Opposition Brief — Colony Cove Properties, LLC, Petitioner v. City of Carson, California, et al.

No. 18-573

IN THE

Supreme Court of the United States



COLONY COVE PROPERTIES, LLC,

Petitioner,

v.

CITY OF CARSON, CALIFORNIA, et al.,

Respondents.



On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Ninth Circuit

BRIEF IN OPPOSITION

SUNNY K. SOLTANI

Counsel of Record

WILLIAM W. WYNDER

JUNE S. AILIN

JEFF M. MALAWY

ALESHIRE & WYNDER, LLP

18881 Von Karman Ave.,

Suite 1700

Irvine, CA 92612

(949) 223-1170

ssoltani@awattorneys.com

MATTHEW D. ZINN

ANDREW W. SCHWARTZ

STEPHANIE L. SAFDI

SHUTE, MIHALY &

WEINBERGER LLP

396 Hayes St.

San Francisco, CA 94102

(415) 552-7272

zinn@smwlaw.com

Counsel for Respondents

i

QUESTIONS PRESENTED

1. Whether a property owner can show a regulatory taking of its property without putting on any

evidence of the value of that property either before

or after the challenged regulatory action.

2. Whether the Court of Appeals properly applied the well-settled standard of review for denial of

a motion for judgment as a matter of law after a jury

verdict.

ii

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ....................................... i

TABLE OF AUTHORITIES ..................................... iii

INTRODUCTION .......................................................1

STATEMENT OF THE CASE ....................................3

REASONS FOR DENYING THE PETITION............8

I.

Colony Cove’s first question

presented involves neither an

unsettled issue of law nor a conflict

with any other circuit. ................................8

A.

The Court of Appeals’ holding

that Colony Cove failed to

carry its burden of showing

economic impact is based on

settled regulatory takings

principles. .........................................8

B.

The Court of Appeals’ opinion

is consonant with CCA

Associates, which Colony Cove

blatantly mischaracterizes.............12

II.

Colony Cove’s second question is

either not worthy of certiorari or not

presented at all. ........................................14

III.

Far being from being an “ideal

vehicle,” this case is a lemon: the

verdict is fatally defective on a host

of additional grounds. ...............................16

CONCLUSION ..........................................................20

iii

TABLE OF AUTHORITIES

Page

CASES

Bass Enters. Prod. Co. v. United States,

381 F.3d 1360 (Fed. Cir. 2004)...................... 18

Branch ex rel. Me. Nat’l. Bank v. United

States,

69 F.3d 1571 (Fed. Cir. 1995)........................ 18

Cavazos v. Smith,

565 U.S. 1 (2011) ........................................... 15

CCA Associates v. United States,

667 F.3d 1239 (Fed. Cir. 2011).......... 12, 13, 14

Cienega Gardens v. United States,

503 F.3d 1266 (Fed. Cir. 2007)................ 13, 14

City of Monterey v. Del Monte Dunes at

Monterey, Ltd.,

526 U.S. 687 (1999) ....................................... 17

Colony Cove Props., LLC v. City of Carson,

565 U.S. 971 (2011) ......................................... 5

Colony Cove Props., LLC v. City of Carson,

640 F.3d 948 (9th Cir. 2011) ................. 5, 6, 19

Cutter v. Wilkinson,

544 U.S. 709 (2005) ....................................... 16

First English Evangelical Lutheran Church of

Glendale v. County of Los Angeles,

482 U.S. 304 (1983) ....................................... 11

iv

Fla. Rock Indus. v. United States,

18 F.3d 1560 (Fed. Cir. 1994)........................ 18

Guggenheim v. City of Goleta,

638 F.3d 1111 (9th Cir. 2010) (en banc) ......... 3

Horne v. Dep’t of Agriculture,

135 S. Ct. 2419 (2015) ................................... 12

Keystone Bituminous Coal Ass’n v.

DeBenedictis,

480 U.S. 470 (1987) ................................... 8, 10

Lingle v. Chevron U.S.A. Inc.,

544 U.S. 528 (2005) ................................ passim

Loretto v. Teleprompter Manhattan CATV

Corp.,

458 U.S. 419 (1982) ....................................... 12

Murr v. Wisconsin,

137 S. Ct. 1933 (2017) ........................... 8, 9, 10

NCAA v. Smith,

525 U.S. 459 (1999) ....................................... 16

Penn Central Transportation Co. v. New York

City,

438 U.S. 104 (1978) ................................ passim

Pierce v. Guillen,

537 U.S. 129 (2003) ....................................... 16

Staff Mortg. & Inv. Corp.,

625 F.2d 281 (9th Cir. 1980) ......................... 19

Tahoe-Sierra Preservation Council, Inc. v.

