Opposition Brief — Hillsbورو Properties Properties v. City of Rohnert Park (No. 06-510)

Q) FILED

No. 06-510 NOV 1 0 2006

—TORREDTE oer

In The | SUPREME COURT, U.S.

Supreme Court of the United States —

4

| HILLSBORO PROPERTIES, and

PAUL GOLDSTONE ENTERPRISES, INC.

dba RANCHO GRANDE MOBILEHOME PARK,

Petitioners,

v.

CITY OF ROHNERT PARK, a municipal corporation, and

CITY OF ROHNERT PARK RENT APPEALS BOARD,

Respondents.

+

On Petition For Writ Of Certiorari

To California Court Of Appeal,

First Appellate District, Division Three

na

BRIEF IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

¢

MICHELLE MARCHETTA KENYON

Counsel of Record

JABRIELLE P. WHELAN

McDONOUGH HOLLAND & ALLEN PC

Attorneys at Law

1901 Harrison, 9th Floor

Oakland, California 94612

Phone: 510.273.8780

Fax: 510.839.9104

Attorneys for Respondents,

City of Rohnert Park and

City of Rohnert Park Rent Appeals Board

COCKLE LAW BRIEF PRINTING Co) S00) 225 6964

OR CALE COLLECT « 42) 342-2831

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ..........:.csecese00+ Sadan iii

STATEMENT OF THE CASE ...0..0<csecocccsccserescacessocese 1

REASONS FOR DENYING REVIEW ........cceceseseeeeee 4

I.

II.

THE QUESTIONS PRESENTED BY HILLS-

—_— BORO REGARDING CALIFORNIA STATE

COURTS’ NONCOMPLIANCE WITH FIRST

ENGLISH DOCTRINE AND HILLSBORO’S

ENTITLEMENT TO DIRECT U.S. SUPREME

COURT ADJUDICATION OF ITS TAKING

CLAIM DO NOT WARRANT REVIEW BY

EERED CAPCIEUE. pcsnissinscialacsuitepavesocontabicepetonaciateaices

A. Neither the Decision Below Nor the Re-

Ss

cord Raises the Questions Presented by

Hillsboro Regarding State Courts’ Non-

compliance with First English or Adjudica-

tion of Hillsboro’s Taking Claim Directly in

the United States Supreme Court...............

Even If Properly Raised, Hillsboro’s Ar-

gument That California State Courts Are

In Noncompliance With The Mandates Of

First English Is Without Merit ...................

Even If Properly Raised, Hillsboro’s Ar-

gument That This Court’s Decision In

San Remo Renders This Dispute Eligible

For Direct Review By The United States

Supreme Court Is Without Merit.............

THE DECISION OF THE CALIFORNIA

COURT OF APPEAL WAS CORRECT ...........

10

TABLE OF CONTENTS -— Continued

Page

Ill. THE ISSUES PRESENTED BY HILLSBORO

DO NOT WARRANT REVIEW UNDER RULE

10 OF THE SUPREME COURT RULEG......... 14

SEY APAPIPULIOY scovisesessvensevmaivnastuboretwenieanieebeituaieinedtes 16

iii

TABLE OF AUTHORITIES

Page

CASES

Agins v. City of Tiburon, 24 Cal.3d 266 (1979)............... 4,5

Allen v. McCurry, 449 U.S. 90 (1980) ...........csscccccceeceeresees 10

Block v. Hirsh, 256 U.S. 136 (1921).......cosescoerssvesecssseceveoeces 8

Bowles v. Willingham, 321 U.S. 503 (1944)... eseseeseees 8

Carey v. Piphus, 435 U.S. 247 (1978) .........ssssccccccssseseseeess 13

Carson Harbor Village, Ltd. v. City of Carson, 353

Fe I ON sictiikiietin specu ticcesiisenlcitsiicaiendimisapsipietaosbaresons 7

Diesel v. Town of Lewisboro, 232 F.3d 92 (2d Cir.

