Petition for Writ of Certiorari — Patel v. City of Gilroy

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In the

Supreme Court of the Anited States

VINOD PATEL,

Petitioner,

Vv.

City oF GILROY,

Respondent.

On PETITION For Writ Or CERTIORARI

To THe CALirorniA Court Ov APPEAL

For Tue SixtH APPELLATE DISTRICT

PETITION FOR WRIT OF CERTIORARI

FRANK A. WEISER

Counsel of Record

3460 WILSHIRE BLVD.

SulTE 903

Los ANGELES, CA 90010

(213) 384-6964

Counsel for Petitioner

BECKER GALLAGHER LEGAL PUBLISHING, INC.,

CINCINNATI, OHIO 800-890-5001

QUESTION PRESENTED FOR REVIEW

Whether a Municipal Transient Occupancy Tax

Ordinance That Prescribes Criminal Penalties for Violation of

Any of its Provisions but Lacks a Scienter Requirement Is

Facially Void under the Due Process Clause of the Fourteenth

Amendment of the United States Constitution?

LIST OF PARTIES TO THE PROCEEDINGS

The parties to the proceeding are Petitioner Vinod

Patel (“Petitioner”) and Respondent City of Gilroy

(“Respondent” or “City”).

ll

TABLE OF CONTENTS

QUESTION PRESENTED FOR REVIEW ......... i

LIST OF PARTIES TO THE PROCEEDINGS ...... li

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Co a a 1

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STATUTES AND CONSTITUTIONAL

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PER Geees GP EEE CASE 2 teens 2

A ee ar orn a Sin hawk ew 2

REASONS FOR GRANTING THE WRIT ......... 6

A. THE ORDINANCE LACKS A

SCIENTER REQUIREMENT

AND THEREFORE FAILS

TO PROVIDE FAIR AND

ADEQUATE NOTICE OF

THE TYPE OF CONDUCT

PROHIBITED AND

ENCOURAGES ARBITRARY

AND DISCRIMINATORY

LAW ENFORCEMENT ........... 6

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APPENDIX

Appendix A

Supreme Court of California Order -

i re rer er er Cee et ee la

Appendix B

a ee Ae ee ed 8 ee 3a

Appendix C

Superior Court of California Judgment -

Seer ens eee eee ee re eee ee 15a

iV

TABLE OF AUTHORITIES

Cases:

Boyce Motor Lines v. United States,

Pan Ga Bet CR i 9 8 00 860s tee 7

Britt v. City of Pomona,

223 Cal.App.3d 265 (1990) ............ 9, 10

City of San Bernardino Motel Association v.

City of San Bernardino,

~ te WS Fe eee 9

Colautti v. Franklin,

Se Ue 2 Ce be es ee een ee 6

Giaccio v. Pennsylvania,

Dae Sh Se Ie 0 8's ada eee eee 12

Grayned v. City of Rockford,

Opn Um. Serre 4 6654 25a ee eee 7

Hoffman Estates v. Flipside, Hoffman Estates, Inc.,

Co Uae. SP PE «0 has ine eee eee 7,9

Kolender v. Lawson,

GOs Ua. Bee Ce se hci ee eee 8, 11

Papachristou v. Jacksonville,

OP MR Es re re a 7

Smith v. Goguen,

S55 UE. FeO TPO es besa eee 8

United States v. Bishop,

or BR es eer eer ere 8

United States v. Petrillo,

Fae Ue RERPTD bv ck heehee eee 13

United States v. Ragen,

Fee Us SED CREE bh 66 6 eee 6 oe ee eS 7

United States v. United States Gypsum Co..,

Ge Gab. She CPD 8 eee eb eeees 7 |

Statutes:

yr BR Some Br |) errr ge er ee 1

vi

OPINIONS BELOW

The Judgment by the Superior Court of the State of

California for the County of Santa Clara was entered on June

20, 2000 (the “Superior Court Order”) (App. C). The

published Opinion by the Court of Appeal of the State of

California for the Sixth Appellate District affirming the

Judgment by the Superior Court was entered on March 8,

2002 (the “Opinion”) (App. B) . The Opinion is reported at

97 Cal. App.4th 483 (2002). The Order of the California

Supreme Court sitting en banc denying the Petition for

Review was entered on June 12, 2002 (the “California

Supreme Court Order”) (App. A) .

JURISDICTION

The California Supreme Court Order was entered on

June 12, 2002. This Court extended the time to file this

Petition for Writ of Certiorari to and including October 9,

2002 (Application No. 02A189) . The jurisdiction of this

Court is invoked pursuant to 28 U.S.C. § 1254(1) .

STATUTES AND CONSTITUTIONAL

PROVISIONS INVOLVED

The pertinent provisions of the Fourteenth Amendment

of the United States Constitution is set forth below:

The Fourteenth Amendment to the United States

Constitution, Section 1 states in pertinent part:

“No State shall make or enforce any law which

shall abridge the privileges or immunities of

citizens of the United States; nor shall any

State deprive any person of life, liberty or

l

property, without due process of law; nor deny

to ant person within its jurisdiction the equal

protection of the laws.”

STATEMENT OF THE CASE

A. FACTS

Petitioner Vinod Patel, owner of the Pacheco Pass

Motel in the City of Gilroy, petitions for review the entry of

the judgment upholding tax assessments imposed on the motel

by the the Respondent City of Gilroy.

This petition presents a facial challenge to a criminal

transient occupancy tax ordinance. Petitioner contends that the

City of Gilroy Transient Occupanct Tax ordinance ' that

created and defined the tax is unconstitutionally vague under

the Fourteenth Amendment of the United States Constitution.

The ordinance requires the proprietor of each “hotel”?

' City of Gilroy Municipal Code § 25A.

