FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

COLONY COVE PROPERTIES, LLC, a 

Delaware limited liability

company,

Plaintiff-Appellant, No. 09-57039

v. D.C. No.  2:08-cv-07065-PA- CITY OF CARSON, a municipal

JWJ corporation; CITY OF CARSON

MOBILEHOME PARK RENTAL REVIEW OPINION

BOARD, a public administrative

body,

Defendants-Appellees. 

Appeal from the United States District Court

for the Central District of California

Percy Anderson, District Judge, Presiding

Argued and Submitted

February 14, 2011—Pasadena, California

Filed March 28, 2011

Before: Arthur L. Alarcón, Pamela Ann Rymer, and

Jay S. Bybee, Circuit Judges.

Opinion by Judge Alarcón

4159
COUNSEL

Matthew W. Close, O’Melveny & Myers LLP, Los Angeles,

California for the plaintiff-appellant.

William W. Wynder, Aleshire & Wynder, LLP, Irvine, California for the defendants-appellees.

OPINION

ALARCÓN, Circuit Judge:

Colony Cove Properties, LLC (“Colony Cove”) appeals

from the district court’s dismissal of its federal claims filed

pursuant to 42 U.S.C. § 1983, and its state law claim seeking

a writ of administrative mandate pursuant to Cal. Civ. Pro.

Code § 1094.5. Colony Cove contends that the City of Carson’s 1979 mobilehome rent control ordinance, and its implementing guidelines as they stood after the adoption of a 2006

amendment, deprive mobilehome park owners of the value of

COLONY COVE PROPERTIES v. CITY OF CARSON 4163
their property and transfer it to park residents, who are able

to sell their mobilehomes at a premium because they are

located on rent-controlled spaces. Colony Cove asserts facial

and as applied challenges to the ordinance and amended

guidelines as violative of the Fifth Amendment’s Takings

Clause and the Fourteenth Amendment’s Due Process Clause.

The district court dismissed Colony Cove’s facial takings

claim as time-barred, its as applied takings claim as unripe,

and its as applied due process claim for failure to state a

claim; the district court declined to exercise supplemental

jurisdiction over Colony Cove’s related state law claim. After

reviewing the briefs and the record, we are persuaded that the

district court did not err in dismissing this action.

I

A

In 1979, the City of Carson (“the City”), adopted a rent

control ordinance applicable to mobilehome parks: the

Mobilehome Space Rent Control Ordinance (the “1979 Ordinance”), Carson, Cal. Mun. Code art. IV, ch. 7 (1979). The

City also adopted “Guidelines for Implementation of the

Mobilehome Space Rent Control Ordinance” (the “Guidelines”). In 1998, the Guidelines were revised in order to make

them consistent with the recent amendments to the Ordinance.

Under the 1979 Ordinance, the City’s Mobilehome Park

Rental Review Board (“Board”) hears and determines rent

adjustment applications. The Board is authorized to “grant

such rent increases as it determines to be fair, just and reasonable.” Carson, Cal. Mun. Code § 4704(g). “A rent increase is

fair, just and reasonable if it protects Homeowners from

excessive rent increases and allows a fair return on investment

to the Park Owner.” Id. The 1979 Ordinance states that, in

making its determinations, the Board:

shall consider the following [11 enumerated] factors

and any Guidelines adopted by the City Council, as

4164 COLONY COVE PROPERTIES v. CITY OF CARSON
well as any other relevant factors, in making its

determination and no one (1) factor shall be determinative.

Id. The 11 factors the Board must consider, pursuant to the

1979 Ordinance, include changes in the Consumer Price

Index (“CPI”), the rent for comparable mobilehome spaces in

the City of Carson, “[t]he completion of any capital improvements related to the mobilehome space or spaces in the rent

increase application[,]” changes in reasonable operating and

maintenance expenses, and the “amount and quality of services provided by the applicant to the affected tenant.” Id.

§ 4704(g)(1)-(11).

Pursuant to a portion of the Guidelines that has not changed

since 1998, in light of the assumption that rents set prior to

the adoption of the Ordinance provided a fair return when the

first park owner made the first application for a rent increase,

“each rent increase application after the first application is

evaluated only on the basis of changes in income, expenses,

profit, the CPI, maintenance, amenities and services that have

occurred since the date of the last increase approved by the

Board.” Since 1998, the Guidelines have also provided that

“[d]ebt service incurred prior to the adoption of the Ordinance

to purchase or operate the park is generally an allowable operating expense.” In contrast, Subsection II.A.2 of the Guidelines provides in part:

f. Debt service incurred after adoption of the Ordinance to purchase a park may be an allowable operating expense if the purchase price paid was

reasonable in light of the rents allowed under the

Ordinance and involved prudent and customary

financing practices. . . . When it is determined that

some increase in debt service was reasonably necessary to acquire the park, but that the amount incurred

was not reasonable in light of the Ordinance and customary and prudent financing practices, then only

COLONY COVE PROPERTIES v. CITY OF CARSON 4165
the appropriate portion of the debt service incurred

may be allowed as an operating expense. The reason

for these general rules is that passing on increased

debt service due to purchases at prices above those

that can be justified by the income earned by the

park under rent control or incurred by unusual

financing methods, such as 100% financing, would

defeat the purpose of rent control.

