Reply Brief — Yee v. Escondido

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1 JAM 14 1992

No. 90-1947 | OFFICE OF THE Clenk

IN THE

Supreme Court of the United States

October Term, 1991

JOHN K. YEE and IRENE YEE, et ai.,

Petitioners,

CITY OF ESCONDIDO,

Respondent.

ON WRIT OF CERTIORARI

TO THE FOURTH APPELLATE DISTRICT, DIVISION ONE,

COURT OF APPEAL FOR THE STATE OF CALIFORNIA

REPLY BRIEF FOR THE PETITIONERS

ROBERT J. JAGIELLO*

DEBRA K. BUTLER

JAGIELLO & PECH

Post Office Box 879

Lake Arrowhead, Calif. 92352

Telephone: (714) 867-5937

ROBERT H. BORK

1150 Seventeenth St., N.W.

Washington, D.C. 20036

Telephone: (202) 862-5851

*Counsel of Record

CASILLAS PRESS. INC, 1717 K STREET, N.W.. WASHINGTON, D.C. 20036

TABLE OF CONTENTS

Page

eat caiee tba tenreswinys 1

I. THE ESCONDIDO ORDINANCE HAS

TAKEN PETITIONERS’ PROPERTY BY

PHYSICAL OCCUPATION...................005. 6

Il. | THE REGULATORY TAKINGS CLAIM IS

RIPE AND MERITORIOUS..................... 10

Il.

THE ORDINANCE DOES NOT

SUBSTANTIALLY ADVANCE A

LEGITIMATE GOVERNMENTAL PURPOSE...... 12

TTT Te ee TCT TTT Teer TET TTTET OTe 13

**

TABLE OF AUTHORITIES

CASES Page(s)

Agins v. City of Tiburon,

467 U.S. SRB GBBRD... occ cccccvcscccccceseueeeee 10

Alamo Land & Cattle Co. v. Anizona,

4946 U.S. BBB GOGO... ccccccccesceovecceue ee 2

Azul Pacifico Inc. v. City of Los Angeles,

740 F. Supp. 772 (C.D. Cal. 1990), aff'd

in pertinent part, 948 F.2d 575 (9th Cir. 1991)...4, 5, 7, 11

Block v. Hirsch,

S58 U.S. 195 (OGRE)... ccccvvcccesusucceaese 4

Bowles v. Willingham,

S21 U.S. SOB CBOE)... ccccccccccesees sua )

Callahan v. Martin,

3 Cal. 34 120, 43 P.28 FOB CORED. ... occ cucckueee ee q

Carefree Ranch, Ltd. v. Mobilehome Park Rental Review

Board, City of Escondido, appeal docketed,

4th Dist. Civ. No. D014142

(Cal. Ce. Agp. Biawel 3B, BGBR).. «0... ccccuccweneeeee 6

DeAnza Properties X v. County of Santa Cruz,

SOS F.28 1608 Gtk Cir. IGDE)......ccccsccenccteunene 11

Dewey v. Des Moines,

A7S U.S. 16D QRGBBD.... nc ccnncccceccuceseuneee 11

Eamiello v. Liberty Mobilehome Sales, Inc.,

208 Conn. 620, 546 A.2d 805 (1988),

appeal dismissed, 489 U.S. 1002 (1989).................. 7

Edgar A. Levy Leasing Co. v. Siegel,

2am U.S. BEB (RGRR). cnn cvcccccuceun en euunae 4

Page(s)

FCC v. Florida Power Corp., 480 U.S. 245 (1987)....... 6, 7

Fresh Pond Shopping Ctr. Inc. v. Callahan,

464 U.S. 875 (1983) (Rehnquist, J., dissenting)......... 7,9

Hall v. City of Santa Barbara, No. 85-5838,

Memorandum of Decision, (C.D. Cal.