ING) inistticcinniintcdédacsspaeteiennnedsndguitininasacedandaaamsimanedse 14

Duquesne Light Co. v. Barasch, 488 U.S. 299 (1989)....12, 14

Federal Communications Commission v. Florida

Power Corp., 480 U.S. 245 (1987) ........c:ccccsersveeees 8, 9,14

First English Evangelical Lutheran Church of

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

CFU Pints venctincsadendiacenbipsdinnsinesipaashiniobauneotoaeuiinaren passim

Galland v. City of Clovis, 24 Cal.4th 1003 (2001)........ 7,13

Hernandez v. New York, 500 U.S. 352 (1991) ...............2ec0e 4

Jersey Cent. Power & Light Co. v. FE.R.C., 810 F.2d

pH Tit Ean SRE 3 Sp OPE a MNS RAUL I 12,14

Kavanau v. Santa Monica Rent Control Board, 16

CS FEE CE ia sitbcrsinsiinsth Siestipaininionibbunciatavn passim

Kremer v. Chemical Constr. Corp., 456 U.S. 461

GRIND cidccsosheinsissha sc Ollasiadeiieaiiviesbaiasicantiadbadunialinaainnateabaidbdeiuns 11

Loretto v. Teleprompter Manhattan CATV Corp.,

Be Sa Ce ian ai cnn cincanncta 8

Los Angeles v. Heller, 475 U.S. 796 (1986)..............ccceeeeeee 13

iV

TABLE OF AUTHORITIES — Continued

Page

Penn Central Transportation Co. v. New York City,

Fe Re Se i wht estecatentestnanthncsus sh acdiciennsa hiskcvonmnosivtias 8

Pennell v. City of San Jose, 485 U.S, 1 (1988)........... 8,9, 14

Reyes v. City of Lynchberg, 300 F.3d 449 (4th Cir.

PEA citascstccielaccheliniliste, oesddassiutiaidmniuntgescnitsioalauupiyeernisees 14

Richardson v. City of South Euclid, 904 F.2d 1050

(6th Cir. 1990), cert. denied, 498 U.S. 1032 (1991)....... 14

San Remo Hotel v. City and County of San

Francisco, 545 U.S. 323 (2005) ..............s000008 5, 10, 11, 16

St. Joseph. Stock Yards Co. v. United States, 298

Betas ee insasbiicchi utestncesnenecbcoodvigantedectnicancuansdcbnasbosieus 12

Tahoe Sierra Preservation Council v. Tahoe Reg. Pl.

Sa, TO Gs PAN Ce oirnesticntctsiniavicntiguisacichtepubipicencnions 7

Travis v. County of Santa Cruz, 33 Cal.4th 757

I sich ciodeineivinsnsckschaiabibinianiginhsisscpdsticheasibusyabdeeisavivetasoies 3

Utah Animal Rights Coalition v. Salt Lake City

Corp., 371 F.3d 1248 (10th Cir. 2004) 0.0... escecceseeeeees 14

Williamson County Regional Planning Commission

v. Hamilton Bank of Johnson City, 473 U.S. 172

“at BORA SRrel ORME Sis ie aaa ARR en Stan aie oe ee Mee) ORR OD 10

Yee v. City of Escondido, 503 U.S. 519 (1992)............cceceeeee 8

STATUTES

- Lik 8 08t Bo Meee caries am Nethiaialiliadawiumtuieniaes 10

DST TR SR S| RARER tar ceh oe melt eke a Ar eR DNR ee 13, 14

RULES

CF ee CE, FI Be vi aicccteh ccc cceihisicnciciintdicntsindssnenee 4

v

TABLE OF AUTHORITIES — Continued

Page

U.S. Supreme Court Rule 10 .................cscsssssssesseesernnes 15,17

US. rapramne: Cotart Fate EA iicsccccscsccsssevscseoroneconcstasvoncnasiocs 6

OTHER AUTHORITIES

Robert L. Stern et al., Supreme Court Practice 459-

A hE I sak avadicsccstdssiesccccnisiscasacnsdsrenvtbivenbacinass 6

1

STATEMENT OF THE CASE

Hillsboro Properties and Paul Goldstone Enterprises,

Inc. dba Rancho Grande Mobilehome Park (“Hillsboro”)

argue that U.S. Supreme Court review of this mobile home

rent control dispute is warranted because Hillsboro has

been unable to obtain damages for a regulatory taking in

state court. In a twisted effort to substantiate U.S. Su-

preme Court review in this case, Hillsboro makes two

arguments for the first time in this Court: 1) that Califor-

nia state courts are in “willful non-compliance with the

mandate of First English,” and 2) that the United States

Supreme Court should rule on Hillsboro’s taking claim

directly, as a matter of federal law.

