Action Apartment Ass'n v. Santa Monica Rent Contr.

• Decision Date: 03 December 2007
• Docket Number: No. 05-56533.,05-56533.
• Citation: 509 F.3d 1020
• Parties: ACTION APARTMENT ASSOCIATION, INC., a California corporation; Mathew Millen, Plaintiffs-Appellants, v. SANTA MONICA RENT CONTROL BOARD, a municipal entity; Mary Ann Yurkonis, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

509 F.3d 1020

ACTION APARTMENT ASSOCIATION, INC., a California corporation; Mathew Millen, Plaintiffs-Appellants, v. SANTA MONICA RENT CONTROL BOARD, a municipal entity; Mary Ann Yurkonis, Defendants-Appellees.

No. 05-56533.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 18, 2007.

Filed December 3, 2007.

Robert J. Franklin (argued) and Rosario Perry, Santa Monica, CA, attorneys for Plaintiffs-Appellants Action Apartment Association, Inc., and Mathew Millen.

David Pettit and Michael Roth (argued), Los Angeles, CA; and David Daniels and Michaelyn Jones, Santa Monica, CA, attorneys for Defendants-Appellees, Santa Monica Rent Control Board and Mary Ann Yurkonis.

Appeal from the United States District Court for the Central District of California; A. Howard Matz, District Judge, Presiding. D.C. No. CV-04-10343-AHM.

Before: SIDNEY R. THOMAS, RAYMOND C. FISHER, and RONALD M. GOULD, Circuit Judges.

THOMAS, Circuit Judge:

In this appeal, we are presented with a claim that Santa Monica's rent control ordinance is unconstitutional under both the "public use" component of the Fifth Amendment's Takings Clause and the substantive component of the Fourteenth Amendment's Due Process Clause. We conclude that the Fifth Amendment claims are not viable, that the facial Fourteenth Amendment claim is time-barred, and that the as applied Fourteenth Amendment claim is unripe. We therefore affirm the judgment of the district court, dismissing the complaint.

I

In 1979, the people of Santa Monica, California, enacted a rent control ordinance by popular referendum. In 1991, we upheld that ordinance against a due process challenge and a takings challenge. Schnuck v. City of Santa Monica, 935 F.2d 171, 172 (9th Cir.1991). We held that Santa Monica's desire to control rapidly rising rents and to cure housing shortages constituted a legitimate governmental purpose, and we held that the 1979 rent control ordinance was a rational means of accomplishing that purpose.

The ordinance has remained in effect continuously since 1979, but the Santa Monica Rent Control Board ("the Board") has amended its provisions on three occasions, twice prior to 2002 and once in 2002. Among the 2002 amendments, the Board enacted some new provisions, including, most significantly, provisions that make it harder for landlords to evict their tenants.

Action Apartment Association ("Action"), an association of landlords, and Matthew Millen ("Millen"), an individual landlord, filed suit under 42 U.S.C. § 1983 exactly two years after the effective date of the 2002 amendments. In their complaint, Action and Millen (collectively, "the Landlords") alleged that the rent control ordinance violates the Fifth Amendment's Just Compensation Clause, the Fifth Amendment's Public Use Clause, and the Fourteenth Amendment's Substantive Due Process Clause.

Acknowledging that Schnuck is binding, the Landlords do not contend that rent control is unrelated to any conceivable public purpose. Rather, they contend that the Board's 2002 decision to reenact rent control with only minor alterations was an arbitrary and irrational response to the many problems that have arisen and persisted since the ordinance went into effect in 1979. Specifically, the Landlords contend that no rational legislator could have expected the more stringent eviction requirements to remedy Santa Monica's housing difficulties. They also contend that the only rational solution to the identified housing problems would be to implement a means test, by which rent ceilings would be available only to poor tenants.

The district court dismissed the complaint, holding that all Fifth Amendment claims were premature and that all substantive due process claims were preempted by the Fifth Amendment. The Landlords appeal the public use claims and the substantive due process claims. They do not appeal the district court's dismissal of their just compensation claims.

II

Because we conclude that the Plaintiffs failed to distinguish this court's decision in Schnuck, we affirm the district court's dismissal of the plaintiffs' public use claims.

The Public Use Clause generally holds that "one person's property may not be taken for the benefit of another private person without justifying public purpose, even though compensation be paid." Thompson v. Consolidated Gas Utilities Corp., 300 U.S. 55, 80, 57 S.Ct. 364, 376, 81 L.Ed. 510 (1937). As the Supreme Court made clear in Kelo v. City of New London, Connecticut, 545 U.S. 469, 125 S.Ct. 2655, 162 L.Ed.2d 439 (2005), this requirement is not a stringent one. Indeed, Kelo specifically noted that the Fifth Amendment provides "legislatures broad latitude in determining what public needs justify the use of the takings power." Id. at 483, 125 S.Ct. 2655. Under that flexible and deferential standard, there can be little doubt that Santa Monica's desire to control rising rents and to remedy housing shortages constitutes a legitimate public purpose. In fact, we have already so held. Schnuck, 935 F.2d at 176.