Ns cc ccc ccc scccsccccccess y

Illinois v. Gates,

Te. ccc ccc csccvcsccces 11

Kaiser Aetna v. United States,

EEE 8

Kimball Laundry Co. v. Umited States,

Nn. cca cccccecsccecces 2, 8

Loretto v. Teleprompter Manhattan CATV Corp.,

Tee ccc ccccceecesccecces 9-10

Nollan v. California Coastal Comm'n,

Ne coc cccsecscoccccces 10

Penn Central Transp. Co. v. New York City,

Teen TT Tn nn cee cece cece cecececes 1

People v. Charles E. Dupont,

San Diego Municipal Court No. E031733

Teen TT ne ceca cc ccceeescescces 5

People v. George Meknan,

San Diego Municipal Court No. E031735

rece cscs es cescesccsccccccccces 5

People v. Olen Mercer,

San Diego Municipal Court No. E031734

Neen ccc ce cece ceccececes 5

IV

Page(s)

People v. Richard C. Keubler,

San Diego Municipal Court No. E031736

ee ee: Oe 5 b's v oS + 60b-e¥aseesdess Ruewenees 5

People v. John Yee,

San Diego Municipal Court No. E031738

SS Se IG on ctv cbudcunaksdasescsnsiscasanees 5

Pinewood Estates v. Barnegat Township Leveling Bd.,

ke Ff 2 fo Se errr 6

Thompson v. Merlino Enterprises, Inc.,

208 Conn. 656, 545 A.2d 1094 (1988) (per curiam),

appeal dismissed, 488 U.S. 1024 (1980)................ 7-8

Webb’s Fabulous Pharmacies, Inc. v. Beckwith,

es Se IS i thc cnvins sdauwbwene tesiewecedews se)

Westwinds Mobile Home Park v. Mobilehome

Rental Review Board, No. N-54104

(San Diego Super. Ct.

fled December 24, 1991)... 0... cc cccccccccccccccces 4,6

Yee v. Mobilehome Park Rental Review Board,

N-51754 (San Diego Super. Ct.

ee Ne Be SS 65 setndedesaccewcnsdeadested’ 3, 4, 11

STATUTES

California Civil Code

I es cade 4c0eerenweneeeusessve¥suanenteea fw)

I PI, 5 sos. tsee esvensencaseteetedabotan 10

California Commercial Code

RE TNs ve donee 00 0 000005409505S4sacene tam 4

California Government Code

Ee cn. cen cacnucesccneteunewar

Section 66410 et seq... .. 2... 6. ccc cece aes

NN eee ce ware

California Pub. Res. Code

Og. cov cecicoscccecvsevess

California Vehicle Code

ce ekeccesvecsdees

CONSTITUTION

United States Constitution

OTHER AUTHORITIES

Hirsch & Hirsch, Legal-Economic Analysis of

Rent Controls in a Mobile Home Context:

Placement Values and Vacancy Decontrol,

35 UCLA L. REV. 399 (1968).................

SAMUELSON, PAUL A., ECONOMICS

ee Gs EN SoG bG sence nadeeul se sesds ce

Stoebuck, William B., Police Power, Takings,

and Due Process, 37 WASH. LAW REV.

GS Go 5ck s Sn Neetu dawpceabae ee cusses

rere re 10

IN THE

Supreme Court of the United States

October Term, 1991

No. 90-1947

JOHN K. YEE and IRENE YEE, et al.,

Petitioners,

v.

CITY OF ESCONDIDO,

Respondent.

ON WRIT OF CERTIORARI

TO THE FOURTH APPELLATE DISTRICT, DIVISION ONE,

COURT OF APPEAL FOR THE STATE OF CALIFORNIA

REPLY BRIEF FOR THE PETITIONERS

INTRODUCTION

Petitioners’ opening brief demonstrated that: (1) the City

of Escondido has taken Petitioners’ property by physical oc-

cupation or, in the alternative, under the criteria laid down

in Penn Central Transp. Co. v. New York City, 438 U.S. 104

(1978), by an oppressive deprivation of protected property

rights; (2) the transfer of Petitioners’ property nghts to their

tenants does not advance any legitimate governmental interest;

and (3) Escondido’s Ordinance deprives Petitioners of their

property without due process of law. Escondido has rebutted

none of this.

More importantly, the City has no good answer for the basic

question: what do people buy when they pay a $20,000 or

$30,000 premium for a used mobilehome in an Escondido

2

mobilehome park? According to the City, they buy ‘‘the pro-

tection [of] the Ordinance.’’ Brief for Respondent at 24. In

other words, they buy the rights created by the Ordinance. !

