# Opposition Brief — Kavanau v. Santa Monica Rent Control Board

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1998
- **Citation:** 522 U.S. 1077

## Text

3
y

No. 97-852 CLERK

In The

Supreme Court of the United States

October Term, 1997
¢

EARL W. KAVANAU,

Petitioner,
VS.

SANTA MONICA RENT CONTROL BOARD,
AN AGENCY OF THE CITY OF SANTA MONICA,

Respondent.

©

On Petition For Writ Of Certiorari To
The Supreme Court Of The State Of California

¢

RESPONDENT’S BRIEF IN OPPOSITION TO
PETITION FOR WRIT OF CERTIORARI

¢
ANTHONY A. TRENDACOSTA * Davip RicHarp Pettit
Doris GANGA * Counsel of Record
SANTA Monica RENT Hepces & CALDWELL
ConTROL BOARD 606 S. Olive Street,
1685 Main Street Suite 500
Santa Monica, CA 90401 Los Angeles, CA 90014
(310) 458-8781 (213) 629-9040

Kart MicHAseL MANHEIM
LoyoLta Law SCHOOL
919 S. Albany Street
Los Angeles, CA 90016
(213) 736-1106
Attorneys for Respondent
Santa Monica Rent Control Board

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964
OR CALL COLLECT (402) 342-2831

RESPONDENT’S RESTATEMENT OF THE
QUESTION PRESENTED

1. Whether a party in a ratemaking proceeding who
brought a combined due process and takings case in State
court, and who lost the takings issue and won the due
process issue, can thereafter maintain an action for
inverse condemnation based solely on the due process
violation.

li

TABLE OF CONTENTS

Page

RESPONDENT’S RESTATEMENT OF THE QUES-
SA DUE op. n eas nc une sepagveenensawnunes i
FRI ROR so 6 Fe nan 5 eae eee ee eee 1
STATEMENT OF THE CABG. 5 oss isc tcerisndececs 1
REASONS FOR DENYING THE WRIT............. 4

A. Whether a Taking Can Be Proven Merely By
Showing a Due Process Violation Is Not a Ques-
tion Requiring Resolution In This Case ........ 6

B. There Is No Conflict Between the Decision
Below and Decisions of The Ninth Circuit ... 10

C. The Decision Below Does Not Deny Fifth
Amendment Protection to Owners Who
Acquire Regulated Property ................. 12

COLT ARIGLINS «soc don ckehebcawcks senate yee 14

iii
TABLE OF AUTHORITIES

CASES
Agins v. City of Tiburon, 447 U.S. 255 (1980)........ 4,7

Armendariz v. Penman, 75 F.3d 1311 (9th Cir. 1994) .... 12

Azul Pacifico, Inc. v. City of Los Angeles, 948 F.2d
BR ee | eT ee wee rere rm ere 13

Duquesne Light Co. v. Barasch, 488 U.S. 299
SE ae Oa aera ag DS ere eee 8, 9, 10

Federal Power Comm’n v. Hope Natural Gas Co., 320
Sa Ee SEE eh dc or dae ea kev ees Cl veh ieewseesd ee 8, 9

First English Evangelical Lutheran Church v. County
o Lee Anecios, 462 US. FOS (1967)... 2... eo ee ee 9

Kavanau v. Santa Monica Rent Control Board, 233
i Se, Ne POE SEDOAE 5.5 vena een smeneeaees.ars ses y

Kavanau v. Santa Monica Rent Control Board, 19 Cal.
Pe IE Fe SA OE ky kh 0 tps anvnenanuevces<s passim

Kavanau v. Santa Monica Rent Control Board, No.
8067620 (Cal. Ct. App. Jan. 9, 1996) ............... 3

Kavanau v. Santa Monica Rent Control Board, 16 Cal.
re oo a hi Seis wee ein be Sins au passim

Lucas v. South Carolina Coastal Council, 505 U.S.
NE So ee CaSO ie ie obec io aCe 4, 13, 14

