Court Opinion

ID: 3050609
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:31:58.789914+00
Date Added: 2024-06-11T12:45:00.427591
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

ACTION APARTMENT ASSOCIATION,           
INC., a California corporation;
MATHEW MILLEN,
                                              No. 05-56533
               Plaintiffs-Appellants,
                  v.                           D.C. No.
                                            CV-04-10343-AHM
SANTA MONICA RENT CONTROL
                                                OPINION
BOARD, a municipal entity; MARY
ANN YURKONIS,
              Defendants-Appellees.
                                        
        Appeal from the United States District Court
            for the Central District of California
         A. Howard Matz, District Judge, Presiding

                  Argued and Submitted
         June 18, 2007—San Francisco, California

                   Filed December 3, 2007

    Before: Sidney R. Thomas, Raymond C. Fisher, and
             Ronald M. Gould, Circuit Judges.

                  Opinion by Judge Thomas

                            15615
15618     ACTION APARTMENT ASS’N v. SANTA MONICA

                        COUNSEL

Robert J. Franklin (argued) and Rosario Perry, Santa Monica,
California, attorneys for Plaintiffs-Appellants Action Apart-
ment Association, Inc., and Mathew Millen.
          ACTION APARTMENT ASS’N v. SANTA MONICA        15619
David Pettit and Michael Roth (argued), Los Angeles, Cali-
fornia; and David Daniels and Michaelyn Jones, Santa Mon-
ica, California, attorneys for Defendants-Appellees, Santa
Monica Rent Control Board and Mary Ann Yurkonis.

                         OPINION

THOMAS, Circuit Judge:

   In this appeal, we are presented with a claim that Santa
Monica’s rent control ordinance is unconstitutional under
both the “public use” component of the Fifth Amendment’s
Takings Clause and the substantive component of the Four-
teenth Amendment’s Due Process Clause. We conclude that
the Fifth Amendment claims are not viable, that the facial
Fourteenth Amendment claim is time-barred, and that the as-
applied Fourteenth Amendment claim is unripe. We therefore
affirm the judgment of the district court, dismissing the com-
plaint.

                              I

   In 1979, the people of Santa Monica, California, enacted a
rent control ordinance by popular referendum. In 1991, we
upheld that ordinance against a due process challenge and a
takings challenge. Schnuck v. City of Santa Monica, 935 F.2d
171, 172 (9th Cir. 1991). We held that Santa Monica’s desire
to control rapidly rising rents and to cure housing shortages
constituted a legitimate governmental purpose, and we held
that the 1979 rent control ordinance was a rational means of
accomplishing that purpose.

  The ordinance has remained in effect continuously since
1979, but the Santa Monica Rent Control Board (“the Board”)
has amended its provisions on three occasions, twice prior to
2002 and once in 2002. Among the 2002 amendments, the
15620     ACTION APARTMENT ASS’N v. SANTA MONICA
Board enacted some new provisions, including, most signifi-
cantly, provisions that make it harder for landlords to evict
their tenants.

   Action Apartment Association (“Action”), an association of
landlords, and Matthew Millen (“Millen”), an individual land-
lord, filed suit under 42 U.S.C. § 1983 exactly two years after
the effective date of the 2002 amendments. In their complaint,
Action and Millen (collectively, “the Landlords”) alleged that
the rent control ordinance violates the Fifth Amendment’s
Just Compensation Clause, the Fifth Amendment’s Public Use
Clause, and the Fourteenth Amendment’s Substantive Due
Process Clause.

   Acknowledging that Schnuck is binding, the Landlords do
not contend that rent control is unrelated to any conceivable
public purpose. Rather, they contend that the Board’s 2002
decision to reenact rent control with only minor alterations
was an arbitrary and irrational response to the many problems
that have arisen and persisted since the ordinance went into
effect in 1979. Specifically, the Landlords contend that no
rational legislator could have expected the more stringent
eviction requirements to remedy Santa Monica’s housing dif-
ficulties. They also contend that the only rational solution to
the identified housing problems would be to implement a
means test, by which rent ceilings would be available only to
poor tenants.

   The district court dismissed the complaint, holding that all
Fifth Amendment claims were premature and that all substan-
tive due process claims were preempted by the Fifth Amend-
ment. The Landlords appeal the public use claims and the
substantive due process claims. They do not appeal the district
court’s dismissal of their just compensation claims.

