Diamond Sands Apartments, LLC v. Clark County

• Court: District Court, D. Nevada
• Decided: April 25, 2025
• Docket: 2:25-cv-00137
• Status: Unknown

Opinion

1 UNITED STATES DISTRICT COURT DISTRICT OF NEVADA 2

3 DIAMOND SANDS APARTMENTS, Case No. 2:25-cv-00137-ART-NJK 4 LLC,

5 Plaintiff, ORDER DENYING PLAINTIFF’S MOTION FOR PRELIMINARY 6 v. INJUNCTION 7 CLARK COUNTY, 8 Defendant. 9 Plaintiff Diamond Sands Apartments, LLC (“Diamond Sands”) moves for a 10 preliminary injunction to enjoin Defendant Clark County from enforcing certain 11 county ordinances. (ECF No. 5.) Plaintiff argues that these ordinances, which 12 impose fines for violations of the county’s short-term rental laws, violate the 13 excessive fines clause of the Eighth Amendment. For the following reasons, the 14 Court denies Plaintiff’s motion for a preliminary injunction. 15 I. BACKGROUND 16 A. Nevada’s Regulation of Short-Term Rental Units 17 In 2021, Nevada enacted legislation mandating that counties enact 18 ordinances regulating short-term rentals. NRS § 244.353545. The statute 19 requires that county ordinances “[p]rohibit the rental of a residential unit or a 20 room within a residential unit that is located in an apartment building.” NRS 21 § 244.353545(2)(d). The statute authorizes counties to impose civil penalties or 22 fines on “a person who makes available a residential unit or room within a 23 residential unit” without authorization. NRS § 244.353545(3). Those fines “must 24 not be less than $1,000 or more than $10,000” for a single violation. Id. 25 B. Clark County’s Short-Term Rental Ordinances 26 In June 2022, Clark County enacted ordinances regulating short-term 27 rental units. Clark Cty. Mun. Code § 7.100. In doing so, the Clark County Board 28 of Commissioners found that the commercial use of residential development for 1 short-term rentals constricts the availability of affordable housing, can cause 2 harm to the quality of life for permanent residents, and negatively impacts local 3 government revenue. Id. § 7.100.010. 4 Section 7.100.230 provides for enforcement actions against “[a]ny person” 5 who violates the chapter. Id. § 7.100.230. The penalties are “cumulative and may 6 be exercised in any order or combination and at any time.” Id. § 7.100.230(b). 7 Any person in violation of Chapter 7.100 may be issued a “written notice of 8 violation,” which sets forth the nature of the violation(s), required actions to 9 correct the violation(s), and warns that failure to take corrective action may result 10 in the issuance of a citation. Id. § 7.100.230(c). 11 Any person in violation of Chapter 7.100 may also be issued a civil 12 administrative citation. Id. § 7.100.230(d). A citation for operating a short-term 13 rental without a license carries a daily fine of between $1,000 and $10,000, 14 depending on the severity of the violation; whether the person who committed the 15 violation acted in good faith; and any history of previous violations. Id. § 16 7.100.230(d)(1). Other violations are fined an amount equivalent to the nightly 17 rental value of the unit or $500 for the first violation and $1,000 for each 18 subsequent violation. Id. Each violation is subject to a separate fine and fines 19 may be assessed cumulatively. Id. § 7.100.230(e)(1). Where the person violating 20 the chapter is not the property owner, “the property owner shall also be subject 21 to receipt of an administrative citation and the remedies and penalties set forth 22 herein.” Id. § 7.100.230(e)(2). 23 Fines are assessed in the same way as other violations of the county code. 24 Id. § 7.100.250. “Failure to pay the assessed administrative fine within fifteen 25 days, provided it has not been successfully challenged by a timely appeal or 26 cancelled upon initial review” will result in a “special assessment lien” if the 27 responsible person is an owner of the property or referral for collection. Id. 28 § 1.14.120. 1 C. Diamond Sands 2 Diamond Sands operates a 360-unit apartment complex located at 8445 S 3 Las Vegas Blvd., Las Vegas, Nevada, 89123. (ECF No. 5-1 at 2.) Diamond Sands 4 tenants pay rent pursuant to long-term lease agreements. (Id.) Those leases 5 prohibit assignment and subletting without consent of the owner, and state that 6 “IMMEDIATE TERMINATION of the lease will result if this is done.” (Id.; ECF No. 7 5-2 at 4.) 