There are two glaring errors in this request for Su-

preme Court review. First, Hillsboro failed to raise any of

these arguments to any of the courts below. Second,

Hillsboro’s arguments substantively have no merit. The

Court of Appeal’s opinion not only followed well-settled

principle, but also complied with all mandates of First

English Evangelical Lutheran Church of Glendale v.

County of Los Angeles, 482 U.S. 304 (1987). Moreover, U.S.

Supreme Court precedent is clear that Hillsboro has no

constitutional right to have its regulatory taking claim

reviewed in the first instance by this Court.

This dispute involves the City of Rohnert Park’s

(“City’s”) mobile home rent control ordinance (“Ordi-

nance”), which was adopted in 1987 and limited the

amount by which a landlord of a mobile home park could

raise rents. (Petition, Appendix (“Pet. App.”) F at p. F-2.)

Although the Ordinance did control rental adjustments in

mobile home parks, it provided for an annual automatic

adjustment tracking the Consumer Price Index. (Pet. App..

2

A at p. A-7.) It also included a procedure to apply for “net

» «ating income” increase. (Pet. App. A at p. A-7.) The

\.ulnance explicitly stated that the “net operating income

procedure” existed “in order to provide a just and reason-

able return.” (Pet. App. A. at p. A-7.)

In 1993, park owners challenged the Ordinance on the

grounds that it did not permit park owners to earn a

reasonable rate of return on the cost of capital improve-

ments. (Pet. App. E at p. E-2.) The federal court found the

Ordinance to be unconstitutional because it violated

substantive due process by preventing mobile home park

owners from collecting any profit on new capital improve-

ments. (Pet. App. E at p. E-2.) On January 24, 1995, prior

to the formal entry of judgment, the City adopted Ordi-

nance No. 599, which amended the Ordinance, to add a

“capital improvement pass-through” provision.’ (Pet. App.

E at p. E-2.)

In 2000, Hillsboro filed a second action in federal

court seeking a declaration that the City was wrongfully

enforcing the Ordinance, as amended. (Pet. App. A at p. A-

6.) In December 2002, the federal court ruled that the

1995 amendments had corrected the constitutional defect

in the Ordinance and entered judgment in the City’s favor.

(Pet. App. A at p. A-6.)

In August 2003, Hillsboro unsuccessfully attempted to

apply to the rent board for a “Kavanau adjustment” rather

" At the conclusion of the 19965 litigation, the tenants and the City

voluntarily stipulated to a limited duration rent increase to cover the

cost of capital improvements made by Hillsboro. (Pet. App. A at p. A-16,

Pet. App. D at p. D-6.) Hillsboro does not claim that it has made any

capital improvements since that time that would have warranted a

capital improvement pass-through. (Pet. App. A at p. A-16.)

3

than following the procedures set forth in the Rules and

Regulations of the Rent Appeals Board. (Pet. App. A at p.

A-6.) The City Attorney did not accept the application and

directed Hillsboro to the procedures outlined in the appli-

cable Rules and Regulations. (Pet. App. A at pp. A-6, A-8.)

In September 2004, Hillsboro filed suit in the Superior

Court for, among other things, inverse condemnation, a

declaration that the ordinance had effected an unconstitu-

tional taking, and a writ of mandate ordering the rent

board to consider the application. (Pet. App. A at p. A-8.) In

this action, Hillsboro sought to recover, either from its

tenants or from the City, rents in excess of the rent control

ceiling for the period during which the Ordinance, subse-

quently held to be unconstitutional, was in force: January

16, 1988 — January 24, 1995.’ (Pet. App. A at p. A-6.)

Rather than alleging that Hillsboro had made any capital

improvements for which it was entitled to compensation,

Hillsboro’s complaint challenged the Ordinance’s rent

ceiling in general. (Pet. App. A at p. A-16.)

The trial court sustained the City’s demurrer to the

complaint without leave to amend, dismissing the first

four causes of action as time-barred and ruling that the

remaining six causes of action failed to state a cause of

action. (Pet. App. A at p. A-8.) On April 6, 2006, the Court

of Appeal affirmed the trial court’s judgment stating “[tlo

* Any challenge to the City’s actions are also time barred. Hills-

boro’s claim accrued at the latest in 1995. More than eighteen years

have elapsed since the Ordinance was adopted and more than eleven

years since its amendment by Ordinance No. 599. The longest statute of

limitations for any type of inverse condemnation claim is five years.

