Source: http://www.dissertation.xlibx.info/d1-economy/295775-16-journal-law-economics-policy-volume-spring-2014-number-editorial.php
Timestamp: 2017-05-25 06:42:45
Document Index: 277326555

Matched Legal Cases: ['§ 15', '§ 15', '§ 1', '§ 1', '§ 15', '§ 7']

16 JOURNAL OF LAW, ECONOMICS & POLICY VOLUME 10 SPRING 2014 NUMBER 2 EDITORIAL BOARD 2013-2014 Steve Dunn Editor-in-Chief Crystal Yi Meagan Dziura Sarah
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An ordinance that prohibits, among other things, the accumulation of weeds, debris, and trash to protect public health and safety is considered within a city’s police power.152 In Thain, a public nuisance ordinance was enacted to prevent the accumulation of weeds, debris, and trash on property within the city.153 The ordinance also authorized the local authority to pursue summary abatement.154 Since it is accepted in the law that a city “may enact ordinances the object of which is to abate or prevent nuisances,” the court held the ordinance bore a reasonable and substantial relation to the object of protecting the public health and safety.155 The court reasoned that since the accumulation of weeds, debris, and trash were readily considered a nuisance and that the ordinance sought to enable the local authority to remove or destroy the nuisance and charge the property owner when he failed to do it himself, the ordinance was a proper exercise of the municipality’s police power.156 147 Thain, 207 Cal. App. 2d at 186 (citations omitted).
148 Id. at 186 (citation omitted).
149 Id. at 187.
150 Wilkins v. City of San Bernardino, 29 Cal. 2d 332, 339 (1946) (citing Zahn v. Bd. of Public Works, 274 U.S. 325, 328 (1927)); Skyline Materials, Inc. v. City of Belmont, 198 Cal. App. 2d 449, 455–56 (1961).
151 Skyline Materials, Inc., 198 Cal. App. 2d at 455 (citing Lockard v. City of Los Angeles, 33 Cal.
2d 453, 461 (1949)).
152 Thain, 207 Cal. App. 2d at 187.
153 Id. at 177–78.
154 Id. at 186.
155 Id. at 187–88.
The CVAPO is similar to the ordinance in Thain in that it requires the lender to remove weeds, debris, and trash as part of maintaining the property according to the neighborhood standard.157 In addition, the CVAPO authorizes the city to abate nuisances and to charge the property owner,158 as in Thain, but the city apparently has made no such effort. In these respects the CVAPO, being similar to the ordinance in Thain, would be upheld as an appropriate exercise of the police power because the regulation has a rational relation to the objective of protecting the public health and safety.
But, as a hybrid regulation, the CVAPO does more.
b. A Public Nuisance Hybrid Regulation That Rewrites a Contract The CVAPO rewrites a contract, which the ordinance in Thain does not. In contrast, the CVAPO, without sufficient warrant, unnecessarily shifts the duty of maintenance to lenders, while the ordinance in Thain, as with public nuisance ordinances in Chula Vista,159 requires the property owner–borrower to clean up the weeds and maintain the property. This significant difference between the two types of ordinances requires an evaluation as to whether the CVAPO is arbitrary, capricious and unreasonable.
The city council arbitrarily chose lenders over borrowers as the party to maintain the property. The council considered the lenders’ lien interest in the vacant property and the desire to protect that interest, but ignored the borrowers’ superior fee interest in the property and the legal obligations imposed on them as owners. The legal obligations of the fee owner enable local government officials to wield their authority against the party who created the vacancy and threat of blight. To ignore the borrower is, in effect, to release him and to substitute the lender—though there has not been an adjudication of the lender’s culpability in the loan transaction or some other factual finding that supports the borrower’s release.
To shackle lenders with the mandate sidesteps the basic purpose of public nuisance regulation, which is to hold property owners accountable for the use (or rather in this case, nonuse) of their land. A local government’s police power has been traditionally exercised to curb offensive uses by owners and tenants, who, through the dominion and control of the property, have exceeded their property rights to the point that their neighbors’ property rights are affected.
