Attorneys Corner

Landmark Decisions by Robert S. Coldren

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Pinnacle Holdings, Inc. v. Simon (1995)

[No. B078275. Second Dist., Div. Six. Jan 31, 1995.]PINNACLE HOLDINGS, INC., Plaintiff and Appellant, v. HAROLD SIMON et al., Defendants and Respondents.

(Superior Court of Ventura County, No. 125343, John J. Hunter, Judge. fn. * )

(Opinion by Stone (S. J.), P. J., with Gilbert and Yegan, JJ., concurring.)

COUNSEL

Hart, King & Coldren, Robert S. Coldren and C. William Dahlin for Plaintiff and Appellant.

Kurt Delsack, Michael Goode, L. M. Schulner, Timothy S. Camarena and Richard A. Weinstock for Defendants and Respondents.

OPINION

STONE (S. J.), P. J.

Four tenants of a mobilehome park protested the park owner’s request for a rental increase. This exercise of free speech and right to protest resulted in their being named as defendants in the park owner’s action against the city for failure to grant the total relief requested. Do the tenants have to remain in the lawsuit and represent unwillingly the rest of the mobilehome park tenants? They do not.

Pinnacle Holdings, Inc. (Pinnacle), appeals from judgments of dismissal in favor of respondents Patty Cau and Harold Simon following the court’s sustaining respondents’ demurrers without leave to amend and denying Pinnacle’s motion to certify respondents as representatives of a class. Pinnacle asserts that the individual defendants were proper parties to the cause of action for declaratory relief as real parties in interest and that the motion to determine and certify the tenants as a class should have been granted. We affirm the judgments.

Facts

Pinnacle owns and operates Imperial Ventura Mobile Estates, a residential mobilehome park which is subject to the City of San Buenaventura’s (City) [31 Cal. App. 4th 1433] mobilehome park rent control ordinance No. 81-39, as amended by City Ordinance Nos. 84-13, 86-1 and 87-15 (Ordinance). In late 1992, Pinnacle applied to the City’s mobilehome rent review board (Board) for a discretionary rent increase pursuant to the Ordinance. The Board made an oral decision to allow a lesser increase than requested by Pinnacle. Pinnacle filed a petition for writ of mandate/administrative mandamus and complaint for declaratory relief, challenging the City’s decision. Along with the City and the Board, Pinnacle named as defendants and real parties in interest four individual tenants of the mobilehome park who had attended the hearing before the Board to protest Pinnacle’s requested rent increases. Pinnacle also filed a motion pursuant to Code of Civil Procedure section 382 to determine class certification.

Two of the named defendants, Patty Cau (mistakenly named as Patty “Cowe”) and Harold Simon, demurred to the petition on grounds of misjoinder and failure to state a cause of action against defendants Cau and Simon for declaratory relief. (Code Civ. Proc., § 430.10, subds. (d), (e), (f).) They and another named defendant, William J. Kilduff, opposed certification of class defendants with them as named representatives. The court sustained respondents’ demurrers without leave to amend and denied Pinnacle’s motion for certification of class. Judgments of dismissal were subsequently entered.

Discussion

[1a] Pinnacle asserts that the trial court erred in sustaining the demurrers because the individual defendants were proper parties to the cause of action for declaratory relief as real parties in interest. The verified petition declared that “Defendants and Real Parties in Interest William J. Kilduff, Patty Cowe, Patrick Burke and Harold Simon are, and at all times herein mentioned were, residents (tenants) located and currently residing within Imperial Ventura and not lessees pursuant to a long-term lease. Pinnacle is informed and believes and thereon alleges that said Real Parties in Interest appeared herein on their own behalf, and on behalf of all similarly situated residents (tenants) of Imperial Ventura….”

The first cause of action for traditional writ of mandate (Code Civ. Proc., § 1085) was against only the Board for violation of applicable laws. The second cause of action for administrative mandamus (Code Civ. Proc., § 1094.5) was also against the Board for allegedly exceeding its jurisdiction and authority, constituting a prejudicial abuse of discretion. The third cause of action for declaratory relief was against all defendants. It alleged that “[a]n actual controversy has arisen and now exists between Pinnacle and [31 Cal. App. 4th 1434] Respondents/Defendants, and each of them, concerning what is the proper and lawful interpretation of the Ordinance, the City of San Buenaventura’s compliance with the Ordinance, applicable law, and the City of San Buenaventura’s compliance with applicable law.”

The third cause of action also alleged that “… Respondents/Defendants, and each of them, contend and take an opposite position in regard to each of the contentions of Pinnacle as set forth above.” It further alleged that “[a] judicial determination and declaration regarding the above-referenced controversy is necessary and appropriate so as to settle the rights, duties and obligations of the parties hereto. A judicial declaration is further necessary and appropriate at this time because an actual controversy exists between Pinnacle and Respondents/Defendants, and each of them, and Pinnacle needs to ascertain its rights, duties and obligations under the Ordinance without being subjected to potential civil liability, potential criminal liability, or a multiplicity of actions by Respondents/Defendants.”

In the prayer for the first and second causes of action, Pinnacle prayed for a writ of mandate or administrative mandamus compelling the Board to grant Pinnacle a rent increase based upon its application. Pinnacle further prayed that the Board be ordered to vacate its decision and enter a new and different award granting Pinnacle 100 percent of the consumer price index increase in its net operating income from the base year to present, allowing and calling for Pinnacle to be reimbursed for its actual allowable expenses, and to utilize submetering of utilities as allowed by law and to otherwise grant and enforce Pinnacle’s application for a rent increase. In the prayer on the third cause of action, Pinnacle requested a judgment declaring that the Board acted contrary to applicable law and deprived Pinnacle of a just and fair return.

Respondents argued that the petition sought no relief from them and that since they were not members of the Board, they could not grant relief to Pinnacle. Pinnacle contends that the individual residents have received a direct economic benefit at the expense of Pinnacle due to the method employed by the City and its Board in reviewing Pinnacle’s rent increase application. For that reason, Pinnacle named the residents who actually appeared at the hearing as parties to the action, individually and as representatives of the other residents.

[2] Pinnacle has the burden to show either that the demurrer was sustained erroneously or that the court abused its discretion in sustaining the demurrer without leave to amend. (Smith v. County of Kern (1993) 20 Cal. App. 4th 1826, 1829-1830 [25 Cal. Rptr. 2d 716]; Stanson v. Brown (1975) 49 Cal. App. 3d 812, 814 [122 Cal. Rptr. 862].) We accept as true all [31 Cal. App. 4th 1435] matters properly pled in the complaint, but may consider matters that may be judicially noted. (Hensler v. City of Glendale (1994) 8 Cal. 4th 1, 8-9, fn. 3 [32 Cal. Rptr. 2d 244876 P.2d 1043].) [3] Before a hearing may be held on the propriety of a class action, the complaint must contain sufficient allegations of class interest or the pleading is vulnerable to a general demurrer. (Bartlett v. Hawaiian Village, Inc. (1978) 87 Cal. App. 3d 435, 437-438 [151 Cal. Rptr. 392].) [4] Whether to certify a class is a decision which rests within the sound discretion of the trial court. (Reyes v. Board of Supervisors (1987) 196 Cal. App. 3d 1263, 1271 [242 Cal. Rptr. 339].) A reviewing court will not disturb this decision on appeal if it is supported by substantial evidence, unless the trial court either employed improper criteria or made erroneous legal assumptions. (Caro v. Procter & Gamble Co. (1993) 18 Cal. App. 4th 644, 655 [22 Cal. Rptr. 2d 419]; see also Osborne v. Subaru of America, Inc. (1988) 198 Cal. App. 3d 646, 654 [243 Cal. Rptr. 815].)

