Guggenheim v. City of Goleta

• Citation: 638 F.3d 1111
• Decision Date: 22 December 2010
• Docket Number: No. 06–56306.,06–56306.
• Parties: Daniel GUGGENHEIM; Susan Guggenheim; Maureen H. Pierce, Plaintiffs–Appellants,v.CITY OF GOLETA, a municipal corporation, Defendant–Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

638 F.3d 1111

10 Cal. Daily Op. Serv. 15,843

2010 Daily Journal D.A.R. 19,204

Daniel GUGGENHEIM; Susan Guggenheim; Maureen H. Pierce, Plaintiffs–Appellants,

v.CITY OF GOLETA, a municipal corporation, Defendant–Appellee.

No. 06–56306.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 22, 2010.Filed Dec. 22, 2010.

Robert S. Coldren, Hart, King & Coldren, Santa Ana, CA, for the appellants.Andrew W. Schwartz (argued), Shute, Mihaly & Weinberger, LLP, San Francisco, CA, and Amy E. Morgan (briefed), Burke, Williams & Sorensen, LLP, Los Angeles, CA, for appellees.David J. Bradford (briefed), Jenner & Block LLP, Chicago, IL, for amicus curiae Equity Lifestyle Properties.Michael M. Berger (briefed), Manatt, Phelps & Phillips, LLP, Los Angeles, CA, for amicus curiae Center for Constitutional Jurisprudence.

Gordon C. Atkinson (briefed), Cooley Godward Kronish LLP, San Francisco, CA, for amicus curiae Golden State Manufactured–Home Owners League.John J. McDermott (briefed), Arlington, VI, for amici curiae National Apartment Association, National Multi Housing Council, Apartment Association of California Southern Cities, Inc., and the Apartment Association of Orange County.Grant Habata (briefed), California Association of Realtors, Los Angeles, CA, for amicus curiae California Association of Realtors.R.S. Radford (briefed), Pacific Legal Foundation, Sacramento, CA, for amici curiae Pacific Legal Foundation and Manufactured Housing Institute.Amy E. Margolin (briefed), Bien & Summers, Novato, CA, for amicus curiae Western Manufactured Housing Communities Association.Karen K. McCay, Sonia S. Shah, Anthony J. Adair, and Stepanie M. Vaughan, (briefed), Pahl & McCay, San Jose, CA, for amicus curiae California Apartment Association.Meaghan McLaine VerGow (briefed), O'Melveny & Myers LLP, Washington, D.C., for amici curiae Manufactured Housing Educational Trust, Goldstein Properties, Inc., and Morgan Partners, Inc.Michael von Loewenfeldt (briefed), Kerr & Wagstaffe LLP, San Francisco, CA, and Jeff M. Malawy (briefed), Aleshire & Wynder, LLP, Irvine, CA, for amici curiae League of California Cities, and California State Association of Counties.Terry R. Dowdall (briefed), Dowdall Law Offices, Orange, CA, for amicus curiae California Mobilehome Parkowners Alliance.Elizabeth B. Wydra (briefed), Constitutional Accountability Center, Washington, D.C., for amici curiae American Planning Association, APA California, Constitutional Accountability Center, and Western Center on Law and Poverty.Meliah Schultzman (briefed), National Housing Law Project, Oakland, CA, Ilene Jacobs, California Rural Legal Assistance, Inc., Marysville, CA, and Kirk Ah Tye, California Rural Legal Assistance, Inc., Santa Barbara, CA, for amici curiae AARP, California Coalition for Rural Housing, Housing California, Legal Services of Northern California, Non–Profit Housing, Association of Northern California, R. Keith Traphagen, and Tenants Together.Appeal from the United States District Court for the Central District of California, Florence–Marie Cooper, District Judge, Presiding. D.C. No. CV–02–02478–FMC.Before: ALEX KOZINSKI, Chief Judge, ALFRED T. GOODWIN, STEPHEN REINHARDT, PAMELA ANN RYMER, ANDREW J. KLEINFELD, RONALD M. GOULD, RICHARD R. CLIFTON, CONSUELO M. CALLAHAN, CARLOS T. BEA, SANDRA S. IKUTA, and N. RANDY SMITH, Circuit Judges.Opinion by Judge KLEINFELD; Dissent by Judge BEA.

OPINION

KLEINFELD, Circuit Judge:

We address the viability of a takings claim arising out of a rent control ordinance affecting mobile home parks.