Recognizing that Schnuck is binding, the Landlords do not ask us to hold that the rent control ordinance is unrelated to a public purpose. In fact, they fully concede that the ordinance and its amendments intend to serve a legitimate public need. The Landlords' only Fifth Amendment argument is that the 2002 amendments to the rent control ordinance are not rationally related to the purpose they intend to serve.

In construing this argument as a Public Use Clause claim, the Landlords rest primarily on the Supreme Court's opinion in Hawaii Housing Authority v. Midkiff, 467 U.S. 229, 104 S.Ct. 2321, 81 L.Ed.2d 186 (1984). In that case, the Court held that a regulatory taking would satisfy the public use clause if it was "rationally related to a conceivable public purpose." Id. at 241, 104 S.Ct. 2321. The Court then conducted a two-step inquiry to determine whether the regulatory taking at issue was constitutional. The first question, of course, was whether the legislature's purpose constituted a "conceivable public purpose." Then, after determining that the legislature's purpose was permissible, the Court asked as a subsequent test of constitutionality whether the legislature's specific approach was rational. See id. at 241-42, 104 S.Ct. 2321. Action and Millen focus exclusively on this second prong of the Midkiff test, arguing only that the 2002 re-enactment and amendments take an irrational approach to solving Santa Monica's housing problems.

This court has confronted such claims before. In Richardson v. City and County of Honolulu, 124 F.3d 1150 (9th Cir. 1997), the plaintiffs challenged a Honolulu condominium conversion law, similar to the state law upheld by the Supreme Court in Midkiff. The plaintiffs argued that although the state law may have been rationally related to a public purpose when passed, subsequent increases in the price of housing subject to the law (at a rate greater than increases in unregulated housing) demonstrated that a conversion law could no longer be considered a rational solution to Hawaii's housing problems. Id. at 1159. The court rejected the argument holding that deference to a legislature's public use determination is required "unless the use involves an `impossibility' or is `palpably without reasonable foundation.'" Id. at 1156 (quoting Midkiff, 467 U.S. at 240-41, 104 S.Ct. 2321). Under Midkiff, "whether the statute actually succeeds is irrelevant." Id. at 1159 (emphasis added). The court concluded that despite how poorly the state law may have performed, the city could have rationally believed that prices would have been even worse had the law not been in effect. Id. at 1159-60.

The Landlords' "public use" claims are similar to the claims this court rejected in Richardson. Even assuming that the Landlords' allegations concerning the effects of the Santa Monica rent control scheme are true, that would not demonstrate that the city's re-enactment of the rent control statute was irrational. This court has already determined that "[c]ontrolling rents to a reasonable level and limiting evictions substantially alleviate hardships to Santa Monica tenants." Schnuck, 935 F.2d at 175. "That rent control may unduly disadvantage others, or that it may exert adverse longterm effects on the housing market, are matters for political argument and resolution; they do not affect the constitutionality of the Rent Control Law." Id. The same reasoning holds true today. As in Schnuck, we decline to second-guess Santa Monica's chosen means of implementing its indisputably legitimate goals. See Kelo, 545 U.S. at 488, 125 S.Ct. 2655 ("`[E]mpirical debates over the wisdom of takings ... are not to be carried out in the federal courts'") (quoting Midkiff, 467 U.S. at 242, 104 S.Ct. 2321).

The 2002 amendments to the Santa Monica rent control law do not change this analysis. The amendments merely tweak the rent control scheme enacted in 1979. We fail to see how these minor changes could alter this court's determination in Schnuck that the Santa Monica rent control law is rationally related to a legitimate purpose. We therefore hold that there was a valid public purpose for the amendments to the rent control law, and on that basis, affirm the district court's dismissal of claims three and five of the complaint.

III

We also affirm the district court's dismissal of the Landlords' substantive due process claims, but we again affirm on different grounds than the district court stated. Although in light of recent Circuit authority we must disagree with the district court's conclusion that the Fifth Amendment preempts the Landlords' substantive due process claims, we conclude that Action's facial claim is time-barred and that Millen's as applied claim is unripe.

A

This court previously had held that the Fifth Amendment preempts certain substantive due process challenges to land use regulations. Armendariz v. Penman, 75 F.3d 1311, 1321-24 (9th...