Yee v. City of Escondido

HUFFMAN, J., Dissenting.

This appeal is from an order sustaining a demurrer without leave to amend. As such, we are dealing only with the various pleadings and our inquiry is limited to whether, under the facts pleaded in the complaints, as supplemented by any matter that may properly be judicially noticed, the pleadings state facts sufficient to constitute causes of action for a governmental taking. (Banerian v. O’Malley (1974) 42 Cal.App.3d 604, 611 [ 116 Cal.Rptr. 919 ].) The court should not uphold the sustaining of a demurrer without leave to amend if there is a reasonable possibility that a defect in the complaints can be cured by amendment. (Minsky v. City of Los Angeles (1974) 11 Cal.3d 113, 118 [ 113 Cal.Rptr. 102 , 520 P.2d 726 ].)

The majority ignores the procedural posture of these cases and decides a complex issue without the benefit of evidence. It does this by characterizing the consolidated lawsuit as one challenging the constitutionality of the Escondido ordinance on its face. (Maj. opn., ante, p. 1352.) Yet the majority also accurately notes the plaintiffs are alleging it is the combined effect of the application of the ordinance and the state statute which amounts to a compensable “taking” within the Fifth and Fourteenth Amendments to the United States Constitution, and article I, section 19 of the California Constitution. (Maj. opn., ante, p. 1352.)

As the majority recognizes, facial challenges are different than challenges to the application of otherwise valid statutes and ordinances. (Maj. opn., ante, p. 1357, fn. 9.) Although a court may declare a regulation invalid on its face “when its terms will not permit those who administer it to avoid confiscatory results in its application to the complaining parties ...” (Birkenfeld v. City of Berkeley (1976) 17 Cal.3d 129, 165 [ 130 Cal.Rptr. 465 , 550 P.2d 1001 ]), the fairness or confiscatory nature of a facially valid regulation will ultimately depend on analyzing a challenge to the regulation as applied. (See Fisher v. City of Berkeley (1984) 37 Cal.3d 644, 679 [ 209 *1360 Cal.Rptr. 682 , 693 P.2d 261 ].) Such challenge generally involves the facts of each particularized case, not just the statute or ordinance in a vaccuum.

While the California Supreme Court has set forth a test for a constitutional facial attack of a rent control regulation, it has found it “premature and problematic” to do so for attacks against specific applications of such regulation. (Fisher v. City of Berkeley, supra, 37 Cal.3d at p. 681, fn. 35 .) In Fisher , footnote 35, our Supreme Court carefully noted the requirement mentioned in Birkenfeld that rent controls must provide landlords a “ ‘just and reasonable return on their property’ ” was made in reference to a facial challenge to a regulation and concerned the legitimate exercise of local police power in enacting the regulation and not as a constitutional standard for the application of the regulation. (Ibid., citing Birkenfeld v. City of Berkeley, supra, 17 Cal.3d at. p. 165.)

The majority appears to use this standard, however, to foreclose plaintiffs from individually challenging the operation of the Escondido ordinance in conjunction with the state statute. (Maj. opn., ante, pp. 1353, 1357, fn. 9.) Admittedly, the complaints as pleaded contain mixed allegations of facial challenges and challenges to the ordinance as applied. However, because there is a reasonable possibility the plaintiffs could plead causes of action challenging the application of the ordinance combined with the statute as was done in the two United States Circuit Courts of Appeals decisions, Hall v. City of Santa Barbara (9th Cir. 1986) 833 F.2d 1270 and Pinewood Estates v. Barnegat Tp. Leveling Bd. (3d Cir. 1990) 898 F.2d 347 , upon which plaintiffs rely, I would allow the plaintiffs to amend their complaints.

As the majority makes clear, we are not bound to follow decisions of lower federal courts even on federal questions. However, when two circuits of the United States Courts of Appeals reach the same result to allow a plaintiff to proceed to attempt to prove a physical taking by application of an ordinance, which is inartfully alleged here, I believe this court should give great deference to those decisions.