[5] Trial courts must carefully weigh the respective benefits and burdens and allow maintenance of the class action “only where substantial benefits accrue both to the litigants as well as the courts.” (Reyes v. Board of Supervisors, supra, 196 Cal. App. 3d 1263, 1271.) Pinnacle, as the party seeking class certification, bears the burden of not only showing that substantial benefits, both to the litigants and to the court, will result from class certification, but that the class will be adequately represented and its interests protected. (Ibid.; see also National Solar Equipment Owners’ Assn. v. Grumman Corp. (1991) 235 Cal. App. 3d 1273, 1284 [1 Cal. Rptr. 2d 325].)

[1b] Pinnacle asserts that since, on demurrer, its allegations must be accepted as true, respondents could not allege that an actual controversy did not exist regarding the Board’s interpretation of Civil Code section 798.41 (allowable utility service fees under the Mobilehome Residency Law [Civ. Code, § 798 et seq.]). Pinnacle argues that, while the tenants may not be indispensable parties, it was permissible to include them within the litigation so that any concern about such parties’ due process rights would be eliminated. Respondents were four of over three hundred tenants who received notices of Pinnacle’s application for rent increase. These four tenants appeared at the hearing to voice their opposition to an increase, as they had a right to do under the Ordinance (a copy of which is attached to Pinnacle’s petition). For their efforts, they are now on the receiving end of a lawsuit. Is this how Pinnacle protects their due process rights?

The tenants are not without means of protecting their interests. They did not need Pinnacle’s help. Section 2289.45 of the Ordinance gives tenants the right to seek injunctive relief and damages, individually or by class action, if “any owner demands, accepts, receives or retains any payment of rent in [31 Cal. App. 4th 1436] excess of the maximum lawful space rent, as determined under this Article ….” Since all tenants to be affected by any increase were on notice that the Board might grant Pinnacle’s request, those who have not sought to be joined in the suit apparently chose to live with the Board’s decision and the chance it could be overturned on appeal. Those who wished to do so could have taken action pursuant to the Ordinance or intervened in any ensuing legal proceedings. (See Code Civ. Proc., § 387.)

It is true that the Board’s decision may affect Pinnacle’s tenants. However, the relief requested can be granted without legal participation of any tenants. ” ‘The question of standing to sue is one of the right to relief and goes to the existence of a cause of action against the defendant ….’ ” (Killian v. Millard (1991) 228 Cal. App. 3d 1601, 1605 [279 Cal. Rptr. 877].) The tenants were not necessary parties because their ability to protect their interest was neither impaired nor impeded. (Citizens Assn. for Sensible Development of Bishop Area v. County of Inyo (1985) 172 Cal. App. 3d 151, 161 [217 Cal. Rptr. 893].) Moreover, even if their ability to protect their interest is impaired by their inaction, they are not indispensable. “The Supreme Court provided guidance in this regard when it cautioned against the common blunder of finding any necessary party as indispensable and observed that ‘… we should … be careful to avoid converting a discretionary power or a rule of fairness in procedure into an arbitrary and burdensome requirement which may thwart rather than accomplish justice.’ ” (Id., at p. 162.)

Pinnacle asserts that it is proper to join respondents in its dispute with the Board even if respondents cannot give the relief sought in the petition because of some passing interest the tenants might have. We disagree. The first cause of action for “traditional mandamus” under Code of Civil Procedure section 1085 is to compel the performance of a duty which is purely ministerial in character. (State of California v. Superior Court (1974) 12 Cal. 3d 237, 247 [115 Cal. Rptr. 497, 524 P.2d 1281].) That cause of action cannot apply to respondents since they have no ministerial duty concerning rent adjustments (Nor does the Board, since its function is discretionary, rather than ministerial.) Nor are respondents proper parties to the cause of action for administrative mandamus under Code of Civil Procedure section 1094.5 since that action is directed to a final administrative order or decision.

Pinnacle asserts that an action for declaratory relief may lie against an administrative agency where the allegation is that the agency has a policy of ignoring or violating applicable laws and regulations, i.e., that the agency has set an overreaching, quasi-legislative policy. (See Californians for Native [31 Cal. App. 4th 1437] Salmon etc. Assn. v. Department of Forestry (1990) 221 Cal. App. 3d 1419, 1429 [271 Cal. Rptr. 270].) Consequently, Pinnacle argues, since it has alleged that an actual controversy exists between Pinnacle and all defendants, respondents are properly joined, even if they are only real parties in interest and not necessary parties. Again we disagree. ” ‘The fundamental basis of declaratory relief is the existence of an actual, present controversy over a proper subject.’ ” (Id., at p. 1427.) Even assuming Pinnacle is challenging an overall policy rather than seeking the same remedies as in the first and second causes of action via declaratory relief rather than mandate (see State of California v. Superior Court, supra, 12 Cal. 3d 237, 248-249), Pinnacle has requested no relief from respondents nor can respondents grant any relief. Those facts are dispositive.

” ‘[I]t is fundamental that a person should not be compelled to defend himself in a lawsuit when no relief is sought against him.’ ” (Duffey v. Superior Court (1992) 3 Cal. App. 4th 425, 429 [4 Cal. Rptr. 2d 334].) The only parties the trial court needed to make a complete determination about whether the Board correctly calculated the rent increase were Pinnacle and the Board. The application to the Board and the ensuing legal action were brought by Pinnacle, not by the tenants. Respondents have had to incur legal expenses due to Pinnacle’s effort to “protect” respondents’ right because they appeared at the hearing on Pinnacle’s application. Had respondents utilized the procedure set out in Code of Civil Procedure section 425.16, the court might well have granted the motion.

Moreover, the cases Pinnacle cites to support its argument that the court abused its discretion in denying its motion to certify defendants as representatives of the class of tenants are inapposite. For the most part, they concern plaintiffs who want to represent a class. (See, e.g., Rich v. Schwab (1984) 162 Cal. App. 3d 739, 744 [209 Cal. Rptr. 417].) “[T]here is a substantial difference between a plaintiffs’ class suit and a lawsuit against a class of defendants. Defendants’ class actions involve the serious danger of fraudulent or calculated selection of defendants who might not fully and fairly represent the interests of the class….” (Simons v. Horowitz (1984) 151 Cal. App. 3d 834, 844 [199 Cal. Rptr. 134].) Here, Pinnacle was attempting to join into the litigation unwilling defendants and impose upon them the responsibility of monitoring the litigation to make certain that the interests of the alleged class are being protected. ” ‘… [I]t is the responsibility of the class representative to protect the interests of all class members.’ ” (Ibid.) To allow Pinnacle to impose such responsibility on unwilling parties against whom Pinnacle seeks no affirmative relief would have a chilling effect on the provision of the Ordinance for allowance of interested parties to participate in hearings of this type. [31 Cal. App. 4th 1438] The judgments are affirmed. Costs to respondents. fn. 1

Gilbert, J., and Yegan, J., concurred.

FN *. Retired judge of the Ventura Municipal Court sitting under assignment by the Chairperson of the Judicial Council.

