Carson Harbor Village Ltd. v. City of Carson

• Decision Date: 30 September 1994
• Docket Number: No. 93-55234,93-55234
• Citation: 37 F.3d 468
• Parties: CARSON HARBOR VILLAGE LTD., a California limited partnership, dba Carson Harbor Village Mobile Home Park, Plaintiff-Appellant, v. CITY OF CARSON, a Municipal Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 468

37 F.3d 468

CARSON HARBOR VILLAGE LTD., a California limited partnership, dba Carson Harbor Village Mobile Home Park, Plaintiff-Appellant, v. CITY OF CARSON, a Municipal Corporation, Defendant-Appellee.

No. 93-55234.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Feb. 9, 1994.

Decided Sept. 30, 1994.

Richard E. Posell, Jonathan J. Panzer, Rhonda H. Mehlman, Shapiro, Posell, Rosenfeld & Close, Los Angeles, CA, Robert E. Jagiello, Jagiello & Pech, Long Beach, CA, for plaintiff-appellant.

Rochelle Brown, Sayre Weaver, Richards, Watson & Gershon, Los Angeles, CA, for defendant-appellee.

Appeal from the United States District Court for the Central District of California.

Before: BROWNING, BEEZER and TROTT, Circuit Judges.

BEEZER, Circuit Judge:

Carson Harbor Village Ltd. appeals the dismissal of its complaint alleging that laws regulating mobile home parks in the City of Carson, California violate the Due Process and Takings Clauses of the United States Constitution. We affirm.

I

Carson Harbor Village Ltd. ("Carson Harbor") owns a mobile home park containing 409 rental spaces in the City of Carson ("city"). Residents of the park own their mobile homes but rent spaces from Carson Harbor. Despite their name, mobile homes are largely immobile. As a practical matter, moving one is expensive and difficult. Once in place, the vast majority of mobile homes are never moved again. ¹ If a mobile home owner desires to relocate, he usually sells the mobile home in place and the purchaser rents the space from the park owner.

Since 1978, mobile home park owners in California have been subject to the Mobile Home Residency Law, Cal.Civ.Code Sec. 798 et seq. ("Residency Law"). The Residency Law severely limits the bases upon which a park owner may terminate a mobile home owner's tenancy. It also prohibits park owners from requiring the removal of a mobile home when it is sold. Park owners cannot charge a transfer fee upon sale, nor can they disapprove a purchaser as long as the purchaser demonstrates an ability to pay the space rental. The Residency Law, however, does not include any rent control provisions.

In 1979, the city passed the Mobilehome Space Rent Control Ordinance ("Rent Control Law"), which sets a maximum ceiling on rent levels that can be charged for a space in mobile home parks. Carson, Cal., Ordinance 79-485U (May 20, 1979); Carson, Cal., Municipal Code, art. IV, ch. 7, Sec. 4700 et seq. The Rent Control Law also contains a provision prohibiting park owners from increasing rents upon termination of a tenancy or sale of a mobile home. It also establishes the Mobilehome Park Rental Review Board ("Review Board") to hear claims for increases above the ceiling. The Review Board's decisions are guided by a set of policy guidelines adopted by the Carson City Council. The Rent Control Law makes legislative findings that park tenants face a "low vacancy rate and rapidly rising space rents" and that the "purchase of a mobile[ ]home involves a substantial investment, and its relocation is expensive and difficult." Carson, Cal., Ordinance 79-485U, Sec. 2, (May 20, 1979). As the findings suggest, and as the city argues on appeal, the Rent Control Law's purpose is to mitigate rising rents and to protect tenants from losing their investments if they sell their mobile homes.

In 1982, the city supplemented the Rent Control Law with an ordinance requiring park owners to obtain city approval before converting mobile home parks to other uses or vacant lots. Carson, Cal., Ordinance 82-589U (Mar. 8, 1982); Carson, Cal., Municipal Code art. IX, ch. 1, pt. 2, div. 8, Sec. 9128.21. Later in 1982, the city passed another ordinance which, among other things, grants the city the power to require a park owner to bear the costs of relocating tenants to another park, reimburse tenants for the on-site value of their coaches, or set aside a certain number of units for park tenants, in the event the park is closed or converted to another use. Carson, Cal., Ordinance 82-618 (Sept. 20, 1982). Together, these two ordinances constitute the Conversion Law. The stated purpose of the Conversion Law is to "minimize the impact [park] closures ... will have on park residents and to provide assistance to park residents in relocating." Carson, Cal., Municipal Code, art. IX, ch. 1, pt. 2, div. 8, Sec. 9128.21.