2 The term “Hotel” is defined as:

“Hotel” means any structure, or any portion of any

structure which is occupied or intended or designed for occupancy

by transients for dwelling, lodging or sleeping purposes, and

includes any hotel, inn, tourist home or house, motel, studio hotel,

bachelor hotel, lodging house, rooming house, apartment house,

dormitory, public or private club, mobile home or house trailer at

a fixed location, or other similar structure or portion thereof.”

(Former City of Gilroy Municipal Code § 25A. I. Ordinance No.

928, § 1 (1971) .)

“Hotel” now includes a recreational vehicle park. (City of

2

ee

in the City of Gilroy to collect, along with the rent, a 9

percent tax from each “transient” * for the privilege of

“occupancy” ‘in the hotel.

The ordinance provides for “exemptions” ° from the tax.

Gilroy Municipal Code § 25A.I. Ordinance No. 97-9, § I (October

20, 1997).)

3 The term “Transient” is defined as:

“.. any person who exercises occupancy or is entitled to

occupancy by reason of concession, permit, right of access, license

or other agreement, for a period of thirty (30) consecutive calendar

days or less, counting portions of calendar days as full days. Any

such person so occupying space in a hotel shall be deemed to be a

transient until the period of thirty (30) days has expired, unless

there is an agreement in writing between the operator and the

occupant providing for a longer period of occupancy. In

determining whether a person is a transient, uninterrupted periods

of time extending both prior and subsequent to the effective date of

the ordinance may be considered.” (City of Gilroy Municipal Code

§ 25A.I1.)

* The term “Occupancy” is defined as:

“the use or possession, or the right to the use or possession

of any room or rooms or portions thereof, in any hotel for

dwelling, lodging or sleeping purposes.” (City of Gilroy Municipal

Code § 25A.!.)

* The “Exemptions” section states:

“No tax shall be imposed upon:

(a) Any person as to whom, or any occupancy as to which, it is

beyond the power of the city to impose the tax herein provided;

3

CE

The ordinance also prescribes criminal penalties for

violation of any of its provisions.° This provision does not

contain a scienter requirement.

In June 1998, following an audit, the City notified

petitioner that he owed $26,292.33 in delinquent taxes,

interest and penalties under the ordinance.

After a hearing in August 1998, the administrative

services director (“Director”) found that petitioner owed the

City $10,965.36, attributable to exemptions improperly

claimed for the three-year audit period ending December 1,

1996, plus interest. The Director noted that the motel kept

“very erratic” records, and that there were no written

agreements for stays of more than 30 days, which would have

allowed an exemption from the tax. However, the Director

also noted that many of the hotel patrons had in fact stayed

longer than 30 days, as reflected in the room rental cards. The

Director further found that petitioner had collected some tax,

which he had included in the room rate without itemizing it on

(b) Any officer or employee of a foreign government who is

exempt by reason of express provision of federal law or

international treaty.

No exempiion shall be granted except upon a claim thereof made

at the time rent is collected and under penalty of perjury upon a

form prescribed by the director of finance.” (City of Gilroy

Municipal Code § 25A.1.)

° The ordinance states regarding criminal penalties that:

“Violations; misdemeanor.

Any person violating any of the provisions of this

chapter shall be guilty of an infraction.”

(City of Gilroy Municipal Code § 25A.13.)

4

the rental cards. Consequently, the Director allowed an

exemption from the tax for all of the patrons who appeared to

have stayed more than 30 consecutive days.

The Director declined to impose penalties, finding no

intent to under report taxes.

Petitioner filed a timely appeal to the Gilroy City

Council, which conducted a hearing and upheld the Director’s

findings. In January 1999, petitioner filed a petition for a writ

of mandate and complaint for declaratory and injunctive relief

in the Santa Clara Superior Court. The petitioner alleged that

the assessment violated his right to due process and equal

protection, and that the ordinance was facially void for

vagueness under the Due Process Clause of the Fourteenth

Amendment of the United States Constitution.

In August 1999, the City filed its own complaint to

recover the amounts found due by the Director and the city

council, along with the interest that had continued to accrue.

Pursuant to a stipulation by the parties, the court ordered that

the outcome of the proceedings against the City would control

the outcome of the City’s collection lawsuit against the

petitioner. As part of the stipulation the parties acknowledged

that if the City prevailed, it would be entitled to recover the

amount found due by the Director, plus accrued interest. On

June 20, 2000, the superior court entered judgment in favor

of the City, finding the ordinance to be “valid and

constitutional.” (App. C).

Petitioner filed a timely appeal to the California Court

of Appeal for the Sixth Appellate District. On March 8, 2002,

the court of appeal, in a published opinion held that the

ordinance was not unconstitutionally vague under the Due

Process Clause of the Fourteenth Amendment of the United

5

States Constitution, since it gave fair notice of its collection

and reporting requirements and provided reasonably adequate

standards to guide enforcement. (App. B) .

The court of appeal held that while the definitions of

“hotel” and “occupancy” contained the words “dwelling” and

“lodging”, implying either a temporary or permanent

Situation, and that the “exemptions” section was “hardly a

model of clarity in exempting whoever is ‘beyond the power

of the city to impose the tax,’” (App. B, pp. 13a-13b), but

that the tax clearly applied solely to those who occupied a

hotel for a period of 30 consecutive calendar days or less who

had not entered into written agreements for longer stays.

Thus, as the court of appeal reasoned, it was clear what the

ordinance as a whole prohibited, and the ordinance was valid

in the vast majority of its intended applications.

Petitioner filed a timély Petition for Review oi the

court of appeal opinion to the California Supreme Court.

On June 12, 2002, the California Supreme Court

sitting en banc denied the Petition for Review. (App. A) .

REASONS FOR GRANTING THE WRIT

A. The Ordinance Violates Due Process in That it

Fails to Provide Fair and Adequate Notice of

the Type of Conduct Prohibited and

Encourages Arbitrary and Discriminatory Law

Enforcement.

