Peace Ranch LLC v. Bonta

[5] 6 UNITED STATES DISTRICT COURT 7 EASTERN DISTRICT OF CALIFORNIA [8] 9 PEACE RANCH LLC, No. 2:21-cv-01651-JAM-AC 10 Plaintiff, 11 v. ORDER GRANTING DEFENDANT’S CROSS-MOTION FOR SUMMARY 12 ROB BONTA, in his official JUDGMENT AND DENYING PLAINTIFF’S capacity as Attorney General MOTION FOR SUMMARY JUDGMENT 13 of the State of California; and DOES 1 through 20, 14 inclusive, 15 Defendant(s). [16] Before the Court are Peace Ranch LLC’s (“Plaintiff”) [17] and Rob Bonta’s (“Defendant”) cross motions for summary [18] judgment. See Pl.’s Mot., ECF No. 69; Def.’s Mot., ECF No. [19] 70. Plaintiff filed its opposition brief, and Defendant [20] filed a reply which was not timely. See Pl.’s Opp’n, ECF [21] No. 77; Minute Order, ECF No. 75. For the following [22] reasons, Defendant’s cross-motion is granted and Plaintiff’s [23] motion is denied.1 [24] /// [26] 1This motion was determined to be suitable for decision 27 without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled for July 1, 2025. The Court did not consider 28 Defendant’s late filed reply brief. 1 I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND 2 The Court need not repeat the factual background set 3 forth extensively in its prior orders. See Orders, ECF Nos. 4 20 and 33. The pertinent background is as follows: in 2021, 5 the California Legislature enacted Assembly Bill 978 (Cal 6 Stats. 2021, ch. 125) to control rent at mobile home parks. 7 Plaintiff filed suit because its mobile home park, Rancho La 8 Paz, was the only park affected by AB 978. First Amended 9 Complaint (“FAC”) ¶ 2, ECF No. 23. In 2022, this Court 10 dismissed with prejudice Plaintiff’s suit for lack of 11 standing. See Order, ECF No. 33. The Ninth Circuit 12 reversed, holding that Plaintiff has standing to pursue this 13 action. See Ninth Circuit Mandate, ECF No. 39; see also 14 Peace Ranch, LLC v. Bonta, 93 F.4th 482 (9th Cir. 2024). 15 Upon remand, the parties now bring cross motions for 16 summary judgment as to the four remaining claims in this 17 action: (1) violation of the prohibition on Bills of 18 Attainder; (2) violation of the Contracts Clause; (3) 19 violation of the Equal Protection Clause; and (4) violation 20 of the Takings Clause. See FAC ¶¶ 41-77; see also Order 21 Dismissing Due Process Claim, ECF No. 42. 22 II. OPINION 23 A. Legal Standard 24 Summary judgment is appropriate when the record, read 25 in the light most favorable to the non-moving party, 26 indicates “that there is no genuine dispute as to any 27 material fact and the movant is entitled to judgment as a 28 matter of law.” Fed. R. Civ. P. 56(a). A genuine dispute 1 of fact exists only if “there is sufficient evidence 2 favoring the nonmoving party for a jury to return a verdict 3 for that party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 4 242, 249 (1986). If the nonmoving party fails to make this 5 showing, “the moving party is entitled to a judgment as a 6 matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317 , 323 7 (1986). 8 B. Requests for Judicial Notice 9 Under Federal Rule of Evidence 201, a district court 10 may take judicial notice of a fact that is “not subject to 11 reasonable dispute because it can be accurately and readily 12 determined from sources whose accuracy cannot reasonably be 13 questioned.” Fed. R. Evid. 201(b)(2). A court may take 14 judicial notice of matters of public record. Reyn’s Pasta 15 Bella LLC v. Visa USA, Inc., 442 F.3d 741 , 746 n.6 (9th Cir. 16 2006). 17 Plaintiff and Defendant make several requests for 18 judicial notice (“RJN”) of matters of public record. See ECF 19 Nos. 67, 71, and 78. Because these requests are unopposed, 20 the Court GRANTS these requests. 21 C. Bill of Attainder 22 The Constitution prohibits any state from passing a 23 bill of attainder. U.S. Const. art. I, § 10, cl. 1. A bill 24 of attainder has three elements: “the statute (1) specifies 25 the affected persons, and (2) inflicts punishment (3) 26 without a judicial trial.” SeaRiver Mar. Fin. Holdings v. 27 Mineta, 309 F.3d 662 , 668 (9th Cir. 2002). AB 978 was 28 passed without a “judicial trial” of Plaintiff. Moreover, 1 because Defendant already “[admitted] that the law targets 2 Peace Ranch” and the Ninth Circuit found that “the 3 Legislature had Peace Ranch ‘in mind’ when it enacted AB 4 978,” the Court finds that AB 978 specifies Plaintiff. See 5 Peace Ranch, 93 F.4th at 490 . As such, the determination of 6 this claim hinges on whether AB 978 inflicts punishment. 