For The Woodhawk Club Condominium Owners Association, the Woodhawk Club Condominium II Owners Association, Plaintiffs-Appellees: Steven M. Ott, Kaman & Ott, Cleveland, OH.

Community Associations Institute, Amicus Curiae: Mark F. Makower, Mark F. Makower & Associates, Farmington Hills, MI.

United Condominium Owners of Michigan, Amicus Curiae: Robert M. Meisner, Bingham Farms, MI.

For Ohio Municipal League, Amicus Curiae: Barry M. Byron, Willoughby, OH.

For City of Mayfield Heights, Margaret A. Egensperger, Andrew Fornaro, Defendants-Appellants: Leonard F. Carr, L. Bryan Carr, Carr, Feneli & Carbone, Mayfield Heights, OH.

Before: NELSON and DAUGHTREY, Circuit Judges; and BERTELSMAN, District Judge. ^* 

PER CURIAM.

Defendant-Appellant City of Mayfield Heights appeals a decision in which the district court determined that the City's failuer to collect garbage from the Woodhawk Condominium complex did not amount to a policy that was rationally related to a legitimate government interest. For the reasons stated below, we REVERSE.

The City of Mayfield Heights is a municipal corporation organized and existing under the laws of the State of Ohio. The City is an eastern suburb of Cleveland with approximately twenty thousand residents. The City's housing stock comprises approximately five thousand single-family homes with a few two-family residences. The remaining five thousand dwellings consist of multi-family condominium developments and apartments.

Margaret A. Egensperger is the duly elected Mayor and Safety Director of the City, who controls and supervises all departments and divisions of the City's administration. Andrew Fornaro is the Service Director for the City who, before the privatization of garbage collection and removal, was responsible for directing the collection and removal of garbage for the City. Ross C. DeJohn is the former Mayor and Safety Director of the City who served as such from 1966 to 1994.

Appellees Woodhawk Club and Woodhawk II are not-for-profit Ohio corporations. Woodhawk Club provides a corporate entity owned by two hundred thirty-six condominium unit owners. Woodhawk II provides the same structure for seventy-two condominium unit owners. Woodhawk Club and Woodhawk II are located in the City of Mayfield Heights, Ohio. For the sake of convenience, the two organizations will be referred to collectively as "Woodhawk." The Woodhawk development can be fairly characterized as an upscale community comprised primarily of "empty nesters." The streets in Woodhawk are concrete, but their rights-of-way are narrower than that of the typical City street. Woodhawk's streets were never dedicated to public use. Sidewalks are lacking on some of the Woodhawk streets, and, where sidewalks are present, there are no tree lawns (grassy strips) between the walkway and the roadway.

In the 1960's the City, through Mayor DeJohn, adopted an administrative policy to provide for the collection and disposal of garbage from all single and duplex residences. This service is supported by public taxes. At or about the same time, the City adopted a policy denying denying garbage collection to condominium developments that did not directly abut publicly dedicated roadways within the City.

Woodhawk's developer, Zaremba Woodhawk Company, approached the City for approval of the complex in 1980. The City's initial consideration was whether or not to grant a request for a zoning variance for the property from a Single-Family Residence Classification to Multi-Family Development Classification. Zaremba ultimately received a zoning variance.

The developer next requested an exemption from the City's Building Code Standards regarding building setbacks from roadways, exclusion of sidewalks and tree lawns, and reduction of right-of-way width requirements. In the Planning and Zoning Commission Minutes of March 3, 1980, the City agreed to the exemptions in exchange for assurances by Zaremba that Woodhawk would be a "private, gated community without the need for City services."

Ohio Revised Code § 5311.26 requires that condominium developers provide a disclosure statement to prospective owners which details all material circumstances or features affecting the purchase of such a unit. In that disclosure under § I(3) "Other Contracts that Affect the Condominium Development," Zaremba disclosed that: "as the units and other improvements near completion, the developer will be entering into other contracts on behalf of the condominium development such as contracts for snow removal, landscaping, garbage removal, exterminating, etc., the same will be set forth on Exhibit 'E' of this disclosure statement." (Disclosure Statement for the Woodhawk Club Condominium, Joint Apdx. p. 353, 369).