                               II

   Because we conclude that the Plaintiffs failed to distinguish
this court’s decision in Schnuck, we affirm the district court’s
dismissal of the plaintiffs’ public use claims.
          ACTION APARTMENT ASS’N v. SANTA MONICA          15621
   [1] The Public Use Clause generally holds that “one per-
son’s property may not be taken for the benefit of another pri-
vate person without justifying public purpose, even though
compensation be paid.” Thompson v. Consolidated Gas Utili-
ties Corp., 300 U.S. 55, 80, 57 S. Ct. 364, 376 (1937). As the
Supreme Court made clear in Kelo v. City of New London,
Connecticut, 545 U.S. 469, 125 S. Ct. 2655 (2005), this
requirement is not a stringent one. Indeed, Kelo specifically
noted that the Fifth Amendment provides “legislatures broad
latitude in determining what public needs justify the use of the
takings power.” Id. at 483. Under that flexible and deferential
standard, there can be little doubt that Santa Monica’s desire
to control rising rents and to remedy housing shortages consti-
tutes a legitimate public purpose. In fact, we have already so
held. Schnuck, 935 F.2d at 176.

   Recognizing that Schnuck is binding, the Landlords do not
ask us to hold that the rent control ordinance is unrelated to
a public purpose. In fact, they fully concede that the ordinance
and its amendments intend to serve a legitimate public need.
The Landlords’ only Fifth Amendment argument is that the
2002 amendments to the rent control ordinance are not ratio-
nally related to the purpose they intend to serve.

   [2] In construing this argument as a Public Use Clause
claim, the Landlords rest primarily on the Supreme Court’s
opinion in Hawaii Housing Authority v. Midkiff, 467 U.S.
229, 104 S.Ct. 2321 (1984). In that case, the Court held that
a regulatory taking would satisfy the public use clause if it
was “rationally related to a conceivable public purpose.” Id.
at 241. The Court then conducted a two-step inquiry to deter-
mine whether the regulatory taking at issue was constitu-
tional. The first question, of course, was whether the
legislature’s purpose constituted a “conceivable public pur-
pose.” Then, after determining that the legislature’s purpose
was permissible, the Court asked as a subsequent test of con-
stitutionality whether the legislature’s specific approach was
rational. See id. at 241-42. Action and Millen focus exclu-
15622     ACTION APARTMENT ASS’N v. SANTA MONICA
sively on this second prong of the Midkiff test, arguing only
that the 2002 re-enactment and amendments take an irrational
approach to solving Santa Monica’s housing problems.

   [3] This court has confronted such claims before. In Rich-
ardson v. City and County of Honolulu, 124 F.3d 1150 (9th
Cir. 1997), the plaintiffs challenged a Honolulu condominium
conversion law, similar to the state law upheld by the
Supreme Court in Midkiff. The plaintiffs argued that although
the state law may have been rationally related to a public pur-
pose when passed, subsequent increases in the price of hous-
ing subject to the law (at a rate greater than increases in
unregulated housing) demonstrated that a conversion law
could no longer be considered a rational solution to Hawaii’s
housing problems. Id. at 1159. The court rejected the argu-
ment, holding that deference to a legislature’s public use
determination is required “unless the use involves an ‘impos-
sibility’ or is ‘palpably without reasonable foundation.’ ” Id.
at 1156 (quoting Midkiff, 467 U.S. at 240-41). Under Midkiff,
“whether the statute actually succeeds is irrelevant.” Id. at
1159 (emphasis added). The court concluded that despite how
poorly the state law may have performed, the city could have
rationally believed that prices would have been even worse
had the law not been in effect. Id. at 1159-60.

   [4] The Landlords’ “public use” claims are similar to the
claims this court rejected in Richardson. Even assuming that
the Landlords’ allegations concerning the effects of the Santa
Monica rent control scheme are true, that would not demon-
strate that the city’s re-enactment of the rent control statute
was irrational. This court has already determined that
“[c]ontrolling rents to a reasonable level and limiting evic-
tions substantially alleviate hardships to Santa Monica ten-
ants.” Schnuck, 935 F.2d at 175. “That rent control may
unduly disadvantage others, or that it may exert adverse long-
term effects on the housing market, are matters for political
argument and resolution; they do not affect the constitutional-
ity of the Rent Control Law.” Id. The same reasoning holds
           ACTION APARTMENT ASS’N v. SANTA MONICA          15623
true today. As in Schnuck, we decline to second-guess Santa
Monica’s chosen means of implementing its indisputably
legitimate goals. See Kelo, 545 U.S. at 488 (“ ‘[E]mpirical
debates over the wisdom of takings . . . are not to be carried
out in the federal courts’ ”) (quoting Midkiff, 467 U.S. at 242).

