Reply Brief — H. N. v. City of Escondido

Supreme Court brief1999

Ask Donna

What actually matters in this document.

Text

No. 98-1346

A = IRB

In the

Supreme Court of the United States

October Term, 1998

ah.

H. N. AND FRANCES C. BERGER FOUNDATION,

Petitioner,

CITY OF ESCONDIDO, JERRY HARMON, individually

and as a member of the City of Escondido Mobilehome Rent

Review Board; SID HOLLINS, individually and as a member

of the City of Escondido Mobilehome Rent Review Board;

RICHARD A. FOSTER, individually and as a member of the

City of Escondido Mobilehome Rent Review Board; LORI

HOLT PFEILER, individually and as a member of the City of

Escondido Mobilehome Rent Review Board; ELMER

CAMERON, individually and as a member of the City of

Escondido Mobilehome Rent Review Board,

Respondents.

On Petition for Writ of Certiorari to the

California Court of Appeal, Fourth Appellate District

PETITIONER’S REPLY BRIEF

R. S. RADFORD

Counsel of Record

Pacific Legal Foundation

10360 Old Placerville Road,

Suite 100

Sacramento, California 95827

Telephone: (916) 362-2833

Facsimile: (916) 362-2932

Counsel for Petitioner

TABLE OF AUTHORITIES

Ii.

CONCLUSION

TABLE OF CONTENTS

THE RECENT DISCOVERY THAT THE

CITY WAS WITHOUT AUTHORITY TO

IMPOSE VACANCY CONTROL UNDER

THE RENT ORDINANCE DOES NOT

ALTER THE FACT THAT THE CITY D/D

UNLAWFULLY ENFORCE VACANCY

CONTROL THROUGHOUT THE PERIOD

RELEVANT TO THIS LITIGATION ........

A REGULATORY SCHEME THAT IS

UNCONSTITUTIONAL ON ITS FACE

CANNOT BE CONSTITUTIONAL AS

APPLIED TO ANY PARTICULAR

PRUE Venennae ae cage eeteedee ks

THE CONFLICTS IDENTIFIED IN THE

PETITION REQUIRE THIS COURT’S

ATTENTION TO RESTORE UNIFORMITY

OF TREATMENT OF REGULATORY

TAKING CLAIMS UNDER THE FIFTH

PUTT IONETTE ik 6 URS NSA SoG hha ws

A. The Decision Below Stands in Direct

Conflict with the Ninth Circuit’s

Richardson Decision .................

B. The Conflict Between the State Courts of

New York and California Must Be

OO EER Ae Pa a oe eng To ae ae iors

eon a eee eS eS SAR! Coe eS eS 8 xe

Fee eee. ee eee. BOS BA Be Oo BS 2 ee ee

Oe:

TABLE OF AUTHORITIES

Page

Cases

Dolan v. City of Tigard, 512 U.S. 374 (1994) ........... 7

Manocherian v. Lenox Hill Hospital,

GOS FB Fe Sie Lae a ko cei de ened oe 7

Nollan v. California Coastal Commission,

4S35 UES BCS i hs 6 ka edd cea ei aw cneeieaees 6-7

Richardson v. City and County of Honolulu,

EA FSG Fi a re as ea cc wae sas en 5-7

Seawall Associates v. City of New York,

SAE PUREE Fe Ce wk oo ra hee bok Saleen 7

Thomsen v. City of Escondido,

4D Cal. Ag. SR GOS TSO) di cain cken tian eeenass 2

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

United States Constitution, Rules of the Court

arte PONCE 6 os ok Cav oer Cen eee a eee ae beak ed l

POMPIRIGI FOUCIOUR 6 6.s 6 te pean eneeask eave ae l

SRRHeInS Cor RMN FOG 35 ese bes hese beemeee wees I

Miscellaneous

Werner Z. Hirsch and Joel G. Hirsch, Legal-

Economic Analysis of Rent Controls in a

Mobile Home Context: Placement Values and

Vacancy Decontrol, 35 UCLA L. Rev. 399

FESO <4 sv eae nice pap UAR Oe eee oars 2

Pursuant to Supreme Court Rule 15.6, Petitioner H. N. and

Frances C. Berger Foundation (Berger Foundation) hereby

replies to the Respondents’ Brief in Opposition (Opp.) filed by

Respondents City of Escondido, et al. (City), on March 24,

1999.