Travis v. County of Santa Cruz, 33 Cal.4th 757, 775 (2004). Hillsboro’s

challenge to the Ordinance is too late by any measure.

4

the extent that Hillsboro is challenging the City’s refusal

to authorize a “Kavanau adjustment,” its claim fails

because it does not allege the facts necessary to establish

its right to such an adjustment, namely that enforcement

of the ordinance has deprived it of a fair and reasonable

rate of return on its investment.” (Pet. App. A at pp. A-16,

A-17.) Hillsboro elected not to request rehearing from the

appellate court but instead petitioned the California

Supreme Court for review.’ On July 12, 2006, the Califor-

nia Supreme Court denied review.

On October 9, 2006, Hillsboro filed its Petition for

Writ of Certiorari with this Court.

ry

v

REASONS FOR DENYING REVIEW

I THE QUESTIONS PRESENTED BY HILLSBORO

REGARDING CALIFORNIA STATE COURTS’

NONCOMPLIANCE WITH FIRST ENGLISH

DOCTRINE AND HILLSBORO’S ENTITLEMENT

TO DIRECT U.S. SUPREME COURT ADJUDI-

CATION OF ITS TAKING CLAIM DO NOT WAR-

RANT REVIEW BY THIS COURT.

For the first time in this Petition, Hillsboro argues

that 1) California courts are in willful noncompliance with

First English mandates because they have effectively re-

implemented Agins v. City of Tiburon, 24 Cal.3d 266

* Because Hillsboro failed to request rehearing, the statement of

the facts and issues posed by the Court of Appeal should be accepted as

true for purposes of Hillsboro’s Petition. Hernandez v. New York, 500

U.S. 352, 366 (1991); Cal. Rule of Court, Rule 28(c)(2).

5

(1979) by deciding and following Kavanau v. Santa

Monica Rent Control Board, 16 Cal.4th 761 (1997), and 2)

as Hillsboro is barred from litigating its claim in federal

district court by this Court’s recent decision in San Remo

—RHpotel v. City and County of San Francisco, 545 U.S. 323

(2005), its claim is ripe for adjudication directly by the

U.S. Supreme Court. (Petition, p. i, 11, 13) This case

presents a poor vehicle for resolving these issues both

because the issues were not raised below and also because

these issues raise no viable federal question.

A. Neither the Decision Below Nor the Record

Raises the Questions Presented by Hills-

boro Regarding State Courts’ Noncompli-

ance with First English or Adjudication of

Hillsboro’s Taking Claim Directly in the

United States Supreme Court.

United States Supreme Court Rule 14 provides that a

petition for review of a state court judgment must specify

the following:

The stage in the proceedings, both in the

court of first instance and in the appellate courts

when the federal questions sought to be reviewed

were raised; the method or manner of raising

them and the way in which they were passed on

by those courts; and pertinent quotations of spe-

cific portions of the record or summary thereof,

* Under Agins a takings plaintiff in California was not entitled to

just compensation for the period during whicl¥ tiie regulation in

question was enforced. Agins v. City of Tiburon, 589 P.2d at 31.

6

with specific reference to the places in the record

where the matter appears.

(S. Ct. R. 14(g)(i).)

This Court has imposed those requirements “so as to

show that the federal question was timely and properly

raised and that this Court has jurisdiction to review the

judgment on a writ of certiorari.” Id.

Hillsboro does not, nor can it, provide this Court with

any of the information required by Rule 14 because Hills-

boro raises these two new questions for the first time in its

petition to this Court. Hillsboro never raised any of these

arguments at the trial or appellate court levels or in its

petition for certiorari to the California Supreme Court.

Had Hillsboro done so, those courts would have had an

opportunity to analyze Hillsboro’s arguments in light of its

takings claim.

When a petition raises questions which were not

decided by the court below because they were not raised in

that forum, any such defect is ordinarily fatal to the

petition. Robert L. Stern et al., Supreme Court Practice

459-460 (8th ed. 2002). Hillsboro’s petition for review by

this Court should be denied, because the courts that

considered the case below were never given the opportu-

nity to review or analyze these arguments.

B. Even If Properly Raised, Hillsboro’s Argu-

ment That California State Courts Are In

Noncompliance With The Mandates Of First

English Is Without Merit.