Regarding the Board’s evaluation of an application to

increase a park’s rental rates, the Guidelines provide that, in

addition to the 11 factors enumerated in the 1979 Ordinance,

the Board “may consider” a Gross Profit Maintenance

(“GPM”) analysis, which “is intended to provide an estimate

of whether a park is earning the profit estimated to provide a

fair return, as established by the immediately prior rent

increase, with some adjustment to reflect any increase in the

CPI.” The Guidelines also state that the GPM analysis “is an

aid to assist the Board in applying the factors in the Ordinance” and “is not intended to create any entitlement to any

particular rent increase.” 

On or about April 4, 2006, Colony Cove purchased the

mobilehome park now known as Colony Cove Mobile Estates

(“the Park”) in the City of Carson for $23,050,060. Colony

Cove obtained financing for approximately $18 million of the

purchase price, which resulted in debt service payments

exceeding $1.3 million per year.

On October 31, 2006, the City of Carson’s city council

amended the Guidelines for the implementation of the 1979

Ordinance “so as to better assure that residents of mobilehome parks are protected from excessive rent increases that

could reduce the supply of affordable housing in the community.” The stated purpose of the 2006 amendment of the

Guidelines (the “2006 Amendment”) was to “provide additional analytical tools to evaluate pending applications for rent

increase, and that such analytical tools will also help to assure

4166 COLONY COVE PROPERTIES v. CITY OF CARSON
that the mobilehome park owners within the City receive a

constitutional fair return on their investments.” The relevant

portion of the 2006 Amendment provides that the Guidelines

were “amended to add a new Section II.C., to read, in its

entirety, as follows”:

C. Maintenance of Net Operating Income (MNOI)

Analysis. In addition to the analysis set forth in SubSection II.B., above, the Board may also consider, a

“maintenance of net operating income analysis,”

which compares the net operating income (NOI)

level expected from the last rent increase granted to

a park owner and prior to any pending rent increase

application (the so-called “target NOI”) to the NOI

demonstrated in any pending rent increase application.

1. Where relevant to any pending rent increase

application, a[n] MNOI analysis shall be included in

the staff report to the Board, along with the analysis

set forth in Sub-Section II.B., above, and in addition

to the analysis considering and evaluating the eleven

(11) factors set forth in Municipal Code § 4704(g),

and where there is sufficient data submitted by the

applicant to permit such an analysis. 

2. An MNOI analysis is intended to provide

another method to estimate whether any applicant

for a rent increase is earning a constitutional fair

return, as established by the immediately prior rent

increase, with appropriate adjustment(s) to reflect

changes in the CPI, and is a methodology approved

by the courts in which changes in debt service

expenses are not to be considered in the analysis

(unlike a gross profits maintenance analysis, where

such changes may be considered). The analysis is

another aid to assist the Board in applying the factors

in the Ordinance, as is to be considered in company

COLONY COVE PROPERTIES v. CITY OF CARSON 4167
with the factors in Municipal Code § 4704(g), and all

other relevant evidence presented and the statutory

purposes of the mobilehome space rent control ordinance. An MNOI analysis is not intended to create

any entitlement to any particular rent increase.

2006 Amendment (emphases added).

On August 6, 2008, the Board issued its decision (“2008

Board Decision”) on Colony Cove’s October 1, 2007 application for a general rent increase for the Park. Colony Cove had

requested an average rent increase of $618.05 per rental space

in the Park that would have raised the average monthly rental

rate from $414.25 to $1,032.30 per space. In its application,

Colony Cove claimed it was entitled to a monthly rate

increase ranging from $208.22 to $618.05 (a 136% to 179%

increase) per space based on “the following alternative methodologies and theories:” return on cash investment ($618.05

increase), return on total investment ($365.93 increase), gross

profits maintenance (“GPM”) analysis ($388.85 increase), and

maintenance of net operating income (“MNOI”) methodology

($208.22 increase). 

The Board’s written decision set out the factors it is

required to consider under the 1979 Ordinance.1 The Board

also discussed its evaluation of the evidence submitted by

Colony Cove and the City of Carson in light of the “various

methodologies to be considered in complying with its statutory obligation to assure the Park Owner [a] fair return while

at the same time protecting these Park residents from excessive rent increases.” The Board stated that it considered Colony Cove’s argument that it had a vested right in a rent

increase to cover the debt service it incurred in purchasing the

Park. The Board explained that “when the Park Owner purchased the property, the ordinance and guidelines both stated

that there was no entitlement to a rent increase pursuant to

1Carson, Cal. Mun. Code § 4704(g)(1)-(11). 