Carson Harbor purchased Carson Harbor Village Mobile Home Park on March 31, 1983, after enactment of the Rent Control and Conversion Laws. On January 30, 1989, Carson Harbor, pursuant to the Rent Control Law, applied to the City of Carson's Community Development Department for an increase in rent above the ceiling. On October 19, 1989, after a hearing before the Review Board, the city granted the request only in part.

On July 2, 1990, Carson Harbor filed suit in district court alleging that the Rent Control Law and Conversion Law are unconstitutional. In its complaint, Carson Harbor asserted claims under the Takings and Due Process Clauses of the United States Constitution, and Art. I, Sec. 19 of the California Constitution. ²

The district court dismissed the entire complaint, concluding: (1) the due process claim failed to state a claim under Fed.R.Civ.P. 12(b)(6), (2) the takings claims based on the Rent Control Law were not ripe for federal adjudication, and (3) the takings claim based on the Conversion Law was not ripe and also failed to state a claim under Fed.R.Civ.P. 12(b)(6). The district court also concluded it lacked pendant jurisdiction to hear the state-law inverse condemnation claim, since the federal claims had been dismissed. Carson Harbor timely appeals from dismissal of the complaint. ³

II

Carson Harbor contests the district court's dismissal of its substantive due process claim for failure to state a claim. We review de novo a district court's Rule 12(b)(6) dismissal. Oscar v. University Students Co-Operative Ass'n, 965 F.2d 783, 785 (9th Cir.) (en banc), cert. denied, --- U.S. ----, 113 S.Ct. 655, 121 L.Ed.2d 581 (1992). In reviewing the sufficiency of a claim, we accept all allegations of material fact as true and construe them in the light most favorable to the appellant. Love v. United States, 915 F.2d 1242, 1245 (9th Cir.1989). A complaint should not be dismissed "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Id. (internal quotation omitted).

Carson Harbor's substantive due process claim is based on the Rent Control Law which prohibits park owners from increasing rent during a tenancy and at the termination of a tenancy. Carson Harbor alleges that Rent Control Law, when acting in concert with the California Mobile Home Residency Law's restrictions on tenancy terminations, has the effect of permitting tenants to occupy the spaces at below-market rents for an unlimited time. When a mobile home tenant sells his home, the seller can charge the buyer a premium for this right over and above the normal market value of the home itself. This premium, Carson Harbor alleges, is a "windfall" to selling tenants. Carson Harbor alleges that the prohibition on rent increases at the termination of a tenancy violates due process because it bears no rational relationship to preventing excessive rents for selling tenants, and because the law "does nothing" to preserve low or moderate income housing.

A generally applicable rent-control ordinance will survive a substantive due process challenge if it is "designed to accomplish an objective within the government's police power, and if a rational relationship existed between the provisions and the purpose of the ordinances." Boone v. Redevelopment Agency of San Jose, 841 F.2d 886, 892 (9th Cir.1988) (quoting Scott v. City of Sioux City, 736 F.2d 1207, 1216 (8th Cir.1984), cert. denied, 471 U.S. 1003, 105 S.Ct. 1864, 85 L.Ed.2d 158 (1985)), cert. denied, 488 U.S. 965, 109 S.Ct. 489, 102 L.Ed.2d 526 (1988) (emphasis added). This deferential inquiry does not focus on the ultimate effectiveness of the law, but on whether the enacting body could have rationally believed at the time of enactment that the law would promote its objective. Williamson v. Lee Optical Co., 348 U.S. 483, 487-88, 75 S.Ct. 461, 464-65, 99 L.Ed. 563 (1955).

In examining the sufficiency of the complaint, we assume that the facts contained in Carson Harbor's pleadings are true. Carson Harbor's pleadings incorporate the text of the statute. As noted previously, the apparent purpose of the ordinance is to mitigate hardships caused by rising rents and to protect the tenants' investments in their mobile homes if they choose to sell. We are free to examine the face of the statute and determine whether, in light of its purposes, Carson Harbor is able to prove any set of facts in support of its claim. See Boone, 841 F.2d at 892-93.

We hold that Carson Harbor has failed to state a claim upon which relief can be granted. Carson Harbor's own pleadings allege that the transfer of the premium grants a "windfall" to tenants who sell. In light of this admission, we have no difficulty concluding that a rational legislator could have believed that the prohibition of rent increases at the termination of a tenancy would further the law's goals, at least insofar as the purpose is to protect the investments of existing tenants. As we have stated before in rejecting a similar claim:

[A] rational legislator could have believed that the unfettered right of a park owner to raise the rent on a space when ownership of a mobile home was transferred might make it difficult for a mobile home owner to sell. The legislator thus could have believed that the ordinance protects owners' investments in their units.

Levald, Inc. v. City of Palm Desert, 998 F.2d 680, 690 (9th Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 924, 127 L.Ed.2d 217 (1994). It may be true that the effect of the ordinance is to take "money from the...