Hillsboro argues that California state courts, includ-

ing the Court of Appeal in this case, by following Kavanau

v. Santa Monica Rent Control Board, have “carved out a

special category of regulatory takings for which the Cali-

fornia courts offer no remedy at all.” (Pet. p. 12-13.) Ac-

cording to Hillsboro, this runs afoul of the mandates of

First English. This misstates the law.

Kavanau merely states that a landlord’s “ .. . continu-

ing right to an adjustment of future rents can provide an

adequate remedy [emphasis added].” Kavanau v. Santa

Monica Rent Control Board, 16 Cal.4th at p. 783. Kavanau

did not decide what alternative remedy might be appro-

priate if a landlord shows that the remedy of future rent

adjustments is for some reason unavailable or inadequate.

Id. at p. 785. A landlord retains the ability to file an

inverse condemnation claim in the event that a Kavanau

adjustment is inadequate. Carson Harbor Village, Lid. v.

City of Carson, 353 F.3d 825, 828 (2004); Galland v. City of

Clovis, 24 Cal.4th 1003, 1025 (2001).

Hillsboro continues this line of argument, stating that

“ ... California provides no remedy of any kind for regula-

tory takings of the sort Hillsboro has suffered.” (Petition,

p. 14.) Yet Hillsboro has not demonstrated that it suffered

a “taking.” Hillsboro appears to argue that inverse con-

demnation should be available in the absence of any

“constitutional injury.” This is simply not the law. Both

state and federal courts require the demonstration of a

“constitutional injury” in order to obtain “just compensa-

tion” for that injury. Tahoe Sierra Preservation Council v.

Tahoe Reg. Pl. Ag., 535 U.S. 302, 328 (2002) (holding that

under this Court’s First English decision a state must

provide a remedy only where taking has been established.)

In short, in line with federal case law, California courts do

provide an inverse condemnation remedy — but only in the

8

event that a landlord demonstrates that he or she has

suffered a constitutional injury.

This Court has consistently affirmed that states have

broad power to regulate the landlord-tenant relationship

without paying just compensation for all economic injuries

resulting from the regulation. Yee v. City of Escondido, 503

U.S. 519, 528-529 (1992); Loretto v. Teleprompter Manhat-

tan CATV Corp., 458 U.S. 419, 440 (1982); Bowles v.

Willingham, 321 U.S. 503, 517-518 (1944) (rent control);

Block v. Hirsh, 256 U.S. 135, 157 (1921). The government

may place ceilings on the rents a landowner can charge.

Yee v. City of Escondido, 503 U.S. at 529. This type of non-

possessory regulation is generally not recognized as a

taking unless it “goes too far,” and unjustly requires the

landlord to pay for a public benefit which ought to be

compensated by the government. Yee v. City of Escondido,

503 U.S. at 531; Penn Central Transportation Co. v. New

York City, 438 U.S. 104, 124 (1978).

This Court has determined that a rent control ordi-

nance goes too far when it deprives the landlord of a fair

and reasonable return on investment. Federal Communi-

cations Commission v. Florida Power Corp., 480 U.S. 245,

253 (1987) (maximum rate may stringently limit the

return on investment so long as rates are not confiscatory)

(“Florida Power”); Pennell v. City of San Jose, 485 U.S. 1, 9

(1988) (discussing, but not deciding, whether a rent control

ordinance reduced rates below an objectively reasonable

amount); Pennell v. City of San Jose, 485 U.S. at 20-21

(Scalia, J., concurring).° In Florida Power, this Court held

* Concurring in Pennell, Justice Scalia argued that under the

Takings Clause a rent control ordinance which permits “reasonable

rents” does not constitute a taking. Pennell v. City of San Jose, 485 U.S.

(Continued on following page)

9

that there is no Fifth Amendment taking of property

where the rate was reasonable and not confiscatory.’

Federal Communications Commission v. Florida Power

Corp., 480 U.S. at 253.

As the foregoing demonstrates, California courts,

including the Court of Appeal in this case, are in compli-

ance with both the state and federal Constitutions, as well

as the mandates of First English. Despite Hillsboro’s

strong desire to the contrary, state and federal precedent

make clear that in the context of rent regulation, a taking

cannot exist absent the denial of a fair return. Hillsboro

cannot establish this necessary prerequisite to stating a

takings claim. As a consequence, the Court of Appeal in

this case correctly followed both state and federal prece-

dent in holding that Hillsboro could make no claim for a

regulatory taking.

at 20-21 (Scalia, J., concurring). He reasoned that where the landlord

receives a reasonable return the landlord does not disproportionately

bear a public burden because the landlord is in part responsible for the

housing conditions which necessitated rent regulation. Jd. at 20.

