Court Opinion

ID: 8955825
Source: CourtListenerOpinion
Date Created: 2022-11-27 09:13:59.442521+00
Date Added: 2024-06-11T17:10:04.942345
License: Public Domain

SCHROEDER, Circuit Judge,
with whom NELSON and NORRIS, Circuit Judges join, dissenting from the denial of en banc hearing:
I respectfully dissent from the order denying en banc reconsideration of this case. The panel opinion holds that a city regulation controlling mobile home park rents may be a physical taking compensable under the fifth and fourteenth amendments. Panel opinion supra 1270 (9th Cir.1986). The ordinance at issue, however, is in all material respects identical to three rent regulation challenges that the Supreme Court dismissed in recent years as lacking a substantial federal question. Fisher v. City of Berkeley, 471 U.S. 1124, 105 S.Ct. 2653, 86 L.Ed.2d 270 (1985); Nash v. City of Santa Monica, 470 U.S. 1046, 105 S.Ct. 1740, 84 L.Ed.2d 807 (1985); Fresh Pond Shopping Center, Inc. v. Callahan, 464 U.S. 875, 104 S.Ct. 218, 78 L.Ed.2d 215 (1983). The panel decision is thus contrary to controlling authority. The decision also conflicts with another circuit’s opinion rejecting a similar taking challenge in light of the Supreme Court’s dismissal of Fresh Pond. Troy Ltd. v. Renna, 727 F.2d 287, 303 (3d Cir.1984) (upholding tenancy act protecting senior citizens and disabled persons).
The panel opinion attempts to distinguish this case because, under a state statute unrelated to rent control, the tenant has the right to sell the mobile home without removing it from the park. Panel op. supra at 1279-81 (discussing effects of Cal. Civ.Code § 798.73 (West 1982 & Supp. 1986)). Rent control makes these on-site sales attractive to buyer and seller. Santa Barbara’s ordinance, however, has the same effect on the landlord as the rent ordinances in Fisher, Nash, Fresh Pond, and Troy. The landlord must allow tenants to live in mobile home parks under controlled rent so long as they do not give any cause for eviction. S.B.Ord. § 26.08.040.
The reason that the Supreme Court has had little difficulty with rent control cases is that economic regulation of landowners’ profit does not constitute a taking so long as the owner is allowed a reasonable return *1283on investment. See, e.g., Connolly v. Pension Benefit Guaranty Corp., 475 U.S. 211, 106 S.Ct. 1018, 1026-27, 89 L.Ed.2d 166 (1986); United States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 106 S.Ct. 455, 460 n. 6, 88 L.Ed.2d 419 (1985); Williamson County Regional Planning Commission v. Hamilton Bank, 473 U.S. 172, 105 S.Ct. 3108, 3119, 87 L.Ed.2d 126 (1985); Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1005, 104 S.Ct. 2862, 2875, 81 L.Ed.2d 815 (1984); Pruneyard Shopping Center v. Robins, 447 U.S. 74, 83, 100 S.Ct. 2035, 2042, 64 L.Ed.2d 741 (1980); Penn Central Transportation Co. v. City of New York, 438 U.S. 104, 124-25, 98 S.Ct. 2646, 2659-60, 57 L.Ed.2d 631 (1978). See also Troy, 727 F.2d at 300; Kargman v. Sullivan, 582 F.2d 131, 134 (1st Cir.1978). The Santa Barbara ordinance does not deprive landlords of a reasonable return on their investment. In fact, the ordinance mandates that park owners receive a fair investment return. S.B.Ord. § 26.08.020(D).
The panel therefore attempts to distinguish this case from all other cases involving economic regulation of property by asserting that the claimed interference here is tantamount to a “physical invasion” of the property. Panel op. supra at 1276. This is, of course, the same argument the Supreme Court refused to consider in Fresh Pond; the Hall analysis is borrowed from Justice Rehnquist’s lone dissent from that dismissal. 464 U.S. at 875, 104 S.Ct. at 218 (Rehnquist, J., dissenting).
The panel acknowledges that the economic regulation cases withstand even “drastic diminution in the value and usefulness” of property. Panel op. supra at 1275 (citing Penn Central). Because the Supreme Court held in Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982), that the extent of interference with the actual use of the property becomes irrelevant when the deprivation is physical, the panel is forced to characterize this ordinance as authorizing a “physical occupation.” Its decision relies almost exclusively upon Justice Marshall’s opinion in Loretto. That opinion therefore deserves close attention.
