Mhc Financing Ltd. v. City of Santee

• Decision Date: 25 January 2005
• Docket Number: No. D042631.,No. D043129.,D042631.,D043129.
• Citation: 125 Cal.App.4th 1372,23 Cal.Rptr.3d 622
• Court: California Court of Appeals Court of Appeals
• Parties: MHC FINANCING LIMITED PARTNERSHIP TWO, Plaintiff and Appellant, v. CITY OF SANTEE, Defendant and Appellant.

23 Cal.Rptr.3d 622

125 Cal.App.4th 1372

MHC FINANCING LIMITED PARTNERSHIP TWO, Plaintiff and Appellant, v. CITY OF SANTEE, Defendant and Appellant.

No. D042631.

No. D043129.

Court of Appeal, Fourth District, Division 1.

January 25, 2005.

As Modified on Denial of Rehearing February 16, 2005.

Review Denied May 11, 2005.

Bien & Summers, Elliot L. Bien, Novato; Hart, King & Coldren, Robert S. Coldren, C. William Dahlin and Robert G. Williamson, Jr., Santa Ana, for Plaintiff and Appellant.

Best, Best & Krieger, James Bell Gilpin and Melissa W. Woo, San Diego, for Defendant and Appellant.

AARON, J.

Under Elections Code¹ section 9215, the city council of defendant City of Santee (the City) adopted without alteration a mobilehome rent control ordinance that was proposed by an initiative petition. However, it was later discovered that as a result of administrative mistake and inadvertence, there were differences between the text of the ordinance the City adopted (Ordinance 381) and that of the ordinance that was circulated with the initiative petition. The City eventually sought to cure the defects in the enactment of Ordinance 381 by enacting the correct version of the initiative-proposed ordinance (Ordinance 412) and making it retroactively effective to the effective date of Ordinance 381.

Plaintiff MHC Financing Limited Partnership Two (MHC), an owner and operator of a mobilehome park in the City, filed the instant action against the City seeking a judicial declaration that both Ordinance 381 and Ordinance 412 were null and void and raising other claims pertaining to the ordinances. The case was tried to the court without a jury and the court entered judgment in favor of MHC, declaring the ordinances void and enjoining the City from enforcing them. The court denied MHC's posttrial motion for attorney fees under Code of Civil Procedure section 1021.5 (the private attorney general statute) and Civil Code section 798.85, which authorizes an award of attorney fees and costs to the prevailing party in an action arising out of California's Mobilehome Residency Law (MRL). (Civ.Code, § 798 et seq.) The City appeals the judgment, and MHC appeals the denial of its motion for attorney fees.² The City's main contention is that the court erred by ruling it could not cure the defects in Ordinance 381 by enacting Ordinance 412. We agree with that contention and, accordingly, reverse that portion of the judgment. We affirm the order denying MHC's request for attorney fees.

FACTUAL AND PROCEDURAL BACKGROUND

On March 18, 1998, a member of a group of mobilehome owners calling themselves the Committee to Restore Fairness (CTRF) submitted to the city clerk written notice of intent to circulate an initiative petition. The notice was accompanied by the text of the initiative (the March 18 initiative), a proposed ordinance that would amend the City's existing mobilehome rent control ordinance. The notice included a request for preparation of a ballot title for, and summary of, the initiative "in accordance with the California Elections Code."³ The city attorney prepared and provided the city clerk with the requested ballot title and summary as required by section 9203.

On April 2, 1998, another member of CTRF submitted a modified version of the initiative (the April 2 initiative) to the city clerk with a new notice of intent to circulate an initiative petition. The April 2 notice stated, "There has been a necessary typographical correction to the initiative as submitted to your office for a title and summary." However, the notice did not include an express request for a ballot title and summary, and the city attorney did not prepare a ballot title or summary for the April 2 initiative. The April 2 initiative petition was circulated under the ballot title and summary that had been prepared for the March 18 initiative.

In September 1998, CTRF submitted a number of completed sections of the April 2 initiative petition to the city clerk, who determined that the petition had been signed by more than 10 percent of the City's registered voters. The county registrar of voters confirmed the number of signatures. Upon receiving that confirmation, the city council was required under section 9215 to do one of the following: (1) adopt the proposed ordinance, without alteration, either at the regular meeting at which it was presented with certification of the petition, or within 10 days after presentation of certification; (2) submit the proposed ordinance to the voters; or (3) order a report on the effect of the proposed ordinance and, when presented with the report, either adopt the ordinance within 10 days or order an election. The city council chose the first option and, on October 28, 1998, enacted Ordinance 381, believing it to be the ordinance proposed by the April 2 initiative. However, due to administrative mistake and inadvertence, the text of Ordinance 381 was not that of the ordinance proposed by the April 2 initiative, but rather, was the text of the ordinance proposed by the uncirculated March 18 initiative.