   [5] The 2002 amendments to the Santa Monica rent control
law do not change this analysis. The amendments merely
tweak the rent control scheme enacted in 1979. We fail to see
how these minor changes could alter this court’s determina-
tion in Schnuck that the Santa Monica rent control law is
rationally related to a legitimate purpose. We therefore hold
that there was a valid public purpose for the amendments to
the rent control law, and on that basis, affirm the district
court’s dismissal of claims three and five of the complaint.

                               III

   We also affirm the district court’s dismissal of the Land-
lords’ substantive due process claims, but we again affirm on
different grounds than the district court stated. Although in
light of recent Circuit authority we must disagree with the dis-
trict court’s conclusion that the Fifth Amendment preempts
the Landlords’ substantive due process claims, we conclude
that Action’s facial claim is time-barred and that Millen’s as-
applied claim is unripe.

                               A

   [6] This court previously had held that the Fifth Amend-
ment preempts certain substantive due process challenges to
land use regulations. Armendariz v. Penman, 75 F.3d 1311,
1321-24 (9th Cir. 1996). But we recently recognized that the
Supreme Court’s decision in Lingle v. Chevron U.S.A., Inc.,
544 U.S. 528, 125 S. Ct. 2074 (2005), signaled that substan-
tive due process can be an appropriate vehicle to challenge the
rationality of land use regulations. Crown Point Dev., Inc. v.
Sun Valley, No. 06-35189, 2007 WL 3197049 (9th Cir. Nov.
15624      ACTION APARTMENT ASS’N v. SANTA MONICA
1, 2007). Thus, as an initial matter, we conclude that the
Landlords’ substantive due process claims are not preempted
and that they are cognizable.

   The Supreme Court has long held that certain substantive
due process claims might be precluded if the same claims
could be decided under an “explicit textual source of constitu-
tional protection” rather than under the “generalized notion of
‘substantive due process . . . .’ ” Graham v. Connor, 490 U.S.
386, 395 (1989). In other words, under the Graham rule, a
substantive due process claim will be preempted if the
asserted substantive right can be vindicated under a different
—and more precise—constitutional rubric.

   Although the Supreme Court has never cited or applied this
preemption rule outside the context of criminal procedural
rights, this court had explicitly held that the rule applied to the
Public Use Clause. In Armendariz, we cited Graham to hold
that litigants may not state their claims as substantive due pro-
cess claims if the governmental action they challenge is a tak-
ing of property for private rather than public use. 75 F.3d at
1321-24.

   Relying on our construction of this rule in Squaw Valley
Development Co. v. Goldberg, 375 F.3d 936, 949-50 (9th Cir.
2004), the Board here argues that the public use clause pro-
vides a preemptive textual source of constitutional protection
against the governmental action that the Landlords challenge.
Indeed, the Board cites Squaw Valley for the broad proposi-
tion that, under Armendariz and Graham, no substantive due
process claim will survive if it is based on a deprivation of
real property.

   To the extent that Squaw Valley can be read to support the
Board’s expansive understanding of Armendariz, the Supreme
Court’s decision in Lingle effectively overruled that portion of
the Squaw Valley opinion. See Crown Point, 2007 WL
3197049, at *4 (citing Miller v. Gammie, 335 F.3d 889, 993
           ACTION APARTMENT ASS’N v. SANTA MONICA          15625
(9th Cir. 2003) (en banc) (holding that a three-judge panel
should declare a prior opinion effectively overruled if the
prior opinion is clearly irreconcilable with intervening
Supreme Court authority)). After Lingle, “it is no longer pos-
sible . . . to read Armendariz as imposing a blanket obstacle
to all substantive due process challenges to land use regula-
tions.” Id.

