Gibbs v. Southeastern Inv. Corp., Civ. No. H-86-565 (PCD).

CourtUnited States District Courts. 2nd Circuit. United States District Court (Connecticut)
Citation705 F. Supp. 738
Docket NumberCiv. No. H-86-565 (PCD).
PartiesCarol P. GIBBS v. SOUTHEASTERN INVESTMENT CORP.
Decision Date30 January 1989

Philip L. Steele, Richard M. Porter, Rogin, Nassau, Caplan, Lassman & Hirtle, Hartford, Conn., for plaintiff.

James T. Haviland, II, Howard, Kohn, Sprague & Fitzgerald, Hartford, Conn., Edward E. Moukawsher, New London, Conn., for defendant.

Robert M. Langer, William M. Rubenstein, John M. Looney, Stephen R. Park, Asst. Attys. Gen., Hartford, Conn., amicus curiae, for State of Conn.

RULING ON MOTION FOR JUDGMENT N.O.V. and APPLICATION FOR PUNITIVE DAMAGES AND ATTORNEY FEES

DORSEY, District Judge.

I. Background

Defendant, Southeastern Investment Corporation ("Southeastern"), owns and operates a Norwich mobile home park in which it rents lots to persons who own mobile homes. In 1983, Southeastern sold a mobile home, located on a lot in its park, to plaintiff. In April 1983, Gibbs and Southeastern entered into a rental agreement for the lot occupied by Gibbs' mobile home. In May 1986, plaintiff brought this action against defendant, claiming that defendant wrongfully and/or fraudulently caused her to submit to eviction, that defendant misled her as to her rights and remedies accorded by the Connecticut Mobile Manufactured Home Parks, Owners, and Residents Act ("the Act"), Conn.Gen. Stat. §§ 21-64 to 84a; and that defendant refused to honor certain of her rights protected by the Act. On July 2, 1987, the jury found for plaintiff on seven of her ten claims that defendant's conduct violated the Connecticut Unfair Trade Practices Act ("CUTPA"),1 Conn.Gen.Stat. §§ 42-110a to 110q, and on two of her four claims that defendant fraudulently misled plaintiff and fraudulently failed to disclose her rights under the Act.

Southeastern has moved for judgment notwithstanding the verdict on the ground that the Act, specifically §§ 21-79, 80, works an unconstitutional taking of property without just compensation. Plaintiff counters that the Act is constitutional and that, even if the challenged provisions are invalid, the validity of the verdict should not be affected.

II. Timeliness and Preservation of Defense

Defendant first raised the defense of unconstitutionality in a motion for directed verdict at the close of plaintiff's case in chief. Thus, defendant has preserved the question of the constitutionality of the Act only insofar as it presents a defense of failure to state a claim upon which relief can be granted, which defense may be raised at any time until a disposition on the merits. Fed.R.Civ.P. 12(h)(2); Ruling on Pending Motions at 2 (November 18, 1987). In order to prevail at this stage of the litigation, defendant must show that the challenged provisions of the Act are unconstitutional on their face (i.e., void ab initio and without the necessity of inquiry into application to defendant's property value, etc.) and that as a result plaintiff does not state a claim for fraud or under CUTPA.

III. Mobile Manufactured Home Parks, Owners, and Residents Act

The Act comprehensively regulates the operation of mobile home parks in the state. The principal sections at issue regulate (a) the eviction of residents who own mobile homes located in a mobile home park, § 21-80(b)(1); and (b) the resident's right to sell the mobile home in the mobile home park and the landlord's right to approve such sale, § 21-79. Specifically, the statute allows eviction of residents who own mobile homes only for the following reasons:

(a) Nonpayment of rent or other reasonable charges, § 21-80(b)(1)(A).
(b) Material noncompliance by the resident with statutory obligations, § 21-80(b)(1)(B).
(c) Material noncompliance by the resident with the rental agreement or park rules and regulations, § 21-80(b)(1)(C).
(d) Failure by the resident to agree to a proposed rent increase, § 21-80(b)(1)(D).

These reasons are exclusive, so that eviction may not even occur upon expiration of the lease. Liberty Mobile Home Sales, Inc. v. Peters, 11 Conn.L.Trib. No. 18 at 18-19 (No. SPH-8401-22129, Oct. 31, 1984). Furthermore, execution of an eviction for failure to agree to a proposed rent increase is statutorily stayed for six months. § 21-80(a).

