Capri Mobile Villa LLC v. City of Petaluma

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 CAPRI MOBILE VILLA LLC, Case No. 25-cv-09096-JSC 8 Plaintiff, ORDER RE: DEFENDANT’S MOTION 9 v. TO DISMISS 10 CITY OF PETALUMA, Re: Dkt. No. 20 Defendant. 11 12 13 Plaintiff Capri Mobile Village LLC, a mobilehome park owner in Petaluma, California, 14 challenges Petaluma’s mobilehome rent control ordinance under the Fifth Amendment’s Takings 15 Clause and the Fourteenth Amendment’s Due Process Clause. (Dkt. No. 18.)1 The ordinance 16 prevents mobilehome park owners from raising rents over certain limits, and a 2025 ordinance 17 amendment prevents park owners from resetting rent to market value when a homeowner sells the 18 mobilehome. Plaintiff asserts the 2025 amendment is an unconstitutional taking on its face and as 19 applied, and violates Plaintiff’s substantive due process rights. Defendant moves to dismiss all 20 claims. After carefully considering the parties’ submissions, and having had the benefit of oral 21 argument on May 21, 2026, the Court GRANTS Defendant’s motion to dismiss as to all claims. 22 Drawing inferences from the Amended Complaint’s allegations in Plaintiff’s favor, Plaintiff has 23 not alleged facts sufficient to support an inference its as-applied takings challenge is ripe, or an 24 inference Petaluma’s rent control ordinance is a per se taking, a regulatory taking, or a violation of 25 Plaintiff’s substantive due process rights. 26 BACKGROUND 27 1 A. The City’s Rent Control Provision 2 In 1994, Petaluma enacted the “Mobilehome Park Space Rent Stabilization Program.” 3 Petaluma, Cal. Municipal Code Ch. 6.50.010 (“the ordinance”). The year before the city council 4 had retained a consultant to conduct a survey of mobilehome park residents. Id. Ch. 6.50.010(D). 5 The ordinance adopted findings from the survey, including how nearly 80% of residents are at 6 least 62 years old and rely on fixed incomes, roughly 90% are low income, and over half spend 7 more than 30% of their income on housing. Id. Ch. 6.50.010(E). The council also found “there is 8 a shortage of spaces for the locations of mobilehomes in the city, a condition which results in low 9 vacancy rates and tends to prevent normal competition between the owners and tenants of 10 mobilehome parks.” Id. Ch. 6.50.010(M). The city council therefore recognized “a need to … 11 provide protection to tenants from unreasonable rent increases” and “alleviat[e] the unequal 12 bargaining power which exists between” residents and park owners, while simultaneously 13 allowing “park owners to obtain a fair and reasonable rate of return and … to generate income” 14 from rent. Id. Ch. 6.50.010(F), (X). 15 The ordinance’s primary solution was to cap rent increases, i.e., rent control. Unless an 16 exception applies, a mobilehome park owner “shall not” increase a tenant’s rent within one year of 17 the most recent rent increase, and any rent increase “may not exceed” the lesser of 4%, or 70% of 18 the percent change in the Consumer Price Index (CPI).2 Id. Ch. 6.50.040(A). “If the change in the 19 CPI is negative, no rent increase is permitted.” Id. An owner may raise rent in excess of those 20 limits by either (1) resetting the base rent price to market value pursuant to the “vacancy control” 21 provision or (2) raising rents pursuant to owners’ right to a “fair return.” 22 B. The 2025 Vacancy Control Amendment 23 As relevant here, the primary rent-control exception is a so-called “vacancy control” 24 provision. “A mobilehome park owner shall be permitted to charge a new base rent for a 25 mobilehome space whenever a lawful space vacancy occurs.” Id. Ch. 6.50.220(A). As originally 26 27 2 The consumer price index measures inflation. “‘Consumer price index’ or ‘CPI’ means the 1 enacted, the ordinance defined a “lawful space vacancy” to include “the termination of the tenancy 2 of the affected mobilehome tenant in accordance with […] California Civil Code Sections 798.55 3 through 798.60[.]” (Dkt. No. 16-2 at 33 (citing the version of Ch. 6.50.220(A)(1) effective August 4 13, 2025).) Those California Civil Code sections provide a tenancy can be terminated when a 5 tenant is evicted for just cause or the mobilehome owner sells the home. See generally Cal. Civ. 6 Code §§ 798.55-798.60. So, in either scenario, as originally enacted, the vacancy control 7 provision allowed park owners to reset rent for a space to market value, i.e., the price the owner 8 would charge in the absence of rent control. 9 But in 2025 the City amended the definition of “lawful space vacancy.” The vacancy 10 control now reads, in relevant part: 11 For purposes of this chapter, a lawful space vacancy is defined as follows: 12 1. A vacancy occurring because of the termination of the 13 tenancy of the affected mobilehome tenant in accordance with the Mobilehome Residency Law pursuant to Civil Code 14 Section 798.56. Notice given by a tenant to the manager or owner of a mobilehome park sixty days prior to vacating a 15 tenancy pursuant to Civil Code Section 798.59 does not create a lawful vacancy permitting the charging of a new 16 base rent pursuant to this section. 17 Petaluma, Cal. Municipal Code Ch. 6.50.220(A)(1) (emphasis added). Under the amended 18 vacancy control provision, a park owner may reset rents to market value when a tenant is evicted 19 for just cause, but may no longer do so when the mobilehome owner sells the home pursuant to 20 Section 798.59. Id.; see Cal. Civ. Code §§ 798.56, 798.59. 21 C. Park Owners’ Right to a Fair Return 22 A park owner may also increase rent above the ordinance’s limits to receive a “fair return” 23 on their investments. Id. Ch. 6.50.040(E); Ch. 6.50.060. If the owner believes they are not getting 24 a “fair return,” the owner may file a petition with the City, which begins an arbitration process. Id. 25 “Upon receipt” of the petition, the city “shall, within seven working days, assign an arbitrator” and 26 “set a date for … hearing” between 14 and 60 days after the arbitrator is assigned. Id. Ch. 27 6.50.060(E). 