Tahoe Reg’l Planning Agency,

535 U.S. 302 (2002) ....................................... 10

v

Taylor v. Sturgell,

553 U.S. 880 (2008) ....................................... 19

Tolan v. Cotton,

572 U.S. 650 (2014) ....................................... 15

United States v. Gaudin,

515 U.S. 506 (1995) ....................................... 13

Yee v. City of Escondido,

503 U.S. 519 (1992) ....................................... 12

Zivotofsky v. Clinton,

566 U.S. 189 (2012) ....................................... 16

STATE CASES

Carson Gardens, LLC v. City of Carson

Mobilehome Park Rental Review Board,

37 Cal. Rptr. 3d 768 (Cal. Ct. App.

2006)......................................................... 19, 20

Colony Cove Props., LLC v. City of Carson,

163 Cal. Rptr. 3d. 499 (Cal. Ct. App.

2013)................................................................. 6

Galland v. City of Clovis,

16 P.3d 130 (Cal. 2001) ................................... 3

RULES

Sup. Ct. Rule 10 ....................................................... 15

TREATISES

E. Gressman et al., Supreme Court Practice

§ 5.12(c)(3), p. 351 (9th ed. 2007) .................. 15

1

INTRODUCTION

Petitioner Colony Cove chose to take on $18 million in debt to finance its $23 million purchase of a

rent-regulated mobilehome park in the City of Carson, California. It made a highly leveraged bet that

it could persuade the City’s Mobilehome Rent Review Board to allow it to pass through more than

$1.2 million in annual debt service to the residents of

the park. The rent increases necessary to shoulder

that debt burden would have been twice as large as

the largest increase ever approved in the nearly 30year history of mobilehome rent control in the City.

The Board did grant Colony Cove rent increases—

some of the largest ever awarded—but declined to

allow it to pass through all of its debt service.

Colony Cove contends that the City took its property without just compensation in violation of the

Fifth Amendment by granting it less than all of the

increase it requested. State trial and appellate

courts roundly rejected the contention that he was

denied a fair return. But when the district court here

gave a jury the task of applying the regulatory takings test from Penn Central Transportation Co. v.

New York City, 438 U.S. 104 (1978), it found a taking.

On appeal, however, the Court of Appeals correctly recognized that Colony Cove had failed to put on

any evidence—and in fact sought to exclude any evidence—of the impact of the Board’s rent decisions on

the value of its full property interest: the fee simple

estate in the mobilehome park. This Court has made

clear that such evidence is indispensable to show the

2

kind of severe interference with property rights that

constitutes a taking.

The Court of Appeals followed the straightforward direction of this Court’s takings cases. Its holding about the evidence necessary to show economic

impact under Penn Central therefore presents no

unsettled question of law that might warrant review.

And nothing about the Court of Appeals’ decision

conflicts with the approach taken by any other circuit. Colony Cove cites a single Federal Circuit case,

but relies solely on dictum. In its holding, by contrast, the Federal Circuit took precisely the same

path taken by the Ninth Circuit here.

Although Colony Cove does not contest that the

Court of Appeals correctly stated the standard of review for a jury verdict, Colony Cove argues the court

failed to correctly apply that standard. But even if

Colony Cove were correct, misapplication of a longsettled standard of review plainly does not meet this

Court’s criteria for certiorari.

Moreover, the district court proceedings and the

verdict were riddled with serious defects that the

City raised below, but that the Court of Appeals had

no occasion to reach. Those defects stand in the way

of affirmance for Colony Cove.

Colony Cove took on enormous debt to purchase

the park, betting that it could force the residents to

bear its burden for it. Rebuffed, it claims the Constitution forces the City to cover that bet. The Court of

Appeals applied blackletter law in rejecting Colony

Cove’s claim, and this Court should therefore deny

the Petition.