Macri v. King County, 110 F.3d 1496 (9th Cir. 1997) .... 12

Nollan v. California Coastal Comm'n, 483 U.S. 825
inks extn snares boa senbn ao ban as x sewe 9 6-7

Patel v. Penman, 103 F.3d 868 (9th Cir. 1996), cert.
coe, AIS. aR SA, BGS C997) os 3 es 12

iv

TABLE OF AUTHORITIES - Continued

Page
Penn Cent. Transp. Co. v. City of New York, 438 U.S.
ROR CEFF sik ok a a ee oa a 13
Pennell v. City of San Jose, 485 U.S. 1 (1988)....... 7, 10
Tibbe 2. Florida, Mal US. BA AIORD. ooo vicki kes vases, 3
Williamson County Reg’l Planning Comm'n v. Ham-
Sis Dee, AI A Re CA 65 oa a ooo hones 9
H
Yee v. City of Escondido, 503 U.S. 519 (1992) ....... 7, 10
Unitep States CONSTITUTION
PRR PN ee eo ca Gana eee ‘ = 6. 3h, 32
Fourteenth Amendment...................-- 4, 6, 11-12
CALIFORNIA CONSTITUTION
i ee Seer eee mi a oa meee 3
STATUTES
United States Code
ee Be ee ST) os hk be FG oe eee 1
Ge Seeks Oe Bis oe eh ee ee 3, 16,. 23
REGULATIONS
Santa Monica Rent Control Board Regulations
OU ee ore ce oo he ewe Oh UP 7
CUBS hi 6.5 5 GAG a ike ine et 2 i
Rutes oF Court
United States Supreme Court Rule 10.1 ............. 14

snail

JURISDICTION

This Court has jurisdiction pursuant to 28 U.S.C.
§ 1257(a).

STATEMENT OF THE CASE

Respondent Santa Monica Rent Control Board
respectfully submits that the published opinion of the
Supreme Court of California contains an accurate
description of the proceedings below. Pet. App. at A-2 -
A-6.! Petitioner’s statement of the case is misleading and
inaccurate in a number of respects.

The California Supreme Court determined in this
case that 12% rent increases for each of eight successive
years were not so low as to constitute a taking of Peti-
tioner’s property. Id. at A-1 — A-2. It also held that a due
process violation had been cured by Respondent and,
because of its insignificant economic impact, did not
result in a taking.

Petitioner does not challenge the holding of the Cali-
fornia Supreme Court that no taking occurred under this
Court’s existing standards. Instead, he asserts a new the-
ory: that a due process violation necessarily is also a
violation of the Takings Clause. Thus, under Petitioner’s
theory, errors in a rate order, even if cured upon routine
review, constitute a temporary taking.

1 The Petition for Certiorari is cited as “Pet. __.” The
Appendices to the Petition are cited as “Pet. App. __.” The
Appendix to this Brief in Opposition to the Petition for
Certiorari is cited as “App. __.

”

Petitioner purchased apartment buildings in Santa
Monica, California, in 1988, nine years after the city
adopted rent control. Shortly after purchase, Petitioner
sought substantial rent increases from Respondent and
challenged an existing regulation that limited rent
increases to 12% per year.? His first challenge was
rejected by the California Court of Appeal, which ruled
that the regulation was constitutional.

In a separate case involving the instant property,
Petitioner again challenged the 12% limitation. He
alleged in his complaint that Respondent's application of
the limitation “constitutes a taking of Petitioner’s prop-
erty without just compensation, and denies Petitioner due
process under the California and United States Constitu-
tions.” App. at 4. The trial court denied relief on both
claims. On appeal, the Court of Appeal reversed on the
due process claim. Pet. App. at E-1 (“Kavanau I”). The
sole remedy awarded by the Court of Appeal was man-
damus ordering a rent increase. Id. at E-6. Although
Petitioner also sought lost interim rents, App. at 4, J 1.(1),
that remedy was not awarded. The California Supreme
Court denied review, and certiorari was not sought in this
Court.4

2 Former Santa Monica Rent Control Board Regulation
4107(a) (amended 1994).

3 The California Supreme Court denied review of the case
and ordered that the decision not be published in the official
reports. See Kavanau v. Santa Monica, 233 Cal.App.3d 1060
(1991).

