Opinion ID: 2851003
Heading Depth: 3
Heading Rank: 2

Heading: Self-Styled “Private Takings Claim”

Text: 15 Perhaps seeing the writing on the wall with respect to its regulatory takings claim, Rancho devotes the majority of its briefing to what it presents as a separate “private takings claim,” arguing that the application of Ordinance 644 to rent increases constitutes an unconstitutional private taking because any purported “public use” is pretextual. Two years ago, in MHC, we noted that we were “aware of no court that has ever recognized a regulatory private taking,” but because we concluded that the claim failed on the merits, we “assume[d] without deciding that such a claim is possible.” 714 F.3d at 1129 n.5. Today we pick up where MHC left off, holding that under the circumstances here, Rancho’s so-called “private takings claim” cannot serve as an independent means to challenge an alleged regulatory taking. Rather, such a public-use challenge must function as part of the larger regulatory takings claim. As explained below, viewed in this context, Rancho’s claim fails for multiple reasons. Putting the “private as-applied takings” moniker on Rancho’s claim is both confusing and misleading. A short history of the terminology is in order. True private takings—those effected by non-governmental actors—such as the power granted to the railroads to take private lands to expand the rails “have a long and distinguished pedigree in our legal system.” Abraham Bell, Private Takings, 76 U. 16 CHI. L. REV. 517, 585 (2009). Another variation, as Bell notes, is the “government-mediated private taking[]” in which the government “simply acts as a middleman who transfers the property from one set of private hands to another.” Id. at 520. And finally, when used as the basis of a takings claim such as Rancho’s, “the term ‘private takings’ more narrowly refer[s] to public takings motivated by a ‘private purpose.’” Id. at 519 n.6. This third approach, as Rancho is attempting to use it here, is simply a renaming of the regulatory takings claim, which seeks to determine whether a property regulation is “functionally equivalent to the classic taking in which government directly appropriates private property or ousts the owner from his domain.” Lingle, 544 U.S. at 539. Of course, the Constitution requires that the government’s taking must be for a public use. Tellingly, in making its private takings argument, Rancho relies predominantly on condemnation cases, running afoul of the Supreme Court’s teaching that the “longstanding distinction between acquisitions of property for public use, on the one hand, and regulations prohibiting private uses, on the other, makes it inappropriate to treat cases involving physical takings as controlling precedents for the evaluation of a claim that there has been a ‘regulatory taking,’ 17 and vice versa.” Tahoe-Sierra, 535 U.S. at 323 (footnote omitted). Accordingly, as a general matter, “we do not apply our precedent from the physical takings context to regulatory takings claims.” Id. at 323-24. Yet Rancho’s private takings argument is rooted in the Supreme Court’s statement in the condemnation case Kelo that the state may not “take property under the mere pretext of a public purpose, when its actual purpose [is] to bestow a private benefit.” Kelo v. City of New London, 545 U.S. 469, 478 (2005). The crux of Rancho’s argument is that because none of the purposes enumerated in Ordinance 644 apply here, its application is pretextual. According to Rancho, the real purpose behind the application of Ordinance 644 here is to “provide each and every one of the 184 tenants with a significant monthly subsidy, whether they need it or not.” This “subsidy,” Rancho argues, violates the principle “that the sovereign may not take the property of A for the sole purpose of transferring it to another private party B.” Kelo, 545 U.S. at 477. This argument fails because it is simply a reframing of a facial challenge to the ordinance through an attack on the stated purposes of the rent-control scheme. Other related arguments fail for the same reason. As noted before, the district court dismissed the facial challenge as time barred and Rancho did not appeal this issue. Rancho cannot resuscitate this claim 18 by re-labeling it and claiming to challenge “the real purpose” of the ordinance through an “as-applied” attack on the validity of the ordinance. Rancho offers up a number of additional arguments. To the extent those arguments seek to challenge the public purpose of the ordinance as applied, they merge the cart and the horse. Because we determined that there has been no taking in the first place, it is unnecessary to address whether the public use requirement is met. Rancho raises two final, though unrelated, points. In 2010 Rancho proposed legislation to the City Council requiring the City to provide rent subsidies to mobile home park tenants “without regard to need, equal to the difference between the rent control rate and the fair market rate.” The rent control administrator apparently said the proposal was “unreasonable.” This statement, however, proves nothing. As Rancho acknowledges, it had no right to have the proposal adopted; indeed, no claim is made that the Council acted improperly. Rancho’s theory that the reaction of the administrator is evidence of “as-applied” pretext is pure speculation and is not tethered to the City’s enforcement of the actual ordinance. Finally, Rancho claims that the rent subsidy violates the California Constitution’s prohibition against gifts of public funds, while at the same time 19 admitting that the City has not made an illegal gift. Cal. Const. art. XVI, § 6 (“The Legislature shall have no power . . . to make any gift or authorize the making of any gift, of any public money or thing of value to any individual . . . .”). This concession is not surprising as the City has not made a transfer or gift of any “public money” to any mobile home park tenant, nor can it be said that the ordinance amounts to an indirect gift as urged by Rancho. In sum, Rancho’s self-styled “private takings claim” cannot serve as a means to evade Penn Central scrutiny. And in any event, as articulated here, such claim fails because it is a thinly veiled facial challenge, which is both time barred and lacks merit.