Ballinger v. City of Oakland

Decision Date01 February 2022
Docket NumberNo. 19-16550,19-16550
Citation24 F.4th 1287
Parties Lyndsey BALLINGER; Sharon Ballinger, Plaintiffs-Appellants, v. CITY OF OAKLAND, Defendant-Appellee.
CourtU.S. Court of Appeals — Ninth Circuit

J. David Breemer (argued), Meriem Lee Hubbard, and Daniel M. Ortner, Pacific Legal Foundation, Sacramento, California, for Plaintiffs-Appellants.

Kevin P. McLaughlin (argued), Deputy City Attorney; David A. Pereda, Special Counsel; Maria Bee, Chief Assistant City Attorney; Barbara J. Parker, City Attorney; Office of the City Attorney, Oakland, California; for Defendant-Appellee.

Brendan Darrow and Matthew Siegel, Berkeley, California, for Amici Curiae League of California Cities and California State Association of Counties.

Nathaniel P. Bualat, Pilar Stillwater, and Rebecca Suarez, Crowell & Moring LLP, San Francisco, California, for Amicus Curiae Western Center on Law and Poverty.

Before: Richard R. Clifton, N. Randy Smith, and Ryan D. Nelson, Circuit Judges.

OPINION

R. NELSON, Circuit Judge:

The City of Oakland required the Ballingers to pay their tenants over $6,000 before the Ballingers could move back into their own home upon the expiration of the lease. The Ballingers challenge the payment as an unconstitutional physical taking under the Takings Clause. Instead, the requirement to pay tenants a relocation fee before an owner may move back into their home is more properly classified as a wealth-transfer provision but not an unconstitutional taking. We therefore affirm the dismissal of the Ballingers' physical takings, exaction, and seizure claims.

I

In September 2016, Lyndsey and Sharon Ballinger leased their Oakland home for one year while fulfilling military assignments on the east coast. After one year, the lease converted to a month-to-month tenancy.

Under the City of Oakland ("the City") Municipal Code, even after a lease has ended and converted to a month-to-month tenancy, the tenancy may only end if the landlord has good cause. Oakland, Cal. Mun. Code § 8.22.360(A). Ending the tenancy, or "evicting," for good cause, includes when a landlord chooses to move back into her home at the end of the month. Id. § 8.22.360(A)(8)(9). In January 2018, the City adopted the Uniform Residential Tenant Relocation Ordinance ("the Ordinance"), which requires landlords re-taking occupancy of their homes upon the expiration of a lease to pay tenants a relocation payment based on rental size, average moving costs, the duration of the tenants' occupancy, and whether the tenants earn a low income, are elderly or disabled, or have minor children. See id. § 8.22.820. Half the payment is due upon the tenant's receipt of the notice to vacate and the other half upon actual vacation. Id. § 8.22.850(D)(1). And the payment need not be spent on relocation costs. Failing in bad faith to make the payments allows a tenant to bring an action against the landlord for injunctive relief, the relocation payment, attorneys' fees, and treble damages. Id. § 8.22.870(A).

When the Ballingers were reassigned to the Bay area, they decided to move back into their Oakland home. The Ballingers gave their tenants sixty days' notice to vacate the property, paying half the relocation payment up front and the remainder after the tenants vacated. In total, the Ballingers paid their tenants $6,582.40 in relocation fees.

The Ballingers sued the City, bringing facial and as-applied constitutional challenges under the Declaratory Judgment Act and 42 U.S.C. § 1983. Characterizing the relocation payment as a "ransom" of their home, they claimed that the relocation fee is an unconstitutional physical taking of their money for a private purpose and without just compensation. Alternatively, they claimed that the fee constitutes an unconstitutional exaction of their Oakland home, and an unconstitutional seizure of their money under the Fourth and Fourteenth Amendments.

The district court dismissed each claim under Federal Rule of Civil Procedure 12(b)(6). It held that "no precedent supports the Ballingers' argument that legislation requiring the payment of money constitutes a physical taking." Because "[t]he Ordinance ... was generally applicable legislation," the district court concluded that it did not give rise to an actionable exaction claim, and the Ballingers had not shown the requisite state action for their seizure claim. The Ballingers appealed.1

II

We review a dismissal under Federal Rule of Civil Procedure 12(b)(6) de novo, accepting as true all allegations of material facts. Mendiondo v. Centinela Hosp. Med. Ctr. , 521 F.3d 1097, 1100 n.1, 1102 (9th Cir. 2008). "Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory." Id. at 1104.

