November 26, 2009 -- A $34 Million case dismissed in its entirety
We are pleased to announce the recent dismissal of a $34 Million federal constitutional challenge to the City of Carson’s mobilehome park rent control ordinance in Colony Cove Properties, LLC v. City of Carson, et al., Central District of California Case No. CV08-07065 PA.
Partners William Wynder and Sunny K. Soltani, with the assistance of associate Jeff Malawy, filed a Motion to Dismiss which was granted by U.S. District Judge Percy Anderson on November 25, 2009, dismissing the case and the park owner’s $34 million claim in its entirety.
Carson’s victory provides confidence to cities and counties to continue to apply their mobilehome park rent control ordinances notwithstanding the Ninth Circuit’s recent decision in Guggenheim v. City of Goleta, which due to the unique facts and circumstances in that case, held Goleta’s mobilehome rent ordinance to be a regulatory taking. Carson’s success is a significant victory for all cities and counties that rely on rent control to preserve affordable housing in their communities, and for whom rent control is the only way to prevent excessive and unfair increases in rent for the captive residents who own coaches in mobilehome parks.
It is not a secret that the owner of Colony Cove and his lawyers had a singular interest in this litigation – the destruction of rent control laws in California. After filing the complaint, the park owner’s lawyers boldly opined in their "News for Mobilehome Park Owners" industry newsletter, that this case "could mean the end of mobile home rent control in California," while urging other park owners to "[c]ontact [their] team of MHP experts." We are pleased to announce that this case did not end up being the "end of mobilehome park rent control in California." Thanks to our lawyers, it did not even end up being the end of rent control in Carson.
Colony Cove’s owner, the owner of Carson’s two largest mobilehome parks, challenged the City's rent control ordinance on numerous federal constitutional grounds, including claims that the ordinance was a regulatory taking, a physical taking, and a private taking, all under the Fifth Amendment; and claims that the ordinance violated equal protection and substantive due process under the Fourteenth Amendment. In the same lawsuit, the park owner additionally challenged a recent decision of Carson’s Mobilehome Park Rental Review Board to award a $36.74 rent increase when the park owner claimed an increase of at least $200 was necessary for a constitutionally-required “fair return.”
Carson’s attorneys successfully argued that all of the challenges to the City’s ordinance were barred by a one-year statute of limitations, which began to run when the ordinance was adopted in 1979. The park owner failed to demonstrate that a 2006 amendment to the City’s non-binding Guidelines for Implementing the Ordinance altered the effect of the ordinance on the plaintiff such that a new statute of limitations should have begun to run. This affirms that facial constitutional challenges to nearly all of the local mobilehome rent control ordinances in this state, adopted in the late 1970s or early 1980s, are barred by the statute of limitations unless there has been a significant amendment to the ordinance.
The taking challenge to the Rental Review Board’s decision was dismissed as unripe, because the park owner had failed to seek compensation in state court through the so-called Kavanau procedure before going to federal court. The court rejected the park owner’s argument that ripeness should not be considered because it is merely a “prudential” consideration in federal court. Finally, the substantive due process challenge to the Board’s decision failed on the merits, as the park owner could not meet the exacting standard necessary to state such a claim.