7 To determine whether a law inflicts punishment, this 8 Court must consider three factors: “(1) whether the 9 challenged statute falls within the historical meaning of 10 legislative punishment; (2) whether the statute, viewed in 11 terms of the type and severity of burdens imposed, 12 reasonably can be said to further nonpunitive legislative 13 purposes; and (3) whether the legislative record evinces a 14 congressional intent to punish.” Selective Serv. Sys. v. 15 Minn. Pub. Interest Research Grp., 468 U.S. 841, 852 (1984) 16 (cleaned up). Regarding the first factor, the traditional 17 punishments in bills of attainder were “death, imprisonment, 18 banishment, the punitive confiscation of property . . . [or] 19 a bar to . . . specified employments or vocations.” 20 SeaRiver, 309 F.3d at 673 (citation omitted). Defendant 21 correctly contends that rent control is not a traditional 22 punishment for purposes of a bill of attainder. Def.’s Mot. 23 at 10. Other courts have similarly decided that rent 24 control laws do not fall within the historical meaning of 25 legislative punishment. See Valley Investments-Redwood LLC 26 v. City of Alameda, 2023 WL 8039803 at *9 (N.D. Cal. 2023); 27 640 Broadway Renaissance Co. v. Cuomo, 740 F. Supp. 1023 , 28 1034-36 (S.D.N.Y. 1990), aff’d sub nom. 640 Broadway v. 1 Cuomo, 927 F.2d 593 (2d Cir. 1991). 2 As for the second factor, AB 978 furthers a nonpunitive 3 legislative purpose because it seeks to protect mobile home 4 residents from rent spikes in the face of California’s well5 documented housing crisis and the economic impact of the 6 COVID-19 pandemic. See A.B. 978, § 1. Plaintiff counters 7 that the law cannot serve a legitimate purpose because it 8 only targets one mobile home park. Pl.’s Opp’n at 16. 9 However, this fact was the same in SeaRiver where the law 10 only targeted the plaintiff’s sea vessel, and the Ninth 11 Circuit nonetheless held that the law furthered a 12 nonpunitive purpose. See 309 F.3d at 667, 674-75. Though 13 the law in SeaRiver only applied to the plaintiff’s vessel, 14 the Ninth Circuit was persuaded by the fact that the law 15 addressed prospective risks to the environment. Id. 16 Similarly, though Plaintiff is the only mobile home park to 17 which AB 978 currently applies, the law addresses the 18 prospective risk of other mobile home residents by applying 19 to any future entities that meet the criteria outlined in 20 the law. See Cal. Civ. Code § 798.30.5 . 21 Moreover, the type and severity of the burden imposed 22 on Plaintiff matches rent control policies that have been 23 imposed on other types of rental housing. As Defendant 24 observes, AB 978 merely took existing rent control policy 25 and applied it to mobile home parks. Def.’s Mot. at 12-13 26 (citing Cal. Civ. Code § 1947.12 (a)). Plaintiff complains 27 that the mobile home park regulation restricts a rental rate 28 increase to the lesser of (a) 5 percent or (b) 3 percent 1 plus the percentage change in the cost of living, whereas 2 the regulation for other dwellings is the lesser of (a) 10 3 percent or (b) 5 percent plus the percentage change in the 4 cost of living. Pl.’s Opp’n at 12. The Court finds this 5 argument unpersuasive, as AB 978’s burden is substantially 6 similar to regulations that existed at the time AB 978 was 7 passed. As Defendant points out, the rates are similar to 8 those in other localities, and the Legislature is currently 9 considering a bill that would lower the rental rate increase 10 statewide to the lesser of (a) 5 percent or (b) 2 percent 11 plus the percentage change in the cost of living. See 12 Def.’s Mot. at 13-14 (citing Cal. Assembly Bill 1157 (202513 2026 Reg. Sess.)). As such, the second inquiry does not 14 support a finding of inflicting punishment. 