CARSON HARBOR VILLAGE, LTD., a Limited Partnership dba Carson Harbor Village Mobile Home Park, Plaintiff-Appellant,
v.
CITY OF CARSON, a Municipal Corporation; Carson City Mobilehome Park Rental Review, Board, Defendants-Appellees, and
Carson Harbor Village Mobilehome Park Homeowners Association, Real Party in Interest, Defendant.
No. 02-56213.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted June 3, 2003 — Pasadena, California.
Filed January 2, 2004.
David Spangenberg, Healdsburg, California, for the plaintiff-appellant.
Rochelle Browne, Peter M. Thorson, Richards Watson & Gershon, Los Angeles, California, for the defendants-appellees City of Carson and City of Carson Mobilehome Park Rental Review Board.
Appeal from the United States District Court for the Central District of California, Robert J. Kelleher, District Judge, Presiding. D.C. No. CV-01-04799-RJK.
Before: STEPHEN REINHARDT, DIARMUID F. O'SCANNLAIN and RAYMOND C. FISHER, Circuit Judges.
Opinion by Judge Fisher; Concurrence by Judge O'Scannlain.
OPINION
FISHER, Circuit Judge:
"We are called upon to consider, yet again, a takings challenge to mobile home rent control laws." Levald, Inc. v. City of Palm Desert,
We agree that this regulatory takings claim is unripe. Carson Harbor has failed to avail itself of state procedures for seeking just compensation, as required by Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City,
FACTUAL AND PROCEDURAL BACKGROUND 3
Carson Harbor is a 420 space, 70 acre mobile home park located in the City of Carson, California and accounts for approximately 17 percent of the City's mobile home rental housing. In 1979, the City enacted the Mobilehome Space Rent Control Ordinance ("Ordinance"), which places a ceiling on rent levels for mobile home spaces. See Carson Municipal Code ("CMC"), Art. IV, Ch. 7, §§ 4700 et seq. The purpose of the Ordinance was to prevent mobile home park owners from exploiting a perceived shortage in mobile home spaces by charging high rents. When the Ordinance was enacted, Carson Harbor was newly opened and was offering below-market rents in an effort to attract tenants. The Ordinance froze those below-market rents in place and required Carson Harbor to secure the Board's approval before instituting any rent increases.
The Ordinance does not provide for automatic rent increases for inflation or changed circumstances such as increased costs of operation or capital investments. Instead, a mobile home park owner seeking a rent adjustment above the ceiling must submit a rent increase application to the Board. CMC §§ 4703, 4704. The Board must then hold a public hearing, at which the mobile home park owner, affected residents and other interested persons may offer testimony. Id. § 4704(e)(f). After a hearing on a proposed rent increase, the Board "may approve the rent increase requested, approve a modified rent increase or deny the application pursuant to the standards established by subsection[ ](g)[ ] of this Section." Id. § 4704(f)(3). Subsection (g) in turn provides that the Board "shall grant such rent increases as it determines to be fair, just and reasonable. A rent increase is fair, just and reasonable if it protects Homeowners from excessive rent increases and allows a fair return on investment to the Park Owner." Id. § 4704(g). The Board must consider 11 enumerated but nonexclusive factors when making its determination. Id. These include changes in the Consumer Price Index, capital improvements to mobile home spaces and changes in reasonable operating and maintenance expenses. Id.
This case arises out of the City's handling of Carson Harbor's June 2000 application for a rent increase. On June 28, 2000, Carson Harbor applied for monthly rent increases ranging from $222.65 to $240.73 for 407 of its 420 mobile home spaces. Carson Harbor claims that it sought the increases "so that the fair rate of return in 1999 would equal the fair rate of return at the inception of rent control in constant dollars." The Board held a hearing on the proposed increases on February 29, 2001, and subsequently approved a monthly rent increase of only $14.29 per space. Carson Harbor alleges that the Board "arbitrarily excluded hundreds of thousands of dollars in legitimately incurred operating expenses" in determining the size of the rent increase and that the Ordinance, "as applied, totally destroyed Plaintiff's reasonable investment-backed expectations."