4 The regulation challenged in Kavanau I has been
amended. Pet. App. at A-6. There is no longer an automatic limit
on rent increases. Should a tenant request a rent increase limit

|

Subsequently, Petitioner filed the present case
(“Kavanau II”) for inverse condemnation and damages.
He alleged that Kavanau I had established a temporary
taking for which he was entitled to further relief. His
claims were based on the Takings Clause, on 42 U.S.C.
§ 1983, and on Article I, Section 19 of the California
Constitution. Only the first claim survives in this Court.5

All three courts below in this case held that just
compensation was not available because Petitioner had
not suffered a taking. Pet. App. at A-15, B-9, D-2. The
California Supreme Court specifically concluded that the
court in Kavanau I did not find a taking. Pet. App. at A-15,
A-25.6 And for that reason, Petitioner failed to state a
claim for inverse condemnation in this case. Whether
damages were independently available for the due pro-
cess violation was not a question before the California
Supreme Court, for Petitioner had abandoned his § 1983
claim. Id. at A-17.

Petitioner now alleges that the prior adjudication (in
Kavanau I) of a due process violation conclusively demon-
strated that a taking had occurred. Thus, according to
Petitioner, he is entitled to just compensation irrespective

based on his or her economic situation, the Board must consider
the economic effect on the landlord of limiting an otherwise
permissible rent increase. In addition, California law has
changed so as to allow additional rent increases in all California
cities beginning January 1, 1999. Id. at A-22.

5 Petitioner abandoned his § 1983 claim, Pet. App. at A-3,
A-17, and his state claim is not reviewable on certiorari.

© Petitioner is barred from rearguing that Kavanau I found a
taking; the California Supreme Court’s coriclusion that it did not
is binding. See Tibbs v. Florida, 457 U.S. 31, 46-47 (1982).

+

of whether the traditional standards under the Takings
Clause are satisfied.

REASONS FOR DENYING THE WRIT

The Petition for Certiorari misstates the issue before
this Court. It is not whether just compensation is avail-
able in California courts for temporary takings of prop-
erty. Indeed, the California Supreme Court’s opinion
reaffirms that such damages are available. Rather, the
issue is whether just compensation is required even when
no taking occurs. The California Supreme Court deter-
mined that Petitioner’s property did not suffer a taking
under any applicable test. It held that no categorical
taking occurred, i.e., that Petitioner had not been
deprived of “all economically beneficial or productive
use of land.” Pet. App. A-10 — A-11 (citing Lucas v. South
Carolina Coastal Council, 505 U.S. 1003, 1015 (1992), and
Agins v. City of Tiburon, 447 U.S. 255 (1980)). The court
also held that no other formulation used by this Court
established a taking. Pet. App. at A-11 — A-13, A-15 -
A-19. Petitioner does not challenge those rulings here.

Instead, Petitioner claims that a Fifth Amendment
taking occurred because he had been denied due process
under the Fourteenth Amendment. According to Peti-
tioner, a “taking of property” necessarily occurs

whenever a rate-setting agency violates due process.” As
such, any substantive or procedural due process violation
affecting property triggers the Fifth Amendment’s self-
executing remedy of just compensation. It was the Cali-
fornia Supreme Court’s refusal to adopt this unification
of the takings and due process clauses, id. at A-20, that
Petitioner assigns as error requiring review by this Court.