However, where the rent is reasonable the landlord is no longer

responsible for the housing conditions. Jd. at 21. Thus, any reduction

below a reasonable return constitutes a taking for which compensation

must be paid. Jd. at 23-24.

* In Florida Power, the FCC was empowered to regulate the rates

under which cable company tenants leased space on utility poles under

certain circumstances. Federal Communications Commission v. Florida

Power Corp., 480 U.S. at 248. This Court found the rate was reasonable

because the regulation provided that rates should permit the utility to

recover its fully allocated costs. Jd. at 254. On this basis, the court

rejected the argument that the regulation amounted to a non-

possessory taking without just compensation. Jd.

10

C. Even If Properly Raised, Hillsboro’s Argu-

ment That This Court’s Decision In San

Remo Renders This Dispute Eligible For

Direct Review By The United States Su-

preme Court Is Without Merit.

Hillsboro reads the Williamson County Regional

Planning Commission v. Hamilton Bank of Johnson City,

_ 473 U.S. 172 (1985) and San Remo decisions together to

conclude that its petition is entitled to review by this

Court. Hillsboro argues that its case is ripe for federal

review under Williamson County and then points out that,

under San Remo, it is precluded from relitigating in

federal court issues that were previously litigated in state

court. (Pet. p. 14.) Hillsboro somehow extrapolates from

these decisions that it is entitled to review by this Court.

(Pet. p. 15.) Neither Williamson County nor San Remo

support this view.

It is well settled that there is no constitutional right to

vindicate federal takings claims in federal court. San

Remo, 545 U.S. at 331; Allen v. McCurry, 449 U.S. 90, 103-

104 (1980). This Court’s decision in San Remo did not

create a special entitlement to Supreme Court review for

regulatory takings plaintiffs like Hillsboro. San Remo

simply held that, under 28 U.S.C. § 1738, a takings plain-

tiff is not entitled to relitigate issues in federal court

which were already decided in state court. San Remo, 545

U.S. at 338, 348. The Court reasoned that “it is entirely

unclear why [petitioner’s] preference for a federal forum

should matter for constitutional or statutory purposes.” Jd.

at 334. The Court went on to state that there was little

precedent jor federal litigation of claims that a state has

taken property in violation of the Fifth Amendment and

11

that state courts are fully competent, if not more experi-

enced, in hearing such claims. Jd. at 346.

Hillsboro now attempts to push the argument rejected

by this Court in San Remo one step further. Hillsboro

argues that this Court should rule on its federal taking

claims directly because “access to the lower federal courts

is barred by San Remo.” (Pet. p. 8.) San Remo does not

support that proposition. Contrary to Hillsboro’s asser-

tions, this Court clearly stated that a plaintiff claiming a

regulatory taking has no special right to have federal

takings claims decided in any federal court. San Remo,

545 U.S. at 342. “This is so even when the plaintiff would

have preferred not to litigate in state court, but was

required to do so by statute or prudential rules.” /d.; see

also Kremer v. Chemical Constr. Corp., 456 U.S. 461, 477

(1982). Notably, in San Remo the Court affirmed dismissal

of the petitioner’s federal takings claims without reaching

the merits. Id. at 347-348. The simple fact that Hillsboro’s

claim will ultimately be decided by a state court does not

entitle Hillsboro to review by this Court. As contemplated

in San Remo, California courts have competently adjudi-

cated Hillsboro’s federal claims in accordance with this

Court’s takings jurisprudence. See id. at 346-47. Hillsboro

’ Hillsboro supports its argument by claiming that in San Remo

this Court suggested that the petitioner should have sought compensa-

tion by way of a writ of certiorari to this Court. (Pet. at p. 15 citing San

Remo, 545 U.S. at 334.) This is patently false. In laying out the

procedural history of the case, the Court in San Remo simply notes that

the petitioners returned to federal district court upon rejection of their

claims by the California Supreme Court rather than seeking a writ of

certiorari. Jd. The Court’s analysis attaches absolutely no significance

to this procedural fact.

12

has had its day in court and its Petition for Writ of Certio-

rari does not warrant further review.

Il. THE DECISION OF THE CALIFORNIA COURT

OF APPEAL WAS CORRECT.