On May 29, 2001, Carson Harbor filed a complaint in federal district court under 42 U.S.C. § 1983 alleging that the Board's partial denial of its June 2000 rent increase application constituted a regulatory taking of property in violation of the Fifth Amendment's Taking Clause, made applicable to the states through the Fourteenth Amendment. The defendants subsequently moved to dismiss Carson Harbor's regulatory takings claim for lack of subject matter jurisdiction under Rule 12(b)(1) of the Federal Rules of Civil Procedure. The district court granted the motion, holding that Carson Harbor's regulatory takings claim was unripe because Carson Harbor had failed to pursue state remedies for just compensation as required by Williamson.
STANDARD OF REVIEW
We review de novo a district court's dismissal of a complaint for lack of subject matter jurisdiction under Rule 12(b)(1). Nurse v. United States,
DISCUSSION
Under Williamson, an as-applied takings claim is ripe only if the plaintiff can establish that (1) "the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue," and (2) the claimant has sought "compensation through the procedures the State has provided for doing so."
We think it beyond question — and the City does not dispute — that Carson Harbor's regulatory takings claim satisfies the first (finality) prong of the Williamson ripeness test. Carson Harbor made a meaningful application for a variance from the rent control law by submitting an application for a rent increase in June 2000, which the Board partially granted and partially denied on February 28, 2001. See Carson Harbor Village Ltd. v. City of Carson,
The disputed question on appeal is whether Carson Harbor has satisfied the second (exhaustion) prong of Williamson. Carson Harbor admits that it has failed to seek state remedies for the alleged taking, but argues that it is not required to do so because those remedies are inadequate. Williamson itself held that a plaintiff may be excused from exhausting state remedies if the plaintiff demonstrates that the remedies are "unavailable or inadequate."
The question, then, is whether Carson Harbor has shown that California's procedures for seeking just compensation are inadequate. Until the California Supreme Court decided Kavanau v. Santa Monica Rent Control Board,
Kavanau and, subsequently, Galland v. City of Clovis,
In Galland, the court considered the further question whether a property owner could seek section 1983 damages in state court for a violation of substantive due process before seeking a writ of mandate and a Kavanau adjustment. The court answered this question in the negative: "[W]hen landlords seek section 1983 damages from allegedly confiscatory rent regulation, we hold that they must show (1) that a confiscatory rent ceiling or other rent regulation was imposed and (2) that relief via a writ of mandate and a Kavanau adjustment is inadequate." Id. at 145. Under Kavanau and Galland, then, it appears that a landowner must seek a writ of mandate and Kavanau adjustment before bringing an inverse condemnation or section 1983 action in state court. Kavanau and Galland thus mark a significant change in California's state law remedies for excessive rent control.4
Carson Harbor argues that Kavanau and Galland have rendered California's compensation scheme inadequate. In Hacienda Valley Mobile Estates v. City of Morgan Hill,
We do not read Kavanau and Galland as reinstating the Agins rule. First, the mandamus/Kavanau adjustment remedy does — at least in principle — allow a landowner to recover for damages incurred prior to issuance of the writ of mandate: the Kavanau adjustment is supposed to compensate for past losses. Second, inverse condemnation and section 1983 damages remedies appear to remain available if the mandamus/Kavanau adjustment remedy proves inadequate. In Kavanau, the court stated that it did not need to:
decide what alternative remedy might be appropriate if a landlord can establish that the remedy of future rent adjustments is for some reason unavailable. But before Kavanau can allege the unavailability of future rent adjustments, he must petition for those adjustments, the Rent Board must determine, subject to judicial review, their appropriate amount, and he must attempt to impose them.
Carson Harbor further contends that a writ of mandate and Kavanau adjustment will not provide adequate compensation because the superior court issuing the writ must remand the case to the municipal rental review board to determine the increase in future rents necessary to compensate the plaintiff for past losses. See Kavanau,
We acknowledge that Carson Harbor raises serious concerns about the adequacy of the new compensation procedures established in Kavanau and Galland. Nevertheless, the alleged inadequacy of the procedures remains highly speculative. Carson Harbor has not sought a writ of mandate and Kavanau adjustment, nor has Carson Harbor identified any landowner who has sought and failed to receive adequate compensation through these procedures. At best, Carson Harbor has merely alleged that the new compensation procedures are "untested or uncertain." Del Monte Dunes,
AFFIRMED.