Petitioner also claims a conflict between the decision
below and Ninth Circuit cases preferring the Takings
Clause over due process in land use cases. No such
conflict exists. Any infirmity in the use of the due process
clause for review of the underlying rate order, rather than
the Takings Clause, is a problem of Petitioner’s own
making. He prevailed in Kavanau I under a due process
theory, and, having allowed that case to become final,
cannot now be heard to complain that it should have
been treated as a takings case. Kavanau | is res judicata and
not subject to review or correction in this case.

The courts below found that no taking had occurred,
either temporary or permanent. Accordingly, Petitioner’s
claim that California courts deny compensation for tem-
porary takings is not properly before this Court. Nor is
Petitioner’s second issue — whether the Takings Clause
protects property acquired with knowledge of regulatory
limitations. That issue too is manufactured. There is noth-
ing in the decision below to suggest that Petitioner’s

7 As put by the court below, “Kavanau asks us to consider
whether a rent regulation that violates a particular property
owner’s right to due process by depriving him of a fair return
also necessarily constitutes a taking.” Pet. App. at A-19.

property is not fully protected by the Fifth and Four-
teenth Amendments.

A. Whether a Taking Can Be Proven Merely By Show-
ing a Due Process Violation Is Not a Question
Requiring Resolution In This Case

The only question arguably presented in this case is
whether a taking can occur solely by virtue of a due
process violation in a rate order. The California Supreme
Court held that even if the general premise were accepted
-— that a due process violation could also constitute a
taking - a taking did not occur in this case. The court
reached that conclusion by applying standard takings
doctrine, focusing on the character and economic impact
of the challenged regulation. Pet. App. at A-11. The court
found that any infirmity in the rate order was insubstan-
tial, and far short of a taking. Id. at A-15 — A-16.8

The court declined Petitioner’s invitation to merge
the due process and takings clauses. It noted that the
clauses are distinct and protect economic interests in
different ways. Id. at A-6. In doing so, the court carefully
followed this Court’s decisions. See Nollan v. California
Coastal Comm'n, 483 U.S. 825, 835, n.3 (1987) (“there is no
reason to believe (and the language of our cases gives
some reason to disbelieve) that so long as the regulation

8 The court also had “serious doubts” that a due process
violation had in fact occurred, suggesting that the Court of
Appeal in Kavanau I had misapplied this Court’s recent cases
concerning review of rate orders. Pet. App. at A-15 — A-16.

of property is at issue the standards for takings chal-
lenges, due process challenges, and equal protection chal-
lenges are identical”); see also Yee v. City of Escondido, 503
U.S. 519, 532-37 (1992) (distinguishing between takings
and due process claims); Pennell v. City of San Jose, 485
U.S. 1, 10 (1988) (same).

In order to establish a taking, and thus entitlement to
just compensation, a property owner must show either an
invasion of his land, Yee, 503 U.S. at 527, or that a regula-
tion fails to “substantially advance legitimate state inter-
ests or denies an owner economically viable use of his
land.” Agins, 447 U.S. at 260. None of these factors were
found in either Kavanau I or this case. Nor does Petitioner
now claim that they were or could be established based
on these facts.?

Rather, the court in Kavanau I found a due process
violation because the 12% annual limit in former Regula-
tion 4107 precluded Respondent from duly considering
Petitioner’s interests. Pet. App. at E-5 - E-6. The purpose
of the limitation was to protect renters from excessive
rent increases; a purpose approved by this Court in Pen-
nell, 485 U.S. at 10-11. Yet, due process requires that the
agency also consider landlord interests in setting rents, id.
at 13-14, which could not be done with an absolute ceiling
on rent increases.

° It bears repeating that Petitioner has apparently misread
the decision of the California Supreme Court. He asserts that the
court held damages were unavailable for a temporary
regulatory taking. Pet. at 11. Instead, the court held that no
temporary taking had occurred, and for that reason “just
compensation” could not be awarded. Pet. App. at A-14 - A-15.