The Court has long’ recognized that the

constitutionality of a vague statutory standard in a criminal

statute is closely related to whether that standard incorporates

a scienter requirement. Colautti v. Franklin, 439 U.S. 379,

6

eat |

395, 99 S.Ct. 675, 685, 58 L.Ed.2d 596 (1979) ; United

States v. United States Gypsum Co., 438 U.S. 422, 434-446,

98 S.Ct. 2864, 2873, 57 L.Ed.2d 854 (1978) ; Papachristou

v. Jacksonville, 405 U.S. 156, 163, 92 S.Ct. 839, 843, 31

L.Ed.2d 110 (1972) ; Boyce Motor Lines v. United States , 342

U.S. 337, 342, 72 S.Ct. 329, 331, 96 L.Ed. 367 (1952) .

This is not an ordinance ‘that “simply regulates

business behavior and contains a scienter requirement, “ see

Hoffman Estates v. Flipside Hoffman Estates, Inc., 455 U.S.

489, 499, 102 S.Ct. 1186, 71 L.Ed.2d 362 (1982) , this is a

criminal tax ordinance that contains no scienter requirement.

The absence of a scienter requirement in the section

directing criminal penalties for any violation of its provisions

renders the ordinance little more than “a trap for those act in

good faith.” United States v. Ragen, 314 U.S. 513, 524, 62

S.Ct. 374, 379, 86 L.Ed. 383 (1942) ; Grayned v. City of

Rockford, 408 U.S. 104, 108-109, 92 S.Ct. 2294, 2298, 33

L.Ed.2d 222 (1972) (enunciating the standards of fair notice

and fair enforcement for evaluating vagueness and stating that

“[vJague laws may trap the innocent by not providing fair

warning”).

The Court has stated that “the degree that the

Constitution tolerates - as well as the importance of fair notice

and fair encforcement - depends in part on the nature of the

enactment.” Hoffman Estates, 455 U.S. at 498, 102 S.Ct. at

1193.

By way of example, the Court in Hoffman Estates

further explained that the Court has traditionally expressed

greater tolerance of enactments with civil rather than criminal

penalties because the consequences of imprecision are

qualitatively less severe, and that a scienter requirement may

7

mitigate a law’s vagueness, especially with respect to the

adequacy of notice. Jd., 455 U.S. at 498-499, 102 S.Ct. at

1193.

Because of the complexity of the nature of this

municipal tax law, a person should not be exposed to criminal

penalties for a bona fide misunderstanding as to liability for

the tax, as to his duty to make a return, or as to the adequacy

of the records of the records he maintains, merely by his

failure to measure up to the prescribed standard of conduct.

A legislature’s failure to establish a_ scienter

requirement not only fails to provide fair warning, but

impermissibly delegates basic policy matters to law

enforcement, judges and juries for resolution on an ad hoc and

subjective basis, with the attendant dangers of arbitrary and

discriminatory applications as to who has criminally violated

the ordinance’s requirements.

The Court has repeatedly emphasized that where a

legislature fails to establish minimal guidelines to govern law

enforcement, a criminal statute may permit “ ‘a standardless

sweep [that] allows policeman, prosecutors, and juries to

pursue their personal predilections.’” Kolender v. Lawson,

461 U.S. 352, 356, 103 S.Ct. 1855, 1858, 75 L.Ed.2d 903

(1983) (quoting Smith v. Goguen, 415 U.S. 566, 574, 94 |

S.Ct. 1242, 1247-1248, 39 L.Ed.2d 605 (1974)). |

For example, in the area of federal income taxation,

because of the complexity of the nature of the tax laws,

Congress has required “willfulness” as an element of certain

federal criminal tax offenses, and the Court has traditionally

construed this term as connoting “a voluntary, intentional

violation of a known legal duty.” United States v. Bishop, 412

U.S. 346, 360, 93 S.Ct. 2008, 2017, 36 L.Ed.2d 941 (1973).

8

|

While it is certainly true that “ [i]n evaluating a facial

challenge to a state law, a federal court must, of course

consider any limiting construction that a state court or

enforcement agency has proffered,” Hoffman Estates, 455

U.S. at 494, n. 5, 102 S.Ct. at 1191, n. 5, the limiting

construction by the court of appeal opinion does not cure the

foundational defect of a lack of a scienter or mens tea

requirement.

The perils of strict criminal liability are particularly

acute here because the terms “dwelling” or “lodging” by

definition imply permanent residency, ’ and are used in the

central definitions of “transient”, “hotel” and “occupancy”.

Even more confusing is the fact that the definitional

structure is patently circular. “Hotel” is not defined simply as

a structure which furnishes occupancy intended for dwelling

or lodging; it is defined as a structure which furnishes

occupancy for dwelling or lodging to a “transient” But

“transient” is not simply defined as a person who obtains

occupancy for 30-days or less; it is defined as a person who

obtains occupancy in a “hotel” The definitions of “hotel” and

“transient” are rendered hopelessly confusing since the

common term “occupancy” is defined as a person who obtains

possession for “dwelling” or “lodging” purposes.

. Two previous published state appellate opinions

invalidated other municipal transient occupancy tax ordinances on

federal due process grounds and emphasized that the definition of

a “transient” occupancy tax by use of the terms “dwelling” or

“lodging” is inherently ambiguous and confusing. See Britt v. City

of Pomona, 223 Cal. App.3d 265 (1990) ; City of San Bernardino

Hotel/Motel Association v. City of San Bernardino, 59 Cal. App.

4th 237 (1997).

The court of appeal’s attempt to limit the construction

of the ordinance does solve the inherent circularity of the

definitional structure.

The court of appeal also held that “the hotel guest is

invariably deemed to be a transient until the first 30 days have

passed, even if he or she appears to be ‘dwelling’ in the hotel

for that period.” (App. B, pg. 12a) .