Notes:
Notes
In April 2001, Carson Harbor filed an application for $295,657 in regulatory lag rents, attorney's fees and costs incurred in obtaining the $14.29 rent increase, but the City allegedly refused to process the application
As a preliminary matter, we will not consider Carson Harbor's second regulatory takings claim, challenging the City's alleged refusal to process the April 2001 regulatory lag rent application. Carson Harbor does not address the dismissal of this claim in its appellate brief and has therefore waived this issue on appealSee Walls v. Wells Fargo Bank, N.A.,
In addition to the regulatory takings claims, Carson Harbor also brought substantive due process, procedural due process and equal protection claims challenging the City's handling of the June 2000 and April 2001 rent increase applications. We address these claims in a separate memorandum disposition filed contemporaneously with this opinion.
This factual background is based on the complaint. Because this case was dismissed for lack of subject matter jurisdiction pursuant to Rule 12(b)(1), the facts alleged in the complaint must be accepted as trueWinn v. Killian,
The district court and the defendants try to distinguishKavanau on the ground that the Kavanau court did not reach the question whether a taking had occurred. That distinction misses the point. The Kavanau court concluded that there was no need to decide whether the rent regulation constituted a taking, because even if it did, the mandamus/Kavanau adjustment process provided an adequate remedy. Kavanau,
To be sure, Kavanau involved a takings claim, and this case is concerned with what is labeled substantive due process. But we have recognized that a price regulation that causes confiscation may be designated interchangeably as either a taking of property under the Fifth and Fourteenth Amendments of the United States Constitution or a violation of due process. It would be incongruous for us to conclude, on the one hand, as we did in Kavanau, that a landlord permitted adequate rent adjustments had not suffered a constitutional injury under the takings clause, but, on the other hand, that he or she has suffered such an injury under the due process clause.
Galland,
Carson Harbor also claims that the mandamus/Kavanau adjustment remedy is inadequate because it requires the landlord to recover compensation from tenants rather than from the municipality. According to Carson Harbor, the "tenants may have moved, died or simply be unable to afford increases intended to make up for the government's past confiscatory rates." Regardless of the merits of this argument, it is also speculative at this stage and thus not ripe for decision. Carson Harbor has not shown that it would be precluded from obtaining damages from the municipality in the event that the mandamus/Kavanau adjustment remedy does prove to be inadequate. See Kavanau,
Because we affirm the dismissal of Carson Harbor's regulatory takings claim on ripeness grounds, we need not address the City's alternative argument that res judicata also justifies the dismissal
O'SCANNLAIN, Circuit Judge, concurring specially.
Because Carson Harbor has made no effort to seek compensation for an alleged taking through a writ of mandamus and Kavanau adjustment, I agree that its regulatory takings claim must be dismissed as unripe. Any analysis of the California procedures in this case would necessarily be speculative. But I write separately to express my concern that California's procedures may not provide "just compensation" because the burden of compensation falls not on the government as the representative of the benefitting general public, but on a select group of future tenants.
The Supreme Court has repeatedly explained the central purpose of the Takings Clause: "The Fifth Amendment's guarantee that private property shall not be taken for a public use without just compensation was designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole." Armstrong v. United States,
Although the Court has wrestled with many issues in its extensive takings jurisprudence — most notably, the intricate question of regulatory takings — it has invariably operated under the assumption that the government is the entity charged with paying just compensation. See, e.g., Tahoe-Sierra Pres. Council v. Tahoe Reg'l Planning Agency,
If Carson Harbor were to establish that it had suffered a regulatory taking, a Kavanau adjustment would provide that future renters alone compensate Carson Harbor in the form of increased rents. Thus, future tenants — some of whom may not have even received the benefit of the earlier confiscatory rates — would be forced to pay for the rental review board's taking of property for public use. I seriously doubt that such outcome would amount to the "just compensation" demanded by the Fifth Amendment, for it violates the principle that compensation must be just both to the deprived property owner and the taking public. See United States v. Commodities Trading Corp.,
Because California's recently altered procedures were not tested in this case, however, consideration of such a weighty but hitherto unexplored issue must be deferred to another occasion, when it is squarely presented for our review.
