Real Estate & Property Law

Ninth Circuit Rent Control Taking Case (Guggenheim) En Banc Oral Argument Report pt. I

By Robert Thomas (inversecondemnation.com)

Even in the rarefied, academic atmosphere of an appellate court, an advocate must sometimes have a thick skin. Today's Ninth Circuit en banc oral arguments in the rent control takings case, Guggenheim v. City of Goleta, was one where the two lawyers who argued to case certainly came away with a few callouses. 

Guggenheim is the appeal from an unsuccessful challenge to the City of Goleta's mobile home rent control ordinance. The district court ruled against the mobile home park owners who asserted the ordinance worked a regulatory taking of their property.

In Guggenheim v. City of Goleta, 582 F.3d 996 (9th Cir., Sep. 28, 2009), a three-judge Ninth Circuit panel reversed, however, and held 2-1 that the challenge was ripe under Williamson County, and ruled the ordinance was a facial taking by applying the three-part Penn Central test. The court remanded the case to the district court for a calculation of compensation owed to the property owners. On March 12, 2010, the court ordered en banc review.

Today's argument was an en banc panel comprising eleven active Ninth Circuit judges (the circuit is so large that "en banc" in the Ninth Circuit doesn't truly mean en banc, but means a panel of eleven active judges). Chief Judge Kozinski was seated front-and-center, and the other ten judges were seated by seniority, alternating between right and left on the bench. Also on the panel were Judges Godwin, Reinhardt, Rymer, Kleinfeld (who dissented from the panel opinion), Gould, Clifton, Callahan, Bea, Ikuta, and N.R. Smith. Robert S. Coldron argued for the property owners, and Andrew W. Schwartz for the City. 

The judges wasted no time in their aggressive questioning of Coldron. He was barely a sentence into his argument when Judge Clifton drew first blood. He asked whether the mobile home park owners acquired the property subject to the regulations claimed to be a taking. The answer to that question, as we shall see, turned into a contentious issue that stretched the length of both parties' arguments. Coldron answered that in 1997, the park owners could not have sued the County of Santa Barbara (the government which imposed a similar rent control ordinance on mobile home parks prior to the incorporation of the City) since more than two years had passed since the County ordinance had been adopted, and the two year statute of limitations for a facial challenge to that ordinance had lapsed. Judge Clifton seemed somewhat irritated with the answers. Judge Clifton did not expressly articulate the source of his question, but appeared to be focusing on whether the plaintiffs had "property," or whether, by having purchased their property already subject to the regulatory regime (allegedly), they were on notice, so to speak, of the restrictions and should not be heard to complain now.

Judge Rymer wanted the answer to a more basic question: she asked whether "there is any such animal" as a facial taking under Penn Central, and if so "precisely, what is it?" Coldron answered by giving examples. In Hodel v. Irving, he asserted, the Supreme Court found a facial taking (this is one of the cases involving Congress' taking of fractionalized Indian interests in land). He also cited the Cienega Gardens case from the Federal Circuit as another example.

Judge Reinhardt challenged Coldron, and asked whether it was correct when he asserted that no one would buy a mobile home park. "Were the regulations in effect when your client bought the property?" "Most," Coldron responded, and started a back-and-forth where Judges Reinhardt and Kozinski tried to pin him down regarding exactly what was different about the regulations in place when the plaintiffs purchased their parks, and the regulations being challenged. Coldron gave several examples, but aroused the sarcasm of Judge Kozinski when he asserted that when he started practicing 30 years ago, the rent control laws were only two pages, but today they are 30 pages. "So it's a matter of pages?" Kozinski remarked, causing the courtroom to laugh, "can you be specific?"

Judge Rymer went back to her earlier question about whether there is "such an animal" as a facial Penn Central takings claim. "What is your precise challenge?" she asked. "What in the ordinance makes it invalid on its face?" Coldron seized on the question to explain. First, he responded, it froze the rent in 2002 at a fraction of 1979 values, with no adjustment. Second, it was a "negative wealth transfer" from the park owners to the mobile home owners, without any social benefit.

Continued in Part II.

Full post as published by inversecondemnation on June 22, 2010 (boomark / email).