Equity Lifestyle v. County of San Luis ( 2008 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
EQUITY LIFESTYLE PROPERTIES, INC., 
f/k/a MANUFACTURED HOME
COMMUNITIES, INC., d/b/a SEA OAKS
MANUFACTURED HOME COMMUNITY,
Plaintiff-Appellant,
v.
COUNTY OF SAN LUIS OBISPO;
COUNTY OF SAN LUIS OBISPO RENT No. 05-55406
REVIEW BOARD; SAN LUIS OBISPO D.C. No.
BOARD OF SUPERVISORS,  CV-03-00037-TJH
Defendants-Appellees, ORDER AND
and OPINION
ELIZABETH CISNEROS; MARY JANE
TATE; FRANK GRECO; IDA GRECO;
ROBERT MEYER; MARGARET MEYER;
ANNE MEYER; LOUISE MCMANUS;
LAVERNE JONES; WILLIAM SPURRIER;
JUNE SPURRIER,
Real Parties in Interest.

Appeal from the United States District Court
for the Central District of California
Terry J. Hatter, Chief District Judge, Presiding
Argued February 7, 2007
Submission Deferred February 12, 2007
Submitted September 11, 2007
Opinion Filed September 17, 2007
Pasadena, California
Opinion Withdrawn November 25, 2008;
New Opinion Filed November 25, 2008
15735
15736 EQUITY LIFESTYLE v. SAN LUIS OBISPO
Before: Cynthia Holcomb Hall, Diarmuid F. O’Scannlain,
and Consuelo M. Callahan, Circuit Judges.
Opinion by Judge O’Scannlain
EQUITY LIFESTYLE v. SAN LUIS OBISPO 15739
COUNSEL
David J. Bradford, Jenner & Block LLP, Chicago, Illinois,
argued the cause for the petitioner/plaintiff-appellants; Edith
R. Matthai, Steven S. Fleishman, Robie & Matthai APC, Los
Angeles, California, and Elliot L. Bien, Bien & Summers
LLP, Novato, California, were on the briefs.
Henry E. Heater, Endeman, Lincoln, Turek & Heater LLP,
argued the cause for the respondents-appellees; Timothy
McNulty, San Luis Obispo County Counsel, San Luis Obispo,
California, and Donald R. Lincoln and Linda B. Reich, Ende-
man, Lincoln, Turek & Heater LLP, San Diego, California,
were on the briefs.
ORDER
The opinion filed in this case on September 17, 2007 is
withdrawn. A new opinion is filed contemporaneously with
the filing of this order.
The panel has voted unanimously to deny the petition for
rehearing. Judges O’Scannlain and Callahan have voted to
deny the petition for rehearing en banc. Judge Hall recom-
mended that the petition for rehearing en banc be denied.
The full court has been advised of the petition for rehearing
en banc and no active judge has requested a vote on whether
to rehear the matter en banc. Fed. R. App. P. 35.
The petition for rehearing and the petition for rehearing en
banc are DENIED. Subsequent petitions for rehearing and
rehearing en banc may be filed.
15740 EQUITY LIFESTYLE v. SAN LUIS OBISPO
OPINION
O’SCANNLAIN, Circuit Judge:
We must determine whether a municipal rent control ordi-
nance survives a due process and equal protection challenge
or requires payment of compensation as a government taking.
I
A
On June 5, 1984, the County of San Luis Obispo adopted
a Mobilehome Rent Stabilization Ordinance (“Ordinance”)
pursuant to a voter initiative.
[The Ordinance sought] to protect the owners and
occupiers of mobilehomes from unreasonable rent
increases, while at the same time recognizing the
need of park owners to receive a suitable profit on
their property with rental income sufficient to cover
increases in the costs of repair, insurance, mainte-
nance, utilities, employee services, additional ameni-
ties, and other costs of operation, and to receive a
fair return on their property.
County of San Luis Obispo, Cal., Code § 25.01.010(c). The
Ordinance exempted “[t]enancies covered by leases or con-
tracts which provide for more than a month-to-month tenancy,
but only for the duration of such lease or contract.” Id.
§ 25.03.010. The Ordinance established a Mobilehome Rent
Review Board (“Board”) consisting of members “not con-
nected with the mobilehome rental housing industry for their
personal gain.” Id. § 25.04.010. The Board’s powers and
duties included the right “[t]o increase or decrease maximum
rents upon completion of its hearings and investigations.” Id.
§ 25.05.010. The Ordinance prescribed a base rent at “the
monthly space rent as of December 31, 1982,” allowed a
EQUITY LIFESTYLE v. SAN LUIS OBISPO 15741
“maximum monthly space rent [to] be increased no more than
once a year by an increase over the then existing space rent
equal to sixty percent of the cost of living increase,” and for-
bade owners to “demand, accept or retain a rent . . . in excess
of the maximum permitted by this chapter.” Id.