This statement is nonsensical. Even granting the court

of appeal’s limiting construction, the term to “appear to be

dwelling” in a genuine transient occupancy situation is a

contradictory statement.®

8’ By way of illustration, a previous California appellate

court explained in invalidating another transient occupancy tax on

federal due process grounds that the use of the te1m “dwelling” in

the definition of a transient occupancy tax is inherently ambiguous:

“The 1987 ordinance sends mixed signals. Section

9126 of that ordinance states that ‘transients’ have

to pay the tax; but in its definitions of ‘hotel’ and

occupancy’, the ordinance includes the word

‘dwelling’ .The plain definition of to ‘dwell’ means

‘to be or continue in some state or condition.’ A

“dwelling” is ‘a building or construction used for

residence.” To ‘reside’ is ‘to settle oneself or a

thing in a place’ be stationed: remain, stay.’ A

‘resident’ is ‘one who dwells in a place for a

period of some duration.’ (Webster’s New

Internat. Dict. (3rd ed. 1981) pp. 706, 1931).

Thus, the text of the ordinance appears to address

both transients and persons in residence.” Britt,

223 Cal. App.3d at 278-279 (1990) .

10

—KK—————-—

Moreover, the court of appeal’s attempt to further

limit the reach of the ordinance by holding that a written

agreement providing for a longer occupancy will remove the

rental arrangement from the transient occupancy tax remains

ambiguous as long as there exist no minimal guidelines in

defining the term “written agreement”.

The “exemptions” section of the ordinance further

exacerbates the problem of vagueness and circularity since it

is unclear who is exempt from the tax, as this section does not

set forth adequate guidelines or definitions as to which class

of “persons” or “occupancy” it is “beyond the City to impose

the tax.”

The court of appeal recognized that the “exemption”

section was “hardly a model of clarity in exempting whoever

is ‘beyond the power of the city to impose the tax,’” (App. B,

pg. 13a) and further stated that the fact that a term is

somewhat imprecise does not itself offend due process. (App.

B, pg. 13a). However, it did not offer a limiting construction

of this portion of the ordinance other than stating by way of

example that:

“Here the Director expressed no confusion in

determining that appellant had not entered any

written agreements with patrons who had

stayed in the motel for a period shorter than 31

days; nor did he appear to have any difficulty

construing the ordinance to require the

collection of tax from those guests.” (App. B,

pg. 14a) .

Not only does this statement essentially misapprehend

the void-for-vagueness doctrine which focuses on actual notice

to the petitioner, not the Director, see Kolender , 461 U.S. at

11

357-358, 103 S.Ct. at 1858, it also illustrates that inherent

ambiguity that remains in the ordinance even given its

previous limiting construction since there is simply no

standard to be found in this section as to how it is be applied,

let alone applied in the manner construed by the court of

appeal.

This grant of unchanneled, standardless discretion

“does not even begin to meet th[e] constitutional requirement

[of due process] .” Giaccio v. Pennsylvania, 382 U.S. 399,

403, 86 S.Ct. 518, 521, 15 L.Ed.2d 447 (1966).

In Giaccio, Justice Black, eloquently stated for the

Court that:

“Certainly one of the basic purposes of the

Due Process Clause has always been to protect

a person against having the Government

impose burdens upon him except in accordance

with the valid laws of the land. Implicit in this

constitutional safeguard is the premise that the

law must be one that carries an understandable

meaning with legal standards that courts must

enforce.” Jd., 382 U.S. at 403, 86 S.Ct. at

521.

This ordinance as written does not even begin to meet

the constitutional requirement of due process. It is impossible

to apply the ordinance’s requirements with reasonable

certainty in advance. Moreover, the circular definitions of

“transient”, “hotel” and “occupancy” deprive these terms of

any meaningful content. By imposing criminal penalties for

failure to comply with its provisions without a scienter

requirement it cannot meet the exacting standards of due

process.

12

eeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee—eEewOonr

The ordinance viewed as a whole, fails to provide

adequate notice and encourages arbitrary and discriminatory

enforcement.

Although due process does not require “impossible

standards” of clarity, see United States v. Petrillo, 332 U.S.

1, 7-8, 67 S.Ct. 1538, 91 L.Ed. 1877 (1947), this is not a

case where further precision in the ordinance’s language is

either impossible or impractical.

CONCLUSION

For all the foregoing reasons, petitioner respectfully

requests that the Petition for Writ of Certiorari be granted and

that the City of Gilroy’s Transient Occupancy Tax Ordinance

be declared and determined to be unconstitutional and void.

Respectfully submitted,

LAW OFFICES OF FRANK A. WEISER

13

APPENDIX A

IN THE SUPREME COURT OF CALIFORNIA

En Banc

[Filed June 12, 2002]

No. S106060

CITY OF GILROY

Plaintiff and Respondent,

v.

LEAVESLEY OCEAN-INN

INVESTORS et al.,

Defendants and Appellants.

i i i a a a

Court of Appeal, Sixth Appellate District

No. H021889

ORDER

Petition for review denied.

GEORGE

Chief Justice

la

APPENDIX B

COURT OF APPEAL OF CALIFORNIA

SIXTH APPELLATE DISTRICT

[Filed March 8, 2002]

[Reported at 97 Cal. App. 4th 483]

No. H021888

VINOD PATEL,

Plaintiff and Appellant,

V.

- CITY OF GILROY,

Defendant and Respondent.

i i a a a a

Superior Court of Santa Clara County

Super. Ct. No. CV779614

Leslie Nichols, Judge

JUDGES:

Elia, J. WE CONCUR Premo, Acting P.J. Mihara, J.

OPINION

Vinod Patel, owner of the Pacheco Pass Motel in

Gilroy, appeals from a judgment upholding the tax

assessments imposed on the motel by the City of Gilroy

(City). Appellant contends that the ordinance that created and

2a

cee

Sixth Appellate District Opinion - 3/8/02

Reported at 97 Cal. App. 4th 483

defined the tax is unconstitutionally vague. We disagree and

affirm the judgment.

