Zikar Holdings LLC v. Ruhland

Background

Plaintiffs sought to develop the Robinson Property in Lino Lakes as “Madinah Lakes,” a several-hundred-unit residential development that would include a masjid, or mosque. Ahmed and Mohammed are Muslims who worship at a masjid in nearby Blaine. They formed Zikar Holdings LLC to pursue a community that would allow Muslim residents to live within walking distance of their place of worship.

The City’s 2040 Comprehensive Plan identified the relevant area around Main Street as a gateway district and recommended master planning for the corridor. In early 2024, Pulte Homes expressed interest in a separate residential development in the same general area. After Zikar publicized Madinah Lakes, some residents opposed the proposal because of its affiliation with Islam. The opinion describes social-media posts and public comments expressing hostility toward Muslims and the proposed development.

Councilmember Michael Ruhland proposed a moratorium on residential development, citing water capacity and infrastructure concerns. On July 8, 2024, the City Council adopted a one-year moratorium covering development in the area. The City Council’s stated reasons included the need to prepare a master plan and study land use, transportation, environmental resources, parks, water, and utilities. The moratorium applied to both the area involving Zikar’s proposal and the area involving Pulte Homes’ proposal.

Plaintiffs’ amended complaint asserted claims under the Fair Housing Act, the First Amendment’s Free Exercise Clause, the Fourteenth Amendment’s Equal Protection Clause, and the Religious Land Use and Institutionalized Persons Act. They moved for a preliminary injunction seeking to stop enforcement of the moratorium and certain related development requirements. At the hearing, they withdrew a request to bar Ruhland and Lyden from participating in future City Council deliberations.

Preliminary-Injunction Standard

The court applied four factors: irreparable harm to the plaintiffs, likelihood of success on the merits, the balance between the plaintiffs’ harm and harm to the defendants, and the public interest. The plaintiffs bore the burden of establishing every factor. Because the requested injunction would restrict a legislative measure, the court also considered whether a heightened showing of likely success was required.

Irreparable Harm

The court held that this factor strongly favored denial. Ahmed and Mohammed argued that continuing the moratorium would violate their right to freely exercise their religion. The court rejected that argument at this stage, concluding that they had not shown that the moratorium substantially burdened their religious practice. The moratorium imposed no permanent restriction on building a mosque, did not prevent Plaintiffs from seeking to develop a mosque elsewhere in Lino Lakes, and did not prevent them from worshiping elsewhere in the City.

Zikar argued that it risked losing the opportunity to purchase the Robinson Property because its purchase agreement would expire before the moratorium ended. The court found that assertion unsupported. Plaintiffs did not submit the purchase agreement, and the declaration from their attorney did not establish a sufficient basis for describing its terms. The court also noted that the agreement was contingent on obtaining necessary City or government approvals and other potential contingencies, but Plaintiffs did not show that these conditions had been satisfied or would be satisfied by any applicable deadline. The court therefore concluded that Zikar had offered only speculation about a possible future loss.

Likelihood of Success

The court treated the motion as addressing the plaintiffs’ Fair Housing Act disparate-treatment claim and their Free Exercise claim. It stated that the motion did not present arguments concerning the Religious Land Use and Institutionalized Persons Act claim, the Equal Protection claim, or the Fair Housing Act disparate-impact claim. The court also assumed, without deciding, that the City’s deferral of review of Zikar’s development plan fell within the Fair Housing Act’s scope.

For the Free Exercise claim, the court concluded that Plaintiffs had not shown a likelihood of success. Although the moratorium might delay their ability to build a mosque and nearby residences in the northwest corner of Lino Lakes, it did not permanently prohibit those activities or prevent worship elsewhere. The court also found that the moratorium applied on its face and in operation to both Zikar’s religiously affiliated project and Pulte Homes’ project, which had no identified religious affiliation. Plaintiffs therefore had not shown that the moratorium imposed a substantial burden on their religious practice or was likely to violate the Free Exercise Clause.

For the Fair Housing Act claim, the court applied the burden-shifting framework used for indirect-evidence disparate-treatment claims. It assumed, without deciding, that Plaintiffs could make an initial showing and that the City could identify a legitimate, nondiscriminatory reason for the moratorium. The court identified evidence that could support an inference of discriminatory pretext, including comments by Lyden, Ruhland’s timing in proposing the moratorium, public opposition to Muslims and Madinah Lakes, the Mayor’s request that Zikar remove its promotional video, and evidence that the City Attorney said the moratorium was not legally necessary for master planning.

The court nevertheless held that the evidence was not strong enough at the preliminary stage to satisfy the heightened standard applicable to an injunction against a legislative measure. The motives of the council members and the reasons for the moratorium’s timing remained unresolved, and a factfinder could instead conclude that the City acted to follow its 2040 Plan and conduct infrastructure and resource planning. The court therefore found the likelihood-of-success factor neutral overall.

Balance of Harms and Public Interest

Because Plaintiffs had not demonstrated harm from denial of the injunction, the court found that the balance-of-harms factor weighed slightly against issuing an injunction. The public-interest factor was neutral. The court rejected Plaintiffs’ argument that the public interest favored an injunction because constitutional rights are generally important, explaining that Plaintiffs had not identified a constitutional violation on the record presented.

Disposition

Judge Jeffrey M. Bryan denied Plaintiffs’ motion for a preliminary injunction. The order decided only whether preliminary relief should issue; it did not enter a final ruling on the plaintiffs’ underlying claims.