Lange Refuses to Stop Demolition of Strizheus House, But Says City Could Get Sued for Money

Judge Roberto Lange issued his ruling in the Strizheus mansion case yesterday.

Quick review: tax cheat and convicted thief Vitaliy Strizheus has been building a second home in south Sioux Falls for nearly a decade. Last year, the South Dakota Supreme Court said the city could demolish the unfinished house for violation of city building ordinances. Strizheus filed a poorly written federal lawsuit last month as a last-ditch effort to preserve his project.

KELO-TV and The Dakota Scout offer conflicting reports on Judge Lange’s ruling yesterday. KELO’s Darcy Anderson makes it sound like Strizheus won:

A judge has ruled that a Sioux Falls mansion should stay standing.

…Monday, the Honorable Judge Lange noted that razing the home would be wasteful, unfortunate, and somewhat irrational [Darcy Anderson, “Judge: Sioux Falls Mansion Shouldn’t Be Demolished,” KELO-TV, 2023.03.27].

Anderson appears to have read the first two sentences of Lange’s ruling:

Plaintiffs Vitaliy and Nataliya Strizheus (collectively “Plaintiffs”) seek a preliminary injunction to prevent Defendant the City of Sioux Falls (“the City”) from enforcing a final state court judgment permitting the razing of Plaintiffs’ partially constructed mansion because of past violations of the City’s code. Razing of the home would be an incredibly wasteful, unfortunate, and somewhat irrational undertaking [Judge Roberto Lange, Opinion and Order Denying Motion for Preliminary Injunction, Strizheus v. City of Sioux Falls, 2023.03.27].

…and neither the heading of the ruling—Opinion and Order Denying Motion for Preliminary Injunction—nor the subsequent reasoning and thrust of Lange’s 29-page opinion, in which Judge Lange rules that the federal court has no authority to enjoin the city’s enforcement of its building codes as authorized by the South Dakota Supreme Court. Jonathan Ellis and Joe Sneve did read further and more accurately report Judge Lange’s ruling as a loss for Strizheus:

A federal judge ruled Monday night that he does not have the legal authority to stop the city of Sioux Falls from razing a nearly completed mansion that has been under construction for nearly a decade.

But the decision also came with a warning from Judge Roberto Lange: Should the city move forward with destroying the home, Sioux Falls taxpayers could be liable for claims of excessive fines and a government taking. The home has an estimated value of $2.75 million [Jonathan Ellis and Joe Sneve, “Federal Judge Won’t Stop Mansion from Being Razed, But City Warned It Could Get Sued,” The Dakota Scout, 2023.03.27].

Judge Lange dismissed the claim Strizheus and his wife make that the city is discriminating against them because they are Ukrainian, noting that the plaintiffs “offered no credible evidence” to that effect. Judge Lange also relied heavily on the Rooker-Feldman doctrine, which states that litigants who lose in state court can’t relitigate their failed claims in federal court. Judge Lange also endorses the city’s claim of res judicata: the plaintiffs had their chance to make their arguments in state court; they can’t bring new arguments on the same claims to the federal court to reverse the results of their fair trial at the state level.

Judge Lange does say the plaintiffs may have an unjustified-takings case under the Fifth Amendment once the city rolls the bulldozers, but the prospect of winning compensation from the city after that grim prospect does not allow the federal court to stop that taking now.

Judge Lange does note that the unfinished house is no longer an eyesore, as the exterior is done. But he also notes that the public has “a strong interest in having building codes and regulations function properly….” While the destruction of the unfinished house “would seem to be an incredible waste at this point,” Judge Lange says “This Court must follow precedent and does not have the authority to impose on the parties a more rational result than razing of the home follow by likely more litigation.” Such litigation seems likely, as Strizheus evidently finds it easier to pay lawyers than contractors, but Judge Lange does not say that Strizheus will have a slam-dunk case for winning compensation from the City of Sioux Falls.

p.s.: Not that this point bears on the legal questions in this case, but Lange’s ruling notes that, for all of Strizheus’s professed online-entrepreneurial brilliance, he couldn’t banks to back his project:

In 2013, Plaintiffs bought lots at 6800 South Westfield in southern Sioux Falls, intending to build a 10,000 square foot, custom-made dream mansion on the lots. Plaintiffs were denied the construction loan they sought and instead decided to self-finance construction [Lange, 2023.03.27, p. 3].

People paying Strizheus to share his secrets for getting rich may want to consider his record.