FN 1. Respondent Simon argued that sanctions for frivolous appeal should be imposed. We deny the request for two reasons. It was untimely and Pinnacle’s appeal was based on language in prior published opinions which could have led it to conclude respondents were permissible, if not indispensable, parties to the litigation.

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Montclair Parkowners Assn. v. City of Montclair (1999)

Annotate this Case

[No. E024137. Fourth Dist., Div. Two. Dec 2, 1999.]MONTCLAIR PARKOWNERS ASSOCIATION et al., Plaintiffs and Appellants, v. CITY OF MONTCLAIR, Defendant and Respondent.

[Opinion certified for partial publication. fn. * ]

(Opinion by McKinster, Acting P. J., with Richli and Ward, JJ., concurring.)

COUNSEL

Hart, King & Coldren, Robert S. Coldren, C. William Dahlin and Keith W. Carlson for Plaintiffs and Appellants.

Robbins & Holdaway, Diane E. Robbins, Richard Holdaway; Endeman, Lincoln, Turek & Heater, Donald R. Lincoln, Henry E. Heater and Linda B. Reich for Defendant and Respondent.

OPINION

McKINSTER. Acting P. J.

Plaintiffs Montclair Parkowners Association and Hacienda Mobile Home Association (hereafter, Park Owners) seek to invalidate ordinance No. 98-777, enacted by the City of Montclair (hereafter, City), on the grounds that it is unconstitutional on its face. Ordinance No. 98-777 was enacted to amend the existing rent control ordinance. Park Owners contend that enactment of the ordinance resulted in a regulatory taking of their property without just compensation in violation of article I, section 19, of the California Constitution. The trial court sustained City’s demurrer on the ground that ordinance No. 98-777 was facially constitutional and dismissed the entire case against City.

In the published portion of the opinion (pt. I), we conclude that ordinance No. 98-777 on its face is not an unconstitutional regulatory taking. In our view, the relevant inquiry into the constitutionality of ordinance No. 98-777 under article I, section 19 of the California Constitution is whether the ordinance is an arbitrary regulation of Park Owners’ property rights. Since City could have reasonably concluded that the limitation on Park Owners’ ability to raise the rent upon sale of mobilehomes would (1) protect [76 Cal. App. 4th 787] the current mobilehome owners’ equity in the homes, and (2) protect prospective mobilehome owners from excessive rent increases, it is not a compensable taking under the California Constitution.

In the unpublished portion of the opinion (pt. II), we conclude that the trial court did not abuse its discretion in denying leave to amend the complaint.

Factual and Procedural Background

A. History of City’s Rent Control Ordinance

Prior to 1998, City had an existing rent control ordinance. According to that ordinance, Park Owners were free to adjust the rental rate for the mobilehome space in the park upon sale of the mobilehome or other voluntary transfer of ownership in the mobilehome unless the transfer was made to a family member by gift, contract, or otherwise. However, according to a study commissioned by City in 1998, the existing rent control ordinance lost some of its effectiveness because Park Owners routinely required prospective mobilehome owners to sign long-term rental agreements or leases that were exempt from local rent control ordinances pursuant to Civil Code section 798.17 (the mobilehome residency statute). As a result, the current mobilehome owners’ ability to sell their mobilehomes was significantly impaired because many prospective mobilehome owners were discouraged from buying by the prospect of paying higher market-level rental rates.

Furthermore, according to the study, the limitation on the ability to sell the mobilehomes resulted in a higher number of the homes being abandoned, which caused an increasing number of the mobilehomes to be placed in the hands of Park Owners. Thus, Park Owners were, in a sense, competing with existing mobilehome owners in selling the mobilehomes. According to the study, although antitrust laws would bar Park Owners from requiring prospective mobilehome owners to purchase their mobilehomes from Park Owners as a condition of residence at the park, nothing would preclude Park Owners from giving rent preferences to those individuals that bought their mobilehomes from Park Owners. Also, the study noted the peculiar nature of mobilehomes, particularly their low mobility, as a factor in favor of amending the ordinance, since the cost of moving a mobilehome from place to place was prohibitive. Therefore, the study concluded that City’s rent control ordinance’s existing vacancy decontrol provision should be replaced with a vacancy control provision in order to (1) protect existing mobilehome owners from excessive rents and preserve equity in their mobilehomes, and [76 Cal. App. 4th 788] (2) protect prospective mobilehome owners from excessive rent increases. The existing vacancy decontrol provision allowed Park Owners unlimited space rent increases when a mobilehome was sold in place. The proposed vacancy control provision would prohibit Park Owners from adjusting the space rent to market level when a mobilehome is sold in place.

When a concern arose that the proposed ordinance would not accomplish its stated legislative purpose, a supplemental report was issued. The report addressed the argument that any benefit created by the proposed vacancy control provision would be captured only by the existing mobilehome owners because lower rent-controlled space-rental rates would allow them to sell their mobilehomes at higher prices. However, the report concluded that, in light of the data collected from neighboring cities with similar rent control ordinances, any potential increase in sale prices of mobilehomes would be more than offset by low rental rates. Also, prospective mobilehome owners would be able to benefit from the higher equity retained in the mobilehomes once they bought them.

On June 20, 1998, City enacted City of Montclair Ordinance No. 98-777 (Ordinance No. 98-777). The stated legislative goal of the ordinance was to “(1) protect current home owner’s investment in their mobile homes by precluding park owners from (a) requiring prospective mobile home owners to sign a long-term lease therefore adversely effecting [sic] sales of mobile homes and (b) raising space rents upon sale or transfer of a mobile home in a park.” (Ord. No. 98-777, § 5-19.01, subd. H.) Moreover, the ordinance’s aim was to “protect prospective mobile home owners from excessive rents by providing (a) for lease options in order to give each prospective home owner a real choice between an exempt long-term lease and a lease subject to the protections of the Ordinance; and (b) that a park owner may not raise space rents upon the sale or transfer of a mobile home in a park.” (Ibid.) Finally, the ordinance was designed to “protect prospective homeowners’ future investments in their mobile homes by precluding park owners from (a) affecting a future sale of such mobile homes through a long-term lease requirement imposed upon the subsequent purchasers and (b) raising space rents upon sale or transfer of a mobile home in a park.” (Ibid.)

Section 5-19.06 of the newly enacted ordinance limits Park Owners’ ability to raise space rental rates upon sale or transfer of ownership of a mobilehome to the greater of: (a) 3 percent; or (b) 100 percent of the most current annual CPI (consumer price index) percentage increase, up to a maximum of 8 percent. Section 5-19.09 allows Park Owners to make an administrative application to increase rental rates above the limitations [76 Cal. App. 4th 789] imposed by the ordinance based on increases in land lease payments made by Park Owners, certain taxes and making of capital improvements. The application for rent increase must be made to the rent review administrator. (Ord. No. 98-777, § 5-19.09, subd. A). Any adverse determination on the application for rent increase can be appealed to the city council, and a subsequent judicial review of the city council’s decision can be made via a petition for a writ of administrative mandate. (Ord. No. 98-777, § 5-19.09, subd. F.)

In addition to any rent increase allowed pursuant to section 5-19.09, Park Owners may seek permission to increase space rent by submitting an application to the park mediation committee (hereafter, Committee). (Ord. No. 98-777, § 5-19.10, subds. A and B.) The Committee shall consist of two representatives from Park Owners, two representatives from the spaces affected by the proposed rent increase, and one mediator appointed by the rent review administrator. (Ibid.)