I. Facts

In 1979, Santa Barbara County, California adopted a rent control ordinance for mobile homes.¹ Mobile homes have the peculiar characteristic of separating ownership of homes that are, as a practical matter, affixed to the land, from the land itself.² Because the owner of the mobile home cannot readily move it to get a lower rent, the owner of the land has the owner of the mobile home over a barrel. The Santa Barbara County rent control ordinance for mobile homes had as its stated purpose relieving “exorbitant rents exploiting” a shortage of housing and the high cost of moving mobile homes.³ The rent control ordinance was amended in 1987.⁴ The ordinance has a complex scheme for setting rents, limiting how fast they rise, and affording landlords a mechanism for disputing the limits.⁵

Eighteen years after the original rent control ordinance went into effect, and ten years after the amendment, the plaintiffs Daniel and Susan Guggenheim and Maureen H. Pierce (the Guggenheims) bought a mobile home park, “Ranch Mobile Estates,” burdened by the ordinance.

The park, when the Guggenheims bought it in 1997, was in what California calls “unincorporated territory” in Santa Barbara County. Five years later, in 2002, the City of Goleta incorporated in territory including the Guggenheims' land. California law requires a newly incorporated city comprising previously unincorporated territory to adopt, as its first official act, an ordinance keeping all the county ordinances in effect for 120 days or until the new municipality changes them, whichever happens first.⁶ Goleta did what was required on its first day of existence, February 1, 2002, so the county rent control ordinance for mobile home parks became the city rent control ordinance on the first day of the City's existence, as the City's very first official act. And on April 22, 2002, within the 120–day sunset period, the City of Goleta adopted the county code including the ordinance, this time without the statutory 120–day sunset period.⁷ The parties have stipulated that there was a legal gap when the ordinance was not in effect, apparently referring to the hours between the City's coming into legal existence and the performance of the City's first official act on its first day. Those hours on the first day of Goleta's existence are the only time between 1979 and the present day, and the only time during the Guggenheims' ownership, when no rent control ordinance has burdened the Guggenheims' mobile home park.⁸

That year, 2002, the Guggenheims sued the City claiming that the rent control ordinance was a taking of their property without compensation, and asserting numerous other claims.⁹ They have limited their takings claim to a facial challenge, not an “as applied” challenge. They claim that it is the rent control ordinance itself, not its particularized application to their mobile home park or the regulatory process applied to their park, that has denied them their constitutional rights. The theory of the takings claim is that by locking in a rent below market rents, and allowing tenants to sell their mobile homes to buyers who will still enjoy the benefits of the controlled rent (albeit subject to upward adjustment ¹⁰), the ordinance shifts much of the value of ownership of the land from the landlord to the tenant. The Guggenheims submitted an expert's report with the summary judgment papers explaining that rents for sites in their mobile home park would average about $13,000 a year without rent control, but average less than $3,300 with rent control, and that the tenants could sell their mobile homes for around an average of $14,000 without rent control, but because of rent control, the average mobile home in the park sells for roughly $120,000. Since the Guggenheims lost on summary judgment, we assume for purposes of decision that this is correct.

The case went through a complex procedural course, but the complexities are of no importance here. First the case in federal court was stayed pursuant to Pullman¹¹ abstention while the Guggenheims pursued claims in state court. They and the City settled the state case. Returning to federal court, the Guggenheims won summary judgment, and the City appealed. While the appeal was pending, the Supreme Court decided Lingle v. Chevron U.S.A. Inc., ¹² and the Guggenheims and the City agreed that Lingle so undermined the district court judgment that they stipulated to dismiss the appeal and they reopened the litigation in district court. This time the City won summary judgment, and the Guggenheims appeal. The district court observed that the Guggenheims “got exactly what they bargained for when they purchased the Park—a mobile-home park subject to a detailed rent-control ordinance.” We reversed, ¹³ but decided to rehear the case en banc,¹⁴ and now vacate our earlier decision and affirm.

II. Analysis

We review a grant of summary judgment de novo.¹⁵ The Guggenheims' challenge is to the 2002 City of Goleta ordinance adopting the county rent control ordinance, and its readoption within the 120–day period.

A. Jurisdiction

The City does not dispute jurisdiction, but we raised the issues of standing and ripeness sua sponte in our panel decision.¹⁶ The Guggenheims have claimed an injury in fact to themselves (deprivation of much of the value of their land), which is fairly traceable to Goleta's rent control ordinance, and is redressable by a decision in their favor, so they do indeed have standing to maintain their challenge to the 2002 ordinances.¹⁷ They owned the land in 2002 when the City of Goleta promulgated the 2002 ordinances.

Ripeness is more complicated, because of Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City. ¹⁸ In Williamson, the Supreme Court imposed two ripeness requirements on federal takings claims. First, a regulatory takings claim is not ripe until the appropriate administrative agency has made a final decision on how the regulation will be applied to the property at issue. ¹⁹ That requirement has no application to this facial challenge. “Facial challenges are exempt from the first prong of the Williamson ripeness analysis because a facial challenge by its nature does not involve a decision applying the statute or regulation.” ²⁰ Second, a property owner who sues for inverse condemnation, claiming that his property was taken without just compensation, generally...