As Petitioners’ brief showed, the rights the Ordinance

transferred are: (1) the right to occupy the property in

perpetuity; (2) the nght to pay a rent below market rent in

perpetuity; (3) the right to select the next tenant to occupy

the property; (4) the right to effectively set and collect a por-

tion of the next tenant’s rent by charging a premium on the

sale of the mobilehome coach; and (5) the right to sell, be-

queath, or let pass by intestacy all of these rights. The ‘‘pro-

tection of the Ordinance’ is Respondent’s euphemism for

leasehold interests that the City has carved out of Petitioners’

property and awarded to the tenants. That is what the incoming

tenant pays a premium for. The City’s euphemism cannot

disguise an uncompensated taking. Bnef for Respondent at 24.

The City attempts to divert attention from the legal inade-

quacies of its position by relying on pages of factual allega-

tions. These are irrelevant since the City asks the Court to

affirm a dismissal on the pleadings. Few of these assertions

are germane to the constitutional issues before the Court.

Most are outside the record. All can be refuted at trial. Peti-

tioners briefly address only some of the more egregious

assertions.

History of Operating Losses in the Yees’ Parks

Escondido asserts there is no taking because Petitioners

receive reasonable rents. Rents have little relevance in tak-

ing cases (except as an indication of value in assessing

\Leaseholds cannot be taken without just compensation. Alamo Land

& Cattle Co. v. Arizona, 424 U.S. 295 (1976); Kimball Laundry Co. v.

United States, 338 U.S. 1 (1949).

3

damages), and the Yees are not, in any event, predators but

ordinary business people whose controlled revenues are in-

sufficient to pay their property’s expenses.” None of the litany

of alleged abuses has any bearing on the constitutional issue:

does Escondido’s Ordinance appropriate interests in the Peti-

tioners’ property? Abusive practices can be and are regulated

through other laws that do not appr’priate interests in the

realty.

The Mobilehome Rental Market in Escondido Is Not

a Monopoly.

‘‘Monopoly,’’ ‘‘monopoly rents,’’ and ‘‘monopoly power”’

echo through the City’s Brief like a refrain as the justification

for Escondido’s Ordinance, but Escondido’s twenty-nine

mobilehome parks (let alone California’s 5,800 mobilehome

parks)? are no monopoly. Economists define monopoly as a

single supplier, such as an electric utility, of a product or ser-

vice for which there is no ready substitute. PAUL A.

SAMUELSON, ECONOMICS (13th ed. 1989). Where people can

choose from dozens of mobilehome parks, buy or rent a house

or condominium, or rent an apartment, there is no monopoly;

and no park owner can exercise monopoly power by restricting

2See Administrative Record in Yee v. Mobilehome Park Rental Review

Board, No. N-51754 (San Diego Super. Ct. filed June 13, 1991). The Yees

are experiencing an annual net operating loss (excluding depreciation of

$291,000) of approximately $84,000 with the rent increase allowed by

Escondido’s rent board. (A.R. 325, 345). That rents increased in the 1970s

and the 1980s proves nothing. At the same time housing prices were soar-

ing eight-fold from $23,000 to $200,000 median price (San Diego Economic

Bulletin, Vol. 39, No. 11, November 1991), and rent increases under the

circumstances were entirely predictable. When property is taken, just com-

pensation must be paid, whether the owner’s remaining property is pro-

fitable, breaks even, or loses money.

‘Brief for Respondent at 5, n.7.

4

supplies in order to increase prices. See Azul Pacifico v. City

of Los Angeles, 948 F.2d 575, 582 (9th Cir. 1991) (rejecting

similar arguments). When demand temporarily outruns sup-

ply, rents will rise and attract new investment, (but for “‘slow

growth’’ policies or local rent controls that deter development)

and new development will tend to depress rents toward

equilibrium levels. What the City labels ‘‘monopoly”’ is just

the normal interplay of supply and demand in a competitive

market. Since the Constitution protects all property — even

that of ‘‘monopolists’’ — Petitioners doubt the constitutional

significance of these issues, but market conditions are issues

of fact. If they matter as much as the City suggests, let them

be proved or disproved at tnal.

