Rancho de Calistoga v. City of Calistoga et al, No. 3:2011cv05015 - Document 33 (N.D. Cal. 2012)

Court Description: ORDER GRANTING: 26 Motion to Dismiss First Amended Petition for Writ of Mandamus. Signed by Judge Jeffrey S. White on November 15, 2012. (jswlc3, COURT STAFF) (Filed on 11/15/2012)

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Rancho de Calistoga v. City of Calistoga et al Doc. 33 1 2 3 4 5 NOT FOR PUBLICATION 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 RANCHO DE CALISTOGA, Petitioner, 11 For the Northern District of California United States District Court 10 12 No. C 11-05015 JSW ORDER GRANTING MOTION TO DISMISS FIRST AMENDED PETITION FOR WRIT OF MANDAMUS v. CITY OF CALISTOGA, et al., 13 Respondents. / 14 15 INTRODUCTION 16 This matter comes before the Court upon consideration of the motion to dismiss filed by 17 Respondents, City of Calistoga (the “City”) and W. Scott Snowden (“Mr. Snowden”) 18 (collectively, “Respondents”). The Court has considered the parties’ papers, relevant legal 19 authority, and the record in this case, and it finds the matter suitable for disposition without oral 20 argument. See N.D. Civ. L.R. 7-1(b). The Court VACATES the hearing scheduled for 21 November 16, 2012, and it HEREBY GRANTS the motion to dismiss. 22 23 24 BACKGROUND A. Procedural History. On October 11, 2011, Petitioner, Rancho de Calistoga (the “Parkowner”), filed a 25 Petition for Writ of Administrative Mandamus (the “Original Petition”), in which it asserted 26 that Respondents had violated the takings, due process and equal protection clauses of the 27 United States Constitution and the California Constitution. Specifically, the Parkowner brought 28 facial and as applied challenges to the City’s ordinance regarding Mobile Home Park Rent Dockets.Justia.com 1 Stabilization (the “Ordinance”). 2 On the same day, the Parkowner filed Petition for a Writ of Administrative Mandamus 3 pursuant to California Code of Civil Procedure Sections 1094.5, et. seq., in the Superior Court 4 of the State of California for the County of Napa (the “state court proceedings”). (See Docket 5 No. 23, Joint Status Report.) Although the parties have not updated the record, there is no 6 suggestion that those proceedings have concluded. On June 27, 2012, the Court granted Respondents’ motion to dismiss the Original 7 8 Petition. (Docket No. 24, Order Granting Motion to Dismiss.) The Court concluded that the 9 Parkowner’s facial challenges were time barred and that its regulatory takings claim was not ripe. (Id. at 4:19-5:4, 7:7-8:3.) The Court concluded that the Parkowner failed to state a private 11 For the Northern District of California United States District Court 10 takings claim, and it granted the Parkowner leave to amend that claim, and the regulatory 12 takings claim, if it was ripe. The Court also granted the Parkowner leave to amend its 13 substantive due process and equal protection claims, so long as it could show those claims 14 would not be subsumed within the takings claim. (Id. at 5:11-7:6, 8:4-9:19.) On July 25, 2012, the Parkowner filed the First Amended Petition (“FAP”). 15 16 17 B. Factual Background. The Parkowner owns and operates Rancho de Calistoga Mobilehome Park (the “Park”), 18 a 184 space mobile home park in the City of Calistoga (the “City”), which it has owned since 19 approximately 1977. (FAP ¶¶ 5, 11-14.) At that time, the City did not have a rent control 20 ordinance, and the Parkowner alleges that it had a “legitimate investment backed expectation ... 21 that it would be entitled to set the rent at the market rate and that it would not be precluded from 22 charging a non excessive or non monopolistic rent at” the Park. (Id. ¶ 17.) 23 In 1984, the City adopted the Ordinance, which was amended in 1993 and again in 24 October 2007. (Id. ¶¶ 21, 23-25; see also Respondents’ Request for Judicial Notice, Ex. A 25 (Ordinance).) The Ordinance provides, inter alia, that “[i]t is necessary to protect mobile home 26 homeowners and residents of mobile homes from unreasonable rent increases and at the same 27 time recognize the rights of mobile home park owners to maintain their property and to receive 28 2 1 just and reasonable return on their investments.” (Ordinance, § 2.22.010.B.41; see also id. § 2 2.22.010.D.1-6.) The Ordinance authorizes a yearly increase in rent that equals the lesser of (1) 3 100% of the percent change in Consumer Price Index; or (2) 6% of the base rent. (Id. § 4 2.22.070.A) If a park owner wants to increase the rent above that amount, the Ordinance 5 provides for an administrative process to consider such requests. (Id. § 2.22.080.) 