1 preponderance of the evidence the reasonable necessity of any rent increase” beyond the 2 ordinance’s caps “to earn a reasonable return.” Id. Ch. 6.50.060(G)(1). There is a rebuttable 3 presumption “the net operating income received by the owner” provides “a fair return.” Id. 4 Ch.60.050.100(A). In the arbitration, the parties “may present evidence regarding the 5 presumption,” i.e., evidence about the park owner’s “net operating income” and whether that 6 amount is “fair.” Id. Ch. 6.050.100(C). For instance, the parties may offer and cross-examine 7 witnesses, experts, and documentary evidence about a park owner’s “exceptional expenses” for 8 “maintenance and repairs,” whether the owner’s “expenses were unreasonably high or low 9 notwithstanding the application of prudent business practices,” and any “uncollected rents … and 10 bad debts” which are “beyond the control of the owner.” Id. Ch. 6.50.060(G)(3); Ch. 6.50.100(B), 11 (C). The arbitrator must submit a “written statement of decision” “within fourteen days of the 12 hearing.” Id. Ch. 6.50.060(G)(4). 13 D. Plaintiff’s Allegations 14 “At a mobilehome park, the park owner owns the land on which mobilehomes are placed. 15 In most cases, the […] residents own the mobilehome and rent the underlying […] space on which 16 the home is placed.” (Dkt. No. 18 ¶ 12.) A mobile home “is not installed on a permanent 17 foundation. Though movable, when a homeowner decides to move out of a park, he typically will 18 sell the home ‘in-place’ at the park to a new homeowner, who then becomes the lessor of the 19 underlying space.” (Id. ¶ 13.) 20 Plaintiff “is a limited liability company that owns” property in the “City of Petaluma, 21 where it operates a mobilehome park.” (Id. ¶ 4.) The “park has 69 spaces or pads, with 22 mobilehomes on all of them. Each home is owned by the resident or residents that live there. 23 Each homeowner rents or leases, from [Plaintiff], the space on which the home sits.” (Id. ¶ 19.) 24 To contextualize its claims, Plaintiff alleges details about mobilehome markets. Like 25 homes and cars, every “mobilehome has a fair market value.” (Id. ¶ 17.) “The vast majority” of 26 mobilehomes are “sold in-place in a park,” and when those sales occur, “the mobilehome’s market 27 value is at least partly a function of the rent paid for the underlying space. All things being equal, 1 Petaluma’s “artificially suppresses the rent charged for a space,” thereby raising mobilehome sale 2 prices and benefiting mobilehome owners. (Id. ¶ 18.) Plaintiff alleges “almost 90% of a mobile 3 home’s sale price represents the value of the lower rents set by the rent-control law,” and at its 4 park, mobilehomes “with an inherent value of roughly $5,000 to $25,000[] are selling for roughly 5 $150,000 to $225,000.” (Id. ¶¶ 26, 44.) As alleged, this windfall to homeowners comes at the 6 expense of park owners’ rental income because “space rents are roughly 40% of their fair market 7 value” “due to the City’s onerous rent-control law.” (Id. ¶ 25.) 8 Plaintiff challenges the 2025 vacancy control amendment, asserting it “undermines 9 investment-backed expectations, as it was enacted after Capri acquired the park and flies in the 10 face of the expectations of both Capri and residents that rents can be reset to market following a 11 lawful vacancy.” (Id. ¶ 45.) Now, as amended, the ordinance means “parks like Capri can now 12 almost never reset space rents to market levels. For the vast majority of spaces, Capri will never 13 be able to raise rents to market.” (Id. ¶ 23.) Effectively, the ordinance 14 compels a wealth transfer from park owners to a select group of “windfall residents” who held space-tenants at the time of the 15 Ordinance’s enactment. The transfer is of the Premium, defined as the net present value of the expected savings associated with the future 16 legally constrained space rent obligations to the park. Specifically, the Ordinance requires a landowner to relinquish an ascertainable amount 17 of money (the Premium) linked to a specific, identifiably property interest (the leasehold governing the leased space) and to transfer it to 18 a third party (the mobilehome owner), which Premium the third party realizes upon the sale of his home. [… T]he Premium is defined and 19 measured by what the owner would be willing to pay for the leasehold in a competitive, unregulated, and arms-length transaction. 20 21 (Id. ¶ 36.) So, the ordinance “benefits only those who were residents at the time of the 22 [ordinance’s] enactment and who then sell their homes for inflated prices.” (Id. ¶ 28.) 23 Plaintiff brings two causes of action. First, Plaintiff contends the vacancy control 24 amendment violates the Fifth Amendment’s Takings Clause, which reads “… nor shall private 25 property be taken for public use, without just compensation.” U.S. Const. Amend. V. Plaintiff 26 asserts the ordinance amendment is a per se taking and a regulatory taking, and is therefore 27 unconstitutional because the taking is not for “public use” and/or the government does not provide 1 Fourteenth Amendment. Both causes of action are brought under 42 U.S.C. section 1983, and 2 Plaintiff purports to challenge the ordinance amendment on its face and as applied in each cause of 3 action. 4 DISCUSSION 5 Defendant moves to dismiss all of Plaintiff’s claims. First, Plaintiff has not plausibly 6 alleged the amendment is a per se taking or a regulatory taking , and the as-applied takings claim 7 is not ripe.3 Second, the Substantive Due Process claim fails because the ordinance survives 8 rational basis review. 9 I. Plaintiff’s Facial Takings Challenge 10 As relevant here, there are two types of takings. The first is a per se taking, often referred 11 to as a “physical” or “categorical” taking, when “the government acquires private property for a 12 public purpose, whether the acquisition is the result of a condemnation proceeding or a physical 13 appropriation.” Brown v Legal Found. of Wash., 538 U.S. 216, 233 (2003) (cleaned up). The 14 second type is a “regulatory taking,” which requires “essentially ad hoc, factual inquiries.” Id. at 15 234 (cleaned up). Brown summarizes case law illustrating the difference between per se and 16 regulatory takings: 17 When the government physically takes possession of an interest in property for some public purpose, it has a categorical duty to 18 compensate the former owner, regardless of whether the interest that is taken constitutes an entire parcel or merely a part thereof. Thus, 19 compensation is mandated when a leasehold is taken and the government occupies the property for its own purposes, even though 20 that use is temporary. Similarly, when the government appropriates part of