   In Squaw Valley, we noted that a substantive due process
challenge brought “in the context of regulating use of real
property” might not be “viable in this circuit.” 375 F.3d at
950. The sole basis for that skepticism was the Fifth Amend-
ment’s preemptive effect. The Squaw Valley opinion traced a
line of cases that started with and followed from Armendariz,
and the Squaw Valley opinion indicated that those cases cre-
ated a “blanket prohibition” of any substantive due process
claim “based on a deprivation of real property.” Id. at 949,
950 n.7. The court then rejected the specific substantive due
process claim at issue in Squaw Valley on the ground that the
claim could be stated as a takings claim—that is, as a chal-
lenge to the regulation’s ability “ ‘substantially [to] advance
legitimate state interests.’ ” Id. at 950 (quoting Macri v. King
County, 126 F.3d 1125, 1129 (9th Cir. 1997)).

   [7] As we recently recognized, that specific logic cannot
survive the Supreme Court’s decision in Lingle. Crown Point,
2007 WL 3197049, at *4. In Lingle, the Court specifically
held that an arbitrary and irrational deprivation of real prop-
erty, although it would no longer constitute a taking, might be
“so arbitrary or irrational that it runs afoul of the Due Process
Clause.” 544 U.S. at 542. Given that holding, it must be true
that the Armendariz line of cases can no longer be understood
to create a “blanket prohibition” of all property-related sub-
stantive due process claims. Squaw Valley, 375 F.3d at 949.
After Lingle, “the Fifth Amendment does not invariably pre-
empt a claim that land use action lacks any substantial relation
to the public health, safety, or general welfare,” Crown Point,
15626         ACTION APARTMENT ASS’N v. SANTA MONICA
2007 WL 3197049, at *4, regardless of anything Squaw Val-
ley said to the contrary.

   [8] We see no difficulty in recognizing the alleged depriva-
tion of rights in real property as a proper subject of substan-
tive due process analysis. We have long held that a
substantive due process claim “must, as a threshold matter,
show a government deprivation of life, liberty, or property.”
Nunez v. City of Los Angeles, 147 F.3d 867, 871 (9th Cir.
1998). In Squaw Valley, we specifically reaffirmed the princi-
ple that landowners have “a constitutionally protected prop-
erty interest” in their “right to devote [their] land to any
legitimate use.” 375 F.3d at 949 (internal quotation marks
omitted) (citing Harris v. County of Riverside, 904 F.2d 497,
503 (9th Cir. 1990)). An arbitrary deprivation of that right,
thus, may give rise to a viable substantive due process claim
in any case in which the Takings Clause does not provide a
preclusive cause of action.1

   [9] The Landlords do not assert that the government has
“taken” their property within the meaning of the Fifth
Amendment. They do, however, assert that the provisions of
the rent control ordinance neither serve nor are “rationally
related to any legitimate government purpose,” and therefore
  1
   In another recent opinion, we explained the distinction between sub-
stantive due process and Takings Clause claims:
      “[The Takings Clause] ‘is designed not to limit the governmental
      interference with property rights per se, but rather to secure com-
      pensation in the event of otherwise proper interference . . . .’ Due
      process violations cannot be remedied under the Takings Clause,
      because ‘if a government action is to be found impermissible—
      for instance because it fails to meet the ‘public use’ requirement
      or is so arbitrary as to violate due process—that is the end of the
      inquiry. No amount of compensation can authorize such
      action.’ ”
Equity Lifestyles Properties, Inc. v. County of San Luis Obispo, No. 05-
55406, slip. op. 12437, 12455 n.16 (9th Cir. September 17, 2007) (citing
Lingle, 544 U.S. at 537, 543).
          ACTION APARTMENT ASS’N v. SANTA MONICA          15627
unconstitutionally violate their right to use their property as
they see fit. [GB 23] Specifically, they argue that the provi-
sions are “arbitrary, unreasonable, and unrelated to the gen-
eral welfare” because “there is no legitimate interest in
subsidizing non-housing uses of rental properties nor in pro-
viding new rights and affirmative defenses for illegal occu-
pants,” particularly where California law does not recognize
illegal occupants as tenants. [RB 12, GB 23] “[A] regulation
that fails to serve any legitimate governmental objective may
be so arbitrary or irrational that it runs afoul of the Due Pro-
cess Clause.” Lingle, 544 U.S. at 542 (citing Lewis, 523 U.S.
at 846). The Landlords’ challenges to the rent control provi-
sions satisfy this standard and state a viable substantive due
process theory.

                               B

   Despite the legal viability of the Landlords’ substantive due
process theory, both of their Fourteenth Amendment claims
fail on timeliness grounds. Action’s claim is time-barred, and
Millen’s claim is unripe.