If the Committee fails to reach an agreement on the application, Park Owners may also apply for a rent increase through arbitration. (Ord. No. 98-777, § 5-19.11.) Park Owners are permitted to employ legal counsel and present physical and testimonial evidence in support of their application. (Ord. No. 98-777, § 5-19.11, subd. F.) The ordinance provides a non-exclusive list of factors on which the arbitrator may rely in reaching his or her decision. (Ord. No. 98-777, § 5-19.11, subd. G.) Any adverse decision by the arbitrator is not binding and can be appealed to the city council. (Ord. No. 98-777, § 5-19.12.) Park Owners may obtain judicial review of any adverse decision by the city council by seeking a writ of administrative mandate. (Ord. No. 98-777, § 5-19.13.)

B. Procedural History of This Litigation

On August 18, 1998, Park Owners filed a complaint against City in the superior court. It contained the following counts: (1) a declaratory relief cause of action re: facial constitutionality of the rent control ordinance; fn. 1 (2) a request for temporary and permanent injunctive relief on the grounds that the ordinance was facially unconstitutional, and its enforcement would result in irreparable harm; and (3) an inverse condemnation claim that alleged that enactment of the ordinance resulted in a regulatory taking of Park Owners’ property without compensation. [76 Cal. App. 4th 790]

City demurred to the entire complaint. The trial court ruled that the ordinance was facially constitutional and sustained City’s demurrer to the entire complaint without leave to amend. Park Owners timely appealed.

Discussion

[1] “A demurrer tests the legal sufficiency of the complaint, …” (Hernandez v. City of Pomona (1996) 49 Cal. App. 4th 1492, 1497 [57 Cal. Rptr. 2d 406]; Sargoy v. Resolution Trust Corp. (1992) 8 Cal. App. 4th 1039, 1041 [10 Cal. Rptr. 2d 889].) On appeal from an order of dismissal after an order sustaining a demurrer, our standard of review is de novo, i.e., we exercise our independent judgment about whether the complaint states a cause of action as a matter of law. (Moore v. Regents of University of California (1990) 51 Cal. 3d 120, 125 [271 Cal. Rptr. 146793 P.2d 479].) We deem to be true all material facts properly pled (Serrano v. Priest (1971) 5 Cal. 3d 584, 591 [96 Cal. Rptr. 601, 487 P.2d 1241, 41 A.L.R.3d 1187]) and those facts that may be implied or inferred from those expressly alleged (Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal. App. 4th 1397, 1403 [44 Cal. Rptr. 2d 339].)

While a decision to sustain or overrule a demurrer is subject to de novo review on appeal, a grant or denial of leave to amend calls for an exercise of discretion on the part of the trial court. (Hernandez v. City of Pomona, supra, 49 Cal.App.4th at p. 1497.) Denial of leave to amend is reviewed for abuse of discretion. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal. 4th 962, 967 [9 Cal. Rptr. 2d 92831 P.2d 317].) The trial court abuses its discretion in denying leave to amend only if the plaintiff shows a reasonable possibility of curing any defect by amendment. (Ibid.)

I. Constitutionality of Ordinance No. 98-777

Park Owners contend that Ordinance No. 98-777 is unconstitutional because it does not substantially advance a legitimate government interest and deprives Park Owners of all economically beneficial use in their property. fn. 2 City responds that the stated legislative purposes of the ordinance, protection [76 Cal. App. 4th 791] of the current mobilehome owners’ investment in their homes and protection of prospective mobilehome owners from excessive rents, are legitimate government interests. City further argues that the ordinance accomplishes its stated legislative purposes by prohibiting Park Owners from adjusting rental rates to the market level upon sale or transfer of ownership of a mobilehome. City points out that lower rental rates protect the current mobilehome owners’ equity in their homes by making the homes more attractive sale items and allow prospective mobilehome owners to capture the benefit of Ordinance 98-777 in the form of lower rental rates.

[2] The following legal principles govern our review of facial constitutional challenges to statutes: ” ‘In determining a statute’s constitutionality, we start from the premise that it is valid, we resolve all doubts in favor of its constitutionality, and we uphold it unless it is in clear and unquestionable conflict with the state or federal Constitutions. [Citation.] A challenge to a statute’s constitutionality must demonstrate that its provisions inevitably pose a present total and fatal conflict with applicable constitutional prohibitions. [Citation.] The corollary to the challenger’s burden is that if the court can conceive of a situation in which the statute can be applied without entailing an inevitable collision with constitutional provisions, the statute will prevail. [Citation.] … A statute will be declared invalid in its entirety only when its scope cannot be limited to constitutionally applicable situations except by reading in numerous qualifications and exceptions, i.e., rewriting it, or if it is invalid in certain situations and cannot be enforced in others without danger of an uncertain or vague future application. [Citation.]’ ” (County Mobilehome Positive Action Com., Inc. v. County of San Diego (1998) 62 Cal. App. 4th 727, 733 [73 Cal. Rptr. 2d 409].)

A. Standard of Review

Initially, we need to address the standard under which the ordinance in question must be reviewed. Both parties take the position that Ordinance No. 98-777 is not an unconstitutional regulatory taking if it (1) substantially advances a legitimate government interest, and (2) does not deprive Park Owners of all economically viable use of their property. (Nollan v. California Coastal Comm’n (1987) 483 U.S. 825 [107 S. Ct. 3141, 97 L. Ed. 2d 677] [76 Cal. App. 4th 792] (hereafter, Nollan); Agins v. Tiburon (1980) 447 U.S. 255, 260 [100 S. Ct. 2138, 2141, 65 L. Ed. 2d 106] (hereafter, Agins).) fn. 3 [3] However, as we explain below, the Agins-Nollan test should not be utilized in determining the constitutionality of a rent control scheme applicable to mobilehome parks. Instead, such a scheme should be reviewed to determine whether it results in arbitrary regulation of private landowner’s property rights. (Santa Monica Beach, Ltd. v. Superior Court (1999) 19 Cal. 4th 952, 967 [81 Cal. Rptr. 2d 93968 P.2d 993] (hereafter, Santa Monica Beach).)

In Nollan, the United States Supreme Court held that in cases where the government conditions lifting of a land use restriction on dedication of a portion of a private land to the public, the condition is an unconstitutional regulatory taking unless it (1) substantially advances a legitimate state interest sought to be protected by the development ban, and (2) does not deprive the landowner of the economically viable use of his land. (Nollan, supra, 483 U.S. at pp. 834-842 [107 S.Ct. at pp. 3151-3152], citing Agins, supra, 447 U.S. at p. 260 [100 S.Ct. at p. 2141].) The court observed that a land use restriction will be particularly scrutinized when the lifting of that restriction is conditioned upon actual conveyance of private property, “since in that context there is heightened risk that the purpose [of the condition] is avoidance of the compensation requirement, rather than the stated police-power objective.” (483 U.S. at p. 841 [107 S.Ct. at p. 3151].)

The United States Supreme Court had no occasion to decide whether the Agins-Nollan test should be used to review either rent control laws applicable to apartment buildings (hereafter, general rent control laws) or rent control laws applicable to mobilehome parks; although, several comments by the court in Yee v. Escondido (1992) 503 U.S. 519 [112 S. Ct. 1522, 1529-1530, 118 L. Ed. 2d 153], 530 (hereafter, Yee), fn. 4 suggest that this test might be applicable to determine whether a mobilehome park rent control law amounts to a regulatory taking. fn. 5 On the contrary, the high court recently acknowledged that it had never extended the Agins-Nollan test beyond cases involving regulations requiring dedication of private property for public use [76 Cal. App. 4th 793] as a condition of the issuance of a land development permit. (City of Monterey v. Del Monte Dunes At Monterey, Ltd. (1999) 526 U.S. 687 [119 S. Ct. 1624, 1635, 143 L. Ed. 2d 882].)

