Peace Ranch LLC v. Newsom

— 1 — — 2 — — 3 — — 4 — — 5 — — 6 — — 7 — 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA — 10 — 11 PEACE RANCH LLC, No. 2:21-cv-01651-JAM-AC 12 Plaintiff, 13 v. ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS AND DENYING 14 GAVIN NEWSOM, in his official PLAINTIFF’S MOTION FOR capacity as Governor of the PRELIMINARY INJUNCTION 15 State of California; ROB BONTA, in his official 16 capacity as Attorney General of the State of California; 17 and DOES 1 through 20, inclusive, — 18 — Defendants. — 19 — 20 In 2021, California enacted AB 978 which limited the amount 21 mobilehome parks could increase rent for mobilehome sites. Peace 22 Ranch, LLC (“Peace Ranch” or “Plaintiff”), the owner of two 23 mobilehome parks, brought this action against Governor Gavin 24 Newsom, Attorney General Rob Bonta, and 20 Doe defendants 25 (“Defendants”) challenging AB 978. Compl., ECF No. 1. Shortly 26 thereafter, Peace Ranch filed a Motion for Preliminary 27 Injunction. Mot. for Prelim. Inj., ECF No. 7. Defendants 28 opposed this Motion. Opp’n to Mot. for Prelim. Inj., ECF No. 13. 1 Plaintiff replied. Reply in Mot. for Prelim. Inj., ECF No. 17. 2 Defendants then filed a Motion to Dismiss. Mot. to Dismiss, ECF 3 No. 10. Plaintiff opposed this Motion. Opp’n to Mot. to 4 Dismiss, ECF No. 14. Defendants replied. Reply in Mot. to 5 Dismiss, ECF No. 16. For the reasons set forth below, 6 Defendants’ Motion to Dismiss is granted, as Plaintiff’s have not 7 demonstrated standing. The Motion for Preliminary Injunction is 8 therefore denied as moot.1 — 9 — 10 I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND 11 In February 2019, Peace Ranch acquired Rancho La Paz, a 12 mobilehome park in Orange County. Compl. ¶ 19. Rancho La Paz 13 consists of two legally distinct parks, as recognized by the 14 California Department of Housing and Community Development. Id. 15 One of the parks is in Anaheim, the other in Fullerton. Id. The 16 previous owners of Rancho La Paz had little to no debt on the 17 property and limited annual property taxes. Id. ¶ 20. This 18 allowed for the park to turn a stable profit even though rent 19 spaces were over 40% below market rent. Id. When Peace Ranch 20 acquired the property, the increase in property taxes meant this 21 below market rent was no longer profitable. Id. Accordingly, 22 Peace Ranch gave the mobilehome owners notice of a rent increase. 23 Id. ¶ 21. This was met with controversy. Id. Peace Ranch 24 subsequently rescinded the rent increase so that it could meet 25 with the homeowners and city leaders in order to create an agreed — 26 — 27 1 These motions were determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was 28 scheduled for December 14, 2021. 1 upon schedule for rent increases phased in over a period of 2 years. Id. 3 The rent increases were a subject of contention in both 4 Anaheim and Fullerton. Id. ¶ 24. As such, a rent control 5 ordinance for mobilehome parks was introduced in both cities. 6 Id. However, neither passed. Id. The cities did get written 7 commitments from Peach Ranch regarding the operations of the 8 parks. Id. 9 Since 2019, California state law limits the amount an owner 10 of residential property can increase rent. Id. ¶ 28. However, 11 mobilehome parks were expressly exempted. Id. In 2020, the 12 Legislature passed AB 2782. Mot. to Dismiss at 2. The bill 13 amended California law so that long-term mobilehome leases would 14 no longer be exempt from local rent control. Id. (citing 2020 15 Cal. Legis. Serv. Ch. 35 (A.B. 2782) (West)). In July 2021, 16 Governor Gavin Newsom signed AB 978 into law, which became 17 effective January 1, 2022. Compl. ¶ 34. Among other things, AB 18 978 created a separate cap for mobilehome owners who rent a site 19 in a mobilehome park. Id. ¶ 35. Specifically, AB 978 prohibits 20 any “qualified mobilehome park” from raising the gross rental 21 rate for a park space more than 3% plus the percentage change in 22 the cost of living, or 5%, whichever is lower. Id. 23 AB 978 defines a “qualified mobilehome park” as “a 24 mobilehome park, as defined in Section 798.4 [of the Civil Code], 25 that is located within and governed by the jurisdictions of two 26 or more incorporated cities.” Id. ¶ 36. Peace Ranch alleges, 27 that the legislation was specifically meant to target Rancho La 28 Paz. Id. Specifically, the author and sponsor of the bill, 1 Assemblymember Quirk-Silva represents Fullerton. Id. ¶¶ 32, 34. 