Mobilehome park owners in the City of Montclair can proceed with a federal lawsuit alleging that the city's rent control law is a regulatory taking, the U.S. Ninth Circuit Court of Appeals has ruled.
A federal district court had dismissed the lawsuit filed by mobilehome park owners because a similar suit was making its way through the state court system (see CP&DR Legal Digest January, 2000). However, the litigation ended early this year when the state Supreme Court refused to review an appellate court decision upholding the city's rent control law because it advanced a "legitimate government interest." Because the circumstances have changed, the district should now hear the federal case, the Ninth Circuit ruled.
In June 1998, Montclair adopted an ordinance amending a previous mobilehome rent control measure. The new ordinance limited rent increases to 3% to 8% annually and prohibited park owners from requiring tenants to sign long-term leases that were exempt from the city's rent controls. The city did allow park owners to request higher rents based on operating costs.
In August 1998, park owners sued in both state and federal courts. They claimed that the ordinance was unconstitutional because it violated due process protections and was an uncompensated taking. U.S. District Court Judge Manuel Real dismissed the federal lawsuit because, under Younger v. Harris, 401 U.S. 37 (1971), federal courts do not take up cases that would interfere with state court proceedings.
Park owners appealed, arguing that state courts "do not permit plaintiffs to instigate inverse condemnation proceedings to redress uncompensated takings and thus do not grant the appropriate remedy guaranteed by federal law." In other words, the lawsuits were not the same.
While not getting into details, the Ninth Circuit said Judge Real was correct. "The district court's timely dismissal of the Association's federal lawsuit precluded any federal interference — real or perceived — with the California courts' consideration of the Association's state law claims," Judge Diarmuid O'Scannlain wrote for the unanimous three-judge panel.
However, O'Scannlain continued, "[b]ecause materially changed circumstances have rendered moot the district court's reasons for abstaining and dismissing the Association's federal lawsuit, we are disposed to vacate the district court's order."
The Case:
Montclair Parkowners Association v. City of Montclair, No. 99-55083, 00 C.D.O.S. 3616, 2000 Daily Journal D.A.R. 4863, filed May 8, 2000.
The Lawyers:
For Montclair Parkowners: R.S. Radford, Pacific Legal Foundation, (916) 362-2833.
For the city: Henry Heater, Endeman, Lincoln, Turek & Heater, (619) 544-0123.
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