Hillsboro’s challenge to the Court of Appeal decision

is simple: Hillsboro disagrees with the well-established

principle that rate regulation is judged to be a taking only

when its effect has been actually confiscatory.” Kavanau,

16 Cal.4th at 771; Jersey Cent. Power & Light Co. v.

F-E.R.C. 810 F.2d 1168, 1181, fn.3 (D.C. Cir. 1987). Hills-

boro is incorrect. There is no “taking” absent denial of a

fair return. Both the Court of Appeal in this case and

federal precedent make clear that in the context of price

regulation, no constitutional injury reaching the level of a

“taking” is established unless the property owner demon-

strates the denial of a “fair return” on its investment. (Pet.

App. A at p. A-14) Duquesne Light Co. v. Barasch, 488 U.S.

299, 308, 310 (1989) (holding that the U.S. Constitution

protects against price limits that are so unjust as to be —

confiscatory); St. Joseph Stock Yards Co. v. United States,

298 U.S. 38, 53 (1936) (holding that so long as the rates

set are not confiscatory, the Fifth Amendment does not bar

their imposition).

* Hillsboro states that the Court of Appeal “did not dispute that

Hillsboro had suffered significant economic injury because of the City’s

violation of Hillsboro’s civil rights.” (Pet. p. 7.) This is a patently false

misstatement of the decision below. The Court of Appeal never consid-

ered the question of whether Hillsboro had suffered economic injury

because Hillsboro never stated that it had suffered economic injury. In

fact, the Court of Appeal ruled that the decision might have been

different had Hillsboro done so. (Pet. App. A p. A-18.)

13

As the Court of Appeal succinctly explained:

Hillsboro’s argument proceeds on the unar-

ticulated premise that a property owner has the

constitutionally protected mght to charge as

much as he or she wants for the use of property,

so that enforcement of an invalid rent ceiling de-

prives it of a constitutionally protected right.

That is not what the federal or state Constitu-

tions, or Kavanau, Galland or any other case,

protect.

(Pet. App. A, p. A-13.)

Denial of a fair return is the sine qua non for relief

under the state and federal Constitutions. As the Court of

Appeal correctly pointed out, Hillsboro has not demon-

strated the requisite denial of a “fair return.” (Pet. App. A

p. A-15.) Rather than demonstrating that it has been

denied a fair return, Hillsboro argues it suffered a taking

because it was not able to impose noticed rent increases

that exceeded the increases permitted under the Ordi-

nance. (Pet. p. 6.) Hillsboro’s position is based on a faulty

premise. Hillsboro has not suffered a constitutional injury

simply because it was affected by the application of an

ordinance which was found to be defective. Regardless of

the validity of the Ordinance, Hillsboro is not entitled to

compensation unless it can establish the Ordinance

deprived it of a constitutionally protected right.’ In the

* See for example, Los Angeles v. Heller, 475 U.S. 796, 799 (1986)

{even if regulation authorized use of constitutionally excessive force, no

cause of action under 42 U.S.C. § 1983, absent constitutional injury

arising from actual use of such force]; Carey v. Piphus, 435 U.S. 247,

253-254 (1978) [recovery of substantial damages under 42 U.S.C. § 1983

requires proof not only of violation of constitutional right but that

plaintiff’s injury was caused by deprivation of constitutional right];

(Continued on following page)

14

context of rent control, a taking arises only where the

landlord is denied a fair and reasonable return. Florida

Power, 480 U.S. at 253; Duquesne Light Co. v. Barasch,

488 U.S. 299, 308, 310 (1989); Jersey Cent. Power & Light

Co. v. FE.R.C. 810 F.2d at 1181, fn.3. A property owner has

no constitutional right to charge excessive rents. Pennell,

485 U.S. at 20-21 (Scalia, J., concurring). Absent a demon-

stration that it has been denied a fair return, Hillsboro

does not have a constitutional right to impose unregulated

rent increases.

Hillsboro’s takings claim is fatally flawed because it

omits this crucial element of a takings claim —- a demon-

stration that the Ordinance has deprived Hillsboro of a

“fair return.” Accordingly, the Court of Appeal’s decision

was correct as it comports with long established state and

federal precedent including First English.

Ill. THE ISSUES PRESENTED BY HILLSBORO DO

NOT WARRANT REVIEW UNDER RULE 10 OF

THE SUPREME COURT RULES.