4168 COLONY COVE PROPERTIES v. CITY OF CARSON
any particular standard or formula.” Based on its review, the

Board granted a $36.74 (or 8.10% to 10.62%) increase per

space, per month.

B

Colony Cove did not institute litigation in a California state

court to challenge the Board’s decision. Rather, on October

27, 2008, Colony Cove filed suit in the United States District

Court for the Central District of California, seeking to have

what Colony Cove termed the City’s “rent control scheme,”

comprising the 1979 Ordinance and the Guidelines as

amended by the 2006 Amendment (“Amended Guidelines”),

declared unconstitutional.

In its Complaint, Colony Cove asserts both facial and as

applied challenges to the City’s rent control scheme as violative of the Fourteenth Amendment’s Due Process Clause and

the Fifth Amendment’s Takings Clause (Claims 1-4); a facial

challenge under the Fourteenth Amendment’s Equal Protection Clause (Claim 5); a declaratory relief claim (Claim 6);

and a claim seeking a writ of administrative mandate pursuant

to state law, Cal. Civ. Pro. C. § 1094.5 (Claim 7). Colony

Cove alleges that the City’s 1979 Ordinance and the

Amended Guidelines hold rents well below market rates,

which “deprives Colony Cove of over $30 million of property

value” and transfers that value to park residents “who on average have been receiving more than $118,000 for their mobilehomes that on average have an appraised value of

approximately $33,000.” As a result, Colony Cove alleges,

the rent control Ordinance and Amended Guidelines “effectively take[ ] property value from park owners and give[ ] it

to park residents.”

In its Complaint, Colony Cove alleges as follows:

The Board has no discretion with respect to the

Guidelines. Although styled as “Guidelines,” these

COLONY COVE PROPERTIES v. CITY OF CARSON 4169
provisions of the City rent control law are mandatory

and must be followed by the Board. The Guidelines

have had the same de facto and de jure force and

effect as actual amendments to the Ordinance, and

the Board and City staff treat[ ] them as such.

Colony Cove also alleges in its Complaint that “[u]nder the

City’s Rent Control Scheme as it existed at the time Colony

Cove purchased the Park in April 2006, Colony Cove was

entitled to, and reasonably expected to, have its debt service

expenses included as an allowable operating expense.”

On December 5, 2008, the City moved to dismiss for lack

of subject matter jurisdiction and for failure to state a claim,

pursuant to Federal Rules of Civil Procedure 12(b)(1) and

12(b)(6), respectively. In its briefing on the motion, Colony

Cove conceded that its facial equal protection claim (Claim 5)

was foreclosed by controlling precedent. On November 24,

2009, the district court issued an order dismissing with prejudice all of Colony Cove’s remaining constitutional claims

(Claims 1-4) and the associated parts of its declaratory relief

claim (Claim 6), and declining to exercise supplemental jurisdiction over the request for a writ of administrative mandamus under state law (Claim 7). Colony Cove timely appealed,

challenging the district court’s ruling as to all but two of its

claims.2

C

After the City filed its motion to dismiss and before the district court ruled on that motion, on October 20, 2009, the City

of Carson’s city council passed a resolution to approve the

conversion of the Park to subdivided resident ownership.3 On

2

In its briefing on appeal, Colony Cove concedes that its facial due process (Claim 1) and equal protection (Claim 5) claims are foreclosed by

current precedent. Appellant’s Opening Br. at 59-60. 

3The City filed a Request for Judicial Notice (“RJN”) with its answering

brief on July 23, 2010. The City asks the court to take judicial notice of

4170 COLONY COVE PROPERTIES v. CITY OF CARSON
December 23, 2009, shortly after the district court ruled on

the City’s motion to dismiss, Colony Cove filed suit in Los

Angeles Superior Court, petitioning for a writ of administrative mandate pursuant to California Code of Civil Procedure

§ 1094.5. In its state court complaint, Colony Cove alleged

that the City’s decisions on its rent increase applications

deprived it of a fair return on its investment, and Colony Cove

asked the state court to compel the City to permit a rent

increase of $200 per month per space, rather than the $36.74

increase previously granted by the City.

II

This court has jurisdiction over this appeal from a final

order of the district court. 28 U.S.C. § 1291. The court

reviews de novo a district court’s decision to grant a motion

to dismiss for failure to state a claim pursuant to Fed. R. Civ.

P. 12(b)(6), or for lack of subject matter jurisdiction pursuant

to Fed. R. Civ. P. 12(b)(1). Manzarek v. St. Paul Fire &

Marine Ins. Co., 519 F.3d 1025, 1030 (9th Cir. 2008); Fed.