The Purchase Price Paid For a Coach is a

Questionable Investment and Its Remaining

Value is a Factual Issue

The City claims that vacancy controls protect the residents’

‘“‘investment.’’* Nowhere do they attempt to separate the

value of the coach itself (which is depreciable personal pro-

perty, worth only its Blue Book value)> from the premium paid

for the ‘‘protection’’ of the Ordinance (i.e., for the bargain

leasehold it creates). At trial, Petitioners will establish that

‘The City argues that rent increases can be substituted for vacancy

decontrol. The Complaint states that premiums are approximately $40,000,

requiring $400 per month rent increases. The City to date has granted

rent increases of $4 to $27.50 to park owners. Westwinds Mobile Home

Park v. Mobilehome Park Rental Review Board, No. N-54104 (San Diego

Super. Ct. December 24, 1991); Yee v. Mobilehome Park Rental Review

Board, supra.

5Coaches are typically financed and secured as personal property under

California Commercial Code §§ 9102, 9202(3)(b),(4) and California Vehi-

cle Code §§ 6301-6302.

5

under rent control the residents’ ‘‘investment’’ consists of

the value of the coach, which depreciates rapidly, and the value

of the interests appropnated by the Ordinance. In other words,

the City would protect the appropriated ‘‘investment’’ in the

park owner’s property. In Azul Pacifico, supra, Mrs. Mor-

rison paid $77,000 for an absolutely worthless coach. 948 F.2d

at 578. To protect the tenant’s ‘‘investment’’ in a worthless

coach, the Ordinance in Azul Pacifico had the effect of

transferring a $77,000 estate in the land to the tenant.®

Seeking Rent Increases at Time of Sale is

Not a Realistic Alternative

The City then argues that owners may ‘‘seek rent increases

at the time of a mobilehome’s sale.’’ Brief for Respondent

at 40. The City would have the Court believe that whenever

a resident lists his coach for sale, the owner need only apply

to the Mobilehome Rent Review Board (the same City Coun-

cil chat filed criminal charges against most of these Peti-

tioners weeks after this Court granted certioran) for an ap-

propriate increase.’ It taxes credulity to suggest that after

®The average coach cost $21,800 in 1985. The Kelley Blue Book shows

a 50% decline in value in ten years from the first number quoted (which

is less than a new price). Kelley Blue Book, Mobilehome Guide, 1980-82.

Ninety-six percent of California coaches are at least ten years old and 60%

are twenty to thirty years old and practically worthless on resale. Hirsch

& Hirsch, Legal-Economic Analysis of Rent Controls in a Mobile Home

Context: Placement Values and Vacancy Decontrol,35 UCLA L. REV. 399,

402 n.6, 463 (1988).

’The charges involve rent increases at resale under long term leases

that Petitioners believe to be exempt from local rent controls. People v.

Charles E. Dupont, San Diego Municipal Court No. E031733 (filed Nov.

27, 1991); People v. Olen Mercer, San Diego Municipal Court No. E031734

(filed Nov. 27, 1991); People v. George Mekyian, San Diego Municipal Court

No. E031735 (filed Nov. 27, 1991); People v. Richard C. Keubler, San

Diego Municipal Court No. E031736 (filed Nov. 27, 1991); People v. John

Yee, San Diego Municipal Court No. E031738 (filed Nov. 27, 1991).

6

three years of litigation in six courts, the City would now allow

significant increases at resale.®

I. THE ESCONDIDO ORDINANCE HAS TAKEN

PETITIONERS’ PROPERTY BY PHYSICAL

OCCUPATION

‘You can dramatically increase

the value of your homes.’’?

Mobilehome rent control advocates recognized that the

passage of the Ordinance (not the continued existence of the

State Mobilehome Park Residency Law) was the critical event

which created the valuable, tranferabie estate, and for good

reason: The Ordinance not only guarantees below market rent

but precludes the park owner from terminating tenancies or

refusing to renew tenancies with existing tenants and refus-

ing to grant tenancies to prospective purchasers. (Ordinance

Section 6, Ordinance No. 88-50, Section 2). This constitutes

‘required acquiescence [which] is at the heart of the concept

of occupation.’’ FCC v. Flonda Power Corp., 480 U.S. 245,

252 (1987).