However, it is a far stretch to transmute this due
process violation into a taking. Even in rate cases invok-
ing both the due process and takings clauses, this Court
has been careful to specify the requirements for a taking.
It is the economic “impact of the rate order which
counts.” Duquesne Light Co. v. Barasch, 488 U.S. 299, 310
(1989) (quoting FPC v. Hope Natural Gas Co., 320 U.S. 591,
602 (1944)). Yet, that issue is conspicuously absent from
the petition, and for good reason. The decisions below
finding an insignificant economic impact on Petitioner
are unassailable.

This is not to suggest that a due process violation can
never be a violation of the Takings Clause as well. Yet, the
clauses are neither equivalent nor fungible. Because the
constitutional standards and the constitutional remedies
are different, Petitioner must separately prove his entitle-
ment to just compensation. Infirmities in rate setting, in
and of themselves, do not cause a taking. Duquesne Light
Co., 488 U.S. at 310.

That is especially true here, where any deficiency in
rents, even if it violated due process, was remedied long
before it could mature into a taking. Pet. App. at A-20. In
response to Kavanau I, Respondent granted Petitioner an
immediate 80% rent increase, even though all due process
required was that the agency set aside its earlier decision
and re-hear Petitioner’s case without regard to the 12%
annual limit. Id. at A-23, E-6. In addition, Petitioner was,
and remains, entitled to further administrative relief in

the event he suffers operating losses, including those
from alleged delay in the prior rent increase.!°

It is this last point that Petitioner emphasizes and
confuses in his petition. He claims that the California
Supreme Court has established a new rule - that damages
are no longer available for a taking; instead, “just com-
pensation” is limited to future rent increases. Pet. at 11.
But the court nowhere said that. It did not flout First
English Evangelical Lutheran Church v. County of Los
Angeles, 482 U.S. 304 (1987), and hold that damages are
unrecoverable for a taking. Rather, the court held that no
taking had occurred. Pet. App. at A-20 (rent increases
already received, and others Petitioner may obtain, “obvi-
ate[ ] a finding of a taking”).

The California Supreme Court simply applied the
standard rule that temporary operating losses, even those
caused by regulatory delay, are not a taking unless they
cause economic hardship. Id. at A-20 - A-21. Those losses
must be so significant in magnitude and duration as to
deny a business the ability to “operate successfully, to
maintain its financial integrity, to attract capital, and to
compensate its investors for the risk.” Duquesne Light Co.,
488 U.S. at 310 (quoting Hope, 320 U.S. at 605). Petitioner
did not even attempt to show a taking by these standards.
Thus, he was not entitled to any recovery for “inverse
condemnation.” The California Supreme Court got the
analysis precisely right.

10 To the extent Petitioner claims that future administrative
relief will be inadequate, his case is not ripe for review at this |
time. Williamson County Reg’l Planning Comm'n v. Hamilton Bank,
473 U.S. 172 (1985).

10

This Court has never adopted Petitioner’s argument
— that due process is but a subset of the Takings Clause.
To do so would mean that in the rate regulation context a
regulated business never has to satisfy the test of
Duquesne Light Co. that rates must be so low as to “jeopar-
dize the financial integrity of the compan[y] . . . [or]
inadequate to compensate” for risk. 488 U.S. at 312.
Instead, all it need establish is some procedural infirmity
in the rate-setting process, and it is automatically entitled
to “just compensation.” Not only does this theory neatly
dispense with the need for congressional damage
remedies (for example, 42 U.S.C. § 1983), it also directly
undermines this Court's efforts to distinguish takings and
due process claims, particularly in the context of rent
control. See Yee, 505 U.S. at 532-37; Pennell, 485 U.S. at
8-14.

B. There Is No Conflict Between the Decision Below
and Decisions of The Ninth Circuit

Petitioner struggles to manufacture a conflict
between the decision below and Ninth Circuit cases. He
argues that the decision below denies state court plain-
tiffs protection under the Takings Clause as long as a due
process remedy exists, while the Ninth Circuit, favoring
the more explicit Takings Clause, “will not entertain a
due process claim.” Pet. at 6. Thus, Petitioner posits a
“deadly contradiction” where choice of forum in Califor-
nia dictates the constitutional cause of action that must be
alleged for regulatory takings. Id.