§§ 25.06.010(a)(1), (b), (d). Upon a transfer of mobilehome
ownership, the Ordinance allowed a rent increase of up to
10% of the prior monthly rent. Id. § 25.06.011. In addition,
the Ordinance included a “hardship exception” so that the
Board could approve rent increases above the normal maxi-
mum in the case of extraordinary expenditures and costs that
would preclude “a just and reasonable return on [the] proper-
ty.” Id. § 25.07.010.
B
Manufactured Home Communities, Inc. (“MHC”), now
known as Equity Lifestyle Properties, Inc., is a public com-
pany. MHC created an Operating Limited Partnership
(“OLP”), which has acquired several mobilehome communi-
ties and resorts from original owners in exchange for limited
partnership assets. The partners of OLP, including MHC and
its limited partners, receive revenue from these assets.1
In 1997, acting on behalf of OLP, MHC purchased the Sea
Oaks Manufactured Home Community in Los Osos, Califor-
nia (“the Park”). OLP maintains title ownership. MHC subse-
quently sought to impose rent increases on nine of the 126
mobilehome lots in the Park.2
On March 26, 2002, MHC (holding itself out as the park-
owner) gave notice to the Park tenants that rent in the nine
lots would increase by an average 185%. The tenants pro-
tested that the Ordinance barred such rent increases, but MHC
noted that they had signed standard-form 12-month rental
1
MHC is also the OLP’s general partner.
2
The tenants of the nine lots are the “Real Parties in Interest.”
15742 EQUITY LIFESTYLE v. SAN LUIS OBISPO
agreements and stated that the Ordinance did not apply to
such leases. See County of San Luis Obispo, Cal., Code
§ 25.03.010 (exempting “[t]enancies covered by leases or
contracts which provide for more than a month-to-month ten-
ancy . . . for the duration of such lease or contract”).
To settle the dispute over the 185% rent increases, MHC
wrote the Board on March 29, 2002, asking for verification
that the Ordinance did not apply the nine lots at issue. On
May 22, 2002, the tenants in turn requested a hearing as to
whether the increases violated the Ordinance. They explained
that the previous Park owner had informed them that the
leases would be subject to the Ordinance and they relied on
that information in renewing their leases.
The Board accepted MHC’s representation that it was the
Park owner and gave notice of hearings, which it conducted
on June 3, July 15, and August 23, 2002. At the hearings, the
Board allowed both sides to present witnesses and to submit
limitless materials, but barred any cross-examination. The
Board concluded that MHC’s “twelve-month” agreements
were in fact month-to-month agreements covered by the rent
control Ordinance, for they included an undefined rent term
and permitted rent increases anytime upon a 90-day notice.3
MHC appealed to the San Luis Obispo County Board of
Supervisors on September 5, 2002, which affirmed the
Board’s decision on October 8, 2002.
C
On January 3, 2003, MHC filed a Petition for Writ of
Administrative Mandamus in the Central District of Califor-
nia, based on federal question and diversity jurisdiction. See
28 U.S.C. §§ 1331, 1332, 1343(a)(3). The petition asserted
3
The Board noted the fact that the prior and current resident managers
of the nine lots had treated the 12-month agreements as being subject to
the Ordinance.
EQUITY LIFESTYLE v. SAN LUIS OBISPO 15743
federal claims under 42 U.S.C. § 1983 as well as California
law claims “within the pendent and/or supplemental jurisdic-
tion of th[e] court.” See 28 U.S.C. § 1367. The petition chal-
lenged the administrative ruling, and the Respondents’ failure
“to declare their own ordinance unconstitutional under the
Fifth and Fourteenth Amendments.”
MHC subsequently filed a First Amended Complaint for:
(1) Petition for Writ of Administrative Mandamus4
(2) Violation of the Fifth Amendment of the
United States Constitution (Takings Claim)5
(3) Violation of the Fourteenth Amendment of the
United States Constitution (Substantive Due
Process)6
(4) Violation of the Fourteenth Amendment to the
United States Constitution (Equal Protection)7
(5) Declaratory Relief8
4
MHC sought the writ under Cal. Code Civ. P. § 1094.5, challenging
the Board for acting in excess of its jurisdiction, failing to give a fair hear-
ing due to lack of adequate notice, harboring bias, failing to follow formal
rules of evidence, and lacking evidentiary support for its ruling.
5
This claim attacked the Board’s decision and the Ordinance for depriv-
ing MHC of the fair market value of its land without reasonable relation
to a legitimate public purpose.
6
MHC asserted substantive due process as an alternative ground for dis-
cerning a constitutional violation.
7
MHC asserted that it had been singled out for regulation.
8
The fifth claim sought declaratory relief for the reasons stated in the
prior four claims, alleging that the Ordinance constituted a regulatory tak-
ing without substantially advancing any legitimate public purpose,
effected a private taking, violated MHC’s substantive due process rights,
and denied MHC equal protection.
15744 EQUITY LIFESTYLE v. SAN LUIS OBISPO
MHC sought damages and equitable relief from application of
the Ordinance.
On November 9, 2004, the County moved to dismiss the
MHC’s First Amended Complaint under Fed. R. Civ. P.