a rooftop in order to provide cable TV access for apartment 21 tenants, or when its planes use private airspace to approach a government airport, it is required to pay for that share no matter how 22 small. But a government regulation that merely prohibits landlords from evicting tenants unwilling to pay a higher rent, that bans certain 23 private uses of a portion of an owner's property, or that forbids the private use of certain airspace, does not constitute a categorical 24 taking. The first category of cases requires courts to apply a clear rule; 25 3 Under the Fifth Amendment, the government may not take private property for “public use” and 26 without “just compensation.” U.S. Const. Amend. V. The parties dispute whether Plaintiff has plausibly alleged a “private taking,” i.e., whether Plaintiff has alleged the government has 27 committed a taking for “public use. (Dkt. No. 18 at 10-11; Dkt. No. 11 at 11-12.) Because the second necessarily entails complex factual assessments of the 1 purposes and economic effects of government actions. 2 Id. at 233-34 (internal citations and quotation marks omitted). 3 As explained below, drawing inferences in Plaintiff’s favor, Plaintiff has not alleged facts 4 plausibly supporting an inference the ordinance is either a per se taking or a regulatory taking. 5 A. Per Se Taking 6 To argue the vacancy control amendment is a per se taking, Plaintiff relies on two cases. 7 Both are inapposite. First, Cedar Point Nursey v. Hassid, 594 U.S. 139 (2021) held it constitutes a 8 “per se physical taking” for a California law to require certain employers to allow union 9 organizers onto the employer’s premises because the law is a “government-authorized invasion[] 10 of property … allowing union organizers to traverse [the property] at will.” Id. at 141, 149, 152. 11 Plaintiff does not assert the ordinance causes a physical invasion of their property, which is the 12 only per se taking theory Cedar Point addresses. (See generally Dkt. Nos. 18, 25.) Plaintiff says 13 Cedar Point stands “for the uncontroversial proposition … that a taking can occur even if ‘the 14 property at issue does not first pass through the government’s hands.’” (Dkt. No. 25 at 10 15 (quoting Dkt. No. 18 ¶ 10).) True, a per se taking does not require the government to own the 16 property, but that portion of Cedar Point cannot reasonably be interpreted to apply to anything but 17 a physical-invasion-of-property taking theory. So, Cedar Point is unhelpful to Plaintiff. 18 Second, in Koontz v. St. Johns River Water Mgmt. Dist., 570 U.S. 595 (2013), the plaintiff 19 sought to obtain a land-use permit to undertake construction on his property. Id. at 600. The local 20 agency with jurisdiction over the plaintiff’s land had a regulation requiring “permit applicants 21 wishing to build on wetlands offset the resulting environmental damage by creating, enhancing, or 22 preserving wetlands elsewhere.” Id. at 600–01. Consistent with that regulation, when the plaintiff 23 applied for a permit, the agency conditioned its approval on the plaintiff agreeing to one of two 24 things. First, the plaintiff could “reduce the size of his development” and “deed to the [agency] a 25 conservation easement” on his property. Id. at 601–02. Alternatively, the plaintiff could “proceed 26 with the development as proposed” and “hire contractors make improvements to” agency-owned 27 land not on the plaintiff’s property. Id. at 602. The Supreme Court held the government’s 1 government command[ed] the relinquishment of funds linked to a specific, identifiable property 2 interest such as a bank account or parcel of property.” Id. at 614. In other words, both conditions 3 “would transfer an interest in property from the landowner to the government.” Id. at 615. 4 Citing Koontz, Plaintiff asserts the vacancy control amendment is a per se taking because it 5 “compels a wealth transfer from park owners” to residents who lived in mobile parks “at the time 6 of the [amendment]’s enactment.” (Dkt. No. 18 ¶ 36.) As the argument goes, the “wealth” 7 purportedly being “transfer[red]” is a “Premium, defined as the net present value of the expected 8 savings associated with the future legally constrained space rent obligations to the park.” (Id.) 9 Simply put, Plaintiff alleges a reduction in “expected,” “future” rent earnings because, absent the 10 ordinance, park owners would charge higher rents. (See id.) 11 Drawing inferences in Plaintiff’s favor, Plaintiff does not allege facts sufficient to support 12 an inference the vacancy control amendment “transfer[s] an interest in property from the 13 landowner to the government,” thereby making the ordinance a per se taking. Koontz, 570 U.S. at 14 616. Plaintiff does not allege the amendment requires “the relinquishment of funds” in a “bank 15 account,” nor do those funds go “to the government.” Id. at 615–16. Rather, Plaintiff alleges the 16 ordinance reduces their “future,” “expected” earnings from rent, which comes from tenants. (Dkt. 17 No. 18 ¶ 36.) Plaintiff’s allegations of a “wealth transfer” are thus conclusory; “wealth” does not 18 include the “present value” of future, unearned, un-promised money to which Plaintiff is not 19 entitled. (Id.) 20 Further, Plaintiff’s argument is foreclosed by Yee v. Escondido, Cal., 503 U.S. 519 (1992) 21 and Ninth Circuit caselaw interpreting Yee. There, the Supreme Court rejected the theory a rent 22 control ordinance similar to Petaluma’s essentially caused a “physical occupation of the park 23 owner’s land” because the ordinance “transferred … the right to occupy the land indefinitely at a 24 submarket rate[ ] from the park owner to the mobile home owner.” 503 U.S. at 527. Although 25 Yee’s holding was limited to the argument the ordinance constituted a physical invasion of land, 26 the Court’s reasoning strongly suggested an ordinance like Petaluma’s must be analyzed as a 27 regulatory taking: petitioners’ use of their land by regulating the relationship between 1 landlord and tenant. This Court has consistently affirmed that States have broad power to regulate housing conditions in general and the 2 landlord-tenant relationship in particular without paying compensation for all economic injuries that such regulation entails. 