III

We affirm the district court's dismissal of the Ballingers' taking claim. The Ballingers assert that the Ordinance effected an unconstitutional physical taking of their money for a private rather than public purpose and without just compensation. But we disagree—even though money can be the subject of a physical, also called a per se, taking, the relocation fee required by the Ordinance was a regulation of the landlord-tenant relationship, not an unconstitutional taking of a specific and identifiable property interest. Because there was no taking, we need not address whether the relocation fee is required for a public purpose or what just compensation would be. See Rancho de Calistoga v. City of Calistoga , 800 F.3d 1083, 1093 (9th Cir. 2015) (private takings claim is not an independent cognizable claim).

A

The Takings Clause of the Fifth Amendment provides that "private property" shall not "be taken for public use, without just compensation." U.S. Const., amend. V ; see also Chi., Burlington & Quincy R.R. Co. v. City of Chicago , 166 U.S. 226, 238–39, 17 S.Ct. 581, 41 L.Ed. 979 (1897) (incorporating the Takings Clause through the Fourteenth Amendment). "Whenever a regulation results in a physical appropriation of property, a per se taking has occurred." Cedar Point Nursery v. Hassid , ––– U.S. ––––, 141 S. Ct. 2063, 2072, 210 L.Ed.2d 369 (2021). "[A]ppropriation means taking as one's own." Id. at 2077 (citation and quotation marks omitted). "Government action that physically appropriates property is no less a physical taking because it arises from ... a regulation (or statute, or ordinance, or miscellaneous decree)." Id. at 2072. The "essential question ... is whether the government has physically taken property for itself or someone else—by whatever means—or has instead restricted a property owner's ability to use his own property." Id. We assess physical appropriations "using a simple, per se rule: The government must pay for what it takes." Id. at 2071.

The Supreme Court "has consistently affirmed that States have broad power to regulate housing conditions in general and the landlord-tenant relationship in particular without paying compensation for all economic injuries that such regulation entails." Loretto v. Teleprompter Manhattan CATV Corp. , 458 U.S. 419, 440, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982).2 For example, "the government may place ceilings on the rents the landowner can charge, or require the landowner to accept tenants he does not like, without automatically having to pay compensation." Yee v. City of Escondido , 503 U.S. 519, 529, 112 S.Ct. 1522, 118 L.Ed.2d 153 (1992) (citations omitted). "Ordinary rent control often transfers wealth from landlords to tenants by reducing the landlords' income and the tenants' monthly payments," and "[t]raditional zoning regulations can transfer wealth from those whose activities are prohibited to their neighbors." Id. The "transfer [of wealth] in itself does not convert regulation into physical invasion." Id. at 530, 112 S.Ct. 1522 (challenge to mobile home rent control should be analyzed as regulatory taking); see also Com. Builders of N. Cal. v. City of Sacramento , 941 F.2d 872, 875 (9th Cir. 1991) (every fee provision cannot be a compensable taking). So legislative enactments "regulating the economic relations of landlord and tenants are not per se takings." FCC v. Fla. Power Corp. , 480 U.S. 245, 252, 107 S.Ct. 1107, 94 L.Ed.2d 282 (1987).

Here, the Ordinance imposes a transaction cost to terminate a lease agreement. We see little difference between lawful regulations, like rent control, and the Ordinance's regulation of the landlord-tenant relationship here. Thus, the relocation fee is not an unconstitutional physical taking—it "merely regulate[s] [the Ballingers'] use of their land by regulating the relationship between landlord and tenant." Yee , 503 U.S. at 528, 112 S.Ct. 1522.3

The Ballingers argue that a taking "does not become a lesser intrusion simply because it is related to a commercial transaction" and the "decision to leave the rental market." See Horne v. Dep't of Agric. , 576 U.S. 350, 365, 135 S.Ct. 2419, 192 L.Ed.2d 388 (2015) (raisin growers' decision to be raisin farmers made federal government's confiscation of raisins no less a taking); Loretto , 458 U.S. at 439 n.17, 102 S.Ct. 3164 ("[A] landlord's ability to rent his property may not be conditioned on his forfeiting the right to compensation for a physical occupation."). But "[w]hen a person voluntarily surrenders liberty or property," like when the Ballingers chose to rent their property causing them to pay the relocation fee when they caused the tenants to relocate, "the State has not deprived the person of a constitutionally protected interest." L.L. Nelson Enters., Inc. v. County of St. Louis , 673 F.3d 799, 806 (8th Cir. 2012) (citing Zinermon v. Burch , 494 U.S. 113, 117 n.3, 110 S.Ct. 975, 108 L.Ed.2d 100 (1990) ); see Yee , 503 U.S. at 527, 112 S.Ct. 1522 ; Fla. Power , 480 U.S. at 252, 107 S.Ct. 1107.

Here, the Ballingers voluntarily chose to lease their property and to...

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