The California Supreme Court has never held that rent control schemes involving mobilehome parks should be reviewed under the Agins-Nollan test. On the contrary, our Supreme Court has recently held that the Agins-Nollan test does not apply to general rent control laws. (Santa Monica Beach, supra, 19 Cal.4th at p. 967.) Instead, the high court concluded that the standard of review in this context must be at least as deferential as for generally applicable zoning laws and other legislative land use controls, i.e. “… the party challenging rent control must show ‘that it constitutes an arbitrary regulation of property rights.’ [Citation.]” (Ibid.) Although the court declined to characterize this new test as a rational basis test, it observed that it was more deferential to the government than the Agins-Nollan heightened intermediate scrutiny test. (Ibid.)

Notably, the court acknowledged that the dictum from Yee “suggested that the mobilehome rent control scheme of regulation would be scrutinized to determine whether those restrictive regulations advanced a legitimate government interest.” (Santa Monica Beach, supra, 19 Cal.4th at p. 969.) Nevertheless, the court left unanswered the question of what standard of review applies to rent control regulation of mobilehome parks. (Ibid.)

California Courts of Appeal have not applied a uniform standard of review to rent control schemes of mobilehome parks. (Compare Casella v. City of Morgan Hill (1991) 230 Cal. App. 3d 43, 57 [280 Cal. Rptr. 876] [“Legislation passes muster if the legislature reasonably could have concluded that its action would promote a legitimate state interest.”] with Sandpiper Mobile Village v. City of Carpinteria, supra, 10 Cal. App. 4th 542, 549-550 [12 Cal. Rptr. 2d 623] [“In evaluating whether an ordinance on its face constitutes a taking of a landowner’s property, the question is whether the ordinance substantially advances a legitimate state interest in the public welfare…. [¶] … [¶] Unless the regulatory ordinance denies the property owner substantially all economically ‘viable use of [the] land,’ there is no compensable taking.”]; accord, Westwinds Mobile Home Park v. Mobilehome Park Rental Review Bd. (1994) 30 Cal. App. 4th 84, 95 [35 Cal. Rptr. 2d 315].)

We conclude that the Agins-Nollan test does not apply to rent control schemes of mobilehome parks. The Santa Monica Beach court rejected the [76 Cal. App. 4th 794] Agins-Nollan test (characterized by the court as an intermediate scrutiny test) in the context of general rent control laws because the test applied only in situations where the government required dedication of private property for public use before it issued a land use permit. (Santa Monica Beach, supra, 19 Cal.4th at p. 966.) Instead, the court adopted a more deferential standard of review, reasoning that general rent control laws are ” ‘essentially legislative determinations’ that do not require any physical conveyance of property.” (Ibid.)

The reasoning of Santa Monica Beach is equally applicable to rent control schemes of mobilehome parks. We are aware of the differences between general rent control laws and rent control laws of mobilehome parks identified by the United States Supreme Court in Yee. However, these differences provide no justification for application of the Agins-Nollan test in the field of rent control of mobilehome parks. All rent control schemes are essentially legislative determinations that only limit one particular use of private land. Rent control laws do not require physical conveyance of the property and do not interfere with traditional property rights, such as, for example, the right to exclude others from the property.

Therefore, we conclude that the proper inquiry in determining whether a rent control scheme applicable to mobilehome parks is a regulatory taking under the California Constitution is whether such a scheme is an arbitrary regulation of landowner’s property rights. (Santa Monica Beach, supra, 19 Cal.4th at p. 967.)

B. Ordinance No. 98-777 Is Constitutional

[4] Having determined the appropriate standard of review, we now turn to the constitutionality of the ordinance in this case.

In order to establish that Ordinance No. 98-777 facially violates the takings clause of the California Constitution, fn. 6 Park Owners must establish that the mere enactment of the ordinance amounted to a regulatory taking of private property for public use without compensation. As noted above, a rent control ordinance is a regulatory taking if it is an arbitrary regulation of property rights. (Santa Monica Beach, supra, 19 Cal.4th at p. 967.) California courts have traditionally upheld rent control regulatory schemes against constitutional challenges under the takings clause. (See, e.g., Santa Monica [76 Cal. App. 4th 795] Beach, supra, 19 Cal.4th at pp. 969-970; cf. Kavanau v. Santa Monica Rent Control Bd. (1997) 16 Cal. 4th 761, 781 [66 Cal. Rptr. 2d 672941 P.2d 851].) In Casella v. City of Morgan Hill, the Sixth District upheld a rent control ordinance under the rational basis standard of review. (Casella v. City of Morgan Hill, supra, 230 Cal.App.3d at p. 57.)

In this case, we conclude that Ordinance No. 98-777 is not a regulatory taking. Park Owners concede that protection of the current mobilehome owners’ equity in their homes and protection of prospective mobilehome owners from excessive rents are legitimate government interests. City could have reasonably concluded that limiting Park Owners’ ability to raise the rent upon the sale or transfer of mobilehomes would accomplish that goal by making mobilehomes more attractive sale items and making mobilehome ownership more feasible for prospective buyers. Thus, Ordinance No. 98-777 on its face is not an arbitrary regulation of Park Owners’ property rights.

Park Owners urge us to part company with prior California decisions upholding the constitutionality of rent control regulatory schemes similar to Ordinance No. 98-777. Instead, they contend that we should follow a 1997 decision from the Ninth Circuit, which found the City of Honolulu’s rent control ordinance to be an unconstitutional regulatory taking. (See Richardson, supra, 124 F.3d at p. 1166.) We are not persuaded.

In Richardson, the Ninth Circuit found that the rent control ordinance was an unconstitutional regulatory taking because it did not provide for a separate mechanism allowing prospective mobilehome owners to capture the benefit of the reduced rental rates. (Richardson, supra, 124 F.3d at p. 1166.) Thus, the court concluded that the ordinance failed to substantially advance the stated legislative goal of the ordinance to create more affordable housing in Honolulu. (Ibid.)

In this case, there is a good reason for not following the Ninth Circuit. The Richardson court used the Agins-Nollan test in striking down the Honolulu rent control ordinance. As we concluded above, this test cannot be used to review constitutionality of rent control schemes applicable to mobilehome parks. Moreover, our Supreme Court expressly held that this test cannot be used to review the constitutionality of general rent control laws. (Santa Monica Beach, supra, 19 Cal.4th at p. 967.)

Therefore, we conclude that Ordinance No. 98-777 on its face is not a regulatory taking under the California Constitution. [76 Cal. App. 4th 796]

II fn. * Denial of Leave to Amend Complaint

* * *

Disposition

The judgment is affirmed.

Richli, J., and Ward, J., concurred.

Appellants’ petition for review by the Supreme Court was denied March 15, 2000. Baxter, J., did not participate therein. Mosk, J., was of the opinion that the petition should be granted.

FN *. Pursuant to California Rules of Court, rules 976(b) and 976.1, this opinion is certified for publication with the exception of part II.

FN 1. Park Owners made an express reservation of their right to litigate federal constitutional issues in federal court pursuant to England v. Medical Examiners (1964) 375 U.S. 411, 420-421 [84 S. Ct. 461, 467-468, 11 L. Ed. 2d 440]. Thus, the only constitutional claim before us is one made under article I, section 19 of the California Constitution.