Loretto makes a sharp distinction between permanent, physical occupations, on the one hand, and regulations impairing use, or even causing temporary injury to property, on the other. The hallmark of the physical invasion described in Loretto is actual appropriation of the land itself through physical contact, as, for example, through flooding or direct occupancy. Lor-etto concerned the installation of cable, a “direct physical attachment of plates, boxes, wires, bolts, and screws to the building, completely occupying space immediately above and upon the roof and along the building’s exterior wall.” Id. at 438, 102 S.Ct. at 3177. Under the Loretto analysis, “placement of a fixed structure on land or real property is an obvious fact that will rarely be subject to dispute.” Id. at 437, 102 S.Ct. at 3177. Once the fact of occupation is shown, compensation is required regardless of the extent of the physical occupation. Id. at 436-37, 102 S.Ct. 3176-77. Thus Loretto holds that physical invasion requires compensation for a relatively minor and almost insignificant interference with the use of property. Moreover, a taking can be found under this theory without consideration of the important public benefits achieved by the action. Id. at 434-35, 102 S.Ct. at 3175.
The panel’s appellation of rent control as a “physical invasion,” is built upon the notion that economic regulation can “shade” into physical invasion. Panel op. supra at 1280. This is antithetical to the reasoning of Loretto. In the final pages of Loretto, the Court expressly characterized its holding as a “very narrow” one, 419 U.S. at 441, 102 S.Ct. 3179, and distinguished the physical occupation from cases involving the government’s power to regulate land — specifically, landlord-tenant relationships.
Finally, we do not agree with appellees that application of the physical occupation rule will have dire consequences for the government's power to adjust landlord-tenant relationships. This Court has consistently affirmed that States have broad power to regulate housing condi*1284tions in general and the landlord-tenant relationship in particular without paying compensation for all economic injuries that such regulation entails. See, e.g., Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241, 85 S.Ct. 348, 13 L.Ed.2d 258 (1964) (discrimination in places of public accommodation); Queenside Hills Realty Co. v. Saxl, 328 U.S. 80, 66 S.Ct. 850, 90 L.Ed. 1096 (1946) (fire regulation); Bowles v. Willingham, 321 U.S. 503, 64 S.Ct. 641, 88 L.Ed. 892 (1944) (rent control); Home Building & Loan Assn. v. Blaisdell, 290 U.S. 398, 54 S.Ct. 231, 78 L.Ed. 413 (1934) (mortgage moratorium); Edgar A. Levy Leasing Co. v. Siegel, 258 U.S. 242, 42 S.Ct. 289, 66 L.Ed. 595 (1922) (emergency housing law); Block v. Hirsh, 256 U.S. 135, 41 S.Ct. 458, 65 L.Ed. 865 (1921) (rent control).
Id. at 440, 102 S.Ct. 3178. We now in this circuit face, as a result of the Hall opinion, the very “dire consequences” that the Court intended to avoid in Loretto.
In addition to all of these infirmities, the Hall opinion in Part II adopts a view, heretofore spurned by the Supreme Court as a tool of constitutional analysis, which may well create even broader turmoil in other fields of economic regulation. Panel op. supra at 1281. It endorses the proposition that the constitutionality of a regulation depends not upon a court’s assessment of its legal consequences, but upon economists’ assessment of its practical effectiveness. The panel suggests in a footnote, for example, that we may have to reassess the rationality of “rent control vel non ” in light of the growing literature on the subject. Panel op. supra at 1281 n. 26.
The opinion acknowledges that the Santa Barbara City Council enacted the ordinance “to alleviate what it perceived as [a] ‘critical shortage of low and moderate income housing.’ ” Panel op. supra at 1280. Then it assails the ordinance for failing to live up to that purpose. Id. “Significant doubt” as to whether a legislative body’s goals are in fact achieved is not sufficient to warrant striking down an ordinance, however. Legislation passes muster if the legislature reasonably could have concluded that its action would promote a legitimate state interest. Williams v. Vermont, 472 U.S. 14, 105 S.Ct. 2465, 2472, 86 L.Ed.2d 11 (1985). The judiciary does not have the power to sit as a “superlegislature” second-guessing the wholly economic regulations of state and local governments. City of New Orleans v. Dukes, 427 U.S. 297, 303, 96 S.Ct. 2513, 2516-17, 49 L.Ed.2d 511 (1976) (per curiam).
This case is important. Although it is not a decision on the merits invalidating any ordinance, it is an authorization for broad, wholesale attacks upon rent control regulation. It casts a shadow upon all economic regulation. Our court must now sit idly by and watch taxpayers’ money and court time being expended in litigation over the effects of this decision. I regret that we did not take this case en banc and put our circuit back in line with the Supreme Court and the rest of the country.