Deposit Ins. Corp. v. Nichols, 885 F.2d 633, 635 (9th Cir.

1989). “When ruling on a motion to dismiss, we may ‘generally consider only allegations contained in the pleadings,

exhibits attached to the complaint, and matters properly subthe facts established in and by the following documents: (1) the City

Council of the City of Carson’s October 20, 2009 adoption of Resolution

No. 09-108 Approving Tentative Parcel Map No. 067049 for Mobilehome

Resident Ownership Conversion of Colony Cove Mobilehome Park; (2)

Petition for Writ of Administrative Mandate filed by Colony Cove on

December 23, 2009, in Los Angeles Superior Court; (3) Colony Cove’s

motion for writ of administrative mandate in that state court action; and

(4) a June 30, 2010 minute order issued by the state court denying Colony

Cove’s petition for writ of administrative mandate. RJN at 1-2, Exs. A, B,

C, and D. Colony Cove opposed the RJN on August 5, 2010, and the City

filed a response thereto on August 11, 2010. Neither the contents of the

City Council of the City of Carson’s Resolution nor the existence of the

state court proceedings is in dispute. Accordingly, we grant the request in

a separate order. Fed. R. Evid. 201(b)-(d). 

COLONY COVE PROPERTIES v. CITY OF CARSON 4171
ject to judicial notice.’ ”

4 Outdoor Media Grp., Inc. v. City of

Beaumont, 506 F.3d 895, 899-900 (9th Cir. 2007) (quoting

Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007)).

The court accepts factual allegations in the complaint as true

and construes the pleadings in the light most favorable to the

nonmoving party. Outdoor Media, 506 F.3d at 900. However,

this court need not accept as true conclusory allegations that

are contradicted by documents referred to in the complaint.

Ashcroft v. Iqbal, ___ U.S. ___, 129 S. Ct. 1937, 1950 (2009)

(“[A] court considering a motion to dismiss can choose to

begin by identifying pleadings that, because they are no more

than conclusions, are not entitled to the assumption of truth.

While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.”); see

also Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136,

1139 (9th Cir. 2003) (“[W]e are not required to accept as true

conclusory allegations which are contradicted by documents

referred to in the complaint, and we do not necessarily assume

the truth of legal conclusions merely because they are cast in

the form of factual allegations.” (internal quotation marks,

citations, and alterations omitted)).

III

Colony Cove advances a number of arguments in connection with the viability of its facial takings claim (Claim 3), as

applied takings claim (Claim 4), and as applied substantive

due process claim (Claim 2). We address each in turn.

A

Colony Cove’s facial takings claim (Claim 3) advances theories that the 1979 Ordinance and Amended Guidelines work

a regulatory taking under Penn Central Transp. Co. v. City of

4The district court took judicial notice of a number of copies of the

Ordinance, Guidelines, the 2006 Amendments, and a number of other relevant documents. 

4172 COLONY COVE PROPERTIES v. CITY OF CARSON
New York, 438 U.S. 104 (1978); a physical taking; and a private taking. The district court dismissed Claim 3 as timebarred. Colony Cove argues that the claim is not time-barred

because the 2006 Amendment created a new injury from

which a new limitations period began to run. Additionally,

Colony Cove contends that its economic injury under the rent

control scheme is sufficient to confer standing to pursue the

claims. It also asserts regarding the merits of each of its theories (regulatory, physical, private) that a taking has occurred.

Because the timeliness of any facial takings claim is dispositive, and this court’s recent decision in Guggenheim v. City of

Goleta, No. 06-56306, ___ F.3d. ___, 2010 WL 5174984 (9th

Cir. Dec. 22, 2010) confirms that dismissal was appropriate,

the court does not reach the merits of Colony Cove’s facial

takings claim.

[1] California’s statute of limitations for personal injury

actions governs claims brought pursuant to 42 U.S.C. § 1983.

Taylor v. Regents of Univ. of Cal., 993 F.2d 710, 711 (9th Cir.

1993) (citing Wilson v. Garcia, 471 U.S. 261, 275 (1985)

(holding that state personal injury limitation statute governs

§ 1983 claims)); Del Percio v. Thornsley, 877 F.2d 785, 786

(9th Cir. 1989). In California, personal injury claims that

accrued after January 1, 2003, are subject to a two-year statute

of limitations. See Cal. Code Civ. Proc. § 335.1; Canatella v.

Van De Kamp, 486 F.3d 1128, 1132-33 (9th Cir. 2007).

[2] This court recently confirmed that the statute of limitations for facial challenges to an ordinance runs from the time

of adoption:

As we held in Levald, Inc. v. City of Palm Desert,

“[i]n the takings context, the basis of a facial challenge is that the very enactment of the statute has

reduced the value of the property or has effected a

transfer of a property interest. This is a single harm,

measurable and compensable when the statute is

passed.”