Petitioner’s flawed premise is that the California
Supreme Court has prevented plaintiffs from litigating

11

claims under the Takings Clause and obtaining just com-
pensation. Indeed, the decision below notes that Califor-
nia law provides two different opportunities to allege a
taking: concurrent with, or subsequent to, review of the
rate order. Pet. App. at A-17. Petitioner elected the for-
mer, but did not prevail. The court below merely held
that, under the facts of this case, none of the well-estab-
lished tests for a Fifth Amendment taking were met, and
that a due process violation does not by itself constitute a
taking. That determination is unexceptional, and erects
no barriers to just compensation.

Petitioner implies that meritorious regulatory takings
challenges are at risk in California courts because they
can be “recharacterized as a due process violation.” Pet.
at 12. Yet this case provides no basis for such an asser-
tion, for no “recharacterization” occurred here. In
Kavanau I, Petitioner brought both a takings and due
process claim, but succeeded solely on due process
grounds. It is Petitioner who seeks to recharacterize that
result in order to obtain a takings remedy. In rejecting
this novel theory, the decision below did not vitiate or
alter the right to just compensation for plaintiffs who
satisfy applicable takings standards. Petitioner’s apparent
frustration that his due process violation was cured by a
procedural remedy rather than through monetary com-
pensation is misdirected given that he waived his § 1983
claim, the appropriate vehicle for any monetary award.

Petitioner’s citation to Ninth Circuit case law also
misses the mark. It is true that the Ninth Circuit has held
that the “explicit textual source of constitutional protec-
tion,” like the Takings Clause, “preempts a more gener-
alized substantive due process claim” brought under the

12

Fourteenth Amendment. Armendariz v. Penman, 75 F.3d
1311, 1321-22 (9th Cir. 1996) (citation and internal quota-
tion marks omitted). However, none of the three Ninth
Circuit cases cited by Petitioner (nor any other) held or
even suggested that a due process remedy is not available
in ratemaking cases. See Armendariz, 75 F.3d at 1325-26
(holding that constitutional protection against takings for
private use grounded solely in the Takings Clause); Patel
v. Penman, 103 F.3d 868 (9th Cir. 1996) (same), cert. denied,
__; US. __, 117 S. Ct. 1845 (1997); Macri v. King County,
110 F.3d 1496, 1500 (9th Cir. 1997) (holding that constitu-
tional protection against land use restrictions that do not
“substantially advance legitimate state interests”
grounded solely in Taking Clause). Thus, the alleged
conflict is illusory.

C. The Decision Below Does Not Deny Fifth Amend-
ment Protection to Owners Who Acquire Regulated

Property

The last question presented by the petition is
whether a property owner “forfeits his Fifth Amendment
rights” to just compensation if his property is taken by a
law enacted prior to purchase. Pet. at 19. This is a con-
trived question having no relation to this case.

Petitioner cites to a single sentence in the decision
below for his claim that the California Supreme Court has
“extinguish[ed] the Fifth Amendment rights of citizens
who purchase regulated property.” Id. The court held
nothing remotely like that. Rather, the court merely held
that prior knowledge was one factor in assessing the
impact on his “investment-backed expectations.” Pet.

13

App. at A-18. That holding is fully in accord with those of
this Court. See Lucas, 505 U.S. at 1003; Penn Cent. Transp.
Co. v. City of New York, 438 U.S. 104 (1978).

The Takings Clause protects against “interfer[ence]
with distinct investment-backed expectations.” Penn Cen-
tral, 438 U.S. at 124. The extent of those expectations is
determined by “existing rules or understandings that
stem from an independent source such as state law.”
Lucas, 505 U.S. at 1028. Thus, it is relevant to any analysis
of economic impact on Petitioner’s interests that the law
he challenges had been in place for nearly a decade when
he acquired the property. This is all the California
Supreme Court said, and all it needed to say because the
law’s impact on Petitioner, however measured, was “not
significant.” Pet. App. at A-18.