12(b)(1) (lack of subject matter jurisdiction) and 12(b)(6)
(failure to state a claim upon which relief can be granted). The
motion contended that MHC lacked standing, that its as-
applied takings claims and due process claims were unripe,
that its facial claims were barred by the statute of limitations,
and that its other constitutional claims offered no basis for
relief. In the alternative, the motion urged the court to “exer-
cise Younger or Pullman abstention.” The district court
responded with the following order: “The Court has consid-
ered Defendant’s motion to dismiss the first amended com-
plaint, together with the moving and opposition papers. It is
ordered that the motion be, and hereby is, granted. Date: Feb-
ruary 22, 2005.” MHC now timely appeals this order.
D
Because abstention has been raised as an issue in this case,
we recount related developments in state court. Three days
after filing its petition in the federal district court, MHC filed
a Petition for Writ of Administrative Mandamus in the Cali-
fornia Superior Court, asserting nearly identical claims as in
federal court. On November 5, 2004, the County—which had
not been served with the petition until October 7—filed a
demurrer arguing that MHC lacked standing. On January 4,
2005, MHC filed a First Amended Petition, containing the
same allegations as before, but explaining that MHC “controls
the actions” of OLP and “has a direct, pecuniary interest in
the amount of rent that can be charged at the property it has
an interest in, including the Sea Oaks park.” On October 19,
2005, the court overruled the demurrer.
On December 7, 2005, MHC filed a Second Amended and
Supplemental Complaint in the state trial court, which mir-
EQUITY LIFESTYLE v. SAN LUIS OBISPO 15745
rored the claims in its First Amended Complaint previously
filed in the federal district court. The state trial court held that
MHC had standing and bifurcated the action as to the writ and
non-writ claims. The court denied the writ on July 26, 2006,
granted judgment on the pleadings for the County on the non-
writ claims on November 8, 2006, and entered judgment for
the County on December 8, 2006. MHC filed a state court
notice of appeal on January 23, 2007. The state trial court
judgment and appeal thus occurred after MHC had appealed
the district court’s order granting the County’s motion to dis-
miss.
II
The dismissal of a federal complaint requires de novo review.9
We begin with the jurisdictional issue. MHC claims standing
based on its financial interest as a partner of OLP. In consid-
ering this claim, we must accept as true its assertion that
MHC lost revenue when the Board forbade OLP from
increasing rents by an average 185%. See Pennell v. City of
San Jose, 485 U.S. 1, 7 (1988) (“[W]hen standing is chal-
lenged on the basis of the pleadings, we ‘accept as true all
material allegations of the complaint, and . . . construe the
complaint in favor of the complaining party.’ ” (quoting
Warth v. Seldin, 422 U.S. 490, 501 (1975)).
[1] The government disputes MHC’s standing because OLP
—not MHC—retains title ownership of the Park. But that
argument is too rigid: the application of standing requirements
9
See Carson Harbor Village, Ltd. v. City of Carson, 353 F.3d 824, 826
(9th Cir. 2004) (reviewing dismissal under Fed. R. Civ. P. 12(b)(1)); Mil-
ler v. Yokohama Tire Corp., 358 F.3d 616, 619 (9th Cir. 2004) (reviewing
dismissal under Fed. R. Civ. P. 12(b)(6)); Ross v. Alaska, 189 F.3d 1107,
1114 (9th Cir. 1999) (reviewing dismissal for want of ripeness); Santa
Maria v. Pac. Bell, 202 F.3d 1170, 1175 (9th Cir. 2000) (reviewing dis-
missal based on statute of limitations). In doing so, we assume the facts
alleged in the complaint to be true. See Carson Harbor Village, 353 F.3d
at 826.
15746 EQUITY LIFESTYLE v. SAN LUIS OBISPO
must not be turned into a “mechanical exercise.” Allen v.
Wright, 468 U.S. 737, 751 (1984). Title ownership is not the
only form of interest that can support standing. We have
stated more broadly that “[p]ecuniary injury is a sufficient
basis for standing.” Fair v. EPA, 795 F.2d 851, 853 (9th Cir.
1986); see also Warth v. Seldin, 422 U.S. 490, 507 (1975)
(stating that standing exists where “unless relief from
assertedly illegal actions [i]s forthcoming, the plaintiff’s
immediate and personal interests would be harmed”). MHC’s
pecuniary interest in the Park is sufficient for standing and we
proceed to the merits.10
III
[2] MHC asserts two forms of takings challenges: a facial
challenge to the Ordinance itself, and an as-applied challenge
to the Board’s implementation of the Ordinance to the nine
lots in question. The County contends that MHC, even if
treated as the current owner, may not bring a facial challenge,
because MHC acquired its interest in the property after the
Ordinance was enacted. The Supreme Court’s decision in
Palazzolo v. Rhode Island, 533 U.S. 606 (2001), seems to
have rejected this view. Indeed, the Court expressly stated
that a regulatory takings claim “is not barred by the mere fact
that title was acquired after the effective date of the state-
imposed restriction.” Id. at 630. However, our decision in
Carson Harbor Village, Ltd. v. City of Carson, counsels other-
wise.11 37 F.3d 468, 476 (9th Cir. 1991) (“The price paid for
10
The jurisdictional question of standing precedes, and does not require,
analysis of the merits. Standing “in no way depends on the merits of the
[ ] contention that particular conduct is illegal.” Warth, 422 U.S. at 500.