COLONY COVE PROPERTIES v. CITY OF CARSON 4173
Guggenheim, 2010 WL 5174984 at *4 (quoting Levald, Inc.

v. City of Palm Desert, 998 F.2d 680, 688 (9th Cir. 1993)).

The rent control ordinance at issue in Guggenheim was

enacted by Santa Barbara County in 1979, and amended in

1987. Id. at *1. The Guggenheims purchased a mobilehome

park in 1997. In 2002, the City of Goleta incorporated territory that included the land on which the mobilehome park was

located, and it adopted, in toto, the rent control ordinance “so

the county rent control ordinance for mobile home parks

became the city rent control ordinance on the first day of the

City’s existence.” Id. The Guggenheims brought a facial challenge to the rent ordinance on the theory that “by locking in

a rent below market rents, and allowing tenants to sell their

mobile homes to buyers who will still enjoy the benefits of

the controlled rent (albeit subject to upward adjustment), the

ordinance shifts much of the value of ownership of the land

from the landlord to the tenant.” Id. (footnote omitted). After

a rehearing en banc, this court affirmed the district court’s

grant of summary judgment in favor of the City of Goleta. Id.

at *2. 

The timeliness of the action the Guggenheims filed in 2002

was not at issue because their facial challenge was made with

respect to the 2002 ordinance. Id. at *3 (“The Guggenheims

challenge only the 2002 City of Goleta ordinance, not the

1979 or 1987 County of Santa Barbara ordinances.”). This

court’s observation that a facial challenge to any earlier version of Santa Barbara County’s ordinance was time-barred

was not a holding; rather, it reflected that the litigants and the

courts all recognized that the limitations period ran from the

time the ordinance was adopted. Id. at *4.

[3] Here, the limitations period for any facial challenge to

the 1979 Ordinance has long since run. Colony Cove’s facial

challenge to the City’s “rent control scheme” proceeds from

the premise that the 2006 Amendment of the Guidelines was

“imbued with the force of law[,]” so that changes to the

Guidelines had the same legal effect as would an amendment

4174 COLONY COVE PROPERTIES v. CITY OF CARSON
to the 1979 Ordinance itself. As an initial matter, the court

need not, and does not, accord an assumption of truthfulness

to legal conclusions that are not supported by factual allegations in the Complaint or that are contradicted by documents

referred to in the Complaint. Iqbal, 129 S.Ct. at 1950; Fox

Family Worldwide, 328 F.3d at 1139. 

[4] Although this court has observed that “substantive

amendments to a takings statute will give rise to a new cause

of action . . . if those amendments ‘alter the effect of the ordinance upon the plaintiffs[,]’ ” Action Apartment Ass’n, Inc. v.

Santa Monica Rent Control Bd., 509 F.3d 1020, 1027 (9th

Cir. 2007) (citation omitted), the 2006 Amendment did not

alter the 1979 Ordinance itself. Rather, the 2006 Amendment

only added a new methodology, the MNOI methodolgy, to the

Guidelines. The 1979 Ordinance itself directs only that the

Board “shall consider” the 11 statutory factors, the Guidelines, “as well as any other relevant factors.” Carson, Cal.

Mun. Code § 4704(g) (emphasis added). In the same sentence,

the 1979 Ordinance states that “no one (1) factor shall be

determinative.” Id.

[5] Although the Guidelines set out requirements for park

owners making an application, and for the Board in considering applications, by their terms, they “are intended to assist

the Board in implementing the Ordinance.” The purpose and

provisions of the 1979 Ordinance remain controlling. The

allegations in Colony Cove’s Complaint are not sufficient to

support a determination that the 2006 Amendment to the

Guidelines has the force and effect of law. Cf. River Runners

for Wilderness v. Martin, 593 F.3d 1064, 1071 (9th Cir. 2010)

(concluding that National Park Service’s management policies, which were “written in mandatory language, were mentioned in the Federal Register, and ha[d] been found binding

[in a district court decision][,]” did not have the force and

effect of law because they “do not purport to prescribe substantive rules” and their text “makes clear that they are

intended only to provide guidance within the Park Service,

COLONY COVE PROPERTIES v. CITY OF CARSON 4175
not to establish rights in the public generally”); United States

v. Fifty-Three (53) Eclectus Parrots, 685 F.2d 1131, 1136

(9th Cir. 1982) (concluding that the procedure set out in the

Customs Manual did not have the “force and effect of law”

to be enforceable against an agency because it was not a “substantive rule,” which can be contrasted with “interpretive

rules, general statements of policy or rules of agency organization, procedure or practice”).

[6] Accordingly, setting aside Colony Cove’s conclusory

allegations that the Guidelines are imbued with the force of

law, the facial takings claim is time-barred because the 2006

Amendment to the Guidelines cannot be reasonably read as a

substantive amendment of the 1979 Ordinance that alters its

effect on mobilehome park owners.