6 According to the Parkowner, the market rental value for spaces at the Park in October 7 2009 was $625 per month and actual average rent at the Park was approximately $471. (FAP 8 ¶ 26; see also id. ¶¶ 33-46.) The Parkowner decided to notice a rent increase to $625 per 9 month. The City appointed Mr. Snowden as a hearing officer and held evidentiary hearings on the proposed rent increase. (Id. ¶¶ 27, 67-70.) On July 14, 2011, Mr. Snowden issued his 11 For the Northern District of California United States District Court 10 decision and concluded that an increase of $60 per space was reasonable. As a result of that 12 ruling, the Parkowner was permitted to raise the rent only to $537.59. (Id. ¶ 71.) The 13 Parkowner alleges that because it was not permitted to increase the rent to $625, it has suffered 14 a “loss of income of at least $248,201.28 per year and a loss in the market value of the 15 Parkowner’s property of at least $3,971,220.48. (Id. ¶ 72.) 16 Based on these and other allegations, the Parkowner alleges that Respondents’ actions 17 violate the takings, due process and equal protection clauses of the United States Constitution 18 and the California Constitution. (See generally id. ¶¶ 78-92.)2 The Parkowner states that it is 19 no longer pursuing facial challenges to the Ordinance and does not intend to pursue the 20 regulatory takings claim. Rather, the Parkowner intends “to attempt to plead a valid private 21 takings claim and then request that this matter by stayed until such time as its state court 22 remedies have been exhausted.” (See FAP ¶ 95.) 23 // 24 // 25 26 27 1 The Ordinance has been codified as Section 2.22 of the Calistoga Municipal Code. Like the Original Petition, the First Amended Petition is structured to include one cause of action for “Administrative Mandate,” which is premised the legal theories set forth above. 2 28 3 1 2 ANALYSIS A. 3 Applicable Legal Standard. A motion to dismiss is proper under Rule 12(b)(6) where the pleadings fail to state a 4 claim upon which relief can be granted. The Court construes the allegations in the complaint in 5 the light most favorable to the non-moving party and all material allegations in the complaint 6 are taken to be true. Sanders v. Kennedy, 794 F.2d 478, 481 (9th Cir. 1986). However, even 7 under the liberal pleading standard of Rule 8(a)(2), “a plaintiff’s obligation to provide the 8 ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a 9 formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). Pursuant to Twombly, a plaintiff must not merely allege conduct that is conceivable but 11 For the Northern District of California United States District Court 10 12 must instead allege “enough facts to state a claim to relief that is plausible on its face.” Id. at 13 570. “A claim has facial plausibility when the plaintiff pleads factual content that allows the 14 court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” 15 Ashcroft v. Iqbal, 556 U.S.662, 678 (2009) (citing Twombly, 550 U.S. at 556). “The plausibility 16 standard is not akin to a probability requirement, but it asks for more than a sheer possibility 17 that a defendant has acted unlawfully.... When a complaint pleads facts that are merely 18 consistent with a defendant’s liability, it stops short of the line between possibility and 19 plausibility of entitlement to relief.” Id. (quoting Twombly, 550 U.S. at 557) (internal quotation 20 marks omitted). If the allegations are insufficient to state a claim, a court should grant leave to 21 amend, unless amendment would be futile. See, e.g., Reddy v. Litton Indus., Inc., 912 F.2d 291, 22 296 (9th Cir. 1990); Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv., Inc., 911 F.2d 242, 23 246-47 (9th Cir. 1990). 24 B. 25 The Court Dismisses the Takings Claim. The “takings clause” provides that private property shall not be “taken for public use, 26 without just compensation.” U.S. Const., amend. 5. The Parkowner alleges that Respondents 27 have applied the Ordinance in a manner that results in purely private taking because: (1) the 28 requested rent was neither excessive nor monoplistic; (2) it is not possible for a mobile home 4 1 parkowner to exploit a tenant unless the rent is above market; and (3) each tenant is entitled to a 2 below market rent without regard to need. (Opp. Br. at 13:4-8; FAP ¶¶ 32-76.) 3 In brief, the Parkowner argues that because it has shown that the proposed rent increase 4 is neither excessive nor monopolistic, Respondents’ reliance on the purposes of the Ordinance 5 to deny the requested increase in full can only be a pretext designed to transfer the Parkowner’s 6 property – the difference between the market rent and the increase that has been allowed - to the 7 Parkowner’s tenants. Respondents argue that these alleged facts are insufficient to state a claim 8 for a private taking. The Court agrees. 