The petition for certiorari asks this Court to take up a

question raised but left unanswered in Yee v. City of Escondido,

503 U.S. 519 (1992), whether the application of Escondido’s

mobile home park rent control law, which transfers marketable

interests in the Berger Foundation’s mobile home park to certain

residents of that park without just compensation, comprises a

regulatory taking in violation of the Fifth and Fourteenth

Amendments to the United States Constitution. The opposition

brief does not address the merits of this question, but instead

raises a number of procedural and prudential side issues. As

will be demonstrated below, none of these side issues has merit.

THE RECENT DISCOVERY THAT THE

CIFY WAS WITHOUT AUTHORITY TO

IMPOSE VACANCY CONTROL UNDER

THE RENT ORDINANCE DOES NOT

ALTER THE FACT THAT THE CITY DID

UNLAWFULLY ENFORCE VACANCY

CONTROL THROUGHOUT THE PERIOD

RELEVANT TO THIS LITIGATION

Although the City concedes that this case involves a

challenge to the same ordinance that was at issue in Yee, and that

the Berger Foundation raises “virtually identical allegations” as

the Yee plaintiffs, Opp. at 13, the City nevertheless argues that

this case does not present an appropriate vehicle to address the

regulatory taking question left open in Yee.

The City bases this peculiar argument on a 1996 California

Court of Appeal opinion construing the Rent Ordinance to

exclude vacancy control. Opp. at 14. Vacancy control--the

maintaining of rent restrictions even after a leasehold ends--is

thought to be an important factor in generating and transferring

to park residents the “placement value,” or premium, that is the

basis of the taking claim. See Werner Z. Hirsch and Joel G.

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

Home Context: Placement Values and Vacancy Decontrol,

35 UCLA L. Rev. 399, 426-32 (1988). Just how important it

may be in any given case, of course, is a factual question that

must be determined at trial. Nevertheless, the City asserts that

the Berger Foundation’s taking claim is fatally undermined

because the Foundation may have been able to set new rents on

vacancy “since at least March 1996”--26 months after the events

that gave rise to this litigation! Opp. at 15.

Throughout the time period relevant to this case, the City

vigorously enforced the Rent Ordinance as if it did in fact

provide for vacancy control. Indeed, the City’s zeal extended so

far as to initiate criminal prosecution of park owners who

attempted to increase space rents when a mobile home in their

park changed ownership.’ Under these circumstances, of course,

all parties consistently acted as if the Rent Ordinance included

vacancy control.

Whether the subsequent revelation that the City had no

legal basis for its punitive enforcement actions would affect the

Berger Foundation’s damages for the 1991-95 period is, again,

‘In June, 1995, 16 months after the complaint in this case was filed,

the City notified a park manager that under the Rent Ordinance,

if you offer a new resident a month to month tenancy .. . for a

space in your park, that resident would be entitled to the same

space rent as the present tenant. . .. Should you raise your rents

to new tenants for tenancy of 12 months or less you will be in

violation of the City's Rent Control Ordinance and subject to

criminal action.

Thomsen v. City of Escondido, 49 Cal. App. 4th 884, 888-89 (1996)

(emphasis added).

a factual question for the trial court to consider on remand.”

However, it has no relevance whatsoever to the question that

was before the court below and is now before this Court, of

whether--assuming the facts alleged in its 1994 complaint are

true--the Berger Foundation has adequately set forth a claim for

a regulatory taking.

