Manufactured Housing Communities v. State

• Decision Date: 09 November 2000
• Docket Number: No. 66831-1.,66831-1.
• Citation: 13 P.3d 183,142 Wash.2d 347
• Parties: MANUFACTURED HOUSING COMMUNITIES OF WASHINGTON, a nonprofit Washington Corporation, Petitioner, v. The STATE of Washington; and Mobile Home Owners of America, Inc., a corporation, Respondent.
• Court: Washington Supreme Court

13 P.3d 183

142 Wash.2d 347

MANUFACTURED HOUSING COMMUNITIES OF WASHINGTON, a nonprofit Washington Corporation, Petitioner, v. The STATE of Washington; and Mobile Home Owners of America, Inc., a corporation, Respondent.

No. 66831-1.

Supreme Court of Washington, En Banc.

Argued March 7, 2000.

Decided November 9, 2000.

Brent David Boger, Vancouver, Pacific Legal Foundation, Robin L. Rivett, Perkins, Coie, William R. Mauer, Bellevue, amicus curiae on behalf of Pacific Legal Foundation.

Stephen Overstreet, Olympia, amicus curiae on behalf of Building Industry Association of Washington.

Groen, Stephens & Klinge, John Maurice Groen, Bellevue, amicus curiae on behalf of Washington Association of Realtors.

Sandra M. Watson, Asst. Seattle City Atty., Ogden, Murphy & Wallace, Wayne Douglas Tanaka, Seattle, amicus curiae on behalf of Washington State Association of Muni.

Montgomery, Purdue & BlanMnship, John Douglas BlanMnship, Shoreline, Montgomery, Purdue & Blankinship, Michael E. Gossler, Seattle, Montgomery, Purdue & Blankinship, Jerry W. Spoonemore, Edmonds, for Petitioner.

Christine Gregoire, Atty. Gen., Jerri Lynn Thomas, Alan D. Copsey, Asst. Attys. Gen., Olympia, Bjorklund & Young, Dan Robert Young, Seattle, for Respondent.

IRELAND, J.

Manufactured Housing Communities of Washington challenges the constitutionality of chapter 59.23 RCW, the mobile home parks—resident ownership act, which gives qualified tenants a right of first refusal to purchase a mobile home park. Finding an unconstitutional taking of private property for private use in violation of amended article I, section 16 of the Washington State Constitution, we reverse the Court of Appeals.

FACTS

In 1995, Manufactured Housing Communities of Washington (Park Owners), an association of mobile home park owners, commenced this declaratory judgment action. The Park Owners argued that the mobile home parks—resident ownership act (the Act) creates an unconstitutional taking of property in violation of amended article I, section 16 of the Washington State Constitution, as well as the Fifth Amendment of the United States Constitution.

The superior court denied the Park Owners' motion for summary judgment and dismissed the complaint after granting summary judgment to the State. The Court of Appeals affirmed, holding the Act did not amount to an unconstitutional taking of property. Manufactured Housing Communities v. State, 90 Wash.App. 257, 259, 951 P.2d 1142 (1998).

With the permission of the Chief Justice, the Pacific Legal Foundation, the Building Association of Washington and the Washington Association of Realtors filed amicus curiae briefs in support of the Park Owners. The Washington State Association of Municipal Attorneys filed an amicus curiae brief supporting the State.

THE ACT

In 1993, the Washington State Legislature, concerned with the availability of mobile home park housing, adopted chapter 59.23 RCW, the Act. RCW 59.23.005. This Act gives mobile home park tenants a right of first refusal when the park owner decides to sell a mobile home park. RCW 59.23.025.

To exercise a right of first refusal, the tenants must organize into a "qualified tenant organization"¹ and give the park owner written notice² of "a present and continuing desire to purchase the mobile home park." RCW 59.23.015. Once the park owner has received such notice, the park owner must notify the tenants of any agreement to sell the park to a third party, as well as disclose the agreement's terms. If the park owner fails to properly notify the qualified tenant organization, a pending third party sale is voidable. RCW 59.23.030.

Upon receiving proper notice, the tenants have 30 days in which to pay the park owner two percent of the third party's agreed purchase price and to tender a purchase and sale agreement as financially favorable as the agreement between the owner and the third party. RCW 59.23.025. If the tenants meet these requirements within the 30-day period, the park owner must sell them the park. RCW 59.23.025. If, however, the tenants fail to meet these requirements or if, in the case of seller financing, the owner determines selling the park to the tenants would create a greater financial risk than selling to the third party, the owner may proceed with the sale to the third party. RCW 59.23.025.³

STANDARD OF REVIEW

When reviewing an appeal from summary judgment, an appellate court employs the same analysis as the trial court. Margola Assocs. v. City of Seattle, 121 Wash.2d 625, 634, 854 P.2d 23 (1993). Legal issues are reviewed de novo, and factual issues are reviewed in the light most favorable to the nonmoving party. Margola, 121 Wash.2d at 634,854 P.2d 23. Because this is a facial challenge, no facts are in dispute and we, therefore, decide the Park Owners' claim solely as a matter of law.