FN 2. In the reply brief, Park Owners state that their complaint encompasses both facial and asapplied challenges to Ordinance No. 98-777. But in their opening brief, Park Owners state as follows: “Plaintiffs have brought an action which includes a cause of action for declaratory relief regarding the constitutionality of one portion of the Ordinance, not as to the entire Ordinance as applied to Plaintiffs.” Furthermore, the declaratory relief count in Park Owners’ complaint is labeled “Declaratory Relief: Re Facial Constitutionality of Ordinance No. 98-777.” Thus, the as-applied challenge is being made for the first time in the reply brief, and it will not be considered. (Reichardt v. Hoffman (1997) 52 Cal. App. 4th 754, 764-765 [60 Cal. Rptr. 2d 770].) In any event, this issue could not otherwise be considered on the merits at this time because it is not ripe for adjudication. (Sandpiper Mobile Village v. City of Carpinteria (1992) 10 Cal. App. 4th 542, 549 [12 Cal. Rptr. 2d 623] [“Because Sandpiper has not alleged that it has attempted to change the use of its park or to apply for rent increases, its regulatory taking claim is not ripe.”].)

FN 3. Hereafter, the Agins-Nollan test.

FN 4. In Yee, the United States Supreme Court noted that rent control schemes applicable to mobilehomes differ from rent control laws applicable to apartments in that an apartment tenant does not transfer anything to the succeeding tenant while a mobilehome owner actually transfers an asset, i.e., the mobilehome itself. (Yee, supra, 503 U.S. at p. 530 [112 S.Ct. at pp. 1529-1530].) Thus while a rent control scheme applicable to apartments benefits only prospective tenants in the form of reduced rent, a similar law applicable to mobilehomes also allows the current mobilehome owners to benefit by charging a higher sale price for the mobilehome. (Ibid.)

FN 5. The lower federal courts had also utilized the Agins-Nollan test to decide whether a rent control regulatory schemes results in a regulatory taking. (See e.g., FHLMC v. New York State DHCR (2d Cir. 1996) 83 F.3d 45, 48; Richardson v. City and County of Honolulu (9th Cir. 1997) 124 F.3d 1150, 1164-1166 (hereafter, Richardson.)

FN 6. Article I, section 19 of the California Constitution provides, in pertinent part: “Private property may be taken or damaged for public use only when just compensation … has first been paid to … the owner.”

FN *. See footnote, ante, page 784.

————————————————————————————————————————————————————————————————-

Mission Oaks Mobile Home Park v. City of Hollister, 788 F. Supp. 1117 (N.D. Cal. 1992)

US District Court for the Northern District of California – 788 F. Supp. 1117 (N.D. Cal. 1992)
March 30, 1992


788 F. Supp. 1117 (1992)

MISSION OAKS MOBILE HOME PARK, Plaintiff,
v.
CITY OF HOLLISTER, et al., Defendants.

No. C 91-20733 JW.
United States District Court, N.D. California.
March 30, 1992.
*1118 Robert S. Coldren, James M. Trush, Hart, King, & Coldren, Santa Ana, Cal., for plaintiff.

John H. O’Brien, City of Hollister, Hollister, Cal., for defendants.

SECOND AMENDED ORDER FOR PUBLICATION GRANTING DEFENDANTS’ MOTION TO DISMISS

WARE, District Judge.

I. INTRODUCTION

Plaintiff Mission Oaks, an owner of a mobilehome park in the City of Hollister, brought suit in federal court challenging the City of Hollister’s mobilehome park rent control ordinance. Mission Oaks previously filed a challenge to the rent control ordinance in state court alleging the same state and federal constitutional and § 1983 violations.

Defendants, City of Hollister et al., move for dismissal on the grounds that the pending action in state court duplicates the instant action, that the state suit was filed prior to the filing in federal court and that there have been substantial proceedings in the state court. Defendants maintain that dismissal is appropriate under the doctrine of abstention and in order to avoid duplicative and piecemeal litigation.

For the reasons discussed below, the Court GRANTS Defendants’ Motion to Dismiss on the grounds of Younger abstention.

II. BACKGROUND

A. STATE COURT PROCEEDINGS

Mission Oaks filed an action in San Benito County Superior Court in September 1990, challenging the City of Hollister’s Mobilehome Park Rent Control ordinance. Plaintiff alleged the following causes of action: inverse condemnation; denial of procedural due process; violation of equal protection; preemption; unconstitutional special tax; violation of 42 U.S.C. § 1983; preliminary and permanent injunction; declaratory relief; writ of mandate for general plan invalidity.

In February 1991, Mission Oaks filed a petition with the Hollister Rent Commission for a rent increase pursuant to the hearing process set forth in the Ordinance. Plaintiff was granted an increase in a lesser amount than had been requested. On July 12, 1991, Plaintiff filed a Petition for Writ of Mandate in the Superior Court challenging the Rent Commission’s decision. Plaintiff alleged that the Commission failed to make the necessary findings and that the evidence did not support the Commission’s decision.

On July 11, 1991, Plaintiff filed a Motion for Summary Judgment on its claims that the Ordinance violated Plaintiff’s rights to procedural due process and equal protection and that the Ordinance constituted a special tax. (See Defs.’ Req. Judicial Notice, Ex. C).

On October 1, 1991, subsequent to the Ninth Circuit’s decision in another challenge *1119 to a mobilehome park rent control ordinance, Sierra Lake Reserve v. City of Rocklin, 938 F.2d 951 (9th Cir. 1991), Mission Oaks filed in the state court a “Reservation to Litigate Federal Claims in the United States District Court.” Defendants moved to strike the “Reservation.”

At a hearing on October 22, 1991, the Superior Court denied the Plaintiff’s summary judgment motion, and Defendants’ motion for judgment on the pleadings as well as Defendants’ motion to strike the Reservation. The judge did not rule on the legal effect of the Reservation. (Defs.’ Mem. P. & A. Supp. Mot. Dismiss at 9).

Approximately two months later, on December 20, 1991, a hearing was held on Plaintiff’s Writ challenging the Rent Commission’s decision on Plaintiff’s rent increase request. The Court denied the Writ, finding that “substantial evidence” existed for the Commission to make its decision. (Pl.’s Opp’n Mot. Dismiss at 5).

The trial in Superior Court is scheduled to begin in May 1992.

B. FEDERAL COURT PROCEEDING

On October 30, 1991, Mission Oaks filed this action in District Court alleging the same claims as those in the state court action and an additional claim for substantive due process violation. Defendants now move for dismissal on the grounds of abstention and the policy rationale of avoidance of duplicative and piecemeal litigation. The Court notes that Defendants seek to cover all bases by arguing that any of the three established abstention doctrines as enunciated in Younger v. Harris, 401 U.S. 37, 91 S. Ct. 746, 27 L. Ed. 2d 669 (1971); Burford v. Sun Oil Co., 319 U.S. 315, 63 S. Ct. 1098, 87 L. Ed. 1424 (1943); and Railroad Comm’n of Texas v. Pullman Co., 312 U.S. 496, 61 S. Ct. 643, 85 L. Ed. 971 (1941) are applicable. Additionally, Defendants contend that the Supreme Court’s decision in Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 96 S. Ct. 1236, 47 L. Ed. 2d 483 (1976), holding that in exceptional circumstances federal courts may dismiss actions in order to avoid duplicative litigation, is equally appropriate.