2 Peace Ranch alleges that after efforts to enact mobilehome park 3 rent control in Fullerton failed, Assemblymember Quirk-Silva 4 introduced AB 978. Id. ¶ 34. In limiting its application to 5 mobilehome parks that were located within and governed by the 6 jurisdictions of two or more cities, and with a stated intent of 7 protecting mobilehome park tenants who reside in counties with 8 certain populations, Peace Ranch alleges the law targeted only 9 Rancho La Paz. Id. ¶¶ 36, 37, 38. The Government, though, 10 points out that Peace Ranch does not allege any statutory 11 provision so limiting AB 978’s application to parks within 12 counties with certain populations. Mot. to Dismiss at 4. Peace 13 Ranch claims the bill’s sponsors relied on the mistaken 14 assumption that Rancho La Paz was a single mobilehome park. 15 Compl. ¶ 36. Accordingly, AB 978 does not actually apply to it. 16 Id. ¶ 9. 17 Peace Ranch then brought this action against Governor 18 Newsom, Attorney General Rob Bonta, and 20 Doe defendants 19 contending AB 978 violates the Constitution’s prohibition on 20 bills of attainder (claim one), the contracts clause (claim 21 three), the equal protection clause (claim four), the due process 22 clause (claim five), and the takings clause (claim six). See 23 generally Compl. Additionally, Peace Ranch brought two 24 challenges on state law grounds: California’s bar on special 25 legislation (claim two) and its takings clause (claim seven). 26 Id. Finally, it requests declaratory judgment that AB 978 does 27 not apply to it at all (claim eight). Defendants move to dismiss 28 all claims. Mot. to Dismiss. 1 II. OPINION 2 A. Judicial Notice 3 Plaintiff requests the Court take judicial notice of seven 4 exhibits: (1) a declaration of Jenny S. Lillge of Legislative 5 Intent Service, Inc., authenticating the legislative history of 6 AB 978; (2) Assembly Committee on Housing and Community 7 Development’s analysis of AB 978 as amended April 21, 2021; 8 (3) Assembly Committee on Housing and Community Development’s 9 Background Information Request Form for AB 978; (4) AB 978 as 10 amended on May 5, 2021; (5) Senate Judiciary Committee’s 11 analysis of AB 978 amended June 14, 2021; (6) AB 978 as amended 12 on June 24, 2021; and (7) AB 978 as approved by the Governor and 13 chaptered. Pl.’s Req. for Judicial Notice (“RJN”), ECF No. 15. 14 The Court finds all exhibits, except the first, to be 15 legislative history whose accuracy cannot reasonably be 16 questioned and a proper subject for judicial notice. See Chaker 17 v. Crogan, 428 F.3d 1215 , 1123 n.8 (9th Cir. 2005). 18 Accordingly, the Court grants Plaintiff’s request for judicial 19 notice of exhibits two through seven but denies Plaintiff’s 20 request for the first exhibit. See Snyder v. Umum Life Ins. Co. 21 of Am., No. CV 13-07522 BRO RZX, 2014 WL 7734715 , at *5 (C.D. 22 Cal. Oct. 28, 2014) (granting judicial notice for legislative 23 history but not a declaration from an employee at Legislative 24 Intent Services, Inc., as it is not a source generally known or 25 whose accuracy cannot reasonably be questioned). 26 B. Legal Standard 27 A defendant may move to dismiss for lack of subject matter 28 jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of 1 Civil Procedure. Fed. R. Civ. P. 12(b)(1). If the plaintiff 2 lacks standing under Article III of the United States 3 Constitution, then the court lacks subject-matter jurisdiction, 4 and the case must be dismissed. See Maya v. Centex Corp., 658 5 F.3d 1060, 1067 (9th Cir. 2011). Once a party has moved to 6 dismiss for lack of subject-matter jurisdiction under Rule 7 12(b)(1), the opposing party bears the burden of establishing 8 the court’s jurisdiction. See Kokkonen v. Guardian Life Ins. 9 Co. of Am., 511 U.S. 375, 377 (1994). 