3

STATEMENT OF THE CASE

1. In 1979, the City adopted an ordinance to regulate rents at mobilehome parks in the City (“Ordinance”), of which there are currently 21. ER

5:741:18-20, 5:755:4-6. “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.” Galland v. City of Clovis,

16 P.3d 130, 135 (Cal. 2001). “Because the owner of

the mobile home cannot readily move it to get a lower rent, the owner of the land has the owner of the

mobile home over a barrel.” Guggenheim v. City of

Goleta, 638 F.3d 1111, 1114 (9th Cir. 2010) (en

banc).

2. The City’s Ordinance invests the Mobilehome

Park Rental Review Board with broad discretion to

determine whether a park owner’s requested rent

increase is “fair, just, and reasonable.” ER 4:597 (§

4704(g)). The Ordinance does not prescribe any

method for the Board’s decisions. Rather, it lists factors for the Board to consider, including rent at comparable parks and capital improvements, but the

factors are not exclusive, and no factor is dispositive.

ER 4:597-98 (§ 4704(g)), 5:742:2-5; Pet. App. at 4a5a.

3. Colony Cove’s principal, James Goldstein,

bought his first mobilehome park in the City in 1983.

ER 4:566, 4:616, 5:738:14-739:9. Shortly thereafter,

Goldstein applied for a rent increase to pass his debt

service through to renters. The Board refused, granting a much smaller rent increase that excluded near-

4

ly all of the acquisition debt service. ER 4:616,

5:756:17-758:11.

Colony Cove purchased the instant rentcontrolled mobilehome park in April 2006 in a highly

leveraged transaction, taking out an $18 million loan

to finance the approximately $23 million purchase

price. ER 5:741:1-11. The loan required annual debt

service payments of $1.2 million, greatly exceeding

the prior owner’s total annual profits. ER 5:722:7-19,

4:461. Indeed, Colony Cove’s appraisal showed that

the purchase price was justifiable only if the Board

would allow park residents’ rents to be increased to

pass through the mortgage interest expense. ER

4:453. Yet before Colony Cove purchased the park,

Goldstein’s long-time counsel warned him in writing

that he should not expect any rent increase. ER

4:428.

4. Later in 2006, the City amended the nonbinding guidelines for implementation of the Ordinance (“Guidelines”). The amendment clarified that,

among other methods, the Board could use the

Maintenance of Net Operating Income (“MNOI”)

method to make its decisions, as it was already routinely doing. The MNOI method excludes mortgage

interest expenses, thereby preventing owners from

manipulating financing arrangements to obtain

larger rent increases. ER 4:601-02 (§ II(C)); 6:798:17799:11, 4:556-557; see also, e.g., ER 5:760:1-761:5;

4:569-70; 4:628-30; 4:634-35, 4:622-27.

5. Colony Cove applied for rent increases in 2007

and 2008 totaling roughly $550 per space per month,

which would have more than doubled existing rents

and dwarfed any rent increase awarded in the histo-

5

ry of the Ordinance. Nearly all of the requested rent

increase was based on Colony Cove’s $1.2 million in

annual interest expense. ER 4:527, 5:750:9-25; 4:484;

4:459-61; 5:754:7-18.

Applying the MNOI method, the Board awarded

rent increases totaling $61.76 per space per month,

thereby increasing Colony Cove’s annual gross income by approximately $300,000. ER 4:539-40,

4:551. Two years later, Colony Cove refinanced its

mortgage to reduce its debt service, and the park has

earned significant profits ever since. 1 See ER 3:278.

6. Colony Cove challenged the Board’s 2007 rent

increase decision in federal court in October 2008.

The district court dismissed Colony Cove’s claims as

untimely, unripe, and unmeritorious, and the Court

of Appeals affirmed. See Colony Cove Props., LLC v.

City of Carson (Colony Cove I), 640 F.3d 948 (9th Cir.

2011), cert. denied, 565 U.S. 971 (2011).

Specifically, the court rejected Colony Cove’s argument—which it nonetheless continues to reiterate

(e.g., Pet. at 2, 6)—that the 2006 Guideline amendment had “changed the rules” applicable to rent control decisions. 640 F.3d at 957 (holding that the

“2006 Amendment did not alter the 1979 Ordinance

itself,” which exclusively governs the Board’s rent

increase decisions). The court held that the Board’s

decision was not arbitrary because neither the “Ordinance [n]or the Guidelines require the Board to

The district court improperly excluded all evidence of the

park’s value, revenue, or financial changes after July 2009, including Colony Cove’s mortgage refinancing and subsequent

profits. ER 3:271-79; ER 1:34.

