Court Opinion

ID: 9481857
Source: CourtListenerOpinion
Date Created: 2023-08-05 08:33:59.154361+00
Date Added: 2024-06-11T17:48:37.461680
License: Public Domain

RYMER, Circuit Judge,
dissenting:
I have no quarrel with the notion that these aggrieved plaintiffs may have some state law cause of action against “the last rampart” of sixties counterculture. I dissent because I am convinced that their inability to allege financial harm sinks their civil RICO claim.
The majority correctly concludes that RICO’s requirement of an injury to “business or property” does not require a plaintiff to plead injury to “business property.” Nevertheless, invocation of the talismanic phrase “property interest” does not suffice to satisfy the statute’s requirement of injury to property. In this circuit, we require civil RICO plaintiffs to allege that they have suffered a “financial loss or injury.” Berg v. First State Ins. Co., 915 F.2d 460, 464 (9th Cir.1990); First Pac. Bancorp, Inc. v. Bro, 847 F.2d 542, 547 & n. 12 (9th Cir.1988). The proper focus is on the nature of the loss these plaintiffs have suffered, not on whether a “property right” exists. Even assuming that these plaintiffs have suffered some harm to a property interest, I fail to see how they have contended that that harm is financial in nature. Their complaint, therefore, cannot survive a motion to dismiss. Cf. Berg, 915 F.2d at 464 & n. 4 (civil RICO action by plaintiff who had “property interest” in insurance policy could not survive summary judgment because harm from cancellation of policy was not “financial”).
The majority reasons that defendants allegedly infringed upon plaintiffs’ right to quiet enjoyment of their leasehold — one of the “bundle of sticks” making up their property right. Not according to California law, they didn’t. A tenant’s right to quiet enjoyment is a warranty by a lessor against her own acts, not against those of strangers. Marchese v. Standard Realty and Dev. Co., 74 Cal.App.3d 142, 148, 141 Cal.Rptr. 370, 374 (1977) (citing Carty v. Blauth, 169 Cal. 713, 717, 147 P. 949 (1915); Lost Key Mines, Inc. v. Hamilton, 109 Cal.App.2d 569, 573, 241 P.2d 273 (1952)). Thus, disturbance by a neighbor cannot support a lessee’s claim of impairment of his right to quietly enjoy his lease.
Plaintiffs’ claims sound, if anywhere, in nuisance.1 Assuming the alleged nuisance here could be characterized as private,2 it is *815be true that “ ‘any interest sufficient to dignified as a property right’ ” will support the action, including “a tenancy for a term.” Venuto v. Owens-Corning Fiberglas Corp., 22 Cal.App.3d 116, 125, 99 Cal.Rptr. 350, 356 (1971) (quoting Prosser on Torts 613-14 (3d ed.)). I agree that these plaintiffs’ property interest is sufficient to confer standing to bring a state law nuisance suit. See Stoiber v. Honeychuck, 101 Cal.App.3d 903, 920, 162 Cal.Rptr. 194, 202 (1980) (“tenancy is a sufficient proprietary interest to give [plaintiff] standing to bring an action based on nuisance.” (emphasis added)). For purposes of this case, though, the proper focus is not on the nature of plaintiffs’ property rights to determine standing but on the nature of the damage they suffered.
In general, there are two types of damages a plaintiff may recover for nuisance: (1) loss of value of property and (2) loss of use and enjoyment of property. 9 H. Miller & M. Starr, Current Law of California Real Estate §§ 29:14-15 (2d ed. 1990). The existence of a “property interest” does not automatically entitle a plaintiff to both types of damages. Rather, a plaintiff’s measure of damages in a nuisance action is “only an amount sufficient to compensate him for his actual detriment.” Coats v. Atchison, T. & S.F. Ry., 1 Cal.App. 441, 444, 82 P. 640 (1905); see also Cal.Civ.Code § 3333 (West 1970) (measure of damages is “detriment proximately caused” by defendants’ action). We must therefore examine the nature of plaintiffs’ “actual detriment.”
When a nuisance is continuing, rather than permanent,3 the usual measure of the first category of damages (loss of value of property) that an owner of property may assert is loss of rental value. Guttinger v. Calaveras Cement Co., 105 Cal.App.2d 382, 387, 233 P.2d 914, 917 (1951); Ingram v. City of Gridley, 100 Cal.App.2d 815, 820, 224 P.2d 798, 801 (1950) (citation omitted).4 That type of loss would qualify as financial. In this case, though, plaintiffs have not sustained that type of injury because they have not alleged that they are even legally capable of renting their property interests to others, much less rent them for higher prices than they were paying their lessors.5 The rental value to plaintiffs, therefore, is zero and cannot be diminished any further. Plaintiffs in this case differ from other plaintiffs in California cases who were capable of renting their interests and therefore could claim actual, financial injury from a nuisance diminishing that rental value. See, e.g., Qualls v. Smyth, 148 Cal.App.2d 635, 637-38, 307 P.2d 29, 30 (1957) (measure of owner’s “value of property” damage from periodic “turkey dust” that wafted over from neighboring farm “was the depreciation of the rental or use value of the property”); Spaulding v. Cameron, 127 Cal.App.2d 698, 706, 274 P.2d 177, 182 (1954) (owner who lived in premises during period of nuisance received damages for loss of rental value); Guttinger, 105 Cal.App.2d at 387, 233 P.2d *816at 917; Ingram, 100 Cal.App.2d at 820, 224 P.2d at 801.
There are other types of loss of value of property that are financial in nature and would therefore arguably be cognizable under RICO, for example, “actual injuries to the land” and “costs of minimizing future damages.” City of San Jose v. Superior Court, 12 Cal.3d 447, 464, 525 P.2d 701, 712, 115 Cal.Rptr. 797, 808 (1974) (citations omitted). Another example would be a tenant who loses rental money because a nuisance forces abandonment of the premises with time still left on a lease for a given term (and therefore money still owed to the lessor). See Kishlar v. Southern Pac. R.R., 134 Cal. 636, 66 P. 848 (1901) (recovery for lost value when nuisance compelled lessee to vacate before the lease ended and building stood idle for over nine months). Plaintiffs in this case have alleged none of these other types of financial loss. They are not out one cent from defendants’ alleged acts, either in foregone opportunity or money owed or damage needing repair. In short, they have alleged no financial loss at all.6
Instead, plaintiffs’ allegations implicate the second type of nuisance injury: loss of use and enjoyment. That is a perfectly proper thing to allege in a nuisance action, and there need not be actual loss of value in order to sustain a nuisance claim for annoyance, inconvenience, discomfort, mental distress or the like. See City of San Jose, 12 Cal.3d at 464, 525 P.2d at 712, 115 Cal.Rptr. at 808; Acadia, Cal., Ltd. v. Herbert, 54 Cal.2d 328, 337, 353 P.2d 294, 299, 5 Cal.Rptr. 686, 691 (1960); Smith v. County of Los Angeles, 214 Cal.App.3d 266, 287-88, 262 Cal.Rptr. 754, 766 (1989); Qualls, 148 Cal.App.2d at 637-38, 307 P.2d at 30; Spaulding, 127 Cal.App.2d at 706, 274 P.2d at 182; Alonso v. Hills, 95 Cal.App.2d 778, 788, 214 P.2d 50, 57 (1950). Yet even if such damage is labeled an “injur[y] to real property,” City of San Jose, 12 Cal.3d at 464, 525 P.2d at 712, 115 Cal.Rptr. at 808, it is not a financial loss. “Personal discomfort and annoyance to which a person has been subjected by a nuisance on adjoining property,” which describes this second type of nuisance damage, “is like that claimed by the plaintiff in a personal injury action.” Ingram, 100 Cal.App.2d at 823, 224 P.2d at 803. It is settled that personal injuries are not financial losses compensable under RICO. Berg, 915 F.2d at 464.
If defendants diminished plaintiffs’ enjoyment of their property, then plaintiffs may sue to their hearts’ content — in state court, alleging nuisance. But in my view, this complaint was in the wrong court under the wrong statute and the district court properly dismissed it.7