11
However, the premise of Carson Harbor, that the purchase price
reflects the allegedly unconstitutional taking, was expressly rejected by
Palazzolo: “A law does not become a background principle for subsequent
owners by enactment itself.” 533 U.S. at 630. In fact, the Court in Palaz-
zolo stated that where the State actor “could not have deprived the prior
owners” of the property right at stake “the prior owners must be under-
EQUITY LIFESTYLE v. SAN LUIS OBISPO 15747
the property presumably reflected the market value of the
property minus the interests taken. Carson Harbor has no
standing to assert facial claims based on the loss of the pre-
mium and the loss of the right to dispose of property.”)
[3] Furthermore, a takings claim must still comply with
timeliness requirements. It must be filed neither too early
(unripe) nor too late (barred by a statute of limitations). In
Williamson County Regional Planning Commission v. Hamil-
ton Bank of Johnson City, 473 U.S. 172 (1984), the Court
articulated a two-step analysis to determine whether a regula-
tory takings claim is ripe: (1) the underlying “administrative
action must be final before it is judicially reviewable”12 and
(2) the claimant must have “unsuccessfully attempted to
obtain just compensation through the procedures provided by
the State.”13 Id. at 192, 195.
A
[4] MHC’s as-applied challenge satisfies the first prong of
the Williamson test based upon its first having sought a deci-
sion of the Mobilehome Rent Review Board and the subse-
quent affirmance by the Board of Supervisors. See
stood to have transferred their full property rights in conveying the lot.”
533 U.S. at 629 (quoting Nollan v. Cal. Coastal Comm’n, 483 U.S. 825,
834 n.2 (1987)) (internal quotation marks omitted). Nevertheless, we
decline to decide whether Palazzolo has overruled Carson Harbor because
such a ruling is not necessary to our disposition and the issue was not
directly briefed or argued by the parties despite the apparent irreconcilabil-
ity of the cases.
12
This requirement applies only to as-applied challenges. Hacienda Val-
ley Mobile v. Morgan Hill, 353 F.3d 651, 655 (9th Cir. 2003) (“Facial
challenges are exempt from the first prong of the Williamson ripeness
analysis because a facial challenge by its nature does not involve a deci-
sion applying the statute or regulation.”).
13
This requirement must be satisfied in order to bring either an as-
applied or a facial challenge.
15748 EQUITY LIFESTYLE v. SAN LUIS OBISPO
Manufactured Home Cmtys v. City of San Jose, 420 F.3d
1022, 1035 (9th Cir. 2005) (stating that the claimant “pursued
its general rate increase claims through the administrative pro-
cess provided by the Ordinance” and thus “fulfill[ed] the first
prong of the Williamson County test for MHC’s takings
claims related to a general rate increase”).
[5] However, MHC has not satisfied the second require-
ment of the Williamson test, because it has not attempted to
obtain relief through the state procedure designed to provide
compensation for rent control losses. In a 1997 decision, the
California Supreme Court established a procedure by which
a party injured by a government taking could seek compensa-
tion. See Kavanau v. Santa Monica Rent Control Bd., 941
P.2d 851 (Cal. 1997). The procedure required “[a]n adjust-
ment of future rents that takes into consideration past confis-
catory rents,” id. at 866, giving homeowners harmed by
regulatory takings a means to obtain “just compensation
through the procedures provided by the State,” Williamson,
473 U.S. at 195.
[6] Unless a complainant has sought relief through a
Kavanau adjustment, he cannot file a federal complaint
objecting to an uncompensated taking by the state. See Manu-
factured Home Cmtys, 420 F.3d at 1035-36 (dismissing as
unripe a complaint filed without first seeking a Kavanau
adjustment); see also Carson Harbor Village, 353 F.3d at 830(O’Scannlain, J., concurring specially) (dismissing a com-
plaint because the injured party had made “no effort to seek
compensation for an alleged taking through a writ of manda-
mus and a Kavanau adjustment”).
MHC then seeks to avoid the rule that “a plaintiff cannot
bring a section 1983 action in federal court until the state
denies just compensation,” Levald, Inc. v. City of Palm
Desert, 998 F.2d 680, 687 (9th Cir. 1993), by arguing that a
Kavanau adjustment procedure could not offer adequate com-
pensation. Here MHC relies on a narrow exception to the sec-
EQUITY LIFESTYLE v. SAN LUIS OBISPO 15749
ond prong of the Williamson test, which allows a claimant to
bypass state procedures if such procedures are shown to be
“unavailable or inadequate.” 473 U.S. at 197. This exception
applies only if a party has already “utilized” state procedures
and has shown pursuit of such remedies would be futile.
