Carson Harbor Village, Ltd. v. City Of CarsonCarson Harbor Village, Ltd. v. City Of Carson
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.
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, 998 F.2d 680, 683 (9th Cir. 1993). Carson Harbor Village, Ltd. (“Carson Harbor“) is a large mobile home park located in the City of Carson (“City“). This case arises out of the City‘s handling of Carson Harbor‘s June 2000 and April 2001 applications for rent increases. In June 2000, Carson Harbor applied for
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, 473 U.S. 172, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985), and has failed to show that these procedures are inadequate. Accordingly, we affirm the district court‘s dismissal of Carson Harbor‘s regulatory takings claim.
FACTUAL AND PROCEDURAL BACKGROUND3
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
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
STANDARD OF REVIEW
We review de novo a district court‘s dismissal of a complaint for lack of subject matter jurisdiction under
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.” Id. at 186, 194, 105 S.Ct. 3108; see also Suitum v. Tahoe Reg‘l Planning Agency, 520 U.S. 725, 733-34, 117 S.Ct. 1659, 137 L.Ed.2d 980 (1997). The first ripeness requirement embodies “the important principle that a landowner may not establish a taking before a land-use authority
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, 37 F.3d 468, 475 (9th Cir.1994) (holding than an earlier regulatory takings claim satisfied the first prong of Williamson because Carson Harbor had applied for a rent increase, which was partially granted and partially denied), overruled in part on other grounds by WMX Techs. v. Miller, 104 F.3d 1133, 1136 (9th Cir.1997) (en banc); see also Kawaoka v. City of Arroyo Grande, 17 F.3d 1227, 1232 (9th Cir.1994).
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.” 473 U.S. at 197, 105 S.Ct. 3108; see also Wash. Legal Found. v. Legal Found. of Wash., 271 F.3d 835, 851 (9th Cir.2001) (en banc), aff‘d by Brown v. Legal Found. of Wash., 538 U.S. 216, 123 S.Ct. 1406, 155 L.Ed.2d 376 (2003). “A landowner who seeks to sue in federal court before seeking compensation from the state `bears the burden of establishing that state remedies are inadequate.‘” Del Monte Dunes at Monterey, Ltd. v. City of Monterey, 920 F.2d 1496, 1506-07 (9th Cir.1990) (quoting Austin v. City & County of Honolulu, 840 F.2d 678, 680 (9th Cir.1988)). “A landowner fails to discharge this burden by showing that state procedures are untested or uncertain.” Id. at 1507; see also Bateson v. Geisse, 857 F.2d 1300, 1306 (9th Cir. 1988); Austin, 840 F.2d at 681.
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, 16 Cal.4th 761, 66 Cal.Rptr.2d 672, 941 P.2d 851 (1997), the state procedure for obtaining just compensation for a takings claim was to bring an inverse condemnation action in state court. If that had remained the procedure when the taking allegedly occurred in this case, there would be no
Kavanau and, subsequently, Galland v. City of Clovis, 24 Cal.4th 1003, 103 Cal. Rptr.2d 711, 16 P.3d 130 (2001), however, have modified California‘s procedure for seeking just compensation in a takings case. In Kavanau, the court held that “a landlord may not obtain inverse condemnation damages against a government agency for temporarily imposing rent ceilings ... so as long as the landlord was able to obtain an adequate adjustment of prospective rents that would compensate for past losses.” Galland, 103 Cal.Rptr.2d 711, 16 P.3d at 143 (interpreting Kavanau); see Kavanau, 66 Cal.Rptr.2d 672, 941 P.2d at 854 (“[W]e conclude Kavanau is not entitled to maintain an inverse condemnation action, because he may obtain a full and adequate remedy for any interim loss flowing from the due process violation through an adjustment of future rents under the rent regulation process.“). Before an owner of rental property can bring a state inverse condemnation proceeding against a rental review board, the owner must first challenge the board‘s actions by applying for a writ of administrative mandate in state court. See Galland, 103 Cal.Rptr.2d 711, 16 P.3d at 143. Once the writ has been granted, the property owner must then seek an adjustment of future rents from the rental review board. Such an adjustment is also referred to as a ”Kavanau adjustment.” See id. at 145.
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
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.
Kavanau, 66 Cal.Rptr.2d 672, 941 P.2d at 867. In Galland, the court went further and held that a landlord can seek section 1983 damages
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, 66 Cal.Rptr.2d 672, 941 P.2d at 866. According to Carson Harbor, the rental review board is unlikely to grant an adequate rent increase because it was unwilling to grant an adequate rent increase in the first place, and consequently California‘s new compensation scheme will “result in a string of writ of mandate challenges, and a string of remand hearings, the costs of litigation ever increasing, until one party or another, the city or the park owner, gives up in exhaustion.”
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, 920 F.2d at 1507. Under our precedents, that is not enough to qualify for an exemption from Williamson‘s second ripeness requirement. Id. It may turn out that the mandamus/Kavanau process proves to be futile. We will not, however, assume the accuracy of this prediction. See Hacienda Valley, 353 F.3d at 659, 2003 WL 22961340, at *6.5 Accordingly, we affirm the dismissal of Carson Harbor‘s regulatory takings claim as unripe.6
AFFIRMED.
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.
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, 535 U.S. 302, 322, 122 S.Ct. 1465, 152 L.Ed.2d 517 (2002) (“When the government physically takes possession of an interest in property for some public purpose, it has a categorical duty to compensate the former owner[.]“) (citation omitted); First English, 482 U.S. at 319, 107 S.Ct. 2378 (“Where this burden results from governmental action that amounted to a taking, the Just Compensation Clause of the Fifth Amendment requires that the government pay the landowner for the value of the use of the land during this period.“); id. at 321, 107 S.Ct. 2378 (“[N]o subsequent action by the government can relieve it of the duty to provide compensation for the period during which the taking was effective.“); Kaiser Aetna v. United States, 444 U.S. 164, 180, 100 S.Ct. 383, 62 L.Ed.2d 332 (1979) (“And even if the Government physically invades only an easement in property, it must nonetheless pay compensation.“). Together, these cases stand for a clear proposition: once the government executes a taking, the Constitution does not permit it to shift the public‘s burden of just compensation to third parties. When property is taken for public use under the Fifth Amendment, the public — and not specific individuals or groups at the order of the government — must pay.
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
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.