3 When a landowner decides to rent his land to tenants, the government may place ceilings on the rents the landowner can charge, or require 4 the landowner to accept tenants he does not like, without automatically having to pay compensation. Such forms of regulation 5 are analyzed by engaging in the “essentially ad hoc, factual inquiries” necessary to determine whether a regulatory taking has occurred. In 6 the words of Justice Holmes, “while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a 7 taking.” 8 Yee, 503 U.S. at 528–29 (internal citations and quotation marks omitted). Indeed, the Ninth 9 Circuit held, en banc, “Yee v. City of Escondido holds that a takings challenge to mobile home rent 10 control ordinances similar to [Defendant’s] should be analyzed as a regulatory taking[, …] not a 11 physical occupation amount to a per se taking[.]” Guggenheim v. City of Goleta, 638 F.3d 1111, 12 1120 (9th Cir. 2010) (en banc). In Guggenheim, the plaintiffs there, mobilehome park owners, 13 raised a virtually identical theory to Plaintiffs’ challenge here: “by locking in a rent below market 14 rents, and allowing tenants to sell their mobile homes to buyers who still enjoy the benefits of the 15 controlled rent[, …] the ordinance shifts much of the value of ownership of the land […] to the 16 tenant.” Id. at 1115. And interpreting Yee, the Ninth Circuit held that ordinance is not a per se 17 taking. Id. at 1120. So, Plaintiff’s per se challenge fails. 18 At the hearing, Plaintiff urged Koontz, rather than Yee and Guggenheim, is controlling. 19 Plaintiff asserts Yee and Guggenheim only addressed “physical” per se theories, whereas Koontz is 20 a new type of per se claim. Not so. This Court is bound by Yee and Guggenheim unless “the 21 reasoning or theory” in those cases “is clearly irreconcilable with the reasoning or theory” of 22 Koontz. See Miller v. Gammie, 335 F.3d 889, 893 (9th Cir. 2003). Koontz did not involve a rent 23 control ordinance; it explicitly applies to government conduct “when owners apply for land-use 24 permits.” 570 U.S. at 604. So, Koontz is not “clearly irreconcilable” with Yee or Guggenheim. 25 And even if Koontz broadly applied to any situation where the government “direct[s] someone to 26 spend money,” id. at 614, as explained above, Plaintiff has not alleged facts sufficient to support 27 an inference the government has forced Plaintiff to spend money because, drawing inferences in 1 Plaintiff’s reliance on Levin v. City & County of San Francisco, 71 F. Supp. 3d 1072 (N.D. 2 Cal. 2014) is also misplaced. There, the court found an ordinance requiring landlords to pay a 3 lump-sum payment to tenants effected a per se taking. See id. at 1077-86. But drawing inferences 4 in Plaintiff’s favor, Petaluma’s ordinance does not require Plaintiff to pay or relinquish money. 5 Despite Plaintiff’s attempts to define their losses in terms of “Premiums,” the bottom line is 6 Plaintiff merely alleges a reduction in future rental income.4 To the extent that constitutes a 7 taking, the Supreme Court has “consistently affirmed” it is not a per se taking. Yee, 503 U.S. at 8 528-29; see id. (“When a landowner decides to rent his land to tenants, the government may place 9 ceilings on the rents the landowner can charge[.]”); FCC v. Florida Power Corp., 480 U.S. 245, 10 252 (1987) (“statutes regulating the economic relations of landlords and tenants are not per 11 se takings”); Guggenheim, 638 F.3d at 1115 (holding is it not a per se taking for a mobile home 12 rent control ordinance to “lock[] in a rent below market rents” and therefore “shift[] much of the 13 value of ownership of the land … to the tenant.”) 14 So, the Court grants Defendant’s motion as to Plaintiff’s per se takings claim. 15 B. Regulatory Taking 16 An ordinance is a regulatory taking when it is “functionally equivalent to the classic taking 17 in which government directly appropriates private property or ousts the owner from his domain.” 18 Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 539 (2005). “[A] takings challenge to [a] mobile 19 home rent control ordinance … should be analyzed as a regulatory taking under Penn Central 20 [Transportation Co. v. New York City, 438 U.S. 104 (1977)].” Guggeinheim, 638 F.3d at 1120. 21 Courts apply three Penn Central factors to determine whether government conduct is a 22 regulatory taking. First, “‘[p]rimary among those factors are the economic impact of the 23 24 4 A district court recently dismissed an as-applied challenge to Petaluma’s ordinance brought by Plaintiff’s counsel, noting the plaintiffs there were “careful” in how they framed their economic 25 injuries. See Little Woods Mobile Villa LLC v. City of Petaluma, 736 F. Supp. 3d 757, 761 (N.D. Cal. 2024) (“Plaintiffs allege that it is economically infeasible to continue operating their parks 26 because the City’s rent-control ordinance prevents Plaintiffs from raising rents[. …] Plaintiffs say[] they are being forced to operate their parks at an ‘economic loss.’”); id. at 763 n.1 (“The best 27 reading of the complaint seems to be that Plaintiffs are currently making some profit; they are 1 regulation on the claimant[.]” Guggeinheim, 638 F.3d at 1120 (quoting Lingle, 544 U.S. at 538– 2 39). The second factor, which overlaps with the first, is “‘the extent to which the regulation has 3 interfered with distinct investment-backed expectations.’” Guggeinheim, 638 F.3d at 1120 4 (quoting Lingle, 544 U.S. at 538–39). Third, courts consider “the ‘character of the governmental 5 action’–for instance whether it amounts to a physical invasion or instead merely affects property 6 interests through ‘some public program adjusting the benefits and burdens of economic life to 7 promote the common good.’” Lingle, 544 U.S. at 539 (quoting Penn Central, 438 U.S. at 124). 8 Plaintiff asserts the vacancy control amendment is a regulatory taking under the Penn 9 Central factors. First, the law has a “severe” economic impact on Plaintiff because “almost 90% 10 of a mobile home’s sale price represents the value of the lower rents set by the rent-control law, 11 and this Premium goes into the pockets of the … residents[] who happened to live at the park at 12 the time of the Ordinance’s enactment.” (Dkt. No. 18 ¶ 44.) Second, the vacancy control 13 amendment “undermines investment-backed expectations, as it was enacted after [Plaintiff] 14 acquired the park and flies in the face of the expectations of both [Plaintiff] and residents that rents 15 can be reset to market following a lawful vacancy.” (Id. ¶ 45.) Third, Plaintiff emphasizes the 16 vacancy control amendment regulates some actors, but not others: the ordinance “restricts only the 17 amount the landowner can charge a new resident for rental” and “does not limit the amount which 18 the outgoing resident, in turn, can demand for sale of his mobile home to that new resident, who 19 must pay an artificially high price to buy the mobile home.” (Id. ¶ 46.) Notably, Plaintiff does not 20 cite any authority holding a rent control ordinance constitutes a regulatory taking. 