Background

In June 1998, following an audit, the City notified

appellant that he owed $26,292.33 in delinquent taxes,

interest and penalties, under the city’s Transient Occupancy

Tax ordinance, Gilroy City Code section 25A. 1, et. seq.' The

ordinance requires the proprietor of each “hotel” to collect,

along with the rent, a 9 percent tax from each “transient” for

the privilege of “occupancy” in the hotel.” ( § 25A.2.)

After a hearing in August 1998, the Administrative

Services Director (Director) found that appellant owed the

' All further unspecified section references are to the

Gilroy City Code.

* Section 25A.2 specifically states: “For the privilege of

occupancy in any hotel, each transient is subject to and shall pay a

tax in the amount of nine per cent (9%) of the rent charged by the

operator. Said tax constitutes a debt owed by the transient to the

city which is extinguished only by payment to the operator or to the

city. The transient shall pay the tax to the operator of the hotel at

the time the rent is paid. If the rent is paid in installments, a

proportionate share of the tax shall be paid with each installment.

The unpaid tax shall be due upon the transient’s ceasing to occupy

space in the hotel. If for any reason the tax due is not paid to the

operator of the hotel, the director of finance may require such tax

[to] be paid directly to the director of finance.”

3a

Sixth Appellate District Opinion - 3/8/02

Reported at 97 Cal. App. 4th 483

City $10,965.36, attributable to exemptions improperly

claimed for the three-year audit period ending December 1,

1996, plus interest. The Director noted that the motel kept

“very erratic” records, and that there were no written

agreements for stays of more than 30 days, which would have

allowed an exemption from the tax. However, the Director

also noted that many of the hotel patrons had in fact stayed

longer than 30 days, as reflected in the room rental cards.

The Director further found that appellant had collected some

tax, which he had included in the room rate without itemizing

it on the rental cards. Consequently, the Director allowed an

exemption from the tax for all of the patrons who appeared to

have stayed more than 30 consecutive days. The Director

declined to impose penalties, finding no intent to underreport

taxes. |

Appellant filed a timely appeal to the Gilroy City

Council, which conducted a hearing and upheld the Director’s

findings. In January 1999, appellant, together with the owners

of the Leavesley Inn,’ filed a petition for a writ of mandate

and complaint for declaratory injunctive relief. The petitioners

alleged that the assessment violated their rights to due process

and equal protection, and that the Transient Occupancy Tax

ordinance was facially void for vagueness.

In August 1999 the City filed its own complaint to

recover the amounts found due by the Director and the City

> This appeal is being considered with City of Gilroy v.

Vinod Patel (dba Oaks Motel), HO21900, and City of Gilroy v.

Leavesley Ocean-Inn Investors, HO21889.

4a

Sixth Appellate District Opinion - 3/8/02

Reported at 97 Cal. App. 4th 483

Council, along with the interest that had continued to accrue.’

Pursuant to a stipulation by the parties, the court ordered that

the outcome of the proceedings against the City would control

the outcome of the City’s collection lawsuit against appellant.

As part of the stipulation the parties acknowledged that if the

City prevailed, it would be entitled to recover the amount

found due by the Director, plus accrued interest. On June 20,

2000, the court entered judgment in favor of the City, finding

the Transient Occupancy Tax ordinance to be “valid and

constitutional.”

Discussion

An enactment may be declared unconstitutionally

vague under the due process clauses of the United States

Constitution and the California Constitution (U.S. Const.,

Amends V, XIV; Cal. Const., art. I, -§ 7) “if it fails to

provide people of ordinary intelligence a reasonable

opportunity to understand what conduct it prohibits [or] if it

authorizes or even encourages arbitrary and discriminatory

enforcement.” ( Hill v. Colorado (2000) 530 U.S. 703, 732,

147 L. Ed. 2d 597, 120 S. Ct. 2480; Chicago v. Morales

(1999) 527 U.S. 41, 56, 144 L. Ed. 2d 67, 119 S. Ct. 1849;

People v. Castenada (2000) 23 Cal.4th 743, 751.) A tax law

in particular “ ‘must prescribe a standard sufficiently definite

to be understandable to the average person who desires to

comply with it. [Citation.]’ “ ( State Bd. of Equalization v.

Wirick (2001) 93 Cal.App.4th 411, 420.) We therefore must

* The complaint is not in the clerk’s transcript on appeal,

but is referred to by the court in its subsequent order.

Sa

Sixth Appellate District Opinion - 3/8/02

Reported at 97 Cal- App. 4th 483

consider whether chapter 25A of the Gilroy City Code (the

Transient Occupancy Tax ordinance) gives fair notice of the

tax collection and reporting requirements and provides

reasonably adequate standards to guide enforcement. ( /d. at

p. 419, quoting Fisher v. City of Berkeley (1984) 37 Cal.3d

644, 702, 209 Cal. Rptr. 682, 693 P.2d 261; City of San

_ Bernardino Hotel/Motel Assn. v. City of San Bernardino

(1997) 59 Cal.App.4th 237, 245.)

su paSEIENOT CSG EEeETeaernmeT

The primary focus of the parties’ dispute is the

definition of the terms used in section 25A.1 -- specifically,

“hotel,” “occupancy,” and “transient.” From 1994 to 1996,

the period for which appellant was audited, “hotel” was

defined as “any structure, or any portion of any structure,

which is occupied or intended or designed for occupancy by

transients for dwelling, lodging or sleeping purposes, and

includes any hotel, inn, tourist home or house, motel, studio

hotel, bachelor hotel, lodging house, rooming house,

apartment house, dormitory, public or private club, mobile

home or house trailer at a fixed location, or other similar

structure or portion thereof.” (Former § 25A.1; Ord. No.

