Yee v. City of Escondido, California, No. 90-1947

• Court: United States Supreme Court
• Writing for the Court: O'CONNOR, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and WHITE, STEVENS, SCALIA, KENNEDY, and THOMAS, JJ., joined. BLACKMUN, J., and SOUTER
• Citation: 112 S.Ct. 1522,503 U.S. 519,118 L.Ed.2d 153
• Parties: John K. YEE, et al., Petitioners v. CITY OF ESCONDIDO, CALIFORNIA
• Decision Date: 01 April 1992
• Docket Number: No. 90-1947

503 U.S. 519 112 S.Ct. 1522 118 L.Ed.2d 153 John K. YEE, et al., Petitioners

v.

CITY OF ESCONDIDO, CALIFORNIA.

No. 90-1947. Argued Jan. 22, 1992. Decided April 1, 1992. Syllabus

The Fifth Amendment's Takings Clause generally requires just compensation where the government authorizes a physical occupation of property. But where the Government merely regulates the property's use, compensation is required only if considerations such as the regulation's purpose or the extent to which it deprives the owner of the property's economic use suggests that the regulation has unfairly singled out the property owner to bear a burden that should be borne by the public as a whole. Petitioners, mobile home park owners in respondent Escondido, California, rent pads of land to mobile home owners. When the homes are sold, the new owners generally continue to rent the pads. Under the California Mobilehome Residency Law, the bases upon which a park owner may terminate a mobile home owner's tenancy are limited to, inter alia, nonpayment of rent and the park owner's desire to change the use of his land. The park owner may not require the removal of a mobile home when it is sold and may neither charge a transfer fee for the sale nor disapprove of a purchaser who is able to pay rent. The state law does not limit the rent the park owner may charge, but Escondido has a rent control ordinance setting mobile home rents back to their 1986 levels and prohibiting rent increases without the City Council's approval. The Superior Court dismissed lawsuits filed by petitioners and others challenging the ordinance, rejecting the argument that the ordinance effected a physical taking by depriving park owners of all use and occupancy of their property and granting to their tenants, and their tenants' successors, the right to physically permanently occupy and use the property. The Court of Appeal affirmed.

Held:

1. The rent control ordinance does not authorize an unwanted physical occupation of petitioners' property and thus does not amount to a per se taking. Petitioners' argument—that the rent control ordinance authorizes a physical taking because, coupled with the state law's restrictions, it increases a mobile home's value by giving the homeowner the right to occupy the pad indefinitely at a sub-market rent—is unpersuasive. The government effects a physical taking only where it requires the landowner to submit to the physical occupation of his land. Here, petitioners have voluntarily rented their land to mobile home

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owners and are not required to continue to do so by either the City or the State. On their face, the laws at issue merely regulate petitioners' use of their land by regulating the relationship between landlord and tenant. Any transfer of wealth from park owners to incumbent mobile home owners in the form of sub-market rent does not itself convert regulation into physical invasion. Additional contentions made by petitioners—that the ordinance benefits current mobile home owners but not future owners, who must purchase the homes at premiums resulting from the homes' increased value, and that the ordinance deprives petitioners of the ability to choose their incoming tenants—might have some bearing on whether the ordinance causes a regulatory taking, but have nothing to do with whether it causes a physical taking. Moreover, the finding in Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 439, n. 17, 102 S.Ct. 3164, 3178, n. 17, 73 L.Ed.2d 868—that a physical taking claim cannot be defeated by an argument that a landlord can avoid a statute's restrictions by ceasing to rent his property, because his ability to rent may not be conditioned on forfeiting the right to compensation for a physical occupation—has no relevance here, where there has been no physical taking. Since petitioners have made no attempt to change how their land is used, this case also presents no occasion to consider whether the statute, as applied, prevents them from making a change. Pp. 526-532.

2. Petitioners' claim that the ordinance constitutes a denial of substantive due process is not properly before this Court because it was not raised below or addressed by the state courts. The question whether this Court's customary refusal to consider claims not raised or addressed below is a jurisdictional or prudential rule need not be resolved here, because even if the rule were prudential, it would be adhered to in this case. Pp. 532-533.