For the reasons discussed more fully below, this Court finds that dismissal under the Younger abstention doctrine is appropriate.

III. DISCUSSION

A. NINTH CIRCUIT’S DECISIONS ON TAKINGS CLAIMS

Concurrently with Plaintiff’s suit pending in state court, on July 9, 1991, the Ninth Circuit issued its decision in Sierra Lake Reserve v. City of Rocklin, 938 F.2d 951 (9th Cir.1991). That case also involved a challenge to a mobilehome park rent control ordinance. In his opinion, Judge Kozinski reviewed the question of ripeness of the takings claim and found that the plaintiff had demonstrated “its inability to `obtain just compensation through an inverse condemnation action under any circumstances'” in state court. Sierra Lake, 938 F.2d at 955 (quoting Austin v. City and County of Honolulu, 840 F.2d 678, 680 (9th Cir.) cert. denied, 488 U.S. 852, 109 S. Ct. 136, 102 L. Ed. 2d 109 (1988)).

Judge Kozinski reasoned that because California courts had not followed the Ninth Circuit’s holding in a previous takings claim case, Hall v. City of Santa Barbara, 833 F.2d 1270 (9th Cir.1986) cert. denied, 485 U.S. 940, 108 S. Ct. 1120, 99 L. Ed. 2d 281 (1988), plaintiffs making similar claims need not exhaust their state court remedies before proceeding in federal court. Sierra Lake, 938 F.2d at 954-55.

The Hall decision, also penned by Judge Kozinski, found that mobilehome park owners challenging a rent control ordinance had stated a takings claim based on the Supreme Court’s holding in a physical takings case, Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 102 S. Ct. 3164, 73 L. Ed. 2d 868 (1982). However, subsequent opinions in state court suits have declined to follow that rationale. See, Casella v. City of Morgan Hill, 230 Cal. App. 3d 43280 Cal. Rptr. 876, 881 (1991) (“We repudiate Hall’s attempt to bootstrap a mobilehome rent control ordinance an *1120 economic regulation to the Supreme Court’s very narrow holding in Loretto.“); See also, Yee v. City of Escondido, 224 Cal. App. 3d 1349274 Cal. Rptr. 551 (1990), cert. granted in part, ___ U.S. ___, 112 S. Ct. 294, 116 L. Ed. 2d 239, and motion to consolidate denied, ___ U.S. ___, 112 S. Ct. 435, 116 L. Ed. 2d 455 (1991), and argued Jan. 22, 1992.

Mission Oaks maintains that prior to Sierra Lake it was unable to bring suit in federal court because federal district courts routinely dismissed such claims on grounds of ripeness. Plaintiff urges the Court to adopt Judge Kozinski’s view that state courts do not provide plaintiffs with an adequate opportunity to vindicate their constitutional claims.

In addition Plaintiff contends that the Reservation filed in the state court allows Mission Oaks to withdraw its federal constitutional and § 1983 claims from the state court proceeding.

As the Court’s decision will illuminate further, this Court is not persuaded. The assumption that the court would dismiss on grounds of ripeness amounts to conjecture and sophistry. Mission Oaks had the opportunity to file originally in federal court but chose to proceed initially in state court.

B. ABSTENTION DOCTRINES

The abstention doctrines enunciated in Burford v. Sun Oil Co., 319 U.S. 315, 63 S. Ct. 1098, 87 L. Ed. 1424 (1943), and Railroad Comm’n of Texas v. Pullman Co., 312 U.S. 496, 61 S. Ct. 643, 85 L. Ed. 971 (1941), are inapplicable in the present context. There is no complex state administrative procedure being challenged as required under Burford abstention. Nor is this a situation in which a state court ruling on state law would obviate the need for a ruling on the federal constitutional claims, as required in order for a court to abstain under Pullman.

Similarly, the Court does not find the existence of exceptional circumstances warranting dismissal in order to avoid duplicative and piecemeal litigation, as required for dismissal under the Colorado River doctrine. Colorado River, 424 U.S. at 818-19, 96 S. Ct. at 1246-47. (discussing the elements necessary and factors to consider in determination of “exceptional circumstances” which warrant a dismissal by federal court.). See also Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25-26, 103 S. Ct. 927, 941-42, 74 L. Ed. 2d 765 (1983) (stating that when considering dismissal under the Colorado River doctrine, courts are to “ascertain whether there exist `exceptional’ circumstances, the clearest of justifications, that can suffice under Colorado River to justify the surrender of that jurisdiction.”).

In this instance, the fact that Mission Oaks filed suit in federal and state court does not rise to the level of exceptional circumstances necessary for the Court to surrender its jurisdiction.

1. Younger Abstention

In Younger v. Harris, 401 U.S. 37, 91 S. Ct. 746, 27 L. Ed. 2d 669 (1971), the Supreme Court held that federal courts may not enjoin pending state court criminal proceedings. This principle has been expanded to apply to pending civil actions between private litigants, and to administrative proceedings. See, e.g., Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 107 S. Ct. 1519, 95 L. Ed. 2d 1 (1987); Ohio Civil Rights Comm’n v. Dayton Christian Schools, Inc., 477 U.S. 619, 106 S. Ct. 2718, 91 L. Ed. 2d 512 (1986).

In Middlesex County Ethics Comm. v. Garden State Bar Ass’n, 457 U.S. 423, 431, 102 S. Ct. 2515, 2520, 73 L. Ed. 2d 116 (1982) the Supreme Court developed a three part test to determine when Younger abstention is appropriate: (1) the state proceedings are ongoing; (2) the proceedings implicate an important state interest; (3) the state proceedings provide an adequate opportunity to raise federal questions. Middlesex, 457 U.S. at 432, 102 S. Ct. at 2521.

The Ninth Circuit follows the three prong test. Fresh Int’l Corp. v. Agricultural Labor Relations Bd., 805 F.2d 1353, 1357 (9th Cir.1986). And as the court remarked in Fresh Int’l Corp., “Younger and its progeny espouse a strong federal *1121 policy against federal-court interference with pending state judicial proceedings, absent extraordinary circumstances.” 805 F.2d at 1356. In the instant case, the Court finds that the three prongs of Middlesex are met and Younger abstention is appropriate.

a) State Proceedings Are Ongoing

Mission Oaks initiated suit in state court over sixteen months ago. The state court has heard oral argument and made rulings on a summary judgment motion as well as Plaintiff’s Writ Petition challenging the Rent Commission’s action. Further, trial is set to commence in May 1992.

In contrast, the federal suit was filed only four and one-half months ago and this is the first matter the Court has had before it. Plaintiff has filed a claim, Defendant has not answered but has responded with this Motion to Dismiss. The Court has made no prior rulings on this matter. The federal court proceedings are still within the embryonic stage. See,Hawaii Hous. Auth. v. Midkiff, 467 U.S. 229, 238, 104 S. Ct. 2321, 2327, 81 L. Ed. 2d 186 (1984) (citing Doran v. Salem Inn, 422 U.S. 922, 929, 95 S. Ct. 2561, 2566, 45 L. Ed. 2d 648 (1975)).