928, 1971, § 1.)° The term “occupancy” refers to “the use or

possession, or the right to the use or possession of any room

Or rooms or portions thereof, in any hotel for dwelling,

lodging or sleeping purposes.” ( § 25A.1.) And a “transient”

is “any person who exercises occupancy or is entitled to

occupancy by reason of concession, permit, right of access,

license or other agreement for a period of thirty (30)

> “Hotel” now includes a recreational vehicle park. ( §

25A.1, Ord. No. 97-9, § I, Oct. 20, 1997.)

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consecutive calendar days or less, counting portions of

calendar days as full days. Any such person so occupying

space in a hotel shall be deemed to be a transient until the

period of thirty (30) days has expired unless there is an

agreement in writing between the operator and the occupant

providing for a longer period of occupancy. In determining

whether a person is a transient, uninterrupted periods of time

extending both prior and subsequent to the effective date of

this chapter may be considered.” ( § 25A.1.)

Appellant contends that these terms are “hopelessly

confusing” because they are defined in a circular way and fail

to distinguish temporary living arrangements from permanent

ones. The definitions of “hotel” and “occupancy,” for

example, are flawed because they contain the words

“dwelling” and “lodging,” which imply either a temporary or

a permanent situation. The 30-day restriction in the definition

of “transient” is inadequate to clarify the reach of the tax,

appellant adds, because it suggests that a tenant of an

apartment on a month-to-month arrangement must pay the tax

for the first 30 days, a situation not intended by the

lawmakers. “It is only on day 31, when the renter pays the

second month’s rent, that the owner may safely assume no tax

is due. But the Ordinance chose to use the words ‘hotel’ and

‘transient’, which apparently was intended to exclude this

hypothetical.”

Appellant’s argument is self-defeating, as it expressly

invokes a “hypothetical” scenario appellant himself does not

face. Whether a month-to-month apartment rental would

create confusion in the lessor and lessee is not the problem

presented here. Rather, here the only issue was whether

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appellant failed to collect tax for those guests who stayed in

his motel for 30 or fewer days without a written agreement

for a longer stay. Appellant “cannot prevail by simply

suggesting hypothetical situations in which constitutional

problems may arise.” ( People v. Sipe (1995) 36 Cal.App.4th

468, 481, italics added.) “Speculation about possible

vagueness in hypothetical situations not before the Court will

not support a facial attack on a statute when it is surely valid

‘in the vast majority of its intended applications.’ “(Hill v.

Colorado, supra, 530 U.S. at p. 733; see also Tobe v. City of

Santa Ana (1995) 9 Cal.4th 1069, 1109, 892 P.2d 1145

[unless law sweeps in substantial amount of constitutionally

protected conduct, facially vague law must be invalid in all

respects and applications]; Evangelatos v. Superior Court

(1988) 44 Cal.3d 1188, 1201, 246 Cal. Rptr. 629, 753 P.2d

585 [in facial vagueness challenge party must demonstrate

vagueness in “all of its applications,” not just some instances

of unceriainty or ambiguity]; cf. American Academy of

Pediatrics v. Lungren (1997) 16 Cal.4th 307, 347-348, 940

P.2d 797.)

Appellant maintains, however, that we must exercise

Stricter scrutiny of the ordinance because it prescribes

criminal penalties for violations.° ( Kolender v. Lawson

(1983) 461 U.S. 352, 358, fn. 8, 75 L. Ed. 2d 903, 103 S.

° In addition to prescribing monetary penalties for

noncompliance, the ordinance originally declared any violation of

the ordinance a misdemeanor punishable by a $500 fine or

imprisonment, or both. The current version of the ordinance

declares such a violation to be an infraction.

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Ct. 1855 [where a statute imposes criminal penalties, the

standard of certainty is higher].) Penal enactments are given

greater scrutiny when their enforcement threatens the exercise

of constitutional rights, such as freedom of expression or

freedom of movement. ( Chicago v. Morales, supra, 527

U.S. at p. 55; Tobe v. City of Santa Ana, supra, 9 Cal.4th at

p. 1095.) But where no such constitutional rights are at stake,

it is the facts of the case and not hypothetical situations that

determine the viability of a vagueness challenge. (Chapman

v. United States (1991) 500 U.S. 453, 467, 114 L. Ed. 2d

524, 111 S. Ct. 1919; People v. Sipe, supra, 36 Cal.App.4th

at p. 481.) Thus, if the conduct with which appellant is

charged falls clearly within the bounds of the ordinance,

appellant may not be heard to complain. (Tobe v. City of

Santa Ana, supra, 9 Cal.4th at p. 1095.)

Even considering appellant’s challenge as properly

presented, we do not find the ordinance unconstitutionally

vague. Appellant acknowledges that the Transient Occupancy

Tax ordinance is presumed to be valid and must be upheld

unless its unconstitutionality “’clearly, positively and

unmistakably appears.’” ( Hale v. Morgan (1978) 22 Cal.3d

388, 404, 149 Cal. Rptr. 375, 584 P.2d 512; Tobe v. City of

Santa Ana, supra, 9 Cal.4th at p. 1102; Voters for

Responsible Retirement v. Board of Supervisors (1994) 8

Cal.4th 765, 780, 884 P.2d 645.) Furthermore, even when

criminal penalties apply, a statute or ordinance will be upheld

against a vagueness challenge “ ‘ “if any reasonable and

practical construction can be given its language.” ‘ “ (State

Bd. of Equalization v. Wirick, supra, 93 Cal.App.4th at p.

420; People v. Townsend (1998) 62 Cal.App.4th 1390, 1400-

1401; People ex rel. Gallo v. Acuna (1997) 14 Cal.4th 1090,

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1117, 929 P.2d 596.) We are bound to give the ordinance

before us “a liberal, practical common-sense construction . .