15 Finally, the third factor mandates “unmistakable 16 evidence of punitive intent,” which requires more than 17 having an entity in mind when crafting a law. Selective 18 Serv. Sys., 468 U.S. at 855 n.15 (citation omitted). While 19 the legislative record refers to Plaintiff throughout, it 20 falls short of demonstrating “any intention of determining 21 [Plaintiff’s] blameworthiness or imposing punitive 22 sanctions.” See Nixon v. Adm’r of Gen. Servs., 433 U.S. 23 425, 480 (1977). Because the bill itself does not name 24 Plaintiff and it could in the future apply to other mobile 25 home parks, the legislature is not “encroaching on the 26 judicial function of punishing an individual for blameworthy 27 offenses.” See id. at 479. Moreover, while AB 978 applies 28 to only Plaintiff as of now, the Supreme Court held that “a 1 legislature may implement its program step by step, adopting 2 regulations that only partially ameliorate a perceived evil 3 and deferring complete elimination of the evil to future 4 regulations.” Minnesota v. Clover Leaf Creamery Co., 449 5 U.S. 456 , 466 (1981) (cleaned up). As such, the third 6 factor also does not support a finding of inflicting 7 punishment. 8 Accordingly, the Court holds that AB 978 does not 9 inflict punishment, and thus Defendant is entitled to 10 summary judgment as to the Bill of Attainder claim. 11 D. Equal Protection 12 The Equal Protection Clause of the Fourteenth Amendment 13 prevents any state from “[denying] to any person within its 14 jurisdiction the equal protection of the laws.” U.S. Const. 15 amend. XIV. Because “AB 978 involves a non-suspect 16 classification,” the parties agree that the proper standard 17 of review is rational basis. See Def.’s Mot. at 23; Pl.’s 18 Mot. at 21. To survive rational basis review, a 19 classification must be “rationally related to a legitimate 20 state interest.” City of Cleburne, Tex. v. Cleburne Living 21 Center, 473 U.S. 432, 440 (1985). A legitimate state 22 interest can be “any reasonably conceivable state of facts 23 that could provide a rational basis for the classification,” 24 and this conceivable state of facts does not have to match 25 the legislature’s actual interest in passing a law. F.C.C. 26 v. Beach Commc’ns., Inc., 508 U.S. 307, 313 (1993). 27 AB 978’s classification is “qualified mobilehome parks 28 . . . in counties with populations between 2,500,000 and 1 3,250,000 according to the last census count.” A.B. 978, 2 § 1(i). “Qualified mobilehome parks” are defined as those 3 “located within and governed by the jurisdictions of two or 4 more incorporated cities.” Cal. Civ. Code § 798.30.5 (h)(4). 5 Because rational basis review only requires that there be a 6 conceivable legitimate interest, it does not necessitate an 7 analysis of the Legislature’s actual intent when it passed 8 AB 978. See Beach Commc’ns., 508 U.S. at 313 . Defendant 9 asserts that the law has a legitimate government purpose of 10 “protecting people who live in mobilehomes from escalating 11 housing costs and otherwise extending existing rental 12 control protections to mobilehome owners in California.” 13 Def.’s Mot. at 24. This interest is legitimate, as mobile 14 home owners are particularly vulnerable to untenable rent 15 increases because their median household income is less than 16 that of conventional renters and less than half of that of 17 conventional homeowners. Sullivan Decl. at 20, ECF No. 7018 3. While renters own their home, it is prohibitively 19 expensive to relocate the home to another mobile home park. 20 Sullivan Decl. at 18, ECF No. 70-3. As such, mobile home 21 owners facing stark rent increases are often forced to sell 22 their homes for a fraction of their appraised value or 23 abandon them to park owners. Id. It is also rational that 24 the Legislature was particularly concerned about mobile home 25 parks that are subject to two or more jurisdictions because 26 it is more difficult for tenants in these parks to obtain 27 local relief. See Cal. Civ. Code § 798.30.5 (h)(4). As 28 such, the Court finds that Defendant’s stated goal of 1 protecting mobile homeowners from rent spikes is a 2 legitimate state interest. 3 “Under the system of government created by our 4 Constitution, it is up to legislatures, not courts, to 5 decide on the wisdom and utility of legislation.” Ferguson 6 v. Skrupa, 372 U.S. 726, 729 (1963). The Supreme Court and 7 the Ninth Circuit have “upheld rent control laws as 8 rationally related to a legitimate public purpose.” Equity 9 Lifestyle Props., Inc. v. Cnty. of San Luis Obispo, 548 F.3d 10 1184, 1194 (9th Cir. 2008) (citing Pennell v. City of San 11 Jose, 485 U.S. 1, 13 (1988)). The Supreme Court also held 12 that it is constitutional for legislatures to address 13 societal problems incrementally or partially even if certain 14 groups are disproportionately affected. See e.g., 15 Williamson v. Lee Optical Co., 348 U.S. 483, 489 (1955); 16 City of New Orleans v. Dukes, 427 U.S. 297, 303 (1976). 