8 D. Enforcement Actions against Diamond Sands 9 Diamond Sands has been subject to several enforcement actions for 10 violations of Clark County Code Chapter 7.100. (ECF No. 11 at 18–51.) Four of 11 the actions were closed without any fine being assessed. (ECF No. 11 at 23–25, 12 38–40, 49–51.) Two of the actions resulted in fines. (ECF No. 5-3; ECF No. 5-4; 13 ECF No. 5-5; ECF No. 11 at 27–31, 49–51.) Diamond Sands paid one of those 14 fines, for $2,125, in February 2024. (ECF No. 11 at 30.) The other fine, for $2,000, 15 remains outstanding. (ECF No. 11 at 42–47.) 16 i. First Citation: $2,125 (Unit 1041) 17 In July 2022, after receiving a complaint that “numerous” units in 18 Diamond Sands were being used as short-term rentals via Airbnb, Clark County 19 Code Enforcement opened a case for unit 1041. (ECF No. 11 at 27–28.) On 20 October 14, 2022, the county issued a notice of abatement, stating that the unit 21 was in violation of Section 7.100.030, operating a short-term rental without a 22 license, and instructing Diamond Sands to “[c]ease the operation of the short- 23 term rental unit and immediately remove any advertisement until a valid short- 24 term rental license is obtained.” (Id. at 33, 35.) The notice warned that failure to 25 correct the violation by November 4, 2022, may result in a citation and 26 corresponding fine. (Id. at 35.) In January 2023, after several inspections 27 confirmed that the unit was being rented on Airbnb, a citation was issued. (Id. at 28 29, 33; ECF No. 5-3 at 2.) The fine was later removed due to a mix-up with 1 another case. (ECF No. 11 at 30.) In April 2023, a second administrative citation 2 was issued. (Id. at 33; ECF No. 5-2 at 2.) In February 2024, Diamond Sands paid 3 the $2,125 fine. (ECF No. 11 at 32.) 4 ii. Second Citation: $2,000 (Unit 1106) 5 Based on the same July 2022 complaint, Clark County opened a case 6 against Diamond Sands unit 1106. (ECF No. 11 at 42–43.) In January 2023, 7 Clark County issued a notice of abatement. (Id. at 45–46.) After a follow-up 8 inspection confirmed that the unit was still being rented on Airbnb, Clark County 9 issued a citation for $2,125. (Id. at 43, 46.) On January 7, 2025, Clark County 10 sent a final notice of delinquency, warning that if Diamond Sands failed to pay 11 the bill within 30 days, a lien may be placed on the property. (ECF No. 5-5 at 2.) 12 E. Procedural History 13 Diamond Sands filed this lawsuit in January 2025. (ECF No. 1.) Diamond 14 Sands then filed this motion, asking the Court to enjoin the County from 15 enforcing Clark County Code sections 1.14.120, 7.100.230, and 7.100.250. (ECF 16 No. 5.) 17 II. LEGAL STANDARD 18 A preliminary injunction is an “extraordinary” and “drastic” remedy that 19 requires the moving party to clearly show that they carry the burden of 20 persuasion. Mazurek v. Armstrong, 520 U.S. 968, 972 (1997). A movant seeking 21 preliminary injunctive relief must show that they are likely to succeed on the 22 merits, that they are likely to suffer irreparable harm in the absence of 23 preliminary relief, that the balance of equities tips in their favor, and that an 24 injunction is in the public interest. Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 25 7, 20 (2008). In cases against the government, the last two factors merge into 26 one. Drakes Bay Oyster Co. v. Jewell, 747 F.3d 1073, 1092 (9th Cir.), as amended 27 (Jan. 14, 2014). 28 While Winter requires a plaintiff to show likelihood of irreparable harm, the 1 Ninth Circuit applies a sliding scale approach to the other factors. All. for the Wild 2 Rockies v. Cottrell, 632 F.3d 1127, 1134–35, 1139 (9th Cir. 2011). If the movant 3 makes a threshold showing of “serious questions going to the merits” instead of 4 likelihood of success on the merits, then strong showings on the remaining 5 factors allow a court to issue the injunction. See Disney Enterprises, Inc. v. 6 VidAngel, Inc., 869 F.3d 848, 856 (9th Cir. 2017) (citing Garcia v. Google Inc., 786 7 F.3d 733, 740 (9th Cir. 2015)). If the movant fails to show serious questions going 8 to the merits, the other factors may not otherwise justify granting the injunction. 