21 To the contrary, the Ninth Circuit has held, on nearly identical facts, a mobilehome rent 22 control ordinance did not constitute a regulatory taking. MHC Fin. Ltd. P’ship v. City of San 23 Rafael, 714 F.3d 1118 (9th Cir. 2013), addressed a mobilehome rent control ordinance enacted in 24 1989 which, like Petaluma’s ordinance, tied permissible rent increases to inflation. Id. at 1122. In 25 1993, the ordinance was amended “to add ‘vacancy control,’ which gave any new resident taking 26 over a mobilehome pad lease the right to rent the pad at the same rate as the previous tenant.” Id. 27 at 1122. Then, in 1999, the government amended the ordinance again to adjust the permissible 1 and 1999 amendments’ adoptions. See id. at 1122–23, 1127.5 In the lawsuit, the plaintiff 2 challenged the “the entire Ordinance as it existed in 1999,” including the 1993 vacancy control 3 amendment.6 See id. at 1122–23, 25. 4 Applying the Penn Central factors, MHC held the ordinance did not constitute a regulatory 5 taking. First, under the “economic impact” factor, the district court found the rent control 6 ordinance caused an “81% diminution in value” of the park “by comparing the effect of the 1999 7 Ordinance with the hypothetical economic result assuming that there was no rent control 8 ordinance in effect at all.” MHC, 714 F.3d at 1127. The MHC court held that analysis was an 9 error in two ways. First, 10 that analysis assumes that MHC purchased the property prior to the enactment of the original ordinance, when it did not. The ordinance 11 was in effect when MHC acquired the property. Therefore, the appropriate analysis of the economic impact on MHC is a comparison 12 of the economic impact of the 1993 Ordinance in effect when MHC purchased the mobilehome park, and the economic effect of the 1999 13 Ordinance enacted after the property acquisition. See [Lingle, 544 U.S. at 538–39] (focusing on the “economic impact of the 14 regulation”). 15 MHC, 714 F.3d at 1127. Second, even assuming that 81% diminution in value was correct, that 16 reduction was not “sufficient economic loss or interference with [the park owner’s] reasonable 17 investment-backed expectations to constitute a taking. Supreme Court precedent has long 18 established that mere diminution in the value of property, however serious, is insufficient to 19 demonstrate a taking.” Id. at 1127–28 (citing three Supreme Court cases finding no taking when 20 the regulations, respectively, caused an “approximately 75% diminution in value,” a “92.5% 21 diminution,” and a 90% diminution). 22 23 5 The opinion does not provide the exact date or year on which the plaintiff purchased the park. But MHC makes clear the plaintiff purchased the park “[w]hile” a prior state court suit challenging 24 the 1993 ordinance amendment was “on appeal,” and cites the state court decision upholding the ordinance: “De Anza Assets, Inc. v. City of San Rafael, Case No. A063017 (Cal.Dist.Ct.App. Oct. 25 6, 1994).” See MHC, 714 F.3d at 1122–23. Later, MHC notes the plaintiff “did not” “purchase[] the property prior to the enactment of the original ordinance” in 1989 and “[t]he ordinance was in 26 effect when [the plaintiff] acquired the property.” Id. at 1127. 6 The Ninth Circuit ruled the plaintiffs could raise arguments regarding the 1993 vacancy control 27 amendment, despite a one-year statute of limitations, “because the constitutionality of the 1 Second, under the “investment-backed expectations” factor, the plaintiff urged it had the 2 expectation it would be able to ‘increase rent at a rate consistent with the rate of increase in 3 housing costs … that is, [the] expectation was that [the park] would be subject to no rent control at 4 all.” Id. at 1128 (cleaned up). The district court below agreed, finding the park owner “had no 5 reason to expect that the City would amend the Ordinance, transferring much of the park’s value 6 to third parties[.]” Id. (cleaned up). The Ninth Circuit ruled that holding was an error: 7 “‘[T]hose who do business in the regulated field cannot object if the legislative scheme is buttressed by subsequent amendments to 8 achieve the legislative end.’ ” Concrete Pipe [& Prods. Of Cal., Inc v. Constr. Laborers Pension Trust for S. Cal.,], 508 U.S. [602,] 645 9 [(1993)] 10 Indeed, sitting en banc in Guggenheim[ …], we recently held that the “‘primary factor,’ ‘the extent to which the regulation has interfered 11 with distinct investment-backed expectations’” to be “fatal” to the Guggenheims’ takings claim, where the Guggenheims purchased a 12 mobilehome park with a rent control ordinance already in place. 638 F.3d at 1120. “[T]he price they paid for the mobile home park 13 doubtless reflected the burden of rent control they would have to suffer. They could have no ‘distinct investment-backed expectations' 14 that they would obtain illegal amounts of rent.” Id. Therefore, this factor also favors the conclusion that no taking occurred. 15 MHC, 714 F.3d at 1128. Finally, evaluating the “character of the ordinance,” MHC held the 16 ordinance was “much more an ‘adjustment of the benefits and burdens of economic life to 17 promote the common good’ than it is a physical invasion of property, and [the amendments] only a 18 slight modification to an already-existing rent control ordinance[.]” Id. (quoting Penn Central, 19 438 U.S. at 124). 20 In light of MHC, and drawing all inferences in Plaintiff’s favor, Plaintiff does not allege 21 facts plausibly supporting an inference the vacancy control amendment is a Penn Central 22 regulatory taking. First, Plaintiff emphasizes Petaluma’s ordinance effectively transfers 90% of 23 the value of home sale prices to people who were tenants at the time of the ordinance’s enactment. 