Residents must be permitted to sell their mobile homes within the park development so long as the mobile home is safe, sanitary and in conformance with the aesthetic standards of the park, § 21-79(a), but any purchaser of the on-site mobile home must assume and be bound by the seller's rental agreement and the rules and regulations of the park. Id. The park owner is prohibited from denying entry to a purchaser of an on-site mobile home except for good cause, with good cause defined to mean only:

Reasonable cause for the owner to believe (1) that such purchaser intends to utilize the purchased mobile manufactured home for an illegal or immoral purpose or for any purpose that would disturb the quiet enjoyment of the other residents of the park or (2) that the purchaser is or will be financially unable to pay the rent for the space or lot upon which the purchased mobile manufactured home is located.

§ 21-79(d). Finally, the statute permits the owner to cease use of his property as a mobile home park and evict all the residents upon providing written notice one year in advance. § 21-80(b)(1)(E).2

IV. The Takings Challenge

Defendant argues that the Act — specifically §§ 21-79, -80 relied on by the jury in finding for plaintiff — effects a taking of private property without just compensation in violation of the Fifth and Fourteenth Amendments to the United States Constitution. Because the act effectively creates a perpetual lease by limiting grounds for eviction, defendant claims that "the park owner is foreclosed from its fee simple ownership right to control who will occupy its property and on what terms." Defendant's Memorandum in Support at 4. In addition, defendant claims that the alleged taking is not for a public use, but rather confers a private benefit on mobile home owners at the expense of park owners.

The fifth amendment provides: "Nor shall private property be taken for public use without just compensation." U.S. Const. Amend. V. This guarantee is "designed to bar government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole." Armstrong v. United States, 364 U.S. 40, 49, 80 S.Ct. 1563, 1569, 4 L.Ed.2d 1554 (1960). Although it is clear that "land use regulation can effect a taking if it `does not substantially advance legitimate state interests, ... or denies an owner economically viable use of his land,'" Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 485, 107 S.Ct. 1232, 1242, 94 L.Ed. 2d 472 (1987), quoting Agins v. Tiburon, 447 U.S. 255, 260, 100 S.Ct. 2138, 2141, 65 L.Ed.2d 106 (1980) (citations omitted), the Supreme Court

has generally "been unable to develop any `set formula' for determining when `justice and fairness' require that economic injuries caused by public action be compensated by the government, rather than remain disproportionately concentrated on a few persons." Rather, it has examined the "taking" question by engaging in essentially ad hoc, factual inquiries that have identified several factors — such as the economic impact of the regulation, its interference with reasonable investment backed expectations, and the character of the government action — that have particular significance.
Kaiser Aetna v. United States, 444 U.S. 164, 175, 100 S.Ct. 383, 390, 62 L.Ed.2d 332

(1979), citing Penn Central Transp. Co. v. New York City, 438 U.S. 104, 124, 98 S.Ct. 2646, 2659, 57 L.Ed.2d 631 (1978).

A. Character of the Government Action

The analysis in this case depends largely upon the characterization of the government action. Defendant contends that the Act effects a per se taking by allowing residents "a permanent physical occupation," Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 426, 102 S.Ct. 3164, 3171, 73 L.Ed.2d 868 (1982), of the park owner's land. Plaintiff counters that this case involves instead "a regulation that merely restricts the use of property." Id. at 430, 102 S.Ct. at 3173. In the former view, a taking necessarily must be found, while the latter view "requires a weighing of private and public interests," Agins, 447 U.S. at 261, 100 S.Ct. at 2141, and must be "analyzed under the multifactor inquiry generally applicable to nonpossessory governmental activity." Loretto, 458 U.S. at 440, 102 S.Ct. at 3178.

In Loretto, a New York statute required a landlord to permit the permanent installation of cable television equipment on his property by a cable company. Justice Marshall, writing for the court, found that under such circumstances no balancing of interests was to be considered; the permanent physical attachment to the property was necessarily a taking "without regard to the public interests that it may serve." Id. at 426, 102 S.Ct. at 3171. The minimal impact on the property was irrelevant: "Permanent occupations of land by such installations as telegraph and telephone lines, rails, and underground pipes or wires are takings even if they occupy only relatively insubstantial amounts of space and do not seriously interfere with the landowner's use of the rest of his land." Id. at 430, 102 S.Ct. at 3173.

The Court was careful to note, however, that its holding was "very narrow," id. at 441, 102 S.Ct. at 3179, and not intended to alter

the government's power to adjust landlord-tenant relationships. This 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. See, e.g., Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241 85 S.Ct. 348, 13 L.Ed.2d 258 (1964) (discrimination in places of public accommodation); Queenside
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