157 See CHULA VISTA, CAL., MUN. CODE §§ 15.60.040,.050,.070 (2013).
158 To do so, the city must rely on other Chapters within the Municipal Code, which are incorporated by reference in to the CVAPO. See CHULA VISTA, CAL., MUN. CODE § 15.060.090 (2013), which incorporates Chapters 1.20, 1.30 and 1.41 of the Municipal Code.
159 See CHULA VISTA, CAL., MUN. CODE §§ 1.030.030–.050 (2013) (using definitions and rules of construction from § 1.04.010).
2014] NATURE ABHORS A VACUUM AND SO DO LOCAL GOVERNMENTS 373 But now, abandoned property ordinances are an expression of police power that is detached from a finding of fault.160 The CVAPO ignores the question of whether a particular lender (or even a majority of lenders) committed fraud, engaged in sharp lending practices, or used loan documents with inconspicuous disclosures so as to trap borrowers in oppressive loans.161 As such, local government’s moral authority to regulate in this manner is put into question. It is unreasonable to exercise core legislative and prosecutorial functions of government on a strict liability basis against a party when the facts that are known establish that another party is at fault.
When local government makes such a choice, it presumes upon itself the authority to impose liability without evidence of fault. This necessarily detracts from the maxim that a nation is best governed by a legal regime that honors the rule of law through a careful adjudication of conduct before a penalty is imposed. When local government eschews a critical aspect of the rule of law for a pragmatic economic choice that rewards the party in default and burdens the nonbreaching party, the regulation does not serve the public welfare and public morals. This is the case in particular where mere speculation that severe harm exists is the putative justification.
The city council acted as if the borrower had no legal interest in or care for the property whatsoever. Regardless of what the borrower’s attitude might have been, he remained the person immediately connected to the property both in right and duty. In this instance, the regulation hangs in midair without moral authority because its mandate is not based on fault.
Lenders did not vacate the property or let it fall into disrepair. In fact, lenders required borrowers to make contractual commitments that seek the same objectives as public nuisance regulations.162 Local governments that enact vacant property ordinances in essence disregard this private effort to assist the public good and instead punish it. The benefit of private law became dispensable in the mind of the Chula Vista City Council. The fact that a 160 See CHULA VISTA, CAL., MUN. CODE § 15.60.110 (2013) (a violation of the CVAPO is a strict liability offense). The principle that the law is to be used against those who have violated the law runs to the early Common Law.
[A]ccording to the common law interpretation of Chapter 29 of the Magna Carta, no person shall be deprived of his property or his livelihood, except when it is done in accordance with the law of the land. This protection requires three things: (1) the law which is alleged to have been violated must be existing and otherwise legitimate, (2) the law must be for a public and not private interest, and (3) a judicial trial conforming to the requirements of due process must be held to determine if wrongdoing has occurred that warrants a deprivation.
BERNARD H. SIEGAN, PROPERTY RIGHTS: FROM MAGNA CARTA TO THE FOURTEENTH AMENDMENT 16 (Soc. Philosophy & Policy Found. & Transaction Publishers 2001) (italics added).
161 See Testimony of D. Leeper, supra note 15. Code Enforcement Manager Doug Leeper claimed that lenders were the problem because of their failure and refusal to maintain the property that secures the loans. Mr. Leeper went on to state that his department faced extremely difficult challenges in efforts to locate the responsible lenders. Id. at 97, 100–01. At no point did Mr. Leeper indicate that he or his department pursued legal claims against lenders or make specific judgments about the validity of particular loan documents.
162 California-Single Family-Fannie Mae/Freddie Mac Uniform Instrument, Form 3005 01/01 § 7. 39374 JOURNAL OF LAW, ECONOMICS & POLICY [VOL. 10:2
lender chooses not to enter the property when its borrower has vacated is not the functional or moral equivalent of an adjudication of fault. There may well be sound economic reasons for its choice, but even when it simply prefers for its own reasons (or for no reason) not to enter, its decision cannot be treated as if it were similar to the borrower’s decision to abdicate his responsibilities. Nor is it satisfactory to enact such an ordinance based merely on the generalization that the city faces a host of bad lenders and bad loans. If violations of the law exist, the appropriate step is to file a court action instead of relying on speculation and generalizations.