9 In order to satisfy the “public use” clause, a taking need only be “rationally related to a conceivable public purpose.” Hawaii Housing Auth. v. Midkiff, 467 U.S. 229, 241 (1984) 11 For the Northern District of California United States District Court 10 (“Midkiff”); see also Kelo v. City of New London, 545 U.S. 469, 488 (2005). However, the City 12 may not take the Parkowner’s property “for the purpose of conferring a private benefit on a 13 particular private party,” nor can it “take property under the mere pretext of a public purpose, 14 when its actual purpose [is] to bestow a private benefit.” Kelo, 545 U.S. at 477-78; see also 15 Midkiff, 467 U.S. at 245 (“A purely private taking could not withstand the scrutiny of the public 16 use requirement; it would serve no legitimate purpose of government and would thus be void.”). 17 The Ordinance states that its purpose is to, inter alia, “[p]revent exploitation of the 18 shortage of vacant mobile home park spaces, ... [r]ectify the disparity of bargaining power that 19 exists between mobile home park homeowners and mobile home park owners,” and prevent 20 excessive and unreasonable rent increases while providing a process by which parkowners can 21 obtain a reasonable rate of return on their investment. (Ordinance, §§ 2.22.010.D.1-6, 22 2.22.010.B.1-5.) The Parkowner includes new and more detailed allegations regarding the 23 evidence that purports to demonstrate that the rent it seeks to charge is below market and that it 24 does not have monopoly power. However, those facts merely elaborate on factual allegations 25 that the Court previously found to be insufficient to state a private takings claim, and the Court 26 finds that those facts do not alter the analysis. 27 The Court’s previous ruling on the private takings claim was premised on the fact that 28 the Parkowner had not alleged facts that would be sufficient to show pretext. The Parkowner 5 1 allegations in the FAP that the City has refused to adopt an ordinance that would require the 2 City to establish a subsidy program, whereby the City would provide each and every tenant at 3 mobilehome parks located in the City with a monthly subsidy equal to the difference between 4 the market rate and the rent control rate, regardless of need. (FAP ¶ 59.) The Parkowner argues 5 that the City’s reaction to its proposal demonstrates that Mr. Snowden’s ruling and the 6 application of the Ordinance to the Parkowner’s request for a rent increase is merely a pretext to 7 justify a purely private taking. For the reasons set forth in the Court’s Order granting the 8 motion to dismiss the Original Petition, the Court concludes that those facts do not render this 9 case analogous to Armendariz v. Penman, 75 F.3d 1311 (9th Cir. 1996), or 99 Cents Only Stores v. Lancaster Redevelopment Agency, 237 F. Supp. 2d 1123 (C.D. Cal. 2001). For similar 11 For the Northern District of California United States District Court 10 reasons, the Court also finds the Parkowner’s reliance on Cottonwood Christian Center v. 12 Cypress Redevelopment Agency, 218 F. Supp. 2d 1203 (C.D. Cal. 2002) to be misplaced. The Court concludes that the Parkowner has not stated a private takings claim. 13 14 Accordingly, the Court dismisses that claim with prejudice. This ruling should not be construed 15 to preclude the Parkowner from attempting to bring a regulatory takings claim if, and when, 16 such a claim becomes ripe. 17 C. The Court Dismisses the Equal Protection and Substantive Due Process Claims. 18 Respondents argue that the Parkowner failed to address the equal protection and 19 substantive due process claims in its opposition brief and, thus, has conceded that those claims 20 should be dismissed. Upon review of the allegations in the FAP, and for the reasons set forth in 21 its Order granting the motion to dismiss the Original Petition, the Court concludes that these 22 claims would be subsumed by the purported takings claim. See Crown Point Development, Inc. 23 v. City of Sun Valley, 506 F.3d 851, 855 (9th Cir. 2007) (“[T]he Fifth Amendment would 24 preclude a due process challenge only if the alleged conduct is actually covered by the Takings 25 Clause. [Lingle v. Chevron, U.S.A., Inc., 544 U.S. 528 (2005)] indicates that a claim of 26 arbitrary action is not such a challenge.”); Colony Cove Properties, LLC v. City of Carson, 640 27 F.3d 948, 960-62 (9th Cir. 2011); Equity Lifestyle Properties, Inc. v. County of San Luis 28 Obispo, 548 F.3d, 1184, 1193-95 (9th Cir. 2008). 6 1 Accordingly, the Court GRANTS the motion to dismiss those claims. Because the 2 Court has previously granted the Parkowner leave to amend, and because the Parkowner does 3 not request leave to amend those claims, the Court dismisses the equal protection and 4 substantive due process claims with prejudice. 5 6 7 8 9 CONCLUSION For the reasons set forth above, the Court GRANTS Respondents’ motion to dismiss. The Court shall issue a separate judgment, and the Clerk shall close this file. IT IS SO ORDERED. Dated: November 15, 2012 JEFFREY S. WHITE UNITED STATES DISTRICT JUDGE 11 For the Northern District of California United States District Court 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7

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