The local Ordinance has to be considered in tandem with

State law. The Pinewood Estates v. Barnegat Township Level-

ing Bd., 898 F.2d 347 (3d Cir. 1990) and Azul Pacifico Courts

of Appeal are in accord, and as the district court said in Azul

Pacifico, to do otherwise would create a constitutional loophole

*In practice, after rolling rents back two and a half years, Escondido’s

rent board has allowed increases of as little as $4 per space per month,

Westwinds Mobile Home Park v. Mobilehome Park Rental Review Board,

City of Escondido, No. N-54104 (San Diego Super. Ct. filed Dec. 24,

1991); Carefree Ranch, Ltd. v. Mobilehome Park Rental Review Board,

City of Escondido, appeal docketed, 4th Dist. Civil No. DO14142 (Cal. Ct.

App. March 26, 1991). At $4 per space per month, an owner would recover

the application fee in sixteen years.

*Election handbills for Proposition K.

where different levels of government cooperating with each

other could achieve an unconstitutional result without liabili-

ty. Azul Pacifico v. City of Los Angeles, 740 F. Supp. 772,

776 (1990), aff'd in pertinent part, 948 F.2d 575 (9th Cir.

1991). Passage of the Escondido Ordinance was the critical

element in the taking.!°

Escondido’s attempted reliance on Flonda Power collides

with the Court’s express refusal there to reach the issue at

hand in the case — the situation where a lessor who has volun-

tarily invited one tenant onto his property is required ‘‘to enter

into, renew, or refrain from terminating’ the tenancy. Flonda

Power, 480 U.S. 245, 252 n.6. Petitioners invited their initial

tenants onto the property, but it is by governmental fiat, not

by voluntary choice, that they must allow in successor tenants,

who have bought the nght to such tenancies from pnor tenants

with hard cash. The City apparently concedes that an Or-

dinance requiring owners to continue to make their property

available for rental use once they begin to do so may be a

physical occupation. Brief of Respondent at 28 (citing Flonda

Power).

Further, the Ordinance effects a transfer of appreciation in

the land from the park owner to the tenant, where the tenant

is free to immediately realize its value by way of sale and

defeats the purpose of rent control: preserving low and

moderate income housing opportunities.'! (This is unlike a

\0See Fresh Pond Shopping Ctr., Inc. v. Callahan, 464 U.S. 875, 878

(1983) (Rehnquist, J., dissenting).

\\While the City erroneously contends that ‘‘all Petitioners have lost

is their ability to extract excessive rents from their homeowner tenants’’

(Brief for Respondent at 17), they studiously avoid the fact chat the Or-

dinance allows departing tenants to extract ‘’excessive rents’’ —

presumably market rents — from incoming tenants. The City’s citations

to Eamiello v. Liberty Mobilehome Sales, Inc., 208 Conn. 620, 546 A.2d

805 (1988), appeal dismissed, 489 U.S. 1002 (1989); and ore -

cont'd)

8

typical rent regulation which, by merely regulating the rents

for existing tenants, simply diminishes the value of the prop-

erty in question and thus serves the purpose of preserving

low and moderate income housing opportunities.) The value

of the underlying real property remains the same, but the

Escondido Ordinance effects an outright transfer of a part of

the property to the selling tenant. This transfer (rather than

mere diminution in value) implicates the power of eminent do-

main and compels just compensation. !? ‘This linchpin . . . is

the principle that an exercise of eminent domain always in-

vokes a transfer of property.’’ William B. Stoebuck, Police

Power, Takings, and Due Process, et al., 37 WASH. L. REV.,

1056, 1084 (1980).

Escondido resorts to an arid legal formalism, arguing that

there is no established ‘‘state-recognized property interest”’

corresponding to that which has been taken from Petitioners

and given to incumbent tenants. A property interest compen-

sable under the Takings Clause is ‘‘that value which is capable

of transfer from owner to owner and thus of exchange for some

equivalent.’’ Kimball Laundry Co. v. United States, 338 U.S.

1, 5 (1949).

The right to control occupancy, ?.e., the right to exclude,

is protected under the Fifth Amendment. Katser Aetna v.