1

6

employ any particular methodology in conducting its

review of rental increase applications.” Id. at 960-62.

7. Colony Cove next tried to overturn the Board’s

rent increase decisions in state court. See Colony

Cove Props., LLC v. City of Carson, 163 Cal. Rptr.

3d. 499 (Cal. Ct. App. 2013). The California trial and

appellate courts both rejected Colony Cove’s challenges on the merits. Id. at 502. The state court of

appeal explained that the MNOI method has not only been approved by multiple courts but “praised . . .

for its fairness and ease of administration.” Id. at

521 (quotation omitted).

8. Colony Cove then returned to federal court to

file this suit in April 2014. Colony Cove pled a Fifth

Amendment regulatory takings claim under several

theories and a substantive due process claim. ER

3:386-420. The district court partially granted the

City’s two motions to dismiss, narrowing Colony

Cove’s claims to a single as-applied Penn Central

claim challenging the rent increase decisions. ER

1:44-74. Over the City’s objections, the district court

concluded that the entire case should be decided by a

jury. ER 1:40:25-43:13; 3:253-54.

At trial, Colony Cove failed to present any evidence from which the jury could determine the extent to which the Board’s decisions affected the

market value of Colony Cove’s property. It presented

no evidence of the value of the park before or after

the challenged decisions, and no evidence comparing

its future cash flows with and without the challenged actions. Rather, Colony Cove chose to show

economic impact with evidence only of the additional

rental income it would have received had the Board

7

allowed it to impose its mortgage interest expenses

on renters. Pet. App. at 12a.

The jury returned a verdict for Colony Cove, concluding that it was entitled to $3,336,056 in just

compensation. ER 2:104-06. The court denied the

City’s renewed motion for judgment as a matter of

law. ER 1:17. The court then awarded Colony Cove

prejudgment interest and attorneys’ fees. ER 2:9698; 2:80-83; 1:3, 1:8, 1:16-17.

9. The City appealed, and the Court of Appeals

reversed in a unanimous opinion, concluding that

the City was entitled to judgment as a matter of law.

The court determined that no reasonable trier of fact

could find for Colony Cove on any of the three Penn

Central factors. Pet. App. at 13a-14a, 18a, 20a. In

particular, the court held that Colony Cove “presented no evidence, by virtue of analyzing diminished income streams or otherwise, of the post-deprivation

value of the Property.” Id. at 13a.

Although the City argued that the district court

erred in sending the entire Penn Central claim to the

jury, the Ninth Circuit declined to reach that issue

and instead applied the standard of review applicable to a jury verdict. Pet. App. at 9a, 20a n.10.

Colony Cove petitioned the Court of Appeals to

rehear the case en banc. No judge requested rehearing, and the court denied the petition. Pet. App. at

21a. Colony Cove then filed its Petition in this Court.

8

REASONS FOR DENYING THE PETITION

I.

Colony Cove’s first question presented

involves neither an unsettled issue of law

nor a conflict with any other circuit.

In holding that no reasonable trier of fact could

have found a regulatory taking of Colony Cove’s

property under the multi-factor Penn Central test,

the Court of Appeals applied the standard for evaluating the economic impact of regulation developed by

this Court and consistently applied by the courts of

appeals. Pet. App. at 10a-14a. Colony Cove’s first

question presented therefore does not satisfy this

Court’s criteria for certiorari.

A.

The Court of Appeals’ holding that

Colony Cove failed to carry its

burden of showing economic

impact is based on settled

regulatory takings principles.

This Court has held that “our test for regulatory

taking requires us to compare the value that has

been taken from the property with the value that

remains in the property.” Murr v. Wisconsin, 137 S.

Ct. 1933, 1943 (2017) (quoting Keystone Bituminous

Coal Ass’n v. DeBenedictis, 480 U.S. 470, 497 (1987)).

The Court of Appeals did nothing more than apply

that basic principle. 2

In the Court of Appeals, Colony Cove admitted that “economic

impact is judged by comparing the property’s value before the

government action to the value just after the government action.” Brief for Plaintiff-Appellee Colony Cove Properties, LLC

at 35 n.5, Colony Cove Props., LLC v. City of Carson, 888 F.3d

445 (9th Cir. 2018), ECF No. 47.