B

[7] The district court dismissed Colony Cove’s as applied

takings claim (Claim 4) as unripe. Colony Cove maintains

that it may pursue that claim in federal court, even though it

has not sought compensation through state procedures as

required by Williamson Cnty. Reg’l Planning Comm’n v.

Hamilton Bank of Johnson City, 473 U.S. 172 (1985), both

because the California procedure for compensating takings

plaintiffs through prospective rent increases is inadequate on

the facts of this case, given the magnitude of the taking, and

because the requirement that state procedures should be

invoked is merely prudential.

The Fifth Amendment does not “require that just compensation for a taking be paid in advance of, or contemporaneously with, the taking; all that is required is that a reasonable,

certain and adequate provision for obtaining compensation

exist at the time of the taking.” Williamson, 473 U.S. at 194

(citation and internal quotation marks omitted). “[T]here is no

constitutional injury until the plaintiff has availed himself of

the state’s procedures for obtaining compensation for the

4176 COLONY COVE PROPERTIES v. CITY OF CARSON
injury, and been denied compensation.” San Remo Hotel v.

City and Cnty. of San Francisco, 145 F.3d 1095, 1102 (9th

Cir. 1998). An as applied takings claim must satisfy both

prongs of the test set out in Williamson. Id. at 1101-02. First,

a plaintiff must demonstrate that “the government entity

charged with implementing the regulations has reached a final

decision regarding the application of the regulations to the

property at issue.” Williamson, 473 U.S. at 186. Second, the

plaintiff must have sought, and been denied, “compensation

through the procedures the State has provided for doing so.”

Id. at 194. 

[8] The state procedure a plaintiff asserting an as applied

challenge to a rent control ordinance must pursue includes a

“Kavanau adjustment,” which involves filing a writ of mandamus in state court and, if the writ is granted, seeking an

adjustment of future rents from the local rent control board.

Kavanau v. Santa Monica Rent Control Bd., 16 Cal. 4th 761

(1997). This court recently concluded that “California’s creation and implementation of the Kavanau adjustment process

provides ‘an adequate procedure for seeking just compensation, [and] the property owner cannot claim a violation of the

Just Compensation Clause until it has used the procedure and

been denied just compensation.’ ” Equity Lifestyle Props., Inc.

v. Cnty. of San Luis Obispo, 548 F.3d 1184, 1192 (9th Cir.

2008) (quoting Williamson, 473 U.S. at 195).

[9] Here, it is undisputed that Colony Cove did not pursue

a Kavanau adjustment prior to filing suit in federal court. Colony Cove’s conclusory allegations of futility are not factual

allegations that must be accorded a presumption of truthfulness. Fox Family Worldwide, 328 F.3d at 1139. Additionally,

as the district court pointed out, this court has considered and

rejected futility arguments on theories of undue delay, the

futility of returning to the same rent control board if a writ is

granted by the state court, and the failure to provide compensation for losses incurred while Kavanau proceedings are

pending. Dist. Ct. Nov. 24, 2009 Order at 9 (citing Equity

COLONY COVE PROPERTIES v. CITY OF CARSON 4177
Lifestyle, 548 F.3d at 1191-92; Mfg’d Home Cmties. v. City of

San Jose, 420 F.3d 1022, 1035-36 (9th Cir. 2005); Carson

Harbor Vill., Ltd. v. City of Carson, 353 F.3d 824, 830 (9th

Cir. 2004); Hacienda Valley Mobile Estate v. City of Morgan

Hill, 353 F.3d 651, 658-60 (9th Cir. 2003)). Accordingly,

because Colony Cove did not utilize the Kavanau adjustment

process prior to filing suit in federal court, and this circuit’s

case law does not support the conclusion that use of the state

procedures would be futile, dismissal for failure to satisfy

Williamson’s “state procedures” requirement was appropriate.

[10] Colony Cove maintains that the magnitude of the

alleged taking at issue here, coupled with the loss of the additional rents while a Kavanau adjustment process that likely

will be unsuccessful winds its way through the state courts,

compels the conclusion that the Kavanau procedure is inadequate in this case. However, this court’s decision in Equity

Lifestyle forecloses a determination that Colony Cove’s asapplied takings claim is ripe. Equity Lifestyle, 548 F.3d at

1192. In Equity Lifestyle, which concerned a challenge to the

constitutionality of a mobilehome rent control ordinance, the

court rejected arguments similar to those advanced by Colony

Cove regarding the ripeness of an as applied takings claim,

explaining: 

We reject MHC’s argument that “a Kavanau adjustment is not an effective remedy unless the park

owner successfully stays enforcement of the applicable rent control ordinance pending the outcome of

the litigation.” Although a stay might be useful to

avoid losses, retrospective compensation also

ensures that a property owner does not suffer from

unwarranted revenue losses incurred during litigation. We will not second-guess the specific procedures California has chosen to use, so long as the

methods provide just compensation.