United States, 444 U.S. 164 (1979). In addition, since an

asset’s earnings are ‘‘incidents of ownership,’’ just as the asset

Merlino Enterpnses, Inc., 208 Conn. 656, 545 A.2d 1094 (1988)(per

curiam), appeal dismissed, 488 U.S. 1024 (1989) are inapposite. These

were not rent control cases. 208 Conn. at 649, 546 A.2d at 820. A

marketable estate in land had not been created on behalf of the tenants.

Rather, the landlord at any time was free to capture any placement value

by raising rents without restriction. A Fifth Amendment violation did not

take place because the park owner was free to obtain just compensation

through the normal operation of the market.

'2Here, the nghts taken from the owner have not disappeared (like Penn

Central’s nght to build an office tower).

9

itself is property, the right to collect rents, which is transfer-

red by the statute from landlord to tenant, enjoys constitu-

tional protection. Webb’s Fabulous Pharmacies, Inc. v.

Beckwith, 449 U.S. 155, 164 (1980).'%

The Hall trial court (after remand from the Court of Ap-

peals), held that Mrs. Hall could have sold the same nght to

occupy at a reduced rate and the tenant would enjoy the add-

ed security of permanence of that nght. Hall v. City of Santa

Barbara, No. 85-5838, Memorandum of Decision at 15 (C.D.

Cal. filed June 18, 1989).

The forced occupancy described above, '* as well as the un-

compensated transfer of an interest in title, constitutes a per

se taking.'5

The City would have the Court believe that the Petitioners,

or their successors, can readily convert their mobilehome

parks to other uses. If this were true, it would avail the City

nothing, for the Court rejected the same argument in Loretto

'3The interest transferred by the Ordinance under California law is an

estate in real property, defined by Cal. Civ. Code § 14 to be coextensive

with ‘‘lands, tenements and hereditaments.’’ Hereditaments include lands,

tenements and all interests which would pass to heirs, and includes incor-

poreal hereditaments such as rents. Callahan v. Martin, 3 Cal. 2d 110,

43 P.2d 788 (1935).

'4Assuming the industry average of 11% move-outs per year (Hirsch

& Hirsch, supra, at 418 n.58), approximately 40% of present tenants in

Petitioners’ parks are there without invitation and as a result of compulsion.

'SWhile not determinative, Block v. Hirsch, 256 U.S. 135 (1921), Edgar

A. Levy Leasing Co. v. Siegel, 258 U.S. 242 (1922) and Bowles v. Will-

ingham, 321 U.S. 503 (1944) involved the application of temporary rent

controls, enacted in wartime or its aftermath, that did not compel owners

to offer accommodations for rent, or to accept incoming tenants. As Justice

Rehnquist noted in his dissent in Fresh Pond Shopping Ctr., Inc. v.

Callahan, 464 U.S. 875, 878 (1983): ‘‘[T]he very fact that there is no

foreseeable end to the emergency takes this case outside the Court's

holding in Block v. Hirsch. We reserved judgment as to whether such a

regulatory scheme would be constitutional if it were made part of a per-

manent scheme.”’

10

v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 439

n.17 (1982):

[T]he landlord could avoid the requirements of [the

New York cable television law] by ceasing to rent

the building to tenants. But a landlord’s ability to rent

his property may not be conditioned on his forfeiting

the nght to compensation... . .'6

II. THE REGULATORY TAKINGS CLAIM IS RIPE

AND MERITORIOUS

The regulatory takings claim is advanced under two rubrics:

that the Ordinance does not substantially advance a legitimate

governmental interest (Nollan v. California Coastal Comm’n,

483 U.S. 825 (1987)), and the Penn Central ad hoc analy-

sis. Escondido oversimplifies takings analysis, as if it were

simply a choice between two categories of virtual per se cases.