2

9

1. Colony Cove never put on any evidence of “the

value that has been taken from the property” or “the

value that remains in the property.” 3 See Pet. App.

at 12a. Instead, it put on evidence of “lost rental income,” Pet. App. at 12a, viz. the amount of revenue it

would have received if the City had granted the full

rent increase it requested. Pet. at 7-8; Pet. App. at

8a, 12a. The obvious flaw in this approach is that it

provides no evidence with which the court—or here,

the jury—can make the before-and-after “compar[ison]” required by this Court’s takings cases.

Murr, 137 S. Ct. at 1943. Lacking that comparative

information, one cannot know whether the regulation is “so onerous that its effect is tantamount to a

direct appropriation or ouster,” which, as Colony

Cove admits (Pet. at 15), is the touchstone of the takings inquiry. Lingle v. Chevron U.S.A. Inc., 544 U.S.

528, 537 (2005). The Court of Appeals correctly applied this principle to hold that Colony Cove had altogether failed to demonstrate the severity of the

impact of the challenged rent increase decisions. Pet.

App. at 12a-13a.

In any event, even if the value of the property

without the rent increase decisions were interpreted

as the purchase price Colony Cove paid for the property ($23 million), the Court of Appeals noted that

the lost rental income would amount—at most—to a

In fact, Colony Cove moved in limine to exclude all evidence of

the value of the property or income from the property after

2009. See supra note 1. It strategically prevented the jury from

contextualizing the “lost” income with information about the

value and profitability of the park—the very context that this

Court’s takings cases demand.

3

10

28.4 percent diminution in that value. Pet. App. at

12a & n.4. As the court recognized, such economic

impact is far below the level necessary to show a

regulatory burden “functionally equivalent to the

classic taking in which government directly appropriates private property or ousts the owner from his

domain.” Id. at 11a-12a (quoting Lingle, 544 U.S. at

539).

Colony Cove does not dispute that “one of the

critical questions” in the takings analysis is determining “the denominator of the fraction” used to calculate economic impact. Murr, 137 S. Ct. at 1944

(quoting Keystone Butuminous Coal Ass’n, 480 U.S.

at 497). Yet nowhere in its Petition, or in its briefing

in the Court of Appeals, has Colony Cove offered any

answer. Instead, it merely disputes the use of the entire property value as the denominator and makes

no attempt to define an alternative.

2. By introducing evidence solely of lost income,

Colony Cove effectively attempted to define the relevant property interest not as the fee simple interest

it owns in the park, but rather as the hypothetical

rental income to which it claims entitlement. But defining the relevant property interest solely as the

aspect affected by the regulation is “circular.” TahoeSierra Preservation Council, Inc. v. Tahoe Reg’l

Planning Agency, 535 U.S. 302, 331 (2002). “If owners could define the relevant ‘private property’ at issue as the specific ‘strand’ [in the bundle of rights]

that the challenged regulation affects, they could

convert nearly all regulations into per se takings.”

Murr, 137 S. Ct. at 1952 (Roberts, C.J., dissenting).

The Court of Appeals correctly held that Colony

11

Cove failed to show the severity of the impact of the

City’s actions on its full property interest, as this

Court’s takings cases plainly require.

3. Colony Cove contends that the Court of Appeals’ decision is inconsistent with this Court’s decision in First English Evangelical Lutheran Church

of Glendale v. County of Los Angeles, 482 U.S. 304

(1983). Pet. at 3-4. Not at all. 4

First, Colony Cove fails to explain why this case

is a temporary takings case. In fact it is not. The

rent increase granted by the City is permanent, and

conversely, the denial of the additional increase

sought by Colony Cove is similarly permanent.

Further, Colony Cove’s suggestion that the decision below renders temporary takings impossible in

violation of First English misunderstands this

Court’s decision in that case. First English merely

held that a regulatory action found to be a taking

remains so even though the action is terminated and

thus made temporary. 482 U.S. at 319. The sine qua

non of such a claim is a permanent taking, cut short

by rescission of the regulation. First English does not

support Colony Cove’s claim that a temporary loss of

income resulting from regulation (even if this case

involved such a loss) necessarily must be a taking.