3. Also improperly before this Court is petitioners' claim that the ordinance constitutes a regulatory taking. The regulatory taking claim is ripe for review; and the fact that it was not raised below does not mean that it could not be properly raised before this Court, since once petitioners properly raised a taking claim, they could have formulated, in this Court, any argument they liked in support of that claim. Nonetheless, the claim will not be considered because, under this Court's Rule 14.1(a), only questions set forth, or fairly included, in the petition for certiorari are considered. Rule 14.1(a) is prudential, but is disregarded only where reasons of urgency or economy suggest the need to address the unpresented question in the case under consideration. The Rule provides the respondent with notice of the grounds on which certiorari is sought, thus relieving him of the expense of unnecessary litigation on the merits and the burden of opposing certiorari on unpresented questions. It also assists the Court in selecting the cases in which certiorari

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will be granted. By forcing the parties to focus on the questions the Court views as particularly important, the Rule enables the Court to use its resources efficiently. Petitioners' question presented was whether the lower court erred in finding no physical taking, and the regulatory taking claim is related to, but not fairly included in, that question. Thus, petitioners must overcome the very heavy presumption against consideration of the regulatory taking claim, which they have not done. While that claim is important, lower courts have not reached conflicting results on the claim as they have on the physical taking claim. Prudence also dictates awaiting a case in which the issue was fully litigated below, to have the benefit of developed arguments and lower court opinions squarely addressing the question. Thus, the regulatory taking issue should be left for the California courts to address in the first instance. Pp. 533-538.

224 Cal.App.3d 1349, 274 Cal.Rptr. 551 (1990), affirmed.

O'CONNOR, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and WHITE, STEVENS, SCALIA, KENNEDY, and THOMAS, JJ., joined. BLACKMUN, J., and SOUTER, J., filed opinions concurring in the judgment.

Robert J. Jagiello, Running Springs, Cal., for petitioners.

Carter G. Phillips, Washington, D.C., for respondent.

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Justice O'CONNOR delivered the opinion of the Court.

The Takings Clause of the Fifth Amendment provides: "[N]or shall private property be taken for public use, without just compensation." Most of our cases interpreting the Clause fall within two distinct classes. Where the government authorizes a physical occupation of property (or actually takes title), the Takings Clause generally requires compensation. See, e.g., Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 426, 102 S.Ct. 3164, 3171, 73 L.Ed.2d 868 (1982). But where the government merely regulates the use of property, compensation

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is required only if considerations such as the purpose of the regulation or the extent to which it deprives the owner of the economic use of the property suggest that the regulation has unfairly singled out the property owner to bear a burden that should be borne by the public as a whole. See, e.g., Penn Central Transp. Co. v. New York City, 438 U.S. 104, 123-125, 98 S.Ct. 2646, 2659, 57 L.Ed.2d 631 (1978). The first category of cases requires courts to apply a clear rule; the second necessarily entails complex factual assessments of the purposes and economic effects of government actions.

Petitioners own mobile home parks in Escondido, California. They contend that a local rent control ordinance, when viewed against the backdrop of California's Mobilehome Residency Law, amounts to a physical occupation of their property entitling them to compensation under the first category of cases discussed above.

I

The term "mobile home" is somewhat misleading. Mobile homes are largely immobile as a practical matter, because the cost of moving one is often a significant fraction of the value of the mobile home itself. They are generally placed permanently in parks; once in place, only about one in every hundred mobile homes is ever moved. Hirsch & Hirsch, Legal-Economic Analysis of Rent Controls in a Mobile Home Context: Placement Values and Vacancy Decontrol, 35 UCLA L.Rev. 399, 405 (1988). A mobile home owner typically rents a plot of land, called a "pad," from the owner of a mobile home park. The park owner provides private roads within the park, common facilities such as washing machines or a swimming pool, and often utilities. The mobile home owner often invests in site-specific improvements such as a driveway, steps, walkways, porches, or landscaping. When the mobile home owner wishes to move, the mobile home is usually sold in place, and the purchaser continues to rent the pad on which the mobile home is located.

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In 1978, California enacted its Mobilehome Residency Law, Cal.Civ.Code Ann. § 798 et seq. (West 1982 and Supp.1991). The Legislature found "that, because of the high cost of moving mobilehomes, the potential for damage resulting therefrom, the requirements relating to the installation of mobilehomes, and the cost of landscaping or lot preparation, it is necessary that the owners of mobilehomes occupied within mobilehome parks be provided with the unique protection from actual or...