. Generally, under California law, the definition of a nuisance includes ”[a]nything which is ... offensive to the senses, or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property....” Cal.Civ.Code § 3479 (West 1970).

. That assumption is not at all clearly warranted. The ills of which plaintiffs complain sound more like a public nuisance, which is defined by California law as “one which affects at the same *815time an entire community or neighborhood, or any considerable number of persons, although the extent of the annoyance or damage inflicted upon individuals may be unequal.” Cal.Civ.Code § 3480 (West 1970). All other nuisances are considered "private.” Cal.Civ.Code § 3481 (West 1970). See Venuto v. Owens-Corning Fiberglas Corp., 22 Cal.App.3d 116, 123-26, 99 Cal.Rptr. 350, 355-57 (1971) (distinguishing private actions based upon public nuisances, which require an injury different in kind from the injuries suffered by the general public, from private nuisances). Plaintiffs in this case have not alleged that their injuries are any different in kind from other residents of their neighborhood.

. A nuisance that will presumably continue indefinitely is considered permanent; one that may be discontinued at any time is continuing. Phillips v. City of Pasadena, 27 Cal.2d 104, 107, 162 P.2d 625, 626 (1945). Because the alleged nuisance in this case has stopped, obviously it was continuing rather than permanent while it lasted.

. Rental value is different from market value, which is the measure of damages when the nuisance is of a permanent character. Ingram, 100 Cal.App.2d at 820, 224 P.2d at 801 (citation omitted).

. They allege only that "[a] reasonable person would have a reduced desire to rent plaintiffs’ apartments” in general, not that the plaintiffs themselves were actually legally capable of renting. Indeed, given that the apartments were rent-controlled, the plaintiffs likely could not sublease them.

. The majority reasons that plaintiffs’ loss is “economic" because their leases are "worth less.” Ante at 812. They may be "worth less” in a lay understanding, but the characterization is legally immaterial. The leases have no quantifiable "worth” to the plaintiffs to begin with, so the leases’ legal value to them has not been diminished, at least given the absence of an alleged capability to earn something from the property. The majority dignifies potential recovery for an abstract loss — a diminished "market value” in general — even though as to these plaintiffs, who are incapable of marketing the property at all, it has no legal rental value. There is no such thing as market value “in the air,” as it were.

. The district court need not have given plaintiffs leave to amend because this complaint was already their fourth try.
Because I believe the complaint did not state a RICO cause of action, I would not reach the causation issue.