Schedule "B" of the same document summarizes annual and monthly costs of garbage removal for the first two years of the development. (Annual and Monthly Expenditures by Category for Common Area Expenses, Joint Apdx. p. 379). Under "budget assumptions" in Schedule "B," the disclosure indicates that garbage removal costs are based on an estimate from Browning-Ferris Industries, a private garbage hauler. Id. p. 381.

In addition, Mayfield Heights's Ordinance § 1357.05 requires that this same disclosure be filed with the City before its use for any promotional purposes. (City of Mayfield Heights Building and Housing Code, § 1357.05 Public Offering Statement, Joint Apdx. p. 590). All indications from the record are that Zaremba filed this disclosure as required.

Through the above requirements, prospective unit owners at Woodhawk are advised of all maintenance costs, including garbage collection and removal, before purchasing a Woodhawk condominium. The unit owners' knowledge of their expenses in also disclosed to them through recorded filings of the Declaration of Condominium Property and deed covenants and restrictions. These documents show that garbage removal is part of the unit owners' financial responsibility.

In 1989, Wesley G. Schmidt, a unit owner in Woodhawk, demanded that the City collect Woodhawk's garbage. Indeed, Schmidt threatened the City with litigation if this demand was not promptly met. Additional requests were made by Schmidt and others for the City to begin providing garbage collection service. The City consistently denied all requests to commence garbage collection at Woodhawk.

Woodhawk finally filed suit in the United States District Court for the Northern District of Ohio at Akron on July 1, 1997. Mediation was scheduled for July 21, 1998. The case was returned to the district court for further processing on July 28, 1998. A bench trial was held on August 11, 1998. Proposed Findings of Fact and Conclusions of Law issued on August 17, 1998. Final Judgment for Woodhawk was entered August 26, 1998.

The court found that the City's garbage collection policy was unconstitutional under the Equal Protection Clause of the Constitution of the United States as incorporated by the 14th Amendment.

The City, its mayor, and other officers were restrained and enjoined from refusing to collect garbage from Woodhawk. The City was ordered to commence garbage collection within three months from date of entry of Judgment. Finally, Woodhawk was awarded $26,000 in damages as a result of the City's unconstitutional actions. This timely appeal followed on September 22, 1998.

District court jurisdiction was proper as the constitutional issue in this case raised a federal question. 28 U.S.C. § 1331. Appellate jurisdiction is based upon 28 U.S.C. § 1291.

In a bench trial, the district court's conclusions of law are reviewed de novo. Kline v. Tennessee Valley Authority, 128 F.3d 337, 341 (6th Cir. 1996). This court reviews a district court's findings of fact under the clearly erroneous standard of review. Id. A finding of fact will only be clearly erroneous when, although there may be some evidence to support the finding, the "reviewing court is left with a definite and firm conviction that a mistake has been committed." Id.

The Equal Protection Clause requies that "all persons similarly situatied should be treated alike." Cutshall v. Sundquist, 193 F.3d 466, 482 (6th Cir. 1999) (internal citations omitted).

The general rule in equal protection analysis is that state action is presumed to be valid and will be sustained if the classification drawn by the state is rationally realted to a legitimate state interest (citation omitted). Where a state classifies by race, alienage, or national origin, or where a state impinges on personal rights protected by the constitution; such action is subjected to strict scrutiny and will be sustained only if narrowly tailored to serve a compelling state interest.

Valot v. Southeast Local School District Board of Education, 107 F.3d 1220, 1229 (6th Cir. 1997). Woodhawk has stipulated that garbage collection and removal is not a suspect classification under Equal Protection Clause jurisprudence. The distinction drawn by the City in this case centers on ownership of a certain type of residence, "which is not among the 'suspect classifications' recognized by the courts." Beauclerc Lakes Condominium Assoc. v. City of Jacksonville, 115 F.3d 934, 935 (11th Cir. 1997).