Colony Cove’s analogy of the taking of a leasehold

through physical occupation of property is similarly

inapt. See Pet. at 18, 19-20. This Court has repeatedIn fact, Colony Cove never cited First English in the Court of

Appeals, despite the fact that the City had made the same argument later adopted by the Court of Appeals.

4

12

ly distinguished physical occupation as a peculiarly

severe interference with property rights, given the

privileged position of the right to exclude. See Loretto

v. Teleprompter Manhattan CATV Corp., 458 U.S.

419, 426, 432-33 (1982); see also Horne v. Dep’t of

Agriculture, 135 S. Ct. 2419, 2427 (2015). As a result, physical occupation, “however minor,” can effect

a taking. Lingle, 544 U.S. at 538. In distinct contrast, the rent increase decisions here—which regulate the income that may be generated by

commercial property—are nothing like a physical occupation. See Pet. App. at 19a; see also Yee v. City of

Escondido, 503 U.S. 519, 527-28, 532 (1992).



In sum, the Court of Appeals’ application of Penn

Central’s economic impact factor implicates no important and unsettled question of constitutional law.

Rather, it merely applied the most basic principle of

this Court’s takings law: that a takings claim requires a comparison of the value of the affected

property before and after the challenged regulatory

decision.

B.

The Court of Appeals’ opinion is

consonant with CCA Associates,

which Colony Cove blatantly

mischaracterizes.

Colony Cove also attempts to manufacture a split

of authority by claiming that the Court of Appeals’

economic impact analysis is at odds with CCA Associates v. United States, 667 F.3d 1239 (Fed. Cir.

2011). Colony Cove distorts CCA Associates beyond

recognition. Pet. at 22-24. The Ninth Circuit in fact

13

applied the very same economic impact test here

that the Federal Circuit applied in CCA Associates.

1. Colony Cove’s perceived circuit split is based

solely on dictum in CCA Associates that is not explained or supported in the opinion, has never been

followed, and has no precedential value. See United

States v. Gaudin, 515 U.S. 506, 522 (1995) (holding

“obiter dicta . . . may properly be disregarded”). By

contrast, the Ninth Circuit’s decision was fully consistent with the holding in CCA Associates.

The CCA Associates panel suggested it would

have preferred to apply a purported “traditional lost

rent . . . approach” to calculating economic impact.

667 F.3d at 1247. But the court cited no case exemplary of that “tradition” and, tellingly, neither does

Colony Cove. And no court since has followed that

mythical tradition.

2. Nor did CCA Associates itself follow that approach. Instead, in its holding, the court applied a

measure of economic impact dictated by the Federal

Circuit’s prior decision in Cienega Gardens v. United

States, 503 F.3d 1266 (Fed. Cir. 2007). The CCA Associates court concluded that it was “bound by the

economic impact methodology” applied in Cienega

Gardens. 667 F.3d at 1246. Lest there be any doubt,

it repeated seven times that it was “bound” by Cienega Gardens. Id. at 1242, 1244, 1246, 1247, 1248.

Cienega Gardens required that the severity of a

regulation’s economic impact be shown by “compar[ing] the value of the restriction to the value of

the property as a whole.” 503 F.3d at 1282. It recognized that “[t]he Supreme Court, in cases like [Penn

14

Central] . . . has made clear that in the regulatory

takings context the loss in value of the adversely affected property interest cannot be considered in isolation.” Id. at 1280.

Citing Cienega Gardens, the Ninth Circuit applied the same economic impact framework here.

Pet. App. at 13a. Given that the Court of Appeals

expressly applied the very same test applied in CCA

Associates and reached the same conclusion, Colony

Cove has shown no conflict of authority.

II.

Colony Cove’s second question is either

not worthy of certiorari or not presented

at all.

At the outset, Colony Cove frames its second

question presented as asking the Court to confirm

the standard of appellate review of jury verdicts. Pet.

at i. Yet Colony Cove transforms the question in its

argument. Pet. at 25-29. It there frames the question

as whether the Seventh Amendment guarantees a

right to a jury trial in takings cases. Under either

form, the question does not meet the criteria for certiorari.