MHC contends that the exception should apply to the
Kavanau adjustment procedure, because Kavanau adjust-
ments only provide for an increase in future rents, and do not
require landowners to be compensated for rent lost prior to or
during the course of the litigation. Although MHC admits that
the Kavanau court addressed this concern by pointing out in
dicta that a landlord could “seek[ ] a stay of that regulation
during litigation,” Kavanau, 941 P.2d at 866, MHC contends
that California courts never grant such stays. To prove this
point, MHC offers only the declaration of Anthony Rodri-
guez, “an experienced mobilehome park attorney,” who
believes that seeking a stay would be futile given his “per-
sonal knowledge” of “at least four cases” in which California
courts denied such stay requests.
We are not impressed by this single declaration and have
considered the state decisions on the issue more closely. “The
futility exception is narrow, and mere uncertainty does not
establish futility.” Manufactured Home Cmtys, 420 F.3d at
1035. “Although the facts alleged by a plaintiff are assumed
true under a motion to dismiss, this court need not accept
baseless allegations as proof of futility . . . . MHC’s [ ] allega-
tions, at best, produce uncertainty and uncertainty does not
equal futility.” Id.California law requires that Kavanau adjustments include
losses incurred during the review process. The California
Supreme Court explained this requirement four years after
Kavanau, expressly clarifying that “the substantial legal and
administrative costs attributable to the rent review process
. . . should be properly included as expenses when calculating
the proper rent readjustment [under Kavanau].” Galland v.
15750 EQUITY LIFESTYLE v. SAN LUIS OBISPO
City of Clovis, 16 P.3d 130, 147 (2001). The Galland decision
ensures that state authorities apply Kavanau in a manner that
provides compensation for losses occurring during litigation.
For that reason, the California Supreme Court rejected the
argument now made by MHC— that a Kavanau adjustment
would not provide adequate compensation and therefore that
a party need not seek such remedy before filing a federal
complaint. See id. at 148 (reversing the court of appeals,
which had held that a party need not pursue a Kavanau adjust-
ment prior to filing a § 1983 claim and that a Kavanau adjust-
ment anyway would have been inadequate). Under California
law, a Kavanau adjustment “may not arbitrarily exclude the
reasonable expenses of seeking legitimate rent increases.” Id.
at 147.
California rent control authorities tasked with making
Kavanau adjustments have applied the rulings of the Califor-
nia Supreme Court to address potential revenue lost during lit-
igation. Although we have found no published case in which
a California court granted a stay pending a Kavanau adjust-
ment, rent control authorities have used alternative means to
ensure that Kavanau adjustments allow property owners to
recoup compensable losses incurred during litigation. For
example, in one ruling, a city council applying Kavanau over-
turned a rent control board decision that denied a rent
increase; the city council then ordered that the rents be
adjusted not only to avoid future losses but to compensate for
revenue opportunities lost during the review process. See City
Council of the City of Concord Mobilehome Rent Review
Board, Res. No. 05-56, at 7 (Aug. 2, 2005). In another deci-
sion, a local rent stabilization board granted rent increases to
compensate for losses incurred due to the application of a rent
decision that was later overturned. See Carpinteria Mobile
Home Park Rent Stabilization Board, Res. No. 5031, at 5
(Dec. 6, 2006).
These alternative approaches enable parties to seek ade-
quate compensation from the state. We reject MHC’s argu-
EQUITY LIFESTYLE v. SAN LUIS OBISPO 15751
ment that “a Kavanau adjustment is not an effective remedy
unless the park owner successfully stays enforcement of the
applicable rent control ordinance pending the outcome of the
litigation.”14 Although a stay might be useful to avoid losses,
retrospective compensation also ensures that a property owner
does not suffer from unwarranted revenue losses incurred dur-
ing litigation. We will not second-guess the specific proce-
dures California has chosen to use, so long as the methods
provide just compensation.
[7] We thus conclude that California’s creation and imple-
mentation of the Kavanau adjustment process provides “an
adequate procedure for seeking just compensation, [and] the
property owner cannot claim a violation of the Just Compen-
sation Clause until it has used the procedure and been denied
just compensation.” Williamson, 473 U.S. at 195. Because
MHC did not seek such compensation, its as-applied chal-
lenge to the Board’s decision was unripe and the district court
properly dismissed that aspect of the claim.
B
The futility analysis differs with respect to MHC’s facial
takings claim.
14
However, we express some concern that the state’s procedure may
place an unjust burden upon future tenants in order to ensure the just com-
pensation of the landlord, by shifting the financial responsibilities of ear-
lier tenants to later ones. See Carson Harbor Village, 353 F.3d at 830(O’Scannlain, J., concurring specially) (“I write separately to express my
concern that California’s procedures may not provide ‘just compensation’
because the burden of compensation falls not on the government as the
representative of the benefitting general public, but on a select group of
future tenants.”). But because this concern does not affect a property
owner’s claim of adequate compensation, it need not be addressed further
in this appeal.