. in accordance with the natural and ordinary meaning of its

words.” (Amador Valley Joint Union High Sch. Dist. v. State

Bd. of Equalization (1978) 22 Cal.3d 208, 245, 149 Cal.

Rptr. 239, 583 P.2d 1281.)

In this case, appellant argues, the ordinance “is so

vague that a hotel/motel operator cannot determine how to

avoid the tax and properly comply with its requirements and

that the respondent cannot avoid arbitrary enforcement.”

Specifically, as noted above, the ordinance uses circular

definitions of “hotel” and “transient” and fails to distinguish

between a person living from day to day or week to week in

a motel and a person living in an apartment on a month-to-

month tenancy. In addition, the provision for an “agreement

in writing” is not defined, thereby adding to the “definitional

confusion between ‘transient’ and ‘permanent’ occupancy.”

The “Exemptions” provision, section 25A.3, “further

exacerbates the problem of vagueness and circularity”

because it “does not set forth adequate guidelines or

definitions as to which class of ‘persons’ or ‘occupancy’ it is

‘beyond the City [sic] to impose the tax.’ “’

7 Section 25A.3, “Exemptions,” precludes imposition of

the tax on “any person as to whom, or any occupancy as to which,

it is beyond the power of the city to impose the tax herein

provided.” ( § 25A.3(a).) Also exempted are officers and

employees of foreign governments if they are made exempt by an

“express provision of federal law or international treaty.”

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Appellant relies principally on City of San Bernardino

Hotel/Motel Assn. v. City of San Bernardino, supra, 59

Cal.App.4th 237, where the Fourth District, Division Two,

found a hotel tax ordinance deficient because it inadequately

defined “hotel,” “occupancy,” and “transient.” He also cites

Britt v. City of Pomona (1990) 223 Cal. App. 3d 265, 272

Cal. Rptr. 724, where the Second District, Division Three,

invalidated an ordinance on vagueness grounds based on the

“circular” definitions of “hotel” and “transient” which failed

to distinguish temporary occupants from long-term residents

in identifying who was subject to the tax.

The ordinance before us does not present the same

interpretative difficulties as those examined in San Bernardino

and Britt. In-Britt, the City of Pomona used the term

“dwelling” in the definition of “hotel,” thus making it appear

that permanent residents also had to pay the tax. Significantly,

however, the definitions of the terms “hotel,” “occupancy,”

and “transient” did not confine the tax to those occupying a

hotel for any specific period.* Thus, it was readily susceptible

of an interpretation that a person “dwelling” in the hotel on

a long-term basis was subject to the tax. (223 Cal. App. 3d

at p. 279.) The use of the term “transient” added circularity,

not clarity, because a transient was defined as one who

occupied a “hotel,” while a “hotel” was a structure designed

for occupancy by transients. In San Bernardino the central

8 The contested ordinances were the result of amendments

that had eliminated the city’s previous limitation of the occupancy

period. Before the. 1987 and 1988 amendments the ordinance had

defined “transient” as a person who occupied a lodging for a period

of 30 days or less. (Britt, supra, 223 Cal. App. 3d at p. 270.)

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problem was not just that the ordinance used the term

“dwelling” in the definition of “occupancy.” Rather, the

ordinance was confusing because it described a transient as a

person who occupied a hotel for a period of 90 days or less

and one who occupied the hotel for more than 90 days

without a written agreement for “permanent” occupancy.

Both “agreement in writing” and “permanent occupancy”

were vague, as it was not clear to the court what kind of

writing could qualify as a written agreement and “permanent”

meant “any definite period of time,” except for the first 90

days in certain kinds of facilities. (59 Cal.App.4th at pp.

249-250.) The court also acknowledged the hotel/motel

association’s argument that the definitions of “hotel” and

“transient” were “needlessly contradictory” because the

former included occupancy for no more than 30 days,’ while

the latter included occupancy for 90 days or (in some

circumstances) more. (59 Cal.App.4th at p. 249.)

The Gilroy ordinance does not suffer from these

infirmities. It is true that the definitions of “hotel” and

“occupancy” refer to “dwelling” as well as “lodging or

sleeping” purposes, but the tax applies solely to those who

occupy a hotel “for a period of thirty (30) consecutive

calendar days or less.” There is no confusing 90-day period

as in San Bernardino; the hotel guest is invariably deemed to

be a transient until the first 30 days have passed, even if he or

° The association’s complaint referred to a definition of

“hotel” that appeared to encompass mobile homes and house

trailers in mobile-home parks occupied for 30 or fewer days. (San

Bernardino, supra, 59 Cal.App.4th at p. 246.)

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she appears to be “dwelling” in the hotel for that period."°

That the provision may require tax on a tenant’s rent for the

first 30 days does not make it impermissibly vague.

Furthermore, a written agreement providing for a longer

occupancy will remove the rental arrangement from the reach

of the ordinance. This exemption provision is not as

ambiguous as that of the San Bernardino ordinance, which

inadequately defined “permanent” as well as “agreement in

writing” in the context of the convoluted definition of

“transient.” (59 Cal.App.4th at p. 249.)

The “Exemptions” provision, section 25A.3, is hardly

a model of clarity in exempting whoever is “beyond the

power of the city to impose the tax.” Nevertheless, “the fact

that a term is somewhat imprecise does not itself offend due

process. Rather, so long as the language sufficiently warns of

the proscribed conduct when measured by common

understanding and experience, the statute is not

unconstitutionally vague.” (People v. Ellison (1998) 68

Cal.App.4th 203, 207-208; see also People v. Hazelton

(1996) 14 Cal.4th 101, 109, 926 P.2d 423 [mere fact that

statute requires interpretation does not make it

10 Although appellant suggests the City could not have

intended to require the tax for the first 30 days of a longer stay, the

language of this section appears to state otherwise: any person

occupying space in a hotel “shall be deemed to be a transient until

the period of thirty (30) days has expired unless there is an

agreement in writing between the operator and the occupant

providing for a longer period of occupancy.” Thus, the tax need not

be collected for the first 30 days only if there is a written agreement

providing for a stay of longer than 30 days.