Ordinance 381 became effective on November 27, 1998. On December 4, 1998, an association of mobilehome park owners known as the Santee Park Owners Association (SPOA) filed an action against the City in the federal district court in San Diego challenging the constitutionality of Ordinance 381. MHC was a member of SPOA at the time the federal action was filed. In mid-December, city employees, including the city clerk, became aware that there were discrepancies between the text of Ordinance 381 and the April 2 initiative. The city employees initially believed the discrepancies were the result of problems with the software that had been used to codify the ordinance. However, the City later discovered that the discrepancies were the result of the city council's inadvertent adoption of the March 18 initiative rather than the April 2 initiative.

In April 1999, while the federal action was pending, the City offered to cure or "reform" Ordinance 381 by adopting the version of the ordinance set forth in the April 2 initiative that had been circulated by petition. SPOA rejected the City's offer, asserting that the City could not lawfully reform Ordinance 381. SPOA's counsel stated: "The horse is out of the barn, and there is nothing the City can do to repair this situation.... The only option the City has is to admit and declare that Ordinance 381 is not an initiative. Any action inconsistent with this will subject the City to further liability." In July 1999, the City filed a counterclaim for reformation and declaratory relief in the federal action, asking the court to reform Ordinance 381 to exactly match the language of the April 2 initiative or, in the alternative, to declare that the City had the power to reform the ordinance in that manner. In November 2000, the federal court dismissed the federal action on the grounds that SPOA had failed to state a federal takings (inverse condemnation) claim and that the court lacked subject matter jurisdiction over SPOA's ancillary state law claims.

In January 2001, the city council enacted Ordinance 412, entitled: "An Ordinance of the City Council of the City of Santee to Cure Error in the Adoption of Ordinance [No.] 381." The April 2 initiative was attached to Ordinance 412. Section 1 of the ordinance provides: "The text of Ordinance No. 381 is corrected to read exactly as in the initiative petition submitted and circulated by the Committee to Restore Fairness, without alteration. This correction is made effective as of the effective date of Ordinance No. 381. The text of Ordinance No. 381 is corrected to read as in the initiative which is as follows: [See attached initiative][.]" The City began enforcing Ordinance 412 on February 23, 2001.

In October 2001, MHC filed the instant action, pleading causes of action for denial of equal protection under the California Constitution, violation of the Elections Code, violation of the Brown Act, and illegal assessment in violation of California Constitution, article XIIID. In its complaint, MHC requested declaratory and injunctive relief based on these claims. On the City's motion for summary judgment or, in the alternative, summary adjudication of causes of action, the court summarily adjudicated in the City's favor the causes of action for denial of equal protection and violation of the Brown Act. The court found there were triable issues of fact as to the other causes of action.⁴ At trial, the court granted MHC's request to file a second amended complaint adding two new causes of action — one alleging that a certain notice provision in Ordinance 412 is preempted by Civil Code section 798.17 (of the MRL) and the other alleging that "Ordinance Nos. 412/381's imposition of application fees and obligations to pay tenants' and/or homeowner association attorneys' fees and costs operate [sic] to deny [MHC's] right of petition [under article I, section 3 of the California Constitution] and renders Ordinance Nos. 412/381 unconstitutional."⁵

After the case was tried to the court on stipulated facts and the presentation of additional evidence, the court issued its final statement of decision and judgment. Under the heading "Decision" in that document, the court ruled that Ordinance 381 and Ordinance 412 were void because they were adopted in violation of the Elections Code. Under the heading "Judgment," the court declared both ordinances void, and permanently enjoined the City from enforcing either of them.

Addressing MHC's "request for damages based on the rent differential between [the rent control ordinance that preceded Ordinance 381] and Ordinance Nos. 381 and 412," the court awarded MHC the remedy of future rent increases in an undetermined amount. The court ruled: "The remedy of future rent increases, as opposed to an award of damages, will adequately compensate MHC. This remedy will place the cost of compensating MHC on those tenants who...