The court below could have gone further and held, as
this Court suggested in Lucas, 505 U.S. at 1030, that the
pre-existing use restrictions on Petitioner’s property
inhered in his title “under relevant property” law; there-
fore, he could not resort to the Takings Clause when
Respondent enforced those restrictions. Id. at 1031.1! But,
contrary to Petitioner’s assertion, the California Supreme
Court did not dismiss his takings claim on this ground. It
merely stated that he could not claim frustration of
expectations when, in fact, he expected a 12% annual

11 To the extent Petitioner complains of the enactment of
the restrictions in the first place (nine years before he
purchased), his claim is barred by the statute of limitations. Azul
Pacifico, Inc. v. City of Los Angeles, 948 F.2d 575, 587 (9th Cir.
1991).

14

limit on rent increases. As noted in Lucas, application of
“existing rules or understandings is surely unexcep-
tional.” Id.

CONCLUSION

The decision below applies well-settled doctrine
under the Takings Clause. It is perfectly consistent with
decisions of this Court and other courts. It does not raise
recurring issues of national dimension. Accordingly, Peti-
tioner has manifestly failed to demonstrate that certiorari
is warranted. Sup. Cr. R. 10.1.

For the foregoing reasons, Respondent respectfully
requests that the Petition for Certiorari be denied.

Respectfully submitted,

*Davip RICHARD Pettit
*Counsel of Record

Hepces & CALDWELL

606 S. Olive Street, Suite 500
Los Angeles, California 90014
(213) 629-9040

ANTHONY A. TRENDACOSTA

Doris GANGA

SANTA Monica Rent CONTROL BOARD
1685 Main Street

Santa Monica, California 90401
(310) 458-8781

Kari MicHAEL MANHEIM
LoyoLta Law SCHOOL
919 S. Albany Street
Los Angeles, CA 90016
(213) 736-1106

APPENDIX

App. 1

CRAIG MORDOH

Attorney at Law State Bar #82425
Suite 301

2444 Wilshire Boulevard

Santa Monica, California 90403
(213) 453-6774

Attorney for Petitioner Earl Kavanau

SUPERIOR COURT FOR THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
WEST DISTRICT

EARL KAVANAU, CASE NO. SS 000 440

Petitioner, FIRST AMENDED
‘ PETITION FOR WRIT OF
‘ ADMINISTRATIVE
SANTA MONICA RENT MANDATE

CONTROL BOARD, an
Agency of the City of
Santa Monica,

[CCP SECTION 1094.5]
(Filed Dec. 12, 1990)

= Respondent.

VIRDELMA GIVAN,
SANDRA JEAN MAJD,
RUSSELL KIZIOR,
PHILIP HIMBERG, JIM
BALLANTINE, PEGGY
COGGESHALL, LAURIE
MONLOUP, THEODORE
KIRSCHNER, ROBERT
VENEGAS, AMY
SHERWOOD, AND
ROBERT SHERWOOD,

Real Parties
in Interest.

Smee Sree ieee eee eee ae ee Nee See Nee eee eee eee Sense Sit See ieee eee ee Se Set” See ee See”

App. 2

Petitioner Earl W. Kavanau (hereinafter referred to as
“Petitioner”) petitions this court for a Writ of Administra-
tive Mandate under California Code of Civil Procedure
Section 1094.5 directed to Respondent Santa Monica Rent
Control Board, an agency of the City of Santa Monica
(hereinafter referred to as “Respondent Agency”), and by
this verified petition represents that:

1. Petitioner is now, and at all times relevant herein,
has been the owner of the real property known by street
address as 818 5th Street, Santa Monica, Los Angeles
County, California (hereinafter referred to as “Property”).
Property consists of ten residential rental units and is
subject to the restrictions of Article XVIII of the Charter
of the City of Santa Monica, commonly referred to as the
Rent Control Charter Amendment.