We thus conclude that California’s creation and

implementation of the Kavanau adjustment process

4178 COLONY COVE PROPERTIES v. CITY OF CARSON
provides “an adequate procedure for seeking just

compensation, [and] the property owner cannot

claim a violation of the Just Compensation Clause

until it has used the procedure and been denied just

compensation.” Williamson, 473 U.S. at 195, 105 S.

Ct. 3108. Because MHC did not seek such compensation, its as-applied challenge to the Board’s decision was unripe and the district court properly

dismissed that aspect of the claim.

Id. (footnote omitted). Here, Colony Cove’s argument that

California’s Kavanau adjustment process is inadequate is

foreclosed by the law of this circuit. The City Council of the

City of Carson’s approval of Colony Cove’s application to

convert the Park to a subdivided condominium form of ownership does not alter this outcome. As the City of Carson

urged at oral argument, and Colony Cove did not refute, the

effect of the Ordinance on the Park will be extinguished upon

the sale of the first condominium lot. See El Dorado Palm

Springs, Ltd. v. City of Palm Springs, 96 Cal. App. 4th 1153,

1178-79 (2002) (explaining that “[a]t [the] time [that a rental

park is converted to resident ownership], sales begin and the

economic mitigation measures for displaced residents specified in [California Government Code] section 66427.5,

including preemption of a local rent control ordinance,

become effective”) (emphasis added). It follows, the City of

Carson argued, that the conversion of the Park increases the

certainty of any damages, if any are awarded by the state

court, to which Colony Cove is entitled. To the extent that the

Kavanau adjustment process would be inadequate to address

any adjustment of future rents following the conversion of the

Park, Colony Cove has not demonstrated that resort to a state

inverse condemnation action against the City would not serve

as a reasonable, certain and adequate procedure for obtaining

just compensation, as required by Williamson. See Galland v.

City of Clovis, 24 Cal. 4th 1003, 1025 (2001) (“[W]hen landlords seek section 1983 damages from allegedly confiscatory

rent regulation, we hold that they must show (1) that a confisCOLONY COVE PROPERTIES v. CITY OF CARSON 4179
catory rent ceiling or other rent regulation was imposed and

(2) that relief via a writ of mandate and a Kavanau adjustment

is inadequate.”). Accordingly, the district court did not err in

dismissing Claim 4 as unripe.

C

Regarding its as applied substantive due process claim

(Claim 2), which the district court dismissed as not cognizable, Colony Cove argues that such claims may be maintained

on the ground that the City’s rent control scheme has deprived

it of a “ ‘fair and reasonable’ return.” In the alternative, Colony Cove argues that the Board’s application of the 1979

Ordinance and Amended Guidelines was arbitrary and unreasonable. 

[11] This court’s holding in Armendariz v. Penman, 75

F.3d 1311 (9th Cir. 1996), that all substantive due process

challenges to land regulation are preempted by the Takings

Clause, was subsequently abrogated by the Supreme Court’s

opinion in Lingle v. Chervron U.S.A., Inc., 544 U.S. 528, 542

(2005). See also id. at 543 (contrasting the Takings Clause,

which “presupposes that the government has acted in pursuit

of a valid public purpose[,]” with “government action [that]

is found to be impermissible — for instance because it . . . is

so arbitrary as to violate due process[,]” which “[n]o amount

of compensation can authorize”). In Crown Point Development, Inc. v. City of Sun Valley, 506 F.3d 851 (9th Cir. 2007),

this court explained that “the Fifth Amendment w[ill] preclude a due process challenge only if the alleged conduct is

actually covered by the Takings Clause.” Id. at 855; see also

United States v. Lanier, 520 U.S. 259, 272, n.7 (1997)

(explaining that Graham v. Connor, 490 U.S. 109 (1989),

“simply requires that if a constitutional claim is covered by a

specific constitutional provision, . . . the claim must be analyzed under the standard appropriate to that specific provision, not under the rubric of substantive due process”).

However, in Crown Point, this court explicitly held “that the

4180 COLONY COVE PROPERTIES v. CITY OF CARSON
Fifth Amendment does not invariably preempt a claim that

land use action lacks any substantial relation to the public

health, safety, or general welfare.” Id. at 856 (emphasis

added); see also id. at 852-53 (stating that, in light of the

Supreme Court’s decision in Lingle, a substantive due process

claim challenging a “wholly illegitimate” land use regulation

is not foreclosed as subsumed by the Takings Clause). 

[12] Here, to the extent Colony Cove alleges a due process

violation on the ground that the Board’s application of the

1979 Ordinance and Amended Guidelines to Colony Cove’s

application for a rental rate increase denied it a fair return on

its investment, Claim 2 is subsumed by the Takings Clause.

