Carson Harbor Village, Ltd. v. City of Carson

• Decision Date: 02 January 2004
• Docket Number: No. 02-56213.,02-56213.
• Citation: 353 F.3d 824
• Parties: 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.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 824

353 F.3d 824

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, 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 monthly rent increases ranging from approximately $223 to $241 per mobile home space, but the City's Mobilehome Park Rental Review Board ("Board") approved an increase of only $14.29 per space.¹ Thereafter, Carson Harbor sued in federal district court under 42 U.S.C. § 1983 claiming a violation of the Fifth Amendment's Takings Clause. The district court dismissed Carson Harbor's regulatory takings claims as unripe under Rule 12(b)(1) of the Federal Rules of Civil Procedure. Carson Harbor now appeals.²

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 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, 226 F.3d 996, 1000 (9th Cir.2000). In reviewing the Rule 12(b)(1) dismissal, we must accept all factual allegations in the complaint as true. Id.

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." 473 U.S. 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 has the opportunity, using its own reasonable procedures, to decide and explain the reach of a challenged regulation." Palazzolo v. Rhode Island, 533 U.S. 606, 620, 121 S.Ct. 2448, 150 L.Ed.2d 592 (2001). As a general rule, until the landowner has "followed reasonable and necessary steps to allow regulatory agencies to exercise their full discretion in considering [whether to grant the landowner's request], including the opportunity to grant any variances or waivers allowed by law[,]... the extent of the restriction on property is not known and a regulatory taking has not yet been established." Id. at 620-21, 121 S.Ct. 2448. "The second [ripeness requirement] stems from the Fifth Amendment's proviso that only takings without `just compensation' infringe that Amendment; `if a State provides an adequate procedure for seeking just compensation, the property owner cannot claim a violation of the Just Compensation Clause until it has used the procedure and been denied just compensation.'" Suitum, 520 U.S. at 734, 117 S.Ct. 1659 (quoting Williamson, 473 U.S. at 195, 105 S.Ct. 3108).

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 ...