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unconstitutionally vague].) “Because we are ‘condemned to

the use of words, we can never expect mathematical certainty

from our language.’ “ ( Hill v. Colorado, supra, 530 U.S. at

p. 733.) “Many, probably most, statutes are ambiguous in

some respects and instances invariably arise under which the

application of statutory language may be unclear. So long as

a statute does not threaten to infringe on the exercise of First

Amendment or other constitutional rights, however, such

ambiguities, even if numerous, do not justify the invalidation

of a statute on its face.” (Evangelatos v. Superior Court,

supra, 44 Cal.3d at p. 1201.)

Here the Director expressed no confusion in

determining that appellant had not entered into any written

agreements with patrons who had stayed in the motel for a

period shorter than 31 days; nor did he appear to have any

difficulty construing the ordinance to require the collection of

tax from those guests. We do not believe that the exemption

provision alone makes it impossible for a hotel operator to

comply with his or her duty to collect the transient occupancy

tax or that it promotes arbitrary enforcement of the law.

In summary, appellant has not demonstrated the facial

invalidity of the ordinance on constitutional vagueness

grounds. Because “ ‘it is clear what the ordinance as a whole

prohibits,’ “ and because the ordinance is “surely valid ‘in the

vast majority of its intended applications,’ “ his facial

vagueness claim must be rejected. (Hill v. Colorado, supra,

530 U.S. at p. 733.) The superior court properly upheld the

tax assessments against appellant.

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Disposition

The judgment is affirmed.

Premo, Acting P.J., and Mihara, J., concurred.

lSa

APPENDIX C

SUPERIOR COURT OF CALIFORNIA

COUNTY OF SANTA CLARA

[Filed June 20, 2000]

No. CV 779614

VINOD PATEL dba OAKS MOTEL and _)

PACHECO PASS MOTEL; JOSEPH A. __)

FILICE, General Partner of LEAVESLEY )

OCEAN INN-INVESTORS, a Limited

Partnership dba LEAVESLEY INN,

Petitioners/Plaintiffs,

Vv.

CITY OF GILROY,

Respondent/Defendant.

mee ee ee eee ee”

JUDGMENT

This cause came on regularly for trial on May 18,

2000, in Department 6 of the above-entitled Court, the

Honorable Leslie C. Nichols presiding. Petitioners appeared

by their attorney, Frank A. Weiser, and Respondent appeared

by its attorney, Jolie Houston. Evidence, both oral and

documentary, having been presented by both parties, the

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Superior Court of California Judgment - 6/20/00

cause having been argued and submitted for decision, and the

Court having caused to be made and filed herein its Notice of

Decision.

Pursuant to the Court Orders and consistent with the

Stipulations entered into by Petitioners and Respondent City,

the issues for the Writ of Mandate and Complaint for

Declaratory Relief and Injunctive Relief were limited to the

following issues:

(a) Whether the tax assessment was

illegal because the City’s

Transient Occupancy Tax

Ordinance is “void for

vagueness” under the Fifth and

Fourteenth Amendments of the

United States Constitution.

Petitioners base this challenge

on City of San Bernardino

Hotel/Motel Association v. The

City of San Bernardino (1997)

59 Cal. App. 4th 237.

(b) Whether the tax assessment was

illegal because of the City’s

Transient Occupancy Tax

Ordinance both on its face and

| as applied to Petitioners

violated the due _ process

| requirement that government

| must provide a fair and

meaningful predeprivation

and/or postdeprivation remedy

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Superior Court of California Judgment - 6/20/00

(c)

The court having answered each of the questions posed

by the foregoing issues in the negative, it is now appropriate

from any disputed taxation.

This challenge will be based on

McKesson Corp. v. Florida

Alcohol & Tobacco Division

(1990) 496 U.S. 18 and

subsequent United States

Supreme Court authority

following McKesson.

Whether the tax assessment was

illegal because the City’s

Transient Occupancy

Ordinance both on its face and

applied to Petitioners, violated

their rights under the Fourth

Amendment of the United

States Constitution by the fact

that the ordinance provides the

owner/operator of the motel

must keep records for a

specified time, and the City has

the power to inspect records

without a subpoena or an

administrative warrant. This

challenge is based on Pinney v.

Phillips (1991) 230 Cal. App.

3d 1570 and United States

Supreme Court relied upon by

Pinney entitled New York v.

Burger (1987) 482 U.S. 691

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Superior Court of California Judgment - 6/20/00

that judgment be entered in favor of the City of Gilroy as

follows:

IT IS HEREBY ORDERED, ADJUDGED, AND

DECREED THAT PETITIONERS RECOVER NOTHING

BY THIS SUIT AND THAT JUDGMENT BE ENTERED IN

FAVOR OF RESPONDENT CITY OF GILROY AS

FOLLOWS:

(1) That Petitioners’ two causes of

action against the City for Writ

of Mandate be denied in their

entirety and that the Writ of

Mandate vacating the City’s tax

assessments against Petitioners

not be issued and said tax

assessments against Petitioners

not be set aside;

(2) That Petitioners’ cause of

action against the City for

Declaratory Relief and

Injunctive Relief be denied in

its entirety and that the

Respondent City’s Transient

Occupancy Tax Ordinance is

hereby declared to be a valid

and constitutional ordinance;

(3) That Petitioners recover

nothing by this suit;

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Superior Court of California Judgment - 6/20/00

(4) | That Respondent City shall be

entitled to recover costs of suit

herein incurred.

Dated: June 16, 2000 /s/

_ Judge of the Superior Court

20a