15752 EQUITY LIFESTYLE v. SAN LUIS OBISPO
1
[8] Following our precedent in this area, Carson Harbor
Village, Ltd. v. City of Carson, 37 F.3d 468 (9th Cir. 1991),
we measure the actionable taking as having occurred in 1984,
the time the Ordinance was enacted. At that time, California
had no damages remedy for regulatory takings. See Schnuck
v. City of Santa Monica, 935 F.2d 171, 173 (9th Cir. 1991)
(“Prior to the Supreme Court’s decision in First English
Evangelical Lutheran Church [482 U.S. 304 (1987)] we . . .
excused such failures in California because California pro-
vided no remedy in damages for a taking by a regulatory ordi-
nance, but gave only injunctive or declaratory relief.”). It was
not until 1987, when the Supreme Court “held California’s
denial of a damages remedy unconstitutional,” that California
courts began to provide damages remedies for regulatory tak-
ings. Id. Because no adequate state remedy was available in
1984, when the ordinance was enacted, MHC need not fulfill
the second prong of Williamson in order for its facial chal-
lenge to be ripe.
2
[9] However, under Carson Harbor, MHC’s facial takings
claim fails for lack of standing because the injury is treated
as having occurred to the previous landowner.15 See Carson
15
Therefore, we do not have jurisdiction over this portion of MHC’s
claim. As stated above, because MHC did not directly address whether
Palazzolo, 533 U.S. at 606, has altered our standing precedent, we decline
to reach the question today. Further, MHC erroneously interprets the
Supreme Court’s decision as eliminating any statute of limitations require-
ment. While 42 U.S.C. § 1983 does not specify a statute of limitations, the
Supreme Court has instructed federal courts addressing § 1983 personal
injury claims to follow the statute of limitations of the state in which the
challenged action occurred. See Wilson v. Garcia, 471 U.S. 261, 276
(1985). Here, the applicable rule can be found in Cal. Code of Civ. P.
§ 340(3) as codified in 1984, which set forth a one-year statute of limita-
tions.
EQUITY LIFESTYLE v. SAN LUIS OBISPO 15753
Harbor, 37 F.3d at 476 (a subsequent landowner “has no
standing to assert facial claims based on the loss of the pre-
mium and the loss of the right to dispose of property”).
IV
We turn next to the district court’s dismissal of MHC’s due
process and equal protection claims.16
A
MHC’s First Amended Complaint asserted a violation of
substantive due process on the grounds that the application of
the Ordinance to MHC bore no rational relationship to any
legitimate state purpose and served the sole purpose of trans-
ferring the value of MHC’s property to a select private group
of tenants. This argument challenges the foundation of the
rent control law and would, if accepted, require its invalidation.17
Under our circuit law, the statute of limitations on a facial takings claim
runs from the date when the statute is enacted. See De Anza Props. X, Ltd.
v. County of Santa Cruz, 936 F.2d 1084, 1085 (9th Cir. 1991). Here, the
statute of limitations expired in 1985, one year after the ordinance was
enacted, and eight years before MHC filed this suit. Furthermore, even if
we were to conclude that Palazzolo prohibits the application of Carson
Harbor and requires that the limitations period must begin at the time of
MHC’s acquisition of property, not at the time the original taking
occurred, then MHC had one year to file its facial takings claim after it
acquired the property in 1997. Because MHC filed its claim in 2003, it
exceeded the statute of limitations by five years. In other words, under
either approach MHC’s claim must fail.
16
MHC presented this claim to the district court “solely in the alterna-
tive, in the event that . . . MHC’s Second Claim for Relief is not cogniza-
ble as a matter of law under the Fifth Amendment’s Takings Clause.”
17
The parties dispute whether takings jurisprudence governs this chal-
lenge, or whether its merits turn only upon our due process doctrine. The
Supreme Court’s decision in Lingle v. Chevron U.S.A., Inc., 544 U.S. 528,
537 (2005), answers this question: “[The Takings Clause] ‘is designed not
15754 EQUITY LIFESTYLE v. SAN LUIS OBISPO
[10] The Supreme Court and this Circuit have upheld rent
control laws as rationally related to a legitimate public pur-
pose. In Pennell, 485 U.S. 1, the Court concluded that a chal-
lenged ordinance “represents a rational attempt to
accommodate the conflicting interests of protecting tenants
from burdensome rent increases while at the same time ensur-
ing that landlords are guaranteed a fair return on their invest-
ment,” id. at 13, adding that “we have long recognized that a
legitimate and rational goal of price or rate regulation is the
protection of consumer welfare.” Id.18
[11] The Ordinance challenged by MHC includes a para-
graph describing its purpose, which is to “protect the owners
and occupiers of mobilehomes from unreasonable rent
increases, while at the same time recognizing the need of park
owners to receive a suitable profit.” County of San Luis
Obispo, Cal., Code § 25.01.010(c). Pennell makes clear that
such an ordinance is rationally related to a legitimate public
purpose, a point we underscored in Carson Harbor Village:
A generally applicable rent-control ordinance will
survive a substantive due process challenge if it is
“designed to accomplish an objective within the gov-
ernment’s police power, and if a rational relationship
to limit the governmental interference with property rights per se, but
rather to secure compensation in the event of otherwise proper interference
. . . .’ ” Due process violations cannot be remedied under the Takings
Clause, because “if a government action is found to be impermissible—for
instance because it fails to meet the ‘public use’ requirement or is so arbi-
trary as to violate due process—that is the end of the inquiry. No amount
of compensation can authorize such action.” Id. at 543.