A REGULATORY SCHEME THAT IS

UNCONSTITUTIONAL ON ITS FACE

CANNOT BE CONSTITUTIONAL AS

APPLIED TO ANY PARTICULAR PROPERTY

The principal argument of the opposition brief is that the

Berger Foundation has set forth allegations which, if proven at

trial, would establish that the Rent Ordinance violates the

Takings Clause on its face, yet the complaint alleges a

constitutional vioJation as applied to the Berger Foundation’s

property. Opp. at 16-20. In essence, the City’s argument is that

a law such as the Rent Ordinance, which is alleged to advance

no purpose except to effect a one-time wealth transfer to a small

political elite, can only be challenged on its face. Once the

Statute of limitations for facial challenges runs, no property

owner can ever again contest the application of the Rent

Ordinance to any specific property based on its failure to

substantially advance legitimate state interests.

> The City cites to the fallacious claim of the court below that the

prospective repeal (or judicial invalidation) of the Rent Ordinance

would somehow eliminate al] the damages the Berger Foundation

suffered from ten years of the City’s heavy-handed enforcement of its

unconstitutional regulations. Opp. at 16. As is typical of the decision

below, however, this is simply the court’s speculation concerning an

empirical question that should rightfully be determined at trial.

The City cites to a small number of state and federal courts

that have accepted this argument (Opp. at 18-19). However,

these decisions miss the thrust of the Berger Foundation’s

complaint. The City has stipulated that the value of the Berger

Foundation’s mobile home park has been reduced by the exist-

ence of the Rent Ordinance, and the City has applied the

ordinance to prevent the Foundation from implementing rent

increases to which it was otherwise entitled. Appendix to the

Petition for Certiorari (Pet. App.) A-4-5. The City claims the

Rent Ordinance gives it the authority to thus interfere with the

peaceful use and enjoyment of the Berger Foundation’s property.

Yet if the Rent Ordinance is unconstitutional on its face--that is,

if it utterly fails to substantially advance a legitimate state

interest and is unconstitutional no matter how it is applied, it

cannot lawfully be applied to impose financial burdens on the

Berger Foundation’s property. From this perspective, it is

completely irrelevant that those who illicitly profited from the

adoption of the Rent Ordinance did so at the time the measure

was passed. The City is still using this measure--which serves

only to maintain the value of a one-time wealth transfer that took

place a decade ago--to impose ongoing burdens on property

owners like the Berger Foundation.

Stripped of sophistry, the City’s argument is that once it

has gotten away with applying an unconstitutional enactment for

five years, its victims thereafter lose their rights to challenge the

application of the measure to their land. This is not the law. If,

as the Berger Foundation alleges, the sole function of the Rent

Ordinance was to enable initial residents of the Town and

Country to capture a one-time wealth transfer from the Berger

Foundation, the City cannot constitutionally apply this law to

restrict the Berger Foundation’s use of its property without

complying with the constitutional mandate of just compensation.

iil

THE CONFLICTS IDENTIFIED IN THE

PETITION REQUIRE THIS COURT’S

ATTENTION TO RESTORE UNIFORMITY OF

TREATMENT OF REGULATORY TAKING

CLAIMS UNDER THE FIFTH AMENDMENT

A. The Decision Below Stands in Direct Conflict

with the Ninth Circuit’s Richardson Decision

The City misapprehends the extent and significance of the

conflict of the decision below with the Ninth Circuit Court of

Appeals’ opinion in Richardson v. City and County of Honolulu,

124 F.3d 1150 (9th Cir. 1997). The City attempts to distinguish

Richardson on three grounds. First, the opposition brief argues

that Richardson involved allegations of a “facial” taking rather

than a taking as applied to a particular property. Opp. at 20, 23.

Second, the City urges that owners of mobile home coaches are

entitled to greater governmental protections than owners of

condominium apartments. Opp. at 21-22, 23-24. Finally, the

City suggests that its Rent Ordinance may substantially advance

some legitimate state interest, even if--like the Richardson rent

ordinance--it fails to preserve or increase the supply of

affordable housing. Opp. at 22-23. None of these distinctions

cuts in the City’s favor.