24 That is insufficient under Penn Central’s first factor because the factor inquires about the severity 25 of impact, and Plaintiff does not quantify the ordinance’s economic impact on Plaintiff; instead, 26 Plaintiff attempts to quantify the ordinance’s impact on mobilehome sale prices. So, Plaintiff has 27 not alleged facts showing how much the vacancy control amendment impacts Plaintiff. Plaintiff’s 1 failure to quantify an economic impact means it has not alleged facts sufficient to support an 2 inference the economic impact is so severe the ordinance is functionally equivalent to a classic 3 taking.7 See MHC, 714 F.3d at 1127–28 (citing Supreme Court cases finding a 90% reduction in 4 property values was an insufficient economic impact on the plaintiffs). 5 Second, drawing inferences in Plaintiff’s favor, Plaintiff has not alleged facts supporting 6 an inference the vacancy control amendment interfered with its reasonable investment-backed 7 expectations. Petaluma enacted the ordinance in 1994, then enacted the challenged amendment in 8 2025. Plaintiff alleges it purchased the park before the 2025 amendment’s enactment and, at the 9 hearing, clarified its purchase occurred after the original ordinance’s enactment. Hence, Plaintiff 10 contends “it had no reasonable investment-backed expectations that” the 2025 ordinance 11 amendment “would be adopted.” (See Dkt. No. 25 at 11.) But because rent control was in effect 12 when Plaintiff purchased the park, or, at least, Plaintiff does not allege that it was not, Plaintiff’s 13 argument is foreclosed by binding Ninth Circuit precedent. In Guggenheim, the ordinance passed 14 in 1987, and the park owners purchased the park in 1997. 638 F.3d at 1115. The park owners, 15 like Plaintiff here, asserted the ordinance “transfer[red] … rent … from the landlord to the tenant, 16 and that this had the effect of raising the price of the average mobile home.” Id. at 1120. The 17 court assumed that impact happened, and noted the ordinance caused that impact 18 before the [owners] bought the mobile home park. Since the ordinance was a matter of public record, the price they paid for the 19 mobile home park doubtless reflected the burden of rent control they 20 7 Plaintiff also alleges “due to the City’s onerous rent-control law, Capri’s space rents are roughly 21 40% of their fair market value.” (Dkt. No. 18 ¶ 25.) But Plaintiff does not mention this allegation in the “regulatory taking theory” section of its opposition brief. (Dkt. No. 25 at 10-11) (cleaned 22 up). To the extent this allegation quantifies the economic impacts on Plaintiff, the allegation is insufficient because Plaintiff specifically challenges the 2025 vacancy control amendment. 23 Therefore, “the appropriate analysis of the economic impact on [Plaintiff] is a comparison of the economic impact of the […] Ordinance in effect when [Plaintiff] purchased the mobilehome park, 24 and the economic effect of the [amendment] enacted after the property acquisition” in 2025. See MHC, 714 F.3d at 1127. Plaintiff does not allege when it acquired the park and does not quantify 25 losses since the amendment’s enactment. Plaintiff also expressly alleges space rents are so low compared to market value “due to the City’s onerous rent-control law,” not due to the 2025 26 vacancy control amendment, so Plaintiff has not conducted the “appropriate analysis.” See id.; (Dkt. No. 18 ¶ 25.) Because Plaintiff has not quantified the economic effect of the 2025 vacancy 27 control amendment, as opposed to the ordinance as a whole, drawing inferences in Plaintiff’s would have to suffer. They could have no ‘distinct investment-backed 1 expectations’ that they would obtain illegal amounts of rent. […] The [owners] bought a trailer park burdened by rent control, and had no 2 concrete reason to believe that they would get something much more valuable, because of hoped-for legal changes, than what they had. 3 4 Id. at 1120-1121. Similarly, in MHC, the original “ordinance was in effect when [the plaintiff] 5 acquired the property,” but the plaintiff challenged an amendment enacted after it purchased the 6 property. MHC, 714 F.3d at 1127–28. Relying on Guggenheim, MHC ruled it was erroneous for 7 the district court to conclude the park owner “had no reason to expect that the City would amend 8 the Ordinance, transferring much of the park’s value to third parties” because “‘those who do 9 business in the regulated field cannot object if the legislative scheme is buttressed by subsequent 10 amendments to achieve the legislative end.’” Id. (quoting Concrete Pipe, 508 U.S. at 645). For 11 that reason, MHC squarely forecloses Plaintiff’s argument it had a reasonable investment-backed 12 expectation the 2025 ordinance amendment would not be adopted. Plaintiff concedes it purchased 13 the park while Petaluma’s rent control ordinance was in effect–that is, Plaintiff began “do[ing] 14 business” in a “regulated field,” and therefore “cannot object” to Petaluma’s “subsequent 15 amendments to achieve the [ordinance’s] legislative end.” Id. 16 Finally, Plaintiff cites no authority for its argument a rent control ordinance’s character is 17 akin to a classic taking, except to say “regulatory takings cases necessarily entail complex factual 18 assessments of the purposes and economic effects of government actions” and “[a] motion to 19 dismiss is not an appropriate mechanism for resolving factual disputes.” (Dkt. No. 25 at 11.) 20 (cleaned up). Drawing inferences in Plaintiff’s favor, Plaintiff’s allegations do not plausibly 21 support an inference the ordinance’s purposes or effects make the law functionally equivalent to a 22 classic taking. The ordinance’s plain text demonstrates, among other things, its purpose is to limit 23 rent increases for mobile home park tenants, who are primarily low-income or elderly and who 24 have limited bargaining power over park owners in negotiating rent increases. See generally 25 Petaluma Cal. Municipal Code Ch. 6.50.010. And the Supreme Court and Ninth Circuit have 26 made clear, without reference to specific facts, a rent control ordinance’s effects are not equivalent 27 to a physical or per se taking. See Yee, 503 U.S. at 528–29 (“This Court has consistently affirmed 1 relationship in particular without paying compensation for all economic injuries that such 2 regulation entails.”) (cleaned up); id. at 528 (“Put bluntly, no government has required any 3 physical invasion of petitioners’ property. Petitioners’ tenants were invited by petitioners, not 4 forced upon them by the government. […] [A] typical rent control statute will transfer wealth from 5 the landlord to the incumbent tenant and all future tenants. […] This effect […] has nothing to do 6 with whether the ordinance causes a physical taking.”); MHC, 714 F.3d at 1127-28 (noting the 7 Penn Central inquiry is about how “the interference with property can be characterized” and 8 ruling, without reference to specific facts, “the Ordinance is much more an adjustment of the 9 benefits and burdens of economic life to promote the common good than it is a physical invasion 10 of property”) (cleaned up)). 