1. As first posed, this question presented falls far

short of those criteria. The standard of review of a

jury verdict is undisputed and was properly stated

by the Court of Appeals. Pet. App. at 10a (“whether

Colony presented sufficient evidence on [the Penn

Central] factors to allow a reasonable finder of fact to

conclude” that the City effected a taking). It is neither the subject of a conflict among the circuits or

with state courts of last resort nor a significant and

unresolved legal question. It also satisfies none of

15

the other extraordinary criteria for review. See Sup.

Ct. Rule 10.

At most, the question challenges the Court of Appeals’ application of the unquestioned standard of

review. Colony Cove contends that the court failed to

dutifully apply the standard and give the requisite

deference to the jury’s conclusion. Pet. at 27-28.

But “[a] petition for a writ of certiorari is rarely

granted when the asserted error consists of . . . the

misapplication of a properly stated rule of law.” Sup.

Ct. Rule 10. “Error correction is ‘outside the mainstream of the Court’s functions.’” Cavazos v. Smith,

565 U.S. 1, 11 (2011) (Ginsburg, J., dissenting) (quoting E. Gressman et al., Supreme Court Practice

§ 5.12(c)(3), p. 351 (9th ed. 2007))); see also Tolan v.

Cotton, 572 U.S. 650, 661 (2014) (Alito, J., concurring).

Alleged misapplication of a long-settled standard

of review is hardly a “compelling reason[]” for review. Sup. Ct. Rule 10. The question as stated at the

outset of the Petition is therefore plainly not worthy

of review.

2. Colony Cove implicitly recognizes that this

milquetoast question is a nonstarter—it offers no

supporting argument. Instead, it directs its argument to a question that is unresolved but not presented: whether the Seventh Amendment guarantees

a right to have a jury apply the multi-factor Penn

Central takings test. Pet. at 27, 29. Because the

Court of Appeals reversed on the merits, it expressly

declined to reach the City’s contention that the Penn

16

Central test should not have gone to the jury. Pet.

App. at 20a n.10.

This Court consistently refuses to resolve weighty

constitutional questions that were never addressed

by the court of appeals. See, e.g., Zivotofsky v. Clinton, 566 U.S. 189, 201-02 (2012); Pierce v. Guillen,

537 U.S. 129, 148 n.10 (2003) (citing NCAA v. Smith,

525 U.S. 459, 470 (1999)). That is because this is “a

court of review, not of first view.” Cutter v. Wilkinson, 544 U.S. 709, 718 n.7 (2005). The Court

should adhere to this longstanding practice and reject Colony Cove’s second question.

III.

Far being from being an “ideal vehicle,”

this case is a lemon: the verdict is fatally

defective on a host of additional grounds.

Colony Cove contends that this case is an “ideal

vehicle” for the Court to consider the questions presented. Pet. at 24. It is nothing of the sort. Even if

the Court were to rule for Colony Cove, numerous

serious defects in the verdict and the district court

proceedings stand between Colony Cove and affirmance of the verdict.

1. Even if this Court were to grant Colony Cove’s

wish to redefine the proper measure of economic impact under Penn Central, the Court of Appeals’ decision would remain valid because the court held that

no reasonable trier of fact could conclude that the

two remaining Penn Central factors supported the

finding of a taking. Pet. App. at 18a, 20a.

The Court of Appeals concluded that no reasonable trier of fact could conclude that Colony Cove had

a “distinct investment-backed expectation” that the

17

City would grant its requested rent increase, given

the lack of any requirement in the Ordinance, Goldstein’s own experience with rent control in the City,

and the unprecedented scale of the requested increases. Pet. App. at 14a-18a. Colony Cove’s only objection to this conclusion is that the court misapplied

the standard of review, Pet. at 27-28, which even if

correct, would fall far short of the criteria for certiorari.

The court also held that the “character of the

governmental action” failed to support the verdict.

Pet. App. at 19a-20a. It followed this Court’s direction in Penn Central in holding that the rent decisions involved “adjusting the benefits and burdens of

economic life to promote the common good” and were

hardly akin to “a physical invasion.” Id. at 19a (quoting Penn Central, 438 U.S. at 124). Colony Cove

points to nothing in this conclusion that could justify

granting the Petition.

2. The City argued below that the district court

improperly asked the jury to apply the Penn Central

takings test, a legal standard that even this Court

has found to be “vexing.” Lingle, 544 U.S. at 539.

The Court of Appeals expressly declined to reach

that question in light of its holding. Pet. App. at 20a

n.10.

