Nash v. City of Santa Monica

• Decision Date: 25 October 1984
• Court: California Supreme Court
• Parties: , 688 P.2d 894, 53 USLW 2238 Jerome J. NASH, Plaintiff and Respondent, v. CITY OF SANTA MONICA et al., Defendants and Appellants. L.A. 31798.

Page 285

207 Cal.Rptr. 285

37 Cal.3d 97, 688 P.2d 894, 53 USLW 2238

Jerome J. NASH, Plaintiff and Respondent, v. CITY OF SANTA MONICA et al., Defendants and Appellants.

L.A. 31798.

Supreme Court of California,

In Bank.

Oct. 25, 1984.

Rich & Ezer, Mitchel J. Ezer, Los Angeles, for plaintiff and respondent.

Bonelli, Heib, Fuchs & O'Neal, Stanley Sapiro, Los Angeles, Stacey & Jones, Santa Monica, Stephen L. Jones, Los Angeles, Ronald A. Zumbrun, John H. Findley, Sacramento, Robert D. Links, Andrew M. Colvin, Colvin, Martin & Links, San Francisco, Thomas L. Berkley, Latham & Watkins, George Kimball, Los Angeles, as amici curiae for plaintiff and respondent.

Stephen S. Stark, Asst. City Atty., Susan L. Carroll, Deputy City Atty., Stephen P. Wiman, Santa Monica, David Pettit, Los Angeles, for defendants and appellants.

Natalie E. West, City Atty., Penny Nakatsu, Berkeley, Terry B. Friedman, Elyse S. Kline, Jana Zimmer, Merced Martin, Los Angeles, Marc B. Mihaly, Shute, Mihaly & Weinberger, San Francisco and James R. Grow, Berkeley, as amici curiae for defendants and appellants.

Robert M. Myers, City Atty., Karl M. Manheim, Deputy City Atty., Santa Monica, for defendant and appellant City of Santa Monica.

Michael Heumann, Senior Atty., Mary Ann Yurkonis, Staff Atty., Santa Monica Rent Control Bd., Santa Monica, for defendant and appellant Santa Monica Rent Control Bd.

GRODIN, Justice.

In this case we are called upon to determine the validity of Santa Monica City Charter section 1803, subdivision (t)--which prohibits removal of rental units from the housing market by conversion or demolition absent a removal permit from the Santa Monica Rent Control Board--as it applies to prevent the owner of an apartment building from evicting his tenants and tearing the building down. The trial court held that the ordinance, as so applied, constitutes a deprivation of property without due process of law in violation of the Fourteenth Amendment of the United States Constitution and article I, section 7, subdivision (a) of the California Constitution.

As is so often the case in constitutional litigation, the issues appear different depending upon one's perspective. For Santa Monica, the challenged provision is nothing more than a land use regulation designed to effectuate the purposes of the city's rent control ordinance of which it is a part, while Nash views it as a means of forcing him to remain a landlord despite his wish to "go out of business"--an interest which he asserts is among the "basic values 'implicit in the concept of ordered liberty.' [Citations.]" (City of Carmel-By-The-Sea v. Young (1970) 2 Cal.3d 259, 266, 85 Cal.Rptr. 1, 466 P.2d 225.) There is a degree of merit in both perspectives, but neither is adequate to resolve the issue presented. Rather, as we shall explain, what is required is a realistic appraisal of the impact of the challenged provision upon Nash and the alternatives available to him, on one hand, and of the relationship of that provision to the objectives of the rent control ordinance, on the other. On the basis of that appraisal, we will conclude that while the challenged provision may be said to implicate interests which are entitled to a high degree of constitutional protection--including one's choice whether to remain in a particular business or occupation--the actual limitation upon those interests posed by the challenged provision is minimal and not significantly different from other, constitutionally permissible, limitations upon the use of private property imposed by government regulation. At the same time, the provision, by protecting existing tenants against eviction and the scarce supply of residential housing in Santa Monica against further erosion, clearly serves important public objectives. Consistent with the settled precedent of this court, and the United States Supreme Court, we shall hold that section 1803, subdivision (t), is not constitutionally infirm.

I.