Hillsboro’s Petition does not warrant Supreme Court

review. Review on a writ for certiorari is granted only for

Utah Animal Rights Coalition v. Salt Lake City Corp., 371 F.3d 1248,

1260-1261 (10th Cir. 2004) [demonstrators not entitled to damages for

delay in issuing permit even though ordinance governing issuance of

permits was later declared to be unconstitutional]; Diesel v. Town of

Lewisboro, 232 F.3d 92, 103-104 (2d Cir. 2000) [no “cognizable constitu-

tional injury” from denial of preferential police treatment, even if

selective enforcement of law was based on constitutionally impermissi-

ble consideration]; Reyes v. City of Lynchberg, 300 F.3d 449, 455-457

(4th Cir. 2002) [no per se cause of action under 42 U.S.C. § 1983 for

prosecution under ordinance later held to be unconstitutional];

Richardson v. City of South Euclid, 904 F.2d 1050, 1053-1055 (6th Cir.

1990), cert. denied, 498 U.S. 1032 (1991) {same].)

15

compelling reasons. S. Ct. R. 10. Supreme Court Rule 10

sets out the considerations guiding the Court’s decision on

whether to grant certiorari. When reviewing state court

decisions, the Court considers whether:

(b) a state court of last resort has decided

an important federal question in a way that con-

flicts with the decision of another state court of

last resort or a United States court of appeals;

(c) a state court or United States court of

appeals has decided an important question of

federal law that has not been, but should be, set-

tled by this Court, or has decided an important

federal question in a way that conflicts with rele-

vant decisions of this Court.

S. Ct. R. 10.

Rule 10 considers whether the subject decision is

made by the state court of last resort. Thus, the rule

suggests that decisions by state intermediate appellate

courts are less important. There are good reasons for this

view. First, a decision by a state intermediate appellate

court is less likely to be considered outside of its jurisdic-

tion. Second, the decision of the intermediate appellate

court can be corrected later by the state court of last

resort. Here, the California Court of Appeal rendered the

decision subject to this petition. It is not the court of last

resort. California’s court of last resort, the California

Supreme Court, denied review of this case.

Even assuming the decision was rendered by a Cali-

fornia court of last resort, none of Rule 10’s considerations

are met by Hillsboro’s petition. Hillsboro has not asserted

that the state court decision conflicts with the decision of

another state court of last resort or United States Court of

16

Appeals. Although Hillsboro alleges that the Court of

Appeal decision violates First English’s mandate that just

compensation be available if a taking is shown, this

characterization of the Court of Appeals’ decision is incor-

rect. Hillsboro neglects to mention that it utterly failed to

demonstrate a “taking” had occurred to either the trial

court or the Court of Appeal. This Petition is, quite simply,

an effort to obtain United States Supreme Court review of

a decision which follows clear federal law on regulatory

takings. Hillsboro’s tortured attempt to characterize this

decision as an improper denial of any and all remedies for

an alleged taking finds no support in the facts or caselaw.

Hillsboro cannot establish that it was in fact denied a fair

return by the City’s application of its Ordinance. As a

result, Hillsboro has failed to justify this Court’s review.

»

vw

CONCLUSION

This is a simple case of faulty pleading and of a record

that fails to sustain any claim for a regulatory taking.

Neither the decision below nor the record raises the

Questions Presented regarding California state courts’

willful noncompliance with federal precedent or entitle-

ment to direct review of Hillsboro’s regulatory taking

claim by the U.S. Supreme Court. Even if Hillsboro’s

petition were not denied on these procedural grounds, it

should be denied on substantive grounds. Both the trial

court and Court of Appeal in this case applied well-settled

law to undisputed facts and found that Hillsboro could

state no claim due to its failure to allege any sort of denial

of a fair rate of return on its investment. Moreover, there

is no legal support for Hillsboro’s contention that under

San Remo its case should be deemed ripe for U.S. Supreme

17

Court review. Finally, as Hillsboro is unable to cite any

grounds for review pursuant to Rule 10, this Court should

deny Hillsboro’s Petition.

DATED: November 10, 2006

Respectfully submitted,

MCDONOUGH HOLLAND & ALLEN PC

Attorneys at Law

MICHELLE MARCHETTA KENYON

Attorney for Respondents,

City of Rohnert Park and

City of Rohnert Park Rent Appeals Board