17 Moreover, any step taken by a legislature need not be the 18 most correct step towards solving the problem; a legislature 19 need only show that the facts it relied upon could be 20 reasonably conceived to be true. Beach Commc’ns., 508 U.S. 21 at 313 ; Clover Leaf Creamery Co., 449 U.S. at 464. 22 Accordingly, because AB 978 is rationally related to a 23 legitimate government interest, the Court holds that 24 Defendant is entitled to summary judgment as to the Equal 25 Protection claim. 26 E. Contracts Clause 27 The Contracts Clause of the U.S. Constitution prohibits 28 a state from passing “any . . . Law impairing the obligation 1 of Contracts.” U.S. Const. art. I, § 10, cl. 1. To 2 determine if a law violates the Contracts Clause, this Court 3 must apply the Supreme Court two-part test: 4 The threshold issue is whether the state law has operated as a substantial impairment of a 5 contractual relationship. . . . If such factors show a substantial impairment, the inquiry turns 6 to the means and ends of the legislation. In particular, the Court has asked whether the state 7 law is drawn in an appropriate and reasonable way to advance a significant and legitimate public 8 purpose. 9 Sveen v. Melin, 584 U.S. 811, 819 (2018) (cleaned up). 10 The Court assumes arguendo that the law substantially 11 impairs the contractual relationship between Plaintiff and 12 its residents. However, the Court holds that because AB 978 13 is “drawn in an appropriate and reasonable way to advance a 14 significant and legitimate public purpose,” Plaintiff’s 15 claim fails as a matter of law. See id. As explained in 16 the Court’s Equal Protection analysis, see supra Part D, AB 17 978 advances a legitimate government interest. Plaintiff 18 argues that the Court cannot reach this conclusion given the 19 Supreme Court’s decision in Allied Structural Steel Company 20 v. Spannaus, 438 U.S. 234 (1978). Pl.’s Mot. at 20. As 21 Defendant points out, Allied Structural differed from the 22 case at hand because rent control is foreseeable and the 23 Minnesota Legislature did not even purport to deal with a 24 “broad, generalized economic or social problem.” See 438 25 U.S. at 250; Def.’s Mot. at 21-22. Plaintiff contends that 26 the Minnesota law that was struck down in Allied Structural 27 is indistinguishable from AB 978 in that both laws do not 28 “protect a broad societal interest” but rather only serve a 1 “narrow class.” See 438 U.S. at 249 ; Pl.’s Opp’n at 19. 2 The Court disagrees. Plaintiff appears to have misread 3 pertinent caselaw in arguing that this Court is required to 4 find that AB 978 has a “broad” effect. Instead, this Court 5 must find, as it has, that AB 978 serves a “broad societal 6 interest.” See id. 7 Relying on its expert’s testimony, Plaintiff argues 8 that AB 978 could have been better crafted to address the 9 Legislature’s interest in protecting residents in mobile 10 homes. Pl.’s Mot. at 20. But it would be improper for the 11 Court to second guess the Legislature and how it decided to 12 address this issue. See e.g., Guggenheim v. City of Goleta, [13] 638 F.3d 1111, 1123 (9th Cir. 2010) (“Whether the City of 14 Goleta’s economic theory for rent control is sound or not, 15 and whether rent control will serve the purposes stated in 16 the ordinance of protecting tenants from housing shortages 17 and abusively high rents or will undermine those purposes, 18 is not for us to decide.”); Schnuck v. City of Santa Monica, [19] 935 F.2d 171, 175 (9th Cir. 1991) (“That rent control may 20 unduly disadvantage others, or that it may exert adverse 21 long-term effects on the housing market, are matters for 22 political argument and resolution; they do not affect the 23 constitutionality of the Rent Control Law.”); Action 24 Apartment Ass’n, Inc. v. Santa Monica Rent Control Bd., 509 25 F.3d 1020, 1024 (9th Cir. 2007) (“As in Schnuck, we decline 26 to second-guess Santa Monica’s chosen means of implementing 27 its indisputably legitimate goals.”) 28 Accordingly, the Court holds that Defendant is entitled 1 to summary judgment as to the Contracts Clause claim. 2 F. Taking 3 The Takings Clause prohibits unlawful takings. U.S. 4 Const. amends. U.S. Const. amends. V & XIV. Plaintiff 5 advances three theories of violation: (1) per se taking; 6 (2) Penn Central taking; and (3) violation of the Public Use 7 Clause of the Takings Clause. Pl.’s Opp’n at 22-25. 