Without proper justification, local government borders on immoral conduct when it relies on raw power to force its will on lenders and the mortgage loan market. In doing so, it has made a choice that is now law with a negative moral consequence—borrowers are effectively released from the loan agreement and the entire public nuisance regulatory scheme.163 In fact, borrowers are encouraged to walk away. The city improperly wields its authority by the blunt force of law without the least bit of an effort toward a just determination of liability. Local government makes “winners” of borrowers and losers of lenders. The extent of arbitrariness of the abandoned property ordinances is shown by the fact that the city’s pragmatic goal of maintained and secure properties could be achieved by enforcement of extant public nuisance law against the owner–borrower.
Having brushed aside its moral authority, local government has no compunction in ignoring borrowers, but it goes further to ignore all other parties that have an interest in the subject property.
The council apparently did not consider whether other people or entities with vested or perfected property rights, who similarly want to protect their interests, would be more effective in the maintenance of the vacant property. A great number of the foreclosures occurred in a part of the city governed by homeowners’ associations.164 Such associations are a possible alternative for maintenance because the associations are mandated by their own recorded covenants to handle all of the maintenance, repairs, and landscaping in the common areas.165 Also, junior lenders, lien creditors, and easement holders have a stake in the condition and value of the property. Tax agencies with liens certainly do, too. Nevertheless, the city’s public record does not reflect the council’s evaluation as to whether any of 163 See infra Part III.B.4.
164 A significant portion of the new housing construction (where a majority of the foreclosures occurred) was in the eastern part of Chula Vista where homeowners associations predominate. Lori Weisberg, Homeowners associations countywide are hit by foreclosure fallout and feeling the pinch of... unpaid dues, SAN DIEGO UNION-TRIB., Nov. 1, 2007.
165 The developments in the eastern part of Chula Vista consist mainly of single-family residences and townhouses on relatively small lots with small private yards. The author points out that homeowners’ associations could have been an alternative surrogate for the borrower rather than the lender, yet recognizes that the economic downturn would have affected the associations’ revenue stream due to the lack of payment of association dues by homeowner members in loan default.
2014] NATURE ABHORS A VACUUM AND SO DO LOCAL GOVERNMENTS 375 these other parties would be better suited to inspect, register, and maintain the vacant houses.166 Any lender, or other party with an interest secured by an instrument recorded after the foreclosing lender’s instrument, would be extremely concerned about such matters because their security interest would be eliminated upon foreclosure by the senior lender.
Without a finding of fault, local government has stripped itself of the moral authority to designate the lender as the party ultimately responsible for the property. This attenuates the relationship between the means and the objective of abandoned property ordinances. Therefore, the city’s rewriting of the loan agreement transforms the CVAPO from a public nuisance ordinance to some other category of ordinance that has yet to be challenged in court. If tested, courts should consider that the rule of law is weakened because an abandoned property ordinance exceeds valid police power authority in that the means to achieve the objective of public health, safety, welfare, and morals belie the core purpose of government—to wield authority against faulty parties. An abandoned property ordinance does not adjudicate wrongdoing; it does not concern itself with fault finding between a lender and a borrower. Instead, such an ordinance makes an economic choice that contradicts a requisite of the rule of law: the private parties’ reliance on the certainty and enforceability of an otherwise lawful contract.
c. A Public Nuisance Hybrid Regulation without Factual Support Further, the CVAPO suffers from the lack of facts to support it. A trial court that faces an issue related to a public nuisance ordinance “may only consider whether there is any substantial competent and material evidence in the administrative record to sustain the findings and order attacked.”167 Where the regulation involves aesthetic matters such as design plans, the regulation must be expressly or impliedly based on findings that the regulation is necessary for the general welfare.168 As discussed above, when the CVAPO was enacted the city council did not make a finding based on substantial competent and material findings that the CVAPO was necessary for the city’s general welfare.169 Neither blight nor significant deterioration of property put the general welfare of the city in jeopardy. The code enforcement personnel may have sensed pressure from the increase in foreclosures and what that could portend for 166 See supra notes 124–27 and related discussion.
167 Thain v. City of Palo Alto, 207 Cal. App. 2d 173, 192–93 (1962).
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