Governmental measures are either literal physical occupations

and per se takings under Loretto; or they cannot be takings

unless they deprive property of substantially all useful value

(the first prong of Agins v. City of Tiburon, 447 U.S. 255

(1980)), or impose confiscatory returns. There is, according

'6In reality, conversion presents a kind of gauntlet. State law requires

notices to residents and preparation of an impact report. Cal. Civ. Code

\ 798.56(f), Cal. Gov't Code §§ 65863.7, 66427. Local governments may,

and often do, condition approvals upon payment of relocation benefits, or

even purchase of used mobilehome coaches at ‘‘in-place value’”’ (i.e., in-

cluding the leasehold interests created by rent control). Depending upon

the new use proposed and applicable zoning, conversion may require

preparation and certification of an environmental impact report under the

California Environmental Quality Act (Cal. Pub. Res. Code § 21000 et seq.);

a change in zoning (Cal. Gov’t Code § 65853 et seq.); amendments to the

local general plan (Cal. Gov't Code §§ 65358, 65860); and approval of a

subdivision may under the Subdivision Map Act (Cal. Gov't Code § 66410

et seq.). These are discretionary approvals, entrusted to elected officials

or their nominees, and in Escondido, to the same City Council members

who sit on Escondido’s Mobilehome Park Rental Review Board. The pro-

cess is slow, uncertain and expensive.

11

to the City, no middle ground of analysis. If this were the law,

most of what this Court has written about takings would have

been entirely unnecessary. Penn Central could have been

decided in a single sentence, for there was no contention there

of either a physical occupation or a total deprivation of value.

From Day One of the operation of the Ordinance Petitioners

have had a takings claim because the rights that command a

premium passed to the incumbent residents. Azul Pacifico,

supra; DeAnza Properties X v. County of Santa Cruz, 936 F.2d

1084 (9th Cir. 1991) The only question which remains is the

amount of compensation to which they are entitled. The raison

d’étre of rent control is to keep rents below market levels.

The Ordinance itself rolls back rents two and a half years and

contains an elaborate, time consuming rent reduction oriented

process. On its face the Ordinance permits a decision to be

rendered in 210 days — in the Yee case the application was

submitted on June 2, 1989, and a decision was not rendered

until December 6, 1990, approximately 550 days later.’

Under the Penn Central test,'* given that tenants can deter-

mine the identity of the incoming tenant, set the rental rate

17¥ee v. Mobilehome Park Rental Review Board, supra n.2, Ad-

ministrative Record at 2, 424.

'8Contrary to the City’s assertions, Petitioners argued Penn Central

below. Brief for Appe'lants before California Court of Appeal at 14; Peti-

tion for Review to California Supreme Court at 21. Even if they had not

preserved the issue — which is an alternative legal theory in support of

the basic taking claim, not a separate claim for relief — so long as an argu-

ment is ‘‘so connected with [the question presented] in substance as to

form but another ground or reason for alleging the invalidity of the lower

court’s judgment . . .’’ it can be considered. IJIlinots v. Gates, 462 U.S.

213, 220 (1983) (quoting Dewey v. Des Moines, 173 U.S. 193, 197-198

(1899)). This Court’s rules permit consideration of subsidiary questions.

‘‘The statement of any question presented [in the Petition for Certiorari]

will be deemed tc comprise every subsidiary question fairly included

therein.’’ Sup. Ct. R. 14.1(a).

12

for occupancy, and sell that right from the onset of the Or-

dinance, the Ordinance interferes with Petitioners’ use,

possession and disposition for the reasons set forth in the Peti-

tioners’ opening brief. Equally, the tenants can capture ap-

preciated value from and after January 1, 1986, thus confirm-

ing the existence of a massive economic impact, and in-

terference with investment-backed expectations. The only re-

maining question is the amount by which damages are offset

by the minimal rent increases allowed by Escondido.

Iii. THE ORDINANCE DOES NOT SUBSTANTIALLY

ADVANCE A LEGITIMATE GOVERNMENTAL

PURPOSE

The ‘‘premium’’ received by the tenant disables the Or-

dinance from substantially advancing a legitimate govermen-

tal purpose in that it in fact permits departing tenants to ef-

fectively impose rent increases at market levels and does not

serve the purpose of preserving low and moderate housing

opportunities, nor does it satisfy the requirement that it closely

fit the purpose of protecting the tenant’s questionable

investment.

13

CONCLUSION

For these reasons, the judgment of the California Court of

Appeal should be reversed with instructions to remand these

consolidated cases for trial.

DATED: January 14, 1992

Respectfully submitted,

ROBERT J. JAGIELLO*

DEBRA K. BUTLER

LAW OFFICES OF JAGIELLO

& PECH

ROBERT H. BORK

*Counsel of Record