                               1

   Because Action’s claim rests on provisions of the rent con-
trol ordinance that have been in effect since 1979, its 2004
complaint was filed well beyond California’s two-year statute
of limitations for § 1983 claims.

   [10] It is well-established that claims brought under § 1983
borrow the forum state’s statute of limitations for personal
injury claims, see Wilson v. Garcia, 471 U.S. 261, 266-67
(1985), and in California, that limitations period is two years.
See Cal. Code Civ. P. § 335.1. “Generally, the statute of limi-
tations begins to run when a potential plaintiff knows or has
reason to know of the asserted injury.” De Anza Properties X,
Ltd. v. County of Santa Cruz, 936 F.2d 1084, 1086 (9th Cir.
1991).
15628     ACTION APARTMENT ASS’N v. SANTA MONICA
   [11] In the context of a facial challenge under the Takings
Clause, we have held that the cause of action accrues on the
date that the challenged statute or ordinance went into effect.
See id. at 1087 (citing Wall v. City of Santa Barbara, 833 F.2d
1270, 1276 (9th Cir. 1986)). We also have held that the mere
re-enactment of a statutory scheme does not restart the clock,
id. at 1086, and that substantive amendments to a takings stat-
ute will give rise to a new cause of action only if those
amendments alter “the effect of the ordinance upon the plain-
tiffs.” id.

   [12] Although we have not yet held that these accrual rules
apply to facial substantive due process claims, see Levald,
Inc. v. City of Palm Desert, 998 F.2d 680 (9th Cir. 1993)
(rejecting a facial takings claim as time-barred but consider-
ing a similar substantive due process claim on the merits,
without discussing timeliness), we see no reason to distin-
guish between facial takings claims and facial substantive due
process claims. First, the Wilson limitations period applies to
all § 1983 claims, regardless of the civil right asserted. 471
U.S. at 272. Second, the logic for the accrual rules in the tak-
ings context applies with equal force in the substantive due
process context. Given the general rule that “the statute of
limitations begins to run when a potential plaintiff knows or
has reason to know of the asserted injury,” it stands to reason
that any facial injury to any right should be apparent upon
passage and enactment of a statute. De Anza, 936 F.2d at
1086. Action, thus, should have known of its injury on the
date of the ordinance’s enactment.

   The only question that remains is whether Action’s asserted
injury arises from provisions that were enacted in 1979 or
from substantive amendments that were enacted in 2002 and
that altered “the effect of the ordinance on” Action. If Action
challenges either the substance of the 1979 provisions or the
mere re-enactment of those provisions in 2002, then its claim
is time-barred.
           ACTION APARTMENT ASS’N v. SANTA MONICA          15629
   [13] Unlike its “public use” clause claim, Action’s substan-
tive due process claim makes no mention whatsoever of the
2002 amendments. Action states only that the “application of
Rent Control to Plaintiffs’ property deprives Plaintiffs of their
property rights without due process of law because Rent Con-
trol is not rationally related to its stated purposes.” That alle-
gation was as true in 1979 as it is today.

  [14] We therefore hold that Action’s facial substantive due
process claim is time-barred.

                                2

   Millen’s substantive due process challenge is time-barred
in part and unripe in part.

   [15] First, Millen alleges that the enforcement of rent ceil-
ings for the benefit of a wealthy tenant is irrational. That
claim is time-barred because the rent ceiling has been in effect
continuously since 1979 and was not substantively altered in
2002.

   Second, Millen seems to allege that the new eviction
requirements, which were enacted in 2002, give rise to a new
injury on the ground that the application of those provisions
for the benefit of the same tenant would be arbitrary. Millen,
however, has not alleged that the government has actually
enforced any of those provisions against him and for the bene-
fit of the identified tenant.

   “[A] substantive due process violation is complete as soon
as the government action occurs.” Macri v. King County, 126
F.3d 1125, 1129 (9th Cir. 1997). However, “[t]he mere exis-
tence of a statute, which may or may not ever be applied to
plaintiffs, is not sufficient to create a case or controversy
within the meaning of Article III.” Stoianoff v. State of Mont.,
695 F.2d 1214, 1223 (9th Cir. 1983).
15630     ACTION APARTMENT ASS’N v. SANTA MONICA
   [16] In this case, the “government action” that Millen chal-
lenges is the enforcement of the new eviction requirements
for the protection of a particular tenant in his building. That
specific government action has not yet occurred. As a result,
his claim is not yet ripe for review.

  AFFIRMED.