The vacancy rate for rental housing in Santa Monica was, at the time of trial, approximately 1.7 percent. In the late 1970's, the city was confronted with a severe shortage of its traditionally scarce housing stock, precipitated in large measure by what came to be known as the "Demolition Derby." This term was coined In 1979, the citizens of Santa Monica by initiative added article XVIII to the city's charter. This new article provided for a rent control board with the authority to set and adjust maximum rents and to control the removal of rental units from the housing market. ( § 1803.) ² The rent control law also regulates tenant evictions. ( § 1806.) Section 1803, subdivision (t) ³ of the rent control law requires a landlord to obtain a permit before demolishing a building. Where the landlord both owns habitable property and does not wish to rebuild, a demolition permit will be granted only upon a finding that (1) the building is not occupied by persons of low or moderate income, (2) cannot be afforded by persons of low or moderate income, (3) removal will not adversely affect the housing supply and (4) the owner cannot make a reasonable return on his investment.

to describe a 15-month period during which Santa Monica landlords razed over 1,300 rental units and converted hundreds of other such units into condominiums. Rental housing units were removed from the market at 10 times the rate of removals (relative[688 P.2d 897] to population) of neighboring Los Angeles. ¹

Respondent Nash was a 17-year-old student when, approximately a year before the rent and demolition controls were enacted, his mother obtained on his behalf a $260,000 apartment building in Santa Monica. ⁴ He soon became disenchanted, however, with operating rental housing: "There is only one thing I want to do, and that is to evict the group of ingrates inhabiting my units, tear down the building, and hold on to the land until I can sell it at a price which will not mean a ruinous loss on my investment."

Nash began the process of filing for a removal permit, so that he might indeed destroy the building and allow the land to appreciate in value. Because he concededly could earn a fair return on his investment, however, it soon became clear to him that he would not be issued the permit. Thus, rather than complete the statutorily mandated, but probably, for him, futile removal permit application process, Nash sought to circumvent the regulations by filing a petition for writ of mandate in Los Angeles Superior Court.

At trial, Nash admitted that if the apartment were left standing and remained occupied, he could earn a fair return on his investment in the property. He further conceded that demolition of his building would adversely affect the supply of housing in Santa Monica. The court found the units in Nash's building were occupied by Based on these findings, the trial court accepted Nash's argument that the challenged provision operated to deprive Nash of property without due process of law. It also declared, sua sponte, that the provision resulted in a taking of his property without just compensation. It ordered a writ of mandate issue commanding the City of Santa Monica and the Santa Monica Rent Control Board to grant Nash a removal permit for his property.

persons of very low, low, or moderate income, and that the rents charged were affordable by them. Thus, the trial court found the prerequisites to the acquisition of a demolition permit had not been satisfied.

II.

We begin by examining the nature of Nash's claim. Notwithstanding the trial court's alternative ruling, Nash expressly disclaims any contention that the city's ordinance effects a "taking" of his property in violation of federal or state Constitutions. Nor, in light of applicable authority, would such a claim appear to have merit. In Penn Central Transp. Co. v. New York City (1978) 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631, the United States Supreme Court considered a constitutional challenge to New York City's Landmark Preservation Law, which authorizes a city commission to prohibit the demolition of designated historic structures. The court held that no taking was involved in application of the ordinance to plaintiff, which desired to modify its railroad terminal by construction of an office building in its place, since the regulation did not interfere with the owner's "primary, investment-backed expectations," and did not render the owner unable to receive a reasonable return on his investment. (Id., at p. 136, 98 S.Ct. at 2665; see also Maher v. City of New Orleans (5th Cir.1975) 516 F.2d 1051, cert. den. (1976) 426 U.S. 905, 96 S.Ct. 2225, 48 L.Ed.2d 830.) It is undisputed that both prongs of the Penn Central test are met here. We are aware of no authority which would impose different requirements under the California Constitution. (See Agins v. City of Tiburon (1979) 24 Cal.3d 266, 277, 157 Cal.Rptr. 372, 598 P.2d 25, affd. 447 U.S. 255, 100 S.Ct. 2138, 65 L.Ed.2d 106.)

Nash asserts that he is "not seeking compensation from the City of Santa Monica for being forced to stay in the apartment-rental business, but only the right to go out of that business." Conceding that there are no decisions precisely in point, and without identifying any particular constitutional provision, Nash contends that there must be limitations upon the power of the state to compel a person to pursue a particular business or occupation against his will.

We agree. The Thirteenth Amendment to the United States Constitution prohibits involuntary servitude. This court has spoken of the basic liberty to pursue and obtain happiness by engaging in the common occupations of the community. (See Sail'er Inn, Inc. v. Kirby (1971) 5 Cal.3d 1, 17, 95 Cal.Rptr. 329, 485 P.2d 529.) The exercise of state power to force upon an individual a career chosen by the state would surely raise substantial questions of constitutional dimension.

The City of Santa Monica has not done that to Nash, however....