18
More generally, the Supreme Court has upheld regulations that fix the
prices or rents in certain industries but not others. See, e.g., FCC v. Fla.
Power Corp., 480 U.S. 245, 250-54 (1987) (approving limits on rates
charged to cable companies for access to telephone poles); FPC v. Texaco
Inc., 417 U.S. 380, 397-98 (1974) (recognizing that federal regulation of
the natural gas market was in response to the threat of monopoly pricing).
EQUITY LIFESTYLE v. SAN LUIS OBISPO 15755
existed between the provisions and the purpose of
the ordinances.” This deferential inquiry does not
focus on the ultimate effectiveness of the law, but on
whether the enacting body could have rationally
believed at the time of enactment that the law would
promote its objective.
Carson Harbor Village Ltd. v. City of Carson, 37 F.3d 468,
472 (9th Cir. 1994), overruled on other grounds by WMX
Tech. v. Miller, 104 F.3d 1133, 1136 (9th Cir. 1997) (citations
omitted). Applying this standard in Carson Harbor Village,
we upheld an ordinance that set “a maximum ceiling on rent
levels that can be charged for a space in mobile home parks”
and established a rent review board “to hear claims for
increases above the ceiling.” See id. at 471-72. MHC’s sub-
stantive due process claim lacks merit under governing law.
The district court properly dismissed it.19
B
In its equal protection challenge, MHC claims that the
Ordinance was created unlawfully to discriminate against a
class of persons in a manner “unrelated to any legitimate gov-
ernmental interest.” MHC claims that the Ordinance singled
out mobilehome owners “from property owners of all other
types of housing in the San Luis Obispo County to bear the
19
MHC argues that Lingle entitles it to a remand in order to develop
other claims that would constitute takings challenges rather than due pro-
cess ones. For this proposition, it relies upon the Lingle Court’s comment
that “we reaffirm that a plaintiff seeking to challenge a government regu-
lation as an uncompensated taking of private property may proceed under
one of the other theories discussed above—by alleging a ‘physical’ taking,
a Lucas-type ‘total regulatory taking,’ a Penn Central taking, or a land-use
exaction violating the standards set forth in Nollan and Dolan.” Lingle,
544 U.S. at 548. This reaffirmation by the Lingle Court cannot be read as
a suggestion that a claimant who fails to raise available claims should have
another chance to do so upon remand. The Lingle Court merely explained
that it did not bar all existing forms of takings claims. MHC deserves no
second bite at the complaining apple.
15756 EQUITY LIFESTYLE v. SAN LUIS OBISPO
burden and expense of providing economic benefits to ten-
ants” and allowed “[a]ll other property owners . . . to adjust
rents to market upon a change of tenancy.”
[12] This equal protection challenge must be considered
under rational basis review because mobilehome park owners
are not a suspect class. See Watson v. Maryland, 218 U.S.
173, 179-80 (1910) (applying the rational basis test to occupa-
tional classifications). Therefore, “the Equal Protection
Clause requires only that the classification rationally further
a legitimate state interest.” Nordlinger v. Hahn, 505 U.S. 1,
10 (1992). “Under rational-basis review, where a group pos-
sesses distinguishing characteristics relevant to interests the
State has the authority to implement, a State’s decision to act
on the basis of those differences does not give rise to a consti-
tutional violation.” Hotel & Motel Ass’n of Oakland v. City of
Oakland, 344 F.3d 959, 971 (9th Cir. 2003) (quoting Bd. of
Trs. v. Garrett, 531 U.S. 356, 366-67 (2001)) (internal quota-
tion marks omitted). Here, the County sought to regulate
mobilehome park rents because of the “shortage of spaces for
the location of existing mobilehomes” within the County and
“the high costs and impracticability of moving mobilehomes
[and] the potential for damage resulting therefrom,” among
other reasons. See County of San Luis Obispo, Cal. Code
§ 25.01.010. These reasons appear to constitute “distinguish-
ing characteristics relevant to interests the State has the
authority to implement.” Hotel & Motel, 344 F.3d at 971. The
district court properly dismissed the equal protection claim as
well.
V
Finally, we address the petition for a writ of administrative
mandamus filed by MHC in the Central District of California.20
In its petition, MHC asserted that a writ was warranted under
20
MHC filed this claim first as a petition, and then as one of five causes
of action in its First Amended Complaint.
EQUITY LIFESTYLE v. SAN LUIS OBISPO 15757
Cal. Code Civ. P. § 1094.5 because the Rent Review Board
and Board of Supervisors acted “in excess of their jurisdic-
tion” and in violation of MHC’s “due process rights under the
state and federal constitutions.” MHC specifically challenged
the adequacy of the Board’s notice of its hearings, its refusal
to allow cross-examination, and its consideration of hearsay.