8 First, pursuant to binding Supreme Court precedent, the 9 Court holds that AB 978 is not a per se taking because 10 “statutes regulating the economic relations of landlords and 11 tenants are not per se takings.” See F.C.C. v. Fla. Power 12 Corp., 480 U.S. 245, 252 (1987) (citation omitted); see also 13 Yee v. Escondido, 503 U.S. 519, 531 (1992). Plaintiff asks 14 the Court to ignore controlling caselaw because of a later 15 Supreme Court case that did not concern rent control. Pl.’s 16 Opp’n at 22-23 (citing Koontz v. St Johns River Water Mngmt. 17 Dist., 570 U.S. 595 (2013)). Because Fla. Power Corp. and 18 Yee are still good law that bind lower courts, the Court 19 declines Plaintiff’s request and holds that AB 978 is not a 20 per se taking. 21 Second, a court can find that a taking took place under 22 Penn Central Transp. Co. v. New York City, 438 U.S. 104 23 (1978), after considering: “(1) the economic impact of the 24 regulation on the claimant; (2) the extent to which the 25 regulation has interfered with distinct investment-backed 26 expectations; and (3) the character of the governmental 27 action.” Murr v. Wisconsin, 582 U.S. 383, 393 (2017). 28 Regarding the first factor, “Supreme Court precedent 1 has long established that mere diminution in the value of 2 property, however serious, is insufficient to demonstrate a 3 taking.” MHC Fin. Ltd. P’ship v. City of San Rafael, 714 4 F.3d 1118, 1127 (9th Cir. 2013) (citation omitted). Indeed, 5 the Ninth Circuit held that an 81 percent diminution in 6 value was not a sufficient economic impact to constitute a 7 Penn Central taking. Id. Here, Plaintiff has not shown 8 that it has suffered an economic impact beyond diminution in 9 property value, and therefore the first factor does not 10 support a finding of a taking. 11 Regarding the second factor, Plaintiff argues that it 12 could not have reasonably expected the Legislature to pass 13 rent control laws targeting mobile homes. Pl.’s Mot. at 23. 14 However, the Ninth Circuit squarely rejected this argument 15 when it held: 16 Simply put, when buying a piece of property, one cannot reasonably expect that property to be free 17 of government regulation such as zoning, tax assessments, or, as here, rent control. Rancho’s 18 argument is tantamount to saying that a homeowner can reasonably expect that the tax assessment or 19 rate of taxation on her home will not increase from the time of purchase. Just as those who do 20 business in a regulated field cannot object if the legislative scheme is buttressed by 21 subsequent amendments to achieve the legislative end, those who buy into a regulated field such as 22 the mobile home park industry cannot object when regulation is later imposed. [23] 24 Rancho de Calistoga v. City of Calistoga, 800 F.3d 1083 , 25 1091 (9th Cir. 2015) (cleaned up). Thus, the second factor 26 does not support a finding of a taking. 27 The third factor also does not support such a finding 28 because the character of the government action here “arises ee nn I OR OI 1 from some public program adjusting the benefits and burdens 2} of economic life to promote the common good.” See Penn 3 Central, 438 U.S. at 124; supra Part D. Accordingly, AB 978 4 is not a Penn Central taking. 5 Finally, Plaintiff argues that AB 978 violates the 6 Public Use Clause of the Takings Clause because the taking 7 is not for public use. Pl.’s Mot. at 23. “[T]he Supreme 8 Court has declared that a taking should be upheld as 9 consistent with the Public Use Clause as long as it is 10 rationally related to a conceivable public purpose. This 11 deferential standard of review echoes the rational-basis 12 test used to review economic regulation under the Due 13 Process and Equal Protection Clauses.” MHC Fin. Ltd., 714 14 F.3d at 1129 (citation omitted). Because the Court has 15 already found that AB 978 is rationally related to a 16 legitimate government interest, see supra Part D, the Court 17 | holds that AB $78 does not violate the Public Use Clause. 18 Accordingly, Defendant is entitled to summary judgment 19 as to the Takings Clause claim. 20 TILT. ORDER 21 For the reasons set forth above, Defendant’s cross22 motion for summary judgment is GRANTED and Plaintiff's 23 | motion for summary judgment is DENIED. 24 IT IS SO ORDERED. 25 Dated: July 25, 2025 [26] 27 a 7 Yond JOHN A. MENDEZ 28 SENIOR UNITED*STATES DISTRICT JUDGE