10 C. Analysis 11 Defendants first move to dismiss all claims against 12 Governor Newsom and the state-law claims based on sovereign 13 immunity. Mot. to Dismiss at 5-6. Peace Ranch does not oppose 14 this. Opp’n to Mot. to Dismiss at 10 n.2. Accordingly, the 15 state-law claims, counts two, seven, and eight, as well as all 16 claims against Governor Newsom are DISMISSED WITH PREJUDICE. 17 See Resnick v. Hyundai Motor Am., Inc., No. CV-1600593-BRO, 2017 18 WL 1531192 , at *22 (C.D. Cal. Apr. 13, 2017) (“Failure to oppose 19 an argument raised in a motion to dismiss constitutes waiver of 20 that argument.”). 21 1. Article III Standing 22 Article III of the Constitution limits the jurisdiction of 23 federal courts to actual “Cases” and “Controversies.” U.S. 24 Const. art. III, § 2. “One element of the case-or-controversy 25 requirement is that plaintiffs must establish that they have 26 standing to sue.” Clapper v. Amnesty Int’l USA, 568 U.S. 398 , 27 408 (2013) (internal quotation marks and citation omitted). To 28 establish standing “a plaintiff must show (1) [they have] 1 suffered an injury in fact that is (a) concrete and 2 particularized and (b) actual or imminent, not conjectural or 3 hypothetical; (2) the injury is fairly traceable to the 4 challenged action of the defendant and (3) it is likely, as 5 opposed to merely speculative, that the injury will be redressed 6 by a favorable decision.” Friends of the Earth, Inc. v. Laidlaw 7 Envt’l. Serv. Inc., 528 U.S. 167, 180-81 (2000). “The 8 plaintiff, as the party invoking federal jurisdiction, bears the 9 burden of establishing these elements.” Spokeo, Inc. v. Robins, — 10 — 578 U.S. 330, 338 (2016). “[A]t the pleading stage, the 11 plaintiff must clearly allege facts demonstrating each element.” — 12 — Id. (internal quotation marks and citation omitted). 13 “A party facing prospective injury has standing to sue 14 where the threatened injury is real, immediate, and direct.” 15 Davis v. Fed. Election Comm’n, 554 U.S. 724, 734 (2008). 16 “[W]hen plaintiffs seek to establish standing to challenge a law 17 or regulation that is not presently being enforced against them, 18 they must demonstrate a realistic danger of sustaining a direct 19 injury as a result of the statute’s operation or enforcement.” 20 LSO, Ltd. v. Stroh, 205 F.3d 1146, 1154 (9th Cir. 2000) 21 (internal quotation marks and citation omitted). 22 Defendants argue, and the Court agrees, that Plaintiff has 23 failed to allege an injury in fact. AB 978 applies to 24 mobilehome parks located within and governed by the 25 jurisdictions of two or more incorporated cities. Compl. ¶ 9. 26 However, Peace Ranch consists of two parks, one in Anaheim and 27 one in Fullerton, with two different permits. Id. Accordingly, 28 it has not alleged an “intention to engage in a course of nee nn een en nnn nnn nn ne on nnn nn nn ne OO ED 1 conduct [. . .] proscribed by a statute,” Susan B Anthony List 2 v. Driehaus, 573 U.S. 149 , 159 (2014), nor a “realistic danger 3 of sustaining a direct injury as a result of the statute’s 4 operation or enforcement.” LSO, Ltd., 205 F.3d at 1154 . 5 Plaintiff, therefore, does not have standing. See Lopez v. 6 Candaele, 630 F.3d 775, 792 (9th Cir. 2010) (finding plaintiff 7 failed to establish standing where the challenged policy did not 8 apply to his past or intended future conduct). As such, 9 Plaintiff’s remaining federal claims are dismissed WITHOUT 10 PREJUDICE. See Fleck & Assocs., Inc. v. City of Phoenix, 471 11 F.3d 1100, 1106-07 (9th Cir. 2006). — 12 — 13 Til. ORDER 14 For the reasons set forth above, the Court GRANTS 15 Defendants’ Motion to Dismiss and DENIES as moot Plaintiff's 16 | Motion for Preliminary Injunction. 17 IT IS SO ORDERED. 18 Dated: February 7, 2022 19 ke Me 20 teiren staves odermacr 7008 — 21 — — 22 — — 23 — — 24 — — 25 — — 26 — — 27 — — 28 —