11 So, the Court grants Defendant’s motion as to Plaintiff’s regulatory-takings claim because 12 drawing all inferences in Plaintiff’s favor, Plaintiff has not alleged facts supporting an inference 13 the ordinance is a regulatory taking. 14 C. Plaintiff’s As-Applied Takings Challenge is Not Ripe 15 Defendant argues Plaintiff’s as-applied takings challenge is not ripe because Plaintiff has 16 not alleged it petitioned for a rent increase. The Court agrees. “[A] regulatory takings claim is not 17 ripe until the appropriate administrative agency has made a final decision on how the regulation 18 will be applied to the property at issue.” Guggenheim, 638 F.3d at 1117. To satisfy the 19 requirement, “all a plaintiff must show is that there is no question … about how the regulations at 20 issue apply to the particular land in question.” Pakdel v. City & Cnty. of San Francisco, 594 U.S. 21 474, 478 (2021). The ripeness requirement is “prudential,” not jurisdictional. Suitum v. Tahoe 22 Regional Planning Agency, 520 U.S. 725, 733-34 (1997). 23 Drawing inferences in Plaintiff’s favor, Plaintiff has not alleged facts supporting an 24 inference its as-applied challenge is ripe because Plaintiff has not alleged whether it petitioned the 25 City to increase rent above the ordinance’s annual limits. As explained above, the “primary” 26 factor in Plaintiff’s as-applied regulatory takings claim is the economic impact on Plaintiff. 27 Guggenheim, 638 F.3d at 1120 (cleaned up). Yet Plaintiff does not specify how much income it 1 economic impact are based on generalized findings from “[s]ome studies,” an allegation rent 2 values are 40% of fair market value due to the entire ordinance, and one example of “a 3 mobilehome for sale at the park” for which Plaintiff “expects” a vacancy “to occur at the park in 4 the next several months.” (See Dkt. No. 18 ¶¶ 20, 25-27.) While these allegations suggest the 5 vacancy control amendment has at least some economic impact, the ordinance provides a potential 6 remedy to offsets those harms: Plaintiff can petition the City for an arbitration hearing, offer 7 evidence its rental income is not providing it a “fair return,” and subsequently earn the right to 8 charge rents in excess of the ordinance’s limits. See generally Petaluma, Cal. Municipal Code Ch. 9 6.50.040, 6.50.060. Because Plaintiff has not availed itself of a potential remedy which could 10 reduce the amendment’s economic impact, the Court cannot ascertain how “the regulations at 11 issue apply to the particular land in question,” namely the degree to which the vacancy control 12 amendment impacts Plaintiff. See Pakdel, 594 U.S. at 478; MHC, 714 F.3d at 1127 (“[T]he 13 constitutionality of the Ordinance can only be determined by evaluating the totality of its 14 provisions and effects and because […] amendments cannot be evaluated in isolation.”) 15 So, the Court grants Defendant’s motion to dismiss as to Plaintiff’s as-applied takings 16 claims. 17 II. Substantive Due Process 18 Plaintiff’s substantive due process claim hinges on whether the ordinance is “rationally 19 related to a legitimate governmental purpose. We will strike down a statute on substantive due 20 process grounds if it is arbitrary and irrational.” MHC, 714 F.3d at 1130 (cleaned up). “[T]he 21 threshold for a rationality review challenge asks only whether the enacting body could have 22 rationally believed at the time of enactment that the law would promote its objective.” Id. at 23 1130–31 (citing Equity Lifestyle Props., Inc. v. Cnty. of San Luis Obispo, 548 F.3d 1184, 1194 24 (9th Cir. 2008)). 25 Plaintiff argues the vacancy control amendment has neither a legitimate governmental 26 purpose nor a rational connection to such a purpose. First, Plaintiff construes the City’s interest as 27 “enriching a select few” residents “at the expense of park owners” and of “incoming residents who 1 were the government interest at issue,” the amendment “bears no rational relationship to the 2 promotion of housing affordability” because the amendment “transfers a premium from park 3 owner to existing residents,” which increases mobilehome prices. (Dkt. No. 25 at 14-15.) 4 Drawing inferences in Plaintiff’s favor, Plaintiff has not alleged facts supporting an 5 inference the vacancy control amendment lacks a rational connection to a legitimate government 6 interest. A rent-control ordinance has a legitimate government interest “if it is designed to 7 accomplish an objective within the government’s police power.” Equity Lifestyle, 548 F.3d at 8 1194 (cleaned up). The ordinance is “designed” to accomplish purposes within the government’s 9 police power because it expressly identifies the City’s interests in promoting affordable housing, 10 reducing homelessness, protecting existing mobilehome tenants from “unreasonable […] rent 11 increases,” and many more.8 See Equity Lifestyle, 548 F.3d at 1194. And the Supreme Court and 12 Ninth Circuit have held highly similar interests are legitimate, and well within the government’s 13 police power. See Pennell v. City of San Jose, 485 U.S. 1, 13 (1988) (“[W]e have long recognized 14 that a legitimate and rational goal of price or rate regulation is the protection of consumer 15 welfare”); Equity Lifestyle, 548 F.3d at 1194 (relying on Pennell to find a “legitimate public 16 purpose” when a rent control ordinance “includes a paragraph describing its purpose, which is to 17 ‘protect the owners and occupiers of mobilehomes from unreasonable rent increases[.]’”). 