As has been set forth above, no logic supports the City’s

position that an ordinance which is facially unconstitutional

could somehow become constitutional as applied to a particular

property. if laws like those at issue in Richardson and in the

present case fail to substantially advance a legitimate interest “no

matter how [they] are applied,”’ they must certainly fail the

same test in the context of a specific as-applied challenge.

Whether residents of mobile home parks should receive

greater governmenial benefits than residents of condominium

apartments is, of course, a question for the legislature, not the

* Yee, 503 U.S. at 534.

courts. However, the allegedly inferior “bargaining power” of

mobile home residents (Opp. at 23-24) does not trump the plain

text of the Takings Clause. Nor is there any significance to the

City’s recitation of California cases that have upheld mobile

home rent control against taking challenges. Opp. at 22. What

the City neglects to point out is that, over the period in question,

no California court found a compensable regulatory taking

under any circumstances whatsoever. The plaintiffs in the cases

cited by the City did not lose because they were challenging

mobile home rent control. They lost simply because they were

property owners, who have uniformly been denied just compen-

sation in every reported Fifth Amendment regulatory taking case

filed in the California courts for at least the past 20 years. No

special consideration attached to the fact that the challenged

regulations involved mobile home parks.

Finally, the City is not technically correct in claiming that

the purposes of the Rent Ordinance are “much broader” than

those of the Richardson rent law. Opp. at 23. For in fact, the

Rent Ordinance sets forth no statement of purpose or necessity

whatsoever. Pet. App. E-1. However, this does not give

reviewing courts a blank check to imagine that some legitimate

interest might possibly be advanced, as was done in the decision

the City cites. Opp. at 23. This is precisely the kind of deferen-

tial review this Court foreclosed in Nollan v. California Coastal

Commission, 483 U.S. 825 (1987).*

By the City’s reasoning, the Richardson ordinance would

have been upheld if only its drafters had been devious enough

* “We have required that the regulation ‘substantially advance’ the

‘legitimate state interest’ sought to be achieved, Agins v. Tiburon,

447 U.S. 255, 260, 100 S.Ct. 2138, 2141, 65 L.Ed.2d 106 (1980), not

that ‘the State “could rationally have decided” that the measure

adopted might achieve the State's objective.”” Nollan, 483 U.S.

at 834 n.3.

not to state the law’s objectives. Although this ploy has met

with success in the California courts, it would not be enough to

salvage the constitutionality of the Rent Ordinance in the Ninth

Circuit under Richardson.

B. The Conflict Between the State Courts of

New York and California Must Be Resolved

In addition to conflicting with the Ninth Circuit’s

Richardson opinion, the decision below exemplifies a deep-

seated conflict between the state courts of California and

New York on the application of federal constitutional law. The

City minimizes the conflict with Seawall Associates v. City of

New York, 542 N.E.2d 1059 (1989), and Manocherian v. Lenox

Hill Hospital, 643 N.E.2d 479 (1994), by dwelling on trivial

factual distinctions. Opp. at 27-29. It is certainly true, as the

City notes, that “neither Seawall nor Manocherian involved

mobilehome ordinances.” Opp. at 29. But there is no exception

to the Takings Clause for mobile home parks. In both Seawall

and Manocherian the New York Court of Appeals found that

rental property regulations violated the Takings Clause by failing

to substantially advance legitimate state interests, under the close

scrutiny required by this Court in Nollan and Dolan v. City of

Tigard, 512 U.S. 374 (1994). As the City itself points out, this

is precisely the analysis the court below and the California

Supreme Court have held to be inapplicable to rent control

ordinances. Opp. at 26; Pet. App. A-13-15. This is a funda-

mental legal conflict in the application of federal constitutional

law by the courts of the most populous states in this nation,

which can only be resolved by this Court.