Kirkpatrick v. City of Oceanside

• Decision Date: 15 July 1991
• Citation: 232 Cal.App.3d 267,283 Cal.Rptr. 191
• Court: California Court of Appeals Court of Appeals
• Parties: Merrill L. KIRKPATRICK et al., Plaintiffs and Appellants, v. CITY OF OCEANSIDE et al., Defendants and Respondents. D011075.

Page 191

283 Cal.Rptr. 191

232 Cal.App.3d 267

Merrill L. KIRKPATRICK et al., Plaintiffs and Appellants, v. CITY OF OCEANSIDE et al., Defendants and Respondents.

D011075.

Court of Appeal, Fourth District, Division 1, California.

July 15, 1991.

As Modified July 18, 1991.

Davis, Punelli & Willard and Robert E. Willard, Newport Beach, for plaintiffs and appellants.

Daniel E. Lungren, Atty. Gen., Marvin Goldsmith, Sr. Asst. Atty. Gen., Randall B. Christison and Richard D. Hendlin, Deputy Attys. Gen., Jennings, Engstrand & Henrikson and C. Michael Cowett, San Diego, for defendants and respondents.

HUFFMAN, Associate Justice.

Merrill L. Kirkpatrick and Rosanna F. Kirkpatrick, husband and wife owners of an Oceanside mobilehome park named Laguna Vista Mobile Estates (Kirkpatricks), appeal from an order dismissing this action after the trial court sustained without leave to amend general demurrers brought by the State of California (State) and the City of Oceanside (City) to Kirkpatrick's complaint for inverse condemnation and declaratory relief. ¹ Kirkpatricks sought to have the City's mobilehome rent control ordinance, Ordinance No. 82-27 (Ordinance), declared unconstitutional as applied to their park and to have its application in conjunction with the State's Mobilehome Residency Law (Civ.Code, § 798 et seq.) declared a confiscatory "taking" of their property by inverse condemnation. We affirm in part and reverse in part for the reasons explained below.

FACTUAL AND PROCEDURAL BACKGROUND

For purposes of reviewing the order sustaining the general demurrers, we accept all facts alleged in the complaint as true, and also consider matters properly judicially noticed. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58.) The complaint originally alleged three causes of action, but Kirkpatricks conceded at the hearing on the demurrer that the second cause of action for deprivation of civil rights in violation of 42 United States Code sections 1981 and 1983 was not viable.

The first cause of action alleges the Kirkpatricks are the owners ("Lessees under a 75 year lease terminating in August 2052") of a 272-space mobilehome park (270 mobile home rental spaces and 2 spaces occupied, without charge, by the park's management) in Oceanside, California, which began operating in July 1978, and which includes amenities such as "lakes, a clubhouse, a swimming pool, etc."

It further alleges City enacted its Ordinance on June 23, 1982, that such has been amended at various times, is codified as chapter 16B of the City's code, has had administrative procedural guidelines (Guidelines) adopted for its enforcement and has been enforced since its enactment by the Oceanside Manufactured Home Fair Practices Commission (Commission) which was created by the Ordinance "to effectuate the provisions and purposes of the Ordinance."

The first cause of action then asserts the Ordinance as applied in combination with the State's Mobile Home Residency Law, which was adopted in 1978, effects a regulatory taking by not allowing the Kirkpatricks a "just and reasonable return" on their property, or on their investment, in violation of the Fifth and Fourteenth Amendments of the United States Constitution and article I, section 19 of the California Constitution. Kirkpatricks allege exhaustion of all administrative and other remedies under the Ordinance and before the Commission. They attach a copy of the Ordinance and its Guidelines as an exhibit to the complaint.

The third cause of action incorporates all the allegations of the first and second causes of action and adds information concerning Kirkpatricks' investment and rate of return on the rent-controlled units of their park. Paragraphs 20 and 21 of this cause of action state:

"20. Plaintiffs' total investment in their park is $3,500,116.00 or $12,963.00 per rental space. Plaintiffs' per space return on the 110 spaces subject to rent control for 1988 was $272.55 per space.

"21. Plaintiffs' rate of return on rent controlled units is approximately 2% per annum, well below established going rates. Such a return does not constitute a just and reasonable or fair return as required by the California and United States Constitutions and as contemplated by the Oceanside Ordinance itself, and application of the Oceanside Rent Control Ordinance (Exhibit A) to Plaintiffs has accordingly deprived them of just compensation and a fair return on their investment in violation of the California State and United States Constitutions as hereinabove alleged."

