Unpublished Disposition, 933 F.2d 1014 (9th Cir. 1989)

MEMORANDUM^** 

Richard Kuebler ("Kuebler"), dba Moonglow MobileHome Park, appeals the district court's dismissal of his substantive due process claim for lack of subject matter jurisdiction. This court has jurisdiction pursuant to 28 U.S.C. § 1291. We affirm.

In June, 1988, voters in Escondido, California, passed Proposition K which established mobilehome rent control ("the Ordinance"). The proposition is codified as Article 5 of the Escondido Code. See Escondido, Cal., Code Secs. 29-101-29-108. The Ordinance prohibits, except as provided in the Ordinance, the payment of rent for mobile home space greater than the rent paid for such space in January, 1986. Id. Sec. 29-103. If a landlord desires an increase in rent, he may file an application with the mobilehome park rental review board ("the Board"). Id. Sec. 29-104(a). The Board is required to "approve such rent increase as it determines to be just, fair and reasonable." Id. Sec. 29-104(g).¹  The Board may require, if necessary to consideration of the application, that the landlord produce "any records, receipts, reports, or other documents." Id. at Sec. 29-104(b). A request for such documents must be made by the Board within thirty days from the date of the application. Id. Sec. 29-104(d). Once the application is complete, the Board must hold a hearing within sixty days. Id. Sec. 29-104(e).

On June 5, 1989, Kuebler applied to the Board for a rent increase. Fifteen days later the Board requested additional information including Kuebler's tax returns. Kuebler responded on August 10, 1989. The Board requested clarifications twelve days later. Kuebler responded on December 14, 1989. The Board then requested additional tax returns in January, 1990. There is no indication in the record of any further interaction between the Board and Kuebler.² 

In May, 1989, prior to applying to the Board for a rent increase, Kuebler filed a lawsuit in California state court alleging the Ordinance constituted a taking of his property without just compensation in violation of the fifth amendment of the United States Constitution, and violated the California Constitution because no emergency existed to justify the taking. These claims were rejected by the California courts. See Yee v. City of Escondido, 224 Cal. App. 3d 1349, 274 Cal. Rptr. 551 (1990).³ 

On October 25, 1989, after his application for a rent increase was filed but prior to a decision by the Board, Kuebler filed suit in the United States District Court for the Southern District of California. Kuebler alleged that the Ordinance, as applied by the Board, violates his procedural and substantive due process rights under the fourteenth amendment. The substantive due process claim is based entirely on allegations that the Ordinance is "irrational."

On December 5, 1989, the City of Escondido ("the City") filed a motion to dismiss the suit. The motion alleged that the procedural due process claim was not yet ripe, and that the substantive due process claim should be dismissed on abstention grounds or for failure to state a claim. The motion also claimed that the suit is barred by the statute of limitations. In the motion to dismiss, the City stated: "It is apparent that Plaintiff's [substantive due process] Claim is based upon the rationale of a Ninth Circuit panel decision in Hall v. City of Santa Barbara, 833 F.2d 1270 (9th Cir. 1986)." In its opposition to the motion to dismiss, however, Kuebler stated that his claim is "not based on the Hall rationale." Kuebler also stated that his substantive due process claim is based upon the allegation that "the Ordinance is not rationally related to any legitimate governmental interest and is therefore an invalid exercise of the police power."

The district court found that both the procedural and substantive due process claims were not yet ripe because Kuebler failed to exhaust his administrative remedies under the Ordinance and the court therefore lacked subject matter jurisdiction over the case. The district court's decision was based on its finding that "Kuebler's claim is a straightforward substantive due process claim as he argues that 'the ordinance is irrational and an invalid exercise of the police power.' " The district court relied on Kuebler's statement that he is not relying on Hall. Kuebler has appealed the court's dismissal of his substantive due process claim.

A. Kuebler's substantive due process claim requires him to "prove that the government's action was 'clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare.' " Sinaloa Lake Owners Ass'n v. City of Simi Valley, 882 F.2d 1398, 1407 (9th Cir. 1989) (quoting Village of Euclid v. Ambler Realty Co., 272 U.S. 365, 395 (1926)), cert. denied, 110 S. Ct. 1317 (1990). The government action in question must be a final decision by the relevant governing entities. A substantive due process claim is therefore not ripe for judicial consideration until the plaintiff has exhausted his available administrative remedies. Id.; Kinzli v. City of Santa Cruz, 818 F.2d 1449, 1456 (9th Cir. 1987), cert. denied, 484 U.S. 1043 (1988).

Here, Kuebler complains that the Ordinance is irrational because the Board's enforcement of limited rent increases permits the tenants to demand higher prices on the sale of the mobilehomes thereby defeating the purpose of the Ordinance, viz., preserving low and moderate income housing opportunities. The record indicates, however, that this action was filed prior to the completion of his rent increase application. Because the Board has not decided Kuebler's rent increase application, Kuebler can allege no enforcement, irrational or otherwise, of the limited rent increases of which he complains. There has been no "final decision regarding the application of the [Ordinance] to the property at issue" by "the government entity charged with implementing the [Ordinance]." Williamson Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 186 (1985). Before his substantive due process claim is ripe he must first obtain a decision regarding his application from the Board.

B. The requirement that available administrative remedies be exhausted before a substantive due process action is ripe does not apply to claims that allege a government authorized physical occupation of the property. Sinaloa, 882 F.2d at 1402, 1407; Hall v. City of Santa Barbara, 833 F.2d 1270, 1281 n. 28 (9th Cir. 1986) ("Where there has been a physical invasion, the taking occurs at once, and nothing the city can do or say after that point will change that fact."), cert. denied, 485 U.S. 940 (1988). A physical occupation occurs when the "government physically intrudes upon private property either directly or by authorizing others to do so." Hall, 833 F.2d at 1275.

Kuebler argues on appeal that the Ordinance constitutes "a physical occupation of property." This argument is based primarily on Hall. In Hall, this court found that a mobilehome rent control ordinance which required mobilehome park owners to offer their tenants leases of unlimited duration amounted to a government authorized physical occupation of the property. Id. at 1276, 1279-80. This argument was not raised by Kuebler below. Indeed, when the City suggested that Kuebler's claim was based on Hall, Kuebler expressly rejected this. There is no allegation in the complaint or elsewhere in the record that the ordinance amounted to a physical occupation of his property. Although Kuebler relies on Hall on appeal, he does not argue that the district court's statement, "Kuebler agrees that the substantive due process claim is not based on the Hall rationale," was erroneous.

Kuebler attempts to excuse his failure to raise this theory below by arguing that the district court "was made well-aware by the briefings of both parties that [the physical occupation theory] had been raised in a Complaint filed in State court." This argument is specious. Regardless of whether this theory was alleged in a state court takings claim, it was clearly not before the district court in the present substantive due process claim. Because this theory was not raised below the district court did not have the opportunity to consider it and we decline to address it on appeal. In re Wind Power Systems, Inc., 841 F.2d 288, 290 n. 1 (9th Cir. 1988).

AFFIRMED.