Although this Court has recognized a general

right to a jury trial in § 1983 takings cases, it has

also clearly held that some issues in such cases will

be inappropriate for a jury’s resolution. City of Monterey v. Del Monte Dunes at Monterey, Ltd., 526 U.S.

687, 718 (1999); see also id. at 731 (Scalia, J., concurring). Del Monte Dunes did not involve a Penn

18

Central claim, and thus the Court had no cause to

consider whether application of that test is a jury issue.

In fact, the Penn Central test represents “a classic exercise of judicial balancing of competing values.” Fla. Rock Indus. v. United States, 18 F.3d 1560,

1570 (Fed. Cir. 1994). Its application is therefore “a

question of law that is based on factual determinations.” Bass Enters. Prod. Co. v. United States, 381

F.3d 1360, 1365 (Fed. Cir. 2004).

Because the Court of Appeals did not address this

issue, it is not presented here and would require remand for resolution. See supra Section II.

3. Even if the district court was right to ask the

jury to apply Penn Central, its instructions failed to

properly prepare the jury for that daunting task. The

court merely repeated verbatim the three factors set

out in Penn Central. ER 2:102. “Standing alone,

those [Penn Central] factors are so general that they

provide little guidance.” Branch ex rel. Me. Nat’l.

Bank v. United States, 69 F.3d 1571, 1578-79 (Fed.

Cir. 1995). Yet the district court provided no context

to explain how those factors have been applied.

Moreover, the court rejected the City’s request to instruct the jury that it must find the City’s action to

be “functionally equivalent to the classic taking in

which government directly appropriates private

property or ousts the owner.” Lingle, 544 U.S. at 539;

see ER 2:215, 1:30:1-31:1.

The Court of Appeals did not address the propriety of the jury instructions. But that issue must also

be resolved for the verdict to stand.

19

4. The verdict was also tainted by the district

court’s material errors in the admission of evidence.

For example, the district court refused to preclude

Colony Cove from arguing that the City had

“changed the rules” applicable to the rent increase

applications after Goldstein purchased the park. ER

1:36, 3:284-93. The Court of Appeals previously held

in Colony Cove I that the City had done no such

thing; the Board always had authority to apply the

MNOI method to rent increase applications. See 640

F.3d at 957. The erroneous notion that the City had

unfairly “changed the rules” formed the heart of Colony Cove’s arguments to the jury. 5 See, e.g., ER

5:646:4-647:23;

5:656:1-15;

6:840:16-841:12;

6:848:22-851:12; 6:856:9-23; 6:870:19-25; 6:898:21900:15; 6:903:14-909:20. Yet that position was precluded as a matter of both issue preclusion and precedent. See Taylor v. Sturgell, 553 U.S. 880, 892

(2008); In re Staff Mortg. & Inv. Corp., 625 F.2d 281,

282-83 (9th Cir. 1980).

Further, the district court allowed Colony Cove to

introduce appellate opinions as evidence and to argue their legal significance to the jury. Colony Cove

introduced Carson Gardens, LLC v. City of Carson

Mobilehome Park Rental Review Board, 37 Cal. Rptr.

3d 768 (Cal. Ct. App. 2006), to suggest—incorrectly

and improperly—that the City had violated the law

by refusing to allow debt service to be passed on to

park residents in this case. See Pet. App. at 15a. But

the sole issue in Carson Gardens was whether the

City had complied with a prior, unappealed superior

5

And they continue to flog that horse here. See Pet. at 2.

20

court order in an unrelated case—an order that the

court of appeal strongly implied had been incorrect.

See 37 Cal. Rtpr. 3d at 775-76. The introduction of

and argument about these opinions was unfairly

prejudicial to the City.

These evidentiary errors are undoubtedly beneath this Court’s notice and were not addressed by

the Court of Appeals. But they too must be resolved

to sustain the verdict.

CONCLUSION

For these reasons, the City respectfully requests

that the Court deny the Petition.

Respectfully submitted,

SUNNY K. SOLTANI

Counsel of Record

WILLIAM W. WYNDER

JUNE S. AILIN

JEFF M. MALAWY

ALESHIRE & WYNDER, LLP

MATTHEW D. ZINN

ANDREW W. SCHWARTZ

STEPHANIE L. SAFDI

SHUTE, MIHALY & WEINBERGER LLP

Counsel for Respondents