CLAIMS

The Park Owners contend chapter 59.23 RCW eviscerates fundamentally important ownership rights. Specifically, the Park Owners believe the Act's mere existence destroys the right to (1) freely dispose of their property, (2) exclude others, and (3) immediately close the sale of a mobile home park. The Park Owners claim that if a park owner decides to sell, chapter 59.23 RCW allows the State to delay the sale and forcibly substitute the owner's chosen buyer with a buyer selected by the State. According to the Park Owners, taking the right of first refusal and then granting this right to private mobile home park tenants, solely for the tenants' private use, violates amended article I, section 16 of the Washington State Constitution, which expressly provides "Private property shall not be taken for private use...." Const. art. I, § 16 (amend.9). The Park Owners believe invalidation of chapter 59.23 RCW is the only appropriate remedy.⁴

The State argues that chapter 59.23 RCW is a legitimate exercise of the police power and makes several additional arguments against the Park Owners' conclusion that chapter 59.23 RCW constitutes a taking prohibited by either the Washington State Constitution or the United States Constitution. First, the State argues that a right of first refusal is not subject to a takings analysis because it is not a property interest. Second, the State argues that a "total taking" has not occurred because chapter 59.23 RCW does not deny the park owners all economically beneficial use of their property. Third, the State argues that a taking has not occurred through physical invasion because chapter 59.23 RCW does not require the Park Owners to submit to the physical occupation of their land. Finally, the State argues that even if a taking has occurred, chapter 59.23 RCW achieves a legitimate "public use" and, therefore, article I, section 16 requires payment of just compensation rather than the statute's automatic invalidation.

POLICE POWER

The government, through the police power, often regulates and restricts the use of private property in the interest of the public. Police power is inherent in the state by virtue of its granted sovereignty. Shea v. Olson, 185 Wash. 143, 153, 53 P.2d 615 (1936). "It exists without express declaration, and the only limitation upon it is that it must reasonably tend to correct some evil or promote some interest of the state, and not violate any direct or positive mandate of the constitution." Shea, 185 Wash. at 153, 53 P.2d 615. However, as noted in Conger v. Pierce County, 116 Wash. 27, 35-36, 198 P. 377 (1921), the police power is not unlimited and, when stretched too far, is a power "most likely to be abused." In Conger, an early Washington case which determined a county had exceeded the scope of the police power, this court said:

[The police power] has been defined as an inherent power in the state which permits it to prevent all things harmful to the comfort, welfare and safety of society. It is based on necessity. It is exercised for the benefit of the public health, peace and welfare. Regulating and restricting the use of private property in the interest of the public is its chief business. It is the basis of the idea that the private individual must suffer without other compensation than the benefit to be received by the general public. It does not authorize the taking or damaging of private property in the sense used in the constitution with reference to taking such property for a public use. Eminent domain takes private property for a public use, while the police power regulates its use and enjoyment, or if it takes or damages it, it is not a taking or damaging for the public use, but to conserve the safety, morals, health, and general welfare of the public.

Conger, 116 Wash. at 36, 198 P. 377.

REGULATORY TAKINGS

Under existing Washington and federal law, a police power measure can violate amended article I, section 16 of the Washington State Constitution or the Fifth Amendment of the United States Constitution and thus be subject to a categorical "facial" taking challenge when: (1) a regulation effects a total taking of all economically viable use of one's property, Lucas v. So. Carolina Coastal Council, 505 U.S. 1003, 1019, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992); or (2) the regulation has resulted in an actual physical invasion upon one's property, Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982); or (3) a regulation destroys one or more of the fundamental attributes of ownership (the right to possess, exclude other and to dispose of property), Presbytery of Seattle v. King County, 114 Wash.2d 320, 330, 787 P.2d 907 (1990); or (4) the regulations were employed to enhance the value of publicly held property, Orion Corp. v. State, 109 Wash.2d 621, 651, 747 P.2d 1062 (1987).

Regulations have also been found unconstitutional because they violate substantive due process, whether or not a total taking or physical invasion has actually occurred.⁵ See Guimont v. Clarke, 121 Wash.2d 586, 608, 854 P.2d 1 (1993); Margola, 121 Wash.2d at 649, 854 P.2d...