18 Therefore, Plaintiff’s allegations, which do not mention the ordinance’s expressly stated purposes, 19 do not permit an inference the City does not share those interests,9 or an inference those interests 20 8 See, e.g., Petaluma, Cal. Municipal Code Ch. 6.50.010(E) (outlining survey results showing 21 mobilehome park residents tend to be elderly and low-income); Ch. 6.50.010(L) (“The city of Petaluma is committed to assisting in the preservation of decent, safe and sanitary housing 22 affordable to all economic segments of the community, especially mobilehome lots affordable to low and very low income individuals and families.”); Ch. 6.50.010(M) (“there is a shortage of 23 spaces … a condition which … tends to prevent normal competition between the owners and tenants of mobilehome parks); Ch. 6.50.010(T) (noting residents “have expressed the concern that 24 they could become homeless” due to “significant rent increases”); Ch. 6.50.010(X)(1)-(2) (identifying two of the ordinance’s purposes as “[p]reventing the imposition of exploitive, 25 excessive and unreasonable mobilehome space rent increases[]” and “[a]lleviating the unequal bargaining power which exists between mobilehome park residents and mobilehome park 26 owners.”) 9 Plaintiff characterizes the City’s interest as “enriching a select few” residents “at the expense of 27 park owners” and of “incoming residents” and rejects the notion the City has an interest in 1 are not legitimate. 2 Second, drawing inferences in Plaintiff’s favor, Plaintiff has not alleged facts supporting 3 an inference the vacancy control amendment lacks a rational connection to the City’s asserted 4 interests. Again, the test is “whether the enacting body could have rationally believed at the time 5 of enactment the law would promote its objective.” Id. Here, the City of Petaluma “could have 6 rationally believed” the vacancy control amendment promotes affordable housing and reduces 7 homelessness because it eliminates scenarios in which park owners could significantly raise rents 8 on low-income and middle-income residents. Id.; see Petaluma, Cal. Municipal Code Ch. 9 6.50.010(E) (finding mobilehome park residents tend to be elderly and low-income); id. Ch. 10 6.50.010(S) (“mobilehome owners generally have very limited economic bargaining power 11 concerning rents charged for mobilehome lots.”); Ch. 6.50.010(T) (echoing residents’ concerns 12 “they could become homeless” due to “significant rent increases”). Plaintiff’s allegations do not 13 support an inference otherwise because whether the vacancy control amendment actually “will 14 serve the purposes stated in the ordinance … is not for [courts] to decide.” Guggenheim, 638 F.3d 15 at 1123. Plaintiffs may be correct the amendment “causes the prices of homes to artificially and 16 substantially increase.” (Dkt. No. 25 at 15.) But because the City of Petaluma “could have 17 rationally believed otherwise,” the amendment does not violate substantive due process. Equity 18 Lifestyle, 548 F.3d at 1194; see Levald, Inc. v. City of Palm Desert, 998 F.2d 680, 690 (9th Cir. 19 1993) (“It may be true that in operation the ordinance does nothing more than take money from 20 the landlord and put it into the pocket of a tenant who no longer resides at the park. However, 21 while one might believe that the ordinance is an ineffective—and indeed draconian—means by 22 which to effect its goals, how well the ordinance serves its purposes is a legislative question, one 23 24 “the enacting body could have rationally believed at the time of enactment.” See Equity Lifestyle, 548 F.3d at 1193–94 (emphasis added). For example, in Equity Lifestyle, the plaintiff argued a 25 rent control ordinance “sole purpose” was to “transfer[] the value of [the park owner’s] property to a select private group of tenants.” Id. at 1193. The Ninth Circuit noted “[t]his argument 26 challenges the foundation of the rent control law and would, if accepted, require its invalidation,” then identified the government’s purpose by referencing the ordinance’s text. See id. at 1193–94. 27 Therefore, to identify the relevant government purpose here, the Court refers to the ordinance’s 1 the court will not consider in the context of a substantive due process challenge.”) (cleaned up); 2 Guggenheim, 638 F.3d at 1123 (“[T]he Due Process Clause does not empower courts to impose 3 sound economic principles on political bodies.”) 4 Accordingly, the Court grants Defendant’s motion and dismisses Plaintiff’s substantive 5 due process claim. 6 III. Leave to Amend 7 Dismissal is without leave to amend for Plaintiff’s per se takings claim and substantive due 8 process claim because amendment would be futile. Guggenheim and Yee make clear challenges to 9 mobilehome rent control ordinances are not per se takings, and the ordinance cannot be reasonably 10 interpreted to authorize a physical invasion of Plaintiff’s property. So, Plaintiff is unable to allege 11 facts supporting a per se takings claim challenging Petaluma’s vacancy control amendment. 12 Plaintiff also cannot cure the defects in its substantive due process claim because such claims do 13 not hinge on specific allegations; rather, they hinge on the statute, binding precedent, and what 14 purposes legislators could reasonably believe. However, the Court grants Plaintiff leave to amend 15 its regulatory-takings claim because Plaintiff may be able to articulate sufficient economic impacts 16 under Penn Central‘s first factor and/or a cognizable investment-backed expectations under Penn 17 Central’s second factor. Finally, the Court’s dismissal of Plaintiff’s as-applied challenge as unripe 18 is without leave to amend, but also without prejudice since it is a jurisdictional dismissal. See 19 Wolfson v. Brammer, 616 F.3d 1045, 1064 (9th Cir. 2010). 20 CONCLUSION 21 As explained above, the Court grants Defendant’s motion and dismisses Plaintiff’s claims. 22 Drawing inferences in Plaintiff’s favor, Plaintiff has not alleged facts sufficient to support an 23 inference its as-applied takings challenge is ripe or an inference Petaluma’s rent control ordinance 24 is a per se taking, a regulatory taking, or a violation of Plaintiff’s substantive due process rights. 25 Dismissal is without leave to amend, except for Plaintiff’s regulatory-taking claim. Plaintiff’s 26 amended complaint, if any, shall be due June 30, 2026. If Plaintiff does not file an amended 27 complaint by that date, judgment will be entered. 1 IT IS SO ORDERED. 2 || Dated: May 21, 2026 4 ne ACMUELINE SCOTT CORLE 5 United States District Judge 6 7 8 9 10 1] a 12 13 14 15 16 17 Z 18 19 20 21 22 23 24 25 26 27 28