MHC contends that federal law required issuance of the
writ, because the Board provided inadequate notice of its
administrative proceedings and because the Board considered
hearsay, depriving MHC of its alleged right to confront the
witnesses.
However, the district court’s order did not state whether the
petition failed to state a ground for relief. See Fed. R. Civ. P.
12(b)(6) (allowing dismissal for “failure to state a claim upon
which relief can be granted”). Indeed, the district court did not
reveal the grounds upon which it based its dismissal. See
supra page 15744. “In the absence of grounds upon which the
order rests, we are required to affirm it if it may be sustained
upon any ground.” Lemm v. N. Cal. Nat’l Bank, 93 F.2d 709,
710 (9th Cir. 1937) (citing United States v. One Distillery,
174 U.S. 149 (1899)).
[13] Under Younger v. Harris, 401 U.S. 37 (1971), and its
progeny, a federal court should abstain from hearing a case
that would interfere with ongoing state proceedings.21 The
Supreme Court has explained that the “importance of the state
interest in the pending state judicial proceedings and in the
federal case calls Younger abstention into play,” and that “[s]o
long as the constitutional claims of respondents can be deter-
mined in the state proceedings and so long as there is no
21
Younger dealt with ongoing state criminal proceedings, but the same
abstention principle was extended to civil actions in Middlesex County
Ethics Comm. v. Garden State Bar Ass’n, 457 U.S. 423, 432 (1982) (“The
policies underlying Younger are fully applicable to noncriminal judicial
proceedings when important state interests are involved.”).
15758 EQUITY LIFESTYLE v. SAN LUIS OBISPO
showing of bad faith, harassment, or some other extraordinary
circumstance that would make abstention inappropriate, the
federal courts should abstain.” Middlesex, 457 U.S. at 435.
[14] MHC has made “no showing of bad faith, harassment,
or some other extraordinary circumstance.” Id. However,
MHC asserts that Younger abstention would not justify dis-
missal, because the state action was filed three days after
MHC filed its district court complaint. We do not accept this
argument. The Supreme Court has made clear that a filing
date is not dispositive:
[No] case in this Court has held that for Younger v.
Harris to apply, the state criminal proceedings must
be pending on the day the federal case is filed.
Indeed, the issue has been left open; and we now
hold that where state criminal proceedings are begun
against the federal plaintiffs after the federal com-
plaint is filed but before any proceedings of sub-
stance on the merits have taken place in the federal
court, the principles of Younger v. Harris should
apply in full force.
Hicks v. Miranda, 422 U.S. 332, 349 (1975) (citation omitted
and emphasis added).22 The facts belie MHC’s claim that the
state action was filed merely as a defensive precaution and the
state case lay “dormant.” In fact, the state trial court has com-
pleted its proceedings and rendered a judgment. See supra
page 15745.
[15] The district court dismissed the complaint without dis-
cussing the merits of MHC’s claims. Where no “proceedings
of substance on the merits have taken place in the federal
court, the principles of Younger v. Harris . . . apply in full
22
This quote refers to criminal proceedings. As noted above, the Court
has since applied Younger principles to non-criminal judicial proceedings
as well.
EQUITY LIFESTYLE v. SAN LUIS OBISPO 15759
force.” Hicks, 422 U.S. at 349.23 We conclude that Younger
abstention justified the district court’s dismissal of the petition
for a writ of administrative mandamus.24
VI
In sum, we conclude that MHC has standing based on its
financial interest in the Park. However, we affirm the district
court’s order dismissing its complaint. The complaint con-
tained no claim upon which relief could be granted, because
its as-applied takings claim was unripe, its facial claims failed
to satisfy the applicable statute of limitations, and its due pro-
cess and equal protection claims lacked merit under the
United States Constitution. Moreover, the principles of
abstention justify the district court’s dismissal of the petition
for a writ of administrative mandamus, and we decline to dis-
turb the state trial court’s subsequent decision denying the
writ.
23
MHC then argues that even if Younger abstention applies, this pro-
ceeding should at most be stayed. For this proposition, MHC cites Gilbert-
son v. Albright, 381 F.3d 965 (9th Cir. 2004) (en banc). In Gilbertson, we
stated:
We conclude that Younger principles apply to actions at law as
well as for injunctive or declaratory relief because a determina-
tion that the federal plaintiff’s constitutional rights have been vio-
lated would have the same practical effect as a declaration or
injunction on pending state proceedings. However, federal courts
should not dismiss actions where damages are at issue; rather,
damages actions should be stayed until the state proceedings are
completed.
Id. at 968. Gilbertson did not require a stay for damages claims that would
be dismissed as untimely or meritless on the pleadings, such as MHC’s
takings, due process, and equal protection claims. Nor did Gilbertson
require a stay with respect to the petition for a writ of administrative man-
damus, because that did not constitute a “damages action.”
24
Having thus concluded that abstention would apply, we do not reach
the County’s alternative argument that Pullman abstention would apply as
well.
15760 EQUITY LIFESTYLE v. SAN LUIS OBISPO
The district court’s order dismissing MHC’s First Amended
Complaint is AFFIRMED.