9 Id. 10 III. DISCUSSION 11 Plaintiff claims that Clark County’s fines against property owners for 12 violations of Chapter 7.100 violate the excessive fines clause of the Eighth 13 Amendment, both facially and as applied to Diamond Sands. (ECF No. 5 at 1.) 14 A. Likelihood of Success on the Merits 15 The Eighth Amendment provides: “Excessive bail shall not be required, nor 16 excessive fines imposed, nor cruel and unusual punishments inflicted.” U.S. 17 Const. amend. VIII. A fine is unconstitutionally excessive under the Eighth 18 Amendment if its amount “is grossly disproportional to the gravity of the 19 defendant’s offense.” U.S. v. Bajakajian, 524 U.S. 321, 336-37 (1998). The 20 Excessive Fines Clause “limits the government’s power to extract payments, 21 whether in cash or in kind, as punishment for some offense.” Timbs v. Indiana, 22 586 U.S. 146, 151 (2019). In Timbs, the Supreme Court incorporated the 23 Excessive Fines Clause to the states through the Fourteenth Amendment. Id. 24 That decision “affirmatively opens the door for Eighth Amendment challenges to 25 fines imposed by state and local authorities.” Pimentel v. City of Los Angeles, 974 26 F.3d 917, 922 (9th Cir. 2020). 27 “To determine whether a fine is grossly disproportional to the underlying 28 offense, four factors are considered: (1) the nature and extent of the underlying 1 offense; (2) whether the underlying offense related to other illegal activities; (3) 2 whether other penalties may be imposed for the offense; and (4) the extent of the 3 harm caused by the offense.” Pimentel, 974 F.3d at 921 (internal citations 4 omitted). In Pimentel, the court considered an Eighth Amendment challenge to 5 municipal parking fines and late penalties and concluded based on the four 6 factors that the fines were not grossly disproportional to the underlying offense 7 of overstaying the allotted time on the parking space. Id. at 922–25. 8 i. Nature and Extent of Underlying Offense 9 A reviewing court first must consider the “nature and extent of the 10 underlying offense.” Pimentel, 974 F.3d at 922. To assess this factor, courts 11 typically look to the violator’s culpability. Id. In doing so, courts must “review the 12 specific actions of the violator rather than [take] an abstract view of the violation.” 13 Id. at 923. Plaintiff argues that “innocent owners of property” have no culpability 14 for any offense under Chapter 7.100. (ECF No. 5 at 14.) Defendant points out 15 that courts have historically held owners responsible for the misuse of their 16 property in other contexts. (ECF No. 11 at 8, 10.) 17 In Pimentel, the court considered analogous the Seventh Circuit’s decision 18 in Towers v. City of Chicago, which held constitutional a municipal ordinance 19 that fined car owners who allowed their vehicle to be used to transport illegal 20 guns or drugs by others, even if they were unaware that their vehicle was used 21 for that purpose. Pimentel, 974 F.3d at 924 (citing Towers v. City of Chicago, 173 22 F.3d 619, 62–26 (7th Cir. 1999)). In Towers the court “rejected ‘the notion that 23 the plaintiffs must be considered completely lacking in culpability,’ even though 24 the act triggering the fine was merely letting another person borrow their vehicle 25 and nothing more.” Pimentel, 974 F.3d at 923 (citing Towers, 173 F.3d at 625). 26 The Towers court explained that “when an owner consents to release control of 27 his or her vehicle to another person, expressly or otherwise, the owner also 28 accepts the risks inherent to that loss of control.” Towers, 173 F.3d at 625. The 1 Court is persuaded by Defendant’s argument that the same reasoning should 2 apply in the context of this case. Here, even if the act is nothing more than leasing 3 an apartment to a person who violates Chapter 7.100, Plaintiff is culpable. 