and that the tenant had been confused about whether the citation applied to chickens as well as roosters. Unrepresented by an attorney, she ultimately pleaded guilty and immediately paid a $225 fine.9

Frustrated but relieved, she thought her ordeal was over, but the reality was that it was just getting started.

Nearly a year later, in early September, 2016, Ramona opened her mail to find a certified letter demanding $3,030.33 for fees associated with “nuisance abatement.”10 The private attorneys hired by the city appeared to be charging her for their time associated with the $225 fine she’d paid.

Shocked and confused, she requested a hearing. Ahead of the hearing, an attorney from Silver & Wright filed a boilerplate memo claiming that the $3,030.33 award was authorized by law and that the firm was entitled to another $2,628.69 for the time spent preparing for the hearing Ramona had requested. The hearing officer—not a judge, but a city official—approved the fee request and ordered Ramona to pay, which she did.11

At the time, she could not believe why, or how, a tiny dispute about a backyard chicken had cost her almost $6,000.

Under California law, when a city resolves a public nuisance—by, for instance, mowing someone’s severely overgrown lawn for them—the city may pass an ordinance allowing it to bill the property owner. The law also allows cities to include “the recovery of attorneys’ fees in any action, administrative proceeding, or special proceeding to abate a nuisance.”12 Until recently, few cities had enacted such ordinances, which meant that in nuisance abatement actions, both sides paid for their own attorneys, win or lose.

That started changing four years ago, however, when two attorneys—Matthew Silver and Curtis Wright—formed a new law firm with a new business model: pitch cities on “cost neutral” code enforcement by prosecuting code violations in criminal court and enabling the collection of attorney’s fees. And the linchpin of their business model was California’s cost-recovery statute.

Silver & Wright started aggressively marketing themselves to cities around California by writing articles and speaking at conferences. The most important part of their pitch to cities was a simple promise: We’ll make the property owners themselves pay our rates, which run between $10013 and $200 an hour.

For the scheme to work, however, Silver & Wright insisted that cities rewrite their ordinances.14 The most important order of business was making sure that the city code explicitly provided for recovery of attorney’s fees in nuisance abatement actions. They also advised that nuisance abatement actions should be defined very broadly, to encompass not only “abatements”—such as the cost of mowing a lawn or picking up trash—but also the administrative and legal aspects, including criminal nuisance prosecutions, civil suits, administrative hearings, and appeals.

Silver & Wright also requested that cities redefine “nuisance” to include any violation of the housing code.15 That is an important change, because traditionally, nuisances were only things that significantly interfered with other people’s use and enjoyment of their own property. In other words, minor, technical violations of the housing code were not usually considered nuisances. By broadening the definition of nuisance, Silver & Wright dramatically increased the number of property owners that they could target.

Once the client cities finished rewriting their codes, Silver & Wright got to work prosecuting a large number of cases. Although a few cases concerned major, problem properties, most prosecutions were for fairly minor violations. For instance:

· Long grass;

· A broken garage door;

· Construction without required permits;

· Having address numbers that are “sun damaged”;

· Hanging decorations that encroached on public space;

· Broken windows;

· Renting parking space without a business license, and;

· Of course, keeping chickens.

Like Ramona, or like almost anyone facing a minor infraction such as a traffic ticket, property owners typically plead guilty, believing that they will only have to pay, at most, a modest fine of a few hundred dollars.

Crucially, Silver & Wright does not inform defendants at the time that they plead guilty that the firm will eventually demand thousands or tens of thousands of dollars in legal fees from defendants. It is usually many months or even a year later, well after it is too late to withdraw the plea, that the defendants finally receive a letter instructing them to pay Silver & Wright’s legal fees.

Although the invoice is on the city’s letterhead, it demands that the check be made payable to Silver & Wright.16 It also warns that if the bill is unpaid, a lien will be placed on the house, and the house may be sold.17

The defendants have a right to appeal these bills. But appeals come with major caveats, making them unappealing. First, the defendant only has a right to dispute the accounting of costs, not the underlying question of whether costs can be assessed in the first place. Second, the appeal is not to the court that heard their original case, but rather to an administrative hearing presided over by a city official, not a judge. That is significant because judges are experienced in reviewing fee applications, and they typically look with a critical eye for any indication that an attorney has been padding the bill. By contrast, city officials are more likely to rubber stamp a fee award, especially because they know that if the law firm is unable to get all its fees from defendants, then under the firm’s contract with the city, the firm can demand that the city pay the lawyers’ hourly rates. Third, and most outrageously, if a defendant chooses to appeal, then he will also have to pay Silver & Wright’s legal fees for the time they spent preparing for the appeal, which means the total award could double.

Silver & Wright handles these cases with minimal oversight by the city. The firm’s contract with Indio, for instance, only requires that the firm give updates about cases on a quarterly basis.18 The law firm makes critical decisions about how to handle each case, and defendants are not even given the opportunity to speak to real, government lawyers. In fact, if a defendant wants to have a settlement discussion with Silver & Wright’s attorneys, the firm demands that the defendant pay the attorneys’ hourly rates for that discussion.

This scheme has allowed Silver & Wright to grow quickly. They have now signed on dozens of California cities as clients,19 and they aren’t slowing down. Their attorneys promote their “cost neutral or even revenue producing” model of code enforcement at conferences and seminars throughout the state. Matthew Silver, one of the founding partners, is even the Vice President of the California Association of Code Enforcement Officers.

Although Silver & Wright was peddling their scheme at conferences for public officials, the general public had no idea what was going on until a reporter for The Desert Sun newspaper broke the story in November of 2017. By submitting public records requests, the reporter determined that, in just 18 individual cases in the cities of Indio and Coachella, Silver & Wright had billed defendants over $122,000 in legal fees.

Remarkably, public officials who were interviewed for the story indicated that they were largely unaware of what was really happening in these cases, and they “admitted they would rethink their methods after being confronted with the full impact on property owners.” One official even noted a specific case, involving a junk filled yard and $25,200 in fees, and admitted that it had not been “a great candidate for prosecution” because it “did not represent an imminent threat to the public health and safety.” This lack of supervision is troubling because the people making the ultimate decision about how to proceed in these cases—private attorneys at Silver & Wright—have an obvious financial interest in the cases.

When Ramona read The Desert Sun article in 2017, she finally understood why a tiny dispute about a couple of chickens had cost her almost $6,000. It was because the “city prosecutor” wasn’t trying to reach a just resolution to her case—he was just trying to get paid.

Troubling Trend of For-Profit Policing in America

Following the 2014 shooting of Michael Brown in Ferguson, Missouri, a national conversation started about the relationship between governments, police and citizens. The ensuing conversation revealed a troubling trend: Many local governments had begun relying on fines, fees, and their municipal court systems to cover shortfalls in their budgets. This dependence creates an incentive for repeated, unnecessary confrontations between residents and law enforcement. And it laid monetary burdens on criminal defendants, who are often already among the most financially vulnerable.

For instance, in Pagedale, Missouri—a tiny town located just a few miles from Ferguson—the Institute for Justice filed a class action lawsuit challenging the city’s use of its code enforcement power to raise revenue. Residents could be ticketed for having mismatched curtains, walking on the wrong side of a crosswalk, or having a beer too close to their barbeque grill.

Following the DOJ’s investigation in Ferguson in 2016, it  released a Dear Colleague letter, written to state judges and justice departments nationwide, noting the constitutional and legal problems with using municipal courts as money-makers. The final pages of the letter stressed that judges and prosecutors cannot, constitutionally, have a pecuniary interest in convicting defendants.

In December of 2017, however, the Jeff Sessions-lead DoJ rescinded this letter (it is no longer even available on the DoJ’s website) and many municipalities across the country continue to use for-profit policing to raise money on the backs of defendants.

Class Action Lawsuit

The Institute for Justice, a national public interest law firm, has teamed up with Ramona to file a class action lawsuit to put a stop to this egregious form of policing for profit. The Due Process Clauses of the United States and California Constitutions require that prosecutors be neutral, without a direct financial stake in the cases that they bring. As the ABA’s ethical standards explain, “The duty of the prosecutor is to seek justice, not merely to convict.”

Perhaps the most important responsibility of the prosecutor is to exercise discretion in whom to prosecute, what to charge, and what penalties to seek. Not every technical violation of the law deserves to be prosecuted to the full extent of the law. Indeed, in the 21st Century there are so many criminal laws on the books that almost everyone unknowingly commits a crime now and then. A neutral prosecutor, however, knows better than to try to throw the book at everyone. A neutral prosecutor would never have charged Ramona Morales with a crime and then billed her almost $6,000 for a minor infraction by her tenant that could have likely been resolved with a phone call.

Ramona and the Institute for Justice have sued the City of Indio, the City of Coachella, and Silver & Wright in its official capacity as deputy city prosecutor for both cities. The lawsuit asks the court to vacate Ramona’s conviction because, at the time she pleaded guilty, she had no idea that her prosecutor had a personal, financial stake in the case. Had she known, she could have defended herself by pointing out that the prosecution was unconstitutional.

We are also asking the court to return all the fees that Ramona has paid and to issue an order enjoining Silver & Wright from acting as a city prosecutor in the future. Finally, we are requesting class wide relief for people in Indio and Coachella who have been prosecuted by Silver & Wright.

The litigation team consists of IJ attorneys Jeffrey Redfern and Joshua House. They are teaming up with Sabrina Strong, David Lash, and Jason Orr from O’Melveny & Myers LLP, who are taking this case pro bono.