Based on these economic facts, Kirkpatricks allege they made application to City for a "hardship or fair return rent adjustment for the years 1989 and thereafter," but City refused to consider their application as it did not fall within the adjustment formulas and procedures provided by the Ordinance and City asserted earlier litigation concerning the Ordinance was res judicata to their claims of unfair returns. Kirkpatricks claim an actual controversy has thus arisen and ask for declarations that the Ordinance as applied to their park does not provide them a fair return on their investment, or just compensation for their property, and they are not foreclosed from bringing this lawsuit by the res judicata effect of earlier actions concerning the Ordinance.

In addition, Kirkpatricks seek a declaration that City must consider their application although it does not conform to the express formulas and procedures in the Guidelines of the Ordinance.

State's motion to strike and demurrer to Kirkpatricks' complaint was heard at the same time as City's demurrer. State sought to strike allegations of the first cause of action which contradicted the language of the State Mobilehome Residency Law and demurred to the complaint on grounds it failed to state a cause of action against State, was uncertain and ambiguous, and was barred by our decision in Oceanside Mobilehome Park Owners' Assn. v. City of Oceanside (1984) 157 Cal.App.3d 887, 204 Cal.Rptr. 239.

City's demurrer also raised the bars of res judicata and stare decisis based on Oceanside, and in addition, based on our unpublished opinion in Merrill Kirkpatrick v. Manufactured Home Fair Practices Commission (June 24, 1987) D004855. City opined Kirkpatricks were relying on the Ninth Circuit decision Hall v. City of Santa Barbara (9th Cir.1986) 833 F.2d 1270 to again challenge the facial validity of the Ordinance and contended administrative mandamus under section 1094.5 of the Code of Civil Procedure was the exclusive remedy for challenging any decision by the Commission regarding rental adjustments under the Ordinance.

At oral argument held May 19, 1989, the trial court declined Kirkpatricks' request to amend the complaint and confirmed its earlier telephonic ruling granting State's motion to strike, overruling State's special demurrer, sustaining without leave to amend State's and City's general demurrers to the Kirkpatricks' complaint and dismissing, on its own motion, the action in its entirety.

On July 24, 1989, the court signed the formal order sustaining the general demurrers without leave to amend and dismissing the case in its entirety, stating, as grounds:

"(a) The complaint fails to allege facts sufficient to state a cause of action; and (b) The first and second causes of action are barred by the doctrines of res judicata and collateral estoppel in that the issues alleged therein have been previously litigated between the parties; and (c) The plaintiffs primarily rely upon the case of Hall v. City of Santa Barbara [, supra, 833 F.2d] 1270, in support of their first and second causes of action which case is contrary to the law as stated by California courts and is thus inapplicable under the doctrine of stare decisis; and (d) General demurrers to the third cause of action are sustained without leave to amend because plaintiffs have failed to exhaust their administrative remedies, have failed to challenge any action taken by the City of Oceanside or its commissions, and are unable to amend the complaint to correct said deficiencies."

On August 7, 1989, the court denied as untimely Kirkpatricks' request for reconsideration of the motions. After granting their motion to set aside the denial, the court denied the motion to reconsider on grounds there was no change in the facts. Kirkpatricks timely appealed from the original formal order sustaining the demurrers and dismissing their case. ²

DISCUSSION

On appeal, Kirkpatricks argue, despite City's and State's assertion otherwise, they are not challenging the facial validity of the Ordinance. They contend that contrary to the trial court's ruling, they have adequately alleged exhaustion of administrative remedies, they have adequately alleged a two percent return on their investment is confiscatory, the doctrines of res judicata and collateral estoppel do not bar their action for inverse condemnation based on allegations of not receiving a fair and reasonable return on their investment or property, Hall v. City of Santa Barbara, supra, 833 F.2d 1270 is good law and should be followed, and the State is jointly responsible for the taking of their property without just compensation. They thus assert the trial court committed reversible error in sustaining the demurrers of the State and City and in dismissing their case.

Although the trial court based its ruling on specifically stated reasons, our review of the ruling must address whether the order sustaining the demurrer and dismissing the complaint is supportable on any grounds, including those stated, as it is the validity of the court's action and not its reasons for its action that is reviewable. (Weinstock v. Eissler (1964) 224 Cal.App.2d 212, 225, 36 Cal.Rptr. 537.)

Basically the issue is whether the Kirkpatricks, whose mobilehome park is regulated by City's Ordinance and State's Mobilehome Residency Law, each pursuant to their police powers, may state a claim for...