Woodhawk has also stipulated that no fundamental right is involved in this dispute. That stipulation was correct; the right to free waste collection is not a fundamental right. Id. See Goldstein v. City of Chicago, 504 F.2d 989, 991-92 (7th Cir. 1974) (denying claimed violation of Equal Protection Clause by condominium owners based on provision of free garbage collection to single-family residences). Therefore, rational-basis review applies in this case.

Rational-basis review requires a two-step process. First, one must identify "a legitimate governmental interest the enacting government body could have been pursuing." Beauclerc, 115 F.3d at 935. Second, one must determine whether a "rational basis exists to believe that the legislation would further the hypothesized purpose." Id. Each requirement will be analyzed in turn.

The legitimate government interest of the City was the promotion of efficiency in the collection of garbage in order to preserve scarce municipal resources. This Circuit has held that the "valid interest in conserving public and private financial resources is, standing alone, of sufficient weight to justify the City's Charter Amendment under a rational basis analysis . . . ." Equality Foundation of Greater Cincinnati, Inc. v. City of Cincinnati, 128 F.3d 289, 301 (6th Cir.), cert. denied, 525 U.S. 943, 119 S.Ct. 365, 142 L.Ed. 2d 302 (1998). See also, Edwards v. Valdez, 789 F.2d 1477 (10th Cir. 1986) (holding that ease of administration and preservation of the fiscal integrity of an unemployment program are legitimate government concerns).

Against this backdrop, control of the costs in the City's sanitation department amounts to a legitimate government objective. As to step one, then, the City has articulated a legitimate government interest.

The second step in the rational-basis inquiry is to determine whether a rational basis exists to believe that the government action would further the hypothesized purpose. Beauclerc, 115 F.3d at 935. This inquiry has been described as determining whether a "conceivably rational-basis exists, not whether that basis was actually considered by the legislative body." Id.

Turning to our case, the City's conceivably rational basis for meeting its cost containment goal arose from its negotiations with Zaremba prior to approval of the development. In those discussions the City agreed to waive, inter alia, building setback requirements in exchange for Woodhawk's disclaiming any City maintenance services. The district court found as a fact that this agreement did not include garbage services. This finding was clearly erroneous for two reasons.

First, the testimony of former Mayor DeJohn established that only two City services were to be provided to Woodhawk:

Q: Okay. Tell the Court if you will what occurs when a property owner makes an application to develop property and represents it will be in a private drive or private roadway kind of situation?

A: Well, the building requirement of the buildings have [sic] to of course, be met. We go through a review of the plans of the roadways, parking areas. We scrutinize and have both fire department and police department review these plans to be sure that fire equipment can be executed and because of the size of the fire vehicles. Those are the two services that we do give to private developments or multifamily developments.

Transcript of DeJohn testimony, Joint Apdx. p. 237-238 (emphasis added). It is clear that if fire and police service are the only two City functions provided to Woodhawk, then all other services including garbage collection, are not provided.

Second, Woodhawk residents knew and accepted from the outset that they would bear charges for snow removal, street repair, and garbage removal. The costs for these items are all classified as "common area expenses" in the Disclosure Statement, which is given to every prospective owner. These expenses are also detained in the Declaration of Condominium Ownership, which appears in the chain of title of every unit in the county recorder's office.

Acceptance of these items was part of the bargain that every unit owner struck with the developer. Indeed, all parties from the beginning knew that the absence of City maintenance services to Woodhawk meant that Woodhawk would not receive City garbage collection. Zaremba would not have taken the time and effort to include estimates of garbage collection costs in the required disclosures he filed unless he understood that the City would not collect garbage from Woodhawk. Moreover, the lack of City garbage collection to the development prompted the Woodhawk Owners Association to enter into a contract with a garbage hauler. Likewise, the individual residents would not pay a private hauler to collect their garbage if they expected the City to provide the garbage collection service.

Everyone with a stake in the Woodhawk development understood from the outset that the lack of City maintenence services implied the lack of garbage collection services. To the extent the language of the agreement was ambiguous, the interpretation placed on it over the years by Zaremba, the unit owners, and the City demonstrates that garbage collection was not included. Consequently, the district court clearly erred in holding that City maintenance services did not include garbage removal.