See Crown Point, 506 F.3d at 855-56 (“To the extent a property owner’s complaint falls within one of the[ ] categories

[“of regulatory action that generally will be deemed a taking

for Fifth Amendment purposes”] the claim must be analyzed

under the Fifth Amendment whether or not it proves successful. . . . ”); see also Duquesne Light Co. v. Barasch, 488 U.S.

299, 308 (1989) (“If the rate does not afford sufficient compensation, the State has taken the use of utility property without paying just compensation and so violated the Fifth and

Fourteenth Amendments.”). Additionally, to the extent Colony Cove alleges a due process violation on the ground that

the Board acted arbitrarily or irrationally in applying the 1979

Ordinance and Amended Guidelines, or that the 1979 Ordinance and Amended Guidelines fail to serve any legitimate

governmental objective, the district court did not err in dismissing Claim 2 for the reasons and in the manner set out in

the district court’s November 24, 2009 Order. The Amended

Guidelines state, as they have since 1998, that the “purpose of

the Ordinance is to protect the homeowners who rent spaces

in mobilehome parks in the City from excessive rents and to

allow Park Owners to earn a ‘just and reasonable’ and ‘fair’

return on investment.” The Guidelines also explain that:

Mobilehome owners (“homeowners”) are a

uniquely vulnerable group of tenants due to the

COLONY COVE PROPERTIES v. CITY OF CARSON 4181
investment made in purchasing and maintaining their

homes and the high cost and difficulty involved in

attempting to move a home. Additionally, many of

the homeowners in the City are seniors on fixed

incomes and many have low or moderate incomes.

Unlike apartment tenants, homeowners cannot just

pack their personal belongings and move if rents

increase to a level they cannot afford.

The Guidelines have also specifically provided, since at least

1998, that “[d]ebt service incurred after adoption of the Ordinance to purchase a park may be an allowable operating

expense if the purchase price paid was reasonable in light of

the rents allowed under the Ordinance and involved prudent

and customary financing practices. . . .” Guidelines § II.A.2.f

(emphases added).

[13] Neither the Board’s use of the MNOI methodology

added by the 2006 Amendment, nor its failure or refusal to

perform a separate fair return analysis, represents arbitrary or

irrational action by the Board. Since 1979, the Ordinance has

provided that, in endeavoring both to protect mobilehome

owners from excessive rent increases and to allow park owners a fair return on investment, the Board must consider the

11 statutory factors, the Guidelines, and any other relevant

factors. The 1979 Ordinance requires only that the Board consider all the factors, and it expressly states that no one factor

is determinative. Neither prior nor subsequent to Colony

Cove’s purchase of the Park did the 1979 Ordinance or the

Guidelines require the Board to employ any particular methodology in conducting its review of rental increase applications. Instead, the Amended Guidelines expressly state that

neither the GPM nor the MNOI analysis is “intended to create

any entitlement to any particular rent increase.” 

The Board’s decision to exclude Colony Cove’s debt service expenses from its calculation of the approved rent

increase also considered each of the 11 factors set out in the

4182 COLONY COVE PROPERTIES v. CITY OF CARSON
1979 Ordinance, reviewed evidence submitted by Colony

Cove’s and the City’s experts, and extensively discussed the

proper use of the evidence submitted by Colony Cove and the

City in determining how much of a rent increase would be

required to give Colony Cove a fair return on its investment

in the Park. 

[14] Finally, as this court recently explained in its discussion of the facial due process challenge advanced in Guggenheim:

Whether the City of Goleta’s economic theory for

rent control is sound or not, and whether rent control

will serve the purposes stated in the ordinance of

protecting tenants from housing shortages and abusively high rents or will undermine those purposes,

is not for us to decide. We are a court, not a tenure

committee, and are bound by precedent establishing

that such laws do have a rational basis. Students in

Economics 101 have for many decades learned that

rent control causes the higher rents and scarcity it is

meant to alleviate, but the Due Process Clause does

not empower courts to impose sound economic principles on political bodies.

Guggenheim, 2010 WL 5174984 at *7 (footnotes omitted).

Accordingly, in light of the purpose and provisions of the

Ordinance, and the rents allowed under the Ordinance and

Guidelines prior to Colony Cove’s purchase of the Park in

April 2006, dismissal of the as applied due process claim

(Claim 2) is appropriate because the factual allegations in the

Complaint, and the documents referenced therein, do not provide a sufficient basis for a claim that the Board’s decision on

Colony Cove’s application for a rent increase reflects action

that was arbitrary, irrational, or lacking any reasonable justification in the service of a legitimate government interest.

COLONY COVE PROPERTIES v. CITY OF CARSON 4183
IV

The district court’s order granting the City of Carson’s

motion to dismiss Colony Cove’s claims is AFFIRMED.

4184 COLONY COVE PROPERTIES v. CITY OF CARSON