The majority criticizes the Ninth Circuit decision in Hall for its failure to cite our earlier decision in Oceanside Mobilehome Park Owners’ Assn. v. City of Oceanside (1984) 157 Cal.App.3d 887 [ 204 Cal.Rptr. 239 ] and affirms our continued reliance on “ . . . what we assumed six years ago in Oceanside was accepted constitutional principle.” (Maj. opn., ante, p. 1358.) The difficulty, however, with this position is that although the Oceanside opinion discussed a multitude of issues having to do with the Oceanside ordinance dealing with rent control of mobilehome parks, it did not really address the issue now before us. The only discussion that remotely resembles the issue in this case is entirely contained in a few paragraphs which the *1361 majority recites as succinctly concluding the Oceanside ordinance was fairly structured not to reduce rents more than required for the purposes of the police power. (Maj. opn., ante, pp. 1353-1354.) Respectfully, these paragraphs do not in any fashion analyze the issue presented here. Consequently, there is nothing in our Oceanside opinion which should be cited on the issue and we should perhaps forgive the Ninth Circuit Court of Appeals for its failure to do so.

The majority’s principal criticism of Hall and Pinewood is that each opinion relies heavily on the United States Supreme Court decision of Loretto v. Teleprompter Manhattan CATV Corp. (1982) 458 U.S. 419 [ 73 L.Ed.2d 868 , 102 S.Ct. 3164 ]. Additionally, Pinewood is criticized for its failure to discuss the later case of FCC v. Florida Power Corp. (1987) 480 U.S. 245 [ 94 L.Ed.2d 282 , 107 S.Ct. 1107 ], I submit the majority’s criticism of these two circuit court opinions is unwarranted.

Loretto makes clear physical occupation of private property by government action constitutes a taking to the extent of the occupation, regardless of public benefit or economic benefit to the owner. (Loretto v. Teleprompter Manhattan CATV Corp., supra, 458 U.S. at pp. 434-435 [ 73 L.Ed.2d at p. 882 ].) Following Loretto , the courts in Hall and Pinewood allowed the plaintiffs to get past the dismissal stage and attempt to prove a physical taking within the meaning of Loretto . Each held a physical taking was conceptually possible under the theory raised by the pleadings of those plaintiffs.

Moreover, as the majority concedes in a footnote after its discussion of how Florida Power conclusively “punctuates” that the type of rent control ordinance considered in Hall does not constitute a taking per se, the Supreme Court in Florida Power did not even consider the issue of the cable television/utility rates there under its holding in Loretto . (Maj. opn., ante, p. 1358, fn. 11.) Thus, the precise issue before this court was not reached. (See FCC v. Florida Power Corp., supra, 480 U.S. 245, 251-252 [ 94 L.Ed.2d at p. 290 ].) The majority’s reliance on Florida Power to undercut Loretto and in turn the premise of both Pinewood and Hall is therefore inapposite.

The majority’s further attempt to brush this fact aside is not persausive. As the court in Hall noted, the fact a tenant’s right to occupy a space is not truly perpetual does not defeat a claim for taking. (Hall v. City of Santa Barbara, supra, 833 F.2d at p. 1277 .) If a property owner is required to allow tenancy in perpetuity at compensation below market rates unless the space rental is terminated for good cause defined by the ordinance and state statute combined in application, Loretto indicates a taking has been shown. I would thus follow the Courts of Appeals in Hall and Pinewood in allowing the plaintiffs to proceed with their cases on this issue.

*1362 The majority opinion, although scholarly and well written, draws upon the author’s own knowledge and that of text writers and law review commentators for the truth of economic principles. Popcorn and popcorn poppers may be complementary goods; however, analogy to their economic relationship does not assist us in resolving the complex questions of real property economics presented by these pleadings. Thus, I am uncomfortable with attempting to resolve those issues at this time.

I strongly believe we should allow the parties to amend their complaints so they can put on their respective cases and we can review this important and difficult issue on a full record. I therefore dissent.

Appellants’ petition for review by the Supreme Court was denied January ¡ 24, 1991. Baxter, J., did not participate therein. Lucas, C. J„ and Panelli, J., were of the opinion that the petition should be granted.