By establishing a quid pro quo with Zaremba, the City avoided the extra expense of collecting garbage from a large development. Through these negotiations, the City was able to pursue its goal of cost containment in the provision of garbage collection services. Therefore, there is a rational basis for the City to deny garbage collection to Woodhawk.

A basic element to the transfer of real property is a state's Recording Act. Ohio's Recording Act provides, in pertinent part:

5301.25 RECORDING OF INSTRUMENTS FOR CONVEYANCE OR ENCUMBRANCE OF LANDS; NAME OF SURVEYOR

(A) All deeds, . . . and instruments of writing properly executed for the conveyance or encumbrance of lands, . . . shall be recorded in the office of the county recorder of the county in which the premises are situated . . . .

OHIO REV. CODE ANN. § 5301.25 (Baldwin 1999).

The deeds for the Woodhawk units sold to individual purchasers were recorded pursuant to § 5301.25.

Ohio adds another recording requirement when the real property in question is a condominium development. The developer of a condominium must file a declaration as provided in Ohio Revised Code § 5311.06:

5311.06 RECORDING OF DECLARATION

(A) A declaration of condominium property shall be filed and recorded in the office of the recorder of the county or counties in which the land or water slips described in the declaration are situated.

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(C) No interest in a unit shall be conveyed until the declaration, bylaws, and drawings, certified as provided in this section, have been filed for record. Errors or omissions in the declarations, bylaws, or drawings do not affect the title of a grantee of a unit.

OHIO REV. CODE ANN. § 5311.06 (Baldwin 1999).

Zaremba filed a proper declaration of condominium ownership within which the estimated charges for garbage collection appeared. The Declaration of Condominium Ownership and By-Laws for Woodhawk Club is recorded at Volume 15622, Page 6, et seq. of the Cuyahoga County Deed Records. The Declaration of Condominium Ownership and By-Laws for Woodhawk II is recorded at Volume 93721, page 5, et seq., of the Cuyahoga County Deed Records.

If the deeds and other instruments are properly recorded, then:

Ohio has long abided by the principle that a purchaser of real property is charged with constructive notice of all prior conveyances [and encumbrances] recorded in his chain of title. Constructive notice is imputed notice which exists by reason of the proper filing of a conveying instrument. A purchaser of real property is obligated to exercise due diligence and thoroughly examine the chain of title to discover the existence of adverse claims or encumbrances.

Columbia Gas Transmission Corp. v. Bennett, 71 Ohio App. 3d 307, 594 N.E.2d 1, 5-6 (Ohio Ct. App. 1990) (citations omitted).

All purchasers of units in Woodhawk were under an obligation to conduct or have conducted an examination of the chain of title of the unit that they were purchasing. Such an examination would have revealed the recorded Declaration of Condominium Ownership and the requirement for payment for garbage collection contained therein. Thus, those owners cannot now say that they are not bound by agreement Zaremba made with the City, when they knew of the requirement to pay for private garbage collection before they entered into a purchase agreement for their condominium.

In addition, the residents benefitted from the arrangement. A waiver of setback requirements allowed Zaremba to build the condominium buildings closer together - which allowed for more units in the same amount of space. This increased density benefitted every owner, beginning with Zaremba. He could build more units to sell. Prospective individual unit owners were rewarded with a lower per unit cost for common expenses. This meant that any individual unit was more affordable. Current unit owners also profit from reduced common area expense because these lower costs make Woodhawk condominiums more attractive on the resale market. These facts provide a further rational basis for the City's position herein.

The City of Mayfield Heights has a legitimate government interest in controlling municipal expenditures for garbage collection. A rational basis for controlling those costs was accomplished by the City's promise to waive building setback requirements for Woodhawk as long as Woodhawk agreed to be a private, gated community with no need for City services. Therefore, the City has not violated the Equal Protection Clause. Consequently, the decision of the district court is REVERSED with directions to enter judgment for defendants and to dismiss the complaint with prejudice.

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