4 Defendant presents evidence suggesting that Plaintiff’s culpability rises 5 above the level of culpability found in Towers. Plaintiff was, at the very least, 6 aware of the violations before the fines were imposed. The county issued notices 7 of abatement which gave Diamond Sands notice and an opportunity to address 8 the violations before fines were imposed. (ECF No. 11 at 19.) Plaintiff could have 9 immediately terminated the lease of the residents of these units pursuant to its 10 lease agreement’s prohibition of assignment and subletting. Defendant also 11 argues that evidence points toward Diamond Sands playing a more active role in 12 the violations. In a declaration, Chief of Code Enforcement Jim Anderson states 13 that enforcement officers spoke with staff at the complex who appeared to be 14 aware that “many of the active Airbnb listings for this property currently have the 15 same host.” (ECF No. 11 at 18.) Defendant notes that it is unlikely that a single 16 tenant could have access to several units without the property owners “allowing 17 or directing that the units be rented out short-term.” (Id. at 8.) 18 Because the evidence suggests that Plaintiff was aware of the violations 19 before fines were imposed, and that it failed to remedy those violations on 20 multiple occasions, the Court finds that Plaintiff bears some level of culpability 21 for the offense. This factor therefore weighs in favor of finding the fines 22 proportional. 23 ii. Whether the underlying offense relates to other illegal activities 24 A court next considers “whether the underlying offense related to other 25 illegal activities.” Pimentel, 974 F.3d at 922. In the context of civil fines, this factor 26 is “not as helpful to [a court’s] inquiry as it might be in criminal contexts.” Id. at 27 923. In Pimentel, the court found this factor neutral because failure to timely pay 28 1 a parking fine has no nexus to other illegal activity. Id. at 923. 2 Plaintiff argues that the underlying offense of “short-term rentals” is 3 unrelated to other illegal activities. (ECF No. 5 at 14.) Defendant argues that 4 operating a short-term rental without a permit violates other county codes, 5 including zoning and tax codes. Id. § 30.44.010(b)(7)(C) (“Transient commercial 6 use of residential development for remuneration is prohibited in all residential 7 zoning districts . . . except as otherwise expressly permitted in this Title or as 8 licensed pursuant to Chapter 7.100 of the Clark County Code”); Id. § 4.08.010 9 (transient lodging taxes). 10 As Plaintiff points out, the zoning code Defendant cites refers directly back 11 to Chapter 7.100, and thus would not necessarily constitute separate illegal 12 activity. (ECF No. 12 at 12.) Defendant’s argument that the offense may also 13 constitute a violation of Clark County’s tax code, which requires that all operators 14 of transient lodging pay additional taxes, is more persuasive. However, neither 15 party has pointed to a case, and the Court is not aware of one, in which a court 16 found this factor relevant in the context of municipal fines like this one. 17 The Court therefore finds that this factor is neutral and does not affect the 18 analysis. 19 iii. Whether other penalties may be imposed 20 The third factor looks to “other penalties that the Legislature has 21 authorized” for the offense. United States v. $100,348.00 in U.S. Currency, 354 22 F.3d 1110, 1122 (9th Cir. 2004). Plaintiff argues that Clark County could fine 23 only the tenants and not the property owners. (ECF No. 5 at 14.) Defendant 24 responds that this “would not accomplish the goal of deterring short-term rentals 25 and stopping property owners from profiting off of unpermitted short-term rentals 26 either directly or indirectly.” (ECF No. 11 at 13.) If only tenants were fined, 27 property owners would have no incentive to prevent short-term rentals and Clark 28 County would not be able to enforce unpaid fines through liens. (Id.) 1 Under Nevada law, Clark County is required to regulate short-term rentals 2 and is permitted, but not required, to issue fines for violations. NRS 3 § 244.353545. The statute does not distinguish between a property owner and a 4 tenant, referring only to “a person.” Id. Contrary to Plaintiff’s arguments, the 5 statute does not authorize an alternative penalty of fining only the tenant. (See 6 ECF No. 12 at 12–13.) This factor does not look to the possibility of alternative 7 penalties, but to “other penalties that the Legislature has authorized.” See 8 Pimentel, 115 F.4th at 1068 (rejecting appellants’ contention that the possibility 9 of a lower late fee is a relevant consideration under Bajakajian). The statute does 10 require that, if a fine is imposed, it be between $1,000 and $10,000. NRS 11 § 244.353545(3). Clark County mirrored that range in Chapter 7.100. 