2. Respondent Agency is now, and at all times rele-
vant herein, has been the agency charged with adminis-
tering the provisions of the Rent Control Charter
Amendment.

3. Real Parties in Interest are now, and at all times
relevant herein, have been tenants residing at the prop-

erty.

4. On or about November 30, 1989, Petitioner filed
with the Respondent Agency a petition for an individual
rent adjustment, Petition Number I-1093, seeking
increases in the maximum allowable rents for the rental
units located on the Property.

5. On December 21, 1989, January 6, 1990 and Janu-
ary 27, 1990 the Respondent Agency’s Hearing Examiner
held evidentiary hearings to determine whether the Peti-
tioner was entitled to rent increases. Petitioner presented

App. 3

evidence, both oral and written, of repair and mainte-
nance, of bids and estimates for work to be done in the
future, and of expenditures of time and money spent by
Petitioner at and on the property.

6. On or about April 17, 1990 the hearing examiner
issued a written decision which granted Petitioner
increases based on the application of the MNOI formula
and proposed and completed capital improvements. The
Petitioner was denied increases for other proven expendi-
tures; the Petitioner’s increases were capped at twelve
percent per year despite the fact that the MNOI formula
determined that Petitioner was entitled to an increase
higher than 12% in order to achieve a fair return; and
Petitioner was denied the ability to take advantage of the
annual general adjustments for a period of seven (7)
years.

7. On or about April 26, 1990 the Petitioner timely
appealed the decision of the Hearing Examiner on the
grounds that the decision of the Hearing Examiner was
not supported by the evidence, was an abuse of the
Hearing Examiner’s discretion, and denied the Petitioner
a fair return.

8. On May 24, 1990 the Respondent Agency consid-
ered Petitioner’s appeal and despite minor revisions to
the decision the Respondent Agency voted to uphold the
decision of the Hearing Examiner.

9. Petitioner has now exhausted all of the adminis-
trative remedies available to him.

10. In making its decision the Respondent Agency
exceeded its jurisdiction, failed to proceed in the manner

App. 4

required by law, acted arbitrarily and capriciously and
abused its discretion in the following respects:

a. The Respondent Agency’s decision to pre-
vent Petitioner from realizing the full rental increase
which he is entitled to under the Respondent Agency’s
MNOI formula, denies Petitioner a just and reasonable
return, constitutes a taking of Petitioner’s property with-
out just compensation, and denies Petitioner due process
under the California and United States Constitutions.

b. The Respondent Agency’s order that Peti-
tioner not partake of the annual general adjustment for a
period of 7 years, denies Petitioner a just and reasonable
return, constitutes a taking of Petitioner’s property with-
out just compensation, and denies Petitioner due process
under the California and United States Constitutions.

c. The Respondent Agency erroneously failed
to include all property tax expenses paid by Petitioner in
the current year.

d. The Respondent Agency erroneously com-
bined certain repair and maintenance items and consid-
ered them capital improvements.

Wherefore, Petitioner prays for judgment as follows:

1. That this court issue a writ of mandate compel-
ling Respondent to vacate and set aside its prior decision
and compelling Respondent (1) to allow Petitioner to take
the full rent increase that he is entitled to as determined
by the MNOI procedure, said increase to be effective as of
May 24, 1990, (2) to take into account the entire real
property tax expense experienced by Petitioner in the
current year, and (3) to correctly treat certain expenses as

App. 5

repair and maintenance items as opposed to capital
improvements;

2. For attorneys’ fees pursuant to Code of Civil
Procedure Section 1021.5 and Government Code Section
800;

3. For Petitioner’s costs of suit; and

4. For such other and further relief as the court
deems just and proper.

DATED: December 9, 1990.

/s/ Craig Mordoh
CRAIG MORDOH, ESQ.
Attorney for Petitioner

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386013_1771%3A2. Public record. Not legal advice.