Moreover, the Ninth Circuit has noted that in determining whether Younger applies, the “critical question is not whether the state proceedings are still ongoing but whether the state proceedings were underway before initiation of the federal proceedings.” Beltran v. California, 871 F.2d 777, 782 (9th Cir.1988) (citing Kitchens v. Bowen, 825 F.2d 1337, 1341 (9th Cir.1987), cert. denied, 485 U.S. 934, 108 S. Ct. 1109, 99 L. Ed. 2d 270 (1988)). See also, Fresh Int’l Corp., 805 F.2d at 1358 (Abstention required only when the state proceedings have been initiated before any proceedings of substance on the merits have taken place in federal court) (quoting Hicks v. Miranda, 422 U.S. 332, 349, 95 S. Ct. 2281, 2291, 45 L. Ed. 2d 223 (1975)).

As noted above, Plaintiff initiated its action in state court over a year ago. This present Motion is the first matter to be considered in federal court. Thus no proceedings on the merits have taken place in federal court and the Court concludes that the first prong of the Middlesex test has been met.

b) Important State Interest

California has a state regulatory scheme regarding mobilehome parks. See, e.g., Cal.Civ.Code § 798 et seq. (West 1982 & Supp.1992) (Mobilehome Residency Law); Cal.Govt.Code §§ 65863.7, 65863.8 (West 1983 & Supp.1992) (Zoning Regulations); § 66427.4 (West 1983 & Supp.1992) (Subdivisions, Maps, Conversion of Mobilehome Park).

Further importance of the regulation of mobilehome park rent is signified by the number of jurisdictions regulating rent: “Mobile homes rent controls exist in over 75 jurisdictions representing in excess of 35% of all mobile homes in this state.” Werner Z. Hirsch & Joel G. Hirsch, Legal-Economic Analysis of Rent Controls in a Mobilehome Context: Placement Values and Vacancy Decontrol, 35 UCLA L.Rev. 399, 407-11 (1988).

Mission Oaks notes that newly constructed mobilehome parks are exempt from some of the state regulatory provisions and argues that this exemption indicates that mobilehome park rent control is not an important state interest. This is not persuasive. The fact is that the state legislature has enacted a range of provisions regulating the use, rental and zoning of mobilehome parks. The Court infers from this regulatory scheme that California has a substantial interest in enforcing and considering the constitutionality of mobilehome park rent control ordinances. See, Fresh Int’l Corp., 805 F.2d at 1358-61 (noting Supreme Court’s opinion in Ohio Civil Rights Comm’n v. Dayton Christian Schools, Inc., 477 U.S. 619, 106 S. Ct. 2718, 91 L. Ed. 2d 512 (1986), citing with approval courts’ decisions finding important state interests to exist in broad range of circumstances).

c) Adequate Opportunity to Raise Federal Claims

Mission Oaks initially chose to raise all of its constitutional claims in state court and filed the state lawsuit prior to attempting to obtain a rent increase pursuant to the *1122 provisions of the Ordinance. Notwithstanding Judge Kozinski’s provocative statement in Sierra Lake, 938 F.2d at 955, this Court concludes that Plaintiff has not established that the available state court procedure will not provide an adequate opportunity to challenge the Hollister rent control ordinance.

Another district court considering this issue in a motion to dismiss found that state court proceedings provide an adequate forum in which to challenge mobilehome park rent control ordinances. Casella v. City of Morgan Hill, No. 91-1034, 1991 WL 334912, 1991 U.S. Dist. LEXIS 14904 (N.D.Cal. Oct. 4, 1991), petition for cert. filed, 60 U.S.L.W. 3322 (U.S. Oct. 15, 1991). The Casella opinion noted that state court proceedings provided a “full and fair opportunity to litigate” federal claims in state court. Casella, No. 91-1034, 1991 WL 334912 at *3, 1991 U.S. Dist. LEXIS 14904 at *7.

Casella opined that the state appellate court in Casella v. City of Morgan Hill, 230 Cal. App. 3d 43280 Cal. Rptr. 876 (1991), rendered a thoughtful opinion explicating its decision to decline to follow the Ninth Circuit’s rationale in Hall, 833 F.2d 1270. The Court concurs with the Casella District Court’s finding that prior to rejecting the arguments, the state appeals court gave meaningful consideration to the Casella plaintiffs’ contentions that Hall was controlling precedent. Casella, No. 91-1034, 1991 WL 334912, at *3-4, 1991 U.S. Dist. LEXIS 14904, at *7-8.

Mission Oaks employs the same rationale regarding the effect of both Hall and Sierra Lake that the Casella plaintiffs did in their argument that Hall was controlling precedent. Mission Oaks asserts that Judge Kozinski’s statement in Sierra Lakeregarding state courts’ refusal to follow Hall validates its argument that Mission Oaks has no adequate opportunity to raise federal claims in state court.

However, as Casella noted in its review of the argument, while United States Supreme Court decisions are binding on state courts, federal appeals court decisions are persuasive, not controlling precedent. Casella, No. 91-1034, 1991 WL 334912, at *4, 1991 U.S. Dist. LEXIS 14904, at *10 (citing 9 Witkin, California Procedure Appeal § 779 at 750 (3rd ed. 1985)). In rejecting the application of the rationale justifying a physical takings claim to a challenge to a rent control ordinance (i.e., a “regulatory taking”), the state appeals court distinguished Hall from Loretto, 458 U.S. 419, 102 S. Ct. 3164, in a reasoned manner. Casella, No. 91-1034, 1991 WL 334912 at *3-4, 1991 U.S. Dist. LEXIS 14904 at *7-8.

Additionally, as Mission Oaks acknowledged at oral argument, the state court in the present action will be bound by the Supreme Court’s decision in a similar challenge to a local rent control ordinance which was recently argued before the Supreme Court. Yee v. City of Escondido, 224 Cal. App. 3d 1349274 Cal. Rptr. 551 (1990), cert. granted in part, ___ U.S. ___, 112 S. Ct. 294, 116 L. Ed. 2d 239, and motion to consolidate denied, ___ U.S. ___, 112 S. Ct. 435, 116 L. Ed. 2d 455 (1991), and argued Jan. 22, 1992.

Therefore, the Court concludes that the state court proceeding provides Mission Oaks with an adequate forum within which to pursue its federal claims.

Finally, while Younger abstention usually does not apply in situations in which the federal plaintiff is also the plaintiff in state court, Fresh Int’l Corp., 805 F.2d at 1360 n. 8, the Court here finds Younger applicable. Mission Oaks has in effect sought to “shield” itself from unfavorable state court decisions on takings law. See, Crawley v. Hamilton County Comm’rs,744 F.2d 28, 30 (6th Cir.1984) (Younger abstention appropriate where state court plaintiffs “attempting to use federal courts to shield themselves from state court enforcement efforts.”). In the instant case the Court finds that plaintiff has unsuccessfully argued that state court proceedings will not provide an adequate opportunity to raise its federal claims. Younger is controlling and the Court abstains from the action.

2. Plaintiff’s “Reservation” Not Applicable

A reservation of litigation of federal claims is appropriate in Pullman abstention *1123 situations where the federal court retains jurisdiction but parties are sent to state court to obtain ruling on a state law question. England v. Louisiana State Bd. of Medical Examiners 375 U.S. 411, 84 S. Ct. 461, 11 L. Ed. 2d 440 (1964). See also Erwin Chemerinsky, Federal Jurisdiction § 12.3 1989 (discussing procedure to be used in Pullman abstention and applicability of England). The instant case does not present such a situation.

Here, Mission Oaks filed a RESERVATION OF RIGHT TO LITIGATE FEDERAL CLAIMS IN THE UNITED STATES DISTRICT C