12 Under Chapter 7.100, the county could have issued a notice of violation 13 alone with no fine. But the county could not have fined only the tenant and not 14 the property owner. The ordinance requires that where the person violating the 15 chapter is not the property owner, the property owner “shall” also receive the 16 administrative citation. Clark Cty. Mun. Code § 7.100.230(e)(2). The only 17 alternative penalties authorized are no fine or a fine between $1,000 and $10,000. 18 The fines issued in this case were all at the minimum end of the authorized 19 range of penalties. This factor therefore weighs in favor of finding the fines 20 proportional. 21 iv. Extent of harm caused by offense 22 Under the fourth factor, the Court “must determine the extent of the harm 23 caused by the violation.” Pimentel, 974 F.3d at 923. Courts may consider both 24 monetary and non-monetary harm. Id. at 924. In Pimentel, the court found that 25 the City was harmed because “overstaying parking meters leads to increased 26 congestion and impedes traffic flow.” Id. 27 Here, there is no real dispute that Clark County is harmed by the operation 28 of unlicensed short-term rentals. Diamond Sands argues again that, as an 1 “innocent owner,” it “has not harmed Clark County in any way.” (ECF No. 5 at 5.) 2 But it also acknowledges that, in enacting these ordinances, Clark County made 3 multiple findings as to the harm that short-term rentals cause. (Id.) Clark County 4 found that the “primary function of residential development in Clark County is to 5 provide permanent, affordable housing for the residents of the county” and that 6 the “commercial use of residential development for transient lodging is 7 inconsistent with this purpose and constricts the availability of affordable 8 housing.” Clark Cty. Mun. Code § 7.100.010(a). It found that the use of short- 9 term rentals “to host large, disruptive parties in residential neighborhoods . . . 10 causes harm to the quality of life for the permanent residents of Clark County 11 and constitutes a public nuisance.” Id. § 7.100.010(b). And it found that the 12 increasing number of short-term rentals has “negatively impacted the revenue 13 derived from [traditional] rentals to local governments and other agencies and 14 other beneficiaries of transient lodging taxes.” Id. § 7.100.010(c). 15 The Court affords “substantial deference to the broad authority that 16 legislatures necessarily possess in determining the types and limits of 17 punishments.” Pimentel, 974 F.3d at 924 (citing Bajakajian, 524 U.S. at 336). 18 The stated legislative findings show that Plaintiff’s offenses cause harm to the 19 county. This factor therefore weighs in favor of finding the fines constitutional. 20 In sum, three of the four Bajakajian factors weigh in favor of finding that 21 the county’s fines are constitutional, and the other is neutral. The fines imposed 22 against Plaintiff, which are on the low end of the statutory fee range, bear “some 23 relationship” to the gravity of the offense. Bajakajian, 524 U.S. at 334. 24 Accordingly, Plaintiff has failed to raise serious questions as to whether the 25 imposition of these fines violates the Eighth Amendment either facially or as 26 applied. 27 The Court declines to address the remaining preliminary injunction factors 28 because even strong showings on those factors would not allow the court to issue 1 || an injunction. See Disney Enterprises, Inc., 869 F.3d at 856. 2 IV. CONCLUSION 3 The Court therefore DENIES Plaintiffs motion for a preliminary injunction 4 || (ECF No. 5). 5 6 DATED: April 25, 2025